Remember American’s China Mistake Fares? An Interesting Follow-Up…

In March of this year, American published a ~$450 roundtrip business class fare between Washington and Beijing.

American-Business-Class
American’s “old” 777-200 business class

That was a heck of a deal, and an amazing way to earn miles, given all the premium cabin bonuses American is offering this year.

American honored the fare for those who had ticketed their reservations, which they had to do given the DOT regulations at the time regarding post-purchase price increases.

The DOT has since changed their policy on that, though I’m not convinced airlines will act differently in the future. That’s because under the new rules airlines can cancel mistake fares, but have to reimburse consumers for “reasonable, actual, and verifiable out-of-pocket expenses that were made in reliance upon the ticket purchase.” That seems like it could get really messy for the airlines.

One thing American did as a result of the mistake fare is update the terms for mileage accrual, stating they don’t have to award miles on mistake fares (bolding mine):

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charter flight tickets; travel agency/industry reduced rate tickets; infant tickets; items occupying a purchased seat; unpublished fare tickets, including consolidator fares, tickets issued as a result of a fare published inadvertently or by mistake and tickets issued subject to special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.

Anyway, while most of us were thrilled with American honoring the fares, that sentiment wasn’t universal. There were also many people who were disappointed. Specifically those who held tickets with American, as non-ticketed reservations were subsequently cancelled. American allows a guaranteed 24 hour hold on tickets, which they have to offer in lieu of a 24 hour refund (since they don’t offer that).

Some people filed complaints with the DOT regarding American not honoring those tickets on hold. Anyway, it has been months since the mistake occurred, but a reader who was in that situation just forwarded the correspondence he received from American yesterday, on which they CCed the Department of Transportation. The email reads in part as follows:

Thank you for your patience in our responding to your complaint regarding the cancellation of a reservation for travel to China which you placed on hold earlier this year.

The reservation you placed on hold was for an extremely low fare offered by American in error, and the mistaken fare was offered for only a few hours. Because the fare was offered in error, we cancelled those reservations, such as yours, that had been made but not ticketed.

In our view, given the fact that the fares American offered for China travel in those few hours were so low that it was obvious they were offered in error (a fact widely acknowledged in the social media posts which prompted many of those who reserved the fares to do so), we were justified in cancelling those reservations that were made but not ticketed, and accordingly will not honor the fare associated with your cancelled reservation. However, we will offer to you two options for reduced rate travel to China, one for business class and one for coach class. The two options are as follows:

Option A – Business Class: We offer you a $1,500 discount on any roundtrip business cabin fare to Shanghai or Beijing.

  • Reservation must be booked by AA and operated entirely by AA (including AA’s regional partners).
  • Travel may not be upgraded, by upgrade certificate, AAdvantage status, or any other means, to a higher class of service.
  • Travel will not be eligible to earn AAdvantage miles or Elite Qualifying Miles or points, and will not count as Elite Qualifying segments in the AAdvantage program.
  • Travel may be ticketed immediately and must be completed within one year of the date of this letter.
  • Travel to PEK or PVG should originate and end in the same U.S. airport(s) as in the original PNR with the same passenger(s) (or subset of passengers) traveling as were listed in the cancelled PNR.
  • Must be ticketed within six weeks of the date of this letter.

Option B – Main Cabin: We offer you the opportunity to receive a $0 fare basis main cabin fare to Shanghai or Beijing, subject to taxes and fees of approximately $450 (varies slightly by routing)..

  • Reservation must be booked by AA for any Q or O class fare to PEK or PVG, and operated entirely by AA (including AA’s regional partners).
  • Travel may not be upgraded, by upgrade certificate, AAdvantage status, or any other means, to a higher class of service.
  • Travel will not be eligible to earn AAdvantage miles or Elite Qualifying Miles or points, and will not count as Elite Qualifying segments in the AAdvantage program.
  • This offer is subject to Q or O class inventory availability for travel outbound starting November 15, 2015.
  • Travel must be completed within one year of the date of this letter.
  • Travel to PEK or PVG should originate and end in the same U.S. airport(s) as in the original PNR with the same passenger(s) (or subset of passengers) traveling as were listed in the cancelled PNR.
  • Must be ticketed within six weeks of the date of this letter.

If you would like to accept one of these offers, please contact American Airlines at the following number to make your flight reservation.

