Topic of the Week: 4 Miles to Get to Hong Kong

United

United had a glitch this week that allowed people to book award tickets to Hong Kong for only 4 miles. As you would imagine, United has said it won’t honor that rate. Go figure. If you tried to redeem 4 miles for a ticket to Hong Kong and didn’t realize it was mistake, then you aren’t very bright. Yet there is already talk about lawsuits. Oh, please. And now there are rumblings that the DOT might require United honor this. Are you f*(ing kidding me?! What do you think?

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47 comments on “Topic of the Week: 4 Miles to Get to Hong Kong

  1. Honour the booking, but at the usual mileage redemption, and waive the taxes/fees – acknowledges the f**k up by United, yet doesn’t really reward ‘ambulance-chasing’ behaviour of those who booked for 4 miles.

    1. Anyway there was a whole storm about the deal, ethics, legalities, posting on the entire blogosphere including FT, MP, BoardingArea and the like so I’m not gonna rehash any arguments here. I think the bigger problem was expenses for UA as most of the F-class bookings were on partner airlines (I mean given a choice of Asiana/ANA F or UA F what would you choose?)

      UA is being fair in allowing people with tickets starting on or before tomorrow to fly as to not disrupt plans and receive bad publicity. So those people who were smart enough to travel immediately lucked out.

  2. If you go to walmart or target shopping and the price is different than what is scanned at the register then they have to honor that price. Why are the airlines exempt from this? If they screwed up then they should bite the bullet and honor it. Yes, I do understand its 4 miles and it would never be that low, but they should be spot checking what they put in for fares.

    1. Who says that airlines are exempt?
      As I understand it the rule says, that if United had put in a wrong fare then they would have to honour it. But they didn’t do that.
      The correct amount of miles had been shown throughout the whole booking process. Only the total amount was suddenly 4 miles. So, now wrong fare or wrong amount of miles needed was stored in the system. It just spit out the wrong total.
      There were also some other minor details that allowed United to cancel those award tickets despite the rule set by DOT.

      1. Nope, that isn’t the case. Airlines weasel their way out of honoring “fat finger” fares all the time. Witness the BA fiasco on those 40 pound base fares a couple of years ago. BA refused to honor the fares, if I recall correctly.

        1. Whoops – guess I should have read the article more closely the first time…

          Since United is a U.S. carrier, apparently they can be forced to honor fat finger fares by the new DOT regulations. Interesting to see how this one turns out.

    2. Michael you absolutely wrong! A retailer, or any other merchant for that matter, is not under any obligation to honor a mistake. What a f***ed up society that we would be living in if that where the case. Every merchant would then calculate what the chances that a mistake would cost them revenue, and then simply increase all cost to off set the chance that some time they would be forced to pay for a pricing mistake. Any rules are pricing that were meant to keep a malicious merchant from purposely misrepresenting the true price of something. By your and ralfinho’s comments I’m sure you will be lined up to vote Obama again.. “long live socialism”

  3. LOL. I was looking forward to your response. Morally, philosophically, I don’t think they should have to honor. But this is a public company that doesn’t give a flying f**k about it’s customers, and the DOT rules support them honoring it. What did that judge say – “the only way to fix bad law is to practice it”. Well I intend to practice with United/DOT.

  4. Everyone – the passengers, the airline, the DOT – know that this was a mistake. I doubt any of the folks who got one of these tickets actually thought, “Hey! A 4-mile flight to the other side of the world; that makes sense!” Besides, the airline industry hardly cares about honest mistakes when passengers make them — if you make an obvious mistake booking a flight, good luck getting that changed without penalty for no other reason than you made an “oopsies” days later. That’s irrelevant to the question of whether UA will have to honour these tickets. Some say this is United’s comeuppance for relying on an inferior IT system. Some say this is karma’s payback for United’s strict administration of rigid policies. It doesn’t really matter. Nor is there any need to try to compare this legally to another situation; you’d find plenty of examples that support honouring it and plenty that don’t. Only the legal regulations that pertain to this industry are useful, and their plain reading doesn’t seem to be in UA’s favour. If the KE incident a few months ago is to serve as any precedent for consistency, I’d suspect United is going to have to buck up and absorb the blow.

