Swiss Int’l Air Lines Cancels RGN Tickets

Last week, inexpensive business and first class fares originating out of Yangon, Burma popped up again to many Canadian destinations and were bookable for about 6 days (from 21-26 September 2012). Many were able to take advantage of the great deal, myself included. Popular routings included Swiss First via Tokyo and Zurich to Montreal, although flights were bookable on all three alliances. One week later, Swiss Int’l Air Lines has begun the process of unilaterally canceling all tickets issued on its own 724 stock. The question now: is it time to fight? In short, yes.

Swiss sent out the following e-mail to some whose itineraries were cancelled (bolding mine)—

Subject: Cancellation of your ticket due to erroneous fare

Dear Sir/Madam,

We are writing in regards to the travel you recently booked with Swiss International Air Lines Ltd. from Yangon (RGN), Myanmar. Unfortunately, as you must have been aware of, the fare you purchased was incorrect and resulted from an inadvertent error that was out of our control. While SWISS honors its commitment to the highest level of customer service and safety in air travel, it must also honor its obligations to its employees and shareholders.

We are not obligated to provide our services for compensation that is obviously erroneously published and commercially infeasible. We are aware that good travel bargains are quickly recognized and booked, however principles of fare bargaining dictate that a service provider does not give away its services for almost free or at a loss.

Because the fare you booked was not valid, we will unfortunately have to cancel your reservation and ticket. We are extremely sorry for this error and we are not increasing the price of your ticket; rather we will promptly issue you a full refund for the total price you paid for the ticket. The full amount will be automatically credited using your original form of payment. In the event that you would like to rebook your itinerary at the appropriate price, please contact your nearest SWISS service center or your travel agent.

SWISS deeply regrets the inconvenience caused by the publication of the erroneous fare to the passengers who may have thought they had booked and purchased a valid ticket for an erroneous cost. We apologize for this unfortunate situation and trust your future travel on SWISS is comfortable.

Sincerely,
Swiss International Air Lines Ltd.

Malzgasse 15, Basel/Schweiz
Registereintragung/Registration:
Handelsregisteramt des Kantons Basel-Stadt

This painstakingly-crafted but incredibly presumptuous letter from Swiss comes as no surprise. After all, Swiss fought tooth and nail against a $400 return fare in business class from Toronto to Delhi via Zurich in 2009.

But let’s be clear about something—this was not a mistake fare. Swiss intended to sell the fare for 130,000 MMK and that is what it sold for. What Swiss did not anticipate—and perhaps IATA shares some blame in this, though that should not be my concern or the concern of any other consumer—is the currency fluctuations that have affected the Myanmar Kyat lately. Swiss Air’s beef should then be with IATA, not consumers.

For reasons of convenience and because of my understanding of the new U.S. Department of Transportation (DOT) regulations concerning so-called “mistake fares” on airlines that serve the United States, I did not include a segment on my trip that touches the USA. I will travel directly from Zurich to Montreal in Swiss First.

Here is the pertinent DOT regulation (again bolding mine)—

Does the prohibition on post-purchase price increases in section 399.88(a) apply in the situation where a carrier mistakenly offers an airfare due to a computer problem or human error and a consumer purchases the ticket at that fare before the carrier is able to fix the mistake?

Section 399.88(a) states that it is an unfair and deceptive practice for any seller of scheduled air transportation within, to, or from the United States, or of a tour or tour component that includes scheduled air transportation within, to, or from the United States, to increase the price of that air transportation to a consumer after the air transportation has been purchased by the consumer, except in the case of a government-imposed tax or fee and only if the passenger is advised of a possible increase before purchasing a ticket. A purchase occurs when the full amount agreed upon has been paid by the consumer. Therefore, if a consumer purchases a fare and that consumer receives confirmation (such as a confirmation email and/or the purchase appears on their credit card statement or online account summary) of their purchase, then the seller of air transportation cannot increase the price of that air transportation to that consumer, even when the fare is a “mistake.” A contract of carriage provision that reserves the right to cancel such ticketed purchases or reserves the right to raise the fare cannot legalize the practice described above. The Enforcement Office would consider any contract of carriage provision that attempts to relieve a carrier of the prohibition against post-purchase price increase to be an unfair and deceptive practice in violation of 49 U.S.C. § 41712.

For travelers like me who do not have a U.S. segment on their itinerary, the question really is what does that mean?  I read it broadly to mean that if a carrier does business in the United States they cannot retroactively increase the fare, no matter what the specific itinerary booked is. In other words, the price of doing business in the USA is that when you sell a ticket at a certain price, you must honor it at that price or face fines from U.S. regulators.

At least so far, the DOT disagrees. They have already sent out this note to a number of travelers whose itinerary does not touch the United States–

We are sorry to hear of your dissatisfaction. However, our jurisdiction is limited to air transportation within, to, or from the United States. Because it appears that your itinerary is for air transportation between two or more non-U.S. points, the regulations enforced by our office do not apply to your transportation. Please contact the carrier directly.

Thank You for Taking the Time to Contact Us,

[name redacted]

Aviation Industry Analyst

US Department of Transportation

I am not willing to accept that shirking of responsibility by the DOT. Take my ticket for example—it was booked on expedia.com, a U.S.-based travel agency by a U.S. citizen (me). Perhaps it should be Expedia, not Swiss, who must be forced to honor the ticket (again, at this point I really do not care who is to blame), but what is the purpose of this new regulation? To protect U.S. consumers from airlines who decide that they no longer wish to honor an airfare because they deem the price paid was not enough? If so, it should not matter what the itinerary is.

This trip will be a special one. My Uncle turns 85 this year and the RGN-KUL-SIN-FRA-ZRH-YUL ticket I booked will link nicely with our trip to Australia in Singapore Airlines’ Suites Class next year. His birthday is next month (he does not read this blog, thankfully!) and this ticket was to be a big surprise for him. Like many, I did not just book these tickets for the heck of it, but with a very specific purpose in mind.

(Not that should really matter in the eyes of the law)

I will deal with the DOT in due time, but my first course of action will be to contact Swiss Air directly and ask them to resolve the issue amicably. I do not expect that will lead to a solution, at least initially, so I will likely have to file a formal complaint with the Canadian Transportation Agency (CTA), which has been helpful in the past in “encouraging” airlines to honor the tickets they have issued.

The point here is not about me. It is not about Swiss. It is about the idea that a company can sell a product to a consumer for a listed price, charge that consumer’s credit card, then decide one week later that the price paid was not high enough.

Even with the United Airlines 4-mile award deal to Hong Kong, which was quite different in that a different price was displayed throughout the booking process up until the final confirmation screen, I ultimately argued that the fare should be honored because United took far too long to respond. Had Swiss cancelled the fare within 24 hours, they would still have had a fight on their hands, but the fact that they have waited a week and only now begun the cancellation process is simply unacceptable. The fact that they just cancelled my ticket with absolutely no notification is likewise unacceptable.

Swiss will be held to account for their actions. At least in my case, it will not be because a spoiled passenger wants a cheap first class seats but because Swiss Air’s actions set a dangerous precedent that undermine consumer rights for everyone and lead to a level of unpredictability that is unpalatable in the fast-paced world of commercial airline tickets.

What I said three years ago hold true today–

“Imagine if I had purchased a nonrefundable ticket and decided 48 hours later that I no longer wished to travel, so I called the airline and asked for my money back,” Mr. Klint said. “Do you think they would be receptive? Of course not, they would laugh at me. It sets a dangerous precedent when an airline can unilaterally cancel a contract because they decide they no longer like the terms.”

Fasten your seat belts and join me for this ride. It is going to be an interesting one.

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