The other “hidden city” trick that could shave $100 or more off your airfare

Many people had never heard of SkipLagged.com until news broke in January that United Airlines and the Orbitz travel web site were suing Aktarer Zaman, SkipLagged’s 22-year-old founder, for damages. Zaman’s sin in the eyes of the industry: to create a search engine that takes advantage of the fact that airlines often price connecting flights cheaper than non-stop flights. As a feature in The Economist explained:

At the time of writing, Delta’s cheapest one-way fare from Atlanta to Cincinnati on February 6th is $252. However, to get from Atlanta to Dallas-Fort Worth with a connection through Cincinnati—on that same initial flight—costs just $197. This is because Delta is the only airline to fly direct from Atlanta to Cincinnati, which are both Delta hubs, and so it can charge what it likes. Two other airlines, meanwhile, operate flights between Atlanta and Dallas. This limits Delta’s pricing power. For anyone wishing to fly to Cincinnati, therefore, the best bet is to book the connecting flight and walk out of the airport in Cincinnati (the “hidden city”), simply failing to show up for the second half of the trip.

But, there are strings attached to using SkipLagged. All of your baggage must ride in the cabin with you, as any checked baggage will be tagged to your final destination. Return trips must be booked separately, as going AWOL anywhere en route will automatically cancel the rest of your reservation.

And if anything goes wrong, such as overbooking or a cancellation forcing the airline to rebook you, they will only help you get to the city you’ve paid to be flown to, not to the hub you were planning to duck out at. So, the hypothetical passenger above planning to sneak away at Delta’s Cincinnati hub could be in trouble if Delta automatically rebooks him on a nonstop flight to Dallas instead, or on a flight via the Minneapolis/St. Paul hub.

There is, however, another version of the “hidden city” trick that could work well if you do wish to check your baggage. This involves booking a legitimate round-trip between your home airport and your intended destination, plus an onward future flight from your home airport that you have no intention of taking.

Consider the following example of a hypothetical Winnipeg-London round trip, departing on the randomly chosen date of July 11 and returning on July 24. It’s not a particularly cheap itinerary as you can see, at a price of $1,714.83.

YWG_LHR_1715

But check out what happens if you make a multi-city booking, taking the same flights from Winnipeg to London and back again, and adding an onward July 25 flight from Winnipeg to Calgary, a market in which Air Canada competes head-to-head with British Airways. Yes indeed, the total price actually drops to $1,603.08 — a saving of $111.75. Having collected your luggage 20 hours earlier in Winnipeg, just don’t show up for the July 25 Winnipeg to Calgary flight.

YWG_LHR_1603

This technique might also be useful for booking one-way flights in foreign lands, as well as for Americans looking to escape the extortionate fares that both U.S. and foreign airlines charge for international flights. Nonstop flights from Chicago to London, for example, currently sell for $2,471 (Cdn.) round-trip on the same July 11-24 dates noted above. Tacking on a July 25 flight from Chicago to Calgary via Denver reduces the price to $2,167 Cdn., a handsome $304 saving.

Cheaper still: making two separate bookings, one for a Chicago-Toronto July 10-25 round-trip, and the other for a Toronto-London July 11-24 round-trip, for a total of $1,877 Cdn. Even with two nights in an airport hotel factored in, the savings could easily amount to $400 per individual, or more than $900 for a couple sharing a room.

But before you do book such an itinerary, check out these cautionary words from the same Economist article quoted above:

. . . [S]ince most airlines’ conditions of carriage expressly forbid the practice, people who do it often enough to attract the company’s attention can have their frequent-flier accounts suspended, miles voided and any elite status revoked.

To search for hidden city itineraries for yourself, see Google Flights.

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Is another airport poaching your passengers? Don’t get mad — get even!

“Prairie people love to escape the winter for a while, but despite having some of the finest airport facilities in the world, thousands of folks who live in Manitoba and Saskatchewan would rather drive 3 or 4 hours to Grand Forks or Minot to make their escape,” veteran Winnipeg broadcaster Roger Currie wrote on the ChrisD.ca current affairs site on May 4.

