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OST-2013-0025 - Ben Edelman Fuel Surcharge Complaint Against British Airways

http://www.benedelman.org


OST-2013-0024 - Complaint Against American Airlines
OST-2013-0027 - Complaint Against Cathay Pacific

January 14, 2012: Fuel Surcharges Mischaracterized as Tax
January 14, 2012: Unavailable Fares
July 17, 2012: Fuel Surcharges Mischaracterized as Tax and Other Price Advertising Violations

OST-2015-0087 - Mike Borsetti v. American Airlines - E-Ticket Complaint


Ben Edelman Fuel Surcharge Complaints

OST-2013-0025 - Complaint Against British Airways

February 5, 2013

Complaint Against British Airways

British Airways charges fuel surcharges of amounts impermissible under DOT rules, fails to disclose these surcharges in the manner required by DOT rules and, for certain around-the-world tickets, misrepresents fuel surcharges as “tax.”

I hereby request that DOT docket this complaint as a request for DOT to exercise its authority under 49 USC 41712 to investigate and impose sanctions on British Airways for the unfair and deceptive practices.

By: Ben Edelman


 

February 11, 2013

Motion of British Airways for Extension of Time to File its Answer to Complaint

Pursuant to § 302.405, the British Airways answer to the complaint filed in this docket is due fifteen days following the date the complaint was filed. British Airways respectfully requests an extension of that deadline until March 22, 2013.

The requested extension is required to enable British Airways to investigate the allegations made in the complaint and is also necessary to enable British Airways to coordinate its response with counsel and staff in the United States and the United Kingdom. British Airways has discussed its request for an extension with Mr. Edelman and he has advised British Airways that he does not object to the requested extension.

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3970


 

February 14, 2013

DOT Granting Extension Request of British Airways

By a motion dated February 11, 2013, Counsel for British Airways, Pic, requested an extension of time in which to prepare an answer in the above-referenced third-party complaint to March 22, 2013. The Respondent's motion advises that the Complainant was contacted and has no objection to grant ofthe request.

This office has decided to grant for good cause the requested extension. This notice is issued under authority assigned in 14 CFR 302.405(a).

By: Nicholas Lowry, 202-366-9351


 

March 21, 2013

Motion of British Airways for Extension of Time to File its Answer to Complaint

Although British Airways anticipated it would be able to complete its response by March 22 when it filed its February 11 Motion, that estimate has proven to be overly optimistic. In order to respond to the Complaint it has been necessary to research historical fuel cost and fuel surcharge records as well as British Airways' historical financial results. It also has been necessary to consult with and coordinate between counsel in the United States and in the United Kingdom. Unfortunately, this process has taken longer than anticipated and it will not be possible for British Airways to submit a response fully addressing the complex economic issues raised by the Complaint before April 5, 2013.

The additional two week extension requested here will enable British Airways to prepare and submit a more comprehensive answer for the Department's consideration. Equally important, a limited two week extension will not harm the interests of any party.

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3970





March 22, 2013

DOT Granting Request of British Airways for Extension

This will service as notice that we have granted British Airways' request for an extension of time in which to file an answer in Docket OST-2013-0025 until April 5, 2013.

By: Nicholas Lowry, 202-366-9351


 

OST-2013-0025 - Complaint Against British Airways
OST-2013-0024 - Complaint Against American Airlines

March 21, 2013

Comments of Mike Borsetti in Support of DOT Investigation and Request for Joint Investigation of Immunized Integrated Joint Venture Partners

In view of the preponderant evidence and public support, the Secretary should open a joint investigation under 49 USC § 41712 without further delay into the deceitful practice by the DOT-immunized integrated joint venture partners American Airlines and British Airways as it pertains to fuel surcharges on, at a minimum, transatlantic routes.

The Secretary should also exercise its duty under 49 USC § 41309 (b) (1) and start a periodic review of Final Order 2010-7-8 (OST-2008-0252) to end its approval on the basis of the failure of the applicants to implement fully the application approved, specifically the “full reciprocity of frequent flyer benefits between American and British Airways” listed in the section entitled “The Proposed Alliance Will Create Significant New Consumer Benefits.”

