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I've heard that it might be illegal for a reseller like lastminutes.com or tui.com to sell a ticket at a lower price than the one offered by the airline itself and that the company, if it finds out, can cancel the ticket and offer a refund.

Example: suppose there's a ticket with Alitalia from Rome to Tokyo at 600 Euros. Can a reseller apply an "online discount option" and sell it for 570 Euros (no matter how much the reseller spent to buy the tickets). I was told that they can't by a tour operator and I'm very skeptical about it.

Fact or Fiction?

[There may be different reasons of why a reseller wants or can sell a ticket at a lower price, but this is out of scope of this question]
[I'm also not talking about full packages that may include hotel and whatsnot. Just plane tickets]

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3 Answers 3

All depends on the contract between the reseller and the airline. Without knowing the details about those contracts, it's impossible to say anything whatsoever.

And remember that the price a reseller pays to the airline is often considerably less than the price they charge you, the end user. That's their profit. So they're often quite capable of offering you a ticket at a price below the list price charged by the airline when dealing with you directly, without selling below the price they pay to the airline for the same ticket.

That's also why package holidays can often be offered at a price that seems impossible when you add up the prices of each individual part (air fare, bus fare, hotel price, meals), the tour operator buys in bulk, often far in advance, and gets a big discount on the list price.
Which can sometimes end up giving you, the customer, an added advantage. For example a few years ago an airline changed their schedule after my tour operator had bought the tickets, resulting in me getting to stay another night in a great beach resort on their expense because the flight home was now a day later.

But yes, it's quite possible for a reseller to sell you something below the list price of the item without running afoul of any contractual or legal obligations, just by buying low from their supplier.

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You start by stating (quite correctly as far as I understand these things) that all depends on the contract and yet you end up concluding just the opposite, namely that it depends only on the price the supplier pays. Which is it? Do these contracts typically/often/sometimes also set minimum retail prices for naked flights? –  Relaxed Mar 4 at 13:41
    
@Annoyed no, he thinks that the price he pays from the reseller is lower and therefore "illegal". I show it's not, even if there'd be a contract that doesn't allow reselling at below the price the reseller pays. –  jwenting Mar 4 at 13:47
    
I don't know what “he” thinks but that's definitely not what my earlier comment was about. You now seem to be saying that the only thing that matters is the price the reseller actually pays (as opposed to some other minimum retail price that could conceivably be set by contract). That's not obvious to me and in direct contradiction with the beginning of your answer. Whether that's true or not seems to be the more interesting question. Do you have any actual information about that? –  Relaxed Mar 4 at 14:17
    
@jwenting That's not what I think. I'm fully aware of the fact they have agreements and so resellers can buy tickets at a lower price but that's not what I'm talking about. My question is: If an airline sells today a ticket Rome-Rio for 600 euros, can a resellers sell it a lower price (no matter of much the reseller actually spent on that ticket in the first place) –  Geeo Mar 4 at 15:45
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@Geeo clearly they can, and do. Whether a specific reseller has a contract allowing them to do so only the airline and that reseller know of course. But there's no law preventing it, unless there's a breach of contract and you can't tell that as you don't have access to that contract. –  jwenting Mar 4 at 15:53

In fact there is no direct contract between the airline and the travel agent (lastminute or other opaque booking site are also travel agents) regarding the price of flights.

Both have an agreement with a so-called GDS (Global Distribution System). It is not clear what exact terms of contract they use but overall a GDS connects with an airline to sell its flights and connects with a travel agent to distribute these flights.

In the contract with a GDS, you define the tools you want to access (as an airline or a travel agent), in particular the way to define the prices. For example the travel agent would want to access the opaque deals, some other good deals, or simply standard deals and it would cost a different price or some other conditions would differ.

I was unsure about the GDS handling also the opaque market but some article seems to confirm GDSes do.

So overall the price is not directly decided by the travel agent (even though they receive a fee on every booking and a possible extra fee that you pay at the end of your booking). It is the airline that actually offers a catalog of possible prices. And I cannot really imagine a travel agent selling a ticket for cheaper than it bought.

To add to it, this notion of "sale" (when items like clothes are sold for cheaper than the initial cost) comes from businesses that store the items they sell (so they have to get rid of all their items in the end). Travel agents do not "store" an amount of tickets.

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Usually airlines and such companies have an agreement between each other.

The real cost of ticket is lower that price you buy at airlines. This difference is a profit of airline company. Airline company may give a right to sell tickets to other companies like Tui.com and so on. Tui may add some additional cost to real price of ticket.

But this additional cost may be lower than additional cost from airline company. Thats why tickets may be cheaper in Tui than in airline.

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