Like many others I watched the drama yesterday surrounding the United “sale” on tickets from Denmark. I also bought one. I did a bad job in buying it as I could have actually made use of an open jaw with a return to London for next November but I messed up on that front. So I just have my one way trip from London to Dallas. Or, I suppose I should say I did have that trip. As has been well publicized, United cancelled the bookings, citing a problem with currency conversion and a 3rd party vendor.
United is voiding the bookings of several thousand individuals who were attempting to take advantage of an error a third-party software provider made when it applied an incorrect currency exchange rate, despite United having properly filed its fares.
So, no extra time in the Lufthansa First Class Terminal for me. And I’m mostly OK with that, though I’m also not entirely sure that the DoT will allow this unilateral move to stand.
How it happened
The early reports of this mistake fare showed up with screenshots of ITA search results. Those results had the mispriced fares across multiple airlines and multiple routes. Once I got a ticket issued I reviewed the receipt online and checked the fare construction. The details there look to be correct for the filed fare.
/FC LON LH X/FRA M 981.90J77 UA X/DEN UA DFW M 10517.68F77OW NUC 11499.58 END ROE 0.638555
Combine that with United blaming a vendor and my guess is that ITA is at least part of the cause of the issues.
The fare construction above shows a total price of 11499.58 NUCs. A NUC is a Neutral Unit of Construction used by airlines to be able to price fares once and have them automatically convert to the local currency for pricing. In this case the Rate of Exchange (ROE) applied to that transaction is 0.638555 which results in a price of ~7,350 DKK, a number which appears to be off by a factor of 10; the price should probably be 73,500DKK to get to the $11,500 equivalent price. On top of that, however, something somewhere managed to make the 7350 DKK actually show up as 74 DKK in the fare construction via ITA. Similarly all taxes & fees were not what they should be.
United uses ITA as the back-end for its website and this is not the first time that bugs in the ITA code have carried over to the United booking engine. The part where United was actually able to process sales originating in London from a Danish point of sale is a great feature for customers, except when it exposes bugs like this. And that feature is rare to find online which is likely part of why United was the main avenue through which this error was exploited.
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I also wonder a bit about Errors & Omissions insurance and indemnity between United and the unnamed vendor. Does United’s contract with the vendor hold said vendor liable for screwing up transactions? If so, should United even bother to care about the mistake? And if not, why not?
How the DoT will react
The DoT has indicated previously that an airline making a mistake in pricing fares is not an excuse which justifies cancelling the tickets. In this case United’s claim is that it did nothing wrong but that a vendor it relies upon screwed up. One colleague suggested that United might try to claim that cancelling the flights is not the same as a fare change per the DoT’s rules. I think that’s an approach likely to fail. Another possibility is that the DoT agrees that because United didn’t directly mess up they could be exempt from the rules. But that opens up a Pandora’s Box of potential claims thanks to outsourcing anything and everything. Does the 3-hour rule no longer apply if the ground handlers are outsourced and that company makes a “mistake” in staffing levels?
One possibility here is that United is using the initial cancellation to rid itself of liability for all of the tickets booked to destinations other than the USA. The DoT has previously held that a trip between two other countries but via the USA (e.g. London to Sydney via SFO) is not covered under its policies. Getting those off the books but allowing trips to/from the USA would help a bit, even if it does not wholly solve the issue.
Or maybe the DoT will agree that it was an “honest mistake” and that the company should be let off the hook. I would be surprised if United took action without first consulting the DoT so the company probably knows what to expect much more than passengers do right now.
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The DoT also issued a Notice of Proposed Rule Making (NPRM) in May 2014 which, in theory, talks to this topic. Among things covered in the NPRM is the issue of deals spreading and “bad faith” bookings:
Since then, the Enforcement Office has investigated a number of incidents where passengers complained that airlines or ticket agents would not honor tickets that had been paid for in full because the sellers of the air transportation erroneously let them book flights for less than the actual value. The Enforcement Office has become concerned that increasingly mistaken fares are getting posted on frequent-flyer community blogs and travel deal sites, and individuals are purchasing these tickets in bad faith and not on the mistaken belief that a good deal is now available.
While that clearly covers “deals” such as this one, regardless of whether anyone is calling it a “mistake fare” in writing about it, it also seems that the DoT is not actually ready to act on this issue yet. The NPRM continues:
We solicit comment on how best to address the problem of individual bad actors while still ensuring that airlines and other sellers of air transportation are required to honor mistaken fares that were reasonably relied upon by consumers.
