How Mistake Fares Get Filed and Why Korean Messed Up

Airlines can accidentally file the wrong fares. I should know, since I’ve personally done it twice. That’s fine, people make mistakes, but it’s the recovery that counts. The recovery from the latest mistake, Korean filing a sub-$500 fare from the US to Palau, is a great example of good intentions gone awry. Korean tried to do this right, but it simply waited too long.

Not So Fast, Palau

You might think that all fare filing is a highly automated process, and much of it can be, but there is still plenty of opportunity for human error. In my days doing pricing at America West, I messed up twice.

The first was a web-only fare (back when airlines still did that) between Baltimore and Phoenix for less than $100 roundtrip. This was in the fairly early days of web booking, and we caught it quickly. I don’t think one seat was sold. With the other, I wasn’t so lucky.

I accidentally filed a $62 roundtrip fare between Indianapolis and Santa Barbara. I don’t remember which, but I had either left off the leading digit or the trailing digit. (Meaning it was supposed to be $462, or something like that, or $620.) A travel agent in Indiana found it and promptly told all his friends. We had sold a few dozen tickets before we found the error and fixed it. In the end, we honored the fare, but I always got ribbed for it.

Filing mistake fares is sort of a rite of passage. It wasn’t a matter of “if,” but “when” you would do it. I fortunately never filed the dreaded zero-dollar fare, but in a way, those are easier. Those are very clearly mistakes and you can probably get away without honoring them.

But for other mistakes, it’s more murky. The latest flub came from Korean Air. I only know about this because I received three different emails on the subject from people who were rightly furious with the way it was handled.

Back in September, Korean filed fares from the US to Palau for between $485 and $560 roundtrip all-in depending upon the origin city. This is clearly an unbelievable deal, and had to be a mistake (others say it’s plausible, but it’s really not). Korean had it out there for 3 or 4 days before they found it and pulled it. A FlyerTalk thread clearly had people warning that it was a mistake fare, but of course, everyone jumped on it with the hope that Korean would honor it. (I don’t blame them at all.)

Now, once an airline figures out it made a mistake, it pulls the fare and then decides whether to honor it or not. There is no set rule on how this should work, and every airline handles it differently. After the fare disappeared on September 6, people waited to see what would happen. Nothing happened, so the assumption was that the fare was being honored. People started booking hotels, making plans, etc.

Then, on November 7, two full months after the fare was purchased, Korean Air sent an email to everyone saying that the fare wouldn’t be honored. The process would be as follows:

Korean Air is offering affected customers a full refund of the fare paid, or the opportunity to purchase a ticket on the same itinerary at a fare equal to the lowest fare offered by Korean Air in the market, or the closest similar market, during the past year.

Korean Air also is reimbursing customers for expenses incurred as a result of having purchased the incorrect fare, such as cancellation fees for flights, hotels, ground transportation, and other arrangements.

In addition, Korean Air is offering those passengers a $200 travel voucher for a future flight to any Korean Air destination from a U.S. gateway.

Now, had Korean put this out the day after the fare was found, then it would probably be acceptable. Oh sure, some people think that airlines should honor a mistake fare no matter what, but to me this seems like it would have been a generous response. But doing it two months later is just ridiculous.

Sure, this means people won’t be out any money, but it fails to account for the fact that people made plans that can’t easily be replaced. Some people scheduled this as their trip over the holiday period. Others picked long weekends. There was one person that was even planning on leaving on November 16. This was canceled a mere 9 days before departure.

Now what do those people do? It will be significantly more expensive to plan a different vacation for the holidays, so people are effectively screwed out of having a real vacation during that time. Again, had Korean canceled this on September 7, then it wouldn’t be a big deal. But this is bad.

So what the heck happened? I’m told that the problem was that Korean wanted to do this right, and that means the airline did it wrong. See, the airline took so long not only discussing internally what to do but also checking with regulators to make sure they were following any laws that might exist, that by the time a decision was made, two months had passed. And that’s how they ended up in the predicament.


17 Responses to How Mistake Fares Get Filed and Why Korean Messed Up

  1. Nik says:

    I booked 2 tickets at 0 (+ 230 taxes) euro with Lufthansa from Helsinki to Caracas. I waited more than 3 months and they didn’t cancel it but then I got opportunity to relocate to another country (continent) 2 months before the scheduled date. So I cancelled those two 0 Euro tickets to get the taxed back. I felt both bad and happy. So pity.

  2. Oliver says:

    How long do I have to correct a booking mistake when purchasing a ticket? 24 hrs with domestic carriers, I believe. That’s how long I think airlines should have (max) to back out of a ticket sale if it was a mistake on their side.

    Do you know if anyone has plans to take Korean to court over this?

    • CF says:

      No idea if anyone is going to take them to court, but I don’t see how they’ll win. As long as the airline refunds your money, they it should be legal.

  3. Oliver says:

    By the way, Cranky, any idea how often airlines fat finger fares such that they end up being higher than intended? And will they happily (and without prompting from the affected customers) refund the difference if the mistake is discovered? (“oops, we charged you $399 when we really meant $299… Here’s the difference and sorry for the inconvenience”). Can’t imagine that’s what would happen.

    • CF says:

      I did that as well. I remember filing a $9000 domestic fare once. Didn’t need to worry about anyone buying that one!

      Fares accidentally filed higher are never really an issue. There are usually multiple structure fares at fairly small intervals along the way. So if a fare is accidentally filed too high, then the next fare may be only a few bucks more and that one will price.