By: Mike Borsetti


 

April 5, 2013

Answer of British Airways to Complaint

BA respectfully urges the Department to decline to commence an investigation or formal enforcement proceeding. There is no basis to do so.

BA’s fuel surcharge is appropriately set and applied. In an attempt to suggest otherwise, Mr. Edelman engages in speculation and hypothesis. Moreover, his hypothetical computations are predicated upon erroneous information and incorrect assumptions. Specifically, Mr. Edelman compares inapposite fuel surcharge figures to what he incorrectly characterizes as the “actual cost of fuel” to BA and, compounding the errors, relies on a series of deeply flawed assumptions. As a result, his analysis is irrelevant and proves nothing.

BA has not committed any violations related to price advertising, whether under 14 CFR § 399.84(a) or 49 USC § 41712, and Mr. Edelman’s Complaint does not establish otherwise. The Department’s February 21, 2012 Guidance specifies that a cost component described as a fuel surcharge “must actually reflect a reasonable estimate of the per-passenger fuel costs incurred by the carrier above some baseline calculated based on such factors as the length of the trip, varying costs of fuel, and number of flight segments involved.” As demonstrated below, BA complies with that requirement.

When consumers access the BA website to purchase a ticket, they are provided the entire price to be paid. In the interest of increasing transparency, consumers are also provided with a breakdown of government imposed taxes and fees as well as carrier charges and surcharges that collectively comprise the total price to be paid by the consumer. It is clear from the Complaint that Mr. Edelman was not confused, much less deceived, by anything he viewed on the BA website, and the Complaint does not provide any evidence that any other consumer was either confused or deceived. Under those circumstances, the Complaint must be dismissed.

Finally, the relief that Mr. Edelman seeks is both unwarranted and unavailable. Sanctions of any sort are not warranted here. Mr. Edelman’s suggestion that the Department refer this matter to US and foreign tax collection agencies for investigation of possible tax fraud or other violations of tax law strays far afield from the alleged “facts” and is meritless and inappropriate. Moreover, as there is no private right of action under 49 USC § 41712, Mr. Edelman may not seek – and he may not ask the Department to pursue – refunds on his own behalf or anyone else’s behalf.

Affirmative Defenses:

  1. The Complaint fails to state a claim upon which relief may be granted.
  2. Complainant lacks a private right of action under 49 USC § 41712.
  3. Complainant has suffered no harm.
  4. Complainant lacks standing.
  5. The Complaint is, in whole or in part, moot.

Counsel: DLA Piper, Richard Hans / Garofalo Goerlich, Don Hainbach, 202-776-3970


 

April 10, 2013

Agreed Motion for Leave to File Complainant's Reply to Answer and British Airways' Surreply

Complainant, Mr. Benjamin Edelman, requested British Airways' consent to filing a reply to British Airways' answer filed April 5, 2013 in this matter. While 14 CFR § 302.408 of the Department's Regulations does not provide for the filing of a reply to an answer to a docketed complaint, British Airways will consent to the filing of a reply on or before April 19, 2013 if Mr. Edelman will consent to British Airways filing a surreply on or before May 3, 2013. Mr. Edelman and British Airways agreed on these dates and are filing this agreed motion for leave for Mr. Edelman to file a reply and for British Airways to file a surreply. The filing of the reply and surreply should provide ample opportunity to develop a complete record to enable the Department to resolve this matter.

British Airways' consent to Mr. Edelman filing a reply is contingent on the Department's grant of leave to British Airways to file a surreply. Should the Department not grant leave to British Airways to file a surreply, British Airways would object to the filing of a reply by Mr. Edelman.

Counsel: DLA Piper, Richard Hans / Garofalo Goerlich, Don Hainbach, 202-776-3970





April 11, 2013

DOT Granting Motion

By this e-mail, we are notifying the parties that we at the Office of Aviation Enforcement & Proceedings grant your joint motion of April 10 providing for a second round of pleadings in the above-referenced docket. The parties have agreed that Mr. Edelman will file his reply by April 19, 2013, and that American's response will be filed by May 3, 2013.

