Three Approaches To Mistake Fares, And Why They’re All Valid

I have a confession to make — my favorite part of mistakes fare is the adventure of it all, and not the actual fare.

A couple of nights ago American published a ~$450 roundtrip business class fare between Washington and Beijing. Most people probably surmised it was a mistake. But the DOT does have a prohibition on post-purchase price increases, which on the surface seems to protect consumers even in the case of mistake fares.

Is the spirit of the DOT regulation to “protect” consumers in the case of “obvious” mistake fares? Of course not. But in practice it seems to, at least as of now. Why? Because when you create laws, you have to draw a line somewhere, and that line can sometimes be very pro-consumer.

So what I enjoy the most about these mistake fares is the dialogue that comes out of them. And I think this fare has been an especially interesting one, because it was about as straightforward as we’ve ever seen. You went directly to the airline’s website, and the fare displayed. There was no “trickery” involved.

With that in mind, I figured I’d (as objectively as possible) sum up the three general sentiments people have when it comes to mistake fares:

“Screw the airlines, I’m filing a DOT complaint”

The first line of thinking, which seems to be the most popular, is somewhere along these lines (this is a comment a reader left yesterday):

People are defending a massive corporation who would bend everyone of us over and take our money if they legally were able to. All we are doing is playing their game. They made the game, and we are playing it. In my opinion, car rentals and airlines are from the two biggest scam businesses around.

Now, I think it’s worth noting that there’s a difference between just booking a mistake fare and actually filing a consumer-protection complaint with the DOT.

The DOT considerably liberalized their consumer protection rules a while back, basically disallowing any sort of post-purchase price increase, even if it was an “obvious mistake” (whatever that means).

So I think the general sentiment in this group is that the airlines do everything they can to screw consumers, so let’s treat them the same way. If you ticket a reservation with American after making a mistake, you’re out of luck. They’ll charge you a change fee and the difference in fare. So why shouldn’t that go both ways?

Simpsons

“I’ll book it, but not fight it”

This group of people will gladly book any mistake fare, partly for the fun of it. If it’s honored, awesome. If it isn’t honored, that’s fine as well. At the end of the day they recognize the fare was a mistake and that they’re not “entitled” to it.

I guess to some degree this group can be summed up by this comment that a reader left yesterday:

I love a bargain as much as the next guy..but lets be honest here. Anyone seeing a $500 business fare that is UNADVERTISED (that is, AA isn’t running full-page ads saying “come and get it!”)…KNOWS its a mistake. By booking it you are taking advantage of a situation and frankly you will be lucky if they honor it.

Accusing AA (or United, etc) of fraud or bad faith, etc is really self-serving. Next time you make an error in writing a check or overpaying and the vendor keeps your extra money then is that ok? If you operate a restaurant and your cashier charges $4 for a steak dinner instead of $40 are you ok with that? If you see someone drop $20 by mistake will you pick it up and not tell them?

I’m sick of people feeling they are entitled to take advantage of other peoples errors. The person who mistakenly entered that $500 fare…should they lose their job over this?

I don’t think the comment sums up the enjoyment there still is just in participating in a “deal,” but I do think it sums up the general mentality. These people don’t feel “entitled” to taking advantage of someone else’s mistake, and they’re not going to file a government complaint if it’s not honored.

So I don’t know if Olaf would be the right spokesperson for this group, but he is sort of happy-go-lucky.

November 1st, 2013 @ 20:49:50

“Even booking mistake fares is unethical”

This group is a small minority, though there are some out there that think it’s unethical to even book a mistake fare, regardless of whether you’re going to fight to have it honored or not. This group generally takes the extreme of the “treat other people the way you want to be treated” mentality.

If someone overpaid you, would you only give the money back if they asked, or would you do so proactively?

Where I stand on mistake fares

Let me start off by saying that I booked several of these tickets. Let me further say that I think mileage running in international first class is a very comfortable way to travel. And I’d love to earn miles for less than a penny each, while easily requalifying for Executive Platinum status.

So where do I stand? I’m probably the closest to being in group two, in a non-judgmental way. I don’t fault people that file DOT complaints, and I don’t fault people that are ethically opposed to booking mistake fares.

My approach is that I enjoy the “quest,” so partly I book these fares for the camaraderie and thrill of it all. If the airline wants to honor the fare, that’s awesome. It could potentially generate a lot of goodwill and publicity for them, so in theory it could even be a net positive for the airline. In theory

But I also won’t file a DOT complaint if they don’t honor. Because I don’t think I’m entitled to taking advantage of someone else’s mistake.

Technically are we entitled to the fare based on the DOT regulations? Based on my interpretation, yes. Is being protected by the DOT in the case of obvious mistake fares within the spirit of the “consumer protection” regulations? I don’t think so.