  5. United (and I would imagine collaboratively with the DOT) have come up with an interesting solution.

    DOT has to stand by its regulations. They have to say the regulations apply to award tickets. But no one reasonably wants to make United honor this, and I say that as the person who first publicized this error in North America. (It was, apparently, being discussed first on the Chinese-language frequent flyer site Flyertea.)

    So United maintains that the correct pricing was displayed throughout the booking process, and is posted prominently on its website. Thus there was no deceptive pricing. Folks who had the right number of miles in their accounts paid that normal price. Folks who didn’t have the usual number of miles in their accounts didn’t actually have ANY miles withdrawn (the 4 miles per person were never even debited).

    United is cancelling the tickets FOR NON-PAYMENT, which is permitted under DOT rules.

    No deception, and not raising the price after booking.

    This allows United to not honor the mistake, and the DOT rules to be affirmed in the process.

  6. Anyone getting an international award ticket for 4 miles and thinking that that is their “right” is kidding themselves and acting like a spoiled child. If a Porsche dealership advertises a new 911 for $10,000 instead of $100,000 in the local newspaper, do we expect them to “honor” the advertised price?

    Threats of lawsuits, demands for points to compensate buyers for their anguish, etc are all very, very silly and reflect poorly on the frequent flier community in general.

    Entitlement and greed isn’t very attractive.

    1. You are spot on I believe. It was the general display of that behavior that drove me from the FlyerTalk and MilePoint sites. People need to step back and take a good long look at themselves.

    2. Ethics and morality are fine discussions, but they have nothing to do with the legal question of whether these tickets should be honoured. This industry has its own regulations and legal principles, so an analogy to a car dealership is completely irrelevant.

      Besides, an advertisement is treated in law as an “invitation to treat”, and nothing more. These tickets were offered, accepted, and consideration was given (payment, which in law can be trivial – you’d be surprised at how many huge corporate deals are completed legally for the princely sum of $1). Offer + acceptance + consideration = valid unforceable contract, subject to certain situations that render the contract void or voidable. A mistake is one of them in general contract law. However, the DOT regulations have expressly and legally over-ridden that traditional rule in contract law with the effect being that mistake is no longer a valid defence to repudiating a contract with respect to airline tickets. That’s it.

  7. I don’t condone knowingly booking fares that are obvious mistakes, and I’m pretty sure 4 miles for a first class award ticket to HKG falls into that category.

    However, I can see why folks would be upset. It’s because of the double standard the airlines have used for years when it comes to mistakes. If a customer makes even the smallest of errors, such as transposing a letter on a last name, or typing in the wrong date, the airlines are quick to throw “no waivers, no favors” in your face, and tell you your only option is to buy a new ticket, complete with change fees and fare differences. But if the airline makes a mistake, whether it be a fat finger fare, or a schedule change, whatever, they basically give you the Italian salute and say “sorry, we know we screwed up, but you get nothing”, except maybe a refund on your original purchase price. With the new DOT rules, perhaps the fat finger issue goes away, at least on U.S.-based carriers. But I can understand why some folks wouldn’t give a second thought to trying to give the airlines some comeuppance.

    That being said, this one seems like an obvious IT glitch, and I don’t particularly like it when people intentionally book this kind of stuff, just hoping for whatever compensation usually gets doled out. Perhaps a fair settlement would be to allow the award bookings at a reduced mileage amount – say, 10,000 miles off of the “normal” award amount – as a gesture of goodwill for the “oops”.

    1. Actually, airlines now have to give 24 hours after the ticket is bought for free cancellation for domestic tickets (and many airlines had such a policy before the rule was put into place).
      Because of this, I wouldn’t call it unreasonable for United to cancel such tickets IF they do it very soon after they were booked, which it sounds like they did.

  8. How many were really purchased during the error period? Since it’s not a matter of life and death, the airline should have to honor it since it was their error.

    At least in the USA we are used to retailers with their ‘buy one get one free’, ‘no tax weekend’, ‘free tote bag to the first 100 customers’, ‘scratch coupon to see how much you save at check out’, and all the big savings the day after Thanksgiving. So why would a 4 mile trip not seem like a speical promo/deal.

