Mileage programs were originally devised as a cost center for the airlines to ensure continued loyalty in a deregulated air market. Over the years they have transformed to a profit center as airlines award fewer miles than ever for flights. Instead airlines make billions of dollars annually by selling their miles to banks and other partners, who then use them to incentivize consumer behavior.
The airlines open up saver award space on flights that they don’t think will sell out, so the redemption cost for them is marginal. You are allowed to give someone a mileage ticket, but you are not allowed to sell one. Many airlines have sophisticated audit departments to ensure that people don’t sell award tickets to people who would have otherwise paid for a ticket. The audit departments also watch out for cases of fraud, where someone may hack an account and drain their miles.
TheMarker (Hebrew) shares the story of a passenger who used his friend’s Delta miles to book an award ticket from Tel Aviv to Bangkok on SkyTeam partner Aeroflot before Yom Kippur 2016.
Unfortunately the passenger used his own credit card for the taxes. That’s a big no-no. You should always use the account holder’s credit card to avoid setting off red flags.
He went to the airport, only to find out that Delta voided his ticket under suspicion of fraud. Some airlines, such as Alaska and American, are notorious for cancelling award tickets just before flight check-in. However Delta’s audit department isn’t as vicious as those airlines. Sometimes those airlines even cancel a ticket during a trip, just to teach a lesson to suspected mileage brokers. Airlines act as the judge, jury, and executioner when they suspect fraud or mileage brokering.
In this case, Delta reinstated the ticket, but it was too late to travel before Yom Kippur, so he had to travel 2 days later.
Delta offered $200 in compensation, which he refused. He took Delta to small claims court in Israel and the judge agreed that Delta had an obligation to inform the passenger of the cancelled ticket. Delta claimed that he should have presented his friend’s ID, but that requirement isn’t found in Delta’s terms.
The judge awarded the passenger 10,070 shekels in compensation and 1,000 shekels for legal expenses, for a total of 11,070 shekels ($3,130) excluding interest from the date of filing.
Many people have taken banks and airlines to small claims court in the US, but often those cases are settled with a non-disclosure agreement, so it’s interesting to actually see the details of a case that went the distance.
It would be good to see similar cases in the US so that airlines will realize they can’t do anything they want without retribution. Unfortunately it’s hard to sue an airline in the US due to the 1978 airline deregulation act (ADA) pre-empting state laws. Most complaints have to go through the DoT.
United couldn’t be sued for taking away lifetime annual upgrades that they promised in writing to million milers due the ADA.
When Northwest banned Binyomin Ginsberg from their mileage program and stripped his Platinum status he lacked a course of action as well due to the ADA. However in that Northwest, Inc. v. Ginsberg opinion, the Supreme Court explicitly questioned whether the ADA would be able to shield an airline against a lawsuit to its mileage program if someone earned most of their miles from credit card spending or sources other than flying.Â
It’s no surprise that airlines choose to settle cases with non-disclosure agreements rather than let a good case from someone who earned their miles via non-flying sources make its way through the courts. That’s a precedent they can’t afford.
Perhaps one day someone will donate an award ticket earned from credit card spending to a charity, but manage to still set off red flags that causes the airline to cancel the ticket. If the donor would work such a lawsuit through the courts (including the court of public opinion) without settling, the result would probably greatly weaken the ADA protections that airlines currently use to abuse passengers…
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21 Comments On "Delta Ordered To Pay 11,070 Shekels For Canceling Passenger’s Award Ticket Without Warning; Thoughts About The Future Of Airline Protections In The US"
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Can you explain exactly how the ADA protects them from being sued? What clauses do that? And why would Congress have made such a rule to protect airlines from activity that harms customers?
interesting just had a similar story two days ago with delta.
What was the story?
still in middle the story basically they cancelled a few award tickets and did not inform the pax.
Airlines think they can do what they want and cancel tickets without doing proper research and notifying passengers. I’ve heard stories like this before and I’m happy to hear that they being held accountable. Delta happens to be a nice airline and they actually care about their passengers but American has done this many times from what I’ve heard and they couldn’t care less about anyone. I’ve had in lga twice them not honoring my sapphire one world status for the benefits I deserved or the citi aa card for the free luggage.
