So, United’s not honoring the four mile awards to China…

Unfortunately I was driving home from Miami last night when the news hit that United wouldn’t be honoring the four mile pricing glitch they had to China over the weekend, so I realize I’m a bit late tot he game here. My mom always taught me not to text and drive (though she hasn’t told me I can’t email or blog), so I decided to listen to her in this instance.

UA Insider posted the following statement last night on FlyerTalk and Milepoint:

Hi Everyone, over the weekend, we discovered a united.com programming error that allowed customers to obtain Mileage Plus travel awards to and from Hong Kong for as little as four miles roundtrip per person, substantially below published levels, which we disclose to customers. We have since corrected the error and will be in contact with customers who have tickets issued at the incorrect award amounts. Customers will be given the choice to redeem at the correct mileage amount or re-deposit their award with all fees waived. We regret any inconvenience this has caused you, and appreciate your understanding.

Shannon Kelly
Director, Customer Insights
United Airlines

Let me start by saying that I don’t think any of us are (realistically) “out” anything here, so I’m hardly in the “we deserve 50,000 miles compensation” camp. I think a lot of people get in on these deals in part because it’s fun to be part of these. It’s always exciting to see how the airlines handle them, and if they honor them it makes for one hell of a story 10 years down the road. If you’re the type that easily gets worked up and needs immediate closure, mistake fares probably aren’t your thing.

With the above in mind, here are some thoughts and outstanding questions:

Clarification on the DOT rules

Obviously for many people this isn’t over, and I’m sure we’ll see plenty of arguing back and forth, maybe threats of lawsuits, and possibly even a lawsuit or ten. In my last post on this pricing glitch I posted about the new DOT regulations, which in part read as follows:

Therefore, if a consumer purchases a fare and that consumer receives confirmation (such as a confirmation email and/or the purchase appears on their credit card statement or online account summary) of their purchase, then the seller of air transportation cannot increase the price of that air transportation to that consumer, even when the fare is a “mistake.”

A contract of carriage provision that reserves the right to cancel such ticketed purchases or reserves the right to raise the fare cannot legalize the practice described above.

In a way this situation is the first of it’s kind since the new rules, so it would be great to get some clarification regardingthe regulations as they apply to award tickets. Confirmation emails were received and for the most part credit cards were charged for the taxes, so that does seem to meet the above guidelines. The question is whether the DOT regulations apply to award tickets, and also whether the above guidelines only apply to raising the cost of tickets or also apply to outright canceling tickets.

Clarification on United’s stance on honoring “mistakes”

A Wall Street Journal article from a while back cites both United and Continental as saying they honor mistakes, no matter how large the error:

UAL Corp.’s United Airlines, Continental Airlines Inc., Southwest Airlines Co., JetBlue Airways Corp. and Singapore Airlines C6L.SG all say their policy is to not cancel tickets even when a mistake is discovered, no matter how large the error.

“That is the right thing to do,” says United spokeswoman Robin Urbanski. In 2007, United honored a business-class fare from Los Angeles or San Francisco to destinations in New Zealand that was missing one zero: it was sold as $1,062 plus taxes and fees instead of $10,620 plus taxes and fees.

While there’s a “new” United, it’s interesting to note that both Continental and United had this stance, so it seems like the new airline would have the same, no?

When will members be notified?

In the world of mistake fares, with each passing minute of not hearing from the airline, the chances of the ticket being honored go up substantially. While United has posted a statement on FlyerTalk/Milepoint, that doesn’t really qualify as contacting members. It has now been 48 hours, and I don’t think most people have been contacted by United yet.

What happens to those that already flew?

The most interesting aspect of this has to be those that booked a ticket for a same day departure and have already flown on their tickets. What happens to them? Will United just deduct the miles from their account? What if they don’t have enough miles in their account? Will they cancel the return portion of the ticket if they’re presently in Hong Kong? Now that’s a sticky situation.

