Honoring Mistake Fares

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The Flight Deal is about finding great deals to amazing destinations. Earlier this week, The Flight Deal posted an amazing deal to Tel Aviv – under $420 for a round-trip ticket originating from multiple U.S. cities. Visitors who follow The Flight Deal were able to book the fare before the airline realized the mistake fare and pulled it later that afternoon.

Some of those fortunate enough to book this deal were concerned that the airline would not honor the mistake fare by either increasing the prices post-purchase or cancelling the tickets altogether. A mistake fare is essentially a pricing mistake — a low fare accidentally entered into booking systems due to a computer problem or human error. In some cases, the airline left too many zeros off the dollar price ($500 instead of $5,000); in other cases, there is a currency conversion mistake. In the Tel Aviv deal, the fare was filed without fuel charges. These mistake fares happen from time to time. In the past, several airlines have honored mistake fares for public relations reasons. Other airlines, however, have cancelled tickets or have required consumers to pay the difference between the mistake fare and the correct fare (a post-purchase price increase).

To address consumer concerns of purchasing these mistake fares, the Department of Transportation passed 14 CFR 399.88, which became effective on January 24, 2012. (Note that this rule only applies to U.S. and foreign carriers that sell scheduled air transportation within, to or from the United States.) In their Answers to Frequently Asked Questions, DOT explains how the rule applies to mistake fares.

Does the prohibition on post-purchase price increases in section 399.88(a) apply in the situation where a carrier mistakenly offers an airfare due to a computer problem or human error and a consumer purchases the ticket at that fare before the carrier is able to fix the mistake?

Section 399.88(a) states that it is an unfair and deceptive practice for any seller of scheduled air transportation within, to, or from the United States, or of a tour or tour component that includes scheduled air transportation within, to, or from the United States, to increase the price of that air transportation to a consumer after the air transportation has been purchased by the consumer, except in the case of a government-imposed tax or fee and only if the passenger is advised of a possible increase before purchasing a ticket. A purchase occurs when the full amount agreed upon has been paid by the consumer. Therefore, if a consumer purchases a fare and that consumer receives confirmation (such as a confirmation email and/or the purchase appears on their credit card statement or online account summary) of their purchase, then the seller of air transportation cannot increase the price of that air transportation to that consumer, even when the fare is a “mistake.”

A contract of carriage provision that reserves the right to cancel such ticketed purchases or reserves the right to raise the fare cannot legalize the practice described above.  The Enforcement Office would consider any contract of carriage provision that attempts to relieve a carrier of the prohibition against post-purchase price increase to be an unfair and deceptive practice in violation of 49 U.S.C. § 41712.

— http://airconsumer.dot.gov/rules/EAPP_2_FAQ_01-11-2012final.pdf

The rule bans airlines from increasing prices to a consumer who has purchased a ticket and paid in full:  “if a consumer purchases a fare and that consumer receives confirmation (such as a confirmation email and/or the purchase appears on their credit card statement or online account summary) of their purchase, then the seller of air transportation cannot increase the price of that air transportation to that consumer, even when the fare is a ‘mistake.’”

But what if the airline chooses to cancel the tickets instead of requiring a post-purchase price increase? According to the rule, the airline is also prohibited from canceling such tickets as to do so would be considered an unfair and deceptive act under 49 U.S.C. § 41712. The DOT rule also negates any airline provision in the contract of carriage reserving the right for an airline to cancel ticketed purchases made on a mistake fare.

Unable to enforce post-purchase price increases or to cancel such tickets, the airlines seem required by the rule to honor their mistake fares. This DOT rule was first put to test when Korean Air cancelled First Class tickets that were based on a mistake fare from Myanmar to the U.S. In that situation, the DOT required Korean Air to honor the mistake fare.

As for the Tel Aviv deal posted by The Flight Deal, the airline stated they will honor the mistake fare. (source: http://blogs.jta.org/telegraph/article/2012/08/09/3103421/breaking-el-al-to-honor-mistake-fares-offering-direct-flight-add-on)

To send a complaint to the DOT for tickets not  honored, please follow this link: http://airconsumer.ost.dot.gov/escomplaint/es.cfm

In summary: If an airline flies itinerary involves flights to or from the United States, mistake fares will likely be honored due to Department of Transportation regulations.

 

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Responses to "Honoring Mistake Fares"

  1. CDKing says:

    You may want to update your summary. RGN round 3 has shown that you actually have to touch US soil.

    Reply
  2. Mistake Fares – How – What – When – Where / Nate Buchanan says:

    […] 1. The DOT requires airlines to honor mistake fares because otherwise it would be considered deceptive advertising. You can learn more about this regulation in the informatative blog post written by The Flight Deal. http://www.theflightdeal.com/2012/08/10/honoring-mistake-fares/ […]

    Reply

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