DOT Rules In Favor Of United on The “Krone Krime” Fares
I was just reading on View From The Wing that the DOT decision is out on the mistake fares United was offering a couple weeks ago for dirt cheap travel from the UK to points abroad.
Gary notes that the DOT essentially ignored parts of their own rules to side with United here (which may ultimately be the correct decision):
It’s because they don’t like consumer actions that they came to this decision (‘contributed to this decision’) rather than that the rules don’t actually apply to fares ‘not marketed to US consumers’. They’ve basically given up the game here: without this contributory factor, DOT wouldn’t have viewed the rules the way that they did.
The DOT rules don’t talk about or attempt to divine consumer intentions, they are straightforward rules that an airline have to honor tickets for which they’ve taken payment.
He goes on to mention that there may be unintended consequences of this ruling further down the road.
I’ve read through the determination that the DOT posted (found here) and would add the following comments:
The determination notes:
The mistaken fares appeared on a website that was not marketed to consumers in the United States. In order to purchase a ticket, individuals had to go to United’s Denmark website which had fares listed in Danish Krone throughout the purchasing process.
To ensure that the Office’s determination that United is not required to honor the mistaken fare is available to all affected consumers expeditiously, the Office is placing this notice on its website rather than responding separately to each individual who has contacted the Department. The Office has also agreed that United may choose to post information about its handling of this incident in a prominent location on its website instead of providing individual responses to consumers who submitted an inquiry to United or the Department regarding this matter. We believe that posting of information by the Department and United is the best course of action as it offers the most effective means of reaching as many consumers as possible at the same time.
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Is part of your argument that united.com listed the fares? Rather than united.dk which is more obvious that it is United for Denmark? So essentially penalise them for allowing you to change your selling site manually rather than forcing based on geolocated IP address which is at best 70% accurate?
So a provider who wants 1 platform selling internationally should do something more to stop you from manipulating things?
Matt, I didn’t say that I thought the presence of it on the US website meant they should honor the fares. I’m saying that the DOT statement of facts was not, in my opinion, accurate on that point.
Separately, I think they should have to honor every single ticket. I’m a business owner and an investor. We have literally over a dozen instances of companies selling products and services. In none of those cases can any of those business units say, “No fair. We didn’t really mean to offer that price.” It is possible to build a website that won’t allow people to book a $10,000 ticket for $80. I’m not saying it’s easy, but if you want to sell $10,000 tickets profitably then you should build a system that does so. Back when I was in the hospitality industry, one of the hotel bars we ran used to sell Louis Trey at some disgusting price. Inevitably, we wouldn’t get the number of required pours out of a bottle and management would complain about yield. But, if a customer had paid for one shot of Louis Trey and we poured them 1.5, I shouldn’t be able to take the glass back from them later on or demand more money.
To be clear, in a regulated industry, I don’t think DOT made the “wrong” decision. They have some say here, so it’s not a completely free market. I do wish it was, though. As a general rule, I don’t think this type of protection ultimately leads to competitive companies that honor commitments to customers.
I absolutely support your argument. But, buying that same glass Louis Trey shouldn’t be $100 USD or $1.5 CAD from the same bar.
I think we all agree that United doesn’t have the best IT systems and its fair to say that none of the airlines truly think about fraud the same way a retailer would. Fraud management and loss prevention requires an investment in data and analytics and an appreciation for the benefits.
Matt, I don’t consider this issue fraud. I understand the other side of the argument and could definitely make that argument. United didn’t have to choose to offer fares in that currency, nor did they have to offer them in that way or use that 3rd party vendor. You make that choice, you should have to live with the consequences. I’d be perfectly fine with them saying, “Sorry, we don’t offer those fares in Krone.” or any other legitimate argument as a business owner. We own a business in Denver and only accept US currency. We don’t accept Paypal or Bitcoin because of issues inherent with our business model (and not wanting to suffer the currency swings of Bitcoin). If we decided to accept Bitcoin and the rate moved (or chose Mt. Gox to hold our Bitcoin) I don’t really feel like I should be able to take that back once I’ve made that business decision. Sure would be nice, but most of the world doesn’t work that way.
And, as to your comment about a provider who wants 1 platform internationally needing to do something to prevent such things, well, yes. As evidenced by the fact that other airlines in this exact situation two weeks ago did exactly that, not allowing the purchase. AA has a standing rule now where all partner awards are going into a queue to be administered by a human or some other scrubbing algorithm prior to ticketing. It wouldn’t be a gargantuan effort to write code that scans the ticketing queue for tickets in J or F that are less than $X and kick them to a separate queue. I don’t believe there’s a law that says they need to issue the ticket 5 minutes later.