I had an interesting experience with airline pricing in the last 2.5 weeks. About 2.5 weeks ago, I got on line with United, the airline I usually use to go to Winnipeg. (From there, I drive 3 hours to Minaki, Ontario.) I wanted to go to Winnipeg on or about July 9.
But I got a surprise. The airline literally wouldn’t let me reserve anything in July. I don’t just mean anything to Winnipeg. I mean anything anywhere. I hadn’t seen that before. You might think that I could reserve first class and pay a ton of money. But no.
So I figured that I didn’t really need to fly out of Monterey. I could take a shuttle to SFO, fly Delta to Minneapolis, and then connect to Winnipeg. So I got on Delta’s site. When I put in the details, it had no flights to MSP connecting to Winnipeg.
Then I went to Expedia and voila: I found a reasonably priced flight, about $550, and a reasonable time to leave and arrive in Winnipeg.
Expedia allowed a full refund if I cancelled within 24 hours. So I reserved and the next day decided to go ahead.
Then, a few days later, after a long discussion with my wife, I decided not to go. (Because of Prime Minister Donald J. Trudeau’s travel restrictions, he couldn’t keep me, a Canadian, out of Canada, but he could insist that I go for at least 15 days and quarantine for 14 of them. It would have been very hard for my wife to have me gone that long.) I made that decision after the 24-hour period and so I canceled, leaving about $550 “in the bank” for a future flight on Delta.
So here’s what I think happened. Delta has a 100% refund policy for its seats. But with people’s travel plans so up in the air, so to speak, Delta realized that with lots of cancellations it could have a tiny revenue stream. So it achieved some revenue stability by selling a higher than usual percent of seats to Expedia, which has no 100% refund policy. Delta could keep its reputation for refunds. Expedia, which is one of many resellers and doesn’t have the same incentive to establish a reputation for refunds (and is upfront about the fact of no refunds) makes some money as well.
I have no upset about this. I just find it fascinating.
READER COMMENTS
David Seltzer
Jul 15 2020 at 5:10pm
Interesting and smart on the part of both Delta and Expedia. It makes sense that Expedia would make a no refund policy clear as they may have bought a higher number of seats. Expedia risks not selling some of seats that would partially compensate them for their opportunity cost.
Conscience of a Citizen
Jul 17 2020 at 6:03pm
You don’t have to feel upset about it, but the airline tactic you described is a form of fraud which is well-known to the law. It is called “bait-and-switch” and is generally actionable at law (though the thoroughly-corrupt American government will not prosecute cases like yours).
“Bait-and-switch” is when a vendor advertises a certain price, but when the would-be purchaser appears to consummate the transaction, the vendor refuses and instead prompts the purchaser to buy at a less favorable price. The vendor “baits” the victim-purchaser into the store by an insincere offer then “switches” the victim to a worse deal.
Per your story, Delta advertised a deal which included a desirable refund policy but then refused to deliver what they advertised though it was in Delta’s power to do so, instead palming you off on one of Delta’s agents to get a worse deal for the same flight(s) as Delta advertised but withheld.
At Common Law an advertisement is a contract. In most if not all US States sellers who do not fulfill deals they advertise are guilty of crimes (that is why you see restrictions like “only ten available at this price” in some ads– the law requires that advertised deals actually be available to purchasers and any that substantial restrictions be spelt out in advance).
However, US Federal law specifically exempts airlines from compliance with State law and immunizes them to most conceivable customer lawsuits. Only Federal regulators (chiefly the FAA) are permitted to discipline airlines, their power is discretionary, and their standing policy is to do nothing in almost all cases (aggrieved customers may complain to regulators but those officials are not obliged to take any action).
A not-too-bright libertarian might brush off concerns about bait-and-switch, saying something like “well, in the end, purchasers end up with whatever they’re willing to pay for, regardless of the negotiation process, so there’s no problem.” That is wrong. Every would-be purchaser incurs search costs and fatigue. False vendor advertising wastes purchasers’ time and money and impedes competition (since honest competing vendors lose sales to crooked ones).
You may not be upset by Delta advertising a deal it does not intend to fulfill, but everyone else ought to be. The only “reputation” Delta deserves on the basis of your story is a reputation for fraud.
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