American Airlines Threatens Travel Agents Over “Unfavorable” Ticketing Practices

Filed Under: American

American Airlines has just sent a memo to travel agents, informing them that the airline will be cracking down on “unfavorable” ticketing practices (thanks to @xJonNYC for bringing attention to this). There are several curious aspects to this…

American Airlines’ memo to travel agents

First let me share the memo, and then below I’ll break down exactly what it means. On January 26, 2021, American sent the following to travel agents:

American Airlines will begin monitoring common booking practices which may result in an unfavorable outcome.

These practices are identified as:

  • Churning
  • Hidden City
  • Inactive Segments
  • Marriage Segment
  • Origin and Destination (O&D) Manipulation

Further detail on these offenses can be found on our addendum to the Governing Travel Agency Agreement (GTAA) for ARC accredited agencies and the IATA Passenger Sales Agency Agreement for international agencies. It is important that you familiarize yourself with these unfavorable practices as it will help prevent the issuance of future debit memos.

Additionally, please be aware that automation will be rolling out in phases to help us identify these types of occurrences and detailed remarks will be entered in the SSR OTHS Field. Our first phase will identify excessive churning, and messaging will be placed in the booking as follows:

We understand these unfavorable practices may occur due to confusion or misunderstanding of American’s policy. We hope this advanced notification will be helpful with your future bookings.

As always, we appreciate your attention to this matter and thank you for your business.

American Airlines has sent a warning to travel agents

What are these ticketing practices?

What exactly are the practices that American Airlines is referring to?

  • Churning — repeatedly holding, canceling, and/or rebooking the same or similar flight segments across one or multiple reservations
  • Hidden city ticketing — booking an itinerary that includes flights you don’t actually intend to take because the pricing is cheaper; for example, you want to fly from Tampa to Dallas, but book a ticket from Tampa to Dallas to Austin, because that’s cheaper, and you intend to skip the second segment
  • Inactive segments — when there’s a schedule change or cancelation and action isn’t taken on it, meaning the segment isn’t active
  • Married segments — airlines release different inventory depending on the exact itinerary you’re flying (these are called “married segments”), so there are sometimes opportunities to manipulate that
  • Origin and destination (O&D) manipulation — this is complicated, but basically it’s when an airline provides better pricing and availability out of a market so you book that, but then later try to alter it

Hidden city ticketing is the most common of these practices

American automates ticketing practice crackdown

American has been going after individuals for practices like hidden city ticketing for years. Last summer I wrote about how someone was contacted by American corporate security for having allegedly booked 52 hidden city ticketing itineraries.

However, up until now American apparently didn’t have any automation in place to catch these ticketing practices, given that the airline is now claiming to have a phased rollout of a new automated system that catches these ticketing practices.

With automation, I’ll be curious to see if American tries to go after a lot more people for violations.

American is automating its hidden city ticketing crackdown

Is this ultimately an empty threat?

How enforceable is a violation of these ticketing practices? For consumers directly:

  • There’s generally nothing illegal about hidden city ticketing, as this simply violates individual carriers’ policies; some court cases have even ruled that airlines can’t go after individuals for booking these kinds of tickets
  • Airlines would even struggle to try and recover the fare difference from consumers
  • The only real leverage that airlines have is the ability to shut down the frequent flyer accounts of passengers, since they can ultimately do that for any reason they please

So hidden city ticketing is always a bad idea if you have a frequent flyer account with status and/or a lot of miles, because you’re putting that in jeopardy.

Now, threatening travel agents is arguably a bit different, since these are industry partners:

  • American threatens “debit memos,” which is essentially when an airline sends a notice to a travel agent that they’ve done something wrong, and requests a sum of money
  • While that’s fair enough if a travel agent intentionally does something wrong, it’s not a travel agent’s fault if they unknowingly book a hidden city reservation; in other words, if I ask a travel agent to book a certain itinerary but don’t actually intend to take one or more of the flights, that’s not the travel agent’s fault

So I question the enforceability here. In some cases travel agents are no doubt behind this, but there are also situations where consumers ask travel agents to book tickets, where they intend to skip segments.

Only time will tell how much American acts on this threat

Bottom line

American Airlines has warned travel agents about certain ticketing practices, threatening to issue debit memos for violations. American is claiming that it has new automation in place that allows it to catch these cases.

