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OST-2008-0031 - 2008 Consent Orders



Pacific Delight Tours, Inc.

Order 2008-2-13
OST-2008-0031 - Consent Order

Issued and Served February 7, 2008

Consent Order

This consent order concerns violations by Pacific Delight Tours, Inc. of the requirements of the Department’s full fare advertising rule, 14 CFR 399.84. Pacific Delight failed to include fuel surcharges, where applicable, in air tour prices it listed in a number of print advertisements and on its website and failed to provide adequate disclosure of additional charges and fees, such as taxes and other fees that may be listed separately. These omissions, moreover, violated 49 U.S.C. § 41712, the statutory provision prohibiting unfair and deceptive trade practices and unfair methods of competition. This order directs Pacific Delight and its affiliated companies to cease and desist from future similar violations and assesses $20,000 in compromise civil penalties.

In an advertising program in early 2007, Pacific Delight promoted several of its air tours to China in the Washington Post, International Travel News, Travel and Leisure and other publications. These advertisements failed to include the airline fuel surcharge in the advertised price and failed to make any mention of additional fees and taxes. The advertisements, in some cases, advised consumers to check the company’s web site for departure dates and special offers, without giving any indication of the existence or the amount of added charges or surcharges. In other cases, advertisements stated that taxes were additional but gave no information on their amount and made no mention of fuel surcharges. On the website itself, although the fuel surcharge was identified, it was listed separately, rather than included in the base fare as required by the Department. Moreover, the additional taxes permitted to be stated separately were not prominently disclosed through a hyperlink or in text next to the pertinent fare, as required by section 399.84 and the Department’s enforcement case precedent. Information on additional taxes (and the fuel surcharge) was, instead, placed in a hyperlink labeled “Notes, Terms and Conditions,” which did not provide the conspicuous display required by the Department. As a further matter, in response to telephone inquiries placed by the Enforcement Office, the company’s reservations agents were at least initially unable to provide full fare information on the additional charges. In mitigation, Pacific Delight states that the errors in its print advertisements and on its website were inadvertent and not intended to mislead consumers.

By: Rosalind Knapp

http://www.pacificdelighttours.com/



Ritz Tours, Inc.

Order 2008-2-22
OST-2008-0031 - Consent Orders

Issued and Served February 15, 2008

Consent Order

This consent order concerns advertisements by Ritz Tours, Inc., that violate the Department’s advertising requirements specified in section 399.84 of the Department’s regulations, and constitute unfair and deceptive trade practices and unfair methods of competition in violation of 49 U.S.C. § 41712. This order directs Ritz Tours to cease and desist from future violations and assesses the company compromise civil penalties of $55,000.

Ritz Tours has specialized for over 20 years in offering comprehensive travel packages that include airfare, hotel, river cruises, guided tours and other amenities, particularly to countries in the Far East. During 2005, 2006, and 2007, Ritz Tours promoted air travel packages through printed brochures and mailers, by means of advertisements that were published on its web site and through direct e-mail advertising campaigns. The airfares and air tours promoted in Ritz Tours’ brochures, e-mails and mailers and on its web site, did not comply with Department requirements. More specifically, the listed prices for the complete air, land and cruise packages did not include airline fuel surcharges and they lacked an appropriate notice or hyperlink prominent and proximate to the price that disclosed to the viewer that taxes and fees that are permitted to be listed separately from the advertised price were not included.

By: Rosalind Knapp



US Airways, Inc.

Order 2008-2-35
OST-2008-0031 - Consent Orders

Issued and Served February 28, 2008

Consent Order

This consent order concerns the display of inaccurate and misleading information on the US Airways website regarding fares for infants traveling on a parent’s lap. The inaccurate display of fare information constitutes an unfair and deceptive trade practice and unfair method of competition in violation of 49 U.S.C. § 41712 and violates the full-fare advertising requirements of 14 CFR 399.84. This order directs the carrier to cease and desist from similar conduct in the future and assesses a compromise civil penalty of $100,000 under 49 U.S.C. § 46301.

During a period beginning in mid-2006, soon after the merger of US Airways and America West, consumers attempting to book reservations for lap infants on international flights understood from the carrier’s website that infants could travel at no charge. When consumers who had booked reservations on the USAirways website arrived at the terminal, however, the carrier’s ticket agents informed passengers that there were in fact charges for lap infants that typically included ten percent of the adult fare, taxes and surcharges and that the display of a “zero charge” on the web fare calculator was erroneous.

US Airways advises that it became aware in the fall of 2006 of the erroneous display of international lap infant fares and sought to modify the site to provide an accurate fare calculator, but, according to the carrier, in view of other website priorities, the modification will not be fully installed until later this year. Initially, the concern on the part of the carrier was to provide a unified website, combining features of both the America West and the US Airways sites, but difficulties in integrating the two systems led to errors such as the one involving lap infant fares. In the interim, the carrier inserted a mandatory screen alerting consumers to the fact that additional charges applied to the transport of infants, including taxes and a fee of approximately 10 percent of the fare of the accompanying adult. The notice, however, did not advise consumers that the full fuel surcharge, equal to that charged adult passengers, applied to lap infants, nor was it clear whether a fee applied to the issuance of a paper ticket required of lap infants. A second interim fix was put in place in early 2007 which gave the fare of the adult passenger, then noted that the infant fare was “to be determined,” in addition to the mandatory page noted above. Later, the carrier states that it stopped accepting international reservations on its website for lap infants and their accompanying adults. The current page instructs consumers to make such reservations by contacting the carrier’s telephone reservations network.