  9. I don’t think any reasonable person would have believed this wasn’t a mistake. United displayed the number of miles correctly, which is what the DOT is concerned with – they just collected the wrong amount. United also makes its award chart readily available to MP Members so there’s little arguing what the understanding is. If the DOT decides on enforcement in this case, airlines will simply budget to honor these mistakes wholesale, and will pass the costs of honoring mistakes along to passengers in the form of fare increases. It seems we’ve spent the 30 years since deregulation overregulating everything not explicitly covered by the Act.

  10. I get the argument if you were at a cash register and checked out they couldn’t come back and charge you more, but I think this is different. If there were a “check-out” process, someone would have noticed the mistake and not let them check-out.

    If I saw a deal like this I’d certainly jump at it, but there’s the old “too good to be true” so I’d probably wait before making my hotel reservation.

    1. Actually, in many countries – and many American states – consumer protection legislation exists such that if you show up at the cash register and the price rings up incorrectly, the retailer is required to honour it.

      Likewise, legislation – through the DOT’s regulations – exists which essentially provides for the same result here.

      The idea of “too good to be true” usually holds true in most cases, but in industries where consumers have traditionally faced unfair bargaining positions and been taken advantage of, this is the price companies have to pay for their mistakes. That’s what happens when we explicitly forbid relying on an obvious mistake to refuse performing their end of the deal, which is exactly what’s happened in this industry.

    2. If you’re using that analogy, where is the “cash register” with an airline? Its after the product or service is picked up? I’d argue the “cash register” doesn’t start until you check in for the flight.

      1. You might argue that but most people in their right mind would have no hesitation in telling you you’re wrong. The “cash register” is the point you pay for it, same rule applies for good bought over the internet where the concept of picking it up doesn’t exist.

  11. From an airline perspective: I’ve done pricing/rev mgt for a few airlines and have had only 1 glitch. We honored the fares, not many purchased because I caught the error right after the ATPCO upload (we submit our fares to an agency that distributes them to the other airlines/systems only a few times a day). I was glad that our CEO allowed us to honor the fare, and he didn’t get mad at me, he said he did the same thing once but cost the airline a lot more money. He didn’t demand any new changes to how I do my job, as it was just a typo in FareManager (I forgot to add a “0”), but the fact we audit the filings, we caught it and it was only out for sale for 4 hours. And we never made the news (was an $8.40 fare instead of $84.00).

    As a frequent flyer and ‘regular’ on FlyerTalk – airlines need to honor their goofs and errors. I took part in the Great Messicana First Class giveaway, where someone filed $150 first class fares (roundtrip) to Cozumel & Cancun. I did get an email from Mexicana advising they will honor the fare however the fare rules will apply to the lowest economy fare and I won’t be eligible for frequent flyer miles.

    I also get there’s a lot of “entitlement” feelings over there @ FT. Many of us fly so much that people feel the airlines ‘owe’ us. I don’t take that attitude, but I would be in that same crowd if one of my ‘preferred’ airlines did a glitch – I’d be all over it in a heart beat.

  12. Having read some of responses off the USA Today web site (your link cranky) Its no wonder I have had my views shaped about the litigious driven ethics(?) of this great country, and why its’s the center of the universe for the legal beagles – 4-air miles sure its for real isn’t it durhhh. And so many people are ill informed about United and Continental, its obvious that they fly little, but for those who are caught in the middle I guess there does need to be some middle ground with United. Maybe Jeff Smisek can personally welcome you aboard your next complimentary flight with United! !@

  13. DOT’s Enforcement Office has repeatedly claimed they have jurisdiction under 14 CFR 399.88(a) to apply unfair and deceptive standards to a “computer problem” or “human error” fare, forcing an airline to honor it. But applicability to mileage changes is an open issue. 399.88(a) doesn’t explicitly address the mileage issue, and airlines can challenge the Enforcement Office on this issue. They may have lots of reasons to do so, and DOT probably recognizes that.