So in other words, American is willing to offer a $450 ticket in economy, or $1,500 off a business class ticket. In both cases they’re not eligible for mileage accrual and not upgradable.

American-777
American 777

 Bottom line

This is an interesting offer on the part of American, especially as it’s more than six months after the mistake fare occurred.

American seems convinced they don’t have to honor the fare for those who had the tickets on hold. I’m not sure how they came to that conclusion. Airlines legally have to offer a 24 hour guaranteed hold or refund option, so they do have to offer the hold option, and they can’t change the fare during it.

I guess the question comes down to whether the contract of carriage gives them the discretion to not ticket mistake fares. The DOT covers post-purchase price increases, but a ticket isn’t purchased if it’s only on hold.

If they’re going to pretend to throw people a bone while trying to discourage them from taking advantage of the offer, I think what they’ve done is pretty smart:

  • They know most people who booked the mistake fare are after the miles, so won’t fly economy without earning any miles
  • While the business class discount is nice in theory, in practice I doubt many people will take them up on it, especially without earning miles or being able to upgrade to first class

American-777-First-Class-01
American’s “old” 777 first class

But I did think this response was interesting enough to warrant a post, as it’s not often we see airlines make such offers in response to a DOT complaint more than six months after the fact.

What do you make of American’s offer to those who had the mistake fares on hold?

Comments

  1. Why they have to honour hold on tickets? You snooze you looselook for other errors and purchase straight away. I don’t think we would like to see airline going to chapter 11 again.

  2. J on AA is around about $4,500 R/T, so $3,000 after the discount….I think I’ll just wait for the next mistake fare 😉

  3. I don’t care about the miles, but I’ll take the $450 economy flight if someone in this situation is willing to just unload it, unless it is name specific and not bookable in the name of someone else. I’d be willing to fly to china on economy class at that price.

  4. @Gintare They should have to honor the ticket holds because that is their alternative to allowing free cancellation within 24 hours of booking. They’re really not the same if AA is allowed to cancel any holds they don’t like, but not allowed to cancel any ticketed reservations.

  5. I think AA is going above and beyond what the people who booked the fares deserve!
    We all know it was a mistake fare and I personally believe people who take advantage of mistake fares are thieves, plain and simple. A misticketed price tag on an item of clothes that someone knows is too good to be true is a small example of people’s ethics and what they would do. I would always bring it to the clerks attention for correction.

  6. @Mike B: The tickets cannot be transferred to anyone else; in addition to the points noted in the email above about passengers, the end of the email states “This offer is non-transferable, applies only to passengers identified in the original reservation, and only in the origin and destination of the original booking. ”

    @Lucky: As someone who filed a complaint with the DOT and got the same response, I’m pretty amazed (and not in a good way) that this response is the best AA could manage after more than seven months. IMO, it does not address the central point of the complaint about AA being obligated to honor a held fare for 24 hours since they do not provide a 24 hour period for free cancellations. Also, they have clearly violated the DOT requirement to provide a substantive response to customer complaints within 60 days. The options offered are so clearly undesirable that they fall somewhere between a hollow gesture and an insult to one’s intelligence. It will be interesting to see DOT’s ruling, which is supposed to be made public after AA’s response to complaints.

  7. This needs to be fixed: “So in other words, American is willing to offer a free ticket in economy”.

    The ticket is far from free to the consumer ($450) or the airline (who pockets the carrier-imposed fuel fees misleadingly included in “taxes”).

    While it is is heavily discounted ticket, to be called free in the English language it must cost 0. Please have some journalistic integrity and fix the copy!

  8. My tickets were cancelled while on hold. I have the copy of reservation. Could i go ahead and request a review now, or is it too late? I would be happy to take the business round trip for 1500.

  9. @ Richard – I don’t disagree with your point about ethics, but I do think the line between a mistake and a really good deal can be very blurry, my example: I bought several tickets on BA’s business class sale earlier this month. A 48 hour sale where I got tickets for a couple different destinations at an average price of about $1,490 (with AARP discount). Earlier this summer, I purchased from BA business class seats LAX-CDG on AA metal. That fare was $1,390 (with AARP discount), and it was available for about 30 minutes after I jumped on it. Several other people found similar fares from DFW and maybe SLC. The second one seems like it was a mistake, just based on the size of the discount and the length of time that it was available, and yet it was only $100 less than BA’s two day sale. $450 to Beijing is an obvious mistake, but given the history of discount J over the past 2 years it’s not always that easy to know what is a mistake fare and what is a sale that is available for a day or a few hours. There were similar sales in September and October 2014, less than 24 hours as I recall.