By: Rosalind Knapp

http://www.usairways.com/



Jet One Jets, Inc.

Order 2008-3-2
OST-2008-0031 - Consent Orders

Issued and Served March 4, 2008

Consent Order

This consent order concerns the unlawful holding out of air transportation by Jet One Jets, Inc. in contravention of the statutory licensing requirements of 49 U.S.C. § 41101, and 49 U.S.C. § 41712, which prohibits ticket agents and air carriers from engaging in unfair and deceptive practices and unfair methods of competition. It directs JOJ to cease and desist from such further violations and assesses JOJ a compromise civil penalty of $60,000.

An investigation by the Office of Aviation Enforcement and Proceedings of JOJ’s advertising practices revealed violations of 49 U.S.C. §§ 41101 and 41712. Specifically, for a period of time during 2006, JOJ’s Internet website and print advertisements contained statements and omissions that, when considered together, would lead the public to conclude erroneously but reasonably that JOJ is a direct air carrier with operational control over flights. For example, the company’s homepage and its other advertisements stated that, “When you fly with Jet One, you’re more than a passenger.” The webpage entitled “Aircraft” included a statement that “[w]e offer a range of aircraft, from heavy jets … to helicopters. In addition, each webpage contained a footer stating, in relevant part, that JOJ was a “full service private aviation provider,” whose services include “private jet operations” and the company’s “Services” webpage referred to “our private jets” and stated that “[w]e operate in countries around the world.” In sum, JOJ created the misimpression that it operated the aircraft used in the transportation by air that it held out to the public for compensation or hire. By doing so, it engaged unlawfully in air transportation.

The Enforcement Office finds JOJ’s website particularly troubling in light of the Department’s notice cautioning entities that lack proper economic authority against the use of misleading statements, phrases, and terms. Through these and other statements on its Internet website and its print advertising, JOJ held out direct air transportation when it did not have proper economic authority, thereby violating 49 U.S.C. §§ 41101 and 41712.

While neither admitting nor denying wrongfully engaging in air transportation, in mitigation JOJ states that any violation of the Department’s regulations was inadvertent due to the company’s basic level of experience with the applicable regulations. JOJ also asserts that, because its customers are sophisticated business people who do not necessitate the consumer safeguards that the regulations mandate, the violations presented a minimal degree of risk of consumer harm.

By: Rosalind Knapp

http://www.jetonejets.com/



AHI International Corporation d/b/a AHI Travel and Alumni Holidays

Order 2008-3-5
OST-2008-0031 - Consent Orders

Issued and Served March 6, 2008

Consent Order

This consent order concerns advertisements by AHI International Corporation d/b/a AHI Travel and Alumni Holidays that violate the Department's advertising requirements specified in section 399.84 of the Department's regulations and constitute unfair and deceptive trade practices and unfair methods of competition in violation of 49 U.S.C. § 41712. This order directs AHI Travel to cease and desist from future violations and assesses the company compromise civil penalties of $45,000.

The airfares and air tours promoted in AHI Travel's brochures, mailers and e-mails, and on its web site did not comply with Department requirements. More specifically, the listed prices for the complete air, land and cruise packages failed to include fuel and security surcharges imposed by carriers and other transportation suppliers, which must be included in the advertised price, despite statements that would likely lead a reader to believe otherwise. In this regard, there is a notice on the page where the land portion of the trip is first revealed that "all service charges when applicable" and "US. government taxes and fees" are included in the overall air plus land package price. This, however, turns out not to be the case. For example, the site includes a "Cruise the Passage of Peter the Great" page, which advertises "12 Days from $2,540 (Land Only)." Below that first descriptive paragraph, the text states under "Included Features:" "Transportation. Round-trip scheduled jet service to Moscow with a return from St. Petersburg aboard Lufthansa or a similar carrier." When however, the reader clicks upon the subtitle "For Program Terms and Conditions, click here, " the reader learns that AHI Travel's air tour prices do not include "any increases in U.S. and Canadian air and airport taxes and security or fuel surcharges imposed by air carriers or other transportation suppliers; ...."

Not including fuel surcharges, port charges, security charges imposed by carriers, or other surcharges collected by AHI Travel in the advertised price of an air tour package when it is first listed violates the Department's regulations and enforcement case precedent. In addition to violating the requirements of section 399.84 and related Department precedent and enforcement policies, such practices constitute an unfair and deceptive trade practice in violation of 49 U.S.C. § 41712.

By: Rosalind Knapp

http://www.ahitravel.com/



Virgin America, Inc.

Order 2008-4-32
OST-2008-0031

Issued and Served April 23, 2008

Consent Order

This consent order concerns Virgin America, Inc.’s advertisement and sale of proposed new air service prior to the carrier obtaining effective economic authority from the U.S. Department of Transportation in violation of 14 CFR 201.5, which also violated 49 U.S.C. § 41712, the statutory prohibition on unfair and deceptive practices and unfair methods of competition. The order assesses a compromise civil penalty of $25,000 and directs the carrier to cease and desist from further violations.

