Fare glitches are often at the center of significant online buzz, as travelers share mistake fares and system glitches that offer up impossible airline fares.
Often only available for minutes at a time, the sophistication and reach of online communication has allowed for thriving communities surrounding these sorts of one-off “mistake fares.”
One of the most recent fare glitches brought up a healthy discussion related to the whether exploiting these fares is simply taking advantage of a fair opportunity or whether it’s more nefarious, in the sense of a moral gray area given that the purchase price is clearly not one that any business could realistically offer.
The recent fare glitch involved flights on United Airlines purchased through Norwegian site Wideroe.no. A post on Flyertalk was the originator of information related to the fare, and eventually the news spread far and wide.
The glitch was significant: the ticketing system dropped the fuel charge from the fare completely, meaning that roundtrip fares to points worldwide were coming it at incredible prices. The glitch occurred due to what’s known as “fuel dumping.”
The website honored the fares, and was even promoting their availability as the error was put squarely on the shoulders of their reservations engine provider, Amadeus. Wideroe says they will honor these fares as well – meaning that someone is going to make up this fare shortfall somewhere along the line.
Fuel dumping
Fuel dumping is one of the primary means for savvy shoppers to exploit the airlines’ myriad fare classes to their advantage.
Airlines, in their relentless bid for profitability via unbundling fares, have attempted to remove the supposed cost of fuel from regular fares and then tack that charge on as a tax – so a “Y” class fare would then have a “YQ” tax tacked on as the fuel surcharge.
And even though this is called a “fuel surcharge,” there is no direct tie to the price of fuel in this surcharge. The airlines use this to drop the base fare price, which allows them to post a much more appealing fare to travelers in the booking process.
The tacked-on fee approach also allows the airline to reduce commissions paid as a percentage of base fare – a sneaky way that unbundling has allowed airlines to increase profitability by reducing partner costs related to travel agents and corporate customers.
Some airlines – such as British Airways, which is being sued in the United States for this practice – also use the YQ fare to book award tickets. This means that award tickets are much more expensive than they would be elsewhere, as the base fare is the only part covered by frequent flier miles. The traveler must pay the large fuel surcharge out of pocket.
In order to determine how much to charge on a YQ-class fare, airlines use complex algorithms that take factors such as itinerary, date, and segments into consideration.
Given the complexity of possible itineraries, some slip through the formula and end up posting a big fat zero for the YQ fuel surcharge. While some websites don’t post those fares, others will – and only charge the base fare at an enormous discount to regularly-posted fares.
This “fuel dumping” is exactly what was exploited in the recent case involving United Airlines. And while it’s impossible to tell how many fares were sold, plenty of posters on FlyerTalk were successful with the fuel dumping strategy.
Why fuel surcharges to begin with?
One poster on Flyertalk made this concise and informative post related to fuel surcharges, explaining:
Large legacy airlines have hundreds of thousands of fares published at any given time. Each fare basis for each city pair is a unique record in the ATPCO database and there is a charge levied every time each record is changed. This charge is quite small (a few cents) but when multiplied by the number of records maintained can easily reach 6 or even 7 figures in value for the entire database.
When global fuel prices (which usually represent between 20-40% of an airline’s costs) became highly volatile, there was a need for airlines to monitor, review and update their systemwide fares on a far more regular basis than previously. However, the cost of changing fares (either up or down) across the entire system was prohibitive.
For an airline the size of British Airways to enforce a 5% fare hike due to higher fuel prices would cost over a million dollars simply to process.The fuel surcharge was the solution to this problem. By simply mandating an additional charge to be collected as a tax on all fares, the database maintained a single record for “YQ” which was then updated by each airline.
So instead of raising all fares by $5, one simply raised the “YQ” by $5 and paid only one database change fee.
A bit more complicated than just fuel dumping
Of course, it’s not as easy as it sounds to dupe the matrix into dropped off a significant portion of the fare. There’s a whole community on FlyerTalk and MilePoint that focus on what’s known as ’3Xs,’ which are the means that allow for fuel dumping. 3X refers to a random one-way ticket somewhere in the world on a lesser-known carrier that won’t be flown (it will be ‘struck,’ thus the nickname). This additional one-way actually confuses the reservations system, thus dropping the fuel surcharge.
3Xs are now incredibly hard to uncover, as the most active mileage junkies are secretive about what’s out there. It’s also making it difficult for airlines to catch up with the ongoing pursuit of fare glitches, as the forum jockeys have implemented a more subtle code related to destinations that involve descriptions of food, landmarks or other identifying marks requiring a bit more interpretation.
The moral
One argument against these extensive fare searches is that they take advantage of non-traditional routes to confuse the intentions and design of the algorithm. By duping the system, these people are swindling the company of money by forcing loss-leader fares on the company.
Of course, the airlines are the primary purveyors of this particular train of thought. They believe that taking advantage of unintended issues with their own systems is a gray-area that amounts to theft.
A request for comment to United Airlines related to why these glitches happen and how the airline approaches honoring these fares returned the following short missive:
The $5 – $10 low fares occurred due to information that had been incorrectly entered into our system. Because the low fares occurred due to human error, we honored the tickets. The other issue you mention occurred because customers were intentionally manipulating our website. We did not honor those reservations.
The vague intentionality of this manipulation is one of the most contentious areas of this debate: if the website allows a fare to be delivered and purchased, shouldn’t that fare be honored regardless of how the outcome was achieved?
The airlines have little leeway, as the American Department of Justice has ruled that domestic airlines must honor these fares. And honoring these fares comes down to cold hard cash: It’s simply cheaper to allow a few fare-searching loyalists to fly cheaper than it is to upgrade the legacy reservations systems.
