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  #41  
Old 02 January 2015, 02:27 PM
overyonder overyonder is offline
 
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Originally Posted by GenYus234 View Post
It is the same loss of revenue that the airline would have had if the passenger actually did fly from A to C at the price the airline set when it scheduled the flight from A to C via B. And since weight is fuel and fuel is money, the airline will actually save some money if the passenger doesn't fly from B to C. Not to mention what others said about the airline probably selling the seat to a standby passenger and getting paid twice for one seat.

What this is really about is loss of potential revenue. The airline wants to force the passenger to fly A to B using the ticket that the airline has set at a more expensive price.
e.g.:
Ticket A-C (via B) costs customer $300. A-B flight operating cost is $50, and B-C is $50 (keeping it simple here). $300 -$50 - $50 = $200 profit. If you don't take the B-C, you "saved" the airline $50, but...:

Ticket A-B costs customer $500. A-B flight operating cost is $50. $500 - $50 = $450 profit.

But wait. There's more! B-C ticket costs (another) customer $300 as it's a direct flight. So $300 - $50 = $250 profit. If they sell the A-B + B-C, they're making even more money ($450 + $250 = $700)

The goal of the airline is to maximize profits as we all know. If A-C is not a profitable route, they would eventually drop it.

Selling to a standby passenger AT FULL PRICE is "not that common" - most standby passengers that fly on an earlier flight are getting that flight for a lower price ($50 to leave earlier, etc).

Bottom line, people seem to think that when they buy A-C via B, that they're *entitled* to A-B-C, when in fact, you're only entitled to A-C. If B happens to be in the mix, so be it. As I mentioned earlier, IRROPS can turn a sure-thing into an "Oh-F***" in a heartbeat. (Been there done that). You could even end up with A-X-Y-Z-C.

OY
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  #42  
Old 02 January 2015, 02:35 PM
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A Turtle Named Mack A Turtle Named Mack is offline
 
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If they are willing to fly you both legs of the flight at a given price, but you decide to use only one leg of that flight, the airline is saving fuel costs on the leg you do not take. They should therefore offer a rebate when you choose not to take that flight.
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  #43  
Old 02 January 2015, 03:01 PM
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Originally Posted by ASL View Post
I'm sure that's part of it, but consider that the airline might actually be accepting a loss (for all we know) if every passenger went from A to C via B (or even A to B!) at A to C via B rates ...
That is certainly possible, but the airline has accepted that selling some seats for A to C to B is worth it to them. They'd have the same problem of less revenue than possible if a large group decided to fly from A to C to B and ended up taking every seat on a flight. That is one of the risks of offering loss leaders, you might end up with a loss.

To me it is like if a grocery store sells turkeys below cost the week before Thanksgiving. They hope to make up the money with all the other things you'd buy at the same time. But some people will buy just the turkey and get everything elsewhere. Those people are not cheating the store by doing so.
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  #44  
Old 02 January 2015, 03:03 PM
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ASL ASL is offline
 
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Allow me to expand on overyonder's example and take into account that some costs are fixed per flight and others are variable per passenger and assuming a flight at least breaks even, it opens up the opportunity for reduced costs tickets based off the variable per-passenger costs, but only if the fixed per-flight costs are already met:

Let’s take a look at a hypothetical scenario that may or may not reflect reality:

City Airline flies a route from A to B and B to C (let’s assume they don’t have an A to C direct route for his scenario, but the competition does, in fact C is one of their major hubs whereas B is City Airline’s major hub).

Let us say that in the case of City Airline:

1) They operate the same 100-passenger jet for both legs.
2) To break even on the A to B flight it needs to sell 80 seats at a rate of $400 per seat.
3) To break even on the B to C flight it, conveniently enough, also needs to sell 80 seats at $400 per seat.
4) A to B takes 2 hours
5) B to C takes 2 hours
6) The layover at B takes 1 hour
7) The competition offers a non-stop 3 hour flight from A to C at a mere $500 (no one said that B was along a great circle/shortest distance route between A and C)

Supposing City Airline on average sells 85 seats per flight at the A to B or B to C rate. Sometimes they sell a little under 80 and sometimes they sell out, but on average they break even and then some. If they weren’t able to average 80+ seats per flight they’d cancel the route altogether and go out of business, but since they are able to exceed their break even point on average, they keep the route open and obviously they can’t cancel every flight that doesn’t quite make 80 seats: that would really piss a lot of customers off (even more so than flying normally does) and people would go to a more reliable airline, so some flights do operate at a loss.

