nsx

Now we're getting somewhere. The "loss" occurs if and only if the A-B-C customer would have paid the higher A-B price to that airline, as opposed to staying home or buying from a competitor. Otherwise the A-B-C ticket price is a gain. Nobody knows what fraction of hidden city customers would have paid market price for their tickets.

Pricing and allocating A-B-C fare buckets is analogous to offering saver award seats. An airline won't offer saver awards just because there are unsold seats. The airline needs to weigh the chance that the FF member might BUY one of the seats rather than redeeming miles. I don't know how they estimate the chance, but somehow they do.

jrl767

it's not the AIRLINE that engages in hidden-city ticketing; it's the passenger who doesn't want to pay Airline X their going rate for AAA-BBB (where BBB is their hub), and has absolutely no compunction about buying AAA-BBB-CCC (where CCC is perhaps Airline Y's hub, and Airline X **really** wants to steal AAA-CCC traffic from Airline Y, and therefore prices that route low)

further, not every BBB-CCC passenger on Airline X is playing this AAA-BBB-CCC game ... there are probably a lot of originating cities that don't have the same order of magnitude of fare differential (in particular, places that Airline Y doesn't serve), and there is probably a certain amount of origin/destination BBB-CCC traffic as well

Mike Jacoubowsky

So if you're someone who bills your services at $200/hour but offer an introductory deal of $100/hour for the first visit, and someone figures a way around your rules to claim that $100/hour for future visits, you haven't lost anything? Opportunity costs don't matter?

You can't claim that $100 as theft, but there's zero difference between the result on income if it were actual theft. You have suffered direct, quantifiable, real harm. You lost out on the opportunity to use those hours for your $200/hour normal billing.

Mike Jacoubowsky

Just curious if even a single person has read something here about the reasoning why throw-away tickets costs the airlines money and changed their mind. Just one.

drsmithy

Opportunity "costs" aren't losses. They're made-up numbers that may or may not bear any resemblance to reality.

There's a huge difference. Let's say you start with $100 in your wallet. In scenario A, someone takes your $100 and you have to hitchhike home. In scenario B, you might have had $200 in your wallet and be able to buy a ticket from A-B, but the deal fell through so you still only have $100 and have to buy a hidden city ticket from A-[B]-C and get off halfway.

Not making $100 is in no way the same thing as losing $100 or having to bear a cost of $100. Fair dinkum, I cannot understand why people are having so much trouble with this concept.

So you're going to claim a $100 loss on your tax return because you didn't prevent someone from using your $200/hr service for only $100 ? Bullsh*t.

Mike Jacoubowsky

If you should have made $500 if people followed the rules of the contract, but they didn't follow the rules so you only received $400, then yes, there's $100 missing... that should have been there. What is it you want to call it other than a loss?

You're going to a whole lot of trouble to rationalize what exactly? That it's OK to break the contract you had when you bought the ticket, because you have unilaterally determined that there's no harm to the airline? What am I missing here? Isn't that it in a nutshell?

nsx

Not if the customer would not have been willing to pay the $500 for the trip. In that case the $400 is close to the most the airline could have gotten from the customer.

Ethics aside, sometimes the trip only happens because a hidden city ticket or award ticket or some other deal is available. Economic reality on the demand side is not simple, and neither is it simple on the supply side.

LHR/MEL/Europe FF

the airline has determined it can't sell all the seats it has from A->B and B->C at full fare. So it asks itself, what can we do to fill those seats? If then starts to offer those seats for connecting passengers.

The seats would be empty anyway. So they are asking 'x' for the connection, and the intending passenger pays 'x'. but they get off half way.

The airline has made exactly the maximum it can from the seats in question.

Could it have made more? Absolutely, if it had sold A->B and B->C at it's asking prices. But then if it did that, there'd be no seats left for the cheaper price.

drsmithy

YOU CANNOT LOSE SOMETHING YOU NEVER HAD.

I'm not "rationalising" anything. The scenario is clear. The airline is happy for me to pay $x to fly from A to C, via B. Whether or not I get off at B, or anywhere else in between, is none of their business, causes them no harm, and causes them no loss.

The people "rationalising" here are the ones coming up with all sorts of convoluted reasons and examples why not winning a million bucks on the lottery is the same as losing a million bucks out of their bank account.

It is, as I have pointed out numerous times before, no different to any other scenario wherein you pay for a good or service and only consume a subset of that good or service. Or where you pay for a good or service and consume that in a way the vendor either did not intend or does not approve of.

The airline is trying to maximise their profit. I am trying to minimise my costs. It's that simple.

drsmithy

I'm pretty sure I've never even taken one, nor am ever likely to - they don't really exist in Australia.

Tchiowa

Clearly you've never managed a business.

And in some cases with some businesses you actually accrue for potential revenue and then have to accrue the loss later.

You are even more right in your last paragraph. A lot of people doing a lot of rationalizing about why they think it's OK to be dishonest.

LHR/MEL/Europe FF

Yeah well - when push comes to shove, what option do we have? I mentioned up-thread a while ago... while not hidden city, I had to purchase a one-way flight in Europe last year for my folks. LH was asking 600 euros for the one way fare, yet I could get the return (same flight outbound) for 120 euros.

That was per person - so saving of 960 Euros for a 90 minute flight.

Was I supposed to buy the one way?

One way vs return is pretty much the same analysis as hidden city. Contract for a return but don't use it in order to save money.

drsmithy

Pretty sure a business can't tell the Government it lost something it never had.

Yeah. "Lots" of "rationalising". An airline is happy to charge $x to fly from A to C via B. I'm going to get off at B. It's practically a doctoral thesis !

As for "dishonesty", well, people in glass houses and all that. I doubt I'd have to spend much time with anyone before they acted dishonestly in some way or another.

chuichi

I personally have never come across an itinerary like the one OP described with this throwaway ticketing scenario... is this similar to the "fuel dumping" / YQ as discussed in other threads on FT?

LHR/MEL/Europe FF

Not the same as fuel dumping.

I would have thought it is fairly common, but maybe not to the same degree you will see in the OP's example.

Take VietNam airways - a friend of mine purchased a Tokyo-Hanoi-bangkok fare that was cheaper than just Tokyo-hanoi. It is often more complex with international itineraries where you might have a return ticket and are required to fly all sectors or they will cancel the rest of the flights...