DOT Enforcement Of Its Prohibitions On Unfair And Deceptive Practices, 2013 (January 2014)

When the Civil Aeronautics Board (CAB) was abolished in 1985, a significant portion of its authority was transferred to the Department of Transportation (DOT). One of the most noteworthy powers now exercised by DOT is to prohibit any "unfair or deceptive practice or an unfair method of competition in air transportation or the sale of air transportation."1 Indeed, DOT's authority over these matters is exclusive; states and municipalities are preempted from imposing their own requirements "related to a price, route, or service of an air carrier."2 For nearly 30 years, DOT has exercised its authority under this statute and associated regulations to monitor and sanction practices by air carriers, ticket agents, and other entities involved in air transportation.

DOT Oversight Of Air Carriers, Ticket Agents, And Other Entities

DOT has several regulatory tools at its disposal for responding to allegedly unfair or deceptive practices, including a private warning or cease-and-desist letter; a public consent order (pursuant to which the air carrier, agent, or other entity usually agrees to pay a fine and refrain from future violations); or a formal enforcement action before a DOT Administrative Law Judge (ALJ). DOT also periodically issues public notices setting forth its policies for advertising and other practices, and can issue new regulations via rulemaking proceedings. But consent orders are by far the most commonly used tool in DOT's arsenal. In 2013, DOT issued 46 consent orders – the fewest since 2009, but still the fourth largest total in DOT history – with the nominal fines attached to them totaling more than $7 million, a new record.3

In the past year, DOT's Office of Aviation Enforcement and Proceedings continued to closely monitor and investigate practices by air carriers, ticket agents, and other entities involved in the sale of air transportation. Although DOT's greatest area of concern in the past year continues to have been the "full fare rule" for advertising by air carriers and ticket agents, DOT also has taken enforcement action – and adopted new requirements – regarding an array of practices, ranging from tarmac delay and customer service plans to the reimbursement of passengers for lost baggage pursuant to domestic and international standards.4

This article briefly summarizes the consent orders and other public guidance that were issued by DOT in 2013, as well as certain related agency actions and court decisions.

A continued development in 2013 was the DOT's continued assertion of authority over unfair or deceptive practices by entities that had not traditionally been considered to fall within its jurisdiction. By statute, in addition to air carriers, DOT can regulate "ticket agents."5 DOT took the position that a website which provided information about air transportation but did not itself sell tickets qualified as a "ticket agent," based on the circumstances of its operations, including its receipt of commissions. The website operator disputed DOT's reasoning, but agreed to enter into a consent order to conclude the matter.6 At the same time, DOT apparently accepted that a website operated by an international airline alliance was not a "ticket agent" because actual sales were made through the reservation centers of member airlines.7

Enhanced Passenger Protection Requirements

In 2011, DOT adopted a second set of "enhance[d] airline passenger protection" regulations ("EAPP II"), which extended certain existing requirements to foreign air carriers for the first time, and also imposed new requirements on both U.S. and foreign air carriers.8 In 2013, several of the EAPP II requirements were the subject of DOT enforcement proceedings:

