Phantom flights | The Economist

September 15, 2016

To understand how this peculiar situation can come about, suppose you wanted to get from Atlanta to Cincinnati on February 6th. Delta is the only airline that flies direct between these cities, and this week the lowest one-way fare it was offering for that date was $251. However, Delta was also offering flights from Atlanta to Dallas with a stop in Cincinnati for just $197. Why? Because two other airlines also fly direct from Atlanta to Dallas, so price competition on that route is especially fierce. However, there is little to stop those wanting to go from Atlanta to Cincinnati from reserving an
Atlanta-Cincinnati-Dallas trip for $197 and simply ending their journey at the “hidden city” in the middle of their booking, saving $54.

Phantom flights @Skiplagged selling tickets A=>C w/ stop at B which are less than just A=>B; perverse incentives!