Tuesday, December 30, 2014

Regulators Say Etihad Must Honor Its Mistake Low Fares -- But the Rules May Change

Sometime on Christmas morning, a computer system at Etihad Airways began to issue tickets at ridiculously low fares, including $187 from New York to Abu Dhabi and $277 from New York to Johannesburg.

Very quickly thereafter, various websites and bloggers began to publicize the mistake. A Forbes story on Saturday said thousands of tickets were issued after airfare monitoring sites including TheFlightDeal, FlyerTalk and SlickDeals shared the news, as did various bloggers who write about frequent flier points and airfares.

Etihad eventually recognized the error and dropped the fares around midday Eastern Time.

The U.S. Department of Transportation requires airlines to honor all tickets it issues, even if a mistake caused tickets to be issued at a low price.

But the DOT is reconsidering that requirement because of the existence of all the websites and bloggers who, in the words of travel writer Joe Brancatelli, “live and die for this stuff.”  If an airline makes a mistake, it can become known extremely rapidly to tens of thousands of people.

The department’s ongoing review makes no difference to Etihad’s decision to honor the tickets, the carrier said.  “We did it because it is the right thing,” said Etihad spokeswoman Katie Connell. “We would have done it either way.” Etihad has not disclosed the number of mistaken-fare tickets it issued.
Brancatelli said the DOT “doesn’t want to be protecting the gamers.

“A sub-industry has popped up, and now an airline that files a mistaken fare could be at risk for thousands of tickets because people move so fast,” Brancatelli said.

“The DOT has said that it never meant the regulation to handcuff an airline when it was obviously a mistaken fare,” he said. “Now the DOT is threading the needle, trying to figure out when they should allow airlines not to honor mistaken fares.”

DOT regulations generally “prohibit sellers of scheduled air transportation from increasing the price of a ticket once it has been purchased,” a DOT spokeswoman said. “A purchase is deemed to have occurred when the full amount agreed upon has been paid by the consumer.

“Therefore, if a consumer purchases a fare and receives a confirmation (such as a confirmation email and/or the purchase appears on a credit card statement or online account summary) of his or her purchase, then the seller of the air transportation cannot increase the price, even when the fare is a ‘mistake,’” the spokeswoman said.

However, last May, the department “issued a notice of proposed rulemaking that, among other things, solicits comment on how to best address the problem of individuals, some of whom are very well-informed and sophisticated with respect to air travel, who opportunistically purchase very cheap tickets knowing that the fares are likely the product of a computer programming or other error,” the spokeswoman said.

The DOT still wants to ensure “that airlines and other sellers of air transportation are required to honor mistaken fares that were reasonably relied upon by consumers,” she said.

The comment period on the proposed rulemaking ended in September, and the agency is now considering what its next step might be.

The agency’s prohibition against post-purchase price increases applies only to itineraries that begin or end in the U.S. or include a stopover of 24 hours or more in the U.S.

One passenger had the unfortunate experience of purchasing her ticket to Abu Dhabi through Expedia only to learn that it was not honored by Etihad.

Around 12:30 p.m. on Christmas day, Nana Opong-Owusu, a clinical research associate who lives in Atlanta, paid $227 each to purchase three tickets to fly JFK-Abu Dhabi on Etihad in October. She received confirmation itineraries from Expedia at 12:42 p.m. Later that afternoon, however, Expedia contacted her to say that it would void the ticket because Etihad would not honor the fare.

On Tuesday afternoon, Expedia called Opong-Owusu, in response to her inquires, to say “that although I purchased the ticket at a specific fare, when they tried to book the ticket, Etihad refused to honor it at $227 because they had then ‘corrected’ the glitch and the fare was then posted as $900+,” she said.

Subsequently, Etihad emailed Opong-Owusu and said it would review her case.  She noted that the tickets of some friends, who purchased after she did, are being honored.

(Ted Reed - Forbes)

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