Only time will tell to what extent this will be enforced, but it sounds like we should maybe expect a more widespread crackdown of hidden city ticketing, etc.

What do you make of this American Airlines memo to travel agents?

Comments
  1. O&D is more similar to married segments for example if you need to fly NYC LON NYC but the lowest price is not available but when you start instead from LON NYC LON the airline will provide better availability for the NYC LON, once you book that you could simply delete the LON NYC as the first flight and than its becomes NYC LON NYC

  2. American is becoming a garbage airline, like United has become.

    Aren’t they due for a nw CEO?

  3. Given COVID travel agencies have got to be in a huge world of hurt. Little business travel and few complex International trips. Sounds like AA is looking for low hanging fruit.

  4. If you have a modern computer system, finding people who do this would not be hard. I’m guessing most airlines use out dated systems and this is tougher to find than it should be otherwise they wouldn’t be making threats, instead they would just punish people who do this.

  5. Your example of a travel agent unknowingly booking a hidden city reservation is probably not realistic as a threat – I worked on a similar system for catching warranty fraud by car dealers and they typically identify statistical outliers to go after – the egregious bad actors – both because of proof issues and because of the cost/reward analysis of going after them

  6. Being a travel agent myself, I see right through these airlines “threatening” travel agents for their “practices” acting as if they do something criminal.
    Especially when working in corporate travel, churning isn’t really something you can help, partly due to airlines giving you a very short ticketing deadline.
    The “inactive segments” are just that because airlines send schedule changes or cancel flights and then expect you to react at lightning speed to it, when it’s hard enought to even reach someone at an airline.
    Airlines know all this very well and they – not just American, but especially Swiss, Lufthansa, Air France, Turkish – just love to send ADMs for some extra cash. They can send these a year later when you have little to no chance to even prove that you did nothing wrong.

    ADMs are a clever way for airlines to make money with little effort and are a far cry from a good business partnership with travel agencies.

  7. Good evening, sir. What may I get for you?

    I’ll have the filet.

    Do you intend to eat all of the filet?

    …. Um, I don’t understand.

    Do you intend to eat all of the filet? We will give you the filet, but only if you eat all of it. If you leave any of it on your plate, we will take away your frequent diner card, and we may try to impose a fine on you. We can’t have our customers choosing how much of our product they wish to consume. If you pay for a filet, you will eat a filet. All of it.

  8. @marina I would advise people to avoid agents. Many , maybe not yourself , have unethical business practices . All major airlines have sophisticated systems to check abuse. Many agents often refuse to assist their customers and refer them to the airlines at the same time pocketing administration fees without doing any work. It’s always better to deal with the airline directly and avoid a middleman.

  9. Why is hidden city booking a major problem? if i want to fly london to dallas but find a flight to Austin Via Dallas thats much cheaper why am i wrong for saving the money and how is the airline cheated?

  10. Ben, I’m confused as to how, exactly, AA defines “churning.” Most readers will be familiar with AA’s “hold” policy (which is more customer-friendly than a 24 hour return policy). Does this memo imply that AA means to penalize customers who “hold” flights and then cancel them before the hold expires in order to put the same itinerary on hold again (and, thus, put off expending the funds until the published price expires)? Does AA really mean to call something totally made possible my its own website “an offence”?

  11. @Greg S – How is the airline cheated? On the example you provided, you booked a LHR-DFW-AUS ticket, leaving the DFW-AUS segment unused. The unused segment cannot be resold to someone else; perhaps someone traveling LGA-DFW-AUS who now has to find other flights with an open DFW-AUS segment.

    Furthermore, the gate agent in DFW is expecting you. When you don’t show up they’ll be paging you which wastes time and money. Yes they got revenue from you, but not the revenue they SHOULD have received given the routing you actually desired. Basically you’re intentionally defrauding American.

    In years past airline reservation systems were good at processing large amounts of data (reservations), but were notoriously difficult and slow to upgrade. Most of the major carriers have taken advantage of new computer languages and software and are now increasingly becoming better at catching these types of practices.

    Buyer beware.

  12. American seems to love handing out threats these days. On a recent AA flight I personally heard 3 passengers threated that they would be on the no fly list if they didn’t keep their masks on. So stupid.

