The DOT is Now Investigating United’s Cancelled Mistake Fare. Here’s Why United Will Prevail.

Earlier in the week flights originating in the UK were pricing in Danish Kroner at a price that’s pennies on the dollar what they normally run.

You could fly from the UK to pretty much anywhere in the world in business or first class at price hovering around $100 or less.

This wasn’t a United-specific glitch, but United.com was the most common place to buy these tickets. United voided these tickets.

Via commenter Elo, the Department of Transportation has posted an update on the United Danish Kroner fares.

I have several thoughts on this:

  1. This was an obvious mistake. United addressed it in less than 12 hours. They shouldn’t be ethically obligated to honor these tickets.
  2. The Department of Transportation stuck themselves in the middle of these fares. Previously, airlines often honored mistake deals (either because of the bad press they often got when they didn’t, or because of contracts with computer reservation systems that required it). A currency conversion error, with this many tickets purchased, might not have been honored.
  3. While the DOT promulgated a rule requiring airlines to honor tickets that have been purchased regardless of price, they don’t like that airlines have to honor tickets regardless of price — they want consumers unaware of a glitch to have tickets honored, but don’t want consumers to be able to take advantage when they’re aware of glitches.
  4. They’re in the process of amending their rules to prevent requiring airlines from honoring mistake fares.
  5. While I’m not a regulatory lawyer, or a transportation lawyer, a plain reading of their rules would seem to come down on net requiring United to honor.
  6. I still don’t expect the DOT to make United honor the fares. They’ll find a reading of the rules that doesn’t require it.
  7. In fact, I’d bet they already know how they’re going to do it. It’s almost a certainty that United discussed and agreed with DOT on how to handle.
  8. The delay is that DOT has to formalize their response.
  9. And since I don’t think United ought ethically to be bound to honor this, I don’t think filing DOT claims or lawsuits is appropriate.


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I really agree that Gary has a reasonable approach to the situation in this post. Chances are slim to none that these tickets are reinstated.

    However, take this post into context with the first VTFW post on this topic. The title of that post was “$85 Business and First Class Sale Fare, Europe-US on Several Airlines”. Nowhere in that post does it mention that this is a mistake fare (a “sale” rather, lol) and there is even a walkthough on how to book the fare. If United wasn’t “ethically bound to honor the tickets” that may have been worth a mention in that first post as well. Sensationalism at best, hyprocrisy at worst. The two posts together just don’t make sense.

  2. What should we make of United’s Contract of Carriage Rule 4(C) (http://www.united.com/web/format/pdf/Contract_of_Carriage.pdf) which states ” Once a Passenger obtains a Ticket indicating confirmed reserved space for a specific flight and date either from UA or
    its authorized agent, the reservation is confirmed even if there is no record thereof in UA’s reservation system.”
    Doesn’t that make it clear that United is on the hook once it sent out confirmations (which it did)?
    How much weight does a COC have in this issue?
    Does the DOT care about or enforce the COC?
    And might this not be dispositive against United?

  3. I think an interesting twist to this is, if the DOT sides with United based on the fact that non-Danish consumers selected “Denmark” on the United.com homepage in order to receive the lower fare, how will this impact the airlines ability to cancel tickets going forward where consumers select a different country website to get a lower fare (as many savvy passengers do now). Will this be viewed as potential “manipulation” of fares allowing the airline an out?

  4. I think Airlines should have 8 hours from the time they issue a ticket/send confirmation to cancel it w/o penalty, after that 6 hour period people should be free to book hotels etc., It’s a fare amount of time and United had the ability to cancel nearly all those tickets within that time period.

    If you lucked out and got it in the first 30m or so, it probably was a mistake fare that happened and before it was publicized by blogs/FT etc., it’s probably the fairest compromises.

    I was aware of this very early in the morning and decided against buying the tickets because to me it was “misrepresentation” as you had to force Denmark as the billing country or lie to get it. Those who legitimately had billing addresses in Denmark (mine are in Sweden) should have the deal honored, but those that live in a US city and put Denmark as their country for billing misrepresented themselves and United should not be on the hook for those.

    People should be happy they don’t have their MP accounts canceled for violating UA terms which this could allow UA to cancel those accounts.

    Just my 2 cents

  5. Good commentary. This is totally abusive of miles community and is so clear. Greedy get slaughtered. You get rule changes now as result of filing DOT complaints. Sometimes the miles community is too way too over the top greedy. With such a large community, airlines will clamp down more on these abuses.

  6. @Scott – the airlines shouldn’t send out a ticket/confirmation until the ticket is confirmed. I don’t know why you’d want them to be able to “CONFIRM” the ticket and then have time to UNconfirm.

