Consumers on the hunt for cheap round-trip fares to India were shocked and delighted last month to find base rates of just $40 from British Airways. Even after taxes, fees, and fuel surcharges were factored in, tickets averaged just $560 – half the cost of a typical advance-purchase ticket.

Some patrons had already purchased tickets with other airlines, and promptly canceled their reservations in favor of B.A.’s outstanding rate. Many others opted to charge tickets on the spot, moving ahead to book hotels and transportation within India.

Following the brief 2-hour window in which the $40 rate was available, B.A. pulled the plug. Allegedly, a glitch in the system was the source of the low price point that has now become the source of an intense debate. BA’s decision to cancel hundreds of purchased tickets has caused anger and resentment among customers – not great timing for an airline trying to compete in the U.S.–India market.

The airline’s refusal to honor tickets purchased at the mistaken rate has also resulted in numerous complaints to the Department of Transportation. After an investigation by the DOT’s Aviation Consumer Protection Division, a statement was issued that B.A.’s reneged fare “has caused financial harm to a large number of consumers . . . [BA] should compensate affected consumers to make them whole.”

Apparently, compensation to “make them whole” was left to interpretation. B.A. offered a $300 discount on future India fares to affected customers; however, strict conditions applied to this deal. First, travelers’ names were required to be the same on both the canceled and new bookings. Second, trips had to be completed by September 30, 2010. Third, customers were only given a few days to book the new trip. Many patrons are still dissatisfied with the decision, and others, have filed small claims court cases.

Is the customer always right, or should buyers beware? What’s your take on B.A.’s decision?