American AAdvantage Updates Terms Regarding Mistake Fares

As most of you probably know, American had a pretty major mistake fare earlier in the year, whereby they were selling business class tickets between Washington and Beijing for ~$450 roundtrip. They ended up honoring these tickets.

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American likely honored the fare because at the time Department of Transportation regulations were extremely pro-consumer, whereby airlines had to honor mistake fares under almost all circumstances. However, earlier this month the DOT updated their stance on mistake fares. Specifically:

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.

American reached out to let me know that they’re updating the AAdvantage terms & conditions in light of the recent DOT ruling. I really do appreciate their transparency in proactively letting me know. The changes are underlined below:

Certain airline tickets are not eligible for earning mileage credit. These include, without limitation, the following: all tickets issued as AAdvantage awards or other free ticket promotions including free or reduced rate tickets; companion tickets; charter flight tickets; travel agency/industry reduced rate tickets; infant tickets; items occupying a purchased seat; unpublished fare tickets, including consolidator fares, tickets issued as a result of a fare published inadvertently or by mistake and tickets issued subject to special provisions.

In other words, American explicitly reserves the right not to award mileage credit on mistake fares.

While I’m of course not excited about that change, I can hardly blame them. Heck, I’d probably do the same if I ran an airline, as that will probably greatly discourage people from taking advantage of mistake fares in the future.

What do you make of the changes to the AAdvantage terms & conditions regarding mistake fares?

Comments

  1. This isn’t surprising, really.

    DOT’s new “mistake fare” policy is (from an airline’s point of view) both distressingly fuzzy and alarmingly fraught with more than just a small risk of being responsible for consequential damages. And consequential damages are the true third rail in any contractual risk assessment. Ask anyone.

    So there will continue to be mistake fares.

  2. Well, bound to happen. I’m not surprised, though now the DOT’s going to have to deal with a lot more complaints. XD

  3. Of course, it’s the airline that determines what a mistake fare is. Some of obviously, others are not.

  4. This is interesting. So, clearly American Airlines is planning to honor mistaken fares so they won’t have to deal with reimbursing their customers. A couple of questions pop up: Is it right for AA to honor a mistake fare and then not award their customers miles? (What if the customer simply didn’t know?) Furthermore, if AA honors a fare, will customers be forced into taking it? Can they cancel, and if they do will they be reimbursed for hotels and such?
    Most importantly, if AA honors a mistake fare, but you put another oneworld ff number on the ticket, will you still get the miles and/or tier points through your respective ff program?

  5. actually, i think this is a bit of good news. It shows that going forward, mistake fares will be honored with perhaps no mileage awarded

  6. What defines “mistake”? Seems like that can potentially give them a lot of wiggle room.

  7. Is the line about “travel agency/industry reduced rate tickets” new? Does this mean tickets booked using the Citi Prestige card which are booked through a travel agency are not eligible for mileage earning?

  8. Well, I guess this takes most of the benefits of flying 3 times in a row to Beijing away. Unless you really want to visit Beijing or had planned to go there anyway it does not make sense for anyone to fly there 3 times and not get a single mile for that.

  9. So the DOT isn’t going to enforce the law that STILL EXISTS and they just decided, “You know what? I don’t really like that law. Let’s just pretend it doesn’t exist!” If that’s the case, isn’t that illegal? Did American give the DOT a call with some money in order for them to change that?

  10. “Travel agency/industry reduced” are non-revenue type tickets typically (such as travel agent familiarization trips) issued on a special fare class and it doesn’t refer to a consumer buying a ticket at a travel agency, in person or online.

    What would be interesting is to see how AA would implement not awarding miles. If the mistake fare is in a normal fare class, then AA would have to void miles by looking tagging all of the invalid tickets.

  11. I think AA will find the execution of not awarding miles for mistake fares to be very problematic. As others have noted, how do you define a mistake fare? How is the customer to be informed? What if the fare is issued by an airline other than AA? My strong suspicion is that this goes into the T&Cs, but will not be acted on in all but the most egregious cases (such as flying 3x times to PEK on a three digit business class fare).

  12. they still need to come out w/ their final ruling I thought. It was just an early ruling to get it out there??

  13. Will there be some kind of pronouncement by AA of what is and what isn’t a “mistake fare”? Will one then be able to refund a ticketed itinerary if such a pronouncement is made?. It’s not my job AA to know when you make mistakes …..

  14. I’ve taken advantage of 3 mistake fares in the past couple years, and while the miles were great, the main goal of grabbing the mistake fare was to get a trip somewhere cool for cheap. So I guess I can still do that!

  15. I think this is as fair as can be when dealing with a business whose main goal is profitability. I get it. No love lost here.

  16. (from the first Tom above)

    There are a lot of great questions here, and I think Ryan nails it. As a practical matter, I think we all realize that AA will be feeling their way along, case by case. They’ve just added another arrow to their quiver — whatever that turns out to mean. The only certainty here is that mistake fares absolutely will continue.

    And, goodness, please ignore Nolan above. Everyone who deals with the government at all knows that just about every administrative agency out there regularly takes “no action” positions (i.e., no enforcement). Just Google, for one very prominent example, “SEC no-action letter” and see what turns up. There are people out there — trust me on this one — who practically make their living interpreting that kind of stuff.

  17. For miles not to be awarded, there would have to be a change in the fare bucket after booking (which is something that the Avios.com scheme in the UK used to do (initial booking was in a miles earning class but down the line, they would change it to a non-earning one), or deduct miles after they post. If it is the former, then a customer booking into a particular fare class is right to expect the advertised miles per the fare class, but with the T&Cs in mind, the customer should then also be offered a full refund as an alternative if AA is planning on not awarding miles.

  18. It’s not hard for AA or their partner airlines not to award the miles. All they have to do, when they honor the ticket, is to issue it in a fare class as an award ticket. So for business it will be U and first class will be in Z (I believe that’s the coding for OW). So no miles for AA nor it’s partner FFP.

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