Delta Moves to Require Roundtrip Purchase for Lowest Fares

Delta, Fares

If you fly Delta and you like to buy one way fares on nonstop flights, get ready to pay more. Delta has been moving toward making its lowest fares require a roundtrip purchase on nonstop routes, even in major, highly competitive markets. It also appears to be playing with advance purchase requirements, among other things. Clearly the revenue management team is trying to flex its muscles and increase revenues in a time where they’ve been going down, but other airlines aren’t going along. Apparently Delta thinks that it has enough pricing power to go back to the way things were before low cost carriers started to dictate pricing. That sounds like wishful thinking.

The overarching theme here seems to be that Delta thinks it’s leaving pricing on the table and can charge more. It has done fare increases and even kept some of those in place while other airlines have retreated. That very rarely happens, if ever. But across-the-board increases are clunky and lack an ability to target those who are most willing to pay. That’s why I assume Delta is introducing a roundtrip purchase requirement on its lowest fares in nonstop markets. Let’s go through some examples so you can see exactly what’s happening. I’ll start with one of the most egregious examples, New York City to Ft Lauderdale.

The New York to Ft Lauderdale market is big, and it’s a mix of business and leisure. Sure there’s plenty of business, but you also need to go visit your grandma in Boca. American stays out of this market thanks to its Miami hub, but there is a good mix of legacy, low cost, and ultra low cost options in this market. Here are the number of flights from New York to Ft Lauderdale next Monday (this doesn’t include return frequencies).

Airline JFK LaGuardia Newark
Delta 5 6
JetBlue 7 6 3
Spirit 4
United 6

I picked a random date in the future (July 13) with a return a week later (July 20) to show you what has happened to pricing in this market in the last month. I chose JFK here.

Pricing Date One Way Roundtrip One Way Premium
Based on R/T
April 12 $103.10 $206.20
April 19 $106.10 $176.20 20%
April 26 $138.10 $176.20 57%
May 3 $481.05 $186.20 417%

It’s important to note here that there was no fluctuation in availability. This is always pricing the lowest filed fare in the market. There are also no Basic Economy fares involved at all. Delta has effectively made three big moves over the last month that have dramatically changed its positioning in this market.

  1. Delta introduced a new, lower fare that required roundtrip purchase.
  2. Delta then converted only its lowest fares into requiring a roundtrip purchase
  3. Delta then converted even more of its lower fares into requiring a roundtrip purchase

The end result is a massive increase in the one way fare while roundtrip pricing has actually even gone down a bit from where it was a month ago. This is good news for those who buy roundtrip tickets, but it’s not for those who buy one way.

You might wonder if this has anything to do with that multi-city pricing mess that I wrote about last month. It’s possible. The airlines have mostly, if not entirely, walked away from that change. Remember, the original point was to prevent people from combining a cheap fare in two markets with ultra low cost carrier fares (like DC to Dallas/Ft Worth and Dallas/Ft Worth to San Francisco) and combining them to create a really cheap connecting fare. Changing fares to require a roundtrip purchase does help to eliminate that issue, but the impact on Delta’s pricing would seem to be too great for that to be the primary reason for this change.

The example I used is pretty dramatic, but the scale is not indicative of what’s happening in every market. Yes, low one way fares seem to be disappearing in most if not all nonstop domestic markets, but the differential isn’t quite as large in most as it is in New York to Ft Lauderdale. For example, using pricing from May 4 (yesterday) for travel at least two months out (had to fluctuate to find lowest fare availability), here’s how Delta was pricing.

Route One Way Roundtrip One Way Premium
Based on R/T
LA – San Francisco $162.10 $224.20 45%
Salt Lake – Vegas $134.10 $168.20 59%
Detroit – Orlando $191.10 $182.20 110%
Minneapolis – DFW $181.10 $156.20 132%
Atlanta – Baltimore $186.10 $172.20 116%
JFK – Portland (OR) $280.10 $460.20 22%

Now what’s interesting here is that the percentages may be all over the place, but the flat amounts aren’t. Except for Minneapolis to DFW, the roundtrip price is either $100 or $200 below the cost of buying two one ways for the same flights. I thought it might be distance-based, but then I saw the longer Portland-New York flight had only a $100 premium. I’m not exactly sure what the pattern is, but there clearly is some method to this.

