American Airlines accidentally filed $0 fares in 31 different domestic markets on Tuesday. They caught it quickly, and didn’t ticket the fares. Here’s American’s internal memo on how the fares are being handled.
American Appears To Mislead Customers About Their Legal Obligations
American’s memo to its agents about these mistake fares appears to suggest their only legal obligation is to refund customers when there is a mistake fare. That’s not true. The Department of Transportation still requires airlines to honor mistake fares, except when certain conditions are met. Those conditions include refunding tickets and making them whole by covering other costs the consumer may have incurred in reliance on the sale.
In 2015 the Obama Administration’s Department of Transportation said it would no longer enforce its own rule that airlines had to honor all fares they sold and that they would promulgate a new rule in its place. No new rule was ever made. However they’ve just used their ‘discretion’ to ignore section 399.88 as long as the airline “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 offering a refund. Those expenses include “non-refundable hotel reservations, destination tour packages or activities, cancellation fees for non-refundable connecting air travel and visa or other international travel fees.”
Put another way, DOT says the airline has 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.”
American Is Reasonable In Not Honoring These Fares
My own view of mistake fares is that I’m happy to book them, airlines will choose to honor the deals or they won’t, but if they’re going to fly people to Paris for $28 I’d like to be one of those people. And I’ve always felt that if an airline acted quickly to say they weren’t going to honor a mistake fare – in this case, same day – then it’s reasonable for them not to do so. That’s at least the case, I think, where a fare is so obviously a mistake ($0 airfare plus taxes).
It’s often not so cut-and-dried. Late last year American Airlines matched a $479 roundtrip business class fare to Brazil that Delta was offering. That wasn’t exactly a mistake, though they wouldn’t have done it without Delta’s mistake. Still, if they’d claimed it was an error the DOT probably would have gone along.
Since DOT has promised a new rule (for 6 years, without action!), here’s a simple approach. In order not to honor a mistake fare:
- An airline should have to certify that they’ve made a mistake. A submission to the DOT certifying under penalty of perjury that the fare in question was indeed an error.
- The error must be obvious and egregious. If an airfare is an 80% or 90% discount from the lowest paid fare (inclusive of all fees and surcharges) sold on the route in the previous 30 days, and it wasn’t offered intentionally, it seems reasonable to accept that it was an error.
- The submission has to be made in a timely manner. Customers generally have the right under current DOT rules to put airfare on hold for 24 hours, or to cancel within 24 hours of ticketing. It seems like airlines should be able to cancel a mistake within 24 hours.
- They should communicate clearly with customers. Individually contact customers within 24 hours of purchase indicating that they’ve submitted to the DOT that the tickets in question were a mistake and won’t be honored.
Put another way, airlines should have to live under rules similar to consumers. It appears American Airlines meets the general conditions here, and I do think it’s fair for them to cancel these fares. Airlines aren’t always so prompt, and fares aren’t always to clearly mistakes.