That’s because an error means completion, so the callback associated to onCompleted never gets called. You can review here Rxjs contract for observables (http://reactivex.io/documentation/contract.html) :
An Observable may make zero or more OnNext notifications, each representing a single emitted item, and it may then follow those emission notifications by either an OnCompleted or an OnError notification, but not both. Upon issuing an OnCompleted or OnError notification, it may not thereafter issue any further notifications.`
For error management, you can have a look at :
https://github.com/Reactive-Extensions/RxJS/blob/master/doc/gettingstarted/errors.md