Skiplagged sued by United and Orbitz
skiplagged.com
skiplagged.com
What in the world? How is that comparison anywhere near remotely justifiable? Absolutely ridiculous.
> American Airlines Group Inc., in a letter to travel agents on its website, suggested it will have to raise fares if it keeps losing money from the practice.
Yes, please do. Price each ticket based on what it costs and a fair margin, not based on competitive meta-market games.
I can only assume that airlines are engaging in potentially unethical pricing themselves. For example, imagine if an airline delivers service from A->C and is low cost. A large competitor airline has no direct route, but flies A->B and B->C, and so offers A->B->C for the same price as the first airline. The route is actually below cost (or has a substantially smaller margin), but the airline offers it anyway to harm its competitor and to keep passengers within its brand. I don't know if I consider this unethical or not, but it's certainly no less ethical than customers taking advantage of hidden city routes for a lower price.
I expect that the airlines will be unsuccessful in their suit but will get the FAA to approve a fee that would be charged if a passenger did not make the complete flight. In the back rooms they will tell the FAA its for passenger safety, after all its important in an emergency to know who is really on the plane, and people who get off early are putting first responders in harms way as they will go looking for people who aren't actually on the plane. They will argue they need a way to discourage that behavior and one way to do that is to charge a hefty "early exit" fee should a passenger depart the route mid-route. They would of course be open to discussions if it was for a legitimate emergency like you had to get back home or something.
And then there will be a $250 "early exit" fee and this web site will be toast and the airlines will be happy again.
They generally do a new itinerary for each new flight, so they should know that person X isn't on the flight. Now, I can understand that they'd be annoyed if they were holding the plane knowing that person X had arrived at that airport and should be nearby. But, anybody could simply tell the check in desk they won't be flying on that flight (as a courtesy).
Was that 'unethical' as in, "Price gouging and charging what the market will bear," or 'unethical' as in [1]? Someone must be confused.
[1] http://business.time.com/2012/06/26/orbitz-shows-higher-pric...
That sounds great in theory, but airlines are the textbook example of "what it costs" not making sense. An airplane costs almost the same to fly from New York to San Francisco whether it's completely empty or completely full. The margin cost of fuel for your 150 lbs of body and 50 lbs of luggage is pennies compared to the cost to operate the airplane generally (e.g., a 777-300ER costs about $320 million today, or a lease payment of about $45,000 per DAY [1]... plus depreciation of the engines, maintenance, inspections, flight crew, cabin crew, etc).
How do you divide that up? If you assume 100% capacity on every flight, the airlines will be even broker than they already are (airlines are hardly raking in money: American Airlines filed for bankruptcy in 2011, Delta and Northwest in 2005, US Airways in 2004, United in 2002, and US Airways again in 2002...). [2]
If you assume something in the middle, maybe 70%, then you end up with a silly situation where seats are flying empty even though the airline would be happy to sell then for 50% off and people would be willing to fill them for 50% off.
Then add the fact that first class passengers are willing to subsidize the rest of the cabin... and so are people who need flexible fares, etc.
Airline seats are a lot like software in that there isn't a good way to figure out "charge what it costs." On average, we know the airlines are charging slightly LESS than what it costs to operate an airline. But it's not like gasoline where you can figure out how much it costs to refine a gallon and then charge a small markup.
[1] http://www.myairlease.com/resources/fleetstatus [2] http://en.wikipedia.org/wiki/Airline_bankruptcies_in_the_Uni...
Of course, the airline thinks it's fine when it is pulling the switcheroo but they get pissed when you do it back to them. As long as the FAA allows them to oversell flights, they should allow passengers to use hidden city fare discounts... it's only fare.
A Sandwich shop sells half sandwiches at 5$ and full sandwiches at 6$
You, and a friend would both like half a sandwich. Instead of ordering two separate halves. You order only 1 full sandwich and cut it in half yourself.
Now the sandwich shop is suing you because you paid $6 for one sandwich, and only ate half of it. That's instead of paying 10$ for two half-sandwiches like the shop would like.
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I think if they don't want people to buy a product, then they shouldn't sell it.
