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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).

Visa Waiver Program Update in Light of Paris Attacks

In the wake of last month’s terrorist attacks in Paris, which were conducted by citizens of countries that currently participate in the Visa Waiver Program, the White House has announced steps it will take to ensure terrorists from Visa Waiver Program countries are not able to enter the U.S.  While some of the proposed changes may impact the procedures foreign carriers currently implement when transporting passengers from Visa Waiver countries, the new measures have been characterized as “limited.”  More sweeping changes are possible over the course of the coming year, but will require Congressional legislation.

The following changes are likely to be implemented in the near term:

  • ​Visa Waiver partner countries will be asked to issue “e-passports” that would include greater detail on the holder’s travel history;
  • The White House plans to expand the use of the “pre-clearance program” in foreign airports in order to allow U.S. border officials to collect and screen biometric information before visa waiver travelers can board aircraft to the United States.
  • DHS will immediately take steps to modify its Electronic System for Travel Authorization (ESTA) applications to capture information from VWP travelers regarding any past travel to countries constituting a terrorist safe haven.
  • The Department of Homeland Security is planning to seek authority to increase the penalty assessed against carriers that fail to verify passenger passport information from $5,000 to $50,000.
  • The Secretaries of DHS, State, and Commerce will promote the Global Entry program among VWP partners to further expand this trusted traveler program, which includes the use of biometrics.​

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)

NTSB TRAINING OFFERED FOR DISASTER RESPONSE

The NTSB Transportation Disaster Response Course (TDA-301) is scheduled for September 23-25, 2014 at the NTSB Training Center in Ashburn, VA.  TDA-301 is a basic family assistance course designed for commercial transportation officials, representatives of federal agencies, staff of non-governmental relief organizations and emergency managers, and is instrumental in understanding how any organization involved in the accident response can most effectively support the family assistance efforts.  During the course, NTSB Transportation Disaster Assistance specialists, clinicians and other professionals will present a variety of disaster response and family assistance topics.  If you have any interest in attending this course, please contact us.

FAA PROPOSES HAZMAT PENALTIES AGAINST THREE COMPANIES

The FAA recently proposed civil penalties ranging from $63,000 to $91,000 against three companies for violating the Hazardous Materials Regulations (HMR).  In each case, the FAA alleged the company failed to declare the hazardous materials being transported and failed to properly class, describe, package, mark, and label the shipments in proper condition for shipment.  The FAA further alleged each of the companies failed to ensure its employees had received the required training for shipping hazardous materials, and did not provide emergency response information with the packages.

The cases include the following:

  • $91,000 penalty against Kuehne & Nagel, Inc., of Jersey City, NJ for offering a cardboard box containing one 3.78 liter can of Carboline Part A paint and one can containing a liter of Carboline Urethane Converter paint to FedEx for shipment by air.  Under the HMR, paint is considered a hazardous material.
  • $78,000 against Pantropic Power, Inc., of Miami, FL for shipping      11 12-ounce cans of aerosol paint on a FedEx aircraft from Miami to Puerto Rico.  Workers at Luis Munoz Marin International Airport in San Juan discovered the package emitting an odor, and found a can had burst and leaked through its packaging.  Aerosols are considered to be hazardous flammable gas.
  • $63,000 against Superior International Industries of Carrollton,      GA for offering an unmarked box containing two, 12-ounce cans of Cardinal Acrylic Aerosol Enamel spray paint to FedEx for shipment by air.  Under the HMR spray paint is considered a flammable aerosol.  The contents of the shipment were discovered after one of the cans leaked yellow paint in transit.

FAA SCALES BACK REPAIR STATION RULE

In an attempt to address industry concerns, the Federal Aviation Administration (FAA) has scaled back its latest revamp of the repair station regulations by eliminating a proposed new ratings system and several other significant changes that were strongly opposed by industry groups after the Administration’s release of a May 2012 notice of proposed rulemaking on the subject.

In addition to the new ratings system, which FAA intended to align with technological shifts since its last update, the Administration has also decided to drop proposals that would have required both supervisors and inspection personnel to speak English and that supervisors be present to oversee work being done by their staffs.  The FAA also removed a proposed requirement that would have mandated that repair stations have the tooling and equipment needed to earn certifications or rating approvals.  In addition, the new rule proposes to amend provisions on records falsification and the ability for FAA to weigh an applicant’s enforcement history when it considers a new certificate application.