    The obvious challenge to DOT splits the cash component (taxes and fees, which didn’t go up here) from the miles component (which did). To apply 399.88(a), DOT must establish that miles are legally equivalent to cash. At least today, they’re not. The IRS doesn’t treat them the same, and every airline makes clear that ownership of miles is retained by the carrier. In United’s case, it states “accrued mileage and certificates do not constitute property of the member” quite explicitly in the MileagePlus terms and conditions.

    Your cash is your property, and when you buy a ticket for cash, you provide that property ($) as valid consideration for future air travel. An exchange of value occurs. But when you exchange mileage, it’s the airline’s property that is exchanged for future travel. For this reason, the airline can argue that post-purchase changes in mileage, particularly when caused by errors or mistakes, are very different from post-purchase changes in cash.

    The stakes are very high here for DOT (in jurisdiction) and the airline (in public relations), and therefore I’d expect a quiet compromise. But application of 399.88(a) here is challenging and DOT likely knows it.

  14. Of course they made a mistake.
    However, if we, the passengers, make a mistake, United will force us to deal with our mistake. No do-overs. So why do they get a pass when they make a mistake.

  15. I have to concur with JBM, this is not a pricing issue. This is a rewards program issue. DOT jurisdiction is in this area is not as clear cut.

  16. The free media attention and “good-will” public relations bonanza that would have occurred had United honored the tickets could not have been purchased by the company for the cost of even a 100 round-trip tickets to HKG. An added bonus would be more people browsing the awards pages looking for additional errors in the future.

    However, by not honoring the tickets, United garners only negative press. Unfortunate decision.

    1. It’s going to take a lot more than that to move the PR needle. It seems like most people aren’t going to be happy unless United reinstates fares and services from the 1970’s.

  17. I agree with AbFabSkyLife that “If the DOT decides on enforcement in this case, airlines will simply budget to honor these mistakes wholesale, and will pass the costs of honoring mistakes along to passengers in the form of fare increases.”

    But this was not a case comparing to wrong item checked out at the cash register. It was wrong listed price. United should learn from their mistakes and honor it. If they don’t learn from their costly mistake they are just stupid.

    Whenever we as a consumer make a costly mistake; we get made at ourselves. Then some vouch never to let it happen again the next time around.

    I also agree with Todd in IAD. “…by not honoring the tickets, United garners only negative press.” You bet.

  18. I am unable to understand Brett’s indignation in defense of the poor old airlines, (as has been common amongst most bloggers over this issue.) We are expected to pay for our mistakes, and no one allows us of the hook! Put a wrong name on a ticket, show up late for a flight by mistake, etc etc…..Do the airlines say, well poor old chaps, sorry you made a mistake, let us waive all fees and expenses and book you on the next flight???? What a laugh, of course not. So why should it be any different for them? They screwed up, and you pay for your mistakes…. I normally would defend Cranky and Co but this unfettered Airline Apologetic Attitude makes one wonder about the real independence of this blog and others, or just how much all the free trips to “review” etc are beginning to bend journalistic integrity…..Just a thought.

    1. I find it highly amusing that everyone thinks airlines won’t help with mistakes. You have 24 hours from the time you ticket to cancel completely with no penalty. So if you make a mistake, then you do have a way to remedy the situation. Why should the airlines not also have that ability?

      1. Back in May I managed to book a ticket for July when I wanted to book it for June. I rightfully caught it within 24 hours and canceled the ticket.

        What I find funny is many people here want the CHEAPEST ticket possible, but correcting for mistakes by the customer costs the airline some money. (Call center staff, lost revenue from not being able to sell that seat, etc.)

        What I find funny is the land rush that occurred when people found out that the ticket was so cheap. Its one thing if I someone across this actually intending to book the ticket, perhaps they were a few hundred miles short, but its a completely different thing with the folks who found out about this on the net, then tried to get UA to honor those tickets.

  19. Lawsuits, bad publicity; in my opinion airlines should focus on public perception; not doing anything financial stupid first. Offer passengers something to appease them after correcting the mistake. There will still be rumblings, but at least United shows that it’s owning up to its mistake and trying to do something about it.