Playing armchair CEO — what I would have done

If you got in on the deal, chances are your “solution” is United honoring the fare and creating “goodwill.” But I put quite a bit of thought into what I would do if I were United. I came up with 100 different solutions, and most of them just didn’t put United in a “winning” position. So I thought of what would make United look good and at the same time cause most people to voluntarily cancel their tickets, which I suspect is what they want.

I suspect that most people that took advantage of this deal booked several tickets. And I suspect that a vast majority of them did so because it seemed like a fun way to fly first class to Asia for a weekend, at least for those people that ticketed 10+ reservations. So from United’s perspective I think it would have made sense to honor the tickets, but only for coach travel. I’d be willing to bet it would cause 90%+ of people to cancel their reservations, and at the same time it would’ve made United look good. The average consumer reading a new story about this would think United is an “airline of their word,” while a vast majority of people that got in on the deal would have canceled. Again, it just seems like it would have mitigated the back and forth on their part, since they would at least give the consumer an option.

Anyway, while it’s over for me, I suspect it’s far from over for some, and I’ll certainly be sitting on the sidelines with my popcorn seeing how it plays out.

Comments

  1. I guess those who already flew may be given the benefit of being quick and forgiven…

    For others, United Bless Them!

  2. “I think a lot of people get in on these deals in part because it’s fun to be part of these”

    IMO those that weren’t doing it for fun are probably taking this “game” too seriously.

  3. I like that solution. Honor the tickets, but in coach only. AND if you cancel, United will give you 4 miles per route as a gesture of goodwill. 😉

    Those that throw a hissy fit on FT and elsewhere about United not honoring this have some serious entitlement issues.

  4. I am not at all upset by what United posted yesterday. It’s what I expected. I am disappointed as a free trip to Hong Kong would’ve been sweet.

    I won’t be canceling this myself though. I will wait until I am contacted directly by United. So far, nothing has changed as far as I’m concerned. I am still ticketed.

  5. @ Albert — Typically the faster they correct the “mistake,” the easier they can reasonably make the claim it was an error and doesn’t need to be honored. Similarly United has a 24 hour cancellation policy for consumers. If I call back a month later and say “oops, I booked for the wrong date and need to make a change,” chances are they wouldn’t have any sympathy.

    If a consumer isn’t contacted after a month, for example, I think they can reasonably make the assumption that the deal is being honored and they can move forward with their travel plans.

  6. United honoring those tickets would have screwed up Star Alliance inventory for months. They’d probably raise prices on the remaining fares to compensate.

  7. We would have been quite happy riding in coach if it means a free trip. People get way too worked up over what seats they sit in. The real thing is that you get to see another part of the world. What’s a little mild discomfort. Just take a nap when you get there.

  8. I don’t think United owes anyone anything. This is akin withdrawing thousands of dollars in your bank account that the bank mistakenly put there. You don’t deserve the thousands in money or the free F, C, or Y ticket. United does not have to worry about “goodwill” here. No one will be deterred from flying United because of this. And honestly, from the non-FF types that I have talked to about this, the people who are demanding compensation are one big fat joke. It is time some people on FT and on the blogs recognize that the FF world is a bit of a bubble/echo chamber. HEADLINE: “FF DEMAND FREE TICKETS TO HK BASED ON GLITCH”.

    On the legal side, I don’t read the DOT provisions as applying in this case, since you aren’t giving anything to United here (the miles are owned by United in the first place), so no consideration given, notwithstanding the fact that the provisions don’t give the right of private causes of actions, etc. This case will be laughed out of court based on the doctrine of unilateral mistake. While I am not strictly a transportation lawyer (but a lawyer who works with contracts), I do feel that this instance is different than a fare mistake. United publishes an award chart plain for everyone to see. This CLEARLY was an error, unlike a mistake fare. If you are fighting this, go ahead and good luck to you. You will need it.

