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That explains why A->B->C costs less than A->C, but for skiplagging to be worthwhile we must also have A->B->C costs less than A->B.

What would make A->B more expensive than A->B->C?




It's got nothing to do with incurred cost. Goods and services are not priced at cost + margin, they're priced at whatever the market will bear.

A->B is a higher demand ticket than A->B->C, so the market bears a higher price for that ticket. By getting off at B, the traveler has "stolen" the difference in those two prices from the airline, as the airline would have charged the skip lagger or another direct flight customer a higher price.


Good use of quotes there - a market participant exploiting an inefficiency steals nothing.


Ya it's an interesting economic puzzle, given the unique nature of the airline business.

I think ultimately the incentives work out to exactly where we are, airlines will simply ban travelers from their services when skiplagging is discovered.

There's no reason to offer services to travelers who pay less.


Subsidies?

Quite a few smaller cities offer subsidies to carriers to bring traffic to their cities. Those same cities might not be happy when travelers use the subsidies to go to the big hub for cheaper and instead. It might even be contractually agreed that the carrier has to make sure they go where they're supposed to, thus the rules we see.


A subsidy big enough to pay for the entire B->C ticket?

Why even involve other routes at that point, offer $20 or $0 service on that link.




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