By: Nicholas Lowry, 202-366-9351


April 11, 2013

DOT Granting Motion - Correction

By this e-mail, we are notifying the parties that we at the Office of Aviation Enforcement & Proceedings grant your joint motion of April 10 providing for a second round of pleadings in the above-referenced docket. The parties have agreed that Mr. Edelman will file his reply by April 19, 2013, and that British Airways' [not American's] response will be filed by May 3, 2013.

By: Nicholas Lowry, 202-366-9351


 

OST-2013-0025 - Complaint Against British Airways
OST-2013-0024 - Complaint Against American Airlines

April 16, 2013

Reply of DOT

This is in response to your letter of April 11, 2013, in which you state that three documents filed in OST-2013-0024 by Mike Borsetti are documents unauthorized by the Department's procedural rules (14 CFR Par 302) and should not be accepted for filing.

While you are correct in pointing out the pleadings are not explicitly allowed under the Department's rule, we at the Enforcement Office have decided that we will accept them along with comments filed by members of the public in a related docket (OST-2013-0025) in the interest of receptiveness to public comment and participation. We will accord them informal consideration in our review of the two dockets. As you point out, under rule 6(c)(3) the Department must consider matters contained in these documents as controverted and American need not answer the filings.

By: Nicholas Lowry, 202-366-9351


 

April 19, 2013

Reply of Benjamin Edelman

My February 4, 2013 Complaint properly called into question whether British Airways fuel surcharges are a reasonable estimate of per-passenger fuel costs above a baseline including costs implausibly high vis-à-vis ordinary paid tickets and seemingly beyond actual fuel costs. I also noted certain BA award point tables failing to disclose carrier-imposed surcharges in the manner required by DOT instructions and combining government-imposed taxes with carrier-imposed fees, again contrary to DOT instructions. Finally, I showed around-the-world fare quotes systematically but falsely characterizing BA carrier-imposed surcharges as “tax."

BA's Answer argues that my Complaint errs in my precise estimation of fuel surcharge revenue and fuel expense, though tellingly British Airways never offers a contrary estimation of its own or any affirmative argument that its fuel surcharges reflect a reasonable estimate of per-passenger fuel costs above a baseline (as specifically required by DOT). Separately, BA attempts to escape liability for the prohibited statements in award charts and the online around-the-world booking tool via mischaracterization of applicable requirements. These defenses fall flat. The DOT should further investigate the scope of the unlawful BA practices I identified.

By: Benjamin Edelman


 

May 3, 2013

Sur-Reply of British Airways to Reply of Complainant

Mr. Edelman’s attempt to use the fuel surcharge analysis contained within the comment of Mike Borsetti as confirmation of the accuracy of his own analysis is misguided because Mr. Borsetti’s analysis is similarly flawed. Mr. Borsetti’s fuel cost for the BOS-LHR flight ($1,009.5 per tonne) was alleged to be based on “the current highest average price paid...compiled weekly by IATA.” Yet a review of the actual price from IATA’s website as of January 25, 2013 (shortly before Mr. Edelman filed his complaint) was actually $1,054.8 per tonne and the price as of March 1, 2013 was even higher at $1,078.3 per tonne. Moreover, Mr. Borsetti, like Mr. Edelman, also failed to factor in European Union regulations that require the plane to carry approximately the jet fuel necessary to fly for eight to nine hours. Both of these errors significantly understate BA’s cost of fuel.

In an attempt to defray a portion of these skyrocketing costs, BA imposes a fuel surcharge on its flights. In so doing, BA is not unique or an outlier – many airlines began to impose fuel surcharges in the same period and that remains the industry practice today. And, fuel surcharges are not limited to airlines; they are imposed by numerous other transportation-related industries, such as: agribusiness companies, concrete companies, food delivery services, railroads, records management companies, shredding services, shipping companies, transportation companies, trucking companies and waste management and environmental services.