Which isn’t to say that one approach is wrong. Some people care about the technicalities of rules, some people care about the spirit of rules. If you’re going one mile over the speed limit are you technically committing a crime? Yes. Will most cops stop you? No.

One point that’s tough to argue with is how damn greedy airlines are. Along with cable and cell phone companies, I don’t think there’s a more hated private sector industry in the US. Airlines’ pricing is irrational, their fees are ridiculous, and they provide an all around lackluster experience.

So there’s some merit to the quote above — “people are defending a massive corporation who would bend everyone of us over and take our money if they legally were able to.” And on one hand I can’t argue with that.

But let’s also remember that those of us that are in this hobby love the airlines, perhaps in a backwards way. If you’re playing the game right, you’re getting a lot more out of the airlines than you’re putting in.

Sign-up for two credit cards and complete minimum spend and then you get a free roundtrip business class ticket to Asia or Europe? Deal! Are the airlines a pain to deal with? Absolutely. But anyone playing this game right would surely agree that they’re getting more out than they’re putting in (if not I have to wonder why they’d “play” the game).

All of this is simply to say that I don’t hold any contempt towards the airlines. Do they at times have ridiculous policies that are extremely anti-consumer and frustrating? Absolutely. But it doesn’t change the fact that we voluntarily take part in this hobby for a reason.

Bottom line

Sorry for the rambling, but I figured I’d share my approach towards mistake fares. I guess to sum it up in a sentence, I’ll gladly book mistake fares, though also don’t feel entitled to them.

Are the DOT regulations technically in our favor? Yes. But if American does fully honor these fares, I would be surprised if they don’t rally the DOT to change rules. As is often the case in this hobby, I think we might be winning the battle but losing the war, so to speak.

Where do you stand on mistake fares? Which of the above groups do you fall in?

Comments

  1. OK, I travel a lt to China for businein BC. And if I had been looking to book a trip and saw one super cheap, I would have booked it.

    But I would not have gone out of my way to book an obvious mistake.

  2. I don’t fill sorry a bit for the airlines. They run a very complex system where the customer has no clue why he is paying what the airline is charging for the ticket. It is basically “pay whatever they ask for” and you have zero bargain power and once you hit the “purchase button” you are fully committed to that purchase and rules they impose on you. Thus, if they offered you a $450 ticket on business class on theit website and you hit the “purchade button” you followed all the rules. Shame on the airlines that don’t invest in better systems to avoid mistake fares. If it is published on their website it is not a mistake. You did jot cheat or did anything illegal. You entered your information, credit card number and hit “purchase”. Done!!!!!

  3. I guess I misread your title as finding(approaches) mistake fares like this. So how do people find it out? We’ve seen UA & AA mistakes in such a short months, I won’t be surprise to see more coming.

  4. @ alcwj — I guess the best way is to simply monitor as many blogs and forums as possible, in hopes of finding these fares quickly. It’s a full time obsession for some of us.

  5. I would like an final verdict from AA soon though, so those of us that are using this as a neat and short little vacation can plan. Well and as a mileage run…I did have to pay for a Chinese visa (oh the humanity!) but its the 10 year one so its not a total loss.

  6. I think that’s where some people anger might come from. I bought this ticket and I paid for this hotel and I got this visa and….so it wasn’t just a plane ticket.

  7. Somewhere between #1 and #2, I wouldn’t have contested the UA 4 miler or DKK fares, but would absolutely dispute the EY Christmas or AA China fares.

    One thing that the #1 commenter alludes to is that it’s not an equal relationship between the airline and flyer, the bargaining power is so overwhelmingly in the airline’s favor that the DOT should absolutely err on the side of protecting the consumer.

  8. I just can’t believe the people who feel it’s their duty to stick up for a multinational corporation. The truth is if there was a net profit in it (profit – bad pr cost – criminal fines) a corporation would kill people — in fact it would be their fiduciary duty to do so.

    For anyone that feels the need to ensure corporations are treated ‘fairly’, I urge you to look up some of these: Chiquita fueling a war that killed 250,000 people in Guatemala, Royal Dutch Shell propping up warlords in Nigeria resulting in the deaths of thousands, HSBC funded Mexican drug lords… The list goes on.

  9. There is a simple solution that would fix all this. DOT should make all tickets refundable by either party for 24 hours after purchase. This protects the consumer from their mistakes and it protects the airlines from their mistakes. After 24 hours all sales are final. Of course an exception should be made for tickets booked within 24 hours of a flight, those should be non refundable upon purchase. This gives a level playing field for all parties. People would know not to book additional items like hotel, rent a car, passport/visa until after the 24 hours have passed. Very simple and very fair.

  10. I’m also boarding in group 2 on this issue.

    I think Gary Leff has the best summary of this position — No one should feel entitled to fly on these mistake fares but if some folks are going to fly them, I’d just as soon I be one of them.

