Don’t use the words “Error Fare” when talking about great bargains. That’s the message handed down this week by a German court. Following a handful of “really nice discounts” offered by Lufthansa over the past few months the carrier sued a German website Urlaubspiraten for publishing the “Error Fare” to members via a WhatsApp group, Facebook posts and its website. And the airline won.
The ruling is in German but the gist of it is that such promotion of fares creates an unfair competitive environment for the airlines and dramatically increases the burden to accommodate such mistakes. And, yes, the airline acknowledges that a human not properly completing a spreadsheet is the cause of the abnormally low fares.
By the targeted information on priceworthy offers of the plaintiff these error fares are discovered much faster than if they were visible only on the website of the plaintiff and Accordingly, according to the plaintiff’s submission, this entails competitive disadvantages with regard to the flights concerned (see section A. 2.) and is thus likely to adversely affect the competition of the plaintiff.
Lufthansa claims that it responded very quickly to the mistake, re-filing the fare within 5 hours.
The plaintiff alleges that the accidental failure to complete an Excel spreadsheet caused the plaintiff to commit a transfer error that resulted in a business class return flight ticket to California for EUR 687 per person instead of the regular price from 3846, – EUR per person was bookable (Annex AS 11).
It further claims that dealing with customers in the event of cancellation of Error Fare bookings also results in an impairment of public perception. The elimination of the controversial offer in dispute within 5 hours was done very quickly. A faster processing is hardly possible in view of the internal processes – especially if the error fare is published on weekends or at night.
The carrier also acknowledges that error fares are very, very difficult and expensive to rescind:
The time window until the flight was always relatively short. As far as foreign customers had booked the flight as an error fare, there were additional problems with the enforcement and, if necessary, very high attorney’s fees. In 2012, in the booking portal of the plaintiff herself a first-class flight to South Africa for several days for 800.00 € and later even for only 08.00 € bookable. Although the former Error Fare was booked only 179 times, The plaintiff was employed for two years for the resulting legal disputes. Legal fees were also charged for domestic prosecution and, in the case of a British customer, legal fees totaling approximately £ 15,000.
The plaintiff not only incurs increased legal costs due to the widespread dissemination of an error fares, but also made it comprehensible, and made it credible that the subsequent reversal threatens her to damage the image of the public. In addition, it has conclusively argued that a rewinding timely to the flight offer, then sell this at a reasonable price, made extremely difficult because of the passage of time. If the plaintiff remains bound by the contract with the user, it must carry it for a fraction of the usual price, thereby causing damage at least in the difference between the market price and the price advertised as being incorrectly advertised. …
Already with a much smaller number of bookings of an error fares, the plaintiff in the past with legal prosecution and reversal competitive disadvantages (such as two years back settlement time and attorney fees) have arisen. The cancellation of the 600 bookings resulting from the exploitation of the Error Fare in dispute is therefore associated with legal uncertainty and considerable additional expense for the plaintiff, which she, the largest German airline, can not tolerate.
It must be taken into account that this is not a case of individual bookings of an Error Fare, but the defendant as the market leader in the area “Reiseschnäppchenportal” reached millions of users and informed about the presence of error fares, so that it – as in the present case – within less hours comes to a variety of bookings. The market power of the defendant therefore adds additional weight to the assessment of (parasitic) exploitation.
Ultimately the German court agreed, siding with the airline:
The defendant acts unfairly, because she consciously exploits a recognizable mistake of the plaintiff and thus creates a significant competitive disadvantage for the plaintiff.
The ruling imposes a potential penalty of 6 months in prison or a 250,000 euro fine for future violations; this incident only costs the company attorney fees.
But the ruling also appears to be spectacularly narrow. It prohibits the promotion of “fares with wrong prices (‘Error Fares’)” named as such. It is not clear that it prohibits the dissemination of “Rare Fares” or “Really Good Bargains” or other terms. It is also unclear that this extends to other websites or airlines. Still, with the potential of a 250k euro fine or jail time looming it would be rather aggressive to stay active in that segment of the market.
And, at least in one instance, it turns out publishing an “Error Fare” proved to be a very, very bad choice.
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