KRALEV: U.S. warns airlines on fare mistakes

• Article
• Comments ()
• Click-2-Listen

By Nicholas Kralev ON THE FLY

Airlines are among the few businesses that sometimes want customers to pay for their mistakes. Every once in a while, a carrier cancels issued tickets after it deems its own published fare was an "error." The Department of Transportation tried to teach such companies a lesson last week - sort of.

Both U.S. and foreign airlines have filed mistake fares in recent years, as has been reported in this column. Some of the airlines, such as United Airlines and Alitalia, have honored purchased tickets, but others, such as Swiss International Airlines, have not.

The DOT's Wednesday ruling was directed at British Airways. Last month, it published an unusually low fare from the United States to India. The base was $40 round trip, though British doesn't include its $370 fuel surcharge in that amount and, unlike most airlines, passes it on as a "tax" rather than as part of the ticket price. The actual taxes were an additional $150, with slight variations depending on the actual city pairs.

While $560 is several hundred dollars less than a regular advance-purchase fare to India, airlines have been offering unprecedented promotions in the past year to attract more passengers. In addition, that fare didn't seem an obvious mistake like the Swiss $300 business-class price from Canada to Europe and India, with a $0 base, about which I wrote in January.

The British fare stayed on the market only a day, but that was enough time for hundreds of tickets to be purchased. Three days later, the airline decided that a mistake had been made and unilaterally canceled all those tickets.

Many of the affected customers were seasoned travelers who know how to play the frequent-flier game, so they decided to put up a fight. After their pleas were rejected by the carrier, they turned to DOT. Some of them said they had made nonrefundable hotel and car-rental reservations and even had bought other plane tickets in conjunction with what they had thought would be their main trip.

DOT said it "conducted a full investigation over the cause, magnitude and consequences of this incident" and determined that "British Airways' unilateral cancellation of all the reservations" made on Oct. 2 "has caused financial harm to a large number of consumers."

"We believe that all airlines should accept some responsibility for even the erroneous fares they publish. Thus, we believe that British Airways should compensate affected consumers to make them whole," the department's Aviation Consumer Protection Division said in a letter to travelers who had filed complaints.

However, the department's refusal to force British Airways to restore the canceled tickets was a big disappointment to many customers. They pointed out that when passengers change or cancel their travel plans, they usually pay hefty penalties.

"The DOT ruling was a good first step, but the apparent agreement that they reached with BA in terms of making customers 'whole' appears to fall woefully short of actually doing so," said Seth B. Miller, who bought a ticket from New York to Chennai and filed a small-claims-court case, which is scheduled to be heard by a judge on Thursday.

British Airways "sincerely" apologized to customers for the "inconvenience" and offered them a $300 discount on new tickets to India, but it imposed strict rules. The travelers' names must match those on the canceled bookings, they must make the new purchases by Thursday and complete their trips by Sept. 30, 2010.

"British Airways is prepared to reimburse you for penalties imposed by an airline or ground-service provider as a result of your cancellation of air or ground arrangements in reliance on your canceled British Airways booking," the airline said.

"British Airways will also reimburse those passengers who necessarily incurred added airfare costs in restoring a preexisting booking or reservation from the United States to India, if that booking or reservation was abandoned as a result of making the canceled booking on British Airways," it said.

"Restoring" a previous reservation on another airline will most likely be very tricky. Even if British Airways reimburses you for the cancellation fee you paid, it's hard to imagine that the other carrier will just resurrect an invalid ticket. It probably will price the new one based on today's fare, which could be much higher than what you paid before. It's unclear whether British will cover the difference.

In any case, if you are among the affected travelers, arm yourself with all the documentation you have and make sure the London-based airline pays you back every cent you spent to prepare for the trip that never happened.