How to Beat the Airlines at their New Pricing Game

Last week I wrote that American changed its fare rules to charge you more on many connecting itineraries and on trips that include stopovers. In fact, United and Delta have done the same thing, though I also explained how to beat the practice.

  • Some fares, especially those intended to compete non-stop against ultra-low cost carriers, may not permit “end-on-end ticketing”
  • And the airline may prevent fares from being used as part of “sum of sector pricing”

In one example I showed you how to save as much as 74% on a ticket: flying Austin – Chicago, Chicago – Dallas, and Dallas – Austin on one reservation, purchased together on American, this priced as $1058. Pricing one-ways separately it was as cheap as $271 (but not more than $509).

United, Delta, and American are preventing you from just adding up the cost of the cheapest fares in some cases, and instead charging you higher fares to combine certain flights and routes.

Multi-segment itineraries may now be more expensive than buying each segment separately on these three major US airlines.

However you can beat the practice by pricing out each flight segment separately, and if cheaper buying the series of one-way tickets instead of a roundtrip, open jaw, or circle trip.

While travel agents may be able to issue multiple tickets in a single reservation (United supports this for instance), if you’re doing it yourself you’ll have multiple reservations.

United and Delta will still let you through-check bags to your final destination when you’re traveling on multiple reservations but on the same airline. American will let you through-check bags and even protect you in the event of irregular operations although not all employees know this rule. It’s important enough though that you should know it and also consider booking American, rather than Delta or United, if booking one-way tickets instead of more expensive fares.

Ed Perkins covers the phenomenon and my post on the issue in the Chicago Tribune.

He highlights Kevin Mitchell’s claim that all 3 of the major legacy US airlines changing their pricing strategy in this way this year may violate anti-trust laws.

In a letter to the U.S. Department of Justice, Mitchell raised the obvious question of possible “illegal coordination” among the big three legacy lines. The fact that all three airlines changed fare rules at essentially the same time, to essentially the same rules, would tend to support this conclusion. As Mitchell puts it, “Perhaps most troubling is how the airlines knew that their competitors had made this change given that there was no public announcement.”

The federal government is already investigating pricing collusion by US airlines. The case is considered a long shot absent a smoking gun that we haven’t seen, as prices are down in inflation-adjusted terms and most price increase attempts by the airlines fail.

Anti-trust is a tricky thing. If you charge more, it’s monopoly pricing power. If you charge the same it’s collusion. And if you charge less it’s predatory pricing.

However charging the same as your competitors is also what you’d expect in a highly competitive environment. And absent any evidence of actual agreement on pricing, there’s no reason to believe there’s anything legally questionable here — and certainly no reason to expect there would be a legal case for such.

Instead, it’s airlines becoming less consumer-friendly and even more opaque, as though anyone thought that this could even be possible.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Gary – give your readers a little more credit for being smart. You’ve posted no new information regarding the subject/title of your post. You’re just rehashing the same content while adding side content that is about collusion. The more times you waste our time or mislead us with subject/titles that are click bait, the less likely we are to return to your blog.

    Points with a Crew destroyed his own blog by doing too much clickbait.

  2. >
    > American will let you through-check bags and even protect you in the event
    > of irregular operations although not all employees know this rule.
    >

    Do you have more details on this rule? I have a AA positioning flight next week to connect at JFK on international segment on AA as well. Two separate tickets on different PNRs.

  3. Today’s high fares in the face of low fuel prices are not due to collusion. They are due to a conscious decision not to compete aggressively. That decision was made independently by the major airlines based on the poor financial results from normal competition.

    Until about 4 years ago we could count on Southwest Airlines to push US domestic fares down as that airline tried to grow. Southwest is now a fare follower, not a leader. Growth is no longer their priority.

    In an unconstrained market new entrants would upset the major airlines’ comfortable and profitable shared understanding of “capacity discipline”. Airline service is, unfortunately, a highly constrained market. I’m not sure what the answer is, but finding ways to facilitate the creation of new airlines would certainly help.

  4. AFAIK, you can still do multicity on UA (one PNR, one ticket, cheaper fare buckets) but I don’t expect that to last forever 🙁

  5. Gary – Isn’t this ticketing of separate segments this same as what the airlines call “end to end” booking which is not permitted in most fare rules?

  6. @Donna airlines may prohibit throwaway ticketing and even nested ticketing (although only in some cases) but generally a fare that does not allow end-on-end simply doesn’t allow that fare to be combined with another fare.

  7. @AnonCHI – actually there’s a couple things that are new.

    1. Last week I wrote about American. The practice exists on United and Delta also

    2. It’s possible to get a travel agent to put multiple tickets into one PNR, for instance with United

    3. There are now calls to DOJ to investigate collusion on the basis of this change.

    4. It’s getting media coverage.

    That’s what prompted this post. (And getting questions from readers here seems to suggest it’s new to them, but beside the point, as what’s new drove me to post whether those are new or noteworthy to you vs just not in my original narrative notwithstanding)

  8. It’s the end-on-end not allowing circle trips any more.

    I think a lot of this is to continue to segment passengers by OD pair and to avoid people taking advantage of breaks in fare components.

  9. This is what happens when there is less competition in the marketplace. Just look at how expensive top line Android and Apple phones are.

  10. Gary:
    Your comments in your last three paragraphs betray a lack of knowledge about antitrust law.

    Conduct based offenses require agreement by two horizontal competitors. Price fixing, territorial allocation, and agreements to restrict capacity are examples of per se conduct based offenses. (Per se means that any restraint of that type is unlawful, regardless of the amount of commerce foreclosed.).

    But actual agreement can be inferred by circumstantial evidence. Actual proof of an agreement need not be shown. You are correct that “conscious parallelism” — looking at what your competitors do and following it, is not unlawful. But the circumstances surrounding the parallel behavior, such as timing, price signaling and behavior inconsistent with a competitive market model, are often used to prove collusion and per se unlawful conduct.

    On the other hand, market share based offenses, such as predation, monopolization and unlawful tying arrangements, can be committed by one company alone, if that company has sufficient market power in a particular market. Remember also that, as we were taught by the Sixth Circuit in the Spirit Airlines v. Northwest Airlines case, each city-pair is a separate product market. (No matter how a price moves in the NYC-LAX market, it has no significant economic effect on demand in the NYC-MIA market.)

    You keep excusing the airlines for conduct and for mergers that appear to many, including me, to be suspect under the antitrust laws. Remember that the air transport industry is designated to the exclusive antitrust oversight of DOJ by its agreement with the FTC, and that criminal prosecution is committed by statute to DOJ regardless of industry. As an antitrust practitioner for 35+ years, including in government, in house at a Fortune 25 company, and in a “big law” law firm, my belief is more a political lack of will on behalf of the Justice Department, or a political decision by the Administration.

  11. Damn it Gary, I also getting sick of your lack of detailed knowledge of our antitrust laws. Next time, please make sure you are an expert of everything, prior to writing about it.

    Thank you.

    🙂

  12. Buying 3 separate tickets (your example) means claiming bags and rechecking twice. Maybe extra fees but surely needing more time between flights. And in lines for TSA two more times.

  13. “United and Delta will still let you through-check bags to your final destination when you’re traveling on multiple reservations but on the same airline. ”

    Good luck actually doing that on United. With SHARES, it’s nearly impossible.

  14. Oh, please…. Why would anyone ever check a bag? Especially on three back back to back one way tickets.

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