There’s never a shortage of lawsuits involving airlines, but there’s one in particular that came up recently which I thought was worth talking about. A woman is suing Delta for what’s called “marrying” segments, and her lawyers are trying to get class action status for this. (I believe “class action” is Latin meaning “only the lawyers win.”) She says this means Delta violated its Best Fare Guarantee, though it’s hard to see how that’s possible. Either way, it’s a fascinating and complex topic. I warn you, this is going to get pretty wonky.
How is a Leg Different Than an O&D? (aka Questions You’ve Never Cared to Ask, Ever)
As you may or may not know, the price you see displayed for a flight is a combination of two things: filed fare and flight availability. It’s the availability bit that’s at the heart of this lawsuit. But before we get into that, we need to define a couple terms: leg and O&D. This is a leg:
Wait, no. A leg in this case is a single flight. Meanwhile, O&D is short for “origin and destination.” That’s a whole one way trip including connections. I think I can explain this best graphically using the Long Beach to Chicago via Salt Lake example that will take us through this whole post.
Fares are Filed By O&D, but Historically Availability is By Leg
With that out of the way, let’s get down to business. The pricing folks at every airline file a whole set of fares for every single O&D they fly, not every leg. There are thousands and thousands out there. When you decide to go from one city to another, the reservation system will know to look for the lowest fare filed in that O&D. On rare occasion, you might see it combining the two local leg fares together because they’re cheaper, but that is pretty rare (the O&D fare is usually cheaper) and not the issue at hand here anyway.
With so many fares on so many O&Ds, each airline has to decide how many seats to make available at each fare on each flight. The way the airlines do this is with so-called buckets. Traditionally, you can think of it like a big Russian nesting doll where the biggest doll is the entire airplane for a single flight. The yield management people at each airline decide they will sell a certain number of tickets on each flight to fill those seats. (It could be more than the actual number of seats if the airline oversells the flight.)
For our first flight from Long Beach to Salt Lake, let’s say that there are 60 coach seats and they’ll sell only 60. That biggest nesting doll holds 60 tickets, but some are in the smaller dolls inside.
The revenue managers know that there isn’t enough demand to sell 60 seats at that highest fare that the big doll represents. Instead, they know that there are only 20 people who will pay for that high fare. That means they’ll need to sell 40 at a lower fare. So the next doll down can only hold 40 tickets. If one is sold, it still deducts from the 60 that the biggest doll holds. It keeps going from there. The smallest one has the cheapest fares in it.
Once they sell the cheapest fares out, that doll, or “bucket” in airline-speak, is full and the next highest one starts filling up with the next highest fares. These buckets are represented by letters in airline reservation systems. In coach, Y is the highest bucket for pretty much every airline, but then each airline has a different hierarchy from there. For Delta, the coach hierarchy from highest to lowest is Y, B, M, S, H, Q, K, L, U, T, X, V, E.
This makes sense, right? (Or did I bore you to sleep too long ago?) The problem until recently has been, as mentioned, that most of these buckets were controlled on a leg basis. So you have fares on an O&D basis (Long Beach to Chicago) but buckets on a leg basis (Long Beach to Salt Lake and Salt Lake to Chicago). You can see how that would be challenging to manage.
Here’s the line-up of fares in the Long Beach to Chicago market for next March:
You see Delta’s lowest fare is an X fare at $163 (this includes some but not all of the taxes, so it’s not final price). But what if there was an X fare at $1,000 in Long Beach to Salt Lake alone? Delta’s revenue managers might get to a place where they really want that latter fare but they wouldn’t want the cheapie former fare. That’s too bad. They either had to have the X bucket open or closed for all. Of course, there were some ways to deal with this. Delta’s team made sure to file fares of similar value in similar buckets. But that’s not easy, nor does it really match up with how you’d ideally like to control things.
The Dawn of O&D Availability Control to Do What Always Should Have Been Done
It was with great glee that airlines started developing systems that allowed them to control inventory by O&D. These systems could “marry” segments together. That meant if somebody picked Long Beach to Chicago with a Salt Lake connection, the system would recognize that it was a connection and marry them to show availability specifically for that O&D only. Here’s a perfect example in our market.
You can see that Delta is willing to sell an X fare in Long Beach to Salt Lake but it’s not willing to do it if you’re going all the way to Chicago, even though it’s the exact same flight. I should also note that you could try to trick the system by searching for Long Beach to Salt Lake and then Salt Lake to Chicago, but when you pick the segments, the system will recognize what you’re doing and marry the segments.
This Silly Lawsuit
To me, this makes sense. If fares are going to be priced by O&D, then the buckets should be controlled by O&D as well. Delta is selling a product, and that’s a ticket from one place to another. The mechanics behind how the airline makes that happen shouldn’t matter. This lawsuit, however, thinks this is all one big scam.
The argument is that Delta says it has a Best Fare Guarantee on its website, and Delta is not giving the best fare because it’s closing buckets on connecting O&Ds that are open on individual legs. This seems incredibly stupid to me.
Delta’s best fare guarantee says that if you can find it cheaper on another website, then Delta will refund the fare difference and give you a $100 voucher. There’s one problem. You can’t find it cheaper anywhere, and the plaintiff isn’t arguing that you can. She’s arguing that Delta is hiding the lower fare from everyone and discriminating against connecting passengers.
The problem here appears to be that the plaintiff has just enough knowledge to get herself into trouble. Using ExpertFlyer, she found an example of this happening and thinks it’s a smoking gun. But ExpertFlyer isn’t a place to buy tickets. It just shows raw data, and in the wrong hands, that can be misunderstood easily.
There will come a time when airlines do more to price discriminate, trying to offer different fares to different people. But those don’t qualify for the best fare guarantee anyway. The terms and conditions actually gut the guarantee pretty much completely, noting that “fares not available to the general public” don’t count. But that’s an issue for a different time. This lawsuit is fare more simplistic than that, and it seems completely baseless.
[Original chicken leg photo via Shutterstock]