It is likely that a follow-up draft regulation that addresses key outstanding issues, like those mentioned above, will be published at some future date.  We will continue to keep you appraised of new developments.

DOT EXTENDS COMMENT PERIOD FOR CONSUMER RULE 3

On July 31, 2014, the U.S. Department of Transportation (DOT) agreed to extend the comment period for its latest rulemaking on transparency of airline ancillary fees and other consumer protection issues.  The new comment deadline is September 22, 2014.

The rule proposes, among other things, to: (1) require carriers to disseminate certain ancillary service fee information to ticket agents; (2) require carriers to modify their websites to display (as specific charges) certain basic ancillary service fees; (3) modify the Department’s post-purchase price increase rule with respect to ancillary fees; and (4) amend the tarmac delay rule to clarify that the Department may impose penalties for tarmac delay violations on a per passenger basis (up to $27,500 per passenger).

DOT ISSUES FINAL ORDER APPROVING IATA RESOLUTION 787

On August 6, 2014, DOT issued a final order (Order 2014-8-1) approving IATA Resolution 787, subject to specific conditions.  This order follows the Department’s tentative grant of  approval issued May 21, 2014.

As background, Resolution 787 establishes a process to develop a technical standard for data exchange within the air transportation market place.  This process uses Extensible Markup Language (XML), which is a markup language that provides rules for encoding data in human-readable and machine-readable format.  Resolution 787 established certain goals associated with the use of this data standard, including the capability to provide personalized airline ticket pricing to consumers.  These goals are known as New Distribution Capability (NDC).

After reviewing more than 40 comments received in response to its tentative grant of approval, DOT ultimately adopted Resolution 787, but limited its approval to the creation of an XML communications standard.  DOT also stated that any future agreement among IATA members regarding business models for distributing air transportation shall not be implemented without compliance with the applicable government approval or notification process.

SENATE COMMERCE CHAIR OPENS PROBE INTO AIRLINE PASSENGER FEES AND CONSUMER DATA PRIVACY POLICIES

On August 18, 2014 Senator John D. Rockefeller, Chairman of the Senate Committee on Commerce, Science, and Transportation, announced that he plans to seek information from the top ten revenue generating U.S. passenger airlines regarding their disclosure policies on certain ancillary fees.  The airlines at issue are United, Delta, American, Southwest, US Airways, JetBlue, Alaska, Hawaiian, Spirit, and SkyWest.  The Senator’s inquiry also asks for information on the airlines’ internal policies for protecting consumer information that is collected during the ticket purchase process.

In the past several years, a trend has emerged where airlines increasingly charge fees for “optional” services, such as checked and carry-on luggage, seat selection, and priority boarding.  Fees of this nature are separate from the base fare and have resulted in significant revenue for airlines.  The Senator’s inquiry tracks concerns by consumer advocate groups that in some cases, optional fees are not sufficiently disclosed to consumers shopping for flights, thus preventing consumers from making a true price comparison.

In a letter to the aforementioned carriers, Chairman Rockefeller requested the following information: (1) the role that ancillary fees play in each carrier’s business model, and how that role has changed over the past decade, if at all; (2) each carrier’s total revenues for 2012, 2013, and 2014 to date, and also for the revenues collected for certain types of fees such as change fees, wi-fi passes, first and second checked bags, and trip insurance; (3) for fees that are sometimes disclosed in a range, such as preferred seat or flight change/cancellation fees, a list of each specific price that may be offered within the range and the frequency each specific price is charged; (4) the difference in the price of many ancillary fees (2009 prices compared with current prices); and (5) whether carriers obtain personal information from consumers when they shop for airfares or from other sources.

The Committee is also interested in raising awareness among consumers about the importance of protecting personal information they provide online because no federal privacy laws currently exist for the collection, use, and disclosure of consumer travel information.

UPDATE ON NORWEGIAN AIR INTERNATIONAL APPLICATION

On July 14, 2014, representatives from the U.S. Departments of State and Transportation met with European Commission (EC) officials to discuss the EC’s views on the meaning and applicability of Article 17 bis so that DOT could take those views into consideration during its review of the NAI application.