  11. Loved your rationalization of why you don’t feel bad about booking these fares. I’d ask you to give me an example of another business model which is allowed to sell something and then un-sell it because the pricing was wrong???

    I’d like to add a point. Why do mistake fares happen in the first place?

    Computer systems are currently in place which allow these mistakes to happen. Having many components to a fare which if one is put in wrong, you end up with a mistake. Could the airlines spend the money to create IT which would prevent these “mistakes” from happening. Probably. Could they simplify the fare structure making errors less likely (less variables means less errors)? Of course they could. However, it is cheaper for them to allow them to happen and then fight to have the fares cancelled. They feel it is even more frugal to spend money lobbying Washington regulators about allowing them to cancel these “mistakes” at will. My opinion is that if you never penalize the airlines by having them honor these fares, then there is no incentive for them to fix an apparently broken pricing system.

  12. I really hate that these China fares just didn’t make sense for us. Once I added in positioning costs to DCA, VISA costs, 2-3 nights hotel in China, and the fact that I really don’t have too much interest in returning to China (dirty), it just didn’t make sense. 🙁

    If they had been from SFO and allowed straight turns back, I would have been all over these!

  13. Does filing a DOT complaint even matter? You know that a bunch of people will file complaints and then DOT will issue a blanket ruling. That’s what they did with the UA DKK fare and that’s what they’ll probably do with cancelled holds here.

  14. I’m sorry, but there is no such thing as an “obvious” mistake fare. Just yesterday, stories about Ryan Air wanting to offer $14 fares to Europe were all over the internet and you can regularly find fares to Asia on the Flight Deal website for just over $500 (I know these are economy not Business class) so what is so obvious about a $440 fare to Beijing?

    There is no problem with the DOT regulation and it is not tilted too far on the consumer side. The regulation is in place because the airlines took advantage of consumers in the past. If you go to the store and someone has made a mistake and mis-priced a product, the store has to sell it to you for that price (otherwise stores could and did, put big signs with false, artificially low prices in the window to lure you in and then tell you it was a mistake when you got to the cash register). It is and shouldn’t be any different for the airlines.

  15. I like the 24 hour cooling off period for both sides idea that Dave S lists. That seems fair to me. It would also get rid of the incentive for bloggers to blow up these mistake fares in order to keep them going a bit longer.

  16. I’m in the first camp: my position is that if an airline offers a price, and you accept the price without violating the terms of service of the airline’s website (or comparable rules if buying in person or through a travel agent), or the law, then the airline must be required to honour the price.
    Airlines have set up incredibly complicated pricing systems for their benefit in maximizing price discrimination between various groups of customers. But this complexity comes with a cost, increased possibility of errors that result in a customer getting a flight for a lower fare than they’d be otherwise be willing to pay. The airlines could reduce the possibility of this cost by either (a) having simpler fare rules, but possibly leaving money on the table, or (b) spending more money – either for staff, systems, or both – to prevent these errors. The airlines want it all their way: maximize revenue through price discrimination, but at the same time be allowed to just say “oops” when the complexity they created for their own benefit bites them in the butt.
    Besides the general legal principle here, not enforcing “you offer it, you honour it” would create an incentive for airlines to deliberately make “mistakes” in order to get additional revenue. One difference between airline tickets and most other consumer goods is that for most consumer goods and service, if the merchant tries to change the price when you go to complete the sale, the worst-case scenario is that the purchase isn’t completed. If I go up to the register at a store with something, and the cashier tells me the price is much higher, I can just leave (after asking the cashier to pass along a message to the manager telling him or her exactly where they can put their merchandise) with no out-of-pocket loss other than a few cents for some Tums.
    But purchase of air fare frequently leads to additional purchases that, in order to get the best value, need to be made right away. For example, let’s say a leisure customer buys $500 ticket to Beijing. He hadn’t already planned to go to China, but has always wanted to visit. He buys the ticket, then books hotel, tours, maybe flights within China, etc., and sends his passport off to get a visa. Airline then comes back a few days later and says “oops, that was a ‘mistake’, it should have been $2000…but since it’s our ‘mistake’ we’ll generously split the difference with you and call it $1,000.” Our prospective flier has already spent money on other preparations, so he either has to write off that money or cough up another $500.
    Does anyone realistically think airlines would be able to resist this temptation?
    And there’s a case to be made that, short of zero fares without any surcharges, the actual loss to the airline could be much smaller, or even not a loss at all – this is an industry with very low marginal costs. For example, if a $500 “mistake fare” leads to a seat being sold that otherwise would go unsold, the airline gains $500 in revenue, and the difference between the $500 and the marginal cost of an individual passenger (fuel burn, food/drink, etc.) is profit straight to the bottom line. There’s really only a true cost to the airline if a passenger buys a ticket that otherwise would have sold at a higher price.
    Bottom line to me is that the airlines could avoid the “mistake fares” by spending more money to prevent them or simplifying their fare structure so there are fewer fares and thus fewer chances to make mistakes. Presumably they’ve crunched the numbers and determined that in the long run it’s better for them financially to not spend the money preventing the errors and just absorbing the occasional losses from the “mistakes”, unless there’s a legal loophole like we saw with the UA-DKK situation that they can use. That’s their decision, and they should have to live with it.