Anyways, the A to B and B to C rates needed to break even aren’t just paying for fuel, they’re paying for maintenance, flight crew salary, insurance, and other things that are fixed costs with each flight and don’t vary with the number of passengers like fuel does. Since they’re able to break even off the one-leg fares and have some extra space, is there any reason not to go ahead and offer an A to C via B route? I mean, sure, no one in their right mind would pay $800 to g from A to C via B when the competition offers a direct flight for $300 less, but what if we cut the cost? Since City Airlines already makes its money back on average, the lower limit for the fare is the price of the fuel and any other per-passengers costs: the flight crew, maintenance, and other fixed costs have already been accounted for. Turns out fuel from A to C via B only costs… $300! That means City Airline can now offer a competing service from A to C at, say, $350, which a lot of people may choose not to take because it takes almost twice as long as the competition’s direct flight, but it does come in at $150 less and still generates some additional profit. It’s really win/win, right? People who aren’t pressed for time get a cheaper fare and City Airline makes a little bit more profit. Only about 5 to 10 people on average fly this route, but since there's 15 seats open on average, it works out well enough.

But next thing you know, people figure out you can book at ticket from A to C via B cheaper than an A to B flight, suddenly a third of the A to B decided they don’t want to pay for the “overpriced” one-leg A to B tickets and instead buy the A to C via B tickets but get off at B, and suddenly the airline finds that the A to B route is no longer breaking even because on average only 40 passengers are paying the A to B fare, and ~40 to 50 per flight are paying the A to C via B fare, and the airline is now operating along A-B-C at a loss!

So, in this example, wherein did City Airline operate unethically and what is City Airline to do now that the A to B leg has ceased turning a profit, keeping in mind that:

1) If the fares for A to B are increased it will only exacerbate the problem.
2) If the fares from A to C via B are increased, the airline might as well not offer that option altogether because market research (hypothetically) suggests $150 savings is about what it takes to get someone to put up with the longer itinerary and stop at B and that any increase in price for the A to C via B itinerary will see a drastic reduction in its customer base because anyone who really wants to get from A to C will almost certainly just pay the $500 for the direct flight on the competition’s airline, in which case City Airline will lose the little bit extra it was getting over the cost of fuel (ie: it will still lose money).
3) If the fares for B to C are raised, well, that doesn’t seem very fair, does it? Assuming they have a monopoly on B to C it might work, but in the real world they certainly don’t.

Really, the only palatable option that doesn’t inherently result in a loss of profit is to take a hard line on fare jumpers and, if it turns out the law will allow it, any third parties that might be facilitating said fare jumping.

TLDR: It’s all very complex. Hopefully I’ve at least gotten that point across.

ETA: And I suppose "fare jumper" isn't the right term. Itinerary jumpers maybe?

Last edited by ASL; 02 January 2015 at 03:15 PM.
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  #45  
Old 02 January 2015, 03:16 PM
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GenYus234 GenYus234 is offline
 
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If the airline generally doesn't fill the flight from A to B to C, then the people who book flights on A to B to C and only fly from A to B are generally not taking away the higher priced A to B and B to C seats.
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  #46  
Old 02 January 2015, 03:26 PM
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But the A to C via B tickets, at least in my example, only work if the fixed costs have already been accounted for by the more expensive A to B and B to C tickets. That's the point: if everyone paid the A to C via B rate, even if the flight sold out every time, the result would be a net loss.

ETA: The A to C via B tickets only generate enough revenue to lead to a profit where the variable per-passenger costs come in. They do not generate sufficient revenue to lead to a profit if they must also account for the fixed per-flight costs. No one would want to take the A to C via B route if it did cost enough to cover fixed costs.

