Originally Posted by
Mike Jacoubowsky
And that's a good thing, because these aren't tickets that are going to go away. United will honor them and not make a big deal of it.
There is a much lower risk of mistake fares not being honored with the DOT rules that went into effect a couple years ago:
http://www.gpo.gov/fdsys/pkg/CFR-201...-sec399-88.xml
The fare could have been $1,400 or $400, it's all the same. Only difference is at $400, I would have bought more of them.
Delta honored their tickets from late last year (domestic F as low as $17 in some cases).
Originally Posted by
Mike Jacoubowsky
But if you're thinking this didn't cost UA anything, you're wrong. These seats sold for less than seats in Y, and in fact came up in any generic search for economy seats. You didn't have to be looking for them to find them. So UA lost about $200 on each seat for that reason alone. And then missed opportunity costs. If those seats were sold to an upgrader using miles, you've got the missing cost of 20,000 miles, plus a copay averaging $500, each way. So whatever the value of 40,000 plus $1000. And of course the obvious, the $1500 difference between the mistake fare and the normal cheapest price for a C TATL r/t.
The hard costs of providing that seat are irrelevant. They don't go empty in July, and the extra margin UA makes on a C seat offsets a lot of losses elsewhere.
It really depends on the route. From the East Coast to Europe, it's not that out of line of a fare. From the West Coast or HNL to Europe, particularly some of the secondary markets where there is no direct TATL service (e.g., some people booked MLA or VCE/PMO/NAP/etc.), it was a much better value.
But what this fare did give UA was an excuse for revenue underperformance for the summer. They'd probably under-shoot either way (as they have for the past several quarters), but now they have something they can blame.
I wonder if there are any *A repercussions. Since UA is responsible for the ex-USA TATL fares, it was clearly their mistake (if it was a mistake). This impacts not just UA's revenue, but all of the JV partners' revenue, so I wonder if there could be any liability for UA on that level as well.