  20. I dont fly any more unless its absolutely necessary. US Carriers are a rip off any way…Its always something wrong they do and its our fault…I dont patronage many places that are that way….Thus I dont fly much

  21. The contract for carriage is not actually binding until two things happen. First you have to pay for the ticket, and then you actually have to commence travel. As a matter of policy, almost no airline will try to increase the price of a ticket after it has been issued if there are no changes to the itinerary, however under the tariff, they generally are permitted to do so until travel actually commences. Once you begin the journey, the contract for carriage is set in concrete, and the penalties for the carrier ‘breaking’ the contract, are pretty stiff. (I’ve had it happen several times). For those who are curious, this is generally covered in what are usually referred to as Tariff rule 80 and Tariff Rule 90. Rule 90 is pretty expensive for the carrier.

    In short United was well within their rights to cancel these trips, as the contract wasn’t binding yet. Having said that, I think United could have handled the situation a whole lot better than they did.

  22. I think both sides are being dumb. United should honor the fares if that is what their site spit out. At the same time, I think they have every right to not honor it if they would prefer the negative publicity. At the same time if I am a customer that booked one of those flights I would want them to honor it, but would also be okay with simply some sort of compensation or discount if they won’t honor the lower price and I still want to take the trip.

    Business is won and loss on how a company handles mistakes, and often not on doing things right the first time. Mistakes are bound to happen, and how you handle them makes all the difference in the world when it comes to perception of the company.

    1. Compensation for what exactly? What terrible injustice have you suffered as a customer who knowingly booked this 4-mile fare?

      Mistakes happen, yes, and how “customers” exploit them determined how I judge them :)

  23. Hey CF, between your time at HP, UA, US, and E0 was there ever a written policy on what to do when this happened? It seems like instead of having to figure it out each time and piss off customers, one would think there’d be a set policy of we underpriced this accidentally only X, so we’ll give the customer that ticket, but if we loaded a $0 fare, we’ll give them 10% of what the actual price was..

    Although, I guess the new DOT rule makes it a moot point.

    1. Nick – I was only in revenue management at America West, and I don’t recall a written policy. I filed two mistake fares in my years there and both were honored. (Well, the first was a web-only fare that was caught so quickly that nobody bought it. The second was a different story.) But I don’t recall a written policy.

  24. Last year I booked two flights for my father using his Dutch first name, not realizing he’d changed it to the Anglicized version on his passport. When I discovered the mistake, both Delta and AirTran changed it and waived the change fee. Point being, the airlines don’t always penalize customers for a mistake.

    I can certainly understand United not wanting to honour mistake tickets, particularly if the bookings are on partner airlines where United has to pay for the seats. Perhaps a compromise would be to honour the tickets but rebook passengers on United flights. The cost of transporting a few extra award passengers on their own metal would be negligible, and as they’re still providing “First Class” service (quotes intentional) they’re technically fulfilling their end of the contract. The only losers would be a few UA elites whose upgrades from J to F wouldn’t clear.

  25. I am a little late to the party on this one, but to me this is an integrity issue by the consumer also. I personally do not feel right paying less than I should if I know the price is wrong. Many times at the grocery store something has been rung up incorrectly and I have corrected the error and paid more. That’s my two cents.

    1. I definitely understand and agree with the integrity issue, although in my mind it is a company’s responsibility to protect itself from undue losses that aren’t caused by illegal acts by a customer. (Its also their responsibility to protect themselves from illegal acts.. but thats a different issue.)

      If a company screws up and doesn’t protect itself, thats their issue. I’ve made a sport out of opening checking accounts for free money. I’ve been doing this for almost nine years with one of the banks. Every year I open an account, fulfill their requirements, get my bonus, then close the account. I’m amazed that they’ven’t put language into the promotion to allow them to address and counteract this behavior, but unlike airlines, I guess banks have money to burn.

    2. Great point, Quest. I was in Vegas over the weekend and a group of us went to a nice dinner Saturday night. We had already paid the bill and were ready to leave when I noticed that we had only been charged for two bottles of wine instead of the three we had. Could we have left and taken advantage of the restaurant’s mistake? Sure, but we didn’t. We grabbed the waiter and had him charge the extra bottle.

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