“Airport managers in Winnipeg and Regina call it leakage, but it seems it’s becoming more of a flood is it not? In the past 12 months, close to a quarter of a million Manitobans, and a similar number from Saskatchewan, have made that long drive rather than catching a flight at home,” Currie continued, lamenting the relatively high taxes and fees levied on passengers boarding in Canada (where the air transport system largely operates on a user-pay basis, and most major airports have been long since privatized) compared to those levied on U.S. airport users (where the system is still largely government-owned and funded, although some surcharges have been added in recent years).

It’s a concern shared by the Winnipeg Airports Authority, which is lobbying the federal government for relief on rents that airports must continue to pay and on security surcharges that are paid directly by travellers. Their goal is to encourage more of those quarter-million Canadians catching their flights at nearby U.S. airports to depart from this side of the border instead.

Nevertheless, to be able to fly Allegiant Air, a U.S. low-cost low-frequency holiday airline, from Grand Forks, N.D. to Orlando, Fla. for $265.50 (U.S.) per person round-trip, or from Fargo, N.D. to Los Angeles for $322, sounds far more attractive than paying roughly $500 Cdn. to make the same round-trip from Winnipeg.

For a family of four or more, the savings to be had from driving to North Dakota to catch one of Allegiant’s flights — and of tolerating Allegiant’s tight seating and limited choice of departure and return dates — can add up to the hundreds of dollars.

But here’s where Winnipeg’s James Richardson International Airport can avenge itself: by promoting itself to North Dakotans and Minnesotans as the place to consider for a lower fare  when traveling further afield or when needing a wider choice of departure and return dates.

As the table below shows, Fargo, N.D.’s Hector Field tends to be the region’s lower-fare leader for flights to various popular U.S. destinations, thanks to five-way competition between Allegiant, American, Delta, Frontier and United, based on the lowest published fares listed on Google Flights* as of Friday evening, May 9 — although once in a while you might be able to get a better deal yet from the often-overlooked Bemidji Airport, where prices otherwise reflect Delta’s monopoly.

But for North Dakotans and Minnesotans going further afield, significant savings can be had by flying to and from Winnipeg, where competition for long-haul passengers is more intense. For instance, the lowest round-trip fare to London was $229 Cdn. ($210 U.S.) per person cheaper departing from Winnipeg than departing from Fargo — and that pales in comparison to the $463 Cdn. ($425 U.S.) advantage that Winnipeg had over Fargo on flights to Honolulu,  and the $808 Cdn. ($741 U.S.) gap in Winnipeg’s favour on flights to Tokyo.

Lowest published fares, in Canadian dollars, for selected dates from Bemidji, Fargo, Grand Forks and Winnipeg airports, as listed on Google Flights on the evening of May 9, 2014. To convert to U.S. dollars, multiply by  0.917. (Click to enlarge.)

Lowest published fares, in Canadian dollars, for selected dates from Bemidji, Fargo, Grand Forks and Winnipeg airports, as listed on Google Flights on the evening of May 9, 2014. To convert to U.S. dollars, multiply by 0.917. (Click to enlarge.)

Still feeling over-charged for air travel? Consider this New York Times post published yesterday, noting that even despite a heavy increase in fees and a general rise in fares over the past few years, the cost of flying in the U.S. (in 2013 dollars) has fallen from an average of 31 cents per mile in 1979 to just 16 cents in 2013.

 

* – Tip: To search multiple airports simultaneously in Google Flights, enter the airport codes separated by commas. For example, if you’re searching for the lowest fare to Southern California in general from Winnipeg, Grand Forks or Fargo, enter YWG, GFK, FAR as your origin and LAX, SNA, ONT, LGB (and perhaps SAN, PSP, BUR or SBA) as your destination.

