Airline pricing is incredibly complicated, and there’s no denying that this also creates some opportunities for consumers. In this post, I’d like to talk about the concept of hidden city ticketing, which many people have probably heard about in passing, if nothing else. Why is airline pricing so complicated, what is hidden city ticketing, and what are the risks of engaging in this?
Airline pricing is ridiculously complicated
There’s no denying that airlines have made revenue and inventory management such a complex art that it’s virtually incomprehensible to the average consumer. Like in any other industry, airlines want to maximize revenue, especially as airplane seats are perishable goods — once a seat goes out empty, there’s no way to recover revenue from that.
At times, airlines use some complicated models for pricing, which is intended to segment the market as much as possible. This largely revolves around segmenting out business travelers from leisure travelers, since the former usually have a higher willingness to pay.
Just to give one example, airlines know they can usually charge more for a nonstop flight (especially in a market they dominate) than they can for a connecting itinerary. After all, people value the convenience of flying nonstop, as it minimizes hassle and time wasted.
The pricing of individual airline tickets has never been based on the cost of offering that exact seat, but it has always been based on how much airlines can get away with charging. So some tickets are sold at incredible margins, while other tickets are sold at a cost below what it costs the airline to operate that seat (though it’s still more profitable than keeping the seat empty).
Bigger picture, keep in mind that US airlines largely have negative margins on actually transporting customers, in terms of comparing passenger revenue per available seat mile to cost per available seat mile. Airlines essentially operate as loss leaders for their loyalty programs. But that’s neither here nor there for these purposes…
What is hidden city ticketing?
Hidden city ticketing (also often referred to as throwaway ticketing) is a trick whereby you book a ticket to a destination other than where you intend to travel to, in order to get a cheaper fare. You’re essentially using airlines’ pricing tactics against them, knowing their logic.
This is perhaps easiest explained in the form of an example. Gainesville to Charlotte is a route that’s exclusively operated by American. Picking a random date, I see a one-way fare of $255.
Meanwhile if you booked a ticket on American from Gainesville to New York connecting in Charlotte on that exact flight, you’d pay $122, which is less than half as much.
Why would American charge you less than half as much to fly more than twice as far? Well, because American knows that if you’re going to fly from Gainesville to Charlotte, you’ll want to do so nonstop, and are probably willing to pay for it. Meanwhile if you’re connecting to New York, there’s more competition in that market, so pricing will reflect that.
So the practice of hidden city ticketing would be to book that ticket from Gainesville to Charlotte to New York, and then just not take that second flight. You get the Gainesville to Charlotte flight you wanted, but just at a significant discount.
You can often find these kinds of fares through trial and error. Otherwise Skiplagged is a website that helps people find hidden city ticketing opportunities, to secure the lowest fare. Over the years the website has faced quite a few lawsuits from airlines and online travel agencies, though as you can see, the site is still there.
What are the risks of hidden city ticketing?
As you’d expect, airlines frown down on the practice of hidden city ticketing. After all, you’re beating them at their own game. The good news is that hidden city ticketing isn’t illegal. The bad news is that you can get in trouble with airlines for hidden city ticketing, as it does violate the contract of carriage you agree to when booking a ticket. There are many things to be aware of:
- Hidden city ticketing doesn’t work if you’re checking a bag, since that has to be checked to your final destination (unless you’re on an inbound international flight to the United States, where you generally have to claim your bag at your first point of entry anyway)
- If you are forced to gate check your bag (which is common, especially if you have a high boarding group), your bag will be checked through to your booked final destination
- While you’re not going to be sent to jail for hidden city ticketing, airlines can try to punish you — if they discover what you’re doing they could force you to buy a new ticket, could ban you from their frequent flyer program, could ban you from flying with the airline, etc.
My thoughts on hidden city ticketing
I don’t at all fault people for using hidden city ticketing, I just encourage them to make sure that they understand what they’re getting themselves into. Paying for a flight and then skipping a segment isn’t like going to a restaurant and not finishing your meal. There can be consequences, and it’s important to be aware of those.
Personally I almost never use hidden city ticketing, because I try to play by the rules, especially given that I write about airlines and travel for a living. I think it’s fine for others to do, though, assuming you understand the risks.
I think it’s fairly low risk if you do it on occasion, aren’t crediting flights to a frequent flyer program, etc. However, if you do this frequently, expect that it’ll catch up to you. For those who do get caught, I don’t have too much sympathy, since you should know the risks of what you’re engaging in.
I will say that I frequently see people make arguments along the lines of the following:
“Airlines deserve to have people use hidden city ticketing because they’re exploiting us with the high fares they’re charging!”
Look, I’ll be the first to hold airlines accountable, but let’s be realistic about the airline industry. Airlines are incredibly low margin and high cost businesses that deal with all kinds of cyclical challenges. A majority of airline tickets are sold at below a carrier’s cost per available seat mile.
In a way, we should be happy as consumers that airlines engage in price discrimination and lack transparency with pricing, since that’s how many of us come out ahead and get great deals. These wild pricing techniques are why airlines can get some business travelers to spend $2,000 for a seat on a flight, while the person seated next to them spends a fraction of that.
I just think it’s important to be realistic here. Airlines aren’t “screwing” us when they’re not charging $69 for roundtrip transcon fares. It just means they’re not hemorrhaging money.
Bottom line
Hidden city ticketing is a popular practice that some people use to save money on airfare. With this, passengers will book a ticket to a destination they don’t intend to travel to, and they simply get off at an intermediate point.
This isn’t illegal, but it does come with some risks, as airlines can punish you. Do I like how complex airline pricing is? No. But it’s also what allows airlines to sell tickets in many markets that are significantly below the cost of providing air transportation.
What’s your take on hidden city ticketing?