Either lower the price of A -> B tickets, or make sure that tickets from A -> B -> C cost no less than A -> B
OR they could ignore this altogether and continue to sell A-B tickets at a premium realizing that people will only buy them for convenience.
Oh, and the airlines sell you the full sandwich for $3, but the half sandwich for $5.
It doesn't make a lot of sense, but it's the airlines right to set their prices and try to defend them; they may succeed or they may not. I doubt this particular lawsuit will be the test case that breaks them.
I wonder what I would do if I were the airline. Obviously the simplest thing would be to suspend the return ticket, but I suppose that the return ticket would typically be booked on a different airline. Another option would be to collaborate with other airlines to suspend return tickets, but I suppose that would be collusion and wouldn't fly with regulators. You could also try a prisoner's dilemma-y thing where future sales to a customer that has hidden city-routed in the past are marked up to fix the difference. If all airlines did this then only infrequent flyers would be able to hidden-city route. But if any airline refuses to participate, it might be tough for the business of the airlines that engaged in this practice.
Tough situation for the airlines. Not that I have too much sympathy, but I do take it into perspective that travelling is historically extremely cheap. It's a great time to be a flyer.
Comparatively, the duties and rights regarding a physical good like a sandwich are fairly simple -- it behaves like most simple physical goods. You buy it, then you can do what you want with it. Airline tickets are unlike this in a variety of ways. Hidden city routing being prohibited would not, I feel, be qualitatively different than many of these other restrictions.
I buy airplane seats; I can sit in both seats or just one. If they don't like which seats I chose to sit in or not, they shouldn't have sold the ticket to me in the first place.
I think the airlines would be willing to ignore a handful of people skipping out on a leg here or there. Pricing is obviously a major issue, but I think even moreso than that, if this were to become a common/well accepted way of buying tickets, there are serious issues in case of cancellations/delays/missed connections that, while fine in the hands of those who know they're subjecting themselves to the risk of being stranded, would lead to a bunch of "I bought a ticket to Chicago and United is going to leave me in Nantucket unless I buy a second ticket" news stories in case of a snowstorm.
They really are.
Coca-cola are marketing a refreshing tasty sparkling beverage, but what they're actually selling is carbonated water with sugar and acid. If I use it to clean my driveway, that's my prerogative, and Coca-cola don't get to retroactively charge me more because driveway cleaning chemicals are a more profitable market.
The government wanted to tax people it they drink it but not if they just clean with it. But then people (well, alcoholics mainly) realized they could buy the untaxed one "for cleaning" but then turn around and drink it. Can't have that!
End result: denatured alcohol, which (given taxes) is cheaper than the drinking kind because they "yuck it up" to the point that you can't drink it.
I just hope they don't do the analogous thing here, which would be like "poison you and hold the antidote at the ticket's final location" :-O
The statement you made about airline tickets is normative, not descriptive. I'm curious about how things actually are, not how people on HN want them to be.
http://www.aa.com/i18n/customerService/customerCommitment/co...
As you can see, hidden city routing is prohibited, and they retain the right to assess the difference between the ticket you actually used and what you paid if you engage in the practice.
Yes: something's gotta give. Consumers are not required to satisfy a business' desires.
Since airlines are a high barrier to entry market regulatory capture is both likely and a real concern, just as collusion (or an emergent cartel, after all this is a general problem of the business model).
So here to answer the question of what's reasonable you'd have to know more about the operating costs and other dynamics of the market. But I wouldn't be surprised if it turns out that simply forgoing that extra profit leads to a healthier market (cheaper fares, more passengers, bigger market altogether) - which is very likely, after all it is already profitable to do the A->B->C route for whatever they offer it, and if they offer it below costs, then that's basically dumping which we know long term likely hurts the market because leads to fewer participants.
What I don't want to do is to let someone else's fare on route A->C cause me to lower the price for people who want to fly from A->B (whose alternative is to pay $250).
The airlines have already fought and won this battle. Airlines contracts of carriage already prohibit hidden city ticketing.