@Dan Off topic but I think now that the new website has been active for a nice amount of time, it’s a good time to take a poll and get a real idea of how people are adjusting to the new design. I personally am a big fan 🙂
May Nafka Mina? and whats not to like about it?
Glad to hear that you like it!
It was not easy to pull off. JJ and Suave pulled many all-nighters getting it together.
What’s the compensation for? If they had told him about it he would’ve had to buy a new ticket. Since they didn’t tell him about it, he….had to buy a new ticket.
Also, if the airline can make your miles expire whenever they want (like, poof all gone tomorrow), they can make your ticket expire, too.
Just because they can cancel your miles doesn’t mean they can cancel an issued ticket.
“Perhaps one day someone will donate an award ticket earned from credit card spending to a charity, but manage to still set off red flags that causes the airline to cancel the ticket. If the donor would work such a lawsuit through the courts (including the court of public opinion) without settling, the result would probably greatly weaken the ADA protections that airlines current use to abuse passengers…”
C’mon Dan! You should totally do this! you’ll rock the airlines wold!!
“perhaps”
Dan: Where does it say in your contract of carriage that you cannot sue the airline in small claims court? My brother sued Delta over a Delta screw up and received about $3,000 plus court fees.
I did not say anything like that.
You made the following comment that suggests that the ADA makes more difficult to sue (how so?) and that most complaints are required to go through DOT (which ones?):
“Unfortunately it’s hard to sue an airline in the US due to the 1978 airline deregulation act (ADA) pre-empting state laws. Most complaints have to go through the DoT.”
If you’ve been damaged, you can sue. No damages, no lawsuit. A complaint without damages … is just that, a complaint. It’s not a lawsuit.
Also, no need to settle your case. Win your case in court and you can broadcast it to the world.
Read the articles I linked to.
“The majority further noted that United’s promise of “lifetime” benefits might be “misleading[,] perhaps even fraudulent,” but the Airline Deregulation Act of 1978 preempted claims based on violations of state consumer-protection law, so Lagen could find no relief there. The Act requires Lagen to channel this sort of grievance through the Department of Transportation, depriving him of a private right of action.”
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“The District Court found that the Airline Deregulation Act of 1978 (ADA) pre-empted the breach of the duty of good faith and fair dealing claim and dismissed the breach of contract claim without prejudice.”
“We must decide in this case whether the Airline Deregulation Act pre-empts a state-law claim for breach of the implied covenant of good faith and fair dealing. Following our interpretation of the Act in American Airlines, Inc. v. Wolens, 513 U. S. 219 (1995), we hold that such a claim is pre-empted if it seeks to enlarge the contractual obligations that the parties voluntarily adopt. And because the doctrine is invoked in the present case in an attempt to expand those obligations, we reverse the judgment of the Court of Appeals.”
“Because respondent’s implied covenant of good faith and fair dealing claim seeks to enlarge his contractual agreement with petitioners, we hold that 49 U. S. C.§41713(b)(1) pre-empts the claim.”
“Our holding also does not leave participants in frequent flyer programs without protection. The ADA is based on the view that the best interests of airline passengers are most effectively promoted, in the main, by allowing the free market to operate. If an airline acquires a reputation for mistreating the participants in its frequent flyer program (who are generally the airline’s most loyal and valuable customers), customers can avoid that program and may be able to enroll in a more favorable rival program.”
“Respondent and amici suggest that Wolens is not controlling because frequent flyer programs have fundamentally changed since the time of that decision. We are told that “most miles [are now] earned without consuming airline services” and are “spent without consuming airline services.” Brief for State of California et al. 18 (emphasis deleted). But whether or not this alleged change might have some impact in a future case, it is not implicated here. In this case, respondent did not assert that he earned his miles from any activity other than taking flights or that he attempted to redeem miles for anything other than tickets and upgrades.”
How did your brother sue Delta in small claims? who is Delta (you just write Delta in the complain)? I want to take BA, they cancelled 2 tickets and didnt refund and calling them doesnt help. Can you sue them on a ticket booked with miles? Ty
I bought a delta award ticket on Virgin Atlantic with my delta points four myself but used my gf’s card for the taxes, is there a risk of it being flagged as fraud and cancelled?
no
I had a similar story. BA cancelled 2 tickets and never refunded me. How do i take them to court in the USA?
Can you post a link to the Israeli small claims court web site that issued this great verdict.
TIA