Last edited by ASL; 02 January 2015 at 03:36 PM.
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  #47  
Old 02 January 2015, 03:38 PM
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No, they'd just stop the A to B to C pricing and go back to making the small profit by selling A to B and B to C tickets.
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  #48  
Old 02 January 2015, 03:47 PM
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In which case they'd still be losing money, albeit not as much, because, remember, they did generate a small profit off of the A to C via B tickets when they were just a little something extra added onto the normal route paid for by A to B and B to C fares. Any way you slice it, in the scenario I laid out, itinerary jumpers result in a loss of profit for City Airline. Whether it's enough to put them out of business or not they certainly have a case against the itinerary jumpers (provided they have a contract of carriage like United does) and may or may not have a case against those "suborning itinerary jumping," as United seems to think they do.

And, oh btw, the honest A to C via B customer now loses out on that reduced fare route and has to fork over the extra $150 to fly the competing airline or just not fly at all. The only people who have been unethical n my hypothetical scenario are the itinerary jumpers who have deprived City Airline of a portion of their profits and people seeking to fly on a budget of a cheaper alternative to the competition. And the end result is the same for those would-be itinerary jumpers. They no longer have the option of the $350 ticket and have to pay the one-leg fare of $400 anyways. In fact, maybe City Airline ups to cost to $410 per ticket so that it DOESN'T lose money after having cancelled it's A to C via B package. So even the itinerary jumpers are hurting more than they would have if they had just left well enough alone.
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  #49  
Old 02 January 2015, 03:51 PM
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It seems like you are saying that it's ethical for a business to maximize savings and profit, and unethical for an individual? I get that it's not desirable for the business for a passenger to do this, but I don't get why it's unethical.
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  #50  
Old 02 January 2015, 03:54 PM
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I'll grant you that it's not unethical, IMHO, if there is no contract in place requiring them to fly their full itinerary.
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  #51  
Old 02 January 2015, 04:24 PM
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Assuming that such a one-sided, nonnegotiable contract term is itself ethical.
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  #52  
Old 02 January 2015, 04:31 PM
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Well, it does result in lower fares and more options for all involved, whether you want to go from A to B, A to C, or B to C, so... Yeah. It kind of is ethical, at least from a utilitarian point of view. The only people who lose out in the long run are the competition, if they can't beat City Airline's fare, and that's capitalism for you. Why do you hate America?
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  #53  
Old 02 January 2015, 04:39 PM
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When I used to fly a lot for work I became aware of this phenomenon. I actually called the airline and asked why I couldn't do it. They told me at the time that for security reasons if a passenger did not come back on the plane for the second leg that they would have to assume that he might have place a bomb in his baggage and they would have to remove all the baggage and search it. They might have been lying but that convinced me not to do it.

dewey
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  #54  
Old 02 January 2015, 04:40 PM
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erwins erwins is offline
 
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Quote:
Originally Posted by wanderwoman View Post
I keep reading the sentence in the terms of service, and trying to figure out what it is saying. I would not recognize that as describing the practice in the OP without someone explaining it more clearly.
That was my never mind post. At first I didn't think the term described the practice in question, but then I reread it a few times, and it does. But an example of clear drafting it ain't.

Quote:
Originally Posted by wanderwoman View Post
I'm having a hard time wrapping my head around this being such a big problem that the airline finds it worthy of a lawsuit. This appeals to a group that flies one way with no luggage, with the knowledge that any deviation from the original flight might completely derail the arrangement. How many people are we talking about here? I guess it's more than I realize, unless United just decided to be a big jerk.
Well, I gather that the reason they (and Orbitz) are suing is because a new company is planning to provide an internet site where people can search for such fares, and then the site is planning to send users to Orbitz to book the flights. So something that may not be that common now could turn into a much bigger thing.

I started out on the passengers' side, but knowing they have an express term forbidding the practice, and seeing some arguments here, I'm actually persuaded the other way. At least as far as them trying to stop someone from creating this website.
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  #55  
Old 02 January 2015, 05:06 PM
jimmy101_again jimmy101_again is offline
 
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Originally Posted by erwins View Post
I started out on the passengers' side, but knowing they have an express term forbidding the practice, and seeing some arguments here, I'm actually persuaded the other way. At least as far as them trying to stop someone from creating this website.
Just because the contract has express terms forbidding something doesn't mean that those terms are legally enforceable. For example, if the ticketing contract forbid Muslims from buying a ticket that part of the contract would be legally void.

