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The Department of Transportation has a sweeping rule on the books that should require airlines to honor all mistake fares because canceling mistake fares constitutes “increas[ing] the price” of air transportation after purchase, which is forbidden. (It is an increase in the price because canceling the ticket means the only way to fly the route is to purchase a new, more expensive ticket.) Check out all the legalese in 14 CFR 399.88 if you’re so inclined.
However, the Department of Transportation completely ignored its existing rules in allowing United to back out of $100 First Class tickets between Europe at the United States offered in krona through its Danish website in January.
Now the Department of Transportation is going to change its rules presumably so airlines don’t have to honor mistake fares, and in the meantime, will not enforce mistake fares.
As a matter of prosecutorial discretion, the Enforcement Office will not enforce the requirement of section 399.88 with regard to mistaken fares occurring on or after the date of this notice so long as the airline or seller of air transportation: (1) demonstrates that the fare was a mistaken fare ; and (2) 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 refunding the purchase price of the ticket.
Except…oops! Requirement number two is going to keep mistake fares alive. Look at what airlines need to reimburse you [emphasis mine]:
These expenses include, but are not limited to, non-refundable hotel reservations, destination tour packages or activities, cancellation fees for non-refundable connecting air travel and visa or other international travel fees. The airline may ask the consumer requesting out-of-pocket expenses to provide evidence (i.e. receipts or proof of cancellations) of actual costs incurred by the consumer. In essence, the airline or seller of air transportation is required 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.
Next time you book a mistake fare, immediately book non-refundable hotels, tours, and other airfare related to the trip. (This is the opposite of the advice before the rule change when it was better to wait to see if a fare would be honored before booking any other parts of your trip.)
Now the airline can either honor the fare or reimburse you hundreds or thousands of dollars worth of expenses and refund your ticket. They’ll probably just honor the fare, but if they don’t, you now have a bunch of reimbursed hotel nights, tours, and other flights, and you are free to book alternate transportation to get you to those things. That’s a win either way for the bookers of mistake fares, and a loss for the airlines.
It’s ironic that the Department of Transportation’s attempt to kill mistake fares not only doesn’t kill them, but might cost the airlines more money when dealing with people who are gaming the system. I eagerly await the Department of Transportation’s attempt to close the new loophole it has opened after the next big mistake fare. Mostly because I want to see what new loophole closing this new loophole will create. 😉
I don’t think mistake fares can be killed. As long as human or computer error offers them, we will benefit. It will be impossible to come up with a rule that allows the airline to completely back out the mistake fares that isn’t completely unfair to non-gaming consumers. (For instance, the rule: “airlines can cancel your ticket whenever with no compensation” would solve the mistake fare “problem” but would be extremely unfair to all flyers, so it would never be implemented.)
Your Take
What do you think of the new rule, and do you think mistake fares can ever be killed by airlines or the Department of Transportation?
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Extremely bad advice in my opinion. If someone booked non-refundable hotels on the United Danish mistake fare, they would have been out hundreds/thousands of dollars along with not having any air tickets.
Arguments to the contrary aside, I think we all know the Danish fare was unique in the steps that needed to be followed to access it. I think Scott’s points are valid for the vast majority of mistake fares.
Yes they would have been. But not anymore. The new rule couldn’t be clearer.
So, you are saying that readers should rely on the “new” rule proposed by an agency which has a “past precedence” of not enforcing it’s own rules.
Let me put forth a scenario, and then you tell me what you would do:
Assume EY has a mistake fare which is causing coach tickets to Maldives to price out at $200 in coach. You were looking to make a trip to Maldives so you book this ticket and it gets issued. It is obviously a “mistake fare”, so we do not know at this point whether it would be honored or not. Picked out a random week for the Park Hyatt in Maldives in October, and it came out to USD 762 per night for a non-refundable reservation. With all fees and taxes, the total came to approx USD 6500 for the week. You could wither book this room at the non-refundable rate, or use 30k pts per night (so total of 210k pts) for a refundable reservation. You know that if you book the cash rate, EY will have to reimburse you if they decide not to honor their fare. But if they do honor their cheap fare, you are out 6.5k in cash. What would you do?
Use the points. I don’t want to chance a $6,500 hotel bill that I’d almost certainly be stuck with.
But go book your roundtrip flights to the hotel, and you make it very unlikely that EY would want to refund that $500 instead of just honoring the ticket.
Totally agree with you there, since that $500 cost is something one would have to pony up anyways.
Extremely bad advice in my opinion. If someone booked non-refundable hotels on the United Danish mistake fare, they would have been out hundreds/thousands of dollars along with not having any air tickets.
Arguments to the contrary aside, I think we all know the Danish fare was unique in the steps that needed to be followed to access it. I think Scott’s points are valid for the vast majority of mistake fares.
Yes they would have been. But not anymore. The new rule couldn’t be clearer.
So, you are saying that readers should rely on the “new” rule proposed by an agency which has a “past precedence” of not enforcing it’s own rules.
