October 12, 2012 DOT Ruling on the UA 4-mile Affair
The DOT released its opinion on the UA 4-mile to first class tickets to HKG this morning.
“We have completed our review of United’s conduct regarding its recent Frequent Flyer fare sale to Hong Kong from the United States on its website. Our review found that the actual price of the advertised fare was never clearly stated during the booking process, thereby creating ambiguous circumstances in which it could be reasonably interpreted that the actual price of the fare was significantly more than the amount consumers paid at the time they attempted to purchase the fare, e.g., $40 plus 4 frequent flyer miles. Therefore, we are not able to establish that consumers, in fact, paid the full amount of the offered fare at the time of purchase. Accordingly, the evidence does not support a finding that United engaged in an unfair and deceptive practice in violation of the relevant statute. Please note that, regardless of the outcome of our investigation, consumers are free to pursue claims (e.g., a breach of contract claim) against the airline in an appropriate civil court for monetary damages and other remedies particular to their situation.“
Let’s look at the good and the bad of this ruling.
Previously, the DOT stated that §399.88 only applies to air travel that touches the US is some way. So this finding seems to state that if the fare offered is consistent throughout the booking process then the Airline will be in violation of the CFR if they change it post-booking. This is bad for Swiss who just canceled a bunch of RGN-Canada fares which routed through the US. The price there was consistent throughout the booking process.
This gives the airline a reasonably easy out to defeat mistake fares. With the 4-mile fare it showed the correct amount of miles and then at the very end charged the buyer 4-miles. Now, the ruling states that §399.88 only applies when the fare is consistent throughout the booking process. So, all the airline has to do is make the fare inconsistent in the booking process.
Say I wanted to book a ticket from Phoenix to Atlanta on UA.com
I go to UA.com and plug in the cities and dates.
UA.com spits out flights but instead of prices, I see words like “cheapest.” I click on cheapest and I see “$400.00 fare in event of mistake” and at the bottom of the page I see “$400.00” and “total with Taxes and Fees $180.00” and I pay $180.00. United could then go back to the transaction and determine later at its own convenience whether or not I had purchased a “mistake” fare or not and demand that I pay the additional $220.00 or cancel my ticket.
This would be in line with the ruling above, and manifestly unfair to the consumer. However, it would insure that UA could go back to anyone who bought tickets through their website and cancel their tickets in the event of a “mistake.” While this would not work through OTA’s Expedia.com which compares prices across airlines, it would still effect a substantial amount of business.