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United, Orbitz sue 22yo entrepreneur over ‘hidden-city ticketing’ search engine

United, Orbitz sue 22yo entrepreneur over ‘hidden-city ticketing’ search engine
A major US airline and its partner travel website are suing a small start-up founded by a 22yo which helps travelers ‘hack’ airfares by finding so-called ‘hidden-city’ fares. United Airlines and Orbitz are seeking $75,000 in damages from lost revenue.

Skiplagged, founded by Aktarer Zaman, works by looking for deals where it is cheaper for a person to buy a ticket with a layover in the final destination. For instance, if you wanted to fly from Washington, DC to Charlotte, North Carolina, it may be more expensive to purchase that route than if you bought a ticket from DC to Birmingham, Alabama with a layover at Charlotte Douglas International Airport and didn’t continue on the second leg of the itinerary.

Flights to or from ‘hub’ airports that are dominated by a single carrier ‒ for United, those include Boston, Massachusetts; Chicago, Illinois; and Denver, Colorado ‒ are 20 to 30 percent higher than at non-hub destinations. Prices are even more inflated when the trip involves a smaller city with a limited number of flights, according to the New York Times.

“Skiplagged is a travel website that actually saves consumers money on airfare by exposing pricing inefficiency among other things,” Zaman told RT about his search engine that aims to help travelers avoid bloated airfares.

READ MORE:US airlines lobby Congress to shut out cheaper European competitor

The Skiplagged.com was launched with the goal of helping consumers become savvy travelers, he wrote in a Reddit post asking for donations to his legal fund. “This involved making an airfare search engine that is capable of finding hidden-city opportunities, being kosher about combining two one-ways for cheaper than round-trip costs, etc.,” Zaman wrote.

“The first of these has received the most attention and is all about itineraries where your destination is a layover and actually cost less than where it's the final stop,” the note continued. “This has potential to easily save consumers up to 80 [percent] when compared with the cheapest on KAYAK, for example. Finding these has always been difficult before Skiplagged because you'd have to guess the final destination when searching on any other site.”

But United and Orbitz (a travel search engine that partners with airlines) took umbrage with what they deemed “unfair competition” from the start-up, filing a federal lawsuit against the 22-year-old from New York City last month. The two companies are seeking $75,000 in damages from lost revenue, claiming “Zaman has intentionally and maliciously used Skiplagged to damage [their] businesses."

“In its simplest form, a passenger purchases a ticket from city A to city B to city C but does not travel beyond city B,” according to the companies’ complaint. “‘Hidden City’ ticketing is strictly prohibited by most commercial airlines because of logistical and public-safety concerns.”

Screenshot from Skiplagged.com

Insiders have known about hidden-city ticketing for decades.

"This has been a dirty little secret of the travel industry for a really long time," Yahoo Travel Executive Editor Laura Begley Bloom told CBS News. "Then along came Skiplagged, and your average traveler suddenly knew about it."

Indeed, Michael Boyd, the president of an aviation consulting firm, told CNNMoney that, when he worked for American Airlines as a ticket agent 30 years ago, he was trained at helping customers find just those fares.

“I don’t think it’s illegal what he’s doing,” Boyd said.

While most airlines prohibit the practice and can exact retribution against customers who skip out on a second leg of a trip, there does not appear to be a law against it.

"Think about it; they could have flown you at a higher rate into that middle city and then booked somebody for that next leg too, so it's a revenue loss for them. If they catch you on it, they say that they'll freeze your frequent flier miles," Bloom said. "They might not let you book tickets in the future; they might not let you take a return flight. It's really pretty threatening."

American Airlines, in a recent sample letter to travel agents, only called the practice “unethical,” not illegal:

Purchasing a ticket to a point beyond the actual destination and getting off the aircraft at the connecting point is unethical. It is tantamount to switching price tags to obtain a lower price on goods sold at department stores. Passengers who attempt to use hidden city tickets may be denied boarding, have the remainder of their ticket confiscated and may be assessed the difference between the fare paid and the lowest applicable fare.

Zaman told CBS News that he does not make any money on the site ‒ it only provides information without actually booking flights, he said. But Orbitz called his statement “disingenuous,” while United told CBS This Morning that the airline was trying to "protect the vast majority of customers who buy legitimate tickets."

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The statement of claim said that “Zaman’s acts interfere with and jeopardize Orbitz Worldwide’s travel agency agreements with major airlines, from which Orbitz Worldwide earns well in excess of $75,000 in revenue annually."

In some ways, the lawsuit may have backfired, bringing more attention to the small site than it would have had without United and Orbitz’s legal action.

“If you're trying to use the site and get no results or the prices seem too high, that's because Skiplagged is over capacity for searches. Try again later and I promise you, things will look great. Sorry about this,” Zaman wrote.

The computer whiz is aiming to raise $10,000 for his legal defense fund through crowd-funding website GoFundMe.