On July 19, 2007, Virgin America ran a number of online and print advertisements that failed to state, as it was directed to do, that the carrier’s services were subject to the receipt of government operating authority. Virgin America, by failing to comply with the conditions of the waiver it was granted, violated section 201.5 and, in addition, engaged in an unfair and deceptive trade practice and unfair method of competition in violation of 49 U.S.C. § 41712.

In mitigation, Virgin America states that prior to selling a ticket to any potential customer online or via the phone, each person received a written or oral notification that operation of the flight for which a ticket was being purchased was contingent on Virgin America receiving its government operating authority. Moreover, the carrier maintains that all other conditions of the waiver were observed.

Virgin America further states that in response to the Office of Aviation Enforcement and Proceeding’s concerns, the advertisements were immediately suspended and revised, the Enforcement Office was provided with a comprehensive report of the steps taken, and Virgin America expended approximately $80,000 in remedial efforts to address all concerns raised by the Enforcement Office. Virgin America further states that it has not received any consumer complaints about the advertisements at issue in this case.

We view seriously a carrier’s failure to comply with section 201.5, particularly where, as here, a carrier was placed on direct notice of, and agreed to comply with, that provision. We have carefully considered all the facts in this case, including those presented by Virgin America and continue to believe that enforcement action is warranted. In order to avoid litigation, Virgin America has agreed to the issuance of this order to cease and desist from further violations of 14 CFR 201.5 and 49 U.S.C. § 41712 and to the assessment of a civil penalty of $25,000 in compromise of potential civil penalties otherwise assessable under 49 U.S.C. § 46301.

By: Rosalind Knapp

http://www.virginamerica.com/



AirTran Airways, Inc.

Order 2008-5-38
OST-2008-0031 - Consent Orders

Issued and Served May 29, 2008

Consent Order

This consent order concerns fare displays by AirTran Airways on its website that failed to comply with the Department’s rule on full fare advertising, 14 CFR 399.84. The carrier’s website failed to include fuel surcharges applicable to advertised fares in certain markets. These advertising practices, in addition, constituted an unfair and deceptive trade practice and an unfair method of competition in violation of 49 U.S.C. § 41712. Based on these violations, this order assesses a compromise civil penalty of $45,000 and directs the carrier to cease and desist from future similar violations.

The AirTran website, in late 2007, violated Department requirements by displaying fares which did not include a fuel surcharge. Information on the fuel surcharge the carrier applied in certain markets was deferred to secondary screens after the consumer had selected an itinerary; such charges must be included in the base advertised fare. The carrier, in response to the inquiries of the Office of Aviation Enforcement and Proceedings, has revised its site to include the fuel surcharge in all base fares. The revised website also provides a link adjacent to fares displayed on its initial screen with an explanation of the nature and amount of those charges.

In mitigation, AirTran states that the fuel surcharge was incorrectly displayed because of an oversight in its internal review process that in the normal course would have identified the incorrect display. AirTran notes that the fuel surcharge at that time did not apply to all fares and staff was attempting to inform the consumer of those fares to which the announced surcharge did apply.

AirTran, for its part, in order to avoid litigation and without admitting or denying the alleged violations, agrees to the issuance of this order to cease and desist from future violations of 49 U.S.C. § 41712 and 14 CFR 399.84 and to an assessment of $45,000 in compromise of potential civil penalties of which $22,500 shall be paid within 30 days of the date of service of this order. The additional $22,500 will become immediately payable if AirTran violates the provisions of this order within the one-year period following issuance of this order.

By: Rosalind Knapp

http://www.airtran.com/



Flight Centre USA, Inc.

Order 2008-7-5
OST-2008-0031 - Violations of 49 U.S.C. § 41712

Issued and Served July 2, 2008

Consent Order

This consent order concerns fare displays by Flight Centre USA, Inc. on its website (www.flightcentre.us) and in newspaper advertisements the company published in the Los Angeles Times and the Chicago Sun Times that failed to comply with the Department's rule on full fare advertising, 14 CFR 399.84. Flight Centre's website and newspaper advertisements did not properly disclose government fees and taxes applicable to its advertised fares, and did not include fuel surcharges applicable to fares in certain markets in the advertised fare. These advertising practices, in addition, constituted an unfair and deceptive trade practice and an unfair method of competition in violation of 49 U.S.C. § 41712. This order directs the company to cease and desist from future similar violations and assesses a compromise civil penalty of $40,000

By: Rosalind Knapp



Thai Airways Internatinoal Public Company Ltd.

Order 2008-9-15
OST-2008-0031

Issued and Served September 12, 2008

Consent Order

This order concerns the unlawful assertion of sovereign immunity by Thai Airways International Public Company Ltd., a foreign air carrier holding permit and exemption authority to operate to and from the United States, conduct that violated the express terms of its operating authority, 49 U.S.C. § 41301, and constituted an unfair and deceptive practice in violation of 49 U.S.C. § 41712. By engaging in air commerce within the United States after it violated the terms of its authority, Thai Airways also engaged in unlawful foreign air transportation in violation of 49 U.S.C. § 41703. This consent order directs Thai Airways to cease and desist from future violations and assesses the carrier a compromise civil penalty of $15,000.

