AA Gets a Slap on the Wrist from the Department of Transportation

Nov 6, 2015

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

Back in March, American Airlines offered phenomenal business-class “sale” fares to Beijing, with round-trip flights pricing at just $462. Surprisingly, AA opted to honor any ticketed reservations, but customers who took advantage of the airline’s free 24-hour hold policy (offered in lieu of a free 24-hour cancelation) had their holds canceled before the expiration.

The Department of Transportation has ruled that AA’s actions were in violation of two related laws — based on the aforementioned order, it’s now clear that last month’s move to offer either a $0 base fare for coach tickets or a $1,500 business-class discount was part of a DOT settlement.

The report states:

During the sale period, 1194 reservations were made though American in total: 589 reservations for 804 passengers were purchased immediately, while 605 reservations for approximately 830 passengers were placed on a 24-hour hold. American honored the 589 tickets that had been fully purchased during the sale period; however, before the expiration of the guaranteed hold period, American canceled the 605 tickets that were on hold.

Fortunately, the DOT will step in to assist customers if it feels that an airline operated unfairly, however it can take months for a ruling to arrive, as was the case with March’s Beijing deal. In this case, following AA’s move to cancel the holds, the DOT received more than 100 complaints.

804 passengers were able to fly to China for a fraction of the regular fare.
804 passengers were able to fly to China for a fraction of the regular fare.

What’s also interesting about this ruling is a reference to blog posts promoting the sale fare. AA argues that customers purchased these discounted fares after seeing posts on social media and blogs, which “resulted in individuals purchasing mistaken fare tickets in bad faith.” The DOT document itself references the following snippets, which appeared on a variety of platforms:

Examples of such posts include: “I fully expect these to be cancelled the base fare was $0…”; “Mistake Fare: Business Class from DC to Beijing for $450 RT”; “Let’s see if this sticks at all…not getting my hopes up.”; “My first mistake fare, if it clears. I feel so alive inside.”; “ It does look like a mistake fare.”; “DO NOT CALL THE AIRLINE”; “There is a rare Business Class mistake fare available on American Airlines for Flights from Washington DC to Beijing.”; “Clearly this was one of those airline computer system pricing blunders!”; “Just noticed that the base fare was $0. Damn!!! Will still try.”

Note that while the DOT did rule that airlines do not have to honor mistake fares back in May, that doesn’t apply to 14 CFR § 259.5(b)(4), which “requires air carriers to adopt and adhere to a provision in their customer service plans allowing reservations to be held at the quoted fare without payment, or cancelled without penalty, for at least twenty-four hours after the reservation is made if the reservation is made one week or more prior to a flight’s departure (“24-hour reservation hold rule”).”

For more on mistake fares, see Mitch Berman’s post “5 Legal Remedies for When Your Flight Deal is Canceled.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.