I read on https://onemileatatime.com/news/american-airlines-sues-skiplagged/:
Airlines don't like when you miss flights to save money.
What's the issue for airlines when a passenger misses a flight intentionally to save money? Is it only because the ticket price difference, or do airlines incur additional fee/charge/expenses/etc. when someone miss their flights, or some other reason(s)?
First, because you are getting something you did not pay for. The market value of a ride from Los Angeles to Chicago is $400. The market value of a ride from Los Angeles to Bumblebutt is only $300. (happens to transfer in Chicago because of the service's low density requiring a hub-and-spoke connection). You are getting a $400 ride for $300.
They have a right to ask for the value they provide. I mean if it weren't for capacity issues, they could simply run a "tap-in, tap-out" system like multi-zone public transit, where you tap-in at Los Angeles and tap-out at Chicago. You only get the Bumblebutt price if you tap-out at Bumblebutt.
We have that. There are faregate/tap-in-out transit systems wired like A-B-C-Airport-D-E, with surcharge on airport exit. You get on at A.... So what would you do, demand the airport station agent let out the exit faregate for the E price? Would you force the matter by buying an anonymous ticket for only the A-E price and jumping over the exit gate "this is not cheating because"? What if you learned that the surcharges at the airport station are how the C-E line was financed?
So if you'll respect the above, you're really saying hidden city ticketing is OK only because airlines don't have exit gating.
However, this may also be depriving the agency who subsidizes flights. If left to the free market, there is no viable ticket price that would work, and that airplane would not exist at all. The authorities ran the math, and discovered that when the average person flies into Bumblebutt and does tourism, that brings direct tax value that is 2x the cost of the subsidy, so it's a good plan. And then, the airplane arrives in Bumblebutt, and they watch 2 people get off even though they subsidized 16. And now the airline has to explain itself: What are you doing with our subsidy money?
Even if the flight is not subsidy-supported, the airline is in the ignoble position of watching their connector flights leave with many absent passengers, and they discover they are being paid negative money per seat to even operate those connectors.
Is it only because the ticket price difference,
Yes.
or do airline incur additional fee/charge/expenses/etc. when someone miss their flights, or some other reason?
No.
Airlines want to charge extra for non-stops because they feel they are more "desirable" despite the fact that it's significantly cheaper for the airline to operate.
Why don't airlines like when one intentionally misses a flight to save money?
It's very simple. The airline would rather have more money than have less money.
An airline is a corporation. A corporation is (to greater or lesser extent, depending where it is chartered), by law, obligated to seek maximum financial returns to its shareholders.
If you use a cheaper ticket for A->B->C to travel A->B which would have been a higher cost ticket, then the corporation has failed in its duty to maximize profit.
The airline industry isn't perfectly competitive where we expect prices to be equal to marginal cost. Instead it's either in the realm of oligopoly or monopolistic competition. The top answer to this question argues that when you shop for a flight from LA to Chicago that the market price is $400 but when you buy a flight from LA to Bumblebutt which happens to stop in Chicago for $300 that you're depriving some subsidizing agency of that $100 because the only reason that pricing exists is because of a subsidy.
This is completely unsubstantiated. I challenge someone to find the airport that receives a subsidy based on number of passengers AND that skiplagged will find as a fake destination for their hidden city fares.
Instead, I content the existence of subsidies at certain airports isn't the driver of the aforementioned pricing weirdness. For instance, let's look up the EAS recipients
Now I look up a flight from my home city, Tampa, to the top result, Ernest A. Love Field, for 9/20/23. The price is $189. I can pull up the pricing calendar and see that it would be cheaper on 9/27, specifically it'd be $172. The layover airports, depending on what airline I pick are DEN or LAX.
Here's the screenshot of the top result:
Under the subsidy theory, flights to DEN or LAX would be even more than that $172 but that's not the case.
Here's Tampa to DEN with a nonstop filter on the same day...
Granted, this is just a single data point but interestingly enough I coincidently found a skiplagged flight to DEN with a fake destination of Charlotte. I can't find anything suggesting that any agency is providing a subsidy based on the number of passengers that land in Charlotte.
The reason airlines will sell A->B->C for cheaper than A->B is because they don't price the tickets according to their marginal cost, at all. It simply isn't part of the math that determines relative ticket prices. This is largely because the marginal cost of an additional passenger is pretty close to $0.
They price it to maximize revenue. The way they figure that out is the relative competition for any given city pair and the desirability of a schedule. That means that they'll figure out a price for A->B, A->C, A->D, A->E, etc. For each of these pairs, they will have a different price for the nonstop version vs the layover version and the former is almost always going to be a premium to the latter. Sometimes, it just so happens that the market dynamics are such that A->C with a layover is determined to have a revenue maximizing price that is lower than A->B nonstop AND that the layover city for that A->C ticket is B. If airlines charged you based on some fixed $/mile markup then, of course, this wouldn't exist but that's not what they do.
Put simply, airlines do not sell flights.
Airlines sell transportation, from one city (airport) to another.
The market market rate for transportation to Duluth is lower than the market rate for transportation to Chicago so your ticket to Duluth is less money than to Chicago, even though you actually fly to Chicago, then Duluth.
The issue is technically theft of revenue by going to Chicago but only paying for Duluth. This is Theft of Services and is just as much a crime as if physical property.
This is called Hidden City Ticketing.