On August 13, 2000, a ticketed Thai Airways passenger, Subir Gupta, attempting to travel from Bangkok to Los Angeles, was denied boarding by Thai Airways employees who questioned the validity of his United States visa. Mr. Gupta subsequently filed suit against the carrier in Superior Court of the State of California for the County of Los Angeles asserting claims for negligence, intentional infliction of emotional distress, intentional interference with contractual relations, and slander per se.

Thai Airways responded to the complaint with a motion to dismiss for lack of subject matter jurisdiction, asserting that, as a “foreign state” under the Foreign Sovereign Immunities Act (28 U.S.C. § 1602 et seq.), it is immune from suit in state or federal court. Thai Airways argued that, as a corporation whose shares are principally owned by the Ministry of Finance of the Kingdom of Thailand, it is an “agency or instrumentality of a foreign state,” and ipso facto, a “foreign state” within the meaning of the Act. Thai Airways failed to inform the state court that by the terms of its operating authority it had waived sovereign immunity and, instead, affirmatively asserted that it had not waived immunity “explicitly or by implication” within the meaning of 28 U.S.C. § 1605(a)(1). Thai Airways’ Mot. for Relief from Default and to Dismiss, Gupta v. Thai Airways, No. BC252276 (Cal.Super.Ct., Aug. 28, 2003). The California state court dismissed the complaint on October 10, 2003.

Specifically, Thai Airways asserted that its “action in questioning [Mr. Gupta’s] international travel privileges was not ordinary commercial activity exercised by a private citizen; it was the exercise of its police power as a sovereign authority in its country of origin.” We disagree. First, all air carriers engaged in international transportation must ensure that persons destined for the United States are entitled to entry, by confirming the person’s possession of a valid passport and unexpired visa, where required, regardless of whether the carrier is owned or controlled by a foreign sovereign. 8 U.S.C. § 1323(a)(1). Second, it is not the country of origin (Thailand) for which Thai Airways was inspecting Mr. Gupta’s travel documents, but the country of destination (the United States); and with respect to the United States, Thai Airways is unmistakably not an agency or instrumentality.

Throughout these and subsequent related proceedings, Thai Airways maintained its position that the FSIA applied to the claims asserted by Mr. Gupta, and that it was accordingly immune from suit. Importantly, Thai Airways did not acknowledge to any competent tribunal during the course of these proceedings that, as a condition of its right to provide foreign air transportation into and out of the United States, it had agreed to the waiver of sovereign immunity noted above. In fact, Thai Airways states that its counsel in Gupta was unaware that its authority to operate into and out of the United States is conditioned upon a qualified waiver of sovereign immunity.

By: Samuel Podberesky



Allegiant Air, LLC

Order 2008-9-18
OST-2008-0031

Issued and Approved September 15, 2008

Consent Order

This consent order concerns fare displays by Allegiant Air, LLC on its website (www.allegiantair.com) that failed to comply with the Department’s rule on full fare advertising, 14 CFR 399.84, and the related statute, 49 U.S.C. § 41712(a). The carrier assessed a “convenience fee” on all ticket purchases except those made at one of the carrier’s airport ticket offices. Under section 399.84, this fee should have been included in initial fare quotes on Allegiant’s website. This order assesses a compromise civil penalty of $50,000 and directs the carrier to cease and desist from future similar violations.

The Allegiant website, in the Enforcement Office’s view, violated Department requirements by displaying fares which on their initial presentation did not include the carrier-assessed convenience fee as described above. Inclusion of the fee in the quoted fare did not occur until the latter stages of the website booking process. As with other carrier-imposed fees that are mandatory for on-line bookings, convenience fees must be included in initial base fares displayed in website advertisements, or in a range of lowest to highest fares inclusive of the fee, both on the carrier’s site and on the sites of secondary vendors.

In mitigation and explanation, Allegiant states that it takes compliance with government requirements very seriously. Consistent with that approach, Allegiant believes strongly that its practice of disclosing the convenience fee in a like manner as checked baggage fees and other non-mandatory fees complied fully with Department rules, guidance and precedent applicable to such fees. Allegiant states that its passengers have been free at all times to purchase transportation at its airport ticket offices without incurring the fee, and that on average over 1,400 per week choose to do so. Availability of that purchase option was and continues to be disclosed repeatedly and clearly on Allegiant’s website, with a complete list of the specific locations and times of operation of the airport ticket offices readily accessible via conspicuous hyperlinks. Thus Allegiant believes that since the convenience fee, like a checked baggage fee, is non-mandatory, Allegiant at all times provided consumers with full and accurate fare information in compliance with Department rules, guidance and precedent.

Allegiant states that despite its strongly-held conviction that no violation occurred, it has cooperated fully with the Department’s investigation, including participation in extensive discussions with the Enforcement Office concerning the latter’s desire for changes to the content, format and layout of various pages of the Allegiant website. Allegiant states that it has voluntarily resolved each Enforcement Office concern, many of which went well beyond the scope of the convenience fee matter.

By: Samuel Podberesky



Primaris Airlines, Inc.

