Interesting Court Decision In Germany - Passenger does not need to fly last leg
Feb 14, 2019, 8:45 am
#212
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Feb 14, 2019, 9:31 am
#214
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Let's look at this through the lens of micro-economics.
In a "Perfectly Competitive" market, prices are driven towards the Marginal Cost of provision.
In a "Monopolistic" market, prices are driven towards the level that minimizes each purchaser's "Consumer Surplus" (ie towards the maximum price each purchaser is theoretically willing to pay).
Does a long-haul Business Class pricing system that seeks to charge $2000 for one flight but charges $1000 for the same flight when bought with an additional flight resemble Perfect Competition or Monopoly pricing?
Those leaping to airline's defenses should think hard about this - airline pricing models are bear all the hallmarks of heavily-imperfect competition / monopoly.
Fare matching across carriers is a textbook example of Oligopolistic "Cartel Pricing" - an implicit agreement that prices will be kept high and whenever anyone attempts to cut prices, the others immediately match it. Net result: all suppliers in the market quickly learn not to cut prices (outside of advertised sales).
Now let's look at the European Shorthaul market: 20 years ago BA would charge 3x the price of a return for a one-way ticket. Clear Monopolistic pricing. Nowadays though, all carriers charge per-direction and many have unbundled a lot of the "value add" services such that the lowest possible price can be presented to consumer.
In summary: the long-haul Business Class market bears many of the hallmarks of Monopolistic pricing. I'm quite surprised airlines are getting any sympathy - they are trying to protect a business model is which they extract as much as they can from consumers (ie us)
In a "Perfectly Competitive" market, prices are driven towards the Marginal Cost of provision.
In a "Monopolistic" market, prices are driven towards the level that minimizes each purchaser's "Consumer Surplus" (ie towards the maximum price each purchaser is theoretically willing to pay).
Does a long-haul Business Class pricing system that seeks to charge $2000 for one flight but charges $1000 for the same flight when bought with an additional flight resemble Perfect Competition or Monopoly pricing?
Those leaping to airline's defenses should think hard about this - airline pricing models are bear all the hallmarks of heavily-imperfect competition / monopoly.
Fare matching across carriers is a textbook example of Oligopolistic "Cartel Pricing" - an implicit agreement that prices will be kept high and whenever anyone attempts to cut prices, the others immediately match it. Net result: all suppliers in the market quickly learn not to cut prices (outside of advertised sales).
Now let's look at the European Shorthaul market: 20 years ago BA would charge 3x the price of a return for a one-way ticket. Clear Monopolistic pricing. Nowadays though, all carriers charge per-direction and many have unbundled a lot of the "value add" services such that the lowest possible price can be presented to consumer.
In summary: the long-haul Business Class market bears many of the hallmarks of Monopolistic pricing. I'm quite surprised airlines are getting any sympathy - they are trying to protect a business model is which they extract as much as they can from consumers (ie us)
Feb 14, 2019, 10:07 am
#215
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Isn't it incumbent on any company to maximise their income/profit? Nothing unusual there IMO.
I just want to be clear over one thing though... I am not really "leaping to airline's defenses" as such. I don't like their long-haul pricing strategy and would prefer something more like the short-haul market. It certainly isn't as transparent as I would like. But then again, while it is what it is, I don't believe we should be buying tickets through deception in the way that many do. The current rules are still the rules and we should comply until they are changed and if we don't then I believe that the airlines should be able to recoup their losses.
I just want to be clear over one thing though... I am not really "leaping to airline's defenses" as such. I don't like their long-haul pricing strategy and would prefer something more like the short-haul market. It certainly isn't as transparent as I would like. But then again, while it is what it is, I don't believe we should be buying tickets through deception in the way that many do. The current rules are still the rules and we should comply until they are changed and if we don't then I believe that the airlines should be able to recoup their losses.
Feb 14, 2019, 10:33 am
#216
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I realise I won't convince you, but the airline did suffer a material loss because it should have sold you the direct London flight for twice as much (and every other direct routing would cost the same). I always have a little inside chuckle when IROPS causes people to be rerouted on a direct service to the final destination they never intended to travel to.
Since my home is not in the UK, if flying BA, then so far I have never needed to dump a final sector of a booked itinerary. I have once missed one truly inadvertently, but never yet deliberately. I do it more with Lufthansa and flights within Europe where it really feels like they are abusing their virtual monopoly on some routes.
Feb 14, 2019, 10:37 am
#217
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At the same time, they have sold you a ticket with conditions that you were prepared to accept and are therefore bound by.
In that respect, it does not really matter whether the airline makes a loss or profit out of you not travelling on the last leg of the journey. The agreement between you and the airline is that you pay the agreed price and fly the agreed legs. If either part does not stick with the agreement, the other part has a right to take appropriate action as per the agreement.
Whether there is any logic or sense to pay extra for not flying is of no relevance to the agreement.
In that respect, it does not really matter whether the airline makes a loss or profit out of you not travelling on the last leg of the journey. The agreement between you and the airline is that you pay the agreed price and fly the agreed legs. If either part does not stick with the agreement, the other part has a right to take appropriate action as per the agreement.
