DOT CONSENT ORDERS

  • Violation of the 24-hour Reservation Hold Rule – The Enforcement Office found that American Airlines violated the 24 hour reservation hold rule, 14 CFR § 259.5(b)(4) and the statutory prohibition against unfair and deceptive trade practices, 49 U.S.C. § 41712, following the airline’s cancellation of 605 tickets placed on hold after a mistaken fare sale.

American Airlines experienced a technical error on its U.S. website on March 17, 2015 between 5:00 pm and 10:00 pm EDT (“sale period).  During this period, full fare business class tickets (including taxes, fees and surcharges) between select U.S. cities and Shanghai or Beijing China, were offered for sale at between $400 and $800 per ticket.  The average full fare cost of the same tickets on American Airlines for the city pairs during the days immediately before and after the sale ranged between $4,500 and $5,000.  A total of 1194 reservations were made during the sale period, while only 100 reservations per day were made in the five days prior to the sale.  American attributed this disparity to social media, which publicized the mistaken fares.  Of the 1194 reservations made during the sale, 809 were purchased immediately and the remaining 605 reservations were placed on a 24 hour hold.  American honored the purchased tickets and canceled the tickets that were on hold.

American Airlines and DOT reached a settlement and American agreed to compensate the holders of the cancelled reservations by either offering a zero dollar economy class ticket, (plus taxes and fees), or a reduced price business class ticket to China between the same city pairs as the cancelled tickets.

  • Violation of Full-Fare Rule – Middle East Airlines (MEA) was fined $10,000 and ordered to cease and desist similar violations of 49 U.S.C. §41712 and 14 CFR § 399.84.  DOT found that MEA violated the full-fare rule by including a carrier-imposed fee within an amount described as “taxes” on its U.S. directed website.

In December of 2013, a third party complaint was filed against MEA for allegedly violating DOT’s full-fare price rule.  The complainant states he used MEA’s website to obtain coach-class travel from New York, New York, to Beirut, Lebanon.  The site displayed a ticket price of $633.00 plus taxes of $734.84 for a final cost of $1,397.84.  The complainant stated there is no tax of $734.84 and alleged MEA mischaracterized a carrier-imposed fee or surcharge as a tax, which is in violation of DOT regulations.  MEA answered in January of 2014 and took corrective action to modify the website to confirm to DOT requirements.

MEA argued that because it does not have DOT economic authority, does not operate to the United States directly or in a codeshare arrangement and is not a ticket agent, DOT did not have jurisdiction to enforce section 399.94.  However, DOT found that MEA is a ticket agent because it “sells, offers for sale, negotiates for, or holds itself out as selling, providing, or arranging for, air transportation” and is therefore subject to section 399.84.

If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622), Drew Derco (dderco@eckertseamans.com, 202-659-6665), or Reese Davidson (rdavidson@eckertseamans.com, 202-659-6633).

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