A first of its kind class action lawsuit has been filed against Canadian airline Air Canada over claims that customers from all over the world, including the United States, purchased tickets from the company at prices the company thereafter alleged were the result of a “computer error.”
The special was run on the website from August 25th-28th, where customers could book a 10-credit flight pass costing $800. This meant that customers could purchase 10 one-way flights for a total of $800, or $80 per flight.
Many customers jumped on the deal and purchased the pass. However, when they went to actually book their flights, they were unable to do so.
Apparently, Air Canada meant to run a deal for the 10-credit flight pass totalling $8,000 - not the $800 originally listed.
Yet the story gets stranger, as Air Canada did allow some people, who both bought the passes and then booked flights using the passes, to take the cheap flights. The company then denied others who had yet to redeem any of the passes.
Garrett Munroe, an attorney with the British Columbia firm Munroe and Company, filed the suit and said it could involve thousands of people. He stated that only Air Canada knows the exact number of people who bought the passes at the $800 price.
Munroe stated the lawsuit is based on basic contract principles: “Our view here is that Air Canada has made an enforceable contract, it delivered the flight packages to consumers and it has improperly taken them away. Air Canada is duty bound and legally obligated to honor its bargain.”
Air Canada, however, claims a “computer-loading” was responsible for the “temporary mispricing.” A statement released by the company indicates that, “Air Canada has contacted purchasers to apologize and provide a refund.” It said that passengers who (were quick enough) to purchase their tickets before the mistake was realized will be allowed to keep the discounted price. But, those who did not yet purchase their actual flights will not be allowed to do so at the discount.
Munroe wants the courts to force Air Canada to live up to their original deal. “They say it’s a mistake, but how much recklessness is reasonable in terms of allowing the website to show an offer that they don’t intend to be bound by. It would create a significant amount of confusion and uncertainty in the marketplace if consumers were conducting business with the possibility that the merchant is going to come back and attempt to undo the deal that it made.”
In fact, one customer sent to Air Canada a screenshot of the website showing Air Canada’s own statement that, “the price of the Flight Pass is guaranteed. You will pay nothing more if the price of the Flight Pass changes after you purchase it.”
That section in the company’s FAQ section was quickly removed.
Munroe pointed out that a class action rather than several lawsuits is the better course of action. “Rather than having tens-of-thousands of lawsuits, it can be dealt with as one.”
The outcome will be interesting for North American companies who increasingly price items using complex computer models. The models are becoming so complex that they can spit out unintended prices, either well above or well below the intended price.
If companies use such predatory pricing models, is it fair that they can simply retract prices the models spits out while keeping others that drive up profits? A Canadian court will soon decide, in a battle that could very well end up at the Supreme Court.