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OST-2008-0031 - 2008 Consent Orders
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Pacific Delight Tours, Inc. Order 2008-2-13 Issued and Served February 7, 2008 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
Ritz Tours, Inc. Order 2008-2-22 Issued and Served February 15, 2008 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
Order 2008-2-35 Issued and Served February 28, 2008 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
Jet One Jets, Inc. Order 2008-3-2 Issued and Served March 4, 2008 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
AHI International Corporation d/b/a AHI Travel and Alumni Holidays Order 2008-3-5 Issued and Served March 6, 2008 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
Issued and Served April 23, 2008 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
Order 2008-5-38 Issued and Served May 29, 2008 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
Flight Centre USA, Inc. Order 2008-7-5 Issued and Served July 2, 2008 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. Issued and Served September 12, 2008 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
Issued and Approved September 15, 2008 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 |
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