We should also consider the possibility that the profits from, e.g., an the LAX->SFO->PDX and LAX->SFO routes are not sufficient to cover expenses if you impose the external requirement that the former must always be more expensive than the latter. Maybe, under these constraints, people decide there are better things to invest their money in than setting up these airline routes, or maybe they replace these two routes with a single, direct LAX-PDX route, and nobody gets to fly to SFO.
That said, I think I'm still grumpy at the airlines for doing it. The basic issue they're trying to resolve is that they want the LAX-SFO-PDX flight to compete only with the other airlines' LAX-PDX direct flights, which justifies their weird pricing.
In reality, though, their LAX-SFO-PDX flight is also competing with their own LAX-SFO flights, because, unless they're locking people in the planes, they're equivalent products for anybody trying to get to SFO.
You're saying "You don't want to lose the business of people flying from LAX->PDX, but also don't want to alter your routes," which makes sense as a business. But as a consumer, it seems pretty screwed up that "I don't want to change my routes" is enough of a reason for businesses to sue people and businesses who take advantage of your refusal to fly where they want to go. It's using litigation instead of just flying to PDX.
LAX->SFO->PDX isn't an equivalent product if you're going to SFO -- the airline can rebook you on any of a number of options (in case of weather, capacity, mechanical difficulties or whatnot) that may or may not go through SFO.
Adjusting routing is nontrivial. Planes are expensive. Gate rental is expensive. Pilots are expensive. Getting pilots and planes to where people are with routes planned to haul them to where they want to be is complicated. As an example of how complicated (and fragile) this is, watch the United departure board when there's a decent storm brewing in Chicago -- It's not just the flights going into and out of ORD that get screwed up -- it's pretty much every flight in the country.
Having a special "both legs only" deal, in the face of higher actual costs for both than for only one, should immediately reveal itself as stupid, though an airline may (foolishly) be trying to kill its competitor.
Yet another analogy: the first business makes a template for cutting cookie shape A and a second for shape B. The second business sees demand for people who need an equal amount of both cookies, and makes a special template that "stamps out" an A and B stuck together. The one template is cheaper than two. Now it can sell the A/B bundle cheaper than the first business.
Some people like having separate cookies, some don't, and some only want one of them. Some like having both and don't mind breaking the fused one. The second business sells the fused one cheaper.
How should the first react? What if it tried to steal the "A/B bundle market" by trying to offer a major discount for people who buy A and B together, but only if they really like both?
Subway update their pricing such that a footlong sells for $5 and a six inch sub costs $7. Looking at those prices, you purchase a footlong sandwich. Should Subway be allowed to demand $2 from you if they see you discarding half of the sandwich?
I feel like these analogy threads are HN users way of getting around the no-fun policy of commenting on HN.
Someone writes a comment using an analogy and almost always there are people de-constructing the analogy and then creating their own "improved" version that take more facts into account making it harder to understand the situation which is the exact opposite effect an analogy should have.
For the passenger, the contracts say that you are expected to use all legs of the tickets and if you do not then the rest of legs of the flights are voided. For the airlines, if they are unable to provide the flight they owe the passenger compensation.
There are no legal repercussions for the passenger not using all legs of the flights, but Skiplagged is clearly committing conspiracy to defraud and I would wager a fair sum of money that they will lose this case.
The issue with the Sandwich analogy is that there is no contract.
> the contracts say that you are expected to use all legs of the tickets
and
> There are no legal repercussions for the passenger not using all legs of the flights
both be true?
In other words, I as the customer have no obligation to use all legs of the flight. I did not promise the airline I would fly all the way to my destination (as far as I know); I do not promise that I even get on the flight at all. How can there be a conspiracy to defraud?
> Fares apply for travel only between the points for which they are published. Tickets may not be purchased and used at fare(s) from an initial departure point on the Ticket which is before the Passenger’s actual point of origin of travel, or to a more distant point(s) than the Passenger’s actual destination being traveled even when the purchase and use of such Tickets would produce a lower fare. This practice is known as “Hidden Cities Ticketing” or “Point Beyond Ticketing” and is prohibited by UA.