Order 2008-9-31
OST-2008-0031 - Consent Orders

Issued and Served October 15, 2008

Consent Order

This order concerns violations by Primaris Airlines, Inc. of the requirements of 14 CFR Part 382 with respect to the filing of annual reports detailing disability-related complaints that Primaris received from passengers in calendar years 2005 and 2007. Part 382 implements the Air Carrier Access Act, 49 U.S.C. § 41705, and violations of Part 382 also violate the ACAA. This order directs Primaris to cease and desist from future similar violations of Part 382 and the ACAA and assesses the carrier $80,000 in civil penalties.

Primaris, which is based in Las Vegas, Nevada, operates charter service within the United States. While the Department's records indicate that Primaris timely submitted its report detailing disability-related complaints received from passengers in calendar years 2004 and 2006, Primaris did not submit its report for calendar year 2007 until June 4, 2008, approximately four months late, and did not submit its report for calendar year 2005 until August 22, 2006, nearly six months late. Therefore, Primaris violated section 382.70 and the ACAA when it did not submit the reports detailing the disability-related complaints that it received in calendar years 2005 and 2007 on flights originating or terminating in the United States in a timely manner.

In explanation and mitigation, Primaris states that its failure to submit its 2007 report on time resulted from a change in personnel. When Primaris submitted its 2005 report late, a Primaris official advised the Department in writing that certain remedial procedures would be established at Primaris' headquarters to ensure future timeliness of submission, including the establishment of a group calendar system with software to notify four company officials with a "tickler" system two week prior to the report submission date. However, Primaris explains that this official left the company without having established this system, or having notified any other Primaris officials of the ACAA reporting requirements. According to Primaris, it has now established a list of jointly responsible senior company officials who will be responsible for submitting the report going forward. Primaris states that the list includes Primaris' President, its Senior Vice President of Communications & Compliance and its General Counsel. Primaris also asserts that outside counsel will be charged with providing a reminder notice. According to Primaris, this list of company officials and outside counsel will be included in a new system designed to remind each and every official as to the pending due date for report submission every year. Primaris explains that this will assure redundancy and future compliance with the reporting requirement and will avoid the risk that the departure of one or two officials could result in a failure to file on time.

By: Rosalind Knapp



Arrow Air, Inc. d/b/a Arrow Cargo

Order 2008-10-19
OST-2008-0031 - Consent Orders

Issued and Served October 21, 2008

Consent Order

This consent order concerns reporting delinquencies by Arrow Air, Inc., d/b/a Arrow Cargo that constitute violations of 49 U.S.C. § 41708 and the accounting and reporting requirements specified in 14 CFR Part 241. This order directs Arrow to cease and desist from future violations and assesses the carrier a compromise civil penalty of $60,000.

Arrow Cargo has failed to file required reports on time on numerous occasions, prompting the Department’s staff to send Arrow Cargo warning letters about its delinquencies. On April 22, 2005, the Department’s Office of Airline Information sent the company a warning letter regarding its delinquent Form 41 financial reports. After Arrow Cargo failed to correct its reporting delinquencies, the Office of Aviation Enforcement and Proceedings warned Arrow Cargo in writing to correct its delinquencies and that any future failure to file required reports on time could result in enforcement action. Although Arrow Cargo eventually filed some of the reports, new delinquencies occurred. Arrow Cargo is now up to date in filing its reports.

We view seriously Arrow Cargo’s failure to file its reports on time as required by Part 241. Accordingly, after carefully considering all of the facts in this case, the Enforcement Office believes that enforcement action is warranted. In order to avoid litigation, Arrow Cargo agrees to settle these matters with the Enforcement Office through the issuance of this consent order directing it to cease and desist from future similar violations of Part 241 and 49 U.S.C. § 41708 and assessing it $60,000 in compromise of potential civil penalties otherwise due and payable. Of this total penalty amount, $10,000 shall be due and payable within 15 days of the issuance of this order. Two additional payments of $10,000 each shall be due 45 days, and 75 days, respectively, after the issuance of this order. The remaining $30,000 will be due and payable if Arrow Cargo violates this order’s cease and desist provision within one year of the issuance of this order, or fails to comply with the order’s payment provisions, in which case the entire unpaid portion of the $60,000 penalty shall become due and payable immediately, and the company may be subject to further enforcement action. We believe that this assessment is appropriate and serves the public interest. It represents an adequate deterrence to future noncompliance with the Department’s reporting requirements by Arrow, as well as by other air carriers.

By: Rosalind Knapp



Frontier Airlines, Inc.

Order 2008-11-1
OST-2008-0031 - Consent Orders

Issued and Served November 5, 2008

Consent Order

This Consent Order concerns violations by Frontier Airlines, Inc. of the Department’s oversales rule, 14 CFR Part 250, and 49 U.S.C. § 41712, which prohibits unfair and deceptive practices, stemming from the carrier’s failure to provide cash compensation to passengers who are involuntarily denied boarding. The order assesses Frontier a civil penalty of $40,000.