If I book a flight and need to carry a large object onto the plane I may need to purchase an extra ticket. That ticket applies to the large object (say a multimillion dollar violin) and not to a person. There is nothing in the booking/ticketing/boarding processes that differentiates a person from a package. So, I book a connecting flight and carry the "package" on my lap the first leg and send the "package" on the second leg in the seat by itself. The package happens to be a volume of air equal to my body volume. I would claim that I have fulfilled the booking requirements of the airline and that I paid the airline to transport that volume of air to the final destination. Whether I actually lived up to the airline's term of use is not for the airline to determine, it would be up to a court.
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  #56  
Old 02 January 2015, 05:09 PM
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Little Pink Pill Little Pink Pill is offline
 
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Originally Posted by dewey View Post
They told me at the time that for security reasons if a passenger did not come back on the plane for the second leg that they would have to assume that he might have place a bomb in his baggage and they would have to remove all the baggage and search it.
That argument only works if the airline isn't keeping records of who checked baggage. (I assume you were talking about abandoning your seat, not your bag.)

I flew a few months after 9/11 and was told my carry on bag had to be lighter than before "for security purposes." When I asked how that was a matter of security, I was told that a heavy bag falling out of the overhead could hurt someone. Right, because the law of gravity didn't exist before 9/11?

My point is, the security argument has been overused more than once, IMO.
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  #57  
Old 02 January 2015, 05:19 PM
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GenYus234 GenYus234 is offline
 
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Originally Posted by ASL View Post
Why do you hate America?
Because it costs so much to fly across it.
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  #58  
Old 02 January 2015, 07:01 PM
Singing in the Drizzle Singing in the Drizzle is offline
 
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Did the hidden city thing one time because it was far too expensive not to. We needed to fly from Seattle SeaTac airport to Chicago O’Hare airport were we would rent a car. Then we would drive to Minneapolis St. Paul airport over two weeks time to fly back home. First thing was the tickets to Minneapolis were much cheaper than to Chicago by a couple hundred dollars each even though we had to stop there for several hours. The other problem was because the trip would not have the same airports at both ends we would have to buy one-way tickets for both trips, costing several hundred more dollars each. We were looking at more than double the cost of a round trip ticket each of us just to have the option of driving between the two cities. So we had a relive book us for the Seattle to Minneapolis trip. Then use the legitimate excuse that one of use had medical requirements that would not allow them to change fights. Add to that we need to have baggage offloaded in Chicago do to medications that were need do to the 4 hour layover. As you can guess we somehow managed to not re-board the airplane in Chicago and drove had to drive to Minneapolis (medical problems, cough, cough). Of course we caught our flight home from Minneapolis as scheduled without incident.

When going to school down in Phoenix AZ, I would fly home to Seattle for vacations. Generally there was a stop in L.A., San Francisco, Portland, Reno or Las Vegas. Depending on the season the fight one way between Phoenix and the middle stop was nearly empty. The other way was packed. It is a strange flight and well pampered flight when there are two flight attendants for each passenger.
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  #59  
Old 02 January 2015, 11:25 PM
Alchemy Alchemy is offline
 
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Originally Posted by crocoduck_hunter View Post
If the airline is selling a ticket for the same seat on the same flight at two different rates depending on whether or not you're buying another seat on another flight at the same time, I'd argue that they're not acting in all that good of faith to begin with.
I disagree; it's perfectly reasonable for a business to charge what the market will bear.

If it costs you $5 to make a widget but people are willing to pay $12 for it, you don't charge $5 or $6 or $7 for the widget. You charge $12. It makes no sense to charge less than people are willing to pay; there's nothing unethical about setting sales prices with little connection to the cost of providing the good or service.

The airline wants to sell itineraries from A to B and flights from A to C through B, and price them according to demand for these destinations, but (1) people find it unfair that pricing is based on demand for the final destination rather than the total distance traveled and/or the cost of operating the individual flights that get the person there, and (2) the airlines find it unfair because they lose control of the passengers in B and can't force them to continue on to the city they paid to terminate in, which loses them revenue for the higher-demand A to B itineraries.

