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Lufthansa Sues Passenger Who Missed His Flight in an Apparent Bid To Clamp Down on 'Hidden City' Trick (cnn.com)
Airline Lufthansa has sued a passenger, who didn't show up for the last leg of his ticketed journey, in an apparent bid to clamp down on "hidden city" trick. From a report: The practice involves passengers leaving their journey at a layover point, instead of making a final connection. For instance, someone flying from New York to San Francisco could book a cheaper trip from New York to Lake Tahoe with a layover in San Francisco and get off there, without bothering to take the last leg of the flight. According to a court document, an unnamed male passenger booked a return flight from Oslo to Seattle, which had a layover in Frankfurt. The passenger used all legs of the outbound flight, but did not catch the Frankfurt to Oslo return flight. He instead flew on a separate Lufthansa reservation from Frankfurt to Berlin. The report adds that a Berlin district court dismissed the case in December last year, but the airline company is now appealing that verdict. Worth noting here that United Airlines has also tried its luck on this front -- to no dice.
This is a huge loss to the industry. Before they could threaten people or at least claim that people must fly the entire route. Once they went to court though, they actually had to prove it and in losing more people will use the "hidden city" work around. I don't have a lot of sympathy for the airlines. Many of their tricks to determine how much I will pay for a flight are morally questionable.
I once needed to be in Europe twice within a three week period for two different clients. As I booked my travel, I noticed that I could book Europe->North America fares a lot cheaper than North America -> Europe, and also that if I stayed at least 1 weekend, the trip was also much cheaper. So what I did was book the bookends of the two trips on one fare (round trip NA->EU->NA) then booked a second trip (EU->NA->EU) in the middle so I could come home.
It all went off pretty well when I flew it, and I saved a significant chunk of my employer's money with the trick. A couple of months later, though, I got a nastygram from the Airline chastising me for violating the fare rules. Given that I was a 100k frequent flyer at the time, I replied back, CC'ing the appropriate people in the frequent flyer program that I didn't appreciate the tone of their letter, and that had I known it would have been a problem, i would have hapily either stayed in Europe for the 5 days, or booked it on another airline, thereby denying them the revenue of the additional flight.
I later got an apology, and a token amount of miles to "make things right"
...si hoc legere nimium eruditionis habes...
It's not regulatory capture which distorts the market. It's a quasi-monopoly. The places I've seen this behavior (missing a leg of a flight) benefit passengers most is at airports where one airline dominates - a hub. Back when Northwest was still around, Detroit was one of their hubs. Something like 80% of all the flights in and out of Detroit were Northwest. That reduced competition meant that Northwest had undue influence over the pricing for tickets in and out of Detroit. They exploited that to charge excessively high prices for tickets starting and ending in Detroit.
But because Detroit was their hub, that meant a ton of flights between other cities made stopovers in Detroit to change planes. The other cities had plenty of competition so their fares were priced a lot closer to the airline's cost. That's what creates the opportunity for people to book flights between different cities at a lower price, and get off at Detroit (missing the last leg). So it's not strictly arbitrage per se, it's just bypassing the airline's quasi-monopoly pricing at a particular airport. (Higher pricing at airports with competition are usually due to fees charged by the different airports. e.g. Flights to/from Los Angeles International are cheaper than to/from Burbank, Long Beach, Ontario, or Orange County because the same agency operates all those airports but charges the lowest fees for LAX.)
I used a similar tactic to visit my sister for free when she was at the University of Michigan, and I was in Boston. Whenever I flew home to visit my parents in California, I'd book a flight with a layover in Detroit, and deliberately maximize the layover time (which gave me about 4 hours there). My sister would meet me at the airport, we'd go out and have a meal together and talk and catch up, and I'd take any presents she wanted me to bring my parents.