  9. Why would United honor the tickets in coach when those tickets are also $1000+? I bet most people who booked trips would take at least 1 of them. Think of it this way, if United had priced only coach tickets for the same 4 miles (plus fees), how many people would have booked those too? Just because someone will only take 1 out of 10 trips that they booked doesn’t mean that that is a “fair” outcome to United.

    I understand that everyone wants to get an incredible deal on a trip to China, but don’t pass off honoring the tickets in coach as a good result for all parties.

    And I don’t see United losing any public goodwill for not honoring what is undeniably a website pricing mistake. Anyone who did not make any bookings is not going to change their minds about United because it refused to basically give away first class flights. And anyone who did make the booking is not suddenly going to choose another airline (anyone savvy enough to have tried this is by definition someone looking to maximize value and will go with the best value regardless of whether its United/AA/Delta/USAir).

  10. Funny thing is I just found out I HAVE to fly out this afternoon for a business trip. Not only is the website down, but phone reservations as well. United is forcing me to fly American Airlines!

  11. I thought about this as well, what United could do, and I certainly agree (1) non-changeable (2) one trip only.

    The problem of honoring for coach travel is that some of the awards are booked on partner flights where coach award space may not be available.

    My variation on this was to say that awards booked in saver/partner reward inventory would be honored as-ticketed. But award trips booked in United standard/easypass inventory would be honored in economy.

    The downside is of course the reworking of itineraries, one at a time, which is labor intensive — to flag each one for no changes, to downgrade folks on United metal in standard booking classes down to standard (or saver) coach.

    But it’s the only way I would have honored it, in United’s shoes, without a pretty firm belief that the government would come down with a hammer more costly than honoring if they didn’t. I suspect, for what it’s worth, that United was likely in touch with the Department of Transportation over this which may have delayed their response somewhat.

    It would be nice if they’re going to flat out cancel for them to provide a $150 voucher for future travel, since after 24 hours if we wanted to make changes on a ticket we booked we would be on the hook for a $150 change fee…. 🙂

  12. All this scheming about how to get something for nothing — it’s what made this nation great!

  13. My suggestion would be that United give a 10% rebate of the “normally” required miles to those that cancel. United gets to use miles as compensation and the affected consumers get something of perceived value. Just a thought ——–

  14. Ben, it is interesting to see what happens to the people that flew already. I asked my cousin who in fact is a contract lawyer and said this about the people that booked and flew the same day:

    “Now, the people that already flew have a defense of estoppel, they relied on the offer and used it, if the company rescinds, it will be to the economic detriment of these customers who have already relied on the offer.”

    Had I known this, since I’m based in CT/NYC I should have booked a BDL-EWR(stop) on the same day I booked it and fly JFK to HKG when I really wanted to fly, but it irrelevant now.

  15. “All this scheming about how to get something for nothing — it’s what made this nation great!”

    People should see this scheming for what it is: greed.

  16. Jonathan M’s ATM analogy is spot on.

    Another thing about DOT regulations is that they don’t exist in a vacuum. There are principles of interpretation that are intended to avoid absurd results. The obvious purpose of the regulation is to protect consumers’ reasonable expectations, a purpose that would not be served by requiring the airline to sell round-trip international first class tickets for 10 cents.

  17. Frequent Flyer University said “Flying Coach to Hong Kong on United would be a punishment, not a reward!”

    Are you really that spoiled or are you just pretending to be spoiled?

  18. “All this scheming about how to get something for nothing — it’s what made this nation great!”

    And the GOP…

  19. Yeah agree with Jonathan M. here. There is probably more to the DOT regulations that would establish that “fare” is something paid with money. If not, courts typically will reject absurd interpretations. Furthermore, on a pure contract law basis, it’s not like anyone who booked this didn’t know that 4 miles for a ticket to HKG was not the right amount so the purchaser would probably have to bear the burden of the mistake.

