American Airlines accidentally filed $0 fares in 31 different domestic markets on Tuesday. They caught it quickly, and didn’t ticket the fares. Here’s American’s internal memo on how the fares are being handled.
American Appears To Mislead Customers About Their Legal Obligations
American’s memo to its agents about these mistake fares appears to suggest their only legal obligation is to refund customers when there is a mistake fare. That’s not true. The Department of Transportation still requires airlines to honor mistake fares, except when certain conditions are met. Those conditions include refunding tickets and making them whole by covering other costs the consumer may have incurred in reliance on the sale.
In 2015 the Obama Administration’s Department of Transportation said it would no longer enforce its own rule that airlines had to honor all fares they sold and that they would promulgate a new rule in its place. No new rule was ever made. However they’ve just used their ‘discretion’ to ignore section 399.88 as long as the airline “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 offering a refund. Those expenses include “non-refundable hotel reservations, destination tour packages or activities, cancellation fees for non-refundable connecting air travel and visa or other international travel fees.”
Put another way, DOT says the airline has 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.”
American Is Reasonable In Not Honoring These Fares
My own view of mistake fares is that I’m happy to book them, airlines will choose to honor the deals or they won’t, but if they’re going to fly people to Paris for $28 I’d like to be one of those people. And I’ve always felt that if an airline acted quickly to say they weren’t going to honor a mistake fare – in this case, same day – then it’s reasonable for them not to do so. That’s at least the case, I think, where a fare is so obviously a mistake ($0 airfare plus taxes).
It’s often not so cut-and-dried. Late last year American Airlines matched a $479 roundtrip business class fare to Brazil that Delta was offering. That wasn’t exactly a mistake, though they wouldn’t have done it without Delta’s mistake. Still, if they’d claimed it was an error the DOT probably would have gone along.
Since DOT has promised a new rule (for 6 years, without action!), here’s a simple approach. In order not to honor a mistake fare:
- An airline should have to certify that they’ve made a mistake. A submission to the DOT certifying under penalty of perjury that the fare in question was indeed an error.
- The error must be obvious and egregious. If an airfare is an 80% or 90% discount from the lowest paid fare (inclusive of all fees and surcharges) sold on the route in the previous 30 days, and it wasn’t offered intentionally, it seems reasonable to accept that it was an error.
- The submission has to be made in a timely manner. Customers generally have the right under current DOT rules to put airfare on hold for 24 hours, or to cancel within 24 hours of ticketing. It seems like airlines should be able to cancel a mistake within 24 hours.
- They should communicate clearly with customers. Individually contact customers within 24 hours of purchase indicating that they’ve submitted to the DOT that the tickets in question were a mistake and won’t be honored.
Put another way, airlines should have to live under rules similar to consumers. It appears American Airlines meets the general conditions here, and I do think it’s fair for them to cancel these fares. Airlines aren’t always so prompt, and fares aren’t always to clearly mistakes.
As they shouldn’t have to.
Gary – so what is your position? You seem to act like AA should honor the fares or “make people whole” (I assume by paying any penalties for hotel and/or car rental they may incur) but later you state it is reasonable for airlines to not honor fares that they quickly identify (and you even mentioned that was the case with these $0 fares). IMHO no one should assume a zero fare is legit. That goes beyond the typical “mistake fares” and is obviously not valid. Also, the reservations weren’t even ticketed. I’m willing to bet anyone that tried to book them is already “made whole” since it is doubtful they jumped on other reservations and, if they did, most can be canceled for no penalty.
Again a click bait title and misleading narrative from you. It is REALLY sad to see how far this blog has fallen during COVID. May keep TPG, OMAT, Miles to Memories, etc but debating dropping you since you come across as a bitter, opinionated old man and that isn’t what I care to read!
@ac – my position is that AA clearly was reasonable cancelling these fares but they appear to be making a flase legal claim about their obligations – DOT requires covering traveler costs when dishonoring fares. That seemed clear in the narrative, no?
AA did not sell anything if they stopped ticket issuance very likely driven by software that flagged the fares as potentially erroneous. Zero dollar fares are much easier to catch than a greatly reduced amount.
Since ticketing confirmations are immediately sent, it is hard to believe anyone could argue that they incurred other expenses because of these mistake fares.
The DOT has said that it is not enforcing the regulation re mistake fares itself, but the regulation still remains in effect. That means that a private person can still enforce the regulation, e.g., in small claims court.
My take as a retired state attorney general consumer protection attorney is that under contract law, an advertisement is an invitation to the consumer to make an offer. When a mistake is made, there is no “meeting of the minds”, a required element in contract law, and the mistake does not have to be honored. It would be great if airlines would, but you can’t force them to.
I don’t see anything wrong with them not honoring the fair, but holy sh*t who the f*ck writes their customer service responses… Yah sorry we couldn’t honor this $0 fare, let me help you buy the ticket at the regular fare.. how about offer $25 good will vouchers for anyone that tickets the mistake fair at the correct rate?
“Would you like me to check what that ticket would price at now? If you do purchase a new ticket, we can offer you a $25 discount off the applicable fare as a goodwill gesture to acknowledge the inconvenience of our mistake.”
I mean something that says yah we fucked up and you might have missed out on a lower fare elsewhere.
@Art Weiss – The DOT doesn’t require airlines to honor mistake fares even when the offer is made and accepted (ticketed) and common law contract principles are often pre-empted by the Airline Deregulation Act, which then defers much rule-making to DOT..
It seems clear that AC is a disgruntled staffer from TPG mad at Gary for exposing their Amtrak lobbying-for-hire posts yesterday. TPG is a dumpster fire. OMAAT is the only good one of the three blogs he mentions. Miles To Memories has occasional good content but several writers have zero knowledge of the field.
My friend and I bought these fares. Their ticket got cancelled but mine is still showing as ticketed. Do you think I’ll get lucky and be able to fly?
Disgusting how AA can make a mistake and ignore the results without a second thought but let a customer make a mistake in booking and see how far they get in asking for a correction. Nothing but a raised middle finger in response.