  13. Ben, as you say these are common practices…as old as deregulation. With all the asks for federal bailout aid, one would think AA would not be so aggressive at discouraging any revenue stream. Yet so expected from AA.

  14. @Icarus:

    Your very nasty opinion of Travel Agents is pure BS.
    The career path you’ve chosen along with your personal & professional ethics are questioned — Karma’s gonna’ bite you.
    And I’m 100% sure NO TA would want to work with someone such as yourself since you pride yourself as a “knowledgable” do-it-yourselfer.

    “@marina I would advise people to avoid agents. Many , maybe not yourself , have unethical business practices . All major airlines have sophisticated systems to check abuse. Many agents often refuse to assist their customers and refer them to the airlines at the same time pocketing administration fees without doing any work. It’s always better to deal with the airline directly and avoid a middleman.”

  15. @icarus, I sure hope you’re a troll, cause that’s a load of BS. I’ve been in this industry for 12 years and I have never met a travel agent that hasn’t tried to move heaven and earth to help a customer. May it be for leisure or business travel.
    If you’re ever in a situation where the airlines is on a strike or there’s a natural desaster and no chance to get through to the airline, you will be greatful for the help of a travel agent.
    It’s people like you that remember that, whenever they’re in such a situation and try and get the service of a travel agent without paying him.

  16. I remember one time Continental Airlines pulled a travel agency’s plate (i.e. revoked ticketing authorization) because they issued tickets for a group of a few dozen travelers on one way tickets that included a hidden city. They all deplaned at the connecting point. The airline later determined the group were migrant farm workers heading to a new job location, and that the travel agency should have known this because all the passengers had Hispanic names. I know, because I was on the legal team defending the agency, who knew nothing about the hidden city requested.

  17. I’ve always wondered why there is even a need for a travel agent. People can book their own tickets on line or over the phone. Why use a middle man? The time of travel agents has come and gone I’m affraid.

  18. @ROBERT J FAHR “…as old as deregulation”
    I think you have nailed the issue – the Big3 seem to think that Deregulation was terribly unfair, and forty years later still try to pretend that they have a working cartel, in which passengers should be obedient to behaviour that maximises airline profits.
    I would be fascinated to learn whether airline executives themselves avoid similarly profit-reducing behaviour as customers of other industries:
    E.g. dining at a restaurant outside a hotel rather than the one in the hotel,
    driving to a gas station off their route to get cheaper fuel,
    buying clothes from different stores rather than whole outfits from one store.

  19. @Icarus
    It is certainly better to deal direct with an airline rather than use an online travel agent (Gotogate, mytrip etc) who are typically a nightmare if the airline changes anything, you want to change anything, or indeed you just want to choose a seat.
    But human travel agents can reduce the stress (and sometimes price) for those travellers who are not used to IRROPS , or the internet.

  20. Our IATA agency specializes in Incentive travel. Years ago, after airlines eliminated agency commission while at the same time, began threatening agents with Debit memos for getting in the middle of airlines incorrectly pricing its product to maximize revenues with no correlation to furnishing the service, we left ARC and became a non-ticketing agency. We sell hotels, cruises and professional services but not air. It’s just not worth it. Let travelers do their own hidden city and churning through the airlines own site or use an OTA. A professional agent wants no part of these losing transactions anyway, let alone get a DM when a client buys a ticket DFW/EWR/ALB and gets off in EWR. It’s not our responsibility to become the AA Police.

  21. This will end on airlines being able to get a hold of your credit card info. If you don’t board the last leg, and you don’t seek for a later leg to your final destination, you will be getting charge the price different. Period.

  22. Well! Don’t blame the travel agents because they do all they can to help the customer per their request. But! Airlines and their executives are the predators in making profits and cost cuttings. After working for travel agent for 15+ years worked for a reputable airline and found out how they make money. For example; if you don’t fly any segments or not used the hidden segment they pocketed the money and someone else is already used that segment for that reason the airline revenue department oversolds all flights to 20% which covers all these hiccups. They even pocketed billions from government during this pandemic relief process and let employees furloughed or made huge layoffs because they want to pocket the billions in aid from government funding of PPP etc. Check out with furloughed and laid-off employees like us they will give the details how these airlines including AA makes money and how far they go on their greed.
    You got to be one of them to know how they do things.