And violation of this provision can, in fact, have repercussions:
> UA’s Remedies for Violation(s) of Rules - Where a Ticket is purchased and used in violation of the law, these rules or any fare rule (including Hidden Cities Ticketing, Point Beyond Ticketing, Throwaway Ticketing, or Back-to-Back Ticketing), UA has the right in its sole discretion to take all actions permitted by law, including but not limited to, the following:
> 1) Invalidate the Ticket(s);
> 2) Cancel any remaining portion of the Passenger’s itinerary;
> 3) Confiscate any unused Flight Coupons;
> 4) Refuse to board the Passenger and to carry the Passenger’s baggage, unless the difference between the fare paid and the fare for transportation used is collected prior to boarding;
> 5) Assess the Passenger for the actual value of the Ticket which shall be the difference between the lowest fare applicable to the Passenger’s actual itinerary and the fare actually paid;
> 6) Delete miles in the Passenger’s frequent flyer account (UA’s MileagePlus Program), revoke the Passenger’s Elite status, if any, in the MileagePlus Program, terminate the Passenger’s participation in the MileagePlus Program, or take any other action permitted by the MileagePlus Program Rules in UA’s “MileagePlus Rules;” and
> 7) Take legal action with respect to the Passenger.
That sounds like the rub. It is against the law to not board a leg of a flight? Doubtful.
> Where a Ticket is purchased and used in violation of the law, these rules or any fare rule (including Hidden Cities Ticketing, Point Beyond Ticketing, Throwaway Ticketing, or Back-to-Back Ticketing)
It still seems unclear that there are legal ramifications. It simply sets out a list of consequences should you not follow through. I suppose they could attempt to come after you in small claims court if you refused to pay.
The crucial thing that this website owner must do is keep this story in the media. He will have to make himself available to various news outlets--sometimes on short notice. Of course, he will need to consult with his attorney.
Unless I'm missing something, as long as he can weather the delays, this appears to be a slam dunk.
I actually thought that airlines have always threatened to 'claw back' the fare difference from travelers that did this, but I may be mistaken.
It's probably the most frequently asked question on that site.
But, they absolutely do not think in these terms...it's "exploit every dollar possible and pay us at the top and our shareholders every penny we scrape, to hell with anyone not like us."
TravelZoo is worth $192 million, and has $158 million in sales. Why couldn't Skiplagged enter that turf with its momentum? (in this hypothetical)
If you look back in the history of the big and small comparison sites, most started with (if the don't still operate) a gimmick but really are making their margins by being a step in the user's path to buying an airline ticket-- or better, a hotel reservation.
imagine you want to go from city A to city B
normally you would search for tickets from A-B
however, during your search, you would NOT see tickets that go from A-B-C.
why is that relevant? sometimes tickets from A-B-C are cheaper than A-B. so you would buy a ticket (A-B-C) and simply leave the airport of city B (not boarding the B-C flight).
the website in question made it easier to find these types of tickets. These tickets are commonly known as "hidden-city" tickets.
the airlines would prefer you to spend more money on an A-B flight rather than buying the cheaper A-B-C ticket.
they are now suing this website to enforce their preference on consumer choice.
if there were something illegal going on, it would be limited to your individual contractual obligations as the owner of an airline ticket. (there could be a term that requires you to actually be present on the airplane for an A-B-C flight)
This website is simply _enabling_ people who intend to violate this (potential) term of their airline ticket agreement.
Interfering with a contractual relationship is a tort. http://en.wikipedia.org/wiki/Tortious_interference
Which might, in some jurisdictions, open the website operators to claims of tortious interference (https://en.wikipedia.org/wiki/Tortious_interference) if they can prove that the site operator knew about the contractual term and incited people to breach it.
Hopefully a term requiring someone to take a flight is unenforceable (if such a term even exists) - so that might give them a defence even if such a term exists.
Notably, the contract didn't yet exist at the time of involvement of the site operator.
At the point of ticket purchase / contractual agreement, the site operator is not involved, and in fact the operator has no knowledge of whether a contract was entered at all.
It's very hard for me to imagine a contract that includes "once you get on the plane, you must not miss your connecting flight".
