Skiplagged built a site on airline pricing logic: book the far city, get off at the hub

BBC Worklife explained in February 2019 how "skiplagging" or hidden-city ticketing works: a traveller who wants to fly Boston to Houston buys Boston to Las Vegas with a Houston layover because it is cheaper, and gets off in Houston. Airline analyst Henry Harteveldt says airlines invite this by setting nonsensically high fares into hubs.

The reason is pricing by market. MIT's Peter Belobaba says Boston-Las Vegas is a price-sensitive leisure market with a $199 nonstop competitor, while Boston-Houston is a business market with higher fares. So the further trip can be cheaper. The website Skiplagged, founded by Aktarer Zaman, exists to find these tickets. When United tried and failed to sue him in 2015, crowdfunding raised over $80,000 for his defence.

Airlines object because they lose yield and complicate a small-margin business, and contracts of carriage often prohibit it.

Sell travellers the longer ticket and let them leave at the layover, because the destination they want is cheaper as a stopover.

Fares follow competition: airlines match low-fare rivals and charge a premium where there are none.

The ticket buyer still pays the airline's price, so the passenger argues the seat was sold fairly.

A website aggregates the unusual itineraries that most travellers would not search for.

Frequent flyers who feel stacked against by fees and delays have little sympathy for airline losses.

Pricing logic that is rational for the seller can leave arbitrage that a small tool can package, though the buyer carries the contract risk.

The practice carries risk: Lufthansa sued a passenger for more than $2,000 in early 2019 (although such lawsuits have failed in the past), and airlines can cancel frequent flyer accounts, ban passengers or stop agents ticketing. One analyst thinks hidden-city tickets are almost impossible to track, though technology may change that. Skiplagged's founder did not respond to BBC queries, so no usage figures are available.