In other words, no changes are being made because the DoT is unsure how to correctly qualify the rules. At least that’s how I’m reading the NPRM. Especially as there are no further details offered in the document which would actually change the rules.
Why I’m a hypocrite
I bought one. I was thinking about possibly buying more, but I got one. And I planned to use it. The trip was less convenient than the coach flight I had previously booked but it would have been much more comfortable. And fun. But I also know that, at some level, it is wrong. This was not a legit price war/sale where the carrier meant to offer up cheap flights. But I booked it anyways.
I read the thread on FlyerTalk and saw posts about people buying 4 or 7 trips and I thought to myself, as I often do when mistake fares happen, “Pigs get fat, hogs get slaughtered.” I use that line a lot when talking about mistake fares, as though somehow it is OK to only book one but booking seven is wrong. And that’s hypocritical. But that doesn’t mean I won’t fly on my ticket should it be reinstated. At least I think I will. It does mean missing the last night at a conference and getting to my ultimate destination much later the following day than I wanted to.
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I think that airlines had the upper hand for far too long and abused that position. And the DoT stepped in to shift the balance of power far more towards the consumer. Probably too far. And now the airlines are fighting back, trying to move the pendulum a bit closer to center. Unfortunately, however, outside of this one tiny section of the rules, the airlines still hold almost all the power in the relationship. Schedule changes are fine for the airline to initiate but not for the passenger. Ditto swapping an aircraft which might not have the same amenities as the one booked. Or, if the above mentioned NPRM goes through, altering any ancillary fee other than checked baggage costs. The airlines still have all the control in the relationship and as a customer I never get a “whoopsie” card to play. And that sucks.
And so, in my own little hypocritical way, I justify booking the one flight for a trip I need to take anyways on this mistake rate. And I wonder if the DoT is going to protect me or not. It certainly was not a “bad faith” booking in that I intend to fly the trip. But I certainly knew the fare was too good to be true.
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At last a thoughtful piece on this. I bought two returns, both of which I was intending to buy anyway but in Economy. I thought hard (but not that hard) and “justified” it to myself because UA has messed me around in the past and shown no remorse or flexibility. But I would certainly have felt very guilty flying on those fares.
One thing that swings this in UA’s favor is that I do have a right to cancel within 24 hours if I make a mistake. UA made a mistake and cancelled within 24 hours – it seems fair enough. I certainly think it would be inequitable were any authorities to hold them to the tickets.
Seth,
I think that United will get away with cancelling these as they can claim that the majority of them got booked on a Danish website claiming to be buyers from Denmark which is dishonest.
I agree with you about people abusing these sort of fares however I’ve bought many things in life at fire sale prices. I don’t think the issue would be the same if this would have been bookable from the USA site and you could find airfares from London for say $100 in any class. Heck Spirit tells me daily how I can fly across the country for $15, $25, $35 or whatever.
Well, Seth conveniently omits the fact that he needed to misrepresent his home and/or billing address country in order to avail himself of this low fare.
Buying from a different point of sale is not all that uncommon. I paid for F seats ex-CMB using the Sri Lanka PoS because that’s how the seats are sold. I’ve similarly purchased from UK, Turkey, Poland, Norway and more just in the past few months.
Yes, the form defaulted to Denmark for the billing country. But that’s also not particularly uncommon IME buying airfares around the world. Lots of e-commerce sites don’t properly handle multi-national transactions because of the billing address.
I’m not saying that either of these things makes it right or wrong. I don’t think others should jump to such conclusions either. Because it is not uncommon IME to have to do these things on “normal” transactions, too.
Eh … I may be mistaken, but I think you needed to give your home address with the country noted as Denmark instead of the U.S., and I think – assuming you paid via credit card, – that you also needed to show your billing address as your address but with the country changed from the U.S. to Denmark.
So this has nothing to do with going to the website page of another country, such as the Canadian or German version of expedia.
Great read. But I’m note sure if its an QPX / ITA mistake.
Fact is, that all airlines were mispriced on ita when showing in DKK.
But my thought was that maybe it was a GDS or ATPCO error, what do you think?
Also you could mention the difference between , and . in N.A. vs. Europe, for example:
10,000.00 US$
in Europe the , and . are exchanged.