Heck, I wish I could get the airlines to say "once you're on the plane, we will make sure your connecting flight doesn't leave without you", but of course that's impractical.
This is just silly.
Except that it basically says "Thou shalt not buy a ticket with the express intent of missing the connection".
http://www.united.com/web/format/pdf/Contract_of_Carriage.pd... (pg. 11)
It might be tough to establish that the consumer entered into that contract knowledgeably, but there are a lot of more important terms in that same document -- so the airlines might have some powerful supporters with a vested interest in the validity of those contracts.
Still, tortious interference presumes an existing contract, from my expert legal reading of Wikipedia. If a customer enters the contract with a preexisting intention to breach, I am not sure you can accuse the site operator of interference before the fact.
I know I would be pissed if I needed to take a flight but it was fully booked, and then found out that a dozen people already planned to not show up.
I see this trick as not very respectful to other people.
Because you may prevent me from taking that seat without actually needing it. Sure you can but it's not nice to me.
Looking at a single possible outcome and using it to complain about the entire practice is foolish.
I'm not the one considering one single outcome, if anything I feel like I'm the only one in these comments considering a different possible side effect of the trick.
I have no idea what you're trying to say. There are millions of people involved. Averages make sense to use.
For example maybe 450k are unable to get a ticket because a plane filled up with non-riders, and 550k are able to get a ticket when they couldn't before because additional capacity was allocated to the route. Is it 'disrespectful'? Hell no, in my view. It's just shuffling what are fundamentally random numbers. These people are buying tickets too late to be assured seats. Some will get them, some won't, and buying your own is not a negative unless you do something like coordinate to buy out an entire route.
Edit:
>I'm not the one considering one single outcome
Yes you are. You are only considering the possible downsides of a purchase. I could use a similar argument to say that nobody should ever buy anything non-critical because stock might run out and screw over the person behind them.
And then the economy collapses.
No, 'everyone else' is not discussing the effects I'm talking about.
'everyone else' is focusing on about the person buying the split ticket.
You are focusing on the other passengers on the plane, which is a noble goal.
But you're only looking at half the picture of those other passengers.
'everyone else' is looking at 50% of the picture, you are bringing 25%, I'm showing the last 25% and how (in my opinion) it counters your argument.
The person buying the split ticket has an effect on the other passengers, but their main effect is changing which potential other passengers are able to buy tickets. Since this is a random and chaotic process subject to the butterfly effect, I declare that it is impossible to not affect it, and therefore affecting it is not disrespectful. It can only be disrespectful if you reduce the total number of seats fulfilled by other passengers. Because supply chases demand, buying extra seats should not have this effect. Therefore there is no disrespect.
Regardless, I always check my baggage so A-B-C type tickets would not work for me.
It's all a complicated algorithm but they have to provide reasonably reliable flights to all of the destinations that they serve in case someone gets bumped. (or they'll have to pay out huge fines to each passenger.)
What actual determines ticket price is mainly the supply and demand around trips between a pair of destinations (like with any other market). Lots of people want to move between DC and New York, and lots of them are business people who can afford to pay a lot, so the market can support a high price for this city pair. This isn't true of, say, DC and Yonkers. What's key, also, is that the layover cities (setting aside people doing the "hidden city" thing) are largely an implementation detail; if you're going from DC to Yonkers, you're comparing the flights that go through New York to flights that go through Philly directly on price (assuming about equal convenience), and you're going to pick the cheapest one. This means market forces are going to drive these prices to be similar, even if the DC->Philly market is radically different from the DC->NYC market. The consequence is weird, unintuitive situations where a flight to the intermediate city can be more expensive than one to the final destination, if market forces are such that the market can typically support a higher price for flights to that intermediate city than they can to the ultimate destination city. Hidden city travelers take advantage of the cost disparity between the markets -- it's a sort of arbitrage.
Some routes will lose money, some will be cash-cows. The algorithm balances it all out for a net profit.
Enter an anti-algorithm that starts mucking with all of the carefully balanced numbers to do an optimization of its own and you end up with very unhappy airlines.
Even if this event will only happen once in a 100 flights it will still cost the airline, the airport, and the people enough time and money for everyone really pissed about this nonsense.
