New Class Action Lawsuit Over AA.com Airfare Pricing

There’s a new class action lawsuit against American Airlines that strikes me as rather frivolous but raises some interesting questions about online purchases, airline seats as commodities, and the sale of digital goods. At least it’s prompted me to ponder some interesting questions.

First the suit itself. The complaint is that when you buy airline tickets on a website you’ll see a price and sometimes (rarely, but it happens) as you check out you’ll be told the inventory for your itinerary at that price isn’t really available, if you want the flights in question it will be more. Even more occasionally you’ll be told you’ll actually pay less.

American Airlines reportedly replaced the $297 ticket and changed the price to $397. The plaintiff says that she ultimately used $320 in air miles to purchase the ticket that was originally offered for $197.

“American’s breach of its contract with Plaintiff for the $197 ticket is part of a systematic and purposeful effort by American to dishonestly lure customers with contracts it knows it cannot honor, then fatten its coffers after the consumer—having already accepted the contract at a lower price—is forced to pay more for the same service,” alleges the American Airlines class action lawsuit.

I’m not even sure what it means for the plaintiff to have “used $320 in air miles” to purchase the $397 ticket maybe they booked a 12,500 saver award and are valuing their miles at over 2.5 cents apiece. It’s unclear to me how having to redeem an award ticket (spending miles that don’t have cash value) can constitute damages, but I’d rather not focus on legal issues here — even around valuing miles.

The lawsuit claims changing the price quote during the booking path is a ‘bait and switch’ one fare is advertised, you want to buy it, but you’re presented a higher price before you can finalize the transaction. And since sometimes a customer may buy the higher fare that’s an unjust enrichment — luring the customer in and then charging them more.

I’ll leave the legal issues to lawyers, but the reasons I’m not sympathetic to this:

  • It’s not like the airline is raising the price after a sale. They’re checking the price again before going through the sale.

  • This most often occurs because of IT errors. IT is hard. Data gets cached to deliver as good a booking experience as possible. There’s no question this is frustrating, but I’ve never felt I could sue American Airlines because AA.com is bad (the same holds true for not suing other airline booking sites because the buying experience isn’t great).

  • This isn’t an advertisement in the classic sense, meant to draw a customer to American’s website with a product or price that never existed. The customer is already at American’s website. And the price did exist, they’re just checking inventory and discovering there aren’t any seats left at that price.

The plaintiff would like you to think of this case as picking a pack of gum up from the store shelf, getting to the register, and being asked for more money than the posted sign.

I think of this more as showing the clerk at the register the list of what you want to buy, including an auto-generated price estimate, and the clerk goes in the back and checks and says they’re all out of the limited inventory of discounted product but they’re still willing to sell it to you at regular price.

If American Airlines simply had its website error out when the booking class inventory turned out not to be available there would be no issue, no case. “Oops, we made a mistake, it turns out we’re all out of seats at that price.”

But that’s not a very good experience. A website that just shrugs its shoulders and says tough luck isn’t as good for customers as one that comes back automatically with the next best option, “I can sell this to you for $20 more if you’d like” is better than making the customer start over and spend more time on their search to get that answer.

It can’t possibly be the case that industry-standard technology that uses caching is illegal. But what if it is? They’d have to reserve seats earlier in the booking process, taking space out of inventory to make sure it’s available for sale.

  • Those seats wouldn’t be available to other customers in the meantime
  • Shopping carts are frequently abandoned
  • The seats might not go back into inventory, I know I get super frustrated by this working on awards if for some reason I have to cancel an itinerary and start over but no seats.

You might think an airline should create a shopping cart with a real reservation, including “this inventory will be held for [a specified number of] minutes.” Maybe that would be a better customer experience, though I’m not certain of that. However even if it is I’m not sure that the government ought to mandate it, or assess damages against a company that doesn’t do it.

Leaving aside the way in which inventory is in fact ‘reserved’ during the booking process, are consumers really going to benefit from this? If you’re an American Airlines customer watch this space — because if it settles you may get a coupon for use when you spend even more money still with American, though I bet in that case the lawyers involved will do quite well.

(HT: Eddy C.)

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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  1. […] New Class Action Lawsuit Over AA.com Airfare Pricing by View From The Wing. I couldn’t disagree with Gary more. I’ve seen airlines price something at say $197, then you get to the payment stage and the price goes to $297. So you decide to look for another flight and start over, then the airline is still advertising the flight at $197 even though it’s already corrected that fare on check out. I don’t think anybody is saying that American Airlines should be sued because the booking experience is bad, but you can’t advertise a price that doesn’t exist regardless off how hard IT is. It’s hard to comment on the specifics of this case and I won’t but there has definitely been booking instances where I think companies have been engaging in intentionally deceptive practices. […]

Comments

  1. It would be interesting in discovery to see how long the inventory would be out of sync.

    Also showing “x numbers of seats left at this price” would also be helpful

  2. There is little question AA baits and switches with inventory — and it kills an immense amount of customer time to get all the way through the process to get the error message at the end.
    It is not all software/inventory glitches.