You might be mad to see the return of old pricing practices, but I’m mostly just fascinated. See, the most remarkable thing about this is that Delta is now making itself highly uncompetitive in an industry where pricing parity has always been considered important. Let’s look at LA to San Francisco, a route flown by American, Delta, Southwest, United, and Virgin America frequently. For travel on July 10, American, Delta Virgin America, and United are charging $112.10 to go one way. Southwest is at $122.98. And Delta? Delta is charging $172.10. (When booked as a roundtrip, Delta matches the Southwest fare.)

Delta is doing some really interesting experimentation right now. The airline took a fare increase on some fares even though other airlines didn’t go along. At the same time, it’s playing this game with one way fares and tweaking other fare rules to try to extract more revenue. I suppose Delta is thinking that its product is now good enough that it can justify a fare premium, and it’s going to target the increases at those most likely to pay (business travelers buying one way fares in nonstop markets). With the notable exception of the cases where one way fares are higher than roundtrip (that just invites fraud), I have to give Delta credit for trying to lead the way in terms of pricing. But at the same time, I’m highly skeptical that it’s going to be successful.

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34 comments on “Delta Moves to Require Roundtrip Purchase for Lowest Fares

  1. This is frustrating because to find a way to fly DL (I do go out of my way to connect just to stay on them) I have to buy one ways. This is all due to our corporate travel policy of picking the lowest fare, always. So one has to get creative because DL’s r/t fairs can sometimes be higher than AA, who is our other “Preferred” carrier. Now this all but assures that I had to pick AA or UA, ugh. Operationally, those airlines suck.

    I hope this policy fails. I do believe DL is worth a minor premium, but I’m not the one with the choice when flying 95% of my 90k miles per year.

  2. Whether Delta wants to return to traditional oneway costs more than return policies is up to them. I do however think it is very important that Delta needs to pick a clear pricing policy and stick with it, so that customers have a clear understanding of how air fares are sold and can act accordingly.

  3. This makes sense. I frequently travel from NYC to Tampa and West Palm Beach and my last 6 trips have been booked one way on Delta and one way on JetBlue. The prices were always the same and when they weren’t i never had an issue paying a slight difference to have a better departure or arrival time.

    1. Brian – What’s interesting is that under the new current structure, Delta has very different approaches to Tampa and West Palm.

      I picked September 13 (random Tuesday in the lowest season) where there was full availability in all classes. Delta will charge you $435.10 one way to West Palm out of LaGuardia ($10 more from JFK). JetBlue will charge you $140.10 from LaGuardia and $163.10 from JFK.

      But looking at Tampa, Delta is $195.10 from LaGuardia or JFK. JetBlue is $140.10 from either.

      So while there’s still a differential, Delta is really testing the waters here. I’m sure this is all meant to give the airline good data about how far it can push.

  4. Very interesting topic Cranky; in the past week I’ve noted something similar with international fares as well on other airlines (including AA). I was trying to book a one way MAD – GRR for the fall and the one way fares I was charged twice of what the round trip ticket cost. I’m seriously considering buying the round trip and loose the return leg to save myself serious amounts of money!

    1. Jo – That’s probably not new. International travel has long continued to have the big roundtrip discount since low cost carriers haven’t had the impact they have on domestic flights. It’s amazing how much more one way flights can be on long haul.

  5. Look, I know some people think Hidden City ticketing is fraud, but it is a big stretch to say that flying only one half of a round trip is also fraudulent.

    1. It is though. You agree to the contract of carriage that you will fly the entire ticket. I can’t think of any way that intentional breach of a contract would not be considered fraud.