During compliance inspections by the Department’s Office of Aviation Enforcement and Proceedings at Ronald Reagan Washington National Airport and Baltimore Washington International Thurgood Marshall Airport, several Frontier ticket counter and gate agents, as well as customer service supervisors, were not fully informed of the Department’s requirement regarding passengers who are involuntarily denied boarding (“bumped”), indicating that Frontier, at these airports, did not offer cash at the airport as an option. Instead, bumped passengers received travel vouchers redeemable on future Frontier flights in an amount based on the length of delay of the passenger’s originally scheduled arrival time. Frontier’s airport agents advised passengers who declined the vouchers and insisted on receiving cash compensation to contact Frontier’s corporate customer service department.

The Enforcement Office recognizes that Frontier’s official policy regarding involuntary denied boarding compensation, as stated in its denied boarding statement and its employee training materials, conforms to the requirements of Part 250. Cash compensation is listed as one of three options available to passengers on Frontier’s “Oversales and Involuntary Denied Boarding Compensation” notice, which also provides under the heading “Method of Payment” that “the customer may, however, insist on the cash payment.” Frontier’s Customer Service Manual confirms that “[a]lthough Frontier offers Transportation Vouchers as compensation, passengers who have been denied boarding involuntarily may request cash compensation.” In practice, however, Frontier impedes involuntarily bumped passengers from seeking cash compensation by making such compensation difficult to obtain when a passenger requests cash instead of a transportation voucher. Frontier does so by requiring passengers who request cash compensation to call Frontier’s corporate customer service department to obtain that form of compensation. Indeed, Frontier’s training manuals provide no guidance regarding how and when cash compensation should be dispensed to eligible passengers who opt for it.

Frontier’s failure to offer involuntarily bumped passengers a realistic opportunity to receive cash compensation on the day and at the place the denied boarding occurs violates the requirements of section 250.8(a). In addition, violations of Part 250 constitute violations of 49 U.S.C. § 41712, which prohibits air carriers from engaging in unfair or deceptive practices, as well as unfair methods of competition, in the provision and sale of air transportation.

In mitigation, Frontier states that it is not Frontier’s regular business practice to oversell its flights and that a significant number of its denied boarding situations arose during irregular operations. At BWI, where the carrier ceased operations in January 2007, Frontier asserts that no consumers were impacted by its agents’ actions. Frontier states that it did not oversell flights in the BWI market, nor did it have any denied boardings during the fourth quarter of 2006, nor did it have any involuntary denied boardings during 2006. Frontier adds that it is not aware of any passenger complaint that it failed to provide the Oversales and Involuntary Denied Boarding Compensation written statement, including the offer of compensation under Part 250.8(a). In addition, Frontier states that, subsequent to the Enforcement Office’s investigation, it revised its training manuals, provided additional training to its gate agents on how to comply with Part 250, and has directed them to provide a copy of the Oversales and Involuntary Denied Boarding Compensation written statement to passengers denied boarding. Frontier has also implemented an internal audit program to confirm that gate agents have received proper training with respect to denied boarding claims.

By: Rosalind Knapp



Constellation Travel Service, Inc. and Mr. Mujhtabah Mohammed Individually

Order 2008-12-3
OST-2008-0031

Issued and Served December 5, 2008

Consent Order

This consent order concerns violations of certain consumer protection provisions of the Department’s Public Charter regulations by Constellation Travel Services Inc., a Public Charter Operator and its President, Mr. Mujhtabah Mohammed. Constellation and Mr. Mohammed failed to properly maintain the company’s Public Charter escrow account and failed to make refunds to consumers within 14 days after the company’s Public Charter flights were canceled, in violation of 14 CFR Part 380. These activities also constituted unfair and deceptive practices in violation of 49 U.S.C. § 41712. This order directs Constellation and Mr. Mohammed, personally, to cease and desist from future violations and assesses Constellation and Mr. Mohammed, jointly and severally, a compromise civil penalty of $50,000.

Constellation is a New York-based Public Charter operator. Under the direction and control of Mr. Mohammad, Constellation operated and sold Public Charter flights between New York and Port of Spain, Trinidad and Georgetown, Guyana, and between Ft. Lauderdale, Florida and Port of Spain, Trinidad. Constellation abruptly canceled its program in April 2008, due to a financial dispute with its direct air carrier, EOS Airlines. As a direct result of this cancellation, the travel plans of hundreds of passengers were disrupted.

After Constellation canceled its Public Charter program, it did attempt to make refunds to passengers. However, there were insufficient funds in the depository escrow account to complete the refund process. As a result, passengers were required to wait a considerable amount of time to receive a refund through funds from Constellation’s Public Charter security instrument.

In mitigation, Constellation asserts that all of its decisions were made first and foremost in consideration of its commitment to its passengers. Constellation asserts that the reason for its initial cancellation of its Public Charter program was because of the poor service being rendered by its direct air carrier, Primaris Airlines. Constellation asserts that the second cancellation was due to the bankruptcy of EOS airlines. Constellation asserts that its passengers were subjected to numerous delays caused by crew shortages and bad maintenance planning. Constellation states that it made every effort to work with the Department to obtain a release of its security instrument in order to make refunds to its passengers and that they have all received full refunds.

Constellation and Mr. Mohammed, in order to avoid litigation and without admitting or denying the alleged violations, agrees to the issuance of this order, which includes a compromise civil penalty assessment of $50,000. This order also directs Constellation and Mr. Mohammed to cease and desist from future violations of 49 U.S.C. § 41712, and 14 CFR Part 380.

