A pricing glitch means American Airlines is on the hook for more than $1 million

Just a bit of a dust up.
Just a bit of a dust up.
Image: Reuters/Dominick Reuter
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This item has been updated.

More than 800 people are eligible to fly to China for free because of a pricing glitch at American Airlines on March 17. For five hours that day, the airline mistakenly offered business class tickets to Beijing and Shanghai for $0 and $20.

In all, tickets for more than 1,600 passengers were booked with, or reserved for, the mistaken fare. After noticing the error, American canceled the reservations of anyone who had reserved a ticket but had yet to pay for it. That action was in violation of US regulations at the time, according to the US Department of Transportation. American does not admit to or deny the allegation. However, in an agreement today (Nov. 4) with the DOT to avoid further legal action, American says those whose reservations were canceled will be offered a free economy class ticket or a $1,500 discount on a business class ticket.

The options come with the condition that taking the flights will not accrue miles in the passenger’s frequent flyer account. In other words, the trip can’t be used for a so-called “milage run” where travelers hop on cheap flights to reap the rewards given to frequent travelers. Passengers who choose the $0 economy ticket will still have to pay taxes and fees of about $450 per ticket according to a letter sent to customers covered by the agreement.

Tickets of customers who fully booked tickets with the mistaken fare are being honored without restriction.

American suspects many travelers whose reservations got canceled aren’t going to take the airline up on its offer, due to the restriction on rewards accrual. Nonetheless the pricing glitch means the airline will possibly forgo more than $1 million in revenue, based on American’s typical roundtrip economy-class fare of $700 or more on tickets between the US and China.

This is possibly the last time passengers are going to be able to take advantage of an airline’s pricing glitches in the US. Starting with fares issued in May 2015, the Department of Transportation ruled, airlines no longer have to honor mistake fares.

Update (Nov. 5): This post was updated to reflect the taxes and fees associated with traveling on the “free” ticket.