Ethics of back-to-back ticketing

Rohit Khare (
Mon, 15 Sep 1997 16:07:34 -0400

[Needless to say, this is bullshit. The carriers put out a product, plain
and simple. None of their Orwellian business what I do with it. Besides, if
I buy in and outbound on American and United, are they going to nationalize
the CRSes to track it? This is just bullschwockey from the airlines, a
scream as they slide down the slipperly slope of continuous real-time
capacity auctions. They ought to embrace it, but the old order is too
attractive. Joke is that 'net pricing' is probably higher-profit... RK]

[PS. Food for thought: each transatlantic route is a $50mn/year business of
its own...]

Airlines: Airlines Crack Down on Agents Over Fare Ploys

By Susan Carey Staff Reporter of The Wall Street Journal

Jay Paap flies so often that he's a "platinum" member of American Airlines'
frequent-flier plan. But in July, the airline's check-in agents at Boston's
Logan Airport declared his ticket "illegal" and refused to let him board a
plane to Denver -- unless he ponied up $815 for a one-way ticket.
Mr. Paap's crime? The Newton, Mass., consultant was traveling on a $310
round-trip ticket that required a Saturday-night stay. It was Tuesday, and
American's computer showed that he held another reservation to head back to
Boston the next day. That, the AMR Corp. unit said, invalidated his cheaper

So-called back-to-back ticketing can shave more than 50% off the cost of a
transcontinental flight. But it also makes the airlines mad. In recent
months, carriers have begun cracking down on fliers who use such tickets
and levying large bills against agents who sell them.

While actions against individual travelers such as Mr. Paap are still rare,
their travel agents are getting busted. Mr. Paap's Sudbury, Mass., travel
agency, News Travels, last month received a bill for $93,000 from American,
mostly to cover the differences between back-to-back fares that the
agency's clients had paid and the correct fares. American recently sent a
$10,800 bill to E. Clarke Travel of Fort Lee, N.J., for the same reason.
And it billed Charles Moore, who owns five agencies in the Dallas area, for

Northwest Airlines and Delta Air Lines have sent similar bills. Other
airlines have issued stern warnings and increased their scrutiny of agents'
records -- which are easy to see through the airlines'
computer-reservations systems.

The result is war. The crackdown was the hottest topic at this week's
meeting in Glasgow, Scotland, of more than 5,000 members of the American
Society of Travel Agents. A smaller travel agents' group says it's
preparing a complaint with the Department of Transportation against three
airlines, alleging they are discriminating against agents with the crackdown.

Agents don't deny that they sell back-to-back tickets. "This is not
something we invented," says Arlette Strauss, co-owner of the New Jersey
agency that was billed by American. "It's been widely publicized for years.
The client asks for it."

Here's how it works: Instead of buying an expensive, midweek round-trip
ticket, a traveler buys two less-expensive round-trips with Saturday-night
stays. Then the traveler uses the departure portions of each trip and
throws out the return portions.

Savings can easily run into hundreds of dollars. And every time airlines
boost their business-travel fares -- as they did this week -- the potential
savings grow.

When planes were empty a few years ago, airlines often ignored such
practices. But now that planes are full and profits are fat, back-to-back
tickets and other tactics that bend the "tariff rules" are back on the
carriers' radar screens.

The tactics, they say, amount to cheating. "Buying a ticket with the
understanding that one is going to travel within certain parameters or on
given days and then NOT doing so to avoid paying a higher fare is stealing
-- plain and simple," Northwest warned travel agents last year. "We expect
reputable travel agencies to refuse to ticket for clients in ways that are
designed to defraud the airline . . . of revenue."

Travel agents complain that if they don't offer such services, their
clients will turn to rivals that do -- including the airlines' own
reservations centers. Mr. Moore, the Texas agency owner who was dunned by
American, says he isn't offering back-to-back tickets anymore. The result:
"We've lost a lot of business."

Other agents continue to sell such tickets. But they are making their
customers sign waivers releasing the agents from responsibility if the
traveler is denied boarding, has to pay a higher fare or if a ticket is
confiscated. Still other agents say they are splitting their back-to-back
round trips between two different carriers, so the tactic is harder to
detect. "It's the only way we can stay competitive," says Troy Munford, Mr.
Paap's travel agent.

John Hawks, president of the Association of Retail Travel Agents, says at
least 150 of his 4,200 members have been billed by airlines for
back-to-back ticketing and other tariff infractions in the past few weeks.

ARTA plans to fight back with its Department of Transportation complaint.
Mr. Hawks says the complaint will allege that reservations agents employed
by American, Northwest and Delta sell back-to-back tickets to the public
without penalty. This represents discriminatory pricing, he says, because
travel agents who do the same thing risk being dunned.

A spokesman for American says the airline's thrust is to "crack down on
widespread patterns of abuse and repeated abuse." American has "reminded"
its own reservation agents not to issue back-to-back tickets, he says. The
practice costs airlines millions of dollars in lost revenue, he says, and
it's unfair to travel agents who abide by the rules. "We can and will"
crack down on passengers as well, the spokesman adds.

Northwest says it won't comment until it has seen the complaint. Delta says
it reserves the right to enforce its tariff rules.

Although back-to-back tickets are at center stage, airlines are on the
lookout for other practices as well. One is "hidden-city" ticketing, which
relies on the idea that it can be cheaper to board a flight, say, from
Chicago to San Antonio, Texas, and get off in Dallas, than to fly just to
Dallas. Northwest has fired off bills to about 100 agents who booked these
types of tickets. The airline wouldn't comment.

Another infraction is "churning": An agent reserves a seat, cancels it and
rebooks repeatedly to hold a low fare past the time when it's available for
sale at that price. Each time the agent rebooks, it costs the airline close
to $5 in fees to the computer-reservations system. Northwest says it now
bills agents for the fees and fines them $50 for each "churn."

Airlines have powerful tools they can use against travel agents. Their
tariff rules are unilateral, and courts generally uphold them, according to
travel attorneys. Airlines' sophisticated software allows them to audit
agencies and spot irregular bookings. Agents who don't pay the sums levied
against them risk having their computer terminals shut off, says Alexander
Anolik, general counsel for the Association of Retail Travel Agents. And
airlines can revoke agents' ticketing authority.

"We're intimidated," says Mr. Moore, the Dallas agency owner billed for
$77,000. "I don't have the money to fight American Airlines in a lawsuit."

Travelers, however, have some options. Mr. Paap, the consultant who wasn't
allowed to board the American flight in Boston, says he was so incensed
that he ran over to United Airlines and paid that carrier the $815 to get
to Denver.

One Passenger's Ploy 

1. Tom needs to travel to Los Angeles from Chicago on a Tuesday and return on a Thursday. The regular round-trip fare is $1,776.

2. There is a seven-day, advance-purchase round-trip fare of $311, but it requires a Saturday-night stay. Tom buys two.

3. Ticket 1, Chicago-Los Angeles: departs on the Tuesday he wants, and has a return date after the first Saturday. He uses the outbound portion of the ticket and throws away the return portion.

4. Ticket 2, Los Angeles-Chicago: has a departure date on Thursday (the day he wanted to travel to Chicago), and a return sometime after the first Saturday. He uses the first part of the ticket and throws the other part away.

5. Instead of paying $1,776, Tom pays $622, saving $1,154.

6. Tom has violated tariff rules filed with the Airline Tariff Publishing Co. by most major U.S. carriers.

Source: The Travel Agents Guide, published by the Airfare Report

Rohit Khare /// MCI Internet Architecture (BOS) ///
Voice+Pager: (617) 960-5131  VNet: 370-5131   Fax: (617) 960-1009