Is United Hurting Themselves By Suing?

While catching up on other news this morning I discovered this article about United and Orbitz quasi-teaming up to sue the creator of a service called Skiplagged.

For those unfamiliar, Skiplagged is a service that helps people identify cheaper flights using something called hidden city ticketing. I’ve talked about it in the past on the blog and to a number of folks. I refer to it as throwaway ticketing, because you “throw away” your last segment of the ticket you booked as the connecting city is actually your destination.

A good example I actually advised a friend on a number of years ago was a flight between Las Vegas and Washington Dulles airport. He was trying to fly his wife and kids in first class one-way but United wanted $2600 per ticket. However, using the exact same flight to Dulles and adding a segment to Rochester dropped the price to $600. It meant that they couldn’t check a bag since it would end up in Rochester, but it saved them thousands of dollars.

United and Orbitz are suing because they believe they are being harmed by folks buying cheaper tickets. They’re suing to recover the princely sum of $75,000. Incidentally, United earned just over $1 Billion in the most recent fiscal quarter, so this move looks more preventive (and punitive). And, it’s unclear whether their stated losses are their actual losses, in that some of the trips taken may not have ultimately been booked because the actual destination was too pricey for the customer to purchase, thus causing them to choose another method of transportation. It would be interesting to see a court argument by United about their damages, in that they may have to prove actual damages. After all, they do get paid to fly someone when the customer books a throwaway ticket, and I would guess it’s almost always above their marginal cost to fly another passenger.

But, are they drawing undue attention to something that’s a small problem now? This is the question that immediately popped into my head when a friend of mine sent me a different article on the same subject a bit later on in the morning.  This friend keeps up on the news but doesn’t follow travel news as closely as I do, and yet he picked up on this article.  How many folks like him are learning about Skiplagged today (this friend already knew about hidden city ticketing).  The few times I’ve tried to access Skiplagged this morning it’s taken a while, possibly indicating higher than normal traffic.

Judging by the fact that it appears Skiplagged already surpassed a goal of raising $15,000 on their website to fight United and is well on it’s way to $20K, this is getting way more attention than United and Orbitz likely hoped for.

United and Orbitz are, in effect, teaching people about the inefficiencies in the airline ticketing system today and giving them training to exploit it!

United Airlines

My friend uttered rhetorically that the airlines could just fix their systems.  And, that’s true.  But, it’s likely a daunting task given the spaghetti of the current reservations systems, or else this likely would have been fixed already.

The airlines do police this for frequent offenders.  I can recall a thread on FlyerTalk some years ago that detailed how American Airlines was handling Dallas-based frequent travelers who would use Austin as a throwaway ticket.  These travelers would book their return flight to Austin with no intention of flying DFW-AUS, since they lived in Dallas.  American Airlines had employees start greeting some of these passengers as they disembarked their flight in DFW and graciously offering to escort them to their Austin flight.  Yikes!

It’s important to note that this type of ticketing isn’t illegal.  In almost all cases where you intend not to fly a segment, you are breaking the carrier’s rules and they do have ways to discourage the behavior, like removing you from their mileage program.  It’s unlikely they take such severe action if you do it infrequently.

I do like some of the comments in the lawsuit, courtesy of this Bloomberg article:

“In its simplest form, a passenger purchases a ticket from city A to city B to city C but does not travel beyond city B,” according to the companies’ complaint. “‘Hidden City’ ticketing is strictly prohibited by most commercial airlines because of logistical and public-safety concerns.”

Among their stated concerns is United’s resultant inability to count passengers, which can cause departure delays and affect fuel load computations.

I really would like to understand the public-safety concerns here.  Is United actually contending that someone using a throwaway ticket and not boarding a flight is harder to count than someone who missed the flight for any other reason?  Frankly, anyone that can’t count the number of people on a plane accurately shouldn’t be in the business of transporting people.

If United only put this sort of effort into fixing the parts of their airline that are unbelievably broken, I might not be finding plenty of excuses to fly other airlines.

Hidden city/throwaway ticketing won’t be fixed anytime soon.  But, it’s unlikely extra attention will cause it to be around longer.


The post Is United Hurting Themselves By Suing? was published first on Pizza In Motion.

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  1. I think the bigger discussion point should be around whether the current system is, in fact, an inefficient pricing mechanism. And I’d argue that it is not. Complex and confounding some days, but not necessarily inefficient.

    If the alternative is to charge by distance then I bet many consumers are likely pay much higher fares. And certain routes simply cannot justify the increased ticket costs we would see on something approximating a fixed-rate scheme. But those are routes which are important and useful. Should flying to California be cheaper to me than flying to Texas? It is further away, but there’s also more supply and more demand.

    And going back to the CAB-era system of regulated fares and routes is a bad, bad idea.