  17. Sorry about the run-on there – I wrote this in Word and didn’t realize the paragraph breaks wouldn’t carry over until I had already hit “post”…

  18. I have never booked a mistake fare myself however I have no compassion whatsoever for airlines and think they should always be deemed to honour the fares that they initially confirmed no matter how low they are.
    As some have pointed out, airlines would never use compassion in front of a customer who would try to change a flight realizing he made a mistake. Why would consumers have to show some in return?

    Another point that strikes me actually is how can airlines justify having those mistakes in their system?
    Other industries have complex systems working in real time and don’t seem to have the same amount of mistakes. It should be possible in today’s time to have a system and the supporting back office functions to prevent mistakes, at least major ones.
    If airlines don’t invest more in the back office and controls over their pricing it has to be because they consider that additional investment to prevent more mistakes would cost more than these mistakes actually impact the company.

  19. I am squarely in camp #2. In some cases, like the recent UA DKK flap, I would have been more in camp #3. I am almost never in camp #1, and I can’t say what circumstances would put me into camp #1 on a mistake fare. Perhaps the Etihad Christmas day example. I booked a flights Christmas morning to Abu Dhabi and truly thought it was a legit sale. I guess in hindsight, I should have recognized it as a mistake. I think when you’re in grey area in terms of pricing, I would fall between #1 and #2.

    As to the China in Business Class from the other day, I actually voluntarily sat out on it. I nearly had it booked until I thought it wasn’t going to be convenient or worth the hassle for me. Good luck to those who are involved in the fallout of this one. It’s the most exciting part of the process to me. Better than the actual travel.

  20. I’m in group 3 for most other businesses, and in group 1 for airlines and rental car companies. I don’t feel one bit sorry to book a mistake fare and fight for it. I wouldn’t fight for a hotel mistake rate, as hotels have always treated me correctly.

    That being said, I always wonder which moron posts a mistake fare on a forum or blog, if he intends to fly it. That was fine several years ago, when these forums were relatively small and a “closed system”.

    But today, these posts will go viral, and almost always the regulator or responsible agency sides with the airline. The DoT is bending its own rules again and again in order to do so.

  21. Meh, I’m all for debating the points while the situation is still in flux, but once confirmation has been issued as to what is being done, this all becomes pointless navel gazing. It is what it is.

    Interesting that you have made several bookings Lucky, if they are all for yourself that would be quite grindy (although it may be an interesting way of shorting the three day layover period through inter-lapping bookings). Should we be looking forward to an in-depth collective review of your flights across this route (the extended road test lol)?

    Do all these error fares put you over or in striking distance of a change in elite frequent flyer status (lifetime, etc), or are you just doing it for the cheap redeemable points? I imagine you don’t really need that much assistance just to re-qualify for Executive Platinum.

  22. As someone living in Asia where there are practically ZERO mistake fares and Mileage Runs to take advantage of, my opinion is the current DOT rules are perfect as is.

    My view is that loosening the rules to allow airlines to not honour “mistake fares” shifts the balance of power too far over to the airlines’ side, because how would you determine what is a mistake and what is not? Low cost carriers (at least in Asia) run $0 fare promotions all the time, couldn’t they then at any time say oops demand for this flight is way higher than I thought so let’s cancel all the $0 fares as “mistakes” and sell the seats to “paying” customers?

  23. I’m torn on this one… In one way, if airfare was fairly (simply) priced, these sort of mistakes wouldn’t happen.

    At the other is how much bullmanure the airlines have to deal with between DOT/TSA/DHS/FAA. Having done some work for an airline, the amounts & things they got fined/penalized for were absurd. I don’t even think die-hard frequent flyers have any idea just how bad the regulatory scene is.

    I like Dave S’s proposal with the 24 hour cooling off period, although I’d like to see a limitation on that if it’s a few days before a flight as people need to be able to make alternate arrangements if the fare isn’t honoured.

    I’m in the “Great if I can get it” crowd. Similarly, I wouldn’t be offended if it was a ridiculously low fare and the airline didn’t want to honor it, but instead made some sort of concession (half price fare, major mileage boost, etc.). I’m a businessman. The profit margins are quite thin on some routes, with some operated as losses. I’d rather they cancel the mistake fares than lose unprofitable routes in their lineup.

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