While i agree that the law suit might be slightly out of place, i think there are some good reasons why this practice isn't kosher. Tho the fact that it's hard or near impossible to buy the same tickets directly without going trough a booking agent that can fix the price for you kinda sucks, i would think that most people would want to kill that guy that made them wait for 2 hours while they got their shit screened again just beause he tried to save 50$...
the only real point they have is that if many people buy A-B-C tickets, their calculations will expect many physical people to be on the B-C flight.
Here is a contrived situation that they might present:
Aircraft are fueled to certain amounts based on the number of passengers they have.
If an airplane takes off from SEA to LAX, it does not want to stop right away and land, minutes after taking off. The landing might be too "hard" since the plane weighs too much. Normally what happens is the plane will either take off with less fuel, or it has to circle around in the air, burning off excess fuel before landing.
If you have an airplane flying from SEA to LAX to DFW, and too many people get out at LAX, and don't make the LAX-DFW flight, then the weight calculations on takeoff and landing at LAX and DFW will be very different.
Now keep in mind in the real world, this probably won't make any difference, since more than 2% of travelers don't do this. Also i have not looked up what kind of weight impact the actual passengers are supposed to have relative to the actual airplane.
If it is going for somewhere far away, however, that gives the crew plenty of time to burn extra fuel on the way by operating inefficiently (turning on the APU, flying at inefficient altitudes or airspeeds, etc), and in any case if enough passengers are missing that the fuel burn will change significantly that'd probably push it back down under the landing weight limit.
The whole circling to burn fuel or fuel dumping thing usually happens when the plane has to make an emergency or unexpected landing; here the typical scenario is that the plane is fully loaded with passengers and luggage, and has nearly-full fuel tanks for a long cross-country or international route. Shortly after takeoff, a technical issue is identified, and the plane needs to shed weight before landing to avoid damaging the landing gear and requiring a costly inspection before returning to service.
The other scenario where circling to burn fuel can happen is if there's a wet runway or other such issue that reduces braking performance. Again, though, this is mostly an issue if you have a fully loaded plane ready for a very long route.
Ideally the planes would be weighed after being loaded to calculate how much fuel they should need, but that might take too long.
(I'm also from Miami)
[1] https://skiplagged.com/?src=ORD&dst=JFK&when=2015-01-31&when...
Maybe the tool works best from smaller airports.
I don't think it's very ethical to deliberately introduce inefficiencies to a system for personal gain, especially if it leads to wasting scarce resources. Being a responsible human being means caring about other things than just money.
Also, it's hard for me to feel compassion for passengers exploiting this trick - air travel is totally underpriced already, casual passengers pay much less than they should actually pay to cover the operating costs (not to mention externalities). People complain about algorithmic pricing, but that actually makes air travel affordable for a typical person, where a fixed pricing scheme would not.
> "Airlines have told Orbitz that a traveler caught on a hidden-city routing is subject to having his ticket voided without refund, the Internet travel company said today in a statement."
How in the world can they ever prove this unless I as the passenger explicitly tell them that I'm on a hidden-city route? Surely, a simple "I was feeling too ill to catch the second flight, so stepped out" would be something they can't contest.
I understand that as the seller they have the right to refusal passengers but it seems like their combative stance is akin to the music/movie industries attitude towards torrents. I would think that both Orbitz and United would be better off on-boarding an "if you can't beat them, join them" mantra. This whole episode could have been flipped on it's head if the headline read "Skiplagged officially endoresed by United and Orbitz". Imagine the number of passengers they'd attract! I'm assuming that the market for flights is demand elastic to some extent. This is anecdotal based on my own buying pattern though.
[1]
Zaman said Skiplagged is just a "side project."
Out of curiosity, is it all possible to book A -> B -> C, and travel the B -> C leg?
Would the airline sell your seat if you didn't show up at A?
> Unfortunately, Skiplagged is now facing a lawsuit for making it too easy for consumers to save money. Ask me almost anything!
0: http://www.bloomberg.com/news/2014-11-18/united-orbitz-sue-t...
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