How I Would Have Handled United’s Hong Kong Award Pricing Mistake

We know now that United doesn’t plan to honor the 4 mile award redemptions. I don’t really blame them. There were millions of dollars on the line.

I do think it’s a sticky situation for folks that already started their trip, and may already be in Hong Kong or beyond. Are they stranded? Will United honor their return? I have to think that those tickets won’t be cancelled.

What about folks with travel in the coming days? Remember that United hasn’t actually contacted folks who booked the tickets yet, they’ve only posted on frequent flyer forums, they do not know whether any particular flyer is aware of their decision nor does any particular flyer know what will happen to their ticket. And since they’ve said that everyone will be given the choice of cancelling without penalty or flying for the correct number of miles, they shouldn’t cancel tickets outright. So folks should be able to fly in the coming days before they’re contacted or during the period of time they’re given to make a decision. But what about folks who then fly but do not have sufficient miles in their account for the award…

Some sticky situations remain, United should resolve those in favor of the person making the bookings I think if only because it’s easier to do so than to deal with the ramnifications of stranding folks.

But what about just honoring the tickets? At one point yesterday it seemed like United might. The longer the situation went on, the more likely that seemed. And when agents had gotten a memo saying they were still working on how to handle the tickets, it seemed like they might be honored in some form or fashion, most likely with no changes permitted.

Here’s the scenario I thought about had United wanted to honor the bookings in some manner.

First they would be non-changeable. You fly what you ticketed, period, or you cancel. Many would cancel.

Second, one trip only. When Priceline had a glitch that allowed folks to book the Parker Meridien Palm Springs for $25, that’s what they did (though if I recall correctly they didn’t give folks a choice, they honored the earliest booking date only and cancelled the rest).

One other potential was to honor the flights but only in coach. “Everyone gets to fly” but just not squeezing out higher revenue tickets.

The problem of honoring for coach travel only is that some of the awards were booked on partner flights where coach award space may not be available. So forcing folks into coach would have been a challenge, or more expensive than honoring the premium cabin.

My thought experiment variation on this was to say that awards booked in saver/partner reward inventory would be honored as-ticketed.

But award trips booked in United standard/EasyPass inventory would be honored only in economy.

One downside to this approach would be reworking the itineraries, one at a time, which is labor intensive — to flag each one for no changes, to downgrade folks on United metal in standard booking classes down to standard (or saver) coach.

But it’s the only way I would have honored it, in United’s shoes, without a pretty firm belief that the government would come down with a hammer more costly than failing to honor.

I suspect, for what it’s worth, that United was likely in touch with the Department of Transportation over this which may have delayed their response somewhat.

It would be nice if United is going to flat out cancel tickets for them to provide a $150 voucher for future travel, one per passenger, since after 24 hours if we wanted to make changes on to ticket we booked we would be on the hook for a $150 change fee…. That would be a wonderful gesture, I think.

But I won’t be going to court, won’t be complaining to the DOT, and just consider myself fortunate that on a portfolio basis — across all of my participation in mistake deals — that I’ve come out way ahead.

Update: USA Today covers the Hong Kong award issue. My quote:

Gary Leff, a BoardingArea.com expert, bought two of the round-trip tickets. “I basically just grabbed a lottery ticket,” he says.
He figured it was probably a mistake but decided to take a chance anyway. “I didn’t expect them to honor the tickets, but sometimes these things work out wonderfully,” he says.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. “consider myself fortunate that on a portfolio basis — across all of my participation in mistake deals — that I’ve come out way ahead” — very well said.

  2. @Jamison – as far as I know they already ddi (although actually it is their co-branded credit card issuer Chase that’s the relevant player)

  3. Does anyone have a real sense of how many tickets were issued at this redemption level. United’s realistic freedom of action would be different if the number were 50, 500, or 5000.

  4. @LarryInNYC – nope. It’s a lot more than 50, I’m guessing less than 5000. My own completely uneducated out of the air order of magnitude number is 1000.

