Yes, Airline Contracts Of Carriage Are Totally Unfair

Filed Under: Advice, United

I can’t think of another industry that has contracts with customers that are as one-sided as we see in the airline industry… but that’s also how it has been for a long time.

Airlines basically promise nothing

Reader Vincent sent me an email about a frustrating experience he had with United Airlines. Vincent upgraded his girlfriend to business class for Valentine’s Day on a flight from Seoul to San Francisco, and he paid $600 plus 30,000 MileagePlus miles for the upgrade (what a good boyfriend he is!).

Two hours into the flight a glitch in the entertainment system caused the crew to restart the system, and somehow this left the entire passenger cabin without “electricity” for the remainder of the overnight flight, meaning there was no entertainment, no charging, no Wi-Fi, no recline, and not even lights.

There was no goodwill offered by the crew, but after contacting customer care, an offer was made for a $200 voucher. United said there was nothing else that could be done.

Vincent finds this to be inadequate, and he’s of course completely right — he paid a significant amount for an upgrade (I’d estimate $1,020 — $600 cash plus 30,000 miles, which I value at $420), but didn’t get a flat bed, entertainment, power, or anything else. As he concludes:

“While I am certainly unhappy with the outcome, I am more frustrated with the immense asymmetry of power between carriers and customers in the marketplace. Though 2020 has brought about some positive changes, the current contracts of carriage continue to be one of the most customer-restricting and merchant-protecting agreements in the business world (e.g. United’s CoC Rule 24-I essentially says no service is guaranteed and the class of service is unilaterally defined by the company). We have filed a complaint with the DOT but don’t expect much as United technically didn’t violate any of its obligations.”

Airlines contracts of carriage promise very little

This is why people don’t like airlines

In many ways I think consumers are unreasonably harsh towards airlines. The airline business is incredibly complex and low margin, and airlines really can’t win with consumers. At the same time, is that surprising when we look at how they treat customers?

Imagine booking a stay at a Hampton by Hilton, and you’re expecting complimentary breakfast, free Wi-Fi, a shower with hot water, etc.

But then imagine you’re told a day before that your stay will be postponed by a week, and then when you arrive at the hotel you’re told there’s no breakfast, no Wi-Fi, no running water, etc.

Would you be expected to pay? Heck to the no. To take it a step further, Hampton by Hilton has a guarantee about customer happiness:

Making you happy makes us happy. So, if we can make your stay better, talk to any member of our team, and we’ll make sure you’re 100% happy. GUARANTEED.

Yet if an airline delays your flight, or doesn’t offer basic services that are promised, you’re out of luck, because those things aren’t promised in the contract of carriage.

Hampton Guarantee, not coming to an airline near you

Can we do anything about it, though?

What can be done in situations where you’re realistically not getting what you paid for, but airlines are unwilling to budge? There are a couple of routes you can go:

  • You can file a consumer complaint with the Department of Transportation (DOT); it won’t necessarily get you anywhere, but airlines tend to take complaints filed through the DOT more seriously, and these complaints also count against the airline in terms of published statistics
  • You could dispute the charge on your credit card (in this case the cash co-pay for the upgrade); while the contract of carriage doesn’t promise certain services, you can dispute a credit card charge if you’re not getting the product that was promised, and airlines do promise certain amenities on their website

While I can’t guarantee a credit card dispute would be successful, in many cases these disputes with airlines are successful, so it’s worth a try given lack of other options.

Should the government get involved?

Airline contracts of carriage being totally one-sided is an accepted business practice, so one has to wonder if perhaps the DOT should step in and regulate a bit more. The US has generally been pretty lax when it comes to consumer rights for air travelers.

In other words, should airlines be allowed to promise one thing in their marketing, but then provide something totally different without any repercussions based on their contract of carriage?

I don’t mean to play both sides here, but I can also appreciate the challenges associated with trying to regulate this, given the operational complexities that airlines face, plus how complicated pricing is in the airline industry.

For example, say you book a paid business class ticket from Seoul to San Francisco, and experience the same thing Vincent’s girlfriend did. What regulations should the government put into place to prevent this situation from being so unfair? What percent of the fare should be refunded? What if just a power port doesn’t work? What if just Wi-Fi doesn’t work? What if the seat doesn’t recline for half the flight, but does recline for the other half?

