The Death of Mistake Airfares?

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Earlier this week I went into a clothing store and picked up a cute winter shirt on clearance for my daughter to wear next year.  At the register the shirt rang up for more money than the tag indicated, and when I pointed out the discrepancy, the manager was called over and told me that unfortunately the shirt (and all others like it) was mis-marked and it wasn’t for sale at the lower price.

At this point she could have stuck to her guns and refused to sale the shirt to me at the lower price since it was a “mistake”, or she could decide to make an exception and take a few dollars loss (if it even was a loss) to sell the shirt to me at the lower price since it was the store’s error that the incorrect price was displayed.  Other than perhaps annoying me as a customer, there would be no negative repercussions to the store if they decided to not honor the price mistakenly marked on the shirt.

In the end they did honor the lower price, but for various reasons the airline industry hasn’t had the same flexibility to decide to not honor prices that are mistakenly displayed and purchased for air travel.  If someone accidentally “fat fingers” an airfare to be $100 instead of $1,000, and travelers purchase the $100 fare, then in the United States the airlines have pretty much had to honor those $100 tickets for the past several years.

Via a quick history lesson (taken largely from here), in April 2011 the Department of Transportation issued a final rule enhancing airline passenger protections prohibiting airlines from increasing the price of air transportation after a purchase has occurred.  Then in June 2012, the Enforcement Office issued a FAQ response that said that the purchase price rule applies to “mistake fares” if the confirmation of purchase is sent to the customer and the purchase appears on the customer’s credit card statement or online account summary.

In May 2014 the Department of Transportation issued a notice that they were considering revising the post-purchase price provision to better address mistake fares, in part because of how quickly mistake fares are shared on the internet, thus resulting in purchases made in “bad faith”.  In other words, purchases that were made solely because the price was clearly lower than normal.  The comment period for this notice closed in September 2014, and the DoT is still reviewing comments.

Then just yesterday the Department of Transportation announced that:

The Assistant General Counsel has decided not to enforce section 399.88 with respect to mistaken fares while the Department completes the aforementioned rulemaking process. As a matter of prosecutorial discretion, the Enforcement Office will not enforce the requirement of section 399.88 with regard to mistaken fares occurring on or after the date of this notice so long as the airline or seller of air transportation: (1) demonstrates that the fare was a mistaken fare; and (2) reimburses all consumers who purchased a mistaken fare ticket for any reasonable, actual, and verifiable out-of-pocket expenses that were made in reliance upon the ticket purchase, in addition to refunding the purchase price of the ticket.
These expenses include, but are not limited to, non-refundable hotel reservations, destination tour packages or activities, cancellation fees for non-refundable connecting air travel and visa or other international travel fees.
The airline may ask the consumer requesting out-of-pocket expenses to provide evidence (i.e. receipts or proof of cancellations) of actual costs Incurred by the consumer.  In essence, the airline or seller of air transportation is required to make the consumer “whole” by restoring the consumer to the position he or she was in prior to the purchase of the mistaken fare.

I’m sure the airlines are thrilled with this development, and as a consumer I do understand to a degree that a company shouldn’t be on the hook for millions of dollars of losses stemming from a legitimate error.  There’s no doubt that these mistakes do spread like wildfire on the internet, so instead of a few dozen people perhaps stumbling across the low prices, there can be thousands of purchases made in a very short period of time.

Of course in the days of $99 flights to Europe, and pretty regular $19 airline sales, it can truly be hard sometimes to tell a mistake fare from a legitimate fare sale, though sometimes it is pretty obvious when a mistake has occurred.  I have booked a couple of mistake fares in my time, but for the most part mistake fares do not make-up a large portion of my travel patterns.

Contrary to the advice I have read a few other places, I would not recommend trying to take advantage of the current notice’s wording and make non-refundable expensive hotel and connecting flight reservations as quickly as possible surrounding the next mistake fare, as that will just surely lead to a further clamping down that can impact legitimate purchases made by customers in good faith…and it just feels icky to be personally.

That said, airlines have no problem saying tough luck if I accidentally purchase the wrong flight, so I’m in no way siding with them totally on this mistake fare issue, but I also don’t feel it is “my right” to fly around the world in first class for $100 just because someone accidentally leaves off a zero or two.  I mean, I would like to be able to take advantage of such a low price, but I’m not going to lose sleep and file complaints if it doesn’t work out that way assuming the airline acts quickly and reasonably to rectify their error.

No matter what your opinion is of mistake fares, I think it is pretty clear that this is likely a big step on the way to the death of mistake airfares.  There are lots of questions still to be answered, but my bet is on mistake fares being honored much less going forward.

 

Thanks to One Mile at a Time for sharing the new Department of Transportation notice. 

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Comments

  1. I think airlines will really only be able to use the mistake fare excuse if they are off by one digit in the filing. And with the airlines being required to make consumers whole, people acting in super bad faith will go book super expensive everything nonrefunable so airlines have to honor the mistake or pay for their vacation sans flights.

  2. “Super bad faith” (kris) is a good turn of phrase … this topic really picques my curiosity as my own interest in investigating better ways to travel (miles, points, etc) stems from a modest “mistake fare” wherein a return from Beijing some years ago was in business and the price (almost 3k still) seemed to be well below anything else comparable, and a travel agent at the time advised me to grab it before the airline fixed it … no idea if it really was a mistake, but there’s a world of difference between booking something like that, and booking the nutty $ 50 europe to the US in first class fares that came up a month or two ago and have been a point of discussion. It’s one of the first times I was kinda embarrassed to be part of the miles and points community.

  3. It is extraordinarily rare to “fly first class for $100” or anything close to what you listed, which is why I feel some people are excessively promoting airline ability to have carte blanch to do as they feel with no regulation.

    I think that sometimes it looks like airlines are doing consumer research with some of these fares. As a marketer myself I really think that they do this, then cancel to get note information they wouldn’t have on travel purchases, routes, and the like. Which is why I am all for them having to pay through the nose for holding consumer money then sagging “nah, never mind”.

  4. Your anecdote is not analogous to a mistake fare. Airlines certainly have the ability to change the price before you book. Since most OTAs cache airfares it is not uncommon to see price $x on Kayak but once you click through and start booking have the price jump to $y.

    A better analogy would be that the store sold you the shirt for the lower price and then (hours, days, weeks…) later came after you and said that if you wanted to keep the shirt you needed to pay a higher price.

    I don’t doubt that the DoT will change the rules so that airlines can get off the hook, but it has nothing to do with fairness and everything to do with campaign money.

    • It’s not exactly the same, but the retailer had an opportunity to identify it was a mistake and decide to not honor the price so that decision making process by a human is what I’m getting at.

  5. The 24 hour rule should apply to both consumers and airlines. After 24 hours, both parties should have to live with their mistakes.

      • I also think that a 24 hour rule would be fair. I’ve never flown on a mistake fare, and likely never will… I’m just not that impulsive and our lives aren’t that flexible. But I feel like there should be a solution that protects consumers and airlines fairly. Neither forcing the airlines to honor every mistake, nor allowing them to change their minds way down the road does that.
        I also wholeheartedly agree that with crazy low fares advertised, it’s not always obvious what is or isn’t a mistake.

  6. It seems to me this must be only an interim guideline. I don’t think it’s a very good solution if DOT doesn’t want to be barraged with tons of complaints about “reasonable, actual and verifiable out of pocket expenses.”

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