Why it can cost the same to fly 1,500 kilometres as to fly 9,000 kilometres

takeoffAre you a pack-a-day smoker? Kick the habit for just 100 days, and you’ll have saved enough money — about $1,100 altogether — to cover airfare for two for a Spring Break holiday in Vancouver, Toronto or Montreal; or airfare for one to Bermuda, with a couple hundred dollars in change.

Had your heart set on Churchill, in Manitoba’s north? Sorry, you’ll have to save up a little bit longer — round-trip airfares between Winnipeg and Churchill, a distance of about 1,000 kilometres (621 miles) each way, sell for almost $1,300 per person round-trip if you buy in advance, or about $2,000 if you need to travel on short notice.

This is one of the enduring mysteries of how airlines set their airfares, not to mention those curious seat sale promotions that offer, to use just one example, a lower fare to fly from Canada to Istanbul via Amsterdam than to fly to Amsterdam itself.

What is the method behind their apparent madness?

A hint at the answer might be found by looking at the airlines’ annual reports, particularly the section where the airline shows its expenditures by category.

WestJet’s 2012 Annual Report, for example, shows the airline having spent slightly more than $3 billion in 2012 to move 17.4 million passengers around its network — or $175 per passenger — with the average flight traveling 978 miles between take-off and touchdown.

Many people assume that fares are based on distance — if you travel twice as far, you should expect to pay twice as much. There is, in fact, some tendency for longer journeys to come with higher fares, but not as much as there was in the days when airfares were government-regulated and often set on a per-mile basis, a politically useful but economically absurd way of going about it.

Some of WestJet’s costs, averaged out below on a per-passenger basis, are indeed strongly or somewhat proportional to distance traveled. Fuel, for instance, is strongly proportionate to distance — the further you go, the more of it the plane tends to burn, even though burn-per-passenger-mile tends to be higher on shorter flights than on longer ones, and on aircraft with higher ratios of kilograms of fuselage to passenger carried. But fuel only accounted for about one-third of WestJet’s total operating costs in 2012.

WestJet Operating Costs

Many other costs have little or nothing to do with distance traveled, such as airport operations, marketing, aircraft leasing or maintenance.

Some of these costs are incurred based on the number of staff required to keep aircraft moving, which explains why point-to-point carriers that spread their flights out over the course of the day have a cost advantage over hub-and-spoke operations that require large numbers of staff to be on duty all at once.

Others are fixed costs that can only be reduced on a per-passenger basis by pushing more people through the system, or are proportional to the number of take-offs and landings regardless of the number of people on each flight or how far they are traveling. (The people who work at the check-in counter, for example, are paid the same to check in a flight with 80 passengers on board as one with 150 passengers, and are paid the same to check in a passenger traveling to the next province as to check in the next passenger traveling to the opposite side of the world.)

Thus, because of the high fixed costs that the airlines have to pay no matter how many flights they operate or how many people are on each flight, it only makes sense to base airfares on a high up-front cost for passengers to use their network — regardless of whether they are traveling 300 or 3,000 kilometres — and then to add gradually to the cost of the ticket to cover distance-related costs such as fuel burn and the amount of food and beverages that need to be loaded on board.

Therefore, it is entirely rational that a round-trip to Minneapolis/St. Paul (635 kilometres each way) might cost $662 round-trip; a round-trip to Los Angeles (nearly four times as far from Winnipeg as the crow flies) might cost just over $120 more; and a round-trip to London might cost only twice as much as a round-trip to the Twin Cities despite being nearly 10 times as far away.

Lowest 2014 Spring Break airfares from Winnipeg, as of Nov. 3, 2013. (Click on image to see updated prices.)

Lowest 2014 Spring Break airfares from Winnipeg, as of Nov. 3, 2013. (Click on image to see updated prices.)

The airlines also make educated guesses about how much they can charge on a given route. On a heavily competitive route, or where a rival is offering a lower fare to get the public’s attention, an airline might offer a lower fare just to bring more revenue in and to fill seats that might otherwise go empty. This might mean charging a lower price to fly from A to C via B than they would charge a passenger to fly from A to B.

