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Airline Mismanagement

Is it your right to buy the cheapest airfare, or your duty to buy the most expensive one?

The courts have even ruled that taxpayers are free to arrange their affairs so as to minimize their tax liability any (legal) way they can.

But the airlines are apparently even greedier than the IRS - they say you are not allowed to take advantage of their own crazy fares!

 
 
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Air Fare Loopholes - Legal or Not?

Might is right - a saying that is particularly true in the American legal system.

There has never been a definitive court case that has confirmed or contradicted the airlines' claims about the enforceability of their bizarre rules.

Part 2 of a 3 part series - click for Parts  One  Two  Three

 

 

 

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 jacket!

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 first journey.

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 your travels.

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 restricted.

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 fare rules'.

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 travel.

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 this issue.

Legalese - the Airline Side of the Game

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 lawyer's website.

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 ticketing.

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 the Sandwich

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

In a 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 from ASTA.

As either a traveler advocate or a travel agent advocate, surely ASTA has a duty to help clarify this situation?

Summary

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 strongest claim.

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 do this.

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Originally published 16 August 2002, last update 19 Dec 2013

You may freely reproduce or distribute this article for noncommercial purposes as long as you give credit to me as original writer.

 
 
Related Articles
Loopholes - The Ultimate Airline Bluff?
Loopholes - Legal or Not?
Loopholes - Avoiding Detection
 
 

 


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