Fare Loopholes - Legal or Not?
Might is right - a
saying that is particularly true in the American legal
There has never been a
definitive court case that has confirmed or contradicted the
airlines' claims about the enforceability of their bizarre
2 of a 3 part series - click for Parts
I recently bought a new suit.
It was on sale and I liked the jacket, but not the trousers. So
I threw away the trousers and kept the jacket, which ended up
costing me less than other jackets being sold by themselves.
You've probably done a similar thing with something, sometime in
the past. And we've none of us been sued by the company selling
the goods. As long as I wear any trousers, no-one is going to
arrest me for not wearing the trousers that came with the suit
But, buy an airline roundtrip
ticket and the airline claims that you must fly every flight on
the ticket you purchased, even though it costs them more money
than if you only fly some but not all the flights on the ticket.
Can they really do this?
No One Forces the Airlines to
Sell Cheaper Roundtrip Tickets
Let's understand one thing
up front. This is a 'problem' entirely of the airlines' own
making. It is a very strange piece of pricing logic to sell two
units of any product for less then the price of a single unit of
the identical same product!
But what changes the
situation from strange to arrogant lunacy is that, after having
set themselves up so as to encourage people to buy roundtrip
tickets, whether they need to travel all segments of their
journey or not, the airlines try and police your use of the
ticket and demand you fly every flight, and also restrict your
ability to fly on other flights, on other tickets, during your
We gave examples last week
and at the start of this column of other situations where items
in bulk might be cheaper than items individually; both within
the travel industry and outside of it. The airlines seem to be
unique in their insistence that you have to fly ever sector of a
ticket, whether you want to or not.
What Happens if You Get Caught?
Reportedly, if the airline
detects you are trying to use back to back or throwaway tickets,
they will probably cancel the ticket you are using and require
you to buy a new (most expensive possible) ticket to complete
If they detect this before
you travel, they might contact you in advance, or they might
just wait to trap you at the gate when your options are most
If they detect this after
you have completed your travel, they might take away some or all
of your accumulated frequent flier miles.
Some people suggest that the
airlines will charge the extra fare that they claim you owe them
to any credit card of yours that they might have on file. I've
been unable to get confirmation that this has ever happened and
suspect it is merely an 'urban legend'.
However, one thing the
airlines delight in doing is turning around and charging the
travel agent that sold you the ticket the difference in fare
between what you paid and what the airlines claim you should
have paid! They essentially tell the travel agency 'either you
pay us this money or you'll never issue one of our tickets
again'! Doesn't give travel agencies much choice, does it (but
see below for an exciting development).
Note the cunning way all
these things are done by the airlines. They do something that
costs them nothing, and then require you to go to the hassle and
expense of starting a law suit against them, rather than
starting a lawsuit against you.
Wanted : A Brave Volunteer!
There you are - its 5pm on a
Friday afternoon, you're at the airport gate and about to fly
home for the weekend when the airline says 'sorry, but it will
cost you another $500 to get on the plane because you broke our
What are you going to do?
Stay in that far away city for months or years while you file a
law suit and spend tens of thousands of dollars (or even much
more - you know the airlines will fight you every step of the
way) to force the airline to accept your ticket? Of course not.
You're going to give the airline the $500 and rush onboard.
Wanted : A volunteer to
agree to bring a major test case against an airline!
Reductio Ad Absurdum
(This is a technique of
logical argument where you extend a situation to a point where
the assumed basis clearly is shown to be ridiculous.)
Imagine this. You fly half a
roundtrip ticket but for some reason are unable to complete your
journey. For example, perhaps your ticket was good for a maximum
one month stay, and the cost of getting it extended for a longer
stay is greater than some other way of traveling back home.