10.000,00 €
And the error (from what I think) got the , and . switched up.
The fact that all were mispriced is one of the reasons I think that ITA/QPX is part of the problem. If it was just one airline then there would be an outlier in the data.
I do not believe that the cultural differences in thousands separator came into play. That’s a rendering issue on the UI, not actually used to do the math if I had to bet.
So many thoughts.
First, thank you. It’s nice to read something both sincere and reasonable. It’s difficult to write about one’s mistakes and hypocrisies, not least because it can be difficult to identify them. Forgive my abuse of a tired metaphor, but reading such writing is a breath of fresh air.
Second, how does one get actively involved in a reasonable conversation about DoT rules? Submitting comments is fine and probably a necessary formality, but do they host any round-table discussions, for example, with the involved players? Are you ever involved in those discussions beyond submitting your own comments (if you do so)? You seem a tiny bit confused, but I could almost take your last paragraph and submit it as a concern to the DoT about their NPRM.
Alas, I have no idea how to really get involved with the DoT and the NPRM process. I wish I did, though, as the “consumer advocates” they typically get in the meetings are much more likely to be advocating for their own personal gain than that of the common passenger.
I do wonder if some folks in Denmark have been using this glitch the past few months (or years) but somehow someone mistakenly found the fare and shared it with everyone on FT.
I made one booking too (was going to fly coach as well.) I only got an email confirmation but never the eticket number. :/ Do you think I should still file a DOT complaint given my reservation never got ticketed?
Easily the most well written and thoughtful blog post on the subject. Well done Seth.
I agree! Thx Seth. I always appreciate reading your insight.
Do you have the rest of the fare construction or is that it? My theory is that the ROE amount is to GBP which would be correct (and just so happens that it is two decimals off from the DKK:USD exchange rate). This would make sense as it is why the fares had to be exLON. My guess is the DKK rate comes in at the end and is essentially UA doing a dynamic currency conversion to make it friendly to buyers around the world in their local currency not a DKK fare itself.
Full fare construction is /FC LON LH X/FRA M 981.90J77 UA X/DEN UA DFW M 10517.68F77OW NUC 11499.58 END ROE 0.638555 XT2GB1UB62DE158RA37YC47XY33XA117US37AY2YQ. Not really much missing other than all the taxes, all of which are priced wrong as well.
But your comment about the ROE being for GBP rather than DKK is an interesting one. That does actually appear quite plausible in terms of explaining how the numbers got where they are. At least in part. The USD:GBP rate is 100:64.94. The USD:DKK rate is 100:652.91. And NUCs are pegged to the USDollar. That explains the decimal place being one digit off resulting in the 7345 DKK price instead of 73450. But it still does not explain how that became 74 in the actual transaction.
But, through all of this, it is important to remember that the fare was filed in NUCs so that’s where the conversion starts, not in GBP or DKK.
Yeah was trying to see if it had the translated fare in the local currency built in and its conversion back to USD to see if we could figure out what the .63 was trying to convert too (GBP or DKK).
I had these same thoughts. I bought one. I booked one for a friend. I agree that booking more than one or two is asking for trouble.. booking some back to back, or booking one per week (I saw this on FT) is ridiculous. There’s a difference between taking one penny or 50 from the jar at the convenience store.
If 10,000 tickets were issued, the cancellation will weed out 30%. If they re-instate, they’ll cut people who booked on partners, another 20% down. Then they’ll downgrade to Y, another 20% will ditch it and we’ll be down to a manageable 3,000 error Y tickets.
Instead of $80M of revenue missed ($8k loss per ticket), it’ll be $3M ($1k loss).
No idea what will actually happen, but interested.. and it’s my first error/mistake fare so it’s fun to watch.
It is unlikely IMO that partner bookings will be treated differently than UA-metal or that downgrades will be part of the play. But we’ll see.
The penny jar analogy is an interesting one but I’m not so sure it applies here. This wasn’t the airline consciously doing you a favor and you taking advantage of that.
So are you going to file a DOT complaint in your name?
I have not filed yet. Doesn’t mean I won’t in the future, but as of right now I’m sitting on the sidelines to see how things are handled.
Appreciate the introspection. Not enough people consider the morality of things like this – which is pretty understandable, as you mention, we as consumers are in an increasingly non-competitive domestic airline environment, and it’s extremely easy to try to grab whatever drops from the hands of giants and dance about cheering at their mistakes.