Quote:
Originally Posted by GenYus234 View Post
What this is really about is loss of potential revenue. The airline wants to force the passenger to fly A to B using the ticket that the airline has set at a more expensive price.
That's pretty much it, I think. Airlines sell tickets for the highest amount they can get away with, not for some set percentage over the cost of operating each leg of the passenger's itenerary. Some flights are extremely profitable and some flights are less profitable, but the less profitable flights help offset the cost of moving passengers and aircraft to places where they can make more profitable flights. What matters to the company is the revenue and costs of the entire system, not the net revenue for each individual flight.

Here's an example. I want to take a flight from DTW (Detroit) to LAX next month. I can get a round-trip flight through DFW (Dallas) (AA 1125, AA 1419, AA 2406, AA 1278) for $286, which is a pretty nice price. (Not a great itinerary but good enough for this discussion.)

But what if I wanted to fly Detroit-Dallas only? I could book AA 1125 there and AA 1278 back but now that single leg costs me $365.

Or what if I wanted to fly Dallas-LA only? I could book AA 1419 and AA 2406 for about $248.

So, essentially, Detroit-Dallas is $365, Dallas-LA is $248, and Detroit-Dallas-LA is $286. AA will charge me a lot to get to Dallas but will give me a deeply discounted Detroit-Dallas leg if I take the Dallas-LA flight.

Why is that?

Well, DFW is an American Airlines hub; they dominate the feeder flights that terminate there and can demand a higher price due to the reduced competition. LAX is also an AA hub but it's shared with several other airlines; AA can't demand top dollar for flights terminating there so AA prices are more competitive. Additionally, hub-to-hub flights transfer pretty large pools of passengers from one place to another, which means a much higher aircraft utilization and less risk of unsold seats.

So, depending on how you look at it, AA is giving passengers who want to get to LA a massive discount on the Detroit-Dallas leg, or alternatively, gouging passengers who actually want to terminate in Dallas by making them pay much more. If AA asked for $365+$248 for my Detroit-Dallas-LA itinerary they'd price themselves out of that route. They ask $286 because that's what the market will bear.

That's sort of how the feeder flights work; you have a mix of passengers paying wildly different amounts for that portion of their itinerary because the people who want to get off in Dallas will pay $$ for it and the people who are continuing on don't care enough about their layover location (why would they?) to pay extra for it to be in Dallas. The people paying extra to get to Dallas help make the feeder flight a little more profitable and makes it easier for AA to get more passengers into their Dallas hub, who they can then load onto profitable flights to LA or Chicago or NY or all other sorts of destinations.

Using the "hidden city" trick means that the people who want to go from Detroit to Dallas get the heavy discount on that leg, which means one less person on that flight is paying the premium to terminate in Dallas. The flight from Dallas to LA then goes one seat empty, which AA isn't likely to get much out of since the passenger is checked in and the seat likely can't be resold even if there was a ready standby passenger. AA loses the chance to sell a Detroit-Dallas ticket because once the passenger got to Dallas AA can't make him get on the LA flight.

I don't think there's anything ethical or unethical about the airlines pricing this way or passengers trying to get around it. Unless a passenger does this repeatedly it's pretty difficult for an airline to prove a particular person is doing this deliberately. I think it's pretty harsh to call it "fraud" when a passenger deliberately skips a connection, although that's perhaps because I've done it myself. (NRT-ORD-CLT; I wanted to extend my stay in Chicago a week but the cost of changing the ticket was much more than booking a different ORD-CLT flight. Skipping the ORD-CLT part of my international flight was easy since I already had all my luggage after passing through immigration at O'Hare; all I had to do was show up a week later and pick up my completely unrelated flight to Charlotte.)
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  #60  
Old 02 January 2015, 11:36 PM
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I disagree; it's perfectly reasonable for a business to charge what the market will bear.

If it costs you $5 to make a widget but people are willing to pay $12 for it, you don't charge $5 or $6 or $7 for the widget. You charge $12. It makes no sense to charge less than people are willing to pay; there's nothing unethical about setting sales prices with little connection to the cost of providing the good or service.
Are you also selling a two-pack of widgets for $8 and complaining that people are buying the two-pack and throwing one away instead of paying $12 bucks for the single?
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