Frequent flyers are abusing air miles to make redundant ‘ghost bookings’ — how their ‘low-risk’ hack for today’s travel chaos can hurt you

Flying to Asia? Flights through Dubai International Airport — considered a global hub and the world's busiest airport for international passenger traffic — are operating at reduced schedules. And tensions in the region mean flight schedules could change at a moment's notice.

But now there's another factor making it harder to get a seat on a plane: ghost bookings. A ghost booking is a travel hack used by frequent flyers to hedge against travel uncertainty.

"Using miles at a time like now is like low-risk insurance," Rob Burgess, founder of travel loyalty site Head for Points, told Bloomberg News. "They give you flexibility, and right now that flexibility is extremely valuable." (1)

While it's a low-risk strategy for frequent flyers, however, it can also hurt other travelers who don't have a cushion of airline miles to fall back on.

The impact of ghost bookings

Here's how ghost bookings work: A frequent flyer "hedges" against travel uncertainty by making multiple bookings with airline miles, credit card points or loyalty program rewards across different routes for the same trip.

Say, for example, a frequent flyer in New York is planning a trip to Asia in the fall. The fastest route is via Dubai. But to hedge against uncertainty in the Middle East, they book an award flight through Dubai, a second one via a longer trans-Pacific route and a third one via a multi-stop northern European route.

At the last minute, they pick the best route and cancel the rest. Or, if prices fall, they could also cancel their award bookings and pay cash to preserve their points.

This strategy comes with little to no risk for the frequent flyer, since award flights typically have minimal or no cancellation fees compared to cash fares, travel experts told Bloomberg News. Leigh Rowan, founder of high-end travel agency Savanti Travel, told Bloomberg that miles are now "an asset class" and that "risk mitigation is key."

But this comes at a price for other travelers. Ghost bookings throttle already-limited inventory — especially seats reserved for redemptions (since airlines typically set aside only a limited number of seats for award flights).

A decrease in seat inventory could cause an airline's algorithm to bump ticket prices, even if "ghost" seats later return to the pool. To hedge against last-minute cancellations, airlines might overbook flights, which can also create hassles for travelers.

And ghost bookings aren't just limited to flights.

Travelers might also make multiple overlapping reservations for hotel rooms, picking the "best" option at the last minute while getting a full refund for the cancelled rooms. In some cases, travelers do this just because some countries require proof of accommodation at the border to enter.

What you can do to minimize the effects of ghost bookings

Even prior to the war in Iran, some airlines had already been looking to reduce speculative bookings. Last November, for example, Etihad Airways introduced a 72-hour cutoff for award cancellations; outside this window, "value" awards are non-refundable.

Still, ghost bookings are increasingly common.

While you might want to take a wait-and-see approach before you book, travel chaos is likely to prevail at least in the short term. Even the lowest-priced economy tickets cost 24% more on average than they did a year ago, according to an aviation outlook from consultancy Teneo. (2) So you may want to prepare for higher prices and adjust your budget accordingly.

"It's very hard for the airlines to make predictions in this environment, so they're going to be conservative," Shye Gilad, a former airline captain who teaches at Georgetown University, told WSAV On Your Side. "And that's why it's likely that their prices will remain elevated for some time until things really stabilize." (3)

As a consumer, there unfortunately isn't much you can do to prevent others from engaging in ghost bookings. However, you can protect your finances from travel chaos by purchasing trip cancellation and trip interruption insurance, as well as by avoiding basic economy tickets (which are typically non-refundable and non-changeable).

If you're hedging against travel uncertainty, you may want to pay up for a standard economy ticket that allows you to cancel or change your flight for a fee. If you buy a refundable ticket, you could also cancel and rebook if you find a better price later.