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OST-02-12260

Frontier Airlines' Complaint Against Hotwire


In the Matter of Hotwire- Unfair and Deceptive Methods of Competition in Violation of 49 U.S.C.41712

OST-02-12260 May 6, 2002 Complaint of American Trans Air and Request for Institution of Enforcement Proceeding Unfair and Deceptive Methods of Competition in Violation of 49 U.S.C.41712
    Attachments Advertisements, Web Page Searches    
    Service List  

ATA requests that the Department of Transportation promptly institute enforcement proceedings against Hotwire pursuant to 14 C.F.R. 302.407 to prevent Hotwire from continuing its unfair deceptive radio advertising practices. Hotwire's conduct is harming consumers by falsely leading them to believe that air fares offered in various markets by ATA are not competitive with those available on Hotwire's internet travel site. In truth, ATA's continuously offered one-way fares are actually below the fleeting Chicago O'Hare fares offered by Hotwire's unidentified partner carriers in virtually every Chicago market served by ATA. ATA carries more passengers at Midway-Chicago's low fare hub-than any other carrier, including Southwest. ATA is ranked in the Department's latest Domestic Airline Fares Consumer Report as the lowest fare carrier in 16 of the 22 nonstop markets ATA serves from Chicago.

Seemingly not content to deliberately mislead consumers about ATA's consistently low fares, Hotwire takes its reprehensible efforts to new depths by calling ATA untrustworthy and unknown. Untrustworthy from a safety standpoint? Hardly. ATA, over almost thirty years of operations, has never experienced a fatality. ATA's comprehensive in-house maintenance department and training facilities have been the subject of numerous FAA commendations.

Counsel:  Squire Sanders, Marshall Sinick, 202.626.6651


American Trans Air, Inc. v. Hotwire

OST-02-12260 May 9, 2002
Docketed May 14, 2002
Letter in Support of Frontier Airlines Unfair and Deceptive Methods of Competition in Violations of 48 U.S.C. 41712

It has come to the attention of Frontier Airlines, Inc. that an "on-line" travel agency based in San Francisco, California is broadcasting deceptive or misleading advertisements for commercial air service in violation of 49 U.S.C. 41712 and 14 C.F.R. 302.407. By this letter, Frontier respectfully requests you immediately begin to investigate whether the company, Hotwire, is violating the U.S. Department of Transportation's advertising requirements. Further, Frontier would like to express its support for the Third-party complaint dated May 6, 2002, which was filed by American Trans Air.

While Frontier is still trying to obtain more information into what exactly Hotwire is stating in their advertisements, it is clear from a random search of Frontier's internet site that Frontier's prices are either better or competitive with those offered by Hotwire. For example, a passenger traveling between Minneapolis and Phoenix on June 19 and returning on June 26 or between Minneapolis and Denver on May 22 and returning on May 29 would save money by purchasing a ticket on Frontier, rather than on Hotwire. Also, a passenger traveling between Minneapolis and Denver on June 5 and returning June 12 would save only $17 by purchasing through Hotwire.

Frontier continues to investigate these matters and will consider filing a separate complaint against Hotwire. In the Interim, Frontier respectfully requests your cooperation with this matter by asking Hotwire to produce transcripts of all advertisements it uses in its campaign that makes reference to Frontier or any other carriers, so we may quantify the misleading nature of its advertising campaign.

By:  Frontier, Mark Berumen


Hotwire- Unfair and Deceptive Methods of Competition in Violation of 49 U.S.C. 41712

OST-02-12260 May 21, 2002 Answer of Hotwire Unfair and Deceptive Methods of Competition in Violation of 49 U.S.C. 41712
      Attachment A-B:  Radio Advertisements   
        Attachment C:  Hotwire Web Search    
        Attachment D:  Hotwire Terms of Use   
     Service List   

Hotwire answers the formal complaint and request for institution of enforcement proceedings submitted by American Trans Air, Inc. Necessity, it has been noted, is the mother of invention. The absence of facts sufficient to support a claim under 49 U.S.C. § 41712 has necessitated the considerable inventiveness that characterizes the argument in the Complaint. But inventiveness and creativity cannot get around the fact that the conduct complained of in the Complaint simply did not happen. Proof is in the very exhibits that ATA submitted in support of its complaint. ATA has filed a complaint about an advertisement that was never made, an advertisement largely of it own creation. The advertisement that Hotwire actually ran was truthful and in full compliance with applicable laws and regulations. Because there has been no violation of 49 U.S.C. § 41712, the Department of Transportation should not institute enforcement proceedings and, instead, should dismiss the Complaint.