So, you go to the airline
and ask for a refund on the unused half of the ticket. Okay - so
I joke - the chances of getting money back on a discount ticket
are minimal; but you hope to perhaps get a credit for future
Instead, the airline demands
you pay them more money for the privilege of not flying. Or call
the cops and file criminal charges against you. Or announce
that, even though you're a super-elite quadrillion mile frequent
flier with them, with enough miles in your account to fly to the
moon and back, they're closing your frequent flier account and
you qill forfeit all your miles!
It sounds ridiculous,
doesn't it. But the airlines claim that their 'contract of
carriage' gives them the right to insist on this. Let's examine
Legalese - the Airline Side of
The airlines attempt to
include language into their Contract of Carriage to force you to
fly all flights you book and pay for. See, for example,
United's contract, rule 100, or
American's contract, 'Ticket Validity - Compliance with
Terms and Conditions of Sale'.
Stated simply, the airlines
seem to be saying that they forbid you to buy the cheapest fare
they have on offer. They are trying to control how you use the
ticket you have purchased.
And now for the great big
unknown. Are these terms enforceable in a court of law? Just
because something is written in a contract doesn't make it
enforceable. Many different types of provisions in contracts are
either illegal or unenforceable, and indeed many standard
contracts (ie contracts that you never get to see or sign) are
often substantially rewritten by the courts if either party is
trying to enforce or contest them.
In addition to the language
in their contracts, some states have laws that include, under
the criminal definition of 'theft of services' the act of
failing to pay the legal fare for air transportation. If you
somehow sneak onto a plane and don't pay anything for a journey,
then in some states you have clearly committed the crime of
stealing an airline service. But what about if you legally buy a
ticket, direct from the airline, and then don't fly all the
flights on the ticket? You've actually used fewer services than
you bought! Is that a crime?
Attorneys I have spoken to
about this are unclear about the finest shades of law underlying
such a situation, but most generally concede that it would be
very hard to get a jury to convict you!
What Do the Courts Say?
As far as I can determine,
there have been very few situations where the courts have had an
opportunity to rule on these issues, and there has never been a
situation where an appellate court has made a decision that
would be influential or binding on future situations.
It would seem that the
airlines are reluctant to have their contracts of carriage
tested in court, and prefer to rely on the bluff that, most of
the time, seems to succeed. Indeed, one reader tells about a
time when he got into an argument when leaving a flight at an
earlier point (on a hidden city ticket). He encouraged the
airline to sue him, but nothing came of it.
I am aware of only one civil
case. In this case (which the traveler brought to court, not the
airline), the court ruled against the airline.
Chris Elliot wrote about the case - the court ordered Delta
to give back the frequent flier mileage it had impounded from
the traveler as a penalty for the use of hidden city fares. What
Chris doesn't say, but which was passed on by travel agent and
reader Michael (one of his clients was on the jury) is that
Delta didn't just lose, but it suffered a massive and decisive
defeat. Michael writes
I am aware of this because
one of my clients was on the jury. After both sides
presented their cases the judge stopped the trial and said
he was ready to render a verdict without the jury's
services. He summarily found the airline wrong and
reinstated everything for the passenger. It's funny to hear
my client tell the story because he says Delta came in with
all kinds of fare statistics and fare rules.
This suggests that the
airlines are on shaky legal ground.
I have also been advised,
off the record, by an attorney that specializes in travel
related law that he has brought a number of actions against
airlines in the past. He says that the airlines resist all the
way to the courtroom door, and then, just as the case is about
to be heard, they settle out of court, so as to avoid getting a
case on the record. Unfortunately, the terms of the settlement
are always required to be confidential as part of the settlement
agreement, so there is nothing official for anyone to go on
here, other than - well, shall we say, a vague feeling that the
airline settlements may tend to be favorable for the passenger!
