BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

American Airlines

Multiple Price Advertising Violations of

49 U.S.C. § 41712 and 14 CFR 399.84(a)

British Airways

Multiple Price Advertising Violations of

49 U.S.C. § 41712 and 14 CFR 399.84(a)

Docket DOT-OST-2013-0024

Docket DOT-OST-2013-0025

COMMENTS IN SUPPORT OF DOT INVESTIGATION INTO AMERICAN AIRLINES 

INC AND BRITISH AIRWAYS PLC VIOLATIONS AND REQUEST FOR JOINT 

INVESTIGATION OF IMMUNIZED INTEGRATED JOINT VENTURE PARTNERS

Communications with respect to this document should be sent to:

Mike Borsetti

1 Montgomery St Ste 2500

San Francisco, CA 94104

mike@borsetti.com

21 March 2013
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BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

American Airlines

Multiple Price Advertising Violations of

49 U.S.C. § 41712 and 14 CFR 399.84(a)

British Airways

Multiple Price Advertising Violations of

49 U.S.C. § 41712 and 14 CFR 399.84(a)

Docket DOT-OST-2013-0024

Docket DOT-OST-2013-0025

COMMENTS IN SUPPORT OF DOT INVESTIGATION INTO AMERICAN AIRLINES 

INC AND BRITISH AIRWAYS PLC VIOLATIONS 

AND 

REQUEST FOR JOINT INVESTIGATION OF IMMUNIZED INTEGRATED JOINT 

VENTURE PARTNERS

MATTER OF PUBLIC DECEPTION IN DOCKET COMMENTS

In reading the comments to date in these docket it is difficult not to notice how many 

people have been deceived by surcharges applied by British Airways or its DOT-immunized 

integrated joint venture partner American Airlines when redeeming their award mileage credits 

for free flights.

These comments include, to date, those of Sam Khatib in DOT-OST-2013-0025-0003, 

Kevin James O'Connor in DOT-OST-2013-0025-0005, Michael Ferris in DOT-OST-2013-0025-
2

0008, Sean Thornton Seelinger in DOT-OST-2013-0025-0022, Anonymous in DOT-OST-2013-

0025-0023, Zak Rakrouki in DOT-OST-2013-0025-0024, J P in DOT-OST-2013-0025-0026,

Margaret Ann Shooshani in DOT-OST-2013-0025-0029, Alex Goldberg DOT-OST-2013-0025-

0030, Aaron Reese in DOT-OST-2013-0025-0032, Kevin Morrison in DOT-OST-2013-0025-

0036, Anonymous in DOT-OST-2013-0025-0038, John Bishop in DOT-OST-2013-0025-0040, 

Regan Eliston Wright in DOT-OST-2013-0025-0039, Deirdre Elizabeth Seim in DOT-OST2013-0025-0041, Jack Short in DOT-OST-2013-0025-0048, and Kathleen Voss in DOT-OST2013-0025-0056, as well as Alex Goldberg in DOT-OST-2013-0024-0003, Anonymous in DOTOST-2013-0024-0006 and Shawn Cole in DOT-OST-2013-0024-0009.

By way of background, prior to the implementation of the integrated joint venture in 

which American, British Airways, and Iberia would cooperate on all of their transatlantic flights 

and services, approved by the DOT in 2010-7-8 Final Order (DOT-OST-2008-0252-3406), the 

(currently) approximately 72 million1 members in the American Airlines AAdvantage program 

were precluded from redeeming their award mileage credits for transatlantic travel on British 

Airways.

With the implementation of the thusly approved integrated joint venture on 1 October 

2010, American Airlines extended the ability to redeem AAdvantage award mileage credits for 

 

1

American Airlines, Inc, Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2012. Retrieved 21 March 2013 from http://phx.corporateir.net/External.File?item=UGFyZW50SUQ9NDk2MDc4fENoaWxkSUQ9NTM0ODgyfFR5cGU9MQ==&t=1
3

transatlantic travel on British Airways, posting on an online F.A.Q.2that British Airways would 

“assess an added surcharge”

3

, the fuel surcharge.

1) AMERICAN DIRECTLY BENEFITS FROM THE “BRITISH AIRWAYS” FUEL SURCHARGE IT 

CHARGES ON AWARDS

It appears that American Airlines directly benefits from the fuel surcharge revenue 

assessed on these redemptions since, as it itself states4, American Airlines and British Airways 

“share the revenue and treat customers the same regardless of which airline actually flies the 

aircraft” (emphasis added). Fuel surcharge is a carrier-imposed fee, and indisputably a form of 

revenue for the carrier.

