The Brancatelli File



April 15, 1989 -- Buying low-priced airline tickets through the “gray market” is riskier than ever thanks to measures taken by some major airlines.

Intent on eradicating all or part of the market—in which travelers can purchase tickets for up to 70 percent less than the airlines lowest published fares—the carriers have put heavy pressure on some cut-rate firms and sued others. They’ve also made many types of gray-market tickets difficult to use. And a few airlines now confiscate some such tickets. “It’s a treacherous time to dabble in the [gray market]. It’s not for the timid,” advises one cut-price broker who closed after a threat of legal action by a major domestic airline.

For the uninitiated, the gray market is an amorphous collection of middlemen, travel agents and brokers who use an array of ticketing strategies to undercut published airline fare. Some of their methods are illegal; they just exploit quirks in ticketing restrictions.

Here’s a brief rundown of the major gray=market offerings currently available.

Consolidator Tickets: Airlines often have excess seats, so they sell blocks of tickets at wholesale prices to middlemen called consolidators, who then resell seats to travel agents or travelers at cut-rate prices. Technically the airline violates U.S. law by dealing with consolidators, but recently the Department of Transportation said it wouldn’t enforce the statutes because it believes consumers benefit from the practice. Consolidator tickets are the safest gray-market bargain—especially if a travel agent deals with a consolidator on the traveler’s behalf—but they’re larded with small inconveniences. The worst is their nontransferable status: other airlines won’t accept a consolidator ticket if the original flight is delayed or canceled. Some airlines, notably Pan Am, have tried to deflate the consolidator market by selling very low-priced tickets directly to travelers through travel agents. But consolidators have responded by lowering their fares even further; at press time, some offered East Coast-Europe tickets for as little as $250 round-trip.

Bonus-Program Tickets: Frequent flyers sell mileage-award coupons to brokers who cash them in for free first-class tickets to popular destinations, then sell the tickets to leisure travelers at a deep discount. This option is getting riskier because the airlines, encouraged by some court decisions upholding their right to prohibit the sale of award coupons, will now void a brokered bonus ticket if they learn its origin.

Hidden-City Tickets: Because airline prices aren’t based on the distance traveled, it’s often cheaper to fly farther. A recent example: American charged $588 for Flight 10, the red-eye from Los Angeles to New York’s JFK. Yet it cost only $308 to fly to San Juan, Puerto Rico, from L.A. If you took Flight 10 and changed to Flight 677 at Kennedy Airport. Travelers could buy the Los Angeles-San Juan ticket but get off in New York—a subterfuge known as the “hidden-city strategy.” This game sounds better than it really is. Often the airline cancels the return reservations of travelers who don’t complete each leg of a trip. And you can’t check luggage since the baggage handlers aren’t in on your secret.

Cross-Border Tickets: Some travelers take advantage of exchange rates and Byzantine aviation agreements by lying about their departure city. At press time, TWA charged $695 for Flight 801 from Paris to New York, which originates in Cairo. Yet because the Egyptian pound is weak against the dollar, it cost 32 percent less ($527) to take Flight 801 from Cairo to New York. A traveler cold buy the Cairo-Paris-New York ticket but board Flight 801 in Paris. But beware: a Dutch court recently upheld KLM’s right to deny boarding in Amsterdam to a woman using a cross-border ticket to Ghana.

This column originally appeared in Travel & Leisure magazine.

Copyright © 1989-2013 by Joe Brancatelli. All rights reserved.