Hidden city tickets: A win for passengers in Lufthansa case?

Back in February 2019, Lufthansa decided to take a passenger to court who chucked away the last part of their ticket. This week the court made a ruling in the passenger’s favour. – but on a legal point that Lufthansa’s terms-of-carriage were incompatible with German law. In fact, Lufthansa withdrew the case.

Before we get into that – let’s look at the whole ‘hidden-city-ticket’ phenomenon:

Why chuck the last leg?

Well, crafty airlines do not charge a set fee per mile for airline travel, or even a set price for a city pair. They charge according to demand. So, if you want to travel from Perth to Sydney, it can sometimes be cheaper to buy a fare to somewhere else, with a transit stop in Sydney, and throw away the rest of the ticket once you get to Sydney.

An example is a trip between Perth and Sydney. For this example, I have chosen dates in 2020. You will find its cheaper to buy a ticket between Perth and Auckland, with a stop in Sydney, and then throw away the Sydney to Auckland coupon, than it is to buy a Business Class ticket Perth to Sydney.

Let’s look at the cost of a one-way direct airfare in Business between Perth and Sydney, for the same dates:

So, you would save $771 if you flew to Sydney on a ticket that would actually take you through to Auckland, and threw away the Sydney to Auckland segment.

Why do airlines have this kind of pricing?

Usually, its because they have a competitor flying the route directly that they need to compete with on price. For instance, on the Perth to Auckland flight, the competitor is Air New Zealand:

. . . and as you can see Qantas at AU$1439, is undercutting Air New Zealand by about AU$300 – but, with a stop somewhere on the east coast of Australia (Sydney, Brisbane or Melbourne). Virgin has an even better deal:

With Virgin, you could save around AU$550, but again, with a stopover and a longer overall flight. If they priced it like they do to get Perth to Sydney, then the airfare would be about double what it is for Qantas.

So, why don’t we all book to Auckland and throw away the last flight coupon?

Well, there are a couple of good reasons why not.

Luggage

First off if you are travelling with checked-in luggage, then it might get separated from you (going on to Auckland while you are in Sydney), or it might hold up the flight so they can offload your luggage when they realised your bags were travelling unaccompanied on the Auckland leg.

Lose your return ticket

If you are travelling on a return ticket, failure to board for a leg of your trip would result in the cancellation of all subsequent legs. So if you got off in Sydney, and didn’t re-board for the Auckland leg – not only would they cancel the Sydney to Auckland coupon, but all your return tickets Auckland to Sydney and Sydney to Perth – so buying a one-way airfare to get back to Perth would kind of defeat the cost-saving purpose.

And finally the big one:

Beware Qantas Conditions of Carriage

Qantas specifically mentions doing something like this in its terms of carriage, with financial consequences:

6.5 Coupon Sequence

(a) The fare paid for your Ticket has been calculated on the basis of the sequence of transportation shown in your Ticket.

(b) Once travel has commenced, if you do not wish to continue the journey in that sequence, you must pay any applicable fees, taxes and fare adjustment. The Ticket will be reissued for the new fare which will be the full unrestricted fare that was applicable for the relevant class of travel on the date of original purchase for the revised itinerary.

(c) Alternatively, you may request a refund for the unused portion of your Ticket within 12 months after the original date of Ticket issue. The amount to be refunded (if any) will be the difference between the fare paid and the full unrestricted fare that would have been payable for the revised itinerary. Any applicable change fee and service fee will be deducted from that amount.

(d) If you wish to change your sequence of transportation before travel has commenced, and your fare rules allow it, you may request a fare recalculation and ticket reissue, in which case payment of any applicable fees and fare difference will be required.Qantas Conditions of Carriage (bolding is mine)

So, you could be liable for a ‘. . . fare adjustment.’ On the basis of the fare difference – possibly $771, plus a change fee!

I bet you other Australian airlines have similar clauses in their T&C’s.

Airlines in other jurisdictions have also reportedly cancelled passengers frequent flyer status, or even sued them for the fare difference – the Lufthansa case being an example.

What happens here in Australia?

Well, we are not sure. Various flyers claim to have done it, but I can’t find any evidence of other negative impacts on flyers. Some flyers speculate that Qantas (or Virgin) could suspend you from their frequent flyer programs – but I have not been able to find any evidence of this being done in Australia on any of the air travel nerd discussion groups I subscribe to. I’m happy to stand corrected on this point if anyone has evidence to the contrary.

It’s possible that as in the Luftansa case, there may be some Australian law that is incompatible with Qantas (and/or Virgins) conditions of carriage. Most likely in Australian consumer laws.

The Australian Competition and Consumer Commission (ACCC) has indicated that it might have an interest in such practices in its 2017 Airlines Terms and Conditions report. Although not addressing hidden-city-ticketing specifically, it does indicate an interest in questions of fairness where an airline can cancel a ticket with no penalty to itself, but, when a customer does the same, there is a penalty. It’s possible to see hidden-city-ticketing under this general area of interest.

2PAXfly Takeout

Hidden city ticketing does occur in Australia. I have no direct experience of employing this strategy.

Should you take advantage of it? – well maybe, as long as you are aware, and prepared to take the following actual and perceived risks:

• miss a sector, and the rest of your ticket will be cancelled. If you are going to do this – book one-way tickets
• you may be separated from your luggage (as it could end up at your ticketed destination, rather than where you leave the plane) – so best not to have any checked-in luggage
• you could get charged for the price difference between you hidden-city-fare and the cost of a ticket to your actual destination
• you could be disqualified or suspended from the airline’s frequent flyer scheme (haven’t been able to find any evidence of this in Australia)
• hidden city ticketing is not illegal (as far as I can tell), but it may be against an airlines conditions-of-carriage
• The ACCC – may be interested in this, and may provide advice or a ruling in the future

If you are serious, then you may want to take a look at skiplagged which claims to identify such fares.

On the other hand, if you have taken advantage of such fare anomalies in Australia – I’d love to hear from you about your experience and the consequences.