      1. Hogwash. Circumvent the “fraud” by cancelling the return leg. Tickets are cancelled thousands of times every day.

      2. Seriously ? What are the airlines going to do, track down the “culprit” and punish them?
        If they (airlines) didn’t play this cat-and-mouse game in the first place, maybe people wouldn’t have to brainstorm and be Philadelphia lawyers to figure out all the mumbo-jumbo. More power to passengers who can find ways to save money = Skiplagged (though skip lagged has it’s negative factors as well).

        1. Yes, they will. I am a ten year Executive Platinum on AA with over 3 million miles, and they sent me a nasty letter saying I was engaging fraud by using hidden cities.

          They said that if it happened again they would cancel my AAdvantage membership.

          Jerks. They can play games with fares but if the customer plays back its “fraud”.

          The frustrating thing was they didn’t even track it right. Half of the flights they accused me of that on we’re either canceled or very late and I had to change flights.

      3. hidden city truly messes up their operation as you are checked in for another leg and the airline is generally responsible if you mis-connect. Throwing away a return ticket is very different because, if you don’t check in, they already know you aren’t coming and make more money without added handling cost.

        I understand giving discounts for roundtrip relative to 2 one-ways. I don’t love it, but I understand. It is when the one-way costs more than the r/t that I think it is fine to throwaway second ticket

      4. You absolutely do not agree that you have to fly a ticket when you buy it. You can always cancel question is amount of refund (which can be zero). The difference on hidden city is you are terminating your trip at a non contracted destination. You aren’t canceling.

    2. I can’t say that I know if this rises to the legal definition of fraud, but it’s clearly breaking rules that the ticket purchaser has agreed to at the time of purchase. Call it what you want, but it’s against the rules.

  6. Just flew FLL-GRR one way yesterday. Guessing FLL is a popular one way destination, as snow birds leave open their return dates. Also guessing, at least on these cold-to-warm routes, passenger demographic have the disposable income to render the price increase a non-factor.

    1. FredOz – If you’re caught doing that, then airlines usually reserve the right to charge you the difference between the roundtrip and the one way fare. They may also suspend your frequent flier account and make you forfeit miles. I’m not sure if there are any other levers they have available.

      How often this happens is a different question and I don’t know the answer. But it appears that United is looking to step up enforcement on at least some of these practices.
      http://www.briansumers.com/home/2016/5/4/united-reminds-airport-workers-to-monitor-hidden-city-tickets

      1. Perhaps this will spark attention to “single use” credit cards and the possibility that the entry of FF account numbers will become detrimental rather than beneficial?

  7. To me this is a cash grab at the corporate flyer. When going on a leisure trip to Ft. Lauderdale I’m probably going to do a r/t down and back for a week or so. Now when I fly for business I’m often flying into one place, then onto another and then home. Sometimes booked as a multi-stop trip (which I’m not sure saves $$$) but many times booked as individual one-way flights.

    I already have clients asking me to fly WN (and connect) because they often (falsely) believe they are cheaper. DL playing these tricks is going to make it harder to argue flying the dominant carrier in my town with non-stop flights is worth the extra $$$. Bad move IMO.

    1. same with their multi-city thing – its all a grab at corporate travellers. Ironic since many of the big ones are under contracts for preferential rates anyway…

  8. guess you should always check and try to make a return months out in the future and see if it can be used on your “next” trip

  9. This is penny wise pound foolish on Delta’s part. We’re going to end up with the days of “creative” ticketing of throw away returns and back to back ticketing. Several years ago airlines started busting travelers and sending out massive debit memos to agencies when back to back ticketing as their software got more sophisticated. So now a traveler will do back to back ticketing with two airlines. Their inventory control will screw last minute travelers as the inventory will already be showing sold. Delta may start overbooking even more heavily. Simply changing return tickets for future travel will not even work as the fares will hold less value than the $200.00 change fees. This is a blatant money grab that I think will only hurt Delta in the long run.

