DOT No Longer Requiring Airlines To Honor Mistake Fares

In April 2011, the Department of Transportation issued a prohibition on post-purchase price increases for airfare. The main intent of the regulation was to prevent airlines from changing the fare or adding undisclosed fees after purchase, though in practice it also extended to mistake fares. In other words, if you booked a mistake fare, it would have to be honored under Department of Transportation regulations.

American-400

The DOT clarified the prohibition on post-purchase price increases as far as mistake fares are concerned, as follows (bolding mine):

On June 15, 2012, the Enforcement Office issued Answers to Frequently Asked Questions about the application of the post-purchase price increase rule to mistaken fares. Mistaken fares are offers by an airline or other seller of air transportation to sell tickets for air transportation for a fare that is usually substantially lower than the intended ticket price for the class of service being sold. The Enforcement Office explained that if a consumer purchases a fare and receives confirmation of the purchase and the purchase appears on the consumer’s credit card statement and/or online account summary, then there has been a purchase whether or not it was a mistaken fare and the post purchase price prohibition in section 399.88 applies. The Enforcement Office also reiterated that it would consider a contract of carriage provision that reserves the right to cancel such a mistaken fare ticket or otherwise attempts to relieve a carrier of the prohibition against post-purchase price increases to be an unfair and deceptive practice in violation of 49 U.S.C. § 41712. S

Well, it looks like the Department of Transportation will no longer be requiring airlines to honor mistake fares. Per the following statement regarding enforcement policies on mistake fares, issued May 8, 2015 (bolding mine):

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 fare4 ; 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. The enforcement policy outlined in this notice is temporary and will remain in effect only until the Department issues a final rule that specifically addresses mistaken fares.

I certainly can’t blame the DOT, since presumably enforcing mistake fares was never the intent of the post-purchase price increase protection. And there’s no denying that a vast majority of DOT complaints regarding this regulation had to do with mistake fares, and that was a big time suck for the department. For example, in February of this year, the DOT received 15,227 “opinions,” and 15,190 of them were from consumers who purchased mistake fares.

DOT-Complaints

That being said, the new policy, as written, seems ripe for abuse as well. The DOT will require airlines to reimburse consumers who purchased mistake fares for “reasonable, actual, and verifiable out-of-pocket expenses that were made in reliance upon the ticket purchase.” There’s no doubt many people will interpret this as meaning that they can book a mistake fare and then make a non-refundable hotel reservation at a luxury hotel, and reasonably expect to be “made whole” by the airline.

If the DOT really wanted to simplify things and find a happy middle ground, I’d think they would be best off saying that the airlines have 24 hours to correct mistake fares before they’re liable with consumers. That way airlines have a duty to correct these mistakes quickly, and it’s less work for the DOT to enforce.

What do you make of the new Department of Transportation regulation on the enforcement of mistake fares?

(Tip of the hat to Mark)

Comments

  1. 🙁 I wonder if airlines will sometimes continue to honor them as an act of good will, or if the sole reason they were ever enforced was because of this rule.

  2. We will now see a large numbers of post-purchase fare increases when the revenue manager regrets their pricing. And they will just call it “A mistake” and forget anything about getting any costs reimbursed – their legal departments will have parties over how many consumer requests they manage to push back on

  3. What a mess this will be for the airlines. The paperwork to pay back flyers for canceled hotels etc. could end up costing more than honoring the fare!
    .
    Plus this is just not good:
    .
    “The enforcement policy outlined in this notice is temporary and will remain in effect only until the Department issues a final rule that specifically addresses mistaken fares.”

  4. Wow Dot just basically made airline required to pay my non-refundable hotel costs. We knew they didn’t want to be bothered enforcing mistake fares buying I have 2k plus in hotels Booked the airline might as well let you fly on that fare.

  5. It was Points Guy right who told people to complain to the DOT after the UA mistake right?

    What a waste of resources – he just killed one of his great reliable traffic sources in the process.