2) AADVANTAGE MEMBERS HURT BY REPLACEMENT OF AA “METAL NEUTRAL” AIRCRAFT 

WITH BA’S

AAdvantage members have been irreparably hurt by the post- integrated joint venture

substitution of “metal neutral” American Airlines-operated aircraft with “metal neutral” British 

Airways-operated aircraft on routes to London. While American Airlines and British Airways

reap the benefits of the integrated joint venture, AAdvantage members are no longer be able to 

obtain non-stop award travel from Boston from 31 March without paying an additional $458 per 

 

2

There was no mention of any surcharges on the email communications to members sent on 1 October 2010 and 

signed by Maya Liebman.

3

From http://www.aa.com/i18n/utility/jba-faqs.jsp, Retrieved 21 March 2013: “Q. Will I have to pay an added 

surcharge when I use my miles for travel on American Airlines? A. No. American Airlines does not assess additional 

charges beyond required government taxes and fees for passengers traveling on American on AAdvantage award 

tickets. Q. How much are the added charges assessed by British Airways and Iberia? A. British Airways and Iberia 

assess an added surcharge which varies based on the origin, destination, cabin etc. At the time of booking, the 

reservation agent will be able to provide you with the amount of the surcharge that applies to the itinerary you've 

chosen.”

4

American Airlines, Inc, Background Information: Antitrust Immunity Application process. Retrieved 21 March 

2013 from http://www.aa.com/content/images/aboutUs/newsroom/ATIBackgrounder.pdf
4

roundtrip (at current Economy class fuel surcharge levels)5. This development is clearly against 

the public interest.

Before

(29 March)

After

(31 March)

3) HARM TO THE PUBLIC

Thirdly, the unreasonably high level of fuel surcharges has harmed the 72 million 

AAdvantage members by devaluing the purchasing power of their award mileage credits of up to 

75% as per the comment by Ms. Voss (DOT DOT-OST-2013-0025-0056)

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. This is the 

equivalent of wiping out the value of up to 457 billion outstanding AAdvantage award mileage 

 

5

On that date the flight formerly operated as AA 108 will be replaced by an additional BA-operated flight, 

maintaining the same total integrated joint venture frequency but completely eliminating AA-operated service. 

Source: search on http://aa.com performed on 21 March 2013

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In my experience on the NYC-LHR route in low season redeeming an Economy class award costs as much as 86% 

of purchasing the ticket, with the vast majority of this being fuel surcharges. American still wants 100% of the

agreed to award mileage credits in addition to this.
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credits, which is clearly against the public interest since most of the public holds award mileage 

credits.

4) ANECDOTAL DISTORTION IN AWARD AVAILABILITY BASED ON “METAL NEUTRAL”

CARRIER

The vast majority of award space on the integrated joint venture is anecdotally available 

only on those flights where the integrated joint venture partners charge fuel surcharges, i.e. those 

“metal neutral” ones operated by British Airways. Fewer than 35% of the award seats to London 

seems to be available on American Airlines, 35% being AA’s approximate market share to 

London. This anecdotal information can be confirmed by a quick analysis of the traffic as 

reported to the DOT, and, if true, should be investigated further.

ACTION TO BE TAKEN

I encourage the Secretary to listen to the commenters and include these issues in its 

investigations, which are a deceptive practice of the integrated joint venture airlines involved. 

Award mileage credits are an integral part of what the public purchases with an airline ticket, and 

are marketed by the airlines as means to be awarded with aspirational free travel, often to pristine 

sandy beaches or far-away placesi. The name itself, award, is synonym of reward, and in the 

English language it means something that is given or bestowed7, not sold. With the imposition 

of fees that are as high as 75% (and higher), it is neither given nor bestowed, and to call it an 

award is, a prima facie, deceitful.

 

7

Sources: http://www.merriam-webster.com/dictionary/award and 

http://dictionary.reference.com/browse/award 
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RESOLUTION

In view of the preponderant evidence and public support, the Secretary should open a

joint investigation under 49 U.S.C. § 41712 without further delay into the deceitful practice by 

the DOT-immunized integrated joint venture partners American Airlines and British Airways as 

it pertains to fuel surcharges on, at a minimum, transatlantic routes.

The Secretary should also exercise its duty under 49 USC § 41309 (b) (1) and start a 

periodic review of Final Order 2010-7-8 (DOT-OST-2008-0252-3406) to end its approval on the 

basis of the failure of the applicants to implement fully the application approved, specifically the 

“full reciprocity of frequent flyer benefits between American