I’m not saying these hurdles couldn’t be overcome, but I also recognize there might not be an easy answer here.

Bottom line

Airline contracts of carriage are completely one-sided. Airlines will market specific amenities and schedules, but the contract of carriage you agree to essentially makes it clear that nothing is guaranteed — not the schedule of the flight, not the amenities onboard, etc.

As consumers this is incredibly frustrating, and it’s this uneven power dynamic that also contributes towards people having such disdain for airlines. While some people make petty complaints, I think Vincent’s complaint above is very reasonable — if you pay 30,000 miles plus $600 to upgrade, and then you can’t even recline your seat, you should get more than a $200 voucher.

What do you make of how one-sided airline contracts of carriage are? Is there a useful way this can be regulated?

  1. IMHO Vouchers should be outlawed to begin with. It allows the company a certain amount of freedom without having to account for claw backs. What’s stopping United from advertising outlandish things, and adding a *on select flights only and then only offering it on one flight?

    That being said, electricity isn’t outlandish. When something like this happens, every passenger should be refunded the difference between what they paid and the base coach fare. I see coach as utilitarian- get from point a to b with no frills… sure you’d still have more legroom in business, but if you take everything else away it’s just a lawn chair bolted to a metal tube jetting through the sky…

  2. J, just be careful, as the calculation between the base coach fare and the business class fare would be decidedly against the consumer. That is, they’d take the difference between a non-refundable, discounted, advance purchase business class fare and the full, refundable, walk-up coach fare. The passenger might well wind up owing the airline money.

  3. @Ben If the customer were to initiate a credit card dispute in scenarios such as this one, do you think the airline would take punitive action against the customer (i.e. closing their FF account, confiscating their miles, issuing a debit memo, etc.)

  4. Totally agree with @J. Vouchers are a huge issue and only cause more headaches. You hardly feel like you’ve gotten anything in return or equivalent to the original money spent when you’ve eventually used one.

    $200 for a transpacific flight is ridiculous. Maybe if the loss of electricity happened in the final hour or two of the flight. I’m basing this off of a B6 flight I had from NY to FL and the entertainment system went out about mid way through. I received an email the very next day saying I had $200 in my travel bank as an apology. That was for about an hour – I’d go crazy on 8+ hours remaining and then receiving a voucher.

  5. I thought United is trying to be #1 best airline in the world. Now we know the real ranking of their service level, good job, UA!

  6. People want cheap flights and they get cheap service. Now they want all kinds of “COVID protection” then bi$ch and moan on FT because domestic F is now a sandwich.

    Should UA offer miles yes and at least at AA crews are allowed to request miles be given for such things as broken IFE and broken recline.

  7. This was an international flight, so had something occurred that the Montreal Convention covered he could have sued United in small claims court. I successfully sued Air Canada in Denver for failure to reimburse due to AC voluntarily cancelling a flight.

  8. Flight attendant here:
    Semi-off topic, but the example you gave is an interesting dilemma. While it could very likely be a maintenance issue, it could equally likely be a case of the flight attendants not knowing how to operate the IFE system.
    I am routinely showing my coworkers how to do basic things, or have to do them myself because they are unwilling to learn. There are pursers with decades of experience who have no clue how to troubleshoot issues with seats, reset WiFi/IFE, correct lighting issues, etc. Basic troubleshooting functions of our job are routinely ignored, and airlines need to do a better job of forcing crews to learn.

    Of course there have been days where the aircraft decides it doesn’t want to provide electricity mid-flight, and there’s nothing anybody can do about that.

  9. 1 other common thing airlines do which has caused me, I am sure thousands of other travelers, plenty of grief and frustration is “Equipment change”. The number of times I paid higher fares to fly on a specific aircraft only for the airline to change it last minute to an inferior product.
    Again, nothing you can do and not even an apology.

  10. Maybe I’m just lucky, but whenever I’ve ever had an issue with something not working in biz class e.g. seat, IFE etc., I always get reasonable compensation. That said, I only ever ask for miles and not $. So in the UA example, either asking for the original 30k miles paid plus 60k (@1c per mile) for the $600, or asking for whatever the mileage difference is between biz and coach for the same flight. Don’t be afraid to haggle on it either; generally the first option is lower than they will eventually offer.