  3. I’ve run into this exact issue with AA.com, but for a cash purchase. I priced out a fare for 4 people one-way to a destination, it said there was available inventory, but when I got into checkout, it raised the price by $100/ticket, stating very vaguely that the price had changed.

    Ok, sure, I get it that only a certain amount of seats are available in a fare bucket and someone might have jumped in ahead of me, bought a seat and wiped out the availability.

    But oddly, in my case, I then went and priced the same ticket through an OTA (Expedia). It priced out at the lower, original price, and I was actually able to ticket through Expedia at that lower price.

    There are definitely shenanigans that go on with ticket pricing, however, it’s above my pay grade to understand what exactly the airlines are doing. And I’m sure our feckless government “watchdogs” at DOT could care less either.

  4. Sorry Gary, don’t agree with you on this one. AA’s site, their inventory, they need to honor the price displayed. IT is hard, but consumer should not be the one to bear the higher cost in this instance. An alternative example I would offer is you bring an item marked $1 to sales register to purchase but are told, ” sorry looks like we only have 4 left, the price is now $1.50.
    Agree though, not sure what damages were incurred using miles, unless miles amount increased as did money fare

  5. The biggest issue is sporting events. When X team is going to a bowl game, NCAA tournament, NFL Playoffs, etc. After announcement, the prices can go up exponentially during the booking process. I’ve had it happen multiple times. That to me is when this scenario is most often encountered.

  6. You can make computers do whatever you want. f airlines wanted real time inventory it could be done. But –

    1) they don’t want to
    2) the government won’t make them. They don’t even make airlines honor fares that you can book.

    Therefore, you get what you get.

  7. IT is hard, but the hard part is caching the prices and checking again at the pre-check-out step. If they want to make it easy, they can just pull the price at inquiry time and honor that price for the full session timeout period of their web page.

    If they want the opportunity to re-check inventory at the last step, they should notify the customer that the “Quoted Price is Not Final Until Checkout Page” (similar to “While Supplies Last”).

    Clearly they’re not delivering a good customer experience when you get all the way through the booking process at one price and are then told the price has changed. That’s true even if it’s legal and even if the reasons it happens are understandable.

  8. Where I live, if I go to a supermarket and the price listed is not the price I paid at checkout, I get the item free.

  9. “Also showing “x numbers of seats left at this price” would also be helpful”

    Alaska does this. Southwest does also.

    I agree with @rjb – airlines don’t want to do IT with real time inventory and the government won’t make them, so the private regulatory function of consumer protection law and the plaintiffs bar will make them. Completely legitimate and foreseeable extension of longstanding bait-and-switch fraud law.

  10. Occurred to me: Stubhub, Ticketmaster and their competitors do real time inventory, where the shopping cart times out after a few minutes and releases the seats, because they are selling individual reserved seat spaces at a particular event exclusively to the person making or considering the purchase. Proof of concept.

  11. Or they could just commit to offering you the price that was originally presented to you at search.

  12. I’ve had this happened numerous times. I’ve even had it where when you go back later or the next day the lower prices are suddenly there again.

    I think Gary that you are incorrect in throwing around the word frivolous. Frivolous has a very specific meaning in the law, but the Chamber of Commerce has spread false claims about the alleged epidemic of frivolous lawsuits (which do exist, but are rare). The Chamber uses frivolous to describe lawsuits against corporations.

    As for damages, using miles that one would not otherwise use is a damage. Plus I am sure many members of the claas paid the higher fares. The suit may be seeking injunctive relief too.

  13. Gary, your “analogy” of sorts is quite contrived. Who does business like that?

    The only difference, from the consumer standpoint, about the way AA does business vis a vis the grocery stores, is that the consumer isn’t physically picking up the ticket and walking it to the cashier.

  14. I agree with many others on here, they could correct this and it is bait and switch, on my mind. VRBO.com is doing this now. Even if you have dates, and # of guests, it will show a lower price to you click through. Sometimes the price is double what it was showing.

  15. Gary:
    It looks like you missed the following point of the lawsuit:
    “The plaintiff says that she and other putative Class Members had accepted American’s offer for a certain plane ticket at a certain price when they selected “Pay Now” on the website.”
    Basically, by entering payment information and clicking “Submit” plaintiff completed her/his side of the contract but then airline decided to switch.
    Of course, AA will be blaming everything on IT but that is a trivial problem to fix.

  16. I disagree about the price on the website. You could for example find the price on google flights for $197 because it feeds that and then click through to see a higher price. If this lawsuit is successful then they should go after rental cars next.

  17. About time.

    Nobody said running an airline is easy, but neither is transforming grain into fresh bread. Yet if at check-out the bread I’m charged a different price than what’s on the shelf, I get it for free. About time that airlines are held accountable (and, of course, it isn’t the DOT to do so — what a sorry country!)

