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