    Delta has the ability for the crew to do such compensations in flight and have a scale of up to, I think, 15,000 skypesos they can offer for service issues (e.g. no duvet, no choice of selected meal etc.)

  11. I get being upset especially from those who can’t imaging themselves in long-haul coach 😉
    But, I interpret a contract of carriage as just that a contract that brings you from point A to point B. The frills and amenities that accompany the trip are simply extra.
    I thought the contract is for them to take you from A to B, and that that guarantee does not include the additional amenities.

  12. If I recall, they only pay out $20 us per kilogramme if your luggage is lost. I could be wrong. One tee shirt cost more than that these days. Pls correct me if I’m wrong.

  13. 1) Vincent should write a politely-worded letter to the CEO asking for his 30k miles and $600 back.

    2) If the CEO doesn’t respond in a reasonable amount of time (say, 3 weeks), Vincent should send a follow-up letter politely demanding the 30k miles and $600, and threatening to sue in small-claims court if he doesn’t receive it by X date.

    3) If UA still refuses to do anything, Vincent should file a case in small claims court. He should meticulously research the value of miles (you can only ask for $ in small claims) and also UA’s public representations about what business class is like. He should bring these to court to support the claim. If UA doesn’t just pay it to avoid the nuisance, I think a reasonable judge would find would side with Vincent despite UA pointing to the CoC.

    4) Vincent should also use social media to bring attention to his case, and point out in his second letter to the CEO how many sympathetic responses he gets that indicate people are mad at UA.

  14. This article nails it. I’ve always been completely discouraged and disheartened at the one way street that this industry is. We were supposed to feel sorry for them when COVID happened, and essentially lend them our own cash when they “weren’t able” to process refunds or whatever; but if something tragic happens in your life and need the airline to be accommodating, they will show absolutely no mercy while it makes zero difference to their bottom line. And ironically, they would likely gain a loyal customer if they played nice. Many people will definitely turn away from a particular airline after experiencing something like that.

    It would be great to have the insights of an airline CEO or revenue manager, and understand why their contract of carriage only includes going from point A to point B, but not the amenities you sometimes pay dearly for.

  15. I have a file folder of useless vouchers from the ghost of bad flights past over the years. What has worked for me recently is high level status. There was a time when I played the field with carriers and whenever things went sideways, I received the worst possible compensation, delays, rerouting, etc. Now, I find that I am in a better negotiating position and can usually get adequate justice. I realize this option isn’t available to most airline passengers and I fully agree that the carriers will throw the small guy under the bus every time and enjoy doing it.

    One other tactic I use worth mentioning, is that I don’t sweat the small stuff. There are a lot of reasons but suffice it to say I don’t feel like investing the time and frustration but more importantly, I believe that I have better clout when pursuing the major issues if I haven’t pestered them incessantly for every little thing. If you’re expecting perfection on every flight and you’re flying a couple hundred thousand miles a year, you’re going to be in for some major disappointments.

    I agree that the current system is unfair. Whatever happened to the Passenger Bill of Rights legislation? Did it pass and I missed it or did it die in Congress? In any event, maybe this is a good time to attempt new legislation.

  16. No reference to EU regulation 261/2004? It could be a good starting point to build a legal regime here in the US…

  17. I would threaten to file a lawsuit. No time for politeness they are in the wrong at that point you’re just showing you’re a weak hand. A pushover. That’s unacceptable on a long haul flight in business class.

  18. @George N Romney

    At least AA crews are allowed to request miles be given for such things as broken IFE and broken recline.

    That has been discontinued

  19. Ancillaries are not part of the contract but of course there’s an expectation in business class. That is why you upgrade. If it were just the IFE a voucher for around $100 is more than justified. The issue here is the passengers still got a better seat and meal. If it were a paid upgrade 30k miles and $600 I guess refund of the miles and a voucher for $600 would seem fair or even half the miles plus the voucher and I would say well at least that was a fair offer.

