Do Airlines Have to Honor Mistake Fares?

Feb 11, 2015

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UPDATE: United has opted to cancel all tickets purchased as a result of this morning’s mistake fares, citing a “third part currency conversion error.”  There’s going to be some fallout from this one way or another, so stay tuned.

Earlier today, United Airlines was offering amazing deals after an apparent computer error caused some first class fares to show up at rock bottom prices, including flights between London Heathrow and the US as low as $50. The deal was shut down after only a few hours, but many readers were able to act quickly and snag these premium seats.

Whenever deals like this pop up, those fortunate enough to get in on them are inevitably left asking whether the fare will be honored, and the sweeter the deal, the greater the cause for concern. This was clearly a pretty sweet deal, so what will United do in this case? To answer that, I think it’s important to look both at the governing rules as well as precedents from similar deals in the past.

Does United have to honor these fares by law?

The Department of Transportation has clear rules against changing the price of a ticket after purchase. According to provision 399.88(a):

“It is an unfair and deceptive practice within the meaning of 49 U.S.C. 41712 for any seller of scheduled air transportation within, to or from the United States, or of a tour (i.e., a combination of air transportation and ground or cruise accommodations), or tour component (e.g., a hotel stay) that includes scheduled air transportation within, to or from the United States, to increase the price of that air transportation, tour or tour component to a consumer, including but not limited to an increase in the price of the seat, an increase in the price for the carriage of passenger baggage, or an increase in an applicable fuel surcharge, after the air transportation has been purchased by the consumer, except in the case of an increase in a government-imposed tax or fee. A purchase is deemed to have occurred when the full amount agreed upon has been paid by the consumer.”

That rule wasn’t enough to stop United from canceling mispriced awards back in 2012, though in that case United contended that customers were shown the correct price throughout the booking process until the end (the mistake only showed up at checkout).

That argument won’t fly this time around, as the price shown for today’s deal remained the same during the whole confirmation and ticketing process. I don’t see what legal basis United has for backing out, but I’m sure right now there’s a room full of people working to find one. The bottom line is that airlines can’t change the price after they sell and ticket (which is what happened here) even if a glitch is in play.

How will United treat these discounted first class fares? Photo courtesy of Shutterstock.

Precedent from past mistake fares

Deals this incredible are pretty rare, but mistake fares happen every so often, leaving airlines to weigh the cost of honoring them against the bad publicity (and potential legal ramifications) of canceling. There are certainly plenty of cases where these kinds of fares have been honored, like Delta’s $100 transcontinental flights at the end of 2013, and United’s own free domestic tickets earlier that year. However, there are plenty of cases where airlines have tried (sometimes successfully) to cancel mistake fares, such as United in the example cited above, or Swiss Airlines canceling first class mistake fares between Canada and Myanmar back in 2012.

I think United has much to gain by currying favor (as Etihad did recently) and leveraging this as an opportunity to apologize for all the horrible IT mistakes and meltdowns the airline has had over the years. United is finally profitable, and only a relatively small number of these tickets were sold, so even though the loss on each ticket might be high, the overall loss might not be too severe. My hope is that United sees this good marketing, especially in contrast to the negative attention Delta has been getting lately.

I’ll be flying to Australia in United Global First (I hope).

My haul

If these fares are honored, this will likely go down as one of the best flight deals in history. I was able to buy a few flights for myself and friends. I paid $44 apiece for one-way tickets from London to Newark (which would have cost $8,700 each normally), and booked a trip for later to Australia via London in United GlobalFirst for $1,437 (which would have cost $27,947). All told, I paid $1,597 for flights that would cost $59,862 to buy with cash as of today!

To those of you who also got in on it, congratulations! To those who missed out, there’s always next time. In either case, stay tuned on Facebook and Twitter for updates about this situation, and follow the TPG Alerts twitter account for announcements whenever great deals like this pop up!

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