  6. And what are we going to do now Lucky??? No more trips for silly money and no reviews no one gives a damn about???

  7. The real issue is the fact that basically any unadvertised “deal” can be claimed to be a mistake fare. Without a 24hr rule, as mentioned, the airlines can throw a party when a actual unadvertised deal is getting too good of a response.

  8. @Greg

    In TPG defense, he must push as much tragic to his blog as he possibly can. He’s a got huge expenses. A Latina gold digger cannot be cheap to maintain. I bet just her daily anal bleachings cost a fortune. 😉

  9. “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.” do you know what a shit storm this might be? haha my hotel’s usually run into the hundreds of Euros a night….. it would be more economical to honour the fare. But then again I do not do the mistake fare thing unless it is in business class…. which is a rare occurrence.

  10. @Lantean your response has me rolling on the floor laughing, I can’t believe how funny that was!!!

  11. I RE-booked an award tkt on phone – paid addt’l taxes, no need for additional miles –airline e/m me ticket with ticket numbers etc – called partner airline they see tkt – gave seat assignments- looked at ticket 6 weeks latter and shows “J” ( full paid business fair)– reservation is for Dec. — have 14 days in hotel all paid -WORRIED!

    Will I have problem at check in?

    New rules — is this a mistake fare ? any recourse ?- any suggestions? –would not want to find out at airport can not travel because “they” made an error

  12. I don’t think people understand how much better this is than before. Now airlines have to pay for hotels and tours that are nonrefundable? So book mistake fare, book very expensive tours and hotels. Get the airline to pay for hotels and tours book a flight to destination with miles. Love it.

  13. Was it only TPG who encouraged people to complain to the DOT or were other bloggers encouraging such nonsense? In any event, one can hold the blogger responsible, but don’t absolve the individuals who chose to actually file complaints.

    Greed apparently has killed the goose laying the golden eggs.

    I have no real problem with the new rule, as I think it’s fair, but it’s unfortunate that it had to be changed. I suspect there will be little/no consistency in how it will be applied. Some fares will be honored (predominantly coach) while others won’t (insanely cheap 1st class). Some airlines will value good will while others will only look at the bottom line for those flights affected.

    It’s good that the airlines will need to make “whole” consumers who purchased tickets and other travel expenses, but I wish that some type of time frame was included. Theoretically, one can book a mistake fare for a trip months away and the airline could cancel the ticket shortly before departure. Most people have conventional jobs and lives with obligations that preclude absolute flexibility to travel. If tickets are to be honored or cancelled, consumers need to know shortly after the flight is booked.

  14. A better solution would be to advise airlines to avoid future mistakes by including a “minimum” fare for each route and fare class in its pricing systems. “Errors” would never result in a fare less than the minimum getting published (unless the airline used an “override” by an executive level employee). In every case the airline would be forced to honor the fare and the Dept of Transport would not have to be involved in disputes. Airlines that do not take that risk mitigation step would have to bear the cost.

  15. How will you make EXP for 2017 now? Oh wait, there are still those Egypt and Sri Lanka fares.

  16. @everyone who thinks “Latina gold digger” is so funny.

    Well, gold digger would’ve sufficed to make it the point. You can all congratulate yourselves for being (not so) closeted racists.

    No wonder there were riots in Baltimore. People can’t even comment on a travel blog without showing their contempt for other races. (I’ll bet none of the people laughing at “Latina gold digger” are Latino.)

  17. “He said duty”

    @Lantean
    Dying laughing. Great comment.

    @Ron
    Assuming the airlines in question, the severity of the “discount”, how much abuse (1 person buying a ticket every weekend for months, which is sounds like a LOT of TPG readers were abusing/doing and “living” in Netherlands), how many overall tickets were sold due to the ‘mistake’, depends how it’ll be handled. Yea, quite obfuscated, b/c we don’t have those numbers. If the mistake was for a couple hours and < 100 ppl got in on a transcon, they'll probably honor it, but it goes for many hours and many TPG readers pounce on a biz fare (obv. a mistake) that alone says they'd cancel it. Add in his posts to his blog to bitch-complain for EACH fare you bought, you can bet your first-born, it's going to get hampered from now on…at least until the "full ruling" is sent.

