Is using hidden city ticketing a theft of service?

Question

In some cases, A-B-C flights (from A to C with layover at B) cost less than a direct A-B flight with the same company. "Hidden city ticketing" is the practice of taking the cheaper A-B-C flight, checking no luggage, and getting off at B, as intended.

Is there any jurisdiction where this would be considered a theft of service?

Sometimes it happens because the layover is inconvenient, the flight is unpopular, so the computer lowers the price to get at least something. Less commonly, A-C flights might be subsidized by a third party. The customer wouldn't know.

There was a debate regarding this on Travel.SE. On one hand, it can be seen as a bundle of services, and one doesn't have to use every service in a bundle. On the other, the customer's behavior can be seen as deceptive.

So far, it appears that airlines had no success enforcing rules against it (the Lufthansa suit ended up dropped). Others have also failed. Could such a charge, or another relevant charge or tort, at least survive dismissal and make it to court?

Any precedents with other services, where a customer was successfully sued for not using one of the services they've ordered?

One example that comes to my mind is buying a double feature movie ticket and only going to one of the movies. That's legal though. Any cases where something similar was ruled not legal? In B2B, it's usually about damages arising from the buyer's failure to collect (e.g. ore sitting in port). The airlines rather seek under-received revenue from the fare difference.

Answer 1

No-show clauses in airline ticket contracts have been considered by the Tribunal Supremo (the Supreme Court) of Spain, in Judgement 631/2018; see section 6. Importantly, they applied EU legislation, the Unfair Terms in Consumer Contracts Directive 93/13/EEC, which means that the reasoning may be applicable elsewhere in the EU and in the UK, although it is not binding on those foreign courts. That is also important because it cuts across how that contract law operates in different member states - those countries could have very different bases for analyzing contracts, but the prohibition of unfair terms should work in the same way in the end.

In the case, Iberia had a contractual term (with my emphasis):

Dependiendo del tipo de tarifa, clase de servicio, estancia en destino, oferta, etc., puede realizar su reserva para vuelos de ida o ida o vuelta. Independientemente de la tarifa aplicada, si alguno de los trayectos comprados no se usa, automáticamente se cancelarán los trayectos restantes comprendidos en el mismo billete.

This would allow the airline to cancel any remaining legs of the journey in the event of a no-show. For example, if you bought an A-B-C return, intending to use only the B-C part, then you might find on showing up at B that the airline had cancelled your entire ticket because you had missed the A-B flight. A consumer rights organization argued, and a lower court agreed, that the Unfair Terms directive should apply. They said the clause created an imbalance in the mutual obligations between the contracting parties: it means the flyer is obliged rather than merely entitled to take all of the flights, which is contrary to a good-faith understanding of how tickets work. The Tribunal Supremo agreed, rejecting a counter-argument from the airline that pricing matters are excluded from the scope of the directive. They also said that if the airline was willing to take a passenger from A to B to C at a certain price, then it should also be willing to do less work for the same amount of money.

In the decision, the Tribunal Supremo was equivocal about people who deliberately use no-show strategies. The rejection of the clause was mainly because it covered people who had changes of plan due to unforeseen events. In paragraph 8 of section 6, the court conceded that the airline might be viewed as suffering harm if people were following the "exceptional" practice of hidden-city ticketing, where the total price was lower than that of any individual part of the journey and the airline could not resell the unused legs in time. If the consumer is deliberately taking advantage of a pricing loophole, then it could also be argued that because they are not acting in good faith, they should not get the benefit of consumer protection law. The court did not consider this matter in much detail, since the term was already deemed unfair in the case of consumers affected by unforeseen circumstances.

So there is some potential room for terms and conditions that are more nuanced than Iberia's. In practice, it appears that Spanish carriers at least have not tried to push back in that way.

There is a potential revision to the Air Passenger Rights Regulation 261/2004/EC which would allow consumers to no-show without having other parts of their journey canceled. But this has been under discussion at least since 2013 and has not progressed very far. If enacted, it would apply definitively across the EU, as an even more specific lex specialis for the scenario in question.

Answer 2

"Theft of services" is a type of theft, sometimes distinguished from "theft of goods" but in Washington is not treated separately except insofar as a particular subclause of theft laws might only apply to a specific good (such as a motor vehicle, or a search and rescue dog while the dog is searching and rescuing). RCW 9A.56.020 defines theft, and many things might constitute "theft" under that statutory language. Specifically:

(a) To wrongfully obtain or exert unauthorized control over the property or services of another or the value thereof, with intent to deprive him or her of such property or services; or

(b) By color or aid of deception to obtain control over the property or services of another or the value thereof, with intent to deprive him or her of such property or services; or

(c) To appropriate lost or misdelivered property or services of another, or the value thereof, with intent to deprive him or her of such property or services.

Clause (b) comes closest to being applicable, since the customer obtains control over the service by aid of deception ("obtains control over" in the case of services means "to secure performance thereof for the benefits of the obtainer or another"). Deception exists when one knowingly

(a) Creates or confirms another's false impression which the actor knows to be false; or (b) Fails to correct another's impression which the actor previously has created or confirmed; or (c) Prevents another from acquiring information material to the disposition of the property involved; or (d) Transfers or encumbers property without disclosing a lien, adverse claim, or other legal impediment to the enjoyment of the property, whether that impediment is or is not valid, or is or is not a matter of official record; or (e) Promises performance which the actor does not intend to perform or knows will not be performed

(a,b) seem clearly to be true, in that the buyer knows they do not intend to fly to C yet the airline has the impression that they will fly to C. The "depriving" comes from the airline not being able to sell that seat to another customer for money. Of course, various internet sources assert that the practice is not illegal, however, as far as I know this has yet to be put to the test. Somewhat closer was that Lufthansa filed a lawsuit against a customer for doing this, but they dropped the lawsuit for some reason.

The practice is clearly a breach of contract according to the contract of carriage of many airlines (Delta, Rule 16(C)(3)). The cheaper fare is not applicable to the shortened trip, therefore in failing to take the last leg, you have violated the contract, and therefore they can sue you.