Let me put forth a scenario, and then you tell me what you would do:
Assume EY has a mistake fare which is causing coach tickets to Maldives to price out at $200 in coach. You were looking to make a trip to Maldives so you book this ticket and it gets issued. It is obviously a “mistake fare”, so we do not know at this point whether it would be honored or not. Picked out a random week for the Park Hyatt in Maldives in October, and it came out to USD 762 per night for a non-refundable reservation. With all fees and taxes, the total came to approx USD 6500 for the week. You could wither book this room at the non-refundable rate, or use 30k pts per night (so total of 210k pts) for a refundable reservation. You know that if you book the cash rate, EY will have to reimburse you if they decide not to honor their fare. But if they do honor their cheap fare, you are out 6.5k in cash. What would you do?
Use the points. I don’t want to chance a $6,500 hotel bill that I’d almost certainly be stuck with.
But go book your roundtrip flights to the hotel, and you make it very unlikely that EY would want to refund that $500 instead of just honoring the ticket.
Totally agree with you there, since that $500 cost is something one would have to pony up anyways.
Thinking out loud a bit so this may not be quite as refined as I’d like. But the rule doesn’t require them to provide reimbursement for “other flights,” as you say above, does it?
For example just taking the UA example, the flights were something like LHR-EWR for $100. Let’s say I got myself a prepaid week at the Four Seasons in New York for $3000. UA is obligated, under this rule, to give me $3000. But I don’t think they’re required to send me to EWR. I guess I might have booked EWR-LAX to visit my sister, and they’d have to reimburse me for that flight?
The problem, of course, is that we are trying to travel cheaply, not screw airlines out of money. It doesn’t really make me better off to book the above scenario, have UA cancel my flight, and then get $3000 to give to the Four Seasons and $1000 to give to AA for my transcon flight. And then there is a risk that UA will call my bluff and honor the ticket! Now I’m stuck staying at the Four Seasons, when I might have otherwise stayed somewhere on points for free. The only way to hedge against that is to… not book expensive non-refundable stuff on the other end of your trip. But that messes up the ‘screw the airline’ plan.
It’s not clear where you live in the above example, but if you book non refundable flights and some reasonably priced airbnb stays as parts of a big trip, then United could either pay you for all that stuff or honor the ticket.
I don’t advocate a “screw the airline” plan because you might get screwed as you note. I advocate a book other flights and lodging immediately that you want to enjoy because you’ll either get all that for free or influence the airline into honoring your mistake fare.
Thinking out loud a bit so this may not be quite as refined as I’d like. But the rule doesn’t require them to provide reimbursement for “other flights,” as you say above, does it?
For example just taking the UA example, the flights were something like LHR-EWR for $100. Let’s say I got myself a prepaid week at the Four Seasons in New York for $3000. UA is obligated, under this rule, to give me $3000. But I don’t think they’re required to send me to EWR. I guess I might have booked EWR-LAX to visit my sister, and they’d have to reimburse me for that flight?
The problem, of course, is that we are trying to travel cheaply, not screw airlines out of money. It doesn’t really make me better off to book the above scenario, have UA cancel my flight, and then get $3000 to give to the Four Seasons and $1000 to give to AA for my transcon flight. And then there is a risk that UA will call my bluff and honor the ticket! Now I’m stuck staying at the Four Seasons, when I might have otherwise stayed somewhere on points for free. The only way to hedge against that is to… not book expensive non-refundable stuff on the other end of your trip. But that messes up the ‘screw the airline’ plan.
It’s not clear where you live in the above example, but if you book non refundable flights and some reasonably priced airbnb stays as parts of a big trip, then United could either pay you for all that stuff or honor the ticket.
I don’t advocate a “screw the airline” plan because you might get screwed as you note. I advocate a book other flights and lodging immediately that you want to enjoy because you’ll either get all that for free or influence the airline into honoring your mistake fare.
One thing gamers should start doing is calling the fares–good fares, or low fares instead of mistake fares. If you know it is a mistake, then maybe you should let the airline know about the fare so that you show integrity as a customer and the airline can be profitable. If there is a good fare or a low fare, as opposed to a mistake fare, then 14CFR 399.88 should provide for an enforceable contract between buyer and seller as two willing parties agreeing to terms and the consideration of a payment being rendered. Bottom line: Stop calling low fares, “mistake fares” as in doing so you are sort of admitting to cheating the airline as in losers weepers–finders, keepers.
Agreed that would be better for gamers.
One thing gamers should start doing is calling the fares–good fares, or low fares instead of mistake fares. If you know it is a mistake, then maybe you should let the airline know about the fare so that you show integrity as a customer and the airline can be profitable. If there is a good fare or a low fare, as opposed to a mistake fare, then 14CFR 399.88 should provide for an enforceable contract between buyer and seller as two willing parties agreeing to terms and the consideration of a payment being rendered. Bottom line: Stop calling low fares, “mistake fares” as in doing so you are sort of admitting to cheating the airline as in losers weepers–finders, keepers.
Agreed that would be better for gamers.