Whether there is any logic or sense to pay extra for not flying is of no relevance to the agreement.
Feb 14, 2019, 10:42 am
#218
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But the airline was only happy to sell the ticket to you at that price precisely because the airline thought you were going to Paris. If you said you only wanted to go to London then the price would have been different most certainly.
Perhaps airlines should be forced to only open up indirect routes once the direct route seats are all sold?
I still feel that this problem would all go away if they priced up the route with and without dropping the last leg so we all knew what it would cost us if we drop the last leg. The airlines would then have a better case when collecting any extra as a result of dropping the last leg because the passenger will have accepted that pricing prior to booking the ticket.
Perhaps airlines should be forced to only open up indirect routes once the direct route seats are all sold?
I still feel that this problem would all go away if they priced up the route with and without dropping the last leg so we all knew what it would cost us if we drop the last leg. The airlines would then have a better case when collecting any extra as a result of dropping the last leg because the passenger will have accepted that pricing prior to booking the ticket.
Feb 14, 2019, 3:44 pm
#220
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I have to admit upfront that I haven't read all the posts in this thread. However (and as someone who has on various occasions started trips from OSL, DUB, AMS and TXL to save cash) the key point is surely that this isn't something that can (or should) be regulated.
Imagine you live in Norway and want to fly to Sydney. You have a choice of all 3 global alliances and the ME3 (or at least 2 of them - do Etihad fly from Oslo?) Looking at city pairs, then OSL to SYD gives at least two one stop options, which are priced competitively. If BA, LH, KL, AF or whatever want to get business on what must be a 2 stop, they have to at least compete with that price or be lower than it. If you did otherwise then who would fly on anyone except the "direct" airlines?
To not allow this sort of differential pricing then you'd be adopting the sort of model that, say, NS apply to Dutch railway tickets (as I understand it), where you are effectively charged a fixed price based on distance. How could you ever enforce that outside of a single jurisdiction?!
I'm currently in Argentina on an ex-OSL ticket with BA, where OSL-LHR-EZE and back was about half the price of LHR-EZE and back. If the airline wants/needs to sell and ex-OSL fare at that price that is their choice, and I am fine with having to travel to OSL to start the journey. I'm not going to OSL on the way back, but have booked it so I can use that flight in a few months to start another journey.
My main concern with the this case is that people discover our secret (though as far as I could see The Times's story yesterday/today didn't get the facts quite right, and the comments from the "expert" were just bizarre)!
Imagine you live in Norway and want to fly to Sydney. You have a choice of all 3 global alliances and the ME3 (or at least 2 of them - do Etihad fly from Oslo?) Looking at city pairs, then OSL to SYD gives at least two one stop options, which are priced competitively. If BA, LH, KL, AF or whatever want to get business on what must be a 2 stop, they have to at least compete with that price or be lower than it. If you did otherwise then who would fly on anyone except the "direct" airlines?
To not allow this sort of differential pricing then you'd be adopting the sort of model that, say, NS apply to Dutch railway tickets (as I understand it), where you are effectively charged a fixed price based on distance. How could you ever enforce that outside of a single jurisdiction?!
I'm currently in Argentina on an ex-OSL ticket with BA, where OSL-LHR-EZE and back was about half the price of LHR-EZE and back. If the airline wants/needs to sell and ex-OSL fare at that price that is their choice, and I am fine with having to travel to OSL to start the journey. I'm not going to OSL on the way back, but have booked it so I can use that flight in a few months to start another journey.
My main concern with the this case is that people discover our secret (though as far as I could see The Times's story yesterday/today didn't get the facts quite right, and the comments from the "expert" were just bizarre)!
Feb 14, 2019, 7:11 pm
#221
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If an airline sues you for dropping the last leg won’t they have to prove you did it with intent?
Eg., there are thousands of travellers who no show or cancel flights every day for loads of reasons (illness, deaths, postponed meetings, missing cats etc). I even heard of a journalist who had to drop his onward ticket to Teheran to cover Khomeini’s funeral because the Tiananmen massacre was deemed more important by his employer. Are airlines really going to come running after these people, many of whom work for their biggest clients?
Worse come to worse, you could see people purposely arrive late at the connecting gate, forcing an offload with the associated delays. You could then refuse rerouting and say you’ll make your own arrangements.
In my unprofessional non-legal mind you pay for a service. It’s paid for - even if you choose not to use all of it.
Eg., there are thousands of travellers who no show or cancel flights every day for loads of reasons (illness, deaths, postponed meetings, missing cats etc). I even heard of a journalist who had to drop his onward ticket to Teheran to cover Khomeini’s funeral because the Tiananmen massacre was deemed more important by his employer. Are airlines really going to come running after these people, many of whom work for their biggest clients?
Worse come to worse, you could see people purposely arrive late at the connecting gate, forcing an offload with the associated delays. You could then refuse rerouting and say you’ll make your own arrangements.
In my unprofessional non-legal mind you pay for a service. It’s paid for - even if you choose not to use all of it.
Feb 14, 2019, 10:46 pm
#222
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Let's look at this through the lens of micro-economics.
