Order 2012

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UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

O n the Eighteenth day of January , 2012

Icelandair Group Docket OST 2012

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Served January 18 , 2012

Violations of 49 U.S.C. § 41712 an d

14 CFR 399.84

CONSENT ORDER

This consent order concerns Internet advertisement s by Icelandair Group (Icelandair) that violate the advertising requir ements specified in 14 CFR 399 .84

, as well as 49 U.S.C. § 41712, which prohibit s u nfair and deceptive practices and unfair methods of competition

. It directs Icelandair to cease and desist from fut ure violations of section

399 .84 and s ection 41712, and assesses the carrier a compromise civi l penalty of $5 0,000

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Applicable Law

As a foreign air carrier, Icelandair is subject to the advertising requirements of Part 399 of the Department’s rules. Pursuant to 14 CFR 399.84, carriers advertising airfares must state the full price to be paid by the consumer. Under long

- standing enforcement case precedent, the Department has allowed taxes and fees collected by carriers and ticket agents, such as passenger facility charges and departure taxes, to be stated separately from base fares in advertisements, so long as such taxes and fees are levied by a government entity, are not ad valorem in nature, i.e., not assessed as a percentage of the fare price, are collected on a per

- passenger basis, and their ex istence and amounts are clearly indicated at the first point in the advertisements where a fare is presented so that2

consumers can immediately determine the full fare to be paid. 1 Thus, for example, fare advertisements that 1) fail entirely to identify the existence and amount of separate additional taxes and fees at the first point at which a fare is displayed, or 2) include only general statements regarding the existence of such taxes and fees do not comply with section 399.84 or the Department’s enforcem ent case precedent. Violations of section

399.84 constitute an unfai r and deceptive practice and unfair method of competition in violation of 49 U.S.C. § 41712. 2

In Internet advertising displays, taxes and fees that properly may be stated separately from the advertised fare may be disclosed through a prominent link placed adjacent to the stated fare that notes that taxes and fees are extra and directly takes the vi ewer to the bottom of the screen, or to a pop

- up or a place on a separate screen, where the nature and amount of taxes and fees are prominently and immediately displayed. 3

Facts and Conclusions

For a period of time in the Fall 2011

, Icelandair displaye d an advertisement stating “Fares

to Iceland a nd Europe starting from $429*.” An asterisk appeared following the fare

without further elaboration. Nowhere on the website were the nature and amount of the additional taxes stated. Rather, once consumers clicked on the fare, they were then taken to Icelandair’s homepage where consumers had to select a city and destination, which would then take the consumer to an additional page where tax and fee information was finally disclosed. Icelandair’s failure to provide proper notice of taxes and fees that may legally be stated separately from the fare violat ed 14 CFR 399.84 and 49 U.S.C. § 41712.

1 On April 20, 2011, the Department issued a rule changing its enforcement policy with respect to section 399.84 to require that airlines and ticket agents comply with the rule as written. Under this new enforcement policy, whi ch is effective January 26, 2012, airlines and ticket agents must include all government taxes and fees in every advertised fare. The Department’s long

- standing p rohibition on omitting carrier

- or agent

- imposed charges, such as fuel s urcharges or convenience fees, from advertised

fares remains in effect.

2 See, e.g., US Airways, Inc ., Violations of 49 U.S.C. § 41712 and 14 CFR 399.84, Order 2 011

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- 2 (June 2,

2011 ); Delta Air Lines, Inc

, . Violations of 49 U.S.C. § 41712 and 14 CFR 399.84 Order 2010

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- 30 (May 28, 2010);

3 For example, under current policies, a carrier or ticket agent could advertise a flight in the following

manner: “ $ 2 60 + Taxes and Fees” with the phrase “ T axes and F ees” set off as a hyperlink that takes the

viewe r directly to the bottom of the screen or to a pop

- up or a place on a separate screen, where the nature and amount of taxes and fees are prominently and immediately displayed. See Department notices entitled

“Disclosure of Air Fare Variations: Web vs. Oth er Sources, Surcharges that May be Listed Separately in Advertisements,” dated November 4, 2004; “Disclosure of Additional Fees, Charges, and Restrictions on Air Fares in Advertisements, Including ‘Free’ Airfares,” dated September 4, 2003; and “Prohibition on Deceptive Practices in the Marketing of Airfares to the Public Using the Internet,” d ated January 18, 2001, available at: http:airconsumer.ost.dot.gov/rules/guidance.htm

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Mitigation

In mitigation, Icelandair submits that it had no intent to mislead, confuse or defraud the public in any way, shape or form and equally had no intent to frustrate or evade the laws

of the United States. Icelandair further asserts that the advertisement at issue was outdated and it was unaware that the advertisement was still being run by an advertisement placement service and , therefor e , not affirmatively sanctioned.

Decisi on

The Department views compliance with the Federal aviation statutes a nd regulations very seriously. The Enforcement Office has carefully considered the inf ormation pro vided by

Icelandair and continues to believe that en forcement action is warranted. The

En forcement Office and Icelandair have reached a settlement of this matter in order to avoid litigation. Without admitting or denying the violati ons described above, Icelandair

consents to the issuance of this order to cease and desist from future violati on s of 49 U.S.C. § 41712 and 14 CFR 399 .84, and to the assessment of $5 0,000 in compromise of potential civil penalties otherwise due and payable pursuant to 49 U.S.C. § 46301.

This compromise assessment is appropriate considering the nature and extent of the violations described herein and serves the public interest. It represents a strong deterrent against future noncompliance with the Department’s advertising requirements.

This order is issued under the authority in 49 CFR 1.57a and 14 CFR 385.15.

ACCORDINGLY,

1. Based on the above information, we approve this settlement and the provisions of this order as being in the public interest;

2. We find that Icelandair Group violated 14 CFR 399.84 by advertising fares that failed

to st ate the entire price to be paid;

3. We find that by engaging in the conduct described in ordering paragraph 2, above, Icelandair Group engaged in an unfair and deceptive practice and unfair method s of

comp etition in violation of 49 U.S.C. § 41712;

4. We order Icelandair Group

, and all other entities owned or controlled by, or under common ownership and control with Icelandair Group and its suc cessors, affiliates, and assignees , to cease and desist from further similar violations of 14 CFR 399.84

and 49 U .S.C. § 41712. Failure to comply with this cease and desist provision shall subject Icelandair Group and its successors , affiliates, and assignees to possible

further enforcemen t action;

5. We asses s Icelandair Group

, $ 50,000 in compromise of civil penalties that might

otherwise be assessed for the violations described above. Of this total penalty amount, $25,000 shall be due and payable within 30 days of the date of issuance of this order.4

The remaining $25,000 shall become due and payable immediately if Icelandair Group , violates this order’s cease and desist provisions within one

- year following the date of issuance of this order, or fails to comply with the order’s payment provisions;

and

6. We order Icelandair Group

, to r emit the payme nt assessed in ordering paragraph 5

above by wire transfer through the Federal Reserve Communications System, commonly known as "Fed Wire," to t he account of th e U.S. Treasury in accordance

with the instructions contained in the a ttachment to this order. Failure to pay the penalty as order ed shall subject Icelandair Group to the assessment of interest, penalty, and collection charges under the Debt Collection Act, and to additi onal enforcement action for failure to comply with this order.

This order will become a final order of the Department 10 days after its service date unless a timely petition for review is filed or the Department takes review on its own

motion.

B Y:

ROSALIND A. KNAPP Deputy General Counsel

(SEAL) An electronic version of this document is available at www.regulations.gov