Plato90s, I'm afraid I think you fail to see the contractual wood for the trees. Too much knowledge about fare-buckets can obscure your understanding of the base contract.

Fare bases would mean absolutely nothing to 99% of the travelling public. To them, it is this simple (and would be to a court): "I've bought a business class ticket. I expect to be accommodated in a business class cabin."

Unless there were a very explicit term making it plain to passengers that on an INVOL REROUTE they could only be accommodated in business if there was availability in the bucket applicable to their fare basis, no court is going to say that it was acceptable for the airline to relegate that customer to the back of the bus and let a seat in Business go empty. On an INVOL REROUTE as the rules KVS has quoted demonstrate, you'd be entitled to the business class seat even if you had an I ticket and there were only seats left showing in the J inventory.

If the airline physically cannot accommodate you in a business cabin on an INVOL REROUTE then - according to AA's own terms - it has to refund the difference. Again, I disagree with the suggestion that the assessment of the refund starts by assessing the full Y fare for the segment. In my view, that's plainly not the correct starting point. The passenger, if told at the time of booking that there would be no business class seats available, would probably book the cheapest economy ticket offering similar flexibility. As such, the true measure of the loss is what could the pax have expected to pay at the point of booking for the coach seat. If the passenger booked in advance, it is not an appropriate measure of loss to apply wholly different market conditions to the ones under which he made the original purchase.

Finally, turning to your car rental example. If I book a Mercedes and Hertz only have a Taurus when I come to pick it up, subject to the terms and conditions, they are in breach of contract. It is not up to them, as the party in breach, to start telling me which of my contractual remedies I have to accept. It's not "take it" or "tough". In fact, in that example, I have the choice of accepting the downgrade and on my terms of a refund of the difference, or waltzing over to Avis picking up a Mercedes and making Hertz pay any difference between what I would have paid Hertz and what I did have to pay Avis.

In all of these situations you start from the premise, "what have I paid for?" Then you consider what you are being offered. If it is not what you paid for, and subject always to the terms and conditions, you have grounds for complaint on the basis of a prima facie breach of contract. As the innocent party, you hold most of the cards when it comes to what you will do about it. In the eyes of the law, however, the starting point is you are entitled to be put in the position that you would have been in had the contract been performed properly. You can choose to abort the whole operation, and go back to the position you were in before the contract was negotiated (e.g. refund) but it is your choice, not that of the party in breach.

Most airlines are weasels when it comes to aquainting the passenger with his/her rights. They frequently forget to tell the passenger, for example, that if a flight is cancelled the passenger can insist on being re-routed on another carrier. No prizes for guessing what causes this sudden amnesia.