    -2 cents

  18. “He said duty”

    @Lantean
    Dying laughing. Great comment.

    @Ron
    Assuming the airlines in question, the severity of the “discount”, how much abuse (1 person buying a ticket every weekend for months, which is sounds like a LOT of TPG readers were abusing/doing and “living” in Netherlands), how many overall tickets were sold due to the ‘mistake’, depends how it’ll be handled. Yea, quite obfuscated, b/c we don’t have those numbers. If the mistake was for a couple hours and < 100 ppl got in on a transcon, they'll probably honor it, but it goes for many hours and many TPG readers pounce on a biz fare (obv. a mistake) that alone says they'd cancel it. Add in his posts to his blog to complain for EACH fare you bought, you can bet your first-born, it's going to get hampered from now on…at least until the "full ruling" is sent.

    -2 cents

  19. @Lantean wrote “In TPG defense, he must push as much tragic [sic] to his blog as he possibly can. He’s a got huge expenses. A Latina gold digger cannot be cheap to maintain. I bet just her daily anal bleachings cost a fortune”….

    ….and many found it to be “rolling-on-the-floor” funny.

    Hmmm… I hope it is the part about pushing “as much TRAGIC to his blog as possible” that’s funny because I otherwise completely fail to see the humor in the clearly bigoted comment…

    G’day.

  20. @Lantean funny because it is 1000% true. Especially anyone that knows his current boyfriend’s previous boyfriend who was an older plastic surgeon who had a house in the Hamptons.
    I wonder if he realizes all the trips and things are on fake money and points & that TPG isn’t actually wealthy.

  21. @DCS and chancer-thank you. I am not sure if there is some back story to @Lantean’s joke but being married to a Latina, I find it offensive on face value.

  22. I didn’t find the comment funny at all either. And, I don’t know why, but I was extremely shocked when others did. Racist, sexist and not appropriate.

  23. I don’t believe TPG has a Latina lover. Probably more like a Latino gold digger.

    In fact, I wouldn’t be surprised jf Ben hasn’t slept with TPG

  24. I can understand why DOT changed the rule, at least in theory, but like @Ron above, I think some type of timeframe should have been put in place. Otherwise, what’s to stop an airline from canceling a ticket that they deem too cheap, even weeks/months after it was confirmed? I agree with you Ben, that they should’ve capped it at 24 hours. That would’ve been fair, in my mind, since that’s how long consumers have to cancel their flights if they change their mind.

  25. Can this be an open door then for airlines to call any fare that they published as ‘mistake fares’?

    I am curious about why can’t businesses self-governed themselves with just basic regulations? If airline publish a fare, and make it available for purchase, mistake or not, then live by it. If it cost them millions, well, don’t make the mistake the next time around.

    My brother and his family flew from CGK to BKK for $19 per person + tax a few years ago on AirAsia. Granted, it is an LCC, but that is incredibly low even for SE Asian standard. Should he assume that it was mistake fare? Airlines cannot rely on the consumers to make the judgement. We don’t understand the complex pricing system that airlines have.

  26. I agree that these rules are not a great solution and that further middle ground needs to be achieved between the old rule and the new rule. Can an airline decide months later that the fate was too low and was a mistake? What about for award tickets, if they release a bunch of seats in F can they decide it was a mistake to release those seats at all and just unilaterally cancel even if you paid the published rate?

  27. Ridiculous. Old ruling was working. If airlines are worried about the risk then they need to take out insurance, just like they do on the planes. If they are sloppy on IT their insurance premiums will be higher. Is there no time constraint on when an airline needs to address the mistake fare and notify??