Tarmac Delay Plans. Under these requirements, carriers must adopt tarmac delay plans that among other mandates generally prohibit aircraft from remaining on the tarmac for more than four hours (in the case of international flights) or three hours (in the case of domestic flights); require food and water to be distributed to passengers within two hours of the start of the delay; and require that passengers be notified every 30 minutes if they have an opportunity to deplane during a tarmac delay.9 In 2013, six carriers were fined for violations of one or more of these requirements. Two carriers had allowed a tarmac delay for an international flight to continue for more than four hours,10 and two carriers had on a total of fifteen occasions allowed a tarmac delay for a domestic flight to continue for more than three hours.11 Additionally, two carriers failed to timely provide food and water to passengers during a tarmac delay,12 and another carrier on two occasions failed to ensure that operable lavatories were provided during a tarmac delay.13 Two carriers failed to notify passengers during a tarmac delay at a gate that they had an opportunity to deplane.14 Finally, two carriers were fined because they had not posted their tarmac delay plans, on whole or in part, on their websites, as also required by DOT.15 Additionally, three requests were made by air carrier trade associations for a limited waiver of the tarmac delay rules: one based on sequestration-based furloughs of air traffic controllers that were anticipated in April 2013;16 one based on delays that resulted from a landing incident at LaGuardia Airport on July 22, 2013;17 and one based on delays that resulted from a shooting incident at Los Angeles International Airport on November 1, 2013.18 DOT to date has not taken any action on the sequestration and Los Angeles requests, but has stated that under the applicable circumstances none of the LaGuardia delays amounted to a violation of the tarmac delay rule.19 DOT also has taken no action on a related waiver request,20 namely that DOT exclude flights delayed due to sequestration-based furloughs of air traffic controllers from the requirement that carriers submit reports about "chronically delayed flights" to DOT.21 Customer Service Plans. The requirements include that carriers adopt customer service plans, addressing twelve specific issues – some of which cross-reference other DOT regulations, and some of which are new.22 In 2013, two carriers were fined because they failed to comply with components of their customer service plan that cross-referenced existing requirements. One had failed to abide by its commitment to comply with DOT's separate regulatory requirements for the issuance of refunds,23 and the other failed to abide by its commitment to comply with DOT's separate regulatory requirements for oversales.24 An additional carrier was fined because it had not posted its customer service plan on its website, as also required by DOT.25 A new customer service plan requirement is that for reservations made one week or more before a flight's departure, airlines either allow reservations to be held without payment for 24 hours, or allow reservations to be cancelled without penalty for 24 hours.26 In 2013, a carrier was fined because in a limited number of cases, it imposed cancellation fees for reservations for which a full refund should have been issued.27 DOT also clarified that the 24-hour requirement should not just be included in customer service plans but also be disclosed in general cancellation policies and other discussions of refund conditions, as well as during certain telephone reservation calls.28 Baggage and Ancillary Fees. The requirements include that carriers must disclose their baggage fees and restrictions, as well as other ancillary fees; ticket agents also have a disclosure obligation, but it is limited to key baggage-related information such as the fees for the first and second checked bag and any carry-on bag.29 In 2013, two ticket agents were fined because they failed to provide any information about baggage fees.30 Additionally, a carrier was fined because it failed to provide information about either baggage fees or fees for other ancillary services.31 Another carrier was fined because it promoted discounts for pre-paid baggage fees but failed to actually make those discounts available to all passengers.32 Complaints. The requirements include that a carrier must acknowledge the receipt of complaints from consumers within 30 days and must provide a substantive response within 60 days.33 A carrier was fined because it failed to respond to a large number of complaints submitted over an eight-month period.34 Additionally, each carrier must provide on its website a mailing address, email address, and telephone number for the submission of complaints, as well as the website address and mailing address of DOT's Aviation Consumer Protection Division.35 A carrier was fined because it failed to provide this information.36 Post-Purchase Price Increase. The requirements include that a consumer be provided a prominent warning if a price increase is possible prior to full payment as well as that written consent be obtained from the consumer about the potential increase;37 moreover, even if a warning is provided and consent is obtained, the only circumstance under which a price increase is permissible after full payment has been made is if it is due to an increase in a government-imposed tax or fee.38 A ticket agent was fined because it failed to prominently disclose the possibility of a fuel surcharge-based price increase for an air tour package and further asserted that the price was subject to increase even after final payment.39 Contract of Carriage. The requirements include that each carrier make its contract of carriage available in "easily accessible form" on its website.40 A carrier was fined because it only made the contract of carriage available after a consumer had searched for a proposed itinerary.41 As discussed below, DOT also continued to closely monitor airfare advertising – and issued consent orders based on its new requirement for "all-inclusive" fare advertising.

Air Carrier And Ticket Agent Advertising

All-Inclusive...