    Nor do I believe that anyone misrepresented themselves when they put Denmark as the billing country. To me, that is asking you what currency you want to pay in. That information is not transmitted to the credit card company and so it has no bearing other than telling the site what currency to bill you with.

    All that said, I agree with Gary that for the majority of purchasers, filing claims/complaints here is inappropriate.

    I have a different interpretation as to why the DOT will side with United, and I agree with that interpretation. I won’t post it here because I’m not being paid for my thoughts, but there is a definite way out that is quite clean.

    As much as I have a distaste for United and the horrible customer service it serves, I have to side with them on this one.

    Pigs get fat. Hogs get slaughtered.

  7. In an industry where the ticket sale contracts are already drastically one-sided in favor of the airline and there is literally no way to submit an offer to the airline for purchase of a ticket (you have to take whatever they give you), DOT siding with United would put us just one step removed from airlines being able to cancel ticketed fares when it is financially beneficial. I also wonder how much is simply paying lip service to the industries players re: “bad actors.” Tough to have bad actors in tremendously one-side adhesion contracts and afford purchasers essentially zero remedies guaranteed in regular contracts.

  8. @Rob has a good point, which is precisely why it so wrong for these people to go complaining to DOT. The outcome is not going to be favorable to the public at large. DOT sees its task as protecting innocent consumers from unethical practices by the airlines, not protecting the rights of schemers who go through several hoops to claim they live in Denmark in order to get a mistake $50 transatlantic J fare. Let’s hope they find a way to rewrite their rules eliminate the latter without harming the former – a tough task to be sure.

  9. Surprised you didn’t take the opportunity to flog a 50,000 bonus United credit card in the post. You must be slacking.

  10. Brad you clearly aren’t smart enough to ‘get’ what Gary was doing in the first post. He shouldn’t and couldn’t write the first post flagging United as not ethically bound to honor the fare, that would have been prima facie evidence that readers knew it was a mistake, and would have been United’s ammunition. Thank goodness he didn’t write that, of course it isn’t working out anyway but we would have been in an even weaker position than he had. The last thing you should do is call out Gary for not labeling this a mistake while it’s live. That would have been worse than even calling the airline. Get it now???

  11. I’m trying to understand the “ethics” of doing business with United airlines. It sounds like you are saying it’s wrong to book a flight when you know the airline did not mean to sell it that cheaply. But, hidden city ticketing is right? What if United forgets to debit my account for the correct award mileage – should I tell them? What if the phone agent gives me an illegal extra stopover or open jaw?

    Europe has some pretty intense passenger protection laws so that the airlines pay you when your travel/life is disrupted. Is that more or less ethically aligned than the US system?

  12. I’m worried that DOT will set a precedent making point of sale a residency restriction. How else would DOT justify selective enforcement of the rule? If they don’t like the unintended consequences of their rule they should change it. However that should not be allowed retroactively.

  13. @2: the CofC also says in 4a: “Reservations that do not contain the full name of each passenger, other required in
    formation, or fraudulent information will be automatically cancelled within 72 hours of reservation confirmation.”

    I guess saying that you live in Denmark when you don’t falls under “fraudulent information”. So no chance here.

  14. @2: and 5h: “UA reserves the right to cancel bookings and/or reservations which it deems abusive, illogical,
    fictitious, or which are booked and/or reserved with no intention of flying without notice to the passenger”

    Manipulating the currency conversion is arguably “abusive”.

  15. Not at all wrong to book these tickets, not at all wrong for United not to honor these tickets. I get that there are some fuzzy issues in the middle, which is precisely why it’s hard to build a rule like what DOT wanted to do. This isn’t one of the fuzzy cases, though. But I think it’s great to book these because if United is going to honor something like this it’s worth not being left behind when they do.

  16. @DaveS, I think DOT sees its role as protecting consumers from unfair practices by airlines, as the airline’s bargaining power in forming contracts is vastly greater than 99% of all ticket purchasers. Consumers cannot bargain for terms like you can in a real contract.

    The real question is, why would you take someone’s money if you didn’t agree with the price of the ticket?

  17. People will always disagree on how best to handle these fare sale vs. mistake fare situations. I still recommend filing a DOT complaint if a person bought one of these tickets. The Points Guy has a post on how to file a complaint if you are knew to DOT.

  18. Chris…Rule 2a refers to fraudulently entering an incorrect name or address. Real addresses had to have been entered or the credit card could not be charged.

