This is fairly similar to the way airlines can charge lower prices for a SFO-NYC-BTV route than they do for SFO-NYC. They know certain routes (SFO-NYC) are used by business travelers.
Some people try to game the airlines in the same way that the article describes, getting a price based on one route (SFO-BTV via NYC) and then actually taking a different one (SFO-NYC). I expect Uber will eventually prevent this the same way the airlines do: penalizing you for taking a trip that doesn't match what you told them you were doing by refusing to allow you to continue once you deviate.
Another part of airline pricing that makes zero rational sense is when a one way flight costs $x, but a round trip flight (which includes the original one way flight) costs <$x.
For instance, (at the time of writing) this Lufthansa one-way flight from Prague to Budapest at 1pm on May 20 costs $425 [0]. But this round trip flight from Prague to Budapest (which includes the 1pm May 20 flight) costs $343 [1].
Butterfly was often far cheaper due to the almost 2-week stay on the outer ticket and a Sat night stay on both tickets. We got the spend the difference on better hotels/food, or that middle ticket could be PHX-SFO for the weekend.
This is a nested ticket and is technically against the contract of carriage with the airline, as you're trying to avoid paying their fees. Very hard to get caught, but if so they would try to come after you.
I don't see how it would be hard to catch. They have uniquely identifying information on each passenger, so just arrange the flights sequentially, and if one matches up, then compare which is 1st leg or 2nd leg and flag it. They can probably even ban you from the airline, and then what? There are quite a few monopolized airports and routes in the US, s you can be majorly inconvenienced by not being able to fly one an airline.
The question is, how badly do they want to catch it?
If it's something only a small fraction of the customers actually bother to do, it doesn't dig into their profits too much.
It effectively acts as another form of market segementation. There is a mostly fixed cost for flying an airplane; the marginal cost per passenger is relatively low. So ideally, you would have a paying passenger in every seat. Some passengers are more price sensitive than others, so you want to have the less price-sensitive passengers pay as much as possible, while still providing ways for the more price sensitive passengers to get fill up seats that are still available after that.
People who are willing to go to the trouble of doing this will happen, but you're still making money off of filling seats with paying customers, they're just acting as slightly more price sensitive passengers.
The airlines fluctuate rates for just this reason; they want people to be able to buy tickets at different prices, so price sensitive passengers can go to a little more trouble to book earlier or take bigger risks by flying standby or waiting for the price to go down if it's not appropriate, while less price sensitive passengers will just buy the ticket whenever convenient.
If this were being seriously abused a lot of the time, or there were automated systems which booked trips like this for you, I could see the airlines doing something about it, but if it's just a few people going out of their way to get a slightly better price, it's probably just considered to be part of the whole ticket pricing game.
> If this were being seriously abused a lot of the time, or there were automated systems which booked trips like this for you, I could see the airlines doing something about it, but if it's just a few people going out of their way to get a slightly better price, it's probably just considered to be part of the whole ticket pricing game.
This is pretty much how it's gone so far - sites that have offered anything even resembling an automated service to do bookings like this (and similar other tricks) have been aggressively fought by the airlines legally.[0]
There are also a very small handful of stories per year about some frequent flier getting caught abusing these sorts of fares habitually and getting a trip canceled and/or banned from the airline.
As far as I know my airline flags all sorts of trips like this - but doesn't do anything about it unless it becomes obviously gamed. For example I fly between two cities frequently for week long+ periods, but may need to go home for a weekend during a 2 week stay now and then. I know my airline flags that, but haven't had a problem since it only happens a few times a year out of dozens of total trips.
Pardon my ignorance, but how does this avoid fees? I can see this being an issue with international flights with visas and whatnot but don't you pay the same fixed rate per flight in the US?
> don't you pay the same fixed rate per flight in the US?
In a word, no.
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Flights in the US are dynamically priced. Each airline decides how much they want to charge per particular flight for a particular person at a particular time (meaning, when you purchase the ticket). Prices fluctuate constantly. If you look up a flight from City A to City B today (and said flight departs within a reasonable amount of time; say, a month), it's fairly likely to have a different price tomorrow. Prices can also vary based upon how you book the ticket (i.e. travel agent, different travel websites, by phone, etc.).
It's very much possible, and generally expected, that you and the person you're sitting next to paid different amounts for what amounts to the same ticket.
This again is market segmentation. When I was flying a lot as a management consultant, even when flying somewhere and back, the times mattered more to me than the airline so I'd often do 1-ways on different airlines and didn't care that it cost ~$1k 1-way for a domestic airline. Also often, I was hopping from place to place using 1-ways.
I understand the economic rationale behind this, but I would think that there's automated tools to exploit this segmentation. It'd just be a simple function call to determine if there is any round trip flight (with a certain one-way segment) that's cheaper than the one-way segment alone.