  20. For those of you bummed about this, there might be some hope according to this article in USA Today:

    The department says that if a consumer buys a ticket and receives confirmation of the purchase either though an e-mail or on a credit card statement, “then the seller of air transportation cannot increase the price of that air transportation to that consumer, even when the fare is a ‘mistake.’ ”

    Bill Mosley, a spokesman for the Transportation Department, says that the department is looking into several complaints it received about the frequent-flier tickets. He says the new rule would apply to frequent-flier tickets, “particularly when they also entail cash payments.”

  21. Well in that case, maybe, since the DOT would probably get deference in interpretation of its own regulations. That said, none of these entailed cash payments towards the fare itself. They were the typical fees and taxes assessed for all tickets.

  22. Not true. I had a $75 charge attached to my ticket for booking in less than a week’s time away.

  23. Glad to see UA cancel these, as it would have caused serious issues with not only award/upgrade availability, but even revenue seat availability for months to come. It was clearly a mistake, the published award rate was included in the booking process, and they do not owe anyone anything.

  24. I purchased 3 tickets, and paid $60.80 for each ticket total $182.40. It was pending until yesterday, but it shows completed now.
    I thought they are going to cancel these charges, but i guess not.

  25. It is really sad if people would turn down a nearly free trip to a destination as great as Hong Kong just because it is in economy. If the flight is the only thing that matters why even call it travel? Masturbatory transport, perhaps?

  26. To your comment that if the ticket was honored only in coach that 90% would cancel – FAR from the truth! I bet a majority would keep the reservations! Remember to crank your head around on your next flight – the majority of the plane is in Y – lol. I am still of the opinion that United doesn’t owe anyone anything as no rational person believed this was a real fare at practically zero cost.

  27. United is a publically traded company so it would be tough to answer to their shareholders if they honored the deal and entirely. If they decided to honor the deal on a standby only basis, I think that would be fair.

  28. There is no way United should honor these tickets. For that matter, all this talk of allowing people to go in coach or giving people miles or whatever is nonsense! “Here is your money and miles back Mr. Customer, sorry for the mistake and confusion. We hope to see you on a flight soon.”

    United should have come out a little stronger and faster with their response. There is nothing wrong with trying for it and kudos to the people who already flew!

  29. GoBears! I think that United should honor those tickets,
    the buyers payed the $$ and the miles United asked for, there was no wrongdoing on there part.
    As a side note I think stockholders should ask “why you keep screwing up?”

  30. I got contacted by UA Beijing yesterday.I was given 2 exactly choices as Shannon mentioned in her post. I didn’t accept any proposal they provided. And she agreed to not make any change on my reservation and just keep it as what it is. She also mentioned that there will be someone from UA US to contact me in a few days.

  31. And I agree, regardless of how big or small the “error” was, I think United should come out with something like this:
    “While we’re sure this was a great deal for customers, it was inadvertent, and we took a big loss (over $XX million – ouch) selling so many items so far under cost. However, it was our mistake. We will be honoring all purchases that took place on XXpm.com during our mess up. We apologize to anyone that was confused and/or frustrated during out little hiccup and thank you all for being such great customers. We hope you continue to Shop. Save. Smile.”
    This is taking for a press release a company put out after a similar computer glitch”

    I don’t have any of those ticket, and these are my 4 cents or 4 miles.

  32. @cane
    Nobody was confused, and the only people that were frustrated were those that were rightfully charged the full price or who couldn’t get in on the deal.
    Every report I’ve read says that the people who had enough miles for the reward were shared the proper amount. Those who didn’t have enough miles were not charged the 4 miles. I can’t see how in the world you can understand it to be full payment when you haven’t paid the airline a cent/mile/anything (and the fare was not 0).
    @Phil: I don’t get why people keep bringing up this 2010 quote. United has changed. Their policies have changed. Why is this any different?

  33. @ Kris Ziel-
    Actually the fare was $0 according to the receipt for the ticketed Hong Kong trip and it usually says that on all the award receipts.