    Selecting Denmark as billing country merely provided local currency fares. But that does not change the fact that the passenger address was correct. Indeed, I logged onto my account when booking the ticket.

    United had my real address. Nothing fraudulent at all.

    Your reference to Rule 2 and 5h allowing cancellation for abusive etc bookings and then claiming that manipulating a currency is “abusive” is a huge leap.

    There is no way anyone could manipulate the currency unless you hack the web site. That’s what that clause is about.

    Sorry, but that argument doesn’t fly either.

  19. What people seem to forget is the fact that you cannot select all ~200 countries of the world on any carrier’s website (try selecting Austria on united.com for instance).
    So does that mean people from all of these countries aren’t allowed to book with United? Does this mean United could cancel their tickets at will?
    Of course not, therefore why should United be allowed to cancel tickets bought on the Danish website?

  20. @Rob

    You say, “The real question is, why would you take someone’s money if you didn’t agree with the price of the ticket?”

    I think this is both a practical thing for airlines to do, as we all seem to like automation but also is something consumers would demand anyway. Although, usually on my credit cards it takes a few days for the payment to clear anyway. But, we as consumers would wonder where the heck our confirmation was if it didn’t happen automatically.

  21. Given that the airlines would screw you at any chance they can get, I think it’s perfectly ethical of people to try to get this deal.

    However, it’s not okay to go to the DOT about this. DOT will no doubt take this as an example of why they don’t need consumer-friendly rules — which is what they (and their lobbyists) want to do.

    We’re shooting ourselves in the foot here.

  22. @Cory, I think the consumer expects it because that’s what the industry has done for quite some time. Really, I’m concerned about contract formation, and that happens when UA runs the credit card and issues tickets. Yes, credit cards take a few days to post, but obviously, as with any purchase, the contract is formed when the card is charged and approved. That’s why you can leave a store with an item after you buy it and not 3 days later. The point is, if binding contracts exist in the land of airfare, (these purchase contracts are so far from normal contracts, i don’t think we can take that as a given), and airlines certainly believe these contracts are binding on consumers after 24 hrs (but only by DOT rule and I can guess what the policy would be if there was no DOT rule!), then the airline has no defense for its breach of contract in cancelling the tickets. Unilateral mistake will not cut the mustard as a defense when the mistaken party has tremendous bargaining power over the buyer and presents contracts on a take it or leave it basis. Contrary to some of the commenters, the buyers did not cause this mistake; either United or a third party did. In addition, I have no idea how buyers are supposed to know what is going on in the mind of UA or any airline. Ask yourself what is a more reasonable assumption: a) the price on the website is what the airline will accept, given it has vast market knowledge, thousands of employees, systems for reviewing and clearing prices, and numerous IT resources; or b) this price must be wrong because it is too low. Basically no one, save airline CEOs and Gary are in a better position than the airline to know the difference between an intended fare and an unintended fare.

  23. Gary, I fully agree with you.
    As much as I love mistake fares like the guy next to me, this is not a case where the mistake fare should get honored.

  24. @ Gary – in the absence of more clearly defined DOT rules, some feel that letting United off the hook here could potentially entitle airlines to unilaterally cancel tickets more freely.

  25. If the website was intended for Danish residents, and the ticket was priced in DKr, then the EU may have jurisdiction (either exclusive or concurrent), and EU consumer protection, data protection and privacy rules would likely apply. I’m not sure if DOT is the final authority here, especially if Danish residents purchased during those 12 hours.

  26. Indeed, if DOT sides with United and cancells all purchased tickets, so be it.

    If however Danes will be allowed to fly on that fare, there will be a mountain of complaints and lawsuits in the 2_. Americans might get screwed if DOT considers putting Denark on payment details as manipulation.

  27. While I understand the corporation’s actions, ( and I did not book this ) simply because I don’t frequent the UK or Denmark, it’s interesting to hear the “airlines” analysis, not conjecture.

    This whole it was a “mistake” and the purchaser should have known it was a mistake etc gets very murky.

    After all , the airlines are responsible for this crazy tiered fare class system correct? And since airfares are deliberately clouded and tiered, meaning there is no “one” price one can reasonably expect to receive, I find it extraordinarily strange that a company who employs this same procedure for revenue maximization would then turn and state that purchasers “should have known” of the error.

    The price of an airline ticket is deliberately manipulated so as to confuse a purchaser in due course of business. To then cry foul, seems quite hilarious to anyone looking on.

    But as I’ve said, doesn’t affect me, so just an interesting sidenote giving one yet another impression of the landscape.

