Airline news: the minimum stay is back

Silly airlines...tricks are for kids!

It appears that the sworn enemy of the business traveler - the minimum stay - has returned. You see, back in the Middle Ages when I worked in airline pricing, this was one of the favorite tricks airlines used to keep those lucrative business travelers from paying the low fares of the leisure traveler. We applied a minimum stay requirement to our fares - and most usually you had to stay over a Saturday.

While business travelers may consider changing flight times and even airports if there is a nearby lower cost alternative (like Chicago Midway vs. Chicago O'Hare) to score a cheaper fare, what few will do is offer to stay over a Saturday night. Corporate generosity only goes so far.

It was a great trick - or a "fence" as we called it back in the day - you know, as in "good fences make great airline revenues."

The Saturday night stay mostly went the way of the buggy whip about eight years ago with the rapid rise of low-cost airlines who gained a lot of market share and growth by introducing easy-to-understand and flexible fare structures. Imagine the thought! While the majors held out as long as they could, eventually they had to adapt to effectively compete with the Southwests, AirTrans and jetBlues out there. From a passenger point of view, it was a great day when the minimum stay went away.

Now, sadly, in the current environment of astronomical fuel prices where airlines are doing everything they can to keep revenues even partially in line with increasing fuel costs, some old airline tricks are making their return - including the dreaded minimum stay:

Earlier this year, several major airlines quietly began reviving Saturday-night and one-, two- or three-night minimum-stay rules on a limited number of routes. Then, in April, United Airlines boldly revived Saturday-night-stay requirements for discount fares on routes in 65 percent of its markets. Not coincidentally, those were markets where United’s competitors were other network airlines, not low-cost carriers. The other major airlines responded by quickly adding their own minimum-stay rules in a large variety of markets.

Here are two examples: A man has a lunch meeting in Knoxville, Tenn., on June 12 and wants to come home that night. On Delta, a round-trip ticket from La Guardia Airport in New York with a departure at 6:10 a.m. and a return that night costs $870. But if he stays one extra night, the fare drops to $455.

A woman has a morning meeting in Norfolk, Va., on Thursday. On Continental, the round-trip fare from Newark is about $875. But if she stays through Saturday night, the fare is about $250.

Do notice that the minimum stay was introduced where the low-cost airlines couldn't keep the majors honest on fares. Nice one... I suspect this will come back to bite them in the ass, and could even turn business travel off more than milking more revenue from it, but if you are fighting for basic survival - and most of the airlines are - you gotta do what you gotta do to increase your revenues.

But never fear, savvy travelers can pretty easily get around minimum stay requirements by gaming the system. The most common way is to book two round trips that meet the low fare hurdles and is called "back to back ticketing." It looks like this:

• Buy two round trip tickets that meet minimum stay requirements:
• one from HOME CITY to VISITING CITY to HOME CITY (trip 1 and trip 2)
  
• two from VISITING CITY to HOME CITY to VISITING CITY (trip 3 and trip 4)
  
• Either time the two round-trips to create two short term tickets:
• TRIP 1 + TRIP 3
• TRIP 4 + TRIP 2
• Or, if the price of these two round trip tickets is less than the short term ticket and you don't need two round trips:
• throw TRIP 2 and TRIP 4 away
  

The airlines hate this and say that it's expressly forbidden. They also claim to have the technology to catch you and if they do, they'll cancel your reservation without granting a refund. In reality, when you consider airlines are dealing with tens of millions of passengers each year, the odds are very much in your favor on getting away with it. Or, just book each ticket with a different airline. Genius!

While I haven't dissected airline fare structures in some time, I sure hope the airlines aren't dumb enough this time around to price the two cheap trips less than one quick trip... the two above examples are mixed. The main reason is that this dumb move can cause havoc on airline flight forecasting systems when people start throwing away return tickets in decent numbers. But if they are that dumb, they probably deserve it.

In closing, just remember, "it's hard out there for a jet" (sing-it-along yourself to "it's hard out there for a pimp." I haven't written the rest of my parody...)

Travel Bug: It's back - the minimum stay [NY Times]