Imagine the cost: replacing all the hardware alone would run into the hundreds of millions, and could easily rise into the billions once training, license fees and myriad integrations are factored in – and that’s for only one airline. The chaos of changing systems – as seen with recent mergers – is also a huge cost and burden on the airline.
As Luth explains, there is more than meets the eye here – and there’s basically nothing airlines can do about it.
You have an entire ecosystem of technology and processes that goes back to the earliest days of booking travel. Everything has to be backwards-compatible with those systems and procedures–a wholesale change and modernization of the reservation systems would be far too expensive and far too disruptive.
Right now, you have all of these interline agreements and codeshares between airlines, and you have tens of thousands of travel agents around the world. One airline can’t just upgrade on its own; everything is in such a delicate balance that it would have to be an industry-wide change. And the cost and disruption caused by that is certainly far, far more (tens of billions, maybe?) than a few million dollars in missing fuel surcharges on tickets people probably wouldn’t have booked at a higher price anyway.
The righteous
Others might see the consumers moral imperative as finding the best deal possible, however it is presented to them.
Some fliers believe that the airlines are simply getting what’s coming to them. Consider it a form of karmic retribution: the airlines have unbundled ‘fuel’ from base fares in order to take advantage of their customers, travel agents and corporate partners, which can be seen as disingenuous, and now those very same customers are fighting back by manipulating the system the airlines created to make more money in the first place.
This is a bit more of a rebel-can-do attitude, where manipulating the available resources is simply a part of the game that the airlines themselves are already deeply engaged with. Coupon-clipping customers have long seen shopping as a giant game, a game that’s won by paying the lowest prices. Travelers fit in nicely here, as there has long been a culture of deal-finding and sharing. This is just part of the new digital economy.
Chris Luth, an active FlyerTalk contributor under the handle ‘jackal’ had this to say related to fuel dumping glitches:
I will say that I think the way airlines have implemented fuel surcharges is underhanded: it cheats travel agents out of commissions, cheats corporations out of their negotiated corporate discounts, and cheats leisure travelers out of promised “free” award tickets.
And they don’t really have anything to do with the cost of fuel–fuel is cheaper now than it was a few years ago, but have airlines reduced their fuel surcharges? Ha.
The opportunistic
When it comes down to taking advantage of fare glitches, the majority of folks are simply taking advantage of a situation presented to them. Of course, that’s the majority of the traveling public. And these fuel dumping opportunities, in addition to other fare glitches, also take a sizable time commitment to hunt down. It’s not like these are widely advertised, and they often disappear within minutes of being revealed.
So if time is of the essence, many consumers simply would do better to pay the higher fares while trading their time for a wage. Nonetheless, the game is a challenge, and many find it fun. All it takes is 5 minutes clicking around FlyerTalk: there are hundreds of hyper-engaged travelers fueling these discussions for thousands of users.
However, this particular Norwegian situation was differentiated by the fact that it was simple. Chris Luth:
What made this glitch unique? It required no work. Normally (as described in the aforementioned blog post), confusing the airline ticketing systems into getting rid of the fuel surcharge can be a painstaking process. It takes time and effort to find and apply the necessary tricks. In this instance, though, you just plugged in a regular round-trip, and boom, it priced out without the fuel surcharge–no tricks required. It was “fuel dumping” for the masses.
At the end of the search, all that matters is that people are still traveling and that the passion remains. This passion is one of the key differentiators – and enormous ongoing opportunities – in the travel industry, and smart airlines would benefit by doing good by these loyalists.
How to
Given that this fare glitch discussion isn’t going away anytime soon, here are some tips on booking sweet fares from Luth:
Two things: pay attention and book first, think later. There are many sources of good airfare deals. You can spend a lot of time in the FlyerTalk Mileage Run Deals forum (http://www.flyertalk.com/
forum/mileage-run-deals-372/), but there can be a lot to comb through. I actually get a lot of my good-deal notifications from TheFlightDeal.com–or, more specifically, their Facebook page: I subscribe to notifications from them on Facebook, and they use geo-targeting to push notifications of good fares from my home market.
The fares you’ll find in those places are generally just really good fares without any tricks or anything, but even without manipulating things, there can be some really good fares out there. The line between intentional “great fare” and unintentional “mistake fare” is sometimes hard to see.
I also have a lot of friends who watch for good fares, and we share ones we find with each other. Personally, I don’t spend time looking for ways to trick the airline systems, but sometimes opportunities like this just fall into your lap, and you just have to be well-connected so you can get in on them. I spend a significant portion of my life dealing with travel and airlines and all of that, and a good portion of my circle of friends comes from that background, too.
Would I have gotten in on this deal if I was a typical twice-a-year-traveler who spent his time doing something else instead of living and breathing travel? Probably not. You get what you put into it. Join a community like FlyerTalk and start living in the travel space, and you’ll pick up on it, too–not just cheap fares but how to improve the travel experience itself, like getting upgrades and lounge access. It takes time and effort, but since I value travel so highly, it’s worth that time and effort for me.
And when you come across one, you have to jump on it fast. These things can disappear in a matter of a few hours. I tried to call a cousin to see if he could join in one of the trips I booked. He didn’t answer his phone and didn’t call me back until about two hours later. By that time, the deal was gone. Most sites have an option to cancel within 24 hours for a full refund, which really helps–grab what you can find now and then take a day to think it over. Those who paused before booking to make sure they could get time off and find places to stay and coordinate with spouses and all of that missed out. You have to be willing and able to react quickly.
NB: Bug in the code image courtesy Shutterstock.