  28. Why is it when I think of airlines in the context of a larger landscape, I always picture that guy or gal in the fraternity or sorority house who has taken it upon themselves to take possession of all the sporting equipment or party paraphenalia , stuck it in a room somewhere and locked it, and then why asked why would you do such a thing if prompted to reply truthfully, would simply state.

    I don’t think you UNDERSTAND, I really REALLY REALLY don’t like to lose.

    Hilarious. Oh by they way, nice to know you have a ticketing office in the Philliipines and that you see yourself when appropriate as a GLOBAL enterprise.

  29. @Ivan Y – we’re likely to get revised DOT rules to do that soon anyway. And DOT has made clear that they do not want to enforce rules against airlines under circumstances like these.

  30. Oh and I’d be VERY interested in seeing these new “supposed” rules, do they limit the use of fare “classes” and so on?

    Do they limit the seller of transportation in any way as to what is to be considered to be “fair offering” of price and availability?

    Because let’s face it even with modern technology and their own web systems, AIRLINES are completely free to take any figure they’ve found on a 3rd party website and if you use their or any associated booking engine alter it claiming that say you’ve purchased 2 or 4 tickets , there was only one fare or two fares available at that class level. Therefore if you wish to purchase the airfare NOW, the offer is not XYZ it’s XYZ plus 300.

    These practices, the very definition of bait and switch, then turned into a take it or leave it situation, are completely fair game, but the consumer on the other hand is not permitted to seek out ways to combat this practice.

    Sure i’d be VERY interested in seeing all the new DOT proposed rules, and I’ll be very interested if their interest is in providing a method for airlines to not honor their offered prices, if they even address the practice of repricing airfares according to oh I don’t know , Frequent Flyer Number, or according to identification systems developed to identify the customer over the internet prior to security screening, or the use of private security information for the purpose not of all passenger safety but rather as a means to maximize revenue.

    And for that matter if we’re going to address fundamental unfairness in the pricing and or compensation system whereby airlines are paid, when are we going to address the ridiculous discounts given to low traffic markets such as in the central united states as opposed to high traffic areas. Why exactly IS It that underserved airports receive such beneficial pricing as opposed to larger markets who obviously generate all the revenue upon which not only your jobs but your entire industry are based.

    Some should be very careful of the pandora’s box you wish to open because there’s quite a few people who’d be all too willing to ask quite a number of poignant questions at this point.

  31. All very well to talk of new rules but they are not the current rules and it would be dishonest of DOT to now come out and say we have this set of hidden rules we have agreed with the airlines but haven’t bothered discussing with the consumers we are tasked to protect.

  32. This is their reply that UA is giving to everybody who is asking about their tickets and asking for they right to fly ( A stardard one actually):
    Dear Ms.XXXXXX XXXXXXXX:
    I understand you are disappointed that we voided your reservation(s) which were based on British Pounds (GBP) and converted to Danish Kroner (DKK), or booked on the version of united.com for customers in Denmark.
    As we communicated to you through email, for a brief period of time, there was a currency exchange rate error with a third-party software provider. While United filed fares correctly, this software error converted fares between GBP and DKK at an incorrect rate that resulted in the price charged that was significantly lower than filed fares and fares offered through all other channels and currency. We have determined the reservation(s) you made were affected by this exchange error. As a result, United will not honor the prices charged at the incorrect exchange rate and have voided the reservations made during this period at no cost to you.
    We would thank you for your time and understanding in this matter.
    Sincerely,
    L.J. Rawcliffe
    Corporate Customer Care
    Case ID: XXXXXX

  33. and this is the reply from CAA (UK), also a standard one

    Dear MS ……..

    Case XXXXXXXXX

    Thank you for your the referral of your complaint.

    We understand your complaint relates to a booking error on United Airlines where tickets were sold at the incorrect fare. United Airlines has advised the CAA they will offer passengers a refund. We suggest you contact United Airlines in the first instance to arrange your refund.

    Please note that the CAA is not taking any further action about your complaint.

    Yours sincerely,

    XXXX XXXXXXXXX
    Consumer Affairs Officer
    Markets and Consumers Group
    Civil Aviation Authority
    CAA House, 45-59 Kingsway, London WC2B 6TE
    Telephone: 0207 453 6888
    http://www.caa.co.uk

    Airline/Airport:
    It is PACT’s policy to forward any airline/airport reply about an individual case to the complainant. It is imperative that any information that you consider is confidential, is identified as such.

    Passenger:
    The information you supply to us will be used by us to provide advice or resolve your complaint. This will usually involve sharing the information with the airline or airport you are complaining about.

    The CAA’s passenger portal can be found at http://www.caa.co.uk/passengers

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