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I stumbled upon this strangeness while planning out a vacation. I'm basically hopping through Europe so I was buying several one way flights. I accidentally clicked the roundtrip button once and noticed that the prices, in general, seemed lower than the one way. So I checked and lo and behold: they were lower. I ultimately just went with Ryanair because their prices were literally a third of what the next lowest carrier wanted (~$35 vs. ~$120).
You have to be careful of this - airlines look for people using the so-called "throwaway ticketing" strategy, and reserve the right to close your frequent flier account. I'm not sure it happens often, but it's certainly within the realm of possibility. Flyertalk[1] is a good place to research this more.
It's definitely possible. But things happen and people miss flights. Unless I do this several times a year on the same airline, how would they ever be able to tell the difference between intentionally and unintentionally missing the return flight?
The people that would really benefit the most from this are people who would use it a lot on the same airline (read: business travelers milking those FF miles), i.e., the people to be most noticeable for the airline and the people with the most to lose from being discovered.
They're not that worried about regular folks doing it once or twice a year.
I use this all the time. It is recommended though when flying this way to not use rewards/ff accounts because they can be closed and to not check baggage because it won't end up in the right place.
I just use Google Flights by first searching for one-ways: I enter in the origin, destination, and departure date. (as an aside: generally only the large legacy carriers do this type of price discrimination.) Find one flight that's not "this is so cheap I don't care" (basically at least a few hundred dollars). Then, change the search mode to round trip and find the same departing flight. The lowest round trip price will be shown.
No the rationale behind it is very different from the Uber case.
The reason behind hidden city fares is, the price of SFO-NYC-BTV is for the SFO-BTV market, to compete with other airlines' SFO-ATL-BTV, SFO-ORD-BTV, SFO-Whatever-BTV or SFO-BTV direct flight. It has nothing to do with SFO-NYC market, just for this particular airline it happens to route through NYC. It discounted more than SFO-NYC market because competitions on that market. That's why competition is good for customers (history has shown us that when an airline has monopoly on a market, you can only expect the fares on that market to go up). That's also why it's against the contract of carriage you have with the airline and the airlines are working very hard to avoid customers doing that (if you associate your frequent flyer number with hidden city bookings, they might cancel your account. they might also put you on a blacklist if you are caught doing this frequently).
The airline practice similar to the Uber one is charging more for frequent flyers. United was caught doing that a few years ago (maybe they are still doing that).
> The reason behind hidden city fares is, the price of SFO-NYC-BTV is for the SFO-BTV market, to compete with other airlines' SFO-ATL-BTV, SFO-ORD-BTV, SFO-Whatever-BTV or SFO-BTV direct flight. It has nothing to do with SFO-NYC market, just for this particular airline it happens to route through NYC. It discounted more than SFO-NYC market because competitions on that market.
In price disparity situations as an outsider, its impossible to determine whether the lower price is because based on competitive pressure (as you claim) or whether the higher price is based on customer's willingness to pay (as I claim), because both imply that the other is the "normal" price absent those features. Its likely a little bit of both.
What is the same is the economics: costs in both industries are primarily based on miles that they took you. Prices are based on what they think they can get away with charging you. The more they know about you (or infer based on the data they have and what you are trying to do) the more chances they have to charge you higher prices because they think you can afford it.
It's always based on customers' willingness to pay, that's how capitalism works. It's just that the competition will make customers less willing to pay more.
They might cancel the rest of your roundtrip ticket and refuse give you a refund, or they might ignore it for a while and then ban you, or they might do random things like refusing to honor ff miles. There are no rules to protect you and no one to complain to except the airline's customer service.
People do this a lot. This is a well-known and old issue known as "Hidden City Ticketing" and goes by other names, as well. It is against the typical Contract of Carriage agreement passengers have their airlines, though it's hard to actually enforce: https://travel.stackexchange.com/questions/17984/is-leaving-...
Note that while this tactic can be money-saving and useful in practice, it does have certain downsides, like if you need to check luggage, or if you expect to collect your airline miles and segments (typically requires completing the full itinerary, though not always).
The big one that nobody's mentioned is that the airline will cancel any remaining flight segments on that ticket, without recourse unless you are very good at begging favors from customer service.
So don't book a round trip SFO-NYC-BTV-NYC-SFO on one ticket and skip the NYC-BTV segment, because you won't be able to rejoin either for BTV-NYC or NYC-SFO.
There's a whole website (https://skiplagged.com/) dedicated to it. The airlines do NOT like it. I believe they sued the creator of the website at one point.
In short, you can't check your baggage, they'll probably notice you didn't take the second leg, and if you do it too many times, you might find yourself with a ban.
There was a whole controversy a few years ago around this. See https://skiplagged.com/about . This website automated that approach so that you got a ticket with a few stops for cheaper but you just left at the stop you wanted originally.
Some people try to game the airlines in the same way that the article describes, getting a price based on one route (SFO-BTV via NYC) and then actually taking a different one (SFO-NYC). I expect Uber will eventually prevent this the same way the airlines do: penalizing you for taking a trip that doesn't match what you told them you were doing by refusing to allow you to continue once you deviate.