In a "Perfectly Competitive" market, prices are driven towards the Marginal Cost of provision.
In a "Monopolistic" market, prices are driven towards the level that minimizes each purchaser's "Consumer Surplus" (ie towards the maximum price each purchaser is theoretically willing to pay).
Does a long-haul Business Class pricing system that seeks to charge $2000 for one flight but charges $1000 for the same flight when bought with an additional flight resemble Perfect Competition or Monopoly pricing?
Those leaping to airline's defenses should think hard about this - airline pricing models are bear all the hallmarks of heavily-imperfect competition / monopoly.
Fare matching across carriers is a textbook example of Oligopolistic "Cartel Pricing" - an implicit agreement that prices will be kept high and whenever anyone attempts to cut prices, the others immediately match it. Net result: all suppliers in the market quickly learn not to cut prices (outside of advertised sales).
Now let's look at the European Shorthaul market: 20 years ago BA would charge 3x the price of a return for a one-way ticket. Clear Monopolistic pricing. Nowadays though, all carriers charge per-direction and many have unbundled a lot of the "value add" services such that the lowest possible price can be presented to consumer.
In summary: the long-haul Business Class market bears many of the hallmarks of Monopolistic pricing. I'm quite surprised airlines are getting any sympathy - they are trying to protect a business model is which they extract as much as they can from consumers (ie us)
In a "Perfectly Competitive" market, prices are driven towards the Marginal Cost of provision.
In a "Monopolistic" market, prices are driven towards the level that minimizes each purchaser's "Consumer Surplus" (ie towards the maximum price each purchaser is theoretically willing to pay).
Does a long-haul Business Class pricing system that seeks to charge $2000 for one flight but charges $1000 for the same flight when bought with an additional flight resemble Perfect Competition or Monopoly pricing?
Those leaping to airline's defenses should think hard about this - airline pricing models are bear all the hallmarks of heavily-imperfect competition / monopoly.
Fare matching across carriers is a textbook example of Oligopolistic "Cartel Pricing" - an implicit agreement that prices will be kept high and whenever anyone attempts to cut prices, the others immediately match it. Net result: all suppliers in the market quickly learn not to cut prices (outside of advertised sales).
Now let's look at the European Shorthaul market: 20 years ago BA would charge 3x the price of a return for a one-way ticket. Clear Monopolistic pricing. Nowadays though, all carriers charge per-direction and many have unbundled a lot of the "value add" services such that the lowest possible price can be presented to consumer.
In summary: the long-haul Business Class market bears many of the hallmarks of Monopolistic pricing. I'm quite surprised airlines are getting any sympathy - they are trying to protect a business model is which they extract as much as they can from consumers (ie us)
However one unintentional side effect is take away the airline's ability to price discriminate will lead to fall in peak supply.
Feb 15, 2019, 2:24 am
#223
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If an airline sues you for dropping the last leg won’t they have to prove you did it with intent?
Eg., there are thousands of travellers who no show or cancel flights every day for loads of reasons (illness, deaths, postponed meetings, missing cats etc). I even heard of a journalist who had to drop his onward ticket to Teheran to cover Khomeini’s funeral because the Tiananmen massacre was deemed more important by his employer. Are airlines really going to come running after these people, many of whom work for their biggest clients?
Worse come to worse, you could see people purposely arrive late at the connecting gate, forcing an offload with the associated delays. You could then refuse rerouting and say you’ll make your own arrangements.
In my unprofessional non-legal mind you pay for a service. It’s paid for - even if you choose not to use all of it.
Eg., there are thousands of travellers who no show or cancel flights every day for loads of reasons (illness, deaths, postponed meetings, missing cats etc). I even heard of a journalist who had to drop his onward ticket to Teheran to cover Khomeini’s funeral because the Tiananmen massacre was deemed more important by his employer. Are airlines really going to come running after these people, many of whom work for their biggest clients?
Worse come to worse, you could see people purposely arrive late at the connecting gate, forcing an offload with the associated delays. You could then refuse rerouting and say you’ll make your own arrangements.
In my unprofessional non-legal mind you pay for a service. It’s paid for - even if you choose not to use all of it.
Feb 15, 2019, 2:34 am
#224
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This is, once again, the "I've bought a bundle of two products and I can choose what to do with each of them" analysis. It is not the only possible analysis; and it is without doubt not the analysis adopted by airlines when they make these cheaper fares available to us.
Feb 15, 2019, 2:36 am
#225
Join Date: Mar 2016
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Maybe not but by doing it you have removed the possibility for them.
If you live near the airport where you jumped ship and don't have any prearranged reason to fly on the the final destination then I'd say that proving intent would be pretty easy.
True. I still think that some people don't understand that they haven't bought a ticket from A-B-C but from A-C. Buying a multi-city A-B-C is most definitely different from buying a ticket from A-C utilising flights via B
They don't have to prove anything. You need to fulfil your side of the contract. And to your last sentence, the service you paid for was from start to finish, not some intermediate point. You could quite legitimately be rerouted to the ticketed final destination and would have no recourse to be brought to an intermediate point.