  5. @LarryInNYC

    from reading of some of the blogs, the number will be north of 2,500 tickets.

    You have to remember some people really took advantage of the “sale” They were booking multiple first class trips for them, their babies, parents and friends.

    On a conservative estimate it is an $8 million mistake (2,500*320,000*0.01)

    *i used 1 cent per mile for book value.

  6. It was so clearly a mistake. The correct mileage was posted and then at the end with the total cost, the incorrect mileage was posted. I think UA is well within its rights to charge the correct mileage. Now, if the correct mileage had not been shown anywhere, that would be a different matter. You book a clear mistake, you bear the consequences.

  7. @OG United hasn’t contacted me, and I’m not in a rush, it hasn’t been a priority for me to deal with since UA isn’t pressuring me to act yet.

  8. All of your solutions assume United owes compensation or should honor the tickets. The alternative assumption is that it was a glitch, people knew it was a glitch, and nothing needs to be honored.

  9. I feel like a token voucher is an admittance of culpability and an invitation to take advantage of these sort of glitches in the future. There were some who decided not to take advantage of this for whatever reason.

    My personal opinion is that no one should be allowed to fly without full payment, including those who have already started their trips.

  10. I love a great deal as much as the next guy, but to say you would solve this by flying people who took advantage of the glitch is very one sided. If those people really wanted to fly I’d offer them three nice options: Saver award level mileage redemption (regardless of whether these were available), a full refund, or if they don’t have enough miles to pay the difference in cash at a reasonable per mile cost, say 1-2cents per.

    Of course that would cause people to be upset. Nowhere does UA advertise 4/8 miles for a first class round trip. It would be different if the award chart simultaneously was changed to reflect this. Then I would say false advertising. But the award chart and the confirmation page both showed the true mileage cost. Those miles were just not taken from your account. This falls more into the line of the “I pulled out $20 from the ATM and $4,000 came out instead” Do you keep the money? No. Do you tell others that the ATM is spitting out free money? No.

  11. @Scottric,

    the problem is I have a confirmed ticket. they can’t just go out canceling 1,000s of tickets, without an outside counsel letter and DOT ok.

  12. There is actually a THIRD assumption, which is that anyone attempting to ticket and fly under the mistake redemption falls under the “contrary to United’s interests” clause of the Mileage Plus program and is subject to having their account closed and their miles confiscated.
    .
    Of course, this is no more likely that United flying all those people for free. But it IS completely in keeping with the terms of the relationship between MP members and United. And that’s still true even if United were forced to honor the tickets (you could have a legal or regulatory tort and still be acting against United’s interests).

  13. @Stubtify: “Do you keep the money? No. Do you tell others that the ATM is spitting out free money? No.”
    .
    Uh oh. . .

  14. @clu:

    I think the real value you need to multiply against is the percentage of those seats that would have been sold times the cash fare they would have gotten. Probably be much, much higher.

  15. @LarryInNYC

    i did say *conservative estimate. if you want to use maximum potential revenue, it could get up to $25m.

    The $25m number might be material to the financials, and that will require disclosure (8-K) with the SEC.

    better check EDGAR

  16. Or everyone could stop hyper-analyzing this to death and just simplify the whole thing by doing exactly what the official United rep said they are going to do. Case closed. The only ones making this a mountain out of a mole hill are those somewhat greedy and disingenuous flyers who are trying to take advantage of an obvious glitch and get something for nothing. Move on already.

  17. In my view, it makes bloggers and posters look greedy when they insist that United should somehow honour this or provide a token of goodwill for United’s error. Remember, these people took advantage of United, and for United correcting that, they want some sort of compensation for that advantage? I am sympathetic to Gary et al for saying they were lucky and didn’t expect anything, but asking for $150 is beyond what United would owe anyone, and I certainly wouldn’t be happy at that result if I were a shareholder. At the end of the day, people’s opinions on United will not change because of their response (except if they strand people legitimately).