There is another very
exciting court case currently working its way through the
courts. Brought by a travel agency and their travel
agent-turned-attorney lawyer, this case seeks to be certified as
a class action suit, and claims RICO based triple damages
against American Airlines for charging penalties against the
travel agency for the actions of their customers. Details
including a copy of their initial statement of claim are on the
The lawyer tells me that
they successfully resisted an American Airlines motion for
summary dismissal, and hopes that the class action certification
may shortly be obtained. If American is faced with the threat of
having to pay back three times what it took from agencies in
'debit memo' charges, that would open the floodgates to an
enormous amount of liability. I'll keep you updated about the
status of this case in my weekly newsletter.
Update, June 2003 :
There is another exciting case working its way through the legal
system at present. In May 2002 a Federal Court judge in Detroit
certified a class action brought by a group of passengers,
accuses Delta, Northwest, and US Airways of acting in a
conspiracy and of maintaining monopoly prices on routes to their
hub airports by refusing to allow passengers to do hidden city
The airlines contested the
class certification, claiming that the passengers should be
required to sue individually. They claimed that the facts of the
individual claims are too diverse to be tried collectively. The
lawsuit presents "highly generalized hub-based evidence, which
lumped 234 separate antitrust markets into a one-size-fits-all
analysis," lawyers for Delta and Northwest said in court papers.
This has always been the
airlines' first line of defense - to make any lawsuit too small
and trivial to justify the cost of bringing it against them. At
last, this line of defense has now been successfully penetrated.
In November 2002, the 6th US Circuit Court of Appeals refused to
hear the airlines' appeal against the action being certified as
a class action. And now, in June 2003, the US Supreme Court also
refused to hear the airlines' appeal, meaning that this action
will now proceed.
The plaintiffs are seeking
damages of almost $1.5 billion, which under anti-trust law would
triple to $4.4 billion if the case is won. It will probably be
several more years before the case is heard and appealed and
appealed, but stay tuned for more developments as they occur.
Travel Agencies - The Meat in
If you're going to try and
exploit airfare loopholes, it would be a kindness not to buy the
tickets through a travel agency. At least until such time as the
lawsuit mentioned above is heard, airlines will typically then
charge, not you the traveler, but the travel agency for the
extra fare cost!!!
That was bad enough when
travel agents made 5% on selling you a ticket. They make $10 on
selling you a $200 ticket, then the airline charges then a $500
penalty for doing so - a totally disproportionate charge! But
now, with agencies earning no commission at all, having the
airline fine them for something they have no control over seems
outrageous in the extreme.
May I suggest you buy your
tickets direct from the airline itself, or from their website!
Imagine the pleasure you'll get from telling an airline gate
agent 'what do you mean, my ticket is invalid? You people sold
it to me yourself!' Former airline employees have even confessed
to me that their airline deliberately turned a 'blind eye' to
such practices in the past (while still fining travel agencies
that did the same thing).
ASTA refuses to comment
letter to ASTA (the American
Society of Travel Agents) on 28 June I asked them what is their
official policy on back to backs? Because the airlines often
claim the extra fare that they say should be paid from the
travel agent that issued the ticket, this is an issue that the
major US travel agency association would be expected to be
actively in the middle of. To date - seven weeks later - they
have failed to answer my question, and, as far as I can tell,
are doing absolutely nothing to protect either travelers or
travel agencies from the airlines. The attorney bringing the
RICO action against American says she has received no assistance
As either a traveler
advocate or a travel agent advocate, surely ASTA has a duty to
help clarify this situation?
Can the airlines legally
require you to buy the highest, rather than lowest, fare
applicable to your travels? The airlines insist they can, and
because they control who gets on their plane, they have the
ability to enforce this - 'might is right' seems to be their
As to the ultimate legality
of their case, they have conspicuously avoided any opportunity
to have their claim tested in court.
But, if you feel that the
airlines are wrong in their claim, and choose to fly in the way
that suits you and gives you the lowest cost, you are probably
best advised to do so in an inconspicuous manner. See the
third part of the series for how to
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16 August 2002, last update
28 May 2011
You may freely reproduce or distribute this article for noncommercial purposes as long as you give credit to me as original writer.