  4. Just how many people would want to go to Palau anyway that they wouldn’t just honor the price. Did they screw up enough to make every booking class on the plane $500ish? If not there would not be that many incorrect fares sold on every flight that they couldn’t honor the tickets. But either way that was a long time to wait to tell people they wouldn’t honor the fare.

    • “Just how many people would want to go to Palau anyway that they wouldn’t just honor the price”

      If they are divers, there would be a big demand. 90% of travelers to Palau are divers. It’s really the only reason to go to Palau, unless you’re either a native or a WW2 buff. Palau is one of those prized dive destinations that’s not cheap to get there and not cheap to stay once you do get there. I’ve done it twice. I may do it again in a few months.

    • David M says:

      Capacity controls on the booking class would limit the number of seats available at the mistake fare on an individual flight (unless the mistake was in a high fare bucket, like Y).

      As far as the numbers of people that would go to Palau, the FlyerTalk types wouldn’t necessarily care. Since Korean is a SkyTeam member, any of them that are big in a SkyTeam member program (like Delta’s SkyMiles) would look at is as a mileage run opportunity.

    • CF says:

      As David M says, a lot of these are the FlyerTalkers who just wanted a cheap mileage run. I have no clue how many people actually booked a trip for the sake of the trip itself, but those are the ones I really feel sorry for.

  5. A says:

    Honestly, I think the airlines should have to honor “mistake” fares. In the retail world there is no way to get a customer to return or pay more for merchandise they already left the store with. If there was a mistake price the retailer eats it. Just because commerical air travel is a service often bought weeks and months in advance shouldn’t be a free ticket to correct mistakes. I work in a service field and if we err on the low side while writing a contract there is fat chance that the client would pay more. We could try to play an angle for additional services to make up the shortfall, cough cough, similar to “fees” in the airline industry. Otherwise I think there should be some protection to the consumer that airlines cannot backpedal and must honor services already sold.

  6. travelnate says:

    When I was managing pricing at Mesa Air Group, we had some technical glitches with our $9 fare that put me in a few screaming matches with our CEO. Apparently the GDS’s now have price-error detection systems, so when a “bad batch” comes thru via ATPCO, the GDS (Worldspan, Amadeus, Sabre, Galileo) will suppress the fares until they are verified with the airline, or kick them out. Fares are done in “batches” three times a day at set times (although I’m told this is now changing to every hour).

    And that’s exactly what happened. Our $9 fares were available only on Sabre for 3 days until I found out we weren’t on any of the other systems. Airlines typically don’t subscribe to the other systems, but after this we did. And it didn’t help that the GDS’s had the wrong e-mail and contact information, otherwise I would have been notified and been able to get the fares fixed by the next batch.

  7. Jim says:

    What they could have done is e-mailed everyone immediately and said something like “this fare was a mistake and will not be honored, and we will send you further information on your options for compensation after consulting with regulators” or something like that. That way they could have taken their time without having people make plans in the mean time.

    • CF says:

      I think the issue was Korean wasn’t sure whether or not is had to honor the fares or not. The airline went to regulators to make sure it was acting legally. But they should have said something . . . anything.

  8. MeanMeosh says:

    There’s really two problems with mistake fares. The first is the increasing difficulty to determine what really is a “mistake” thanks to all the gimmick fares out there these days. Especially if you’re from Europe or Asia, you’re probably used to the “1 euro”, “1 rupee”, etc. promo fares that budget airlines like to advertise (yes, it’s a base fare, but I used to get legitimate deals all the time like $40 all-in from HYD to DEL). You guys might also remember the fracas BA dealt with last year with the $450 fares ($40 base plus taxes/fees) to India. That may sound crazy to some, but considering you can get fares to India for less than $1,000 depending on when you go, it really isn’t that far fetched. Where do you draw the line on what’s an “obvious mistake” and what isn’t, especially if you’re not an experienced airline geek?

    Second, the airlines have done this to themselves by the blatant double standard they impose for mistakes. If you the traveler mess up and enter a wrong name, wrong dates, etc., you (usually) have 24 hours to fix it. Don’t figure it out until 2 or 3 days later? That’ll be a $150 change fee plus the fare difference, please. But the airlines expect to be able to tell us they won’t honor a fare when they don’t discover a mistake until a few days or even weeks (or months in this case) after the fact. That just isn’t right, and leaves a bad taste in people’s mouths.

    • CF says:

      It’s true – sometimes mistake fares are hard to discern, but a $500 fare from the US to Palau is clearly a mistake.

      And in a way, they did pay a change fee of sorts with the $200 voucher for future travel. Not quite the same, but it is something.

      • Chris says:

        ‘something’ would have been a $200 payment not a $200 credit for future travel…

      • “It’s true – sometimes mistake fares are hard to discern, but a $500 fare from the US to Palau is clearly a mistake.”

        I can’t with certainty say that’s the absolute case for every airline because I once got a multi-city $500 fare from the US to Palau after three days in Yap via COs fare desk. Granted, it was from Hawaii and granted it was almost four years ago and fuel prices have gone up. But if I saw a sub $1,000 fare from SFO to ROR go up today on UA/CO, I would think it was legit.

        The fact that it was Korean Air would be a red flag for me however. Delta and Asiana too. It has to do with where their fares on the route historically have been and nobody that flies to ROR comes close to matching UA/CO’s fare

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