  18. @Johnathan M

    You shouldn’t invest in a company that always have problems and never seems to make any money.

    free market, they screwed up they pay

  19. @Gary, I strongly disagree with your comment in the USAToday. I think it is a disservice to all of us as a whole to admit you knew it was a mistake.

    That said, I do generally agree with your analysis.

    But I also strongly believe this canceling or price changing is not legal based on the DOT regs now.

    I don’t have a dog in this. It would not process my purchase even though it was before it was dead and i decided after a couple attempts to let it go as it really didn’t fit my plans for time. But I do feel this is the real downside of all their fees and their market and they made a mistake as company that has consequences. If I made the mistake and took more than 24 hours to speak out about it they’d charge me left right and center for it telling me sorry but these are the rules of the marketplace.

  20. it was advertised to me as a mistake. so i took it for that.

    but i don’t feel it is something that should be admitted to as it then gives UA leverage to back out of this when I do believe UA is responsible to fly people as purchased.

  21. It was clearly a mistake and the proper mileage is clearly published. UA owes nobody anything, including those that already traveled, whose accounts should be deducted for the published amounts.

  22. @Jonathan M,

    While I’m fully in the camp that this was an obvious mistake, and United need not honor it, I actually see some merit in Gary’s $150 amends amount. If I make a mistake booking a ticket, United shows absolutely no leniency and will charge me a minimum of $150 plus fare difference to change a date, etc.. The same should work in reverse.

    Those demanding to be flown, threatening lawsuits, calling it discrimination, etc… are only embarrassing themselves and showing to the world what type of people they really are.

  23. C’mon Gary, you have more readers than than! You know there had to be more than 1000 tickets booked!

  24. On Sunday, I guessed the cost to UA for honoring this mistake would be about $10 million, as I estimated it would have to forego 2000 seats that they could sell for an average of $5000. I am pretty certain that more than 2000 seats were “bought” on Sunday, but some of those were for seats that would otherwise be flown without revenue.

    Where my estimate could be wrong, however, is if some people bought TONS of seats. If you were dilligent, you probably could have bought over 100 seats in a half hour. I’m guessing a few people may have done that. UA, of course, could have chosen to void these tickets and honors those who didn’t completely abuse the system.

  25. @Cdiddy, if you make a mistake booking, United gives you a 24 hour window to correct your mistake. Contrary to your thoughts, United does not punish you for an itchy finger. As well, in this case, United is offering to cancel with all fees waived. $150 voucher…for what???

  26. @Jon M, afaik United hadn’t offered anything within 24 hours. So if not $150, one free change on any future UA flight would be a fair request.

  27. If it were a saver award on UA metal, then those would have been seats that UA thought would not be purchased. Airlines have become very good at revenue management…and the release of FF saver seats is closely related to that. Folks who argue that a saver F UA seat for HKG deprives UA of five or ten thousand dollars is probably grossly overestimating. At most this ‘saver seat’ probably represents the lost revenue that a upgradeable C fare would bring in to upgrade to F. UA is not liberal with its saver availability and it’s tightened up considerably since the boys from Houston took over the show. Of course it is a whole different story for those who booked ‘standard’ awards.

  28. I don’t think you can do much with DOT in this case. I would have jumped in this deal,but I think you are wrong to be expect any compensation. I think the main difference is that awards have a set “price”, while regular tickets don’t.

  29. Regardless of how big or small the “error” was, I think United should come out with something like this:
    “While we’re sure this was a great deal for customers, it was inadvertent, and we took a big loss (over $XX million – ouch) selling so many items so far under cost. However, it was our mistake. We will be honoring all purchases that took place on XXpm.com during our mess up. We apologize to anyone that was confused and/or frustrated during out little hiccup and thank you all for being such great customers. We hope you continue to Shop. Save. Smile.”
    This is taking for a press release a company put out after a similar computer glitch”

    My 4 cents or 4 miles.

  30. I think everyone who booked such a ticket knew perfectly well that United had no intention of offering flights for 4 miles. It was a totally obvious glitch. I think they are entitled to nothing from United, since there was no misunderstanding at all, just greedy folks hoping to get lucky.

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