  23. This reminds me too much of Gov. Jerry Brown in California during his reign in the last decade (more at the bottom)

    American Airlines is continuing to step over to dollars to pick up pennies, imo. It happened with their crackdown on the AA cards – going after people with an iron fist for opening multiple cards without violating theirs or Citi’s terms of service all the while AA was getting tons of revenue through the sale of their miles and also through investment calls when they bragged about destroying their competition in credit card partnerships / card holders.

    So here, they are attacking another revenue stream because they have paid some coders to find anomalies and fix them (automation). We’ll see if they actually work with travel agents to correct their problems or just send out citations carte blanche (via automation). If the travel agents are constantly operating in fear, they will move that business to other airlines.

    Back during Jerry Brown’s last reign in California as its governor, he vowed to get all corporations to pay their (what he deemed) fair share in taxes. The problem was corporations had agreements in place like all big bad corporations do (via tax benefits) to operate in certain places. California is one of the world’s top three economies and held three of the top ten companies in their state (Chevron, Google and Apple – this was 2012 or so no facebook yet). Unfortunately, those three companies alone paid most of the taxes in California (even at reduced rates). So, by using this iron fist, Chevron moved 10000+ workers and some of its companies to Texas and other countries. Apple built its Austin operations and moved a bunch of people and US manufacturing there. Google started the formation of Alphabet, Inc which was then based out of Ireland. Toyota of America moved to Texas. A large part of silicon valley also followed…

    Anyway, the point of the story is when you rule via iron fist without compromise, that business is usually lost – not reworked to your new rules.

  24. @Marina
    yes, you are right. On the one hand for lots of companies ADM might be a good way to increase income. On the other hand, carriers try to cover their costs: unless a travel agent remove inactive segment from booking, GDS will charge a fee.

  25. This is an example from 2015 of BA charging a travel agent for passengers who skipped the last leg of their trips. Their exposure was a potential of over $500,000.

    In the past BA has written to individual passengers because they missed so many last legs warning of the consequences if they persisted (some examples in the thread below and also others on flyer talk)

    https://www.flyertalk.com/forum/british-airways-executive-club/1731641-our-ex-eu-horror-story.html

    Airlines are getting even more serious about HCT than in the past and Ben and other bloggers have written about it before.

    BTW HCT is not the same as not eating the whole of a steak. Differnt products, different sectors, different rules.

  26. @oleg while you are correct about the inactive segments, please remember that it’s the airlines who “inactivate” them. Countless schedule changes, equipment changes, cancellations (even before Covid). It takes time to sort through all that, reach the customer if you have to (i.e. for looking for an alternative) and airlines have unrealistic and unfair timelines as to how quickly that should happen.
    An agents worst nightmare is Swiss. They send you schedule changes or cancellations and in order to get rid of the inactive segments and change the ticket, you have to follow a rigid protocol that changes at a whim. They do this specifically to be able to send you ADMs. It’s pretty obvious. Just think about that for a second… and airline cancels your flight and then wants money from you as a travel agent! That’s lunacy.

  27. @marina thanks for your comment. Working as a travel agent we also encountered many difficulties. In spite of the fact that you can dispute ADM, very often it actually doesn’t work and agency will be charged by carrier in any case, otherwise, your authorization might be suspended. Agree with you LX and LH have the most restrictive rules for agents.

  28. I think this is more of a “nothing to see here, move along” or “inside baseball” type news.
    This is nothing new for the carriers, and especially AA, have been strict with travel agents over the years (decades). TAs already know this, it’s all in the agreement the travel agency owner signs when they get appointed to be an agent for the airline. The carriers will have no problems enforcing this, especially with the new automation systems in place. AA will quickly suspend your plate (ticketing ability) until all debit memos are paid or for repeat offenders just “pull your plate” for good. In some markets losing the ability to ticket AA can be devastating for business.

    Trust me, the carriers have no problem biting the hand that feeds, they have demonstrated this throughout the years. My advice for TAs, work your queues and clean up those segments. Place time limits on reservations and most importantly, don’t let clients bully you into doing shady ticketing. When the carrier finds out, they will go after the TA rather than the passenger and good luck getting the money back from the client – they will just move on to the next travel agency or do it online.

  29. So if someone books a hidden city ticket online with Expedia and the dastardly deed is discovered, exactly which entity does AA pursue?

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