    That’s the kicker, the airlines say that FF miles have no cash value and that the fare is $0. The airline makes the transaction at $0 plus fees, taxes, etc. The exchange of points is an internal transaction that occurs within the Frequent Flyer program that is wholly owned by airline (not the consumer). However, once the consumer has been ticketed and paid the proper money (see below) then the consumer is now a passenger and protected by the regulators.

    Example of a Frequent Flyer ticket/receipt to Hong Kong:

    Fare Breakdown
    Airfare: 0.00 USD
    U.S. Customs User Fee: 5.50
    U.S. Immigration User Fee: 7.00
    U.S. APHIS User Fee: 5.00
    September 11th Security Fee: 7.50
    Hong Kong Airport Passenger Departure Tax: 15.50
    Per Person Total: 40.50
    USD
    eTicket Total: 40.50
    USD

    As for the 2010 quote, it was the policy of United then, and the policy of Continental then. The new United has never said they would not honor purchased mistakes of this nature (except for that posting in Monday’s flyer blog which is worded strangely-they said “obtained” not “purchased”).

    When those two airlines became one, why would they change that policy without telling anyone? It’s even the same person/leader who made that unequivocal quote.

    United gets the credit for having a consumer friendly policy (which is why I thought these tix are and evidently continue be valid since folks are flying right now). But what good is the policy if they temporarily suspend it when the going gets tough?

    At first blush, it might seem crazy for the regulators to enforce the validity of these extra-cheap airline tickets that were purchased. However, what will be even crazier is for the regulators to set a new precedent by saying that fully booked and ticketed (and paid for with $$) passengers are not covered by these protections because the tickets issued had something to do with a frequent flyer program.

    This is a precedent setting mistake that should make all airlines invest more in their IT systems. If United honors these tix, then they will eat some of the savings they have incurred by being such cheap skates with their IT.

  34. @ Phil: That’s an impressive post, and I think it summarizes a lot of what may be going on behind the screen… And why no action is going on yet. Everyone’s got loads of opinions, but when you take the price (4 miles + fees) out of it, the regulatory issues and precedence setting of this occurance remain… And in the end, those are much larger than the price itself. It makes this interesting as we are watching a small piece (well, a large piece for frequent travelers!) of history sort itself out.

  35. While I for one didn’t get in on this deal, I have been following it closely. I have one thought…

    Perhaps UA is attempting to scare those that “bought” the tickets into some sort of settlement – hence the phone calls. It’s possible their lawyers said “if a passenger is ‘encouraged’ to give up the reservation, great. Otherwise pull have to honor them. That is, unless you want to eat the fines of (up to) $27,000 (per ticket).” To that point, I suspect UA is trying to “scare” as many of the unsuspecting pax as possible. I guess it’s better than letting them all fly, right?

    Any chance there’s truth to what I’m saying?

    *This is not based on any factual evidence. This is purely my opinion. Despite UA’s “official” stance, I still wish I had gotten in on it 🙂

  36. My wife and I booked a single R/T from the US to Hong Kong on United metal during the…unintentional promotion. We only have about 3,000 miles in the account. As of now, we’re still ticketed (and only about 3 weeks out.)

    I’m a little surprised we haven’t heard a peep out of United if they’re actually going to cancel these.

  37. An article on this issue which quotes Lucky:

    http://news.yahoo.com/battle-over-33-flights-hong-kong-200052930–finance.html

    And a nice quote as well (from somebody else):

    “When a waiter adds up the check wrong in my favor, I let him or her know. When a clerk hands me back too much change, I give it back,” said George Hobica, founder of AirfareWatchdog. “These fliers knew that this was a mistake, and they should treat an airline the same way they treat any other entity.”

  38. So ya, they just started cancelling the tickets now apparently, mine was cancelled in the last 30min.

  39. Hmmm…if I paid the published amount and was later involuntary downgraded to coach, I would expect a full refund of all miles and fees paid…well……seems like a good place to start. They could also have the courtesy of being notified in advance, giving them the opportunity to back out. UA would still be honoring the TRAVEL..just in a different class of service than booked.

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