They also have a rough idea of what percentage of passengers traveling between two cities are traveling because it seemed like it would be a nice thing to do, and what percentage are traveling because they need to, and aren’t about to quibble over a couple hundred dollars.

For instance, if you’re travelling from Winnipeg to Honolulu on a Wednesday in mid-January, it’s pretty much assured that you are a price-sensitive leisure traveler, so the airline will offer a low fare knowing that a seat with a posterior in it bringing in $500 round-trip for the airline is a lot better than an empty seat bringing in $0, at least until their software indicates that demand is starting to exceed supply, at which point the fare will go back up.

But if you’re going to Gillam, Manitoba — where no one but a masochist would go for fun in the dead of winter; not that many people would fly to Winnipeg for that purpose in mid-January, either — they’ll pretty much have figured out that you most likely have no choice and will pay whatever the going price is to be on the flight. (Not to mention that the smaller airlines that fly those northern routes have to spread their fixed costs among far fewer passengers, and serve destinations that most of the population wouldn’t even visit for free.)

Finally, don’t worry that the airlines might be gouging you. According to WestJet’s annual report, they made earnings before income taxes of $340 million in 2012 on revenues of $3.4 billion, averaging out to $19.53  of profit per passenger or about $1 of profit for every $10 in revenue. At RBC Royal Bank, by comparison, profits before taxes came to about $1 for every $3 in revenue, which goes to show that there is far better money to be made in the financial sector than there is in the airline business.

Old seat sale ads show how affordable air travel has become

One of the most remarkable events of modern times has been the falling cost of long-distance air travel. For previous generations, a trip to Europe was either a sign of wealth or a once-in-a-lifetime event after having spent a few years saving up the money for it.

And a trip to Australia or New Zealand? That was an even more exclusive luxury for the rich.

Today, a trip to any of these destinations is within the grasp of the middle class — particularly independent travelers, groups of friends, couples and retirees.

As a reminder of how far we’ve come, take a look at some of these seat sale fares from the past. These fares were, as usual, not inclusive of whatever taxes and surcharges existed at the time. (And, being seat sale prices, they were bargains compared to the regular coach fare.)

Then, look at how much these trips cost today, including taxes and surcharges, based on Expedia’s lowest available round-trip price as of May 2-3, departing Sept. 13 and returning Sept. 24.

Montreal to London, round trip (1956)

Airline: Trans-Canada Airlines (now Air Canada)
Date Advertised: Oct. 30, 1956
Seat Sale Fare (1956 dollars): $416
Seat Sale Fare (2007 dollars): $3,244

Currently Available For: $787 on US Airways

Winnipeg to Germany, round trip (1964)

Airline: Lufthansa (with domestic segment on TCA-Air Canada or CP Air)
Date Advertised: Sept. 26, 1964
Seat Sale Fare (1964 dollars): $503.90
Seat Sale Fare (2007 dollars): $3,426

Currently Available For: $1,106 to Frankfurt on Delta/Northwest

Winnipeg to Vienna, round trip (1967)

Airline: Air Canada
Date Advertised: June 10, 1967
Seat Sale Fare (1967 dollars): $530
Seat Sale Fare (2007 dollars): $3,265

Currently Available For: $1,065 on Air Canada/Austrian

Winnipeg to Copenhagen, round trip (1970)

Airline: Air Canada
Date Advertised: Jan. 8, 1970
Seat Sale Fare (1970 dollars): $364 to $493
Seat Sale Fare (2007 dollars): $1,999 to $2,708

Currently Available For: $1,110.56 on Air Canada/Scandinavian

Winnipeg to Honolulu, round trip (1989)

Airline: Northwest
Date Advertised: Jan. 28, 1989
Seat Sale Fare (1989 dollars): $699
Seat Sale Fare (2007 dollars): $1,042

Currently Available For: $762 on Air Canada

Admittedly, you won’t get the level of pampering today that you would have received all those years ago. But those of us who’ve been bitten by the travel bug would say it’s a fair trade-off.

When was the last time you heard an airline promote the delicious food and comfortable seating they offer in Economy?