Monday, July 1, 2013

The Ethics of Exploiting Travel Pricing Errors

Nothing gets travel bloggers, not to mention the travel industry's customers, more riled up than the issue of "pricing errors" when it comes to car rentals, hotel rooms, and airfare (though the problem tends to be most acute in the area of airfare).  Today, I'll compare the competing views on whether or not it's ethical to take advantage of pricing errors, and my personal take on the issue. 

For those who are dying for a report on my recent trip to Alaska - relax.  I'll start putting posts up later this week.  It takes longer than you might think to sift through photos and write up an article that's interesting to read, after all.

So what is a "pricing error", anyway?

The term seems simple enough, right?  However, the reality is actually much more complicated.  The most common type of pricing error is once you tend to see quite a bit of in pretty much any business - the "fat finger" error, where a programmer leaves off a digit or misplaces a decimal point off the total price, for example, posting a $325.00 airfare as $3.25, or a $199 hotel room as $19.  These are pretty easy to spot, and usually get corrected pretty quickly.

But in today's age of "a la carte" pricing and added fees/surcharges, it's increasingly common to find an error in only one component of a fare, which then distorts the total, but often not obviously.  Let's take an airfare from Dallas to London, with a $549 base fare, $399 fuel surcharge, and $90 in taxes and fees, for a total fare of $1,038.  Now suppose the $549 is fat fingered as $54.90; your total is now $543.90.  Now, while a fare of $543.90 to London and back is cheap, that's not exactly an obvious (more on this later).  If you're flying on a foreign carrier or on a route originating overseas, foreign exchange errors can also occur - either by fat-fingering the rate (i.e. 550 rupees to the dollar instead of 55), or just using the wrong rate altogether.  Such errors will create abnormal fares to display, but they may not be immediately obvious, depending on the error.

Or, a pricing error can be as simple as an airline, hotel, or car rental chain entering in the fare from the wrong chart, such as using one that's 2 years old.

Although pricing errors are exceedingly rare, when they do occur, fireworks almost quickly ensue.  The most high-profile incident of recent memory was the British Airways $40 fares to India dust-up, where BA canceled all reservations about 5 days after booking (the total fare was actually a little over $500 after taxes and fees).

Two Opposing Camps

There are two camps on this issue, each equally vocal, and equally quick to denounce those who disagree as uneducated, criminal, or worse.  I'll start with the first camp, those that believe taking advantage of a pricing error is both immoral, and equivalent to stealing from the travel provider.  If you take advantage of a company's error, you are committing fraud against the company, the theory goes.  This view is best illustrated by travel columnist and consumer advocate Christopher Elliott, who went so far as to refer to those who booked the BA error fare as "bottom-feeders" - you'll have to scroll down to the comments to see.  (To be fair, he was only referring to those who deliberately booked the fare, not the average traveler who probably wouldn't have recognized the mistake.  And while I disagree with his opinion on the issue of pricing errors, his site is an interesting read, and I view it frequently.) 

Meanwhile, the opposing camp thinks there's nothing wrong at all with taking advantage of a pricing error.  A pricing error isn't the customers fault, and it's only fair for businesses to take responsibility for their own mistakes, after all - and in any event, the travel industry, especially the airlines, deserves a little payback for their own onerous rules and fees if you the traveler makes a mistake and needs to change a reservation.'s Matthew Klint offers a detailed rebuttal of Elliott's missive here.  A subset of this camp takes things a step further, however, actively advertising pricing errors and encouraging other travelers not only to book the mistake fares, but to then demand compensation if the travel provider later refuses to honor the fare (the article above doesn't directly go there, but Mr. Klint seems to hint that compensation beyond a refund is warranted).  The "mileage run" forums on FlyerTalk are famous (or infamous, depending on your point of view) for advertising these deals for the world to see. 

What Do I Think?

Pricing error discussions tend to devolve into an unfortunate quagmire, because both sides believe they are absolutely right, and the other camp absolutely wrong.  The truth, as usual, lies somewhere in the middle, in my opinion.

I take serious issue with Chris Elliott's opinion on pricing errors.  Based on several other posts he's written on the subject, it seems his belief is that consumers are obligated to perform multiple levels of verification to determine the veracity of an advertised fare, and even after all of that, if the travel provider comes back later and says the price is a mistake, you are morally and legally obligated to accept the cancellation or pay the higher price without complaint or compensation.  In today's age of gimmicky "doorbuster" sale prices and add-on surcharges and fees, it can be practically impossible to determine whether a deal really is "too good to be true" or not.  "Low cost carriers" like Spirit and Ryanair are notorious for offering gimmick base fares for $9 or even 1 penny, so just because you see a base fare to India of $40 like in the BA example, that doesn't necessarily stick out as a mistake.  I also have major issues with travel providers waiting days, or even weeks in the case of a Korean Air fare snafu, to claim that previously booked and confirmed fares are mistakes, then unilaterally canceling all reservations with no compensation to affected travelers.  That doesn't seem fair, even if the pricing error was an obvious one.

On the other hand, I have a hard time condoning the practice of knowingly making a reservation at a price that is an obvious error, such as booking a normally $199 hotel room for $19.90 (or if you know how to read pricing software, knowingly booking a fare that you know must be wrong, such as a $0 base fare).  I also think it's disingenuous, in the least, to book something at a price you know is wrong, and then demand compensation when the mistake is caught.

My take?  Travel providers should be able to correct egregious errors, but there should be a time limit on doing so - say, 24 or 48 hours.  That should be long enough to spot the error, but also quick enough to avoid significantly inconveniencing anyone who's booked the fare.  After that, time for the business to take responsibility for their error and eat the mistake, obvious error or not.  As far as intentionally booking a pricing error, I think it's a stretch to call that stealing.  It is an advertised price, after all.  But if you do so, I think it should be at your own risk that the error may be caught and the deal rescinded (again, within a reasonable amount of time from the date of booking).  In other words, don't expect compensation if your $9 first class fare to Australia doesn't pan out.

No comments:

Post a Comment