  28. “Jason says:
    In fact, I wouldn’t be surprised if Ben has slept with TPG.”

    @Jason. Thanks. That imagery of either one just made me vomit my breakfast.

  29. All the people who say this new rule is ripe for abuse, I’m not sure I totally understand where you’re coming from. Specifically, people claiming they would book a mistake fare, then book expensive hotels, tours, etc. with the plan of getting those reimbursed when the airline cancels the mistake fare, then booking alternative travel plans and staying in the hotel anyway. I’m pretty sure that this reimbursement is only intended to apply if you actually don’t end up using the hotel, and if the DOT and/or airline were aware of this behavior they would not take too kindly to it. I’m assuming that you’ll have to show some kind of proof that you didn’t end up using the hotel stay, for example, to actually be reimbursed.

    Also, what happens if the airline doesn’t void the fare? You’re fine taking the risk of being stuck with thousands of dollars of hotel rooms that you wouldn’t normally have paid for? This seems like an ill-advised plan.

  30. The unknown here is how DOT will define what airlines must do to “demonstrate that the fare was a mistaken fare”. If the bar is set high enough, it should still effectively keep airlines from deliberately setting fares and then trying to go back and declare those “mistakes” if they sell too fast. That’d prevent abuse on the airlines’ part while allowing them to disallow the occasional “real” mistake such such as a “decimal slip” (meant to list $1000, put $10.00 instead).

    And as long as reimbursement requests are reviewed adequately, there shouldn’t be any real opportunity for people to abuse the “make whole” rule.

    @Dfu: how is honouring mistake fares “unfair” to people who purchased the “regular” fare? Presumably “regular” fare purchasers are making a rational decision when they buy their tickets based on the price vs. the value the fare represents (“utility” in economist-speak.) Most mistake fare buyers are buying a ticket that they otherwise would never buy at all. By your logic, no one would ever be able to lower prices to later customers on anything, ever, since it’d be “unfair” to previous purchasers, and any early-purchase discounts would also be “unfair” since someone got a better deal.

  31. I never knew Ben was gay. I guess I don’t care.

    I am married to Latina. Smoking hot one too. I found the comment funny.

    People are way too sensitive and easily offended. Well, I am offended by you being offended by that post. Now what do you do?
    Quit your whining and man up.

    The new DOT rule is bad. And it is a sign of worse to come. It certainly shows that the airline lobbyists have the DOT by the balls or at least by the personal bank accounts.
    The new DOT regulation should include a 24 hour rule from the time of PUBLISHING of the fare. If the airline catches it within that time frame, fine allow them to cancel it. After that, they are stuck with it, just like we are stuck with tickets after 24 hours

  32. Sometimes I find it very funny that big corporation can get away with making mistake, at least for their office working staff anyway… So someone in the office who publish the fares made a mistake and the airline is not responsible… So let me put it to the extreme, what if the pilot of that same airline make a mistake and crash a plane? Does the airline say, oh we don’t mean to make that mistake? You know what I mean? If the airline does not have a system of check in places to ensure this kind of fare mistaken doesn’t happen, then they deserve to have to suffer for the consequences. How hard is it to have a supervisor to check for any mistaken and then have a manager to approve fare (especially fare below certain threshold) before it goes live on their website? Anyone design a good SOP will have incorporate some kind of check and balance like this… Imagine if all the flight around the world doesn’t have these kind of check and balance then you will see a lot more accident. So airline are used to these kind of check and balance approach to their SOP and apply them to their flying staff, so why can’t they do the same to their office staff? If a small grocery store made a mistake on their pricing on a bottle of wine and if the grocery store sold it to their customer then the store will have to bare the loss (they can’t possible go chase their customer to return the wine), so why should airlines be allow to chase the customer to return the ticket purchase? Just crazy.

  33. The regulation remains in place, they just said as a matter of proprietorial discretion they will not enforce.

    However, could one go to small claims court?

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