Counsel:  Swidler Berlin, Paul Dennis, 202.424.7810


Hotwire - Unfair and Deceptive Methods of Competition in Violation of 49 U.S.C. 41712

OST-02-12260 June 3, 2002 Reply of American Trans Air and Motion for Leave to File Hotwire - Unfair and Deceptive Methods of Competition in Violation of 49 U.S.C. 41712

ATA's Reply contains additional factual information necessary for a complete understanding of Hotwire's conduct. This information has only become available since ATA submitted its Complaint on May 6, 2002.  After review of Hotwire's Answer and various public statements made by Hotwire's spokespersons, it is abundantly clear that Hotwire's radio advertisements violate long-established Department policy' prohibiting the use of unfair and deceptive marketing practices by the travel industry. Hotwire's grossly misleading radio advertisements should indeed qualify it for the Triple Crown of deception-mythical fare advertisements which lead consumers to mistakenly believe the quoted fare is available from their location, which contain seriously outdated fare quotes that Hotwire later admitted consumers should not have expected to find on its website, and which then sink to new depths by suggesting that ATA, despite its outstanding safety record, is a carrier not worthy of consumers' "trust."

Nothing in Hotwire's Answer changes the immutable fact that its so-called "man on the street" radio advertisements, which Hotwire admits broadcasting in a variety of markets around the United States, are plainly misleading, unfair and deceptive under the Department's precedents. In fact, Hotwire's Answer and public statements about its radio advertisements made since ATA filed its Complaint on May 6 establish a prima facie case of deception on a nationwide scale that should be addressed promptly by the Department. Hotwire freely acknowledges the content of its advertising campaign and all too predictably claims that its misleading and baseless statements do not violate Department enforcement policy. About the only point on which ATA and Hotwire are in agreement is that ATA took Hotwire's so-called challenge and lost. Not even ATA could decipher that Hotwire's mythical fare comparison had no relevance to the cities in which it was broadcast. One can only guess at the number of unwary consumers across the nation hoodwinked by Hotwire.

Counsel:  ATA and Squire Sanders, Marshall Sinick, 202-626-6651


Hotwire- Unfair and Deceptive Methods of Competition in Violation of 49 of 49 U.S.C. 41712

OST-02-12260 June 12, 2002 Supplemental Answer , Motion to Strike and Motion for Leave to File of Hotwire Hotwire- Unfair and Deceptive Methods of Competition in Violation of 49 of 49 U.S.C. 41712
    Attachment A:  Newspaper Article form Chicago Sun-Times 5/07/02  
    Attachment B:  Newspaper Article form  Wall Street Journal 5/07/02   
    Attachment C:  Newspaper Article form  Denver Post 5/07/02   
    Attachment D:  Metropolitan Areas were Advertisements Were Run  
    Service List  

Perhaps recognizing the weakness of its original complaint, ATA has launched a series of new allegations under the guise of its "Reply." Confronted with the inaccuracy of its initial allegation that ATA fares were lower than fares available on Hotwire, ATA has stepped up the smear campaign against Hotwire. ATA now wrongfully accuses Hotwire of "mythical fare advertisements" which in ATA's eyes contain "seriously outdated fare quotes." ATA also adds wrongful allegations that "Hotwire knowingly and willfully altered the advertisement's content prior to broadcast to obfuscate the facts and mislead consumers to the maximum extent." Hotwire is wrongfully accused of "deliberately target[ing]...several well-known low-fare carriers, including ATA," and accounts of recent statements by Hotwire personnel are inaccurately recast as "an outright admission of wrongdoing."  Hotwire specifically denies these allegations.

Unless the Reply is struck, Hotwire should be allowed to answer these new allegations. Otherwise this forum, which is designed to allow fully informal decisions based on all material facts, will be distorted. Complainants will have an incentive to hold back allegations for the "Reply" in the hope that respondents will have limited themselves in their initial answer and therefore be unable to mount a complete defense to allegations not yet made.

Counsel:  Swidler Berlin, Paul Denis, 20.424.7810


Hotwire- Unfair and Deceptive Methods of Competition in Violation of 49 of 49 U.S.C. 41712

OST-02-12260 June 12, 2002 Re:  ATA Will Not Respond to Hotwire's Supplemental Answer Hotwire- Unfair and Deceptive Methods of Competition in Violation of 49 of 49 U.S.C. 41712

Counsel:  Squire Sanders, Marshall Sinick, 202-626-6600


American Trans Air / Frontier Airlines v. Hotwire, Inc.

Order 02-10-7
OST-02-12273
OST-02-12260
OST-02-12333
Issued and Served October 4, 2002 Consent Order

Word Document

Violations Pursant to 14 CFR 302.404

Clearly, the advertisements at issue here are airfare advertisements subject to 49 U.S.C. § 41712 and the Department’s applicable rules and related enforcement case precedent.  While we acknowledge that Hotwire has been fully cooperative in our investigation, we believe that enforcement action is warranted in this instance.  Hotwire, as a travel agent, is subject to the policy guidelines of section 399.80.  By omitting a full description of the markets in which its advertised fares were available, specifically by failing to state the origin point of prospective itineraries in its advertisements, Hotwire created the false impression that the fares it advertised were available in the cities in which its advertisements were broadcast when that, in fact, was not the case.  Accordingly, Hotwire engaged in a deceptive practice and an unfair method of competition in violation of 49 U.S.C. § 41712 and 14 CFR 399.80 (c) and (f).  This order directs Hotwire to cease and desist from future similar violations and to pay a compromise civil penalty.

By: Roland Knapp


 

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