American Airlines earns $9.4 million from “Skiplagged” website that exploits the airline’s business model

A federal jury in Texas has awarded American Airlines a massive sum of 9.4 million dollars in a lawsuit against the website Skiplagged.com, a website that helps travelers find cheaper flights by booking connecting flights and then skipping the continuation flight to the final destination.

The airline industry dislikes Skiplagged, despite there being nothing technically illegal about the practice it promotes. Last week, the court ruled for 4.7 million dollars in Skiplagged’s revenue based on estimated lost fares and another 4.7 million dollars for copyright infringement, as they were canceling American Airlines flight schedules in violation of the airline’s terms of service.

As of today, Skiplagged still reroutes prices and routes from American Airlines. It is unclear if that will change. We have reached out for comment.

Most airlines explicitly prohibit skipping – an effective exploitation of airlines’ business model – and use technology to try to catch when customers are doing so. Travelers have been banned from some airlines for years after being caught.

The concept of skipping – and why airlines hate it – is somewhat complex to understand. Let’s assume you want to travel from Boston to San Francisco, and a search on Google Flights shows direct flights for 300 dollars. Instead, you could book a flight from Boston to Sacramento with a layover in San Francisco for 199 dollars. Essentially, what Skiplagged does is uncover the “hidden” flight path that takes you to San Francisco for 100 dollars less. All you have to do is book a flight to Sacramento, and when you land in San Francisco (your actual intended destination), simply exit the airport and skip the continuation flight.

It seems counterintuitive – why would traveling to San Francisco and then taking another flight to Sacramento be cheaper than just flying to San Francisco? Essentially, major airlines operate on a model where direct flights between every city would not make sense – how many people actually want to travel from Boston to Sacramento? So, for efficiency, airlines use major cities like San Francisco as central hub connections for flights to other less demanded destinations. The airline charges a fee to the passenger based on demand to Sacramento, and offers a discounted fare to ensure filling those seats to Sacramento and at least some revenue. The airlines also feel they can charge higher fees for direct flights due to passenger convenience factor.

But skipping disrupts the business model. In the case of skipping, airlines use algorithms to estimate the number of passengers who will skip their flight, and deliberately overbook the flight to generate additional revenue. The airline earns revenue from the passenger who misses the flight, and additional revenue from another person who took up this seat. When a passenger disembarks at the first stop of the flight, they must assume that the passenger will also take their continuation flight and cannot overbook this seat. This is the potential remaining revenue on the table for American Airlines.

It’s hard to sympathize with airlines in this case. Anyone who travels regularly knows how gate agents constantly beg passengers to change their flight when the plane is overbooked and many people show up. Airlines play games to maximize revenue to the max and frustrate customers, skipping turns the tables on them, giving some power back to the customer. But a judge decided that American Airlines’ terms of service against unauthorized extractions were clear, and Skiplagged decided to violate them anyway. It’s no different than the way AI companies have decided to ignore terms of service agreements to scrape content sites.

Luckily, you don’t actually need to use Skiplagged to find these fares. If you’re smart enough, you can do so using any other travel booking site like Google Flights or Expedia. Just don’t do it frequently on the same airline, or you might get caught. And remember you can’t check luggage using this method, as your bags will be sent to the final destination. Traveling light is better anyway.