  10. An interesting response for sure. I received this email and am debating using the $0 (well $450 tax) coach fare this year, its still a good deal even in economy, brutal, but a good deal.

  11. Ben, may I suggest that you don’t refer to the fare as a mistake? Despite what AA claims and even though it’s several months since they were around, we’ve known for a year or two that airlines who publish these types of fares are using references to blogs and travel websites to claim that passengers knew the fare was a mistake, arguing this is another reason the airlines shouldn’t be held accountable. AA highlighted that in their response that you included in your post. I don’t think we need to make it any easier for them than it already is to cancel these types of fares.

  12. This bit of it is interesting “…and the mistaken fare was offered for only a few hours…” Maybe they just threw that in as icing on the cake, but if AA is going to use that as *part* of the mistake argument, it’s pretty weak. Lots of fares, of all sorts, may only be around for a few hours.

    On the one hand with obvious mistakes you take your chances to an extent. Yet the consumer is already in the weaker position, airlines may push this too far. The airlines have whole departments of people, and fancy computer programs, managing and publishing fares…the onus is on them to ensure they’re not pushing erroneous fares. While $450 biz is obvious to just about anyone, what about the next one that’s not such a drastic departure from the norm?

  13. I had my ticket booked by a Brazilian, in Brazil, and paid with a BR credit card. I just – after weeks/months of hassle – got final word that AA will not honor my fare, despite them claiming to honor all fares for Brazilians.

    My question, is whether or not it’s worth it for me to file with the DOT to get the ~$350 in cancelation fees reimbursed. I’ll be subjected to about that amount when canceling my on-the-ground reservations and interior flights and wonder if it’s worth the hassle.

    Anyone have experience with this stuff?

  14. For those who think we, the general public, should recognize a mistake fare, I have to ask. When Frontier offered a $1 fare ( plus tax) recently, should I assume no airline in their right mind would offer a fare that low and so it must be a mistake? If you find an extremely high price, do you assume the other lower fares for the same seat must be a mistake and just pay the highest amount? How many different prices are paid for the same seat/class on every flight? Dozens? Which ones should I know are mistake fares? And for practically every website I join, I have to enter my email twice, just to be sure. Do airlines not have some sort of similar control to verify their info beforehand?

  15. TucsonJohn – Stop being flippant. Not one single person has said the general public should recognise ANY mistake fare.

    If you don’t recognise $450 return to China in business as a mistake then it’s for the best if your ticket gets cancelled anyway. Anyone who is so naïve will struggle to get by in somewhere like China (or pretty much anywhere unfamiliar) without being scammed!

  16. I think this is a fair and reasonable response from American, and I really don’t understand all the complaining.

    The comments around whether or not this should be construed a “mistake fare” are irrelevant, as American is honouring all tickets issued, regardless of whether or not it was a mistake. DOT 399.88 clearly only applies when “the full amount agreed upon has been paid by the consumer”

    The original purpose of the 24 hour cancellation rule was to allow consumers to cancel if they had buyers remorse or found a better fare. The DOT subsequently allowed airlines to offer a 24 hour hold instead because it provided essentially the same protection for buyers remorse as a 24 hour cancellation.

    Since DOT 399.88 doesn’t apply to holds, what should American do? I think offering a substantial discount off of the normal fare is a reasonable response. The offers would be significant for a normal traveller who wanted to buy a ticket to China, as evidenced by people asking to take other’s vouchers (I’d like one, too, please!)

    Finally, since American cancelled the original holds within 60 days, they met the substantive response within 60 days requirement. Just because JN didn’t like their response, and they decided to come out with a sweetened offer ~7 months later does not violate any DOT response requirement.

  17. They probably feel confident making the “ruling” b/c they have an inside track on what the DOT is thinking on their final ruling. I have very little doubt the DOT is in contact w/ the major domestic airlines either directly or via lobbyists to “aid them” in their final ruling … it’s just the way politics in the good ol’ U. S. of A works.

  18. Ok, they clearly state no AAdvantage miles, but what about earning with a OW partner?. If it books into a mileage earning class of service could no credit to say CX?

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