Orbitz, United and “Hidden City”: A Lawsuit to Change The Travel Industry and Digital Ethics?

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Aktarer Zaman is a 22-year-old graduate of Rensselaer Polytechnic Institute, in Troy, New York with a degree in computer science. Like many young, industrious individuals, particularly in the tech sector, he saw an opportunity to develop a business. Like many, he set out to create a website that would both provide a service that people could use, and hopefully make himself some money in the process. The difference is that most such startups don’t invoke the ire of United Airlines and Orbitz, two of the travel industry’s most powerful forces, in one fell swoop.

Mr. Zaman’s business is called “Skiplagged” and the very short version of the story is that it helps users find cheaper flights. The how of this equation is where it gets tricky.

Zaman started the business after searching for a flight from his home in New York to Seattle. He found that the best price included a layover in San Francisco. Out of sheer curiosity, he searched for direct flights from New York to San Francisco to find that prices were surprisingly much higher. The same plane and flight he was taking as only one leg of his trip was $300 when sold as a direct flight, while his entire NYC to Seattle ticket (including the layover in San Franccisco) was only $200. What would there be to stop someone wishing to end up in California, from purchasing his two-flight ticket and simply never boarding the second plane in San Francisco?

This practice was not unknown to the world, in fact it is well-documented enough to have its own term –  “hidden city” ticketing. It had simply never been highlighted as a means of saving on airfare and a specific search infrastructure for finding “hidden city” flight deals had never been developed before “Skiplagged.” This is, in part, because the practice is prohibited by the airlines.

Airlines have what is known as a “contract of carriage” which is part of the fine print involved in purchasing and using an airline ticket. United Airlines’ version, as the company at the center of this story, can be found here. Hidden city ticketing is prohibited by this document, which amounts to a terms of service agreement entered into by any airline passenger. As part of their relationships with booking companies like Orbitz (again, at the center of this story) airlines ask that booking companies not highlight or promote “hidden city” ticketing as a means of saving money, or encourage passengers to book flights they don’t plan on taking.

In November, Zaman was served with a lawsuit by United Airlines and Orbitz over the business conducted by Skiplagged. United argues that the site interfered with its contract of carriage. Skiplagged merely found users applicable flights and then redirected them to sites like Orbitz to book them as part of its business model. Orbitz sued on the grounds that by Skipplagged inducing users to book prohibited flights, Skipplagged put Orbitz’s relationships with airlines at risk and wanted no part of it.

The arguments in this case are as dense as the methods used for pricing flights under current models. The travel indistry is complicated. To simplify, we’ve consolidated some of the key arguments for and against below:

  • During an “A.M.A.” session on Reddit, one user pointed out the following analogy: “You could buy a Kit-Kat and a Snickers for less than the price of the Kit-Kat, but you only want a Kit-Kat. Is it unethical to buy the bundle and throw the Snickers out?”
  • According to United spokeswoman Christen David, the airline believes another analogy is more apt. According to her, the practice of hidden city ticketing is “tantamount to switching price tags to obtain a lower price on goods sold at department stores.”
  • While technically no airline (or any entity for that matter) can force a consumer onto a plane, and one could simply argue that it is their right to decide not to take the second leg of a flight, ostensibly the passenger entered into a contract with the airline when purchasing their ticket and willfully breaking it for personal gain is wrong.
  • The logic of charging less for a longer flight, or more for one flight than two may seem fuzzy at best, but it has to do with the airlines’ business model. Since most major airlines have adopted the “hub and spoke” model, in which passengers are gathered from across the world into designated “hub” cities for particular airlines out of which the majority of flights depart. This is more efficient for the airlines and allows them to move the same number of passengers in fewer planes and thus charge less. Flights are then priced based on supply and demand rather than strictly on fuel and duration of flight.
  • Hidden city ticketing takes advantage of this model at the airlines’ expense. Some would argue that this is the airlines’ problem and an inherent vulnerability of a business model they chose. Others point out that hidden city ticketing as a movement, would net passengers some cheaper flights in the short term, while hurting consumers in the long term. Airlines have slim profit margins as it is, and inevitably they would have to raise prices to make up the difference from these tickets.

We ask you to consider both sides of this story as you look to discuss it as a family. For more information we recommend this article outlining the situation and the players involved. Consider the consumer and airline positions on “hidden city” ticketing, as well as the notion of contracts for service and the consumer obligation to obey guidelines in exchange for services rendered. We recommend our recent piece “You Can Unlock More on Netflix, But Should You?” for a similar exploration of “terms of service” agreements. Do you think “hidden city” ticketing is wrong or the airlines’ problem to deal with?

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