It is the opinion of the EC that Article 17 bis provides no legal basis for a party to unilaterally deny an application under Article 4 of the Agreement.  If a party has a concern about Article 17 bis, it should be brought to the Joint Committee.  Given this, it is the EC’s position that Article 17 bis of the Agreement cannot be used by one party as a mechanism to refuse to grant operating authorization under Article 4 of the Agreement to an airline of the other Party.

This meeting sparked many new filings in the docket, which are summarized below by issue.

Issue:  Consideration of Article 17 bis in implementation of Air Transport Agreement

In favor of the application’s approval, Delegation Chairmen John Byerly and Daniel Calleja noted that the EC’s position is consistent with the parties’ intentions when the U.S.-EU Open Skies Agreement was being negotiated.  Federal Express agrees with the EC’s view that “Article 17 bis itself does not formulate a legal rule that can be applied unilaterally by one party”.

On the other hand, the Allied Pilots Association commented that Article 17 bis was formulated by EU and U.S. negotiators, in part to address Labor Representatives’ concern that carriers might seek to evade social laws and undermine labor standards by engaging in venue-shopping.  The Southwest Airlines Pilots Association (SWAPA) noted that no definitive language exists in Article 17 to define the article’s consideration as anything other than guidance for a decision of fitness by a sole party to the agreement.

Issue:  Public Interest

Numerous applicants including Air France, Austrian Airlines, KLM Royal Dutch Airlines, and SAS, urged the Department to deny NAI’s application because approval would be not be consistent with the public interest.  U.S. carriers such as Delta Airlines, United Air Lines, and American Airlines commented that the basic objectives of Article 17 bis would be undermined if DOT approves NAI’s application, as it would allow NAI to enter the U.S.-EU market by establishing “a de facto flag of convenience” designed to go around Norway’s labor protection laws.

Issue:  Promotes U.S. Economy

Washington Airports Task Force, the American Society of Travel Agents, Travel United, the U.S. Travel Association, the Port of Oakland and the Broward County Aviation Department all filed in support of NAI’s application, arguing that approval will benefit growth of the transatlantic market, provide additional choices to the traveling public, and bolster the U.S. economy by creating jobs in the travel industry and through increased airport traffic. 

Issue:  Possible retaliation and trade war

NAI filed a comment asserting the opponents of its application have an anti-Open Skies agenda.  NAI believes if this “protectionist position” is followed, the Department will invite an unnecessary, potentially grave dispute with the European Union and Ireland.

FINES UPDATE

In addition to those noted above, the below additional fines have recently been issued by DOT:

Delta Air Lines, Inc. – $100,000

Delta Air Lines, Inc. (Delta) was fined $100,000 for violating the Department’s advertising rules.  Under those rules, Delta is required to clearly and conspicuously note the disclosure of a roundtrip purchase requirement prominently and in close proximity to the each way fare amount. From November 2012 to February 2014, Delta had advertised “Fare Specials” for each way fares that required a roundtrip purchase.  DOT determined that Delta did not clearly and conspicuously note this requirement prominently and proximately, and thus violated DOT advertising requirements.

Alaska Airlines, Inc. – $150,000

Alaska Airlines, Inc. was fined $150,000 for violating DOT’s codeshare disclosure rules.  Air carriers are required to disclose in all advertisements the name of the air carrier providing a passenger’s air transportation prior to the purchase of a ticket.  Where one or more of the flights at issue is operated by a codeshare partner, the existence of a code-share arrangement must be disclosed.  In late 2013, an investigation by DOT’s enforcement office revealed that for flights operated by its sister carriers and regional partners, Alaska Airlines’ reservation agents did not identify the corporate name of the carrier operating these flights, or any other name under which the flight was operated. DOT determined that this practice violated its codeshare disclosure requirements.

Skywest Airlines – $295,750

The FAA has proposed a fine of $295,750 against Skywest Airlines for allegedly violating FAA drug and alcohol testing requirements.  According to the FAA, Skywest allegedly failed to include more than 150 safety sensitive employees in a random drug testing pool, hired two employees before verifying they passed their drug tests, and allegedly improperly subjected three employees to drug tests that they should not have been subjected to.  Skywest is set to meet with the FAA later this month to discuss these allegations.