By: Rosalind Knapp



Spirit Airlines, Inc.

Order 2008-12-14
OST-2008-0031 - Consent Orders

Issued and Served December 23, 2008

Consent Order

This consent order concerns fare displays by Spirit Airlines, Inc. on its website that failed to comply with the Department’s rule on full fare advertising, 14 CFR 399.84. The carrier’s website failed to include certain carrier-imposed fees in the advertised “base fare” in violation of 14 CFR 399.84. These advertising practices, in addition, constituted an unfair and deceptive trade practice and an unfair method of competition in violation of 49 U.S.C. § 41712. Based on these violations, this order assesses a compromise civil penalty of $40,000 and directs the carrier to cease and desist from future similar violations.

The Spirit website violated 14 CFR 399.84 and 49 U.S.C. § 41712 by displaying fares which did not include certain carrier-imposed fees in the advertised “base fare.” Two of the fees in question were collected for seven days in June, 2008 and were denoted as a “Natural Occurrence Interruption Fee” ($2.50), and an “International Service Recovery Fee” ($8.50) and appeared at the bottom of screen displays after text setting out government taxes and fees. For a thirty day period, air fares advertised on the Spirit website were also subject to a “Passenger Usage Fee” ($7.90), later renamed a “convenience fee,” ($5.00), which the carrier assessed on all tickets not purchased at an airport ticket counter. The carrier, in response to the inquiries of the Office of Aviation Enforcement and Proceedings discontinued these charges.

In mitigation, Spirit states that it is committed to fully complying with the Department’s policies and rules with respect to full fare disclosure. Specifically, during the period in question Spirit was working on its website to ensure the site met the requirements of both the U.S. and foreign governments for flights originating in the various countries to which it operates. Spirit states that it put great effort into meeting all governmental requirements including where foreign requirements conflicted with those of the U.S.

We acknowledge that Spirit has cooperated in our investigation; however, we believe that enforcement action is nonetheless warranted in this instance. Spirit, for its part, in order to avoid litigation and without admitting or denying the alleged violations, agrees to the issuance of this order to cease and desist from future violations of 49 U.S.C. § 41712 and 14 CFR 399.84 and to an assessment of $40,000 in compromise of potential civil penalties. Of this total penalty amount, $20,000 shall be due and payable in four equal $5,000 installments, the first payment due and payable on January 9, 2009 and subsequent equal installments due on April 9, 2009, July 9, 2009, and October 9, 2009. Up to $10,000 of the last two of those payments may be offset by June 9, 2009, for verified refunds paid to customers for convenience fees and/or additional fees charged to customers in violation of 14 CFR 399.84 and 49 U.S.C. § 41712, as described above. Spirit shall submit a sworn statement by a responsible airline official, detailing its expenses for which it claims an offset. Thereafter, the Office of Aviation Enforcement and Proceedings will notify Spirit of the allowable offset. The remaining $20,000 shall be paid if Spirit violates this order’s cease and desist provisions during the 12 months following the service date of this order, and Spirit. may be subject to further enforcement action. This compromise assessment is appropriate in view of the nature and extent of the violations in question and serves the public interest. This settlement, moreover, represents a deterrent to future noncompliance with the Department's advertising regulations and section 41712 by Spirit, as well as by other sellers of air transportation.

By: Rosalind Knapp



US Airways, Inc.

Order 2008-12-13
OST-2008-0031 - Consent Orders

Issued and Served December 23, 2008

Consent Order

This Consent Order concerns violations by US Airways, Inc. of the Department’s oversales rule, 14 CFR Part 250, and the statutory prohibition against unfair and deceptive practices, 49 U.S.C. § 41712. The violations stem from the carrier’s failure 1) to solicit volunteers before involuntarily denying boarding to passengers on oversold flights, 2) to furnish the required written notice to passengers who were denied boarding (“bumped”) involuntarily, and 3) to provide in a timely manner bumped passengers with the appropriate amount and type of denied boarding compensation. The order assesses US Airways a civil penalty of $140,000.

A recent review of US Airways’ passenger complaint records from July 2007 to July 2008 conducted by the Office of Aviation Enforcement and Proceedings and of passenger complaints involving US Airways during the same period sent directly to the Enforcement Office revealed numerous instances in which the carrier bumped passengers, but did not follow one or more of the provisions of 14 CFR Part 250.

In mitigation, US Airways states that it did ultimately compensate all of the passengers identified by the Department. In addition, US Airways states that it has revamped its applicable training program to ensure that all airport staff are current on all Part 250 rules. US Airways is also reexamining its policies and procedures relating to overbooking to ensure a smoother process at the airport when it becomes necessary to seek volunteers or deny boarding.

In order to avoid litigation and without admitting or denying the violations described above, US Airways, Inc., agrees to the issuance of this order to cease and desist from future violations of 14 CFR Part 250 and 49 U.S.C. § 41712. US Airways, Inc., further agrees to the assessment of $140,000 in compromise of potential civil penalties otherwise assessable against it. The Enforcement Office believes that this compromise assessment is appropriate in view of the nature and extent of the violations in question, serves the public interest, and provides a strong incentive to all airlines to comply with the Department’s denied boarding regulation.