BA respectfully requests that the Department of Transportation decline to conduct an enforcement proceeding and dismiss the Complaint pursuant to 14 CFR § 302.406(a)(2).

Counsel: DLA Piper, Richard Hans / Garofalo Goerlich, Don Hainbach, 202-776-3970


 

May 19, 2013

Further Comments of Mike Borsetti in Support of DOT Investigation into British Airways Violations

am sure the DOT will have no trouble seeing through the economic fallacy of British Airways’ assertion that additional fuel loaded for reserves, but not burned, should be somehow included in the calculation of cost of fuel. Not only 100% of such unused fuel is recovered (aircraft tanks are “topped off” during refueling, and the remaining fuel after each flight is not, as the proposed methodology would imply, drained and disposed as waste), but the methodology used by me is based on the actual and verified average overall British Airways fuel consumption rate, which therefore includes the amount of fuel burned to carry the extra fuel required for reserves as well as any additional fuel burned for diversions and other off-schedule events.

I am a simple consumer with zero law training writing on his free time on a Sunday, not a team of seven attorneys (most of whom probably billng by the hour), so pardon my brevity.

The facts in this docket speaks for themselves: British Airways has never provided any actual, verifiable data -- actual fuel surcharge revenue, actual fuel costs, and how fuel surcharge revenue is shared under the integrated joint venture with American Airlines. It has acted similarly to a child caught red-handed, offering a jumbled series of inventive arguments, some truly head scratchers.

By: Mike Borsetti


 

Order 2014-9-2
OST-2013-0025
- Complaint Against British Airways

Issued and Served September 5, 2014

Consent Order and Order of Dismissal

The Enforcement Office has considered Mr. Edelman’s complaint, as well as the other pleadings filed by both parties, and believes that British Airways has violated 14 CFR 399.84(a) with respect to misrepresentations of its agent, oMC, on the oneworld booking engine. In relevant part, section 399.84(a) provides that a carrier may separately state the components of a fare, but those statements may not be false and misleading. We believe that the displays on the oMC site, as they existed prior to February 18, 2013, were in violation of the provisions of 14 CFR 399.84(a) as further discussed in the Enforcement Office's industry guidance of February 21, 2012. The Enforcement Office and British Airways have reached a negotiated settlement of this matter under which the carrier, without admitting the violations asserted above, consents to the issuance of this order to cease and desist from future similar violations of 14 CFR 399.84(a) and 49 USC § 41712. However, as oMC promptly corrected the misleading displays of taxes and surcharges by February 18, 2013, within two weeks of the filing of Mr. Edelman's complaint against British Airways, we find that civil penalties are not warranted for these violations.

With regard to Mr. Edelman’s complaint about British Airways’ fuel surcharges, on July 22, 2013, the Enforcement Office asked the carrier to provide affirmative justification of the fuel surcharge amounts for the routes Mr. Edelman refers to in his complaint. The Enforcement Office also requested that British Airways provide an explanation for its calculations of the fuel surcharge revenue and actual fuel expenses regarding the two itineraries Mr. Edelman lists in his April 19, 2013 submission. British Airways provided the Enforcement Office with the requested information in a letter dated August 26, 2013, with a request for confidential treatment. We have carefully considered British Airways’ response and the data that the carrier provided. We have concluded that the evidence does not support a finding that British Airways violated 14 CFR 399.84(a) by misrepresenting its actual fuel costs. Further, British Airways has ceased characterizing its surcharges as fuel surcharges and now describes them as “carrier charges.

Finally, British Airways’ On Business company travel program involves small and medium-sized business enterprises that choose to accept the program’s Terms and Conditions on a contractual basis and is not available to the general public. As a matter of enforcement policy, the Enforcement Office has not enforced the full fare advertising rule in connection with private corporate booking tools, such as the one at issue here, because they are not available to the general public, they involve private contractual arrangements, and the contracting parties are deemed to have notice and have accepted the carrier’s terms and conditions.

By: Blane Workie


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