    1. Seth, I agree that the pricing can be confusing to normal folks. And, I’d likely agree that in most cases the pricing is efficient. Distance-based pricing doesn’t make sense to me from a business perspective in that routes WAS-LGA create much higher demand than their distance might dictate. My view has been that airlines see throwaway ticketing as a nuisance they try to minimize. I don’t see them abolishing it inside their current framework and I suspect it’s an inconsequential amount of “loss” in the grand scheme of things. For those reasons, United’s actions today surprise me.

  2. “Pricing is done based on demand and competition” Hence why prices arent really dropping as fuel drops, and why it costs more to fly on monopoly routes vs competing routes and why hidden city works with so many hubs. United just brought undue attention to the issue which I cant imagine is all that common as mostly elites know about it and dont do it. Now, more people may when they realize how easy it is.

    I think it is wrong to bully someone for making a website which shows public pricing data already out there. Claiming a safety and count issue is BS as the airline allows standby pax on the flight, and presumably doesnt know how many people are on board until time of departure. I feel bad for the revenue managers and the AO crew trying to separate legitimate late/misconnects from those who follow this dishonest practice, but it is up to UA and other airlines to stop the behavior, not squash information sharing.

    And I agree – against the rules is not the same as illegal. I am upset at how often airlines invoke the police to remove people from a flight when no laws are broken, or how they hide behind Deregulation Act to basically squash any consumer protection

    1. Noah, I agree with just about everything you say. But, I’m not sure I’m ready to call the practice dishonest. The airline has things it can do to enforce behavior, like throwing you out of their mileage program. But, I’m not sure I would say purchasing a published fare and using it a different way is dishonest. Not saying it is honest, either. But, I lean towards that since the airlines do have control over their pricing.

  3. The example about being ‘escorted’ is an urban legend, I must think. I’d like to see how that goes down when they try to force you onto a plane. I think I’d have the police arrest the agent.

    I have no objections to using hidden city, however, I worry about those with little experience getting involved in the process without knowing the potential risks. When they gate-check you bag to the final destination, or even worse…if you miss your flight and they put you on a direct flight(!)…. For seasoned fliers, we know the risks… but kettles get into situations…

    1. Alan, I’m not so sure it’s urban legend. Folks that reported this said they weren’t forced. They could choose whether to get on the flight to AUS (or wherever) or not. But, I have no first-hand knowledge. Considering HQ is a couple miles away, asking someone to do this wouldn’t be anywhere near the most surprising thing an airline has done.

      1. Ha. Indeed – You are probably right they tried it. I’d like to see it go down though! Offering to escort me, “Nope; I’m good thanks.”.

        As a side note.. I once was ticketed Den-Msp-Ord-xxx, I arrived at the airport late and missed the flight. Standing at the counter while the agent said, “Or I can get you Den-Ord” direct… Quite awkward having to say, “Actually I need to drop off a gift with a friend in Msp”… It was pretty clear the agent knew what was going on when they said, “I don’t think you’ll make the last flight to xxx tonight going that way, but I assume that is OK with you?”.

        1. Alan, chuckle. I’d imagine most agents get a little chuckle out of our crazy antics. Unless they work for UA and then generally just aren’t that pleasant. 🙂

  4. This is classic Streisand Effect. They’ve taken a little known practice and website, and in an attempt to stop it they have given it more publicity than they ever could of hoped for. Round of applause to the lawyer that came up with this plan.

  5. In my experience, the reason this works so well is that tickets are often priced as two one-ways instead of a round-trip. Wouldn’t incorporating more round-trip pricing (although perhaps less efficient) mitigate some of UA’s exposure? With all of this publicity, I can’t imagine other airlines are too thrilled either…

    1. NcSam, you’re right that adding a round-trip component to the fare would eliminate some of this practice. But, don’t give them any ideas! I like the flexibility of one-way fares for lot more reasons than this.

  6. I don’t think that United or Orbitz will be hurt by this lawsuit at all, nor that it will have any real impact on hidden city ticketing.

    The vast, vast majority of travelers don’t understand this practice, and have already forgotten about the lawsuit, and won’t remember to look for hidden cities the next time it could save them a few dollars. The leakage due to hidden city isn’t worth the airlines putting a great deal of effort into enforcement – except an automated free service might be worth getting shut down. Since the service induces customers into defrauding the airline, I think they have a case to shut it down.

    But I don’t think they will lose any customers over this nor create any increase in hidden city ticketing – shutting it down will decrease the potential instead.

    1. Carl, I don’t think they have a case. What skip lagged is doing isn’t fraud, IMO, nor is the customer committing fraud. They’re buying a ticket, not making a fraudulent statement. The airline has every right to bar the practice and cancel the ticket. They might even have the right to bar the customer from flying the airline in the future. This is no more fraudulent than counting cards, another prohibited practice.

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