By: Rosalind Knapp

OST-2001-9325 - Oversales and Denied Boarding



Air Jamaica, Ltd.

Order 2008-12-25
OST-2008-0031 - Consent Orders

Issued and Served December 30, 2008

Consent Order

This consent order concerns fare displays by Air Jamaica, Ltd. on its website that failed to comply with the Department’s rule on full fare advertising, 14 CFR 399.84. These advertising practices, in addition, constituted an unfair and deceptive trade practice and an unfair method of competition in violation of 49 U.S.C. § 41712. Based on these violations, this order assesses a compromise civil penalty of $105,000 and directs the carrier to cease and desist from future similar violations.

For some time, Air Jamaica advertised fares on its website, that did not include certain carrier-imposed fees, such as fuel surcharges. Moreover, some fare displays excluded notice of the nature and amount of applicable government-imposed taxes and fees that may properly be listed separately until the consumer had confirmed his or her itinerary. The carrier, in response to the inquiries of the Office of Aviation Enforcement and Proceedings, promptly revised its site to include the carrier-imposed charges in question in all base fares and to properly disclose government-imposed taxes and fees. However, Air Jamaica’s past conduct violates 14 CFR 399.84 of the Department’s regulations and constitutes a deceptive practice and unfair method of competition in violation of 49 U.S.C. § 41712.

We have carefully considered all the facts in this case, including those put forth by Air Jamaica as noted above; however, we believe that enforcement action is warranted in this instance. Air Jamaica, for its part, in order to avoid litigation and without admitting or denying the alleged violations, agrees to the issuance of this order to cease and desist from future violations of 49 U.S.C. § 41712 and 14 CFR 399.84 and to an assessment of $105,000 in compromise of potential civil penalties. Of this total penalty amount, $52,500 shall be due and payable in three equal installments, as directed in the ordering paragraphs below. The remaining $52,500 shall be paid if Air Jamaica violates this order’s cease and desist provisions during the 15 months following the service date of this order, in which case Air Jamaica may be subject to further enforcement action. This compromise assessment is appropriate in view of the nature and extent of the violations in question and serves the public interest. This settlement, moreover, represents a deterrent to future noncompliance with the Department's advertising regulations and section 41712 by Air Jamaica, as well as by other sellers of air transportation.

By: Rosalind Knapp

http://www.airjamaica.com/



JTB Corporation d/b/a JTB USA, Inc.

Order 2008-12-24
OST-2008-0031 - Consent Orders

Issued and Served December 29, 2008

Consent Order

This consent order concerns advertisements by JTB Corporation d/b/a JTB USA, Inc. that violate the Department’s advertising requirements specified in section 399.84 of the Department’s regulations (14 CFR 399.84) and constitute unfair and deceptive trade practices and unfair methods of competition in violation of 49 U.S.C. § 41712. This order directs JTB USA to cease and desist from future violations and assesses the company compromise civil penalties of $60,000.

JTB USA specializes in offering airfares and comprehensive travel packages, which include airfare, hotel, guided tours and related amenities, particularly to Japan and other countries in the Far East. JTB USA has promoted its airfares and air travel packages through printed advertisements, brochures and mailers, and by means of advertisements that were published on its website.

The airfares and air tours promoted in JTB USA‘s print advertisements and on its web site did not comply with Department requirements. More specifically, the listed prices for the complete air and land packages failed to include fuel surcharges imposed by carriers, which must be included in the advertised price. For example, in connection with its advertisement of an airfare, entitled “From $800 JAL US to Japan Special,” JTB includes the following notice just below the title: “Fuel surcharge (about $170-366) and other taxes are not included in airfare below. Terms and conditions are subject to change without notice.”

Not including fuel surcharges imposed by carriers, or other surcharges collected by JTB USA, in the advertised price of an air ticket or air tour package when it is first listed violates the Department’s regulations and enforcement case precedent. In addition to violating the requirements of section 399.84 and related Department precedent and enforcement policies, such practices constitute an unfair and deceptive trade practice in violation of 49 U.S.C. § 41712. Moreover, it is unclear from JTB USA’s advertisement whether the notice regarding “other taxes not included” refers to taxes that properly may be excluded from the advertised fare, i.e., those imposed by the government on a per-passenger basis.

The Enforcement Office has carefully considered all of the information available to it, including that provided by JTB USA, but continues to believe that enforcement action is warranted. In this connection and in order to avoid litigation, the Enforcement Office and JTB USA have reached a settlement in this matter. While neither admitting nor denying the above allegations, JTB USA accepts the findings and conclusions stated herein in order to avoid potential litigation. Under this order, JTB USA is assessed $60,000 in compromise of potential penalties otherwise assessable under the provisions of 49 U.S.C. § 46301. Of the penalty amount, $30,000 shall be due and payable within 15 days of the date of issuance of this order. The remaining $30,000 shall be due and payable if JTB USA violates the cease and desist or payment provisions of this order, in which case the entire sum will become due and payable immediately and the company may be subject to further enforcement action.

By: Rosalind Knapp

http://www.jtbusa.com/


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