  20. @Peter
    I noticed B6 is really good about proactively giving us a little bit of something for what I’d consider minor things.
    The IFE was inoperative on a 45min flight from ORH-JFK, it was a 6am flight and I didn’t even think of turning it on, but later that day I had a $15 credit in my travel bank.

    This also bring me back on topic, that credit just expired because I couldn’t spend it due to our pandemic travel restrictions. Now since it was something unexpected I received, I can’t care less about its expiration, but I have to agree that the voucher/credits we get in place of refunds.. the airlines are betting that we don’t cash in on it sometime in the future.

  21. Don’t forget small claims court. Regardless of CoC, you can win cases based on the principle of implied covenant of good faith. CoC is an adhesion contract (you don’t get to negotiate it), so there’s more leeway especially when it comes to small claims commissioners who are evaluating your case against the consumer protection laws in your jurisdiction.

    Airlines have entire staffs dedicated to handling these settlements and claims. They expect to be sued. If enough people are using small claims, they may reconsider their analysis of these costs.

  22. Had a similar experience on an AA 787, ZRH PHL a bit over a year ago. Actually a worse initiating cause. One seat’s IFE system shorted out, the cabin smelled of smoke. All power was shutdown except emergency lighting. Whatever seat position you were in, it remained that way for 5 hours. Each seat had to be manually raised for landing. Lunch had been served, but only snacks and beverages were available in the galley.

    Must’ve been a 787 from South Carolina…

  23. Airline, train and cruise industry are similar in this regard. The contract is to get you from point A to B and provide the seat to travel. Anything above that is just an amenity but not wrapped into the contract as an item requiring compensation if not supplied they may compensate you for it, but not obligated. Normally they will tend to compensate the travellers with higher status over someone who is low or no status. Legally not much you can do as the contract of carriage is one sided mostly in favour of the company.

  24. Same thing basically happened to me on a paid AA business class, transatlantic flight – they were truly sorry that seat didn’t recline and no power for 8 hour flight, but weren’t planning to do anything about it . . .

  25. At the very least, they should have refunded the copay…

    Something similar happened to me on AA business class (I’d upgraded with miles). Recline on the seat only went back about 1/3 of the way and didn’t lie flat. I contacted their customer support after the fact and received a refund on the copay, and 10k miles back (mind you, I paid 25k miles + copay for the upgrade).

    Overall, pretty reasonable. I ended up with basically a more private PE seat on a 17 hour flight for a 15k point upgrade.

  26. those miles are toast but this is a clear opportunity for a successful chargeback. i’d be surprised if the card company didn’t side with them.

  27. I can’t say that if he disputes the charge he will be successful. Many credit cards are not being more picky regarding such disputes and services that should have been provided. Also, he could continue to escalate the issue with United, but he may be “blacklisted” in a way giving more difficulty when he has a dispute in the future. Think of too many damaged or poor quality issues reported to Amazon. The companies want to avoid people making a business out of this and want to be sure there are genuinecomplaints.

  28. There are times when it really the worst. You have to fight, fight, fight. And it should not be that way.

    However, regardless of people in a job be it customer service or CEO, if you don’t make things right, it still goes to your karma, and then you have to deal with it when you die.

    Stuff doesn’t just away because you are in a job or even a politician, it’s all there waiting for you, regardless of whether one believes in that system or not, it is still answerable.

    Not everyone may like this comment, but its the truth.

  29. I had this exact same thing happen to me a couple of years ago flying PEK to IAD. That 14-hour flight had no IFE and almost none of the cabin lighting was operable so we sat in the dark for the entire flight including for meals and in a messy lavatory too. This seems to be some kind of defect on the 777 and even though United knew about the problems before takeoff they did not bother to let the passengers know about it until it was too late to get off. For Biz class, they offered about $200 in vouchers.

  30. Regarding AA FAs being authorized to offer miles for things such as non-functioning IFEs, power outlets etc.

    This happened to me on an LHR-IAD flight once. The purser/ CSD told and in fact seemed to show me on his tablet that the most he could do for an inoperable power outlet was 1,000 AA miles.

    I noticed and raised the issue shortly after take-off. Even the purser/ CSD couldn’t hide a smile of embarrassment over this offer. 1,000 miles? Come on!

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