Seth,
Since you think UA will end up reinstating these tickets, do you think they’ll do it for all? Only those with US destinations? Partner flights? Only for people who complain formally to the DoT? Only those with a legit Danish CC billing address? Only ???
I’ve had two for trips that we probably won’t take otherwise but it sure would be fun to take my family in first class.
Thanks for the insight.
Michael
Thanks for writing this – it’s so much better to go with some nuance than the three hardcore opinions that always seem to surface – sue-sue-sue, it’s my right; you’re all crooks; try-everything-let’s-move-on. But it’s certainly confusing to me why people keep bringing up the issue about buying from a foreign point of sale. This is normal and there are plenty of reasons to do it – it’s not fraud and there’s nothing about it that should per se indict someone’s actions!
Very thoughtful article. I got on it very late and only booked one ticket (was trying to get multiple to do a MR for status before 3/1) and it sure looked on my ticket as if the GBP:DKK rate was messed up (see the example below for my LHR-IAH-LHR ticket). Another interesting aspect is that a separate 40 DKK booking charge actually came across in as 40 USD for everyone including me.
FARE INFORMATION
Fare Breakdown
Airfare: 4,717GBP
Equivalent Airfare: 48DKK
U.K. Air Passenger Duty: 2
U.K. Passenger Service Charge: 1
U.S. Customs User Fee: 37
U.S. Immigration User Fee: 47
U.S. APHIS User Fee: 33
U.S. Federal Transportation Tax: 234
September 11th Security Fee: 37
International Surcharge: 4
U.S. Passenger Facility Charge: 20
Per Person Total: 463DKK
eTicket Total: 463DKK
The airfare you paid on this itinerary totals: 48 DKK
The taxes, fees, and surcharges paid total: 415 DKK
The numbers on the UA receipt you see are converted, not the real prices charged/used in the calculations. The base fare prices in NUCs, not GBP nor DKK.
Right, just pointing out that the GBP amounts were correct – it’s the DKK amounts that were wrong. Using Feb. 11 exchange rates, 4717 GBP is about 47264 DKK. It’s only if you use 4.717 (US) / 4,717 (int’l) that you get to 47.26 DKK.
Fun!
P.S. Thanks for the info on NUCs — never knew what that was.
This is one of the few posts and comment thread that is rational on this topic. You actually used your brain to take in the information and analyze based on the rules/principals, not some preconceived bias.
This was not a UA specific issue, it was showing on ITA for other airlines. UA just happened to have one of the systems that would carry the issue through to its customers. There is a reason UA hasn’t gone with the Danish website or billing address route as a basis for canceling, its not going to be a winner. However, just canceling while blaming some 3rd party will probably eliminate a lot of would be travelers, thus making a DOT forced honoring a little bit easier, if its only for those who complained.
UA has this system because it is profitable to them most of the time, only that this time it favored the customer. DOT should continue to force honoring of mistakes, as you clearly articulated, customers have little to no power in these transactions and few alternatives. As a consumer you are always at their mercy, and their answer is usually buy insurance, well for this instance I think consumers should be able to reply tough, establish a smarter system or buy insurance for these situations.
In fact, I think I will talk with some friends insurance about offering the mistake fare insurance for airline industry!
I think you make the salient point that DOT is getting tired of being the “go to” people for schemers out to force an airline to give out J tickets for cheap to people who need to lie about their billing address to get them. The May 2014 memo outlines their thinking, and this most recent incident can only add fuel to the case for a rules change. DOT sees itself as protecting the public; not as enforcing FlyerTalk travel hacking swindles.
Its a clear error in calculation and most knowingly booked it. UA cancelled it within the 24h limit it normally allows the customer to cancel for free if they make a mistake.
The fact that the company acted quickly is good. I’m just not sure it meets the DoT’s requirements.
Two points.
1. Unlike most mistakes, this one required an affirmative misrepresentation by the buyer (“I’m in Denmark”), for most people. (I assume some minuscule number of people were actually in Copenhagen trying to fly LHR-EWR.
2. I notice that the DKK prices on, e.g., expedia.dk list one thousand like this: “1.000”, which in the U.S. is considered one, not one thousand. I wonder if that was the issue — the comma being a decimal?