  18. It always seems like a significant portion of the public wants to game something for free. Yes, if you could prove that a merchant (in this case AA) DELIBERATELY displayed fares that they knew they couldn’t sell, sure it could be a lawsuit. But that’s not what’s happening at all and only the biggest cynic would think so. As Gary notes, it’s an IT error. It happens often with online shopping. Like I try to add a shirt to my cart that seems to be available but, when I do, I get a message it’s no longer available. Are the folks with the pitchforks going to demand that every company honor my shirt sale? Puh-leez. Bad websites are bad for business. It leads to unhappy customers who abandon their purchases. That’s enough incentive for businesses to try to accurately price their products on “first click.” Not everything needs to be a lawsuit, even if some people think everyone should be perfect (except, perhaps

  19. themselves).

    Also, might I note that online merchants aren’t even required to honor “mistake” prices AFTER A SALE IS COMPLETED. But you’re going to require them to display perfect inventory before you even make a sale? Ridiculous, and only in America would this be a lawsuit.

  20. “but raises some interesting questions about online purchases, airline seats as commodities, and the sale of digital goods. At least it’s prompted me to ponder some interesting questions”

    literally the opposite of frivolous

    but many thanks other wise keep up good work G!

  21. It happened to me several times, one price displayed, then higher at the check out. Very annoying.
    (I was trying to buy only one ticket every time). AA changed website, now you cannot choose trip by the schedule, have only 2 options: lowest price and flexible. “By the schedule” was very handy for multi city searches. I was Executive Plat. since 2008, would love to change the carrier, but all of the the same.

  22. @ Gary: You are obviously confused.

    “I think of this more as showing the clerk at the register the list of what you want to buy, including an auto-generated price estimate, and the clerk goes in the back and checks and says they’re all out of the limited inventory of discounted product but they’re still willing to sell it to you at regular price.”

    This is precisely picking up the pack of gum at the shelf where marked at $1 and walking it to the cashier who then tells you that because you stopped to look at vegetables prior to coming to the check-out counter you now have to pay $1.50.

    It is far from being rocket science to hold inventory in the. consumer’s shopping cart at the set price for a certain period of time. Precious metals dealers do this every day. Hopefully AA gets reamed.

  23. Stop blaming IT. Yes, IT is hard, but that is why you pay people like me a bunch of money (I do not work for any airline). This is the business model and not IT’s fault. IT implements the business rules it is given. You can be certain that the software was not released without going through a rigorous QA process. If there were no more seats on the plane, then that is an inventory problem. In this case, their demand model changed the prices between selection and payment time. This is not how business should be done. If you say the price is $300, you charge $300 when the person pays for the selected $300 item. If ALL of the seats of that type are gone when you try to pay, then OK, someone grabbed the last item off of the shelf before you. Don’t confuse physical inventory with a demand pricing model.

  24. I worked for a carrier that sells travel online. The online booking system looked at availability and displayed what was there. You started what you thought was “booking” but you were actually assembling a request. When you were done “booking”, and after you had entered your personal information and your payment information, only then did the system send all of that to the actual booking engine, which pulled the space, created a PNR (Passenger Name Record), and returned the results and the electronic ticket to you. Why do it this way? Because otherwise, if you actually pulled inventory while shopping, people could easily tie up all the space without buying it. The method we used, and which apparently most airlines use, is that space only gets booked when you show you are serious and committed to the purchase by sending your payment information. And it is possible that if space at a certain fare is limited, that someone else who is also assembling a request finalizes his or her purchase before you do. (Our system indicated to the user how much space remained at that fare. From my experience, United Airlines’ site does, too.)

  25. I am so happy that finally someone is suing over this! I have been in too many unproductive phone calls with agents who claim that they do not see the inventory that is showing on the website. As an EP/Platinum Elite for several years, it always bothers me how I see a fare (I.E. for $400 R/T) and then when I go check out, it says that it is no longer available. However, when I go back to rebook another fare, it gives me the same one over and over again. I call the agent to book it over the phone and they always claim that they do not see that inventory since they claim that their systems do not have the same inventory that the website does. It really does not make sense! I truly believe that AA creates these bogus fares just to entice us to continue booking a fare with them instead of using that valuable time looking for a better fare with another carrier. As a Delta Diamond, AA EP, Hawaiian Platinum, & Alaska MVP 75, I do have choices so I get upset when these airlines pull stunts to deceit its passengers.

  26. The system can be programmed to honor the cart price regardless of the underlying inventory. That’s the airline’s choice. They chose not to do that. We’ll see how this settles out.

  27. I have bought tickets from American Airlines for at least 14 years starting around 2000 until about 2014, big variations in the price of tickets after you entered all the info and got down to the bottom the tickets were no longer available. When you checked a later date the tickets were available again at a lower price. Did not matter how early you check for tickets, you paid a high price. Also, they lost my luggage returning from Aruba for 2 days and never received any compensation for the inconvenience of my lost luggage. At the luggage counter in Florida the gal could not speak English and after about 15 minutes someone came to her aid, by then our luggage was resent to Texas for the 2nd time. It was very cold in Florida and had no warm clothes, we spent the night in Florida. No apology or compensation. I refuse to fly anymore with this crooked airline.

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