No unanimity on airline pricing errors
04/25/2010 12:05 AM
04/25/2010 12:05 AM
If you found a bargain airfare, you'd book it, right? But what if you knew the price was a mistake? Would you still do it?
In an era of too-good-to-be-true prices, gimmicky discounts and even an occasional zero fare, travelers have to make that call every day.
Sometimes they get it right. Sometimes not.
Last fall, for example, British Airways accidentally offered a $40 base fare from North America to India. After taxes and fees were added, the total came to around $500 — still a deal, but not an obvious error to the untrained eye. Thousands of people booked tickets in a two-hour period.
When British Airways refused to honor the price, many inexperienced air travelers were outraged. They pointed out that if the tables were turned — if they had made a mistake on their ticket — that the airline would keep their money.
But a smaller subset of travelers spotted the $40 base fares and knew they were a mistake, but booked anyway, believing they could force British Airways to accept the purchase. Was that wrong?
William Sannwald, a lecturer at San Diego State University, says both a company and its customers have an obligation to determine if an offer is accurate. "With all the unethical things taking place in business today," he says, "I think that customers need to be vigilant in any transaction." And flexible, too. "We all make mistakes, and a reasonable person should understand this," he added.
I've been thinking about what separates a frugal traveler from a thief, and although the experts I spoke to seem to agree on the big issues (you know, stealing is wrong) there's no unanimity when it comes to finer points of pricing snafus. By way of full disclosure, I thought the travelers who bought tickets knowing the fare was foul were morally challenged. In a blog comment, I referred to them as "bottom feeders," which may have been a little harsh. I probably just should have called them criminals.
When do you say "no" to a deal?
When it's too good to be true. Everyone knows when something just doesn't feel right. And if you've been around long enough, you also know when it probably isn't — either there's a catch or it's a bait-and-switch or it's a legitimate error.
"If it appears to be too good to be true," says Charles Green, the chief executive of Trusted Advisor Associates, a business consulting firm in West Orange, N.J., "then it's very possibly not true." The gut-check is important. It can save you from making a small mistake, like buying an erroneous fare, to investing in a fraudulent travel club or timeshare.
If you know it's a mistake. Virtually all of the experts I spoke with for this story told me that knowingly booking an erroneous fare is wrong. The argument that airlines wouldn't be as understanding if the roles were reversed made no difference to them.
But what if you don't know? Jonathan Burgstone, an adjunct professor at the University of California's Center for Entrepreneurship and Technology, says that's different. "If the customer is genuinely unaware of the mistake, then he or she could reasonably accept the transaction," he says. "A reasonable-minded person can generally assume that an advertised price is correct." (British Airways offered a $300 voucher off a future flight, incidentally.)
If the company is wishy-washy. Obviously, having to wade through pages of fine print on a "bargain" can be such a turn-off that you would want to walk away. But if you see a terrific offer and make inquiries, and the answers are less than satisfactory, perhaps you shouldn't be making reservations.
"Check with the airline or with a travel agent," advises Joseph Pastore, a professor at Pace University's business school. Only if you have a clear and satisfactory answer should you assume the offer is legit. (In the British Airways case, travelers were initially told the offer was good, but it was over a weekend, when key decision-makers weren't available).
If it's a dramatically lower price than anyone else is offering. Ever heard of the saying, "You get what you pay for"? When it comes to pricing errors, that may be particularly true. A price that's far lower than those of competitors can be assumed to be either wrong or defective (or both).
"To manage your risk, you might buy another reasonable fare," says Rick Brenner, a consultant with the management consulting firm Chaco Canyon Consulting in Cambridge, Mass. If you want to hedge your bets, and are planning hotel reservations, consider booking a more expensive, refundable ticket — just in case. "When the offerer discovers its error, take the compensation and consider it your winnings," he says. "This won't always work, but I do believe it's your best shot."
I put the question to the ethicists: How should a British Airways scenario — or one like it — have played itself out? "The ethical thing to do is to flag the error," says Shel Horowitz, an expert on marketing ethics.
"Good common sense should prevail" after that, says Mark Zupan, dean of University of Rochester's business school. Which is to say that if an airline sells thousands of fares at $40, or even $500, it could present a financial hardship.
"Mistakes like this do get made, and bearing the consequences of one's mistakes is part of the process which one takes to pay better attention in the future," he told me. "Where a firm's ongoing viability is threatened by a mistake, however, then it's best for the company to fess up and find a way to make amends." Zupan says the $300 offer was acceptable, given the circumstance.
On the question of whether a travel company should honor an incorrect price, there was some agreement among the professionals. Michael McGrath, author of the book "Decide Better! For a Better Life," says a pricing error shouldn't put a company out of business. "Decisions like this need to be made with consideration of what is ethical and what is a good customer practice, offset by the financial impact," he told me.
But there's a significant disconnect between the rhetoric and the reality. I asked Stephen Martin, a professor at the University of Denver's business school, to poll his students about what they would have done if offered an erroneous fare. Although 90 percent believed buying an erroneous fare was unethical, a majority said they'd do it anyway.
"They felt like the airlines always take advantage of them," Martin says.
At the same time, an equal percentage said they believed British Airways had missed an opportunity to make things right with its customers. "Most felt that $300 credit was a weak response and only intended to get more revenue," he added.
In other words, we can talk about ethics until the cows come home. But once we're on a plane, many of us jettison our values right out the cabin door.