  10. This is bull. I do a lot of one-ways overseas when I’m traipsing around the world on a month long vacation.

    But the games the carriers with FF award availability really impact me. It’s not uncommon for me to have to fly out of ORD and back into NYC. I live in DC. Sometimes I can get my DC-ORD/JFK on the same ticket, sometimes I can’t. If I can’t, then I’m buying one-ways.

  11. Airline pricing has been, and is just plain nuts. The day will come when the system will just break, every passenger booking every trip with back-to-back RTs, with the ticket for first leg of each (going, returning) RT the only thing the PAX uses, throwing the return ticket in the trash can.

    Sure, the airlines might kill off all our FF accounts but today these programs are not worth much anyway. Don’t worry, if you’re a big spender, you’ still get your upgrades.

    The final straw for this mess will be airline passengers getting Congress to force DOT to allow ticket-holders to sell their tickets in the open market. Whoever owns the ticket, will get his or her name on the ticket or on some contractual document stipulating who you are.

    Airlines, take your fare codes, your fare rules, your inventory buckets, and stuff it. Viola! Our long national nightmare with airline pricing is over!

    1. Reports like this is why I’m rooting for the Norwegians of the world and I want them in as many cities not a hub flying transatlantics.and why I’m ready for Spirit to double the number of planes they have.

  12. I’m glad this only applies to non-stop itineraries. I have no problem flying two one-ways on different airlines when cheaper than a round trip on either. Since I almost always have to connect, the change won’t mean much.

  13. DLs quarterly profits seem to show they are doing something right…but man it stinks. First, DL ended the interlining with AA, then they added the penalty rules on point-to-point/circle/open jaws travel, now they are forcing the r/t sale. It makes it hard to be loyal to DL and stay responsible to your employer’s travel budget.

    As some point you have to wonder if its starts to hurt them–and while I don’t wish harm on my beloved DL, this is really making it hard to be “super-duper” loyal. To be honest, I used to try to keep as much of my travel on DL and would often try put one leg on DL when they were charging crazy high fares and/or didn’t have a flight at the right times on the other leg of a trip.

    I feel as if Rev Mgmt is missing what was often happening: I was the king of interline tickets…but it was to help DL, as I wanted to stay on DL when possible. So rather than fly r/t on AA or UA or even B6, I would interline or buy one-way tickets so that at least part of my trip was on DL. Oh well, no more, I guess.

  14. Cranky, are you sure this is just for non-stops? I found one-way more expensive than round-trip on flights between LGB and Montana in July.

    Of course, LGB is special in that it often has outrageous fares, like over $600 when a corresponding itinerary from LAX or SNA with the same connection at SLC can be under $150 each way. I really don’t understand why LGB has such a price pull — it is my preferred airport and I’m willing to pay a premium for it, but nothing close to a 300% premium. Given that the drive between Long Beach and LAX or SNA is about 30 minutes in good traffic, and taxi fares are in the vicinity of $80, it would rarely make sense to pay a premium of over $100 one way, divided by the number of passengers.

    My last booking was a bit unusual since I’m sending a child alone, so convenience is more important than usual. And despite Delta’s exorbitant unaccompanied minor fee ($150, compared to $50 on Alaska), the advantage of leaving from close and cozy LGB rather than LAX, coupled with short connecting flights through SLC rather than longer flights via the Pacific Northwest, made me swallow the extra price. Though I ended up booking a one-way on Delta from LGB using miles (not even the cheapest rate) just because of the outrageous LGB cash fares.

    Final thought: How come Delta is operating a CRJ-700 from LGB in July? Shouldn’t the new slots for upgauged aircraft kick in by then?

    1. Ron – The new initiative appears to be for nonstop travel, but there are plenty of smaller markets out there that already had the roundtrip purchase requirement. This is one of those markets since there isn’t low cost competition. So it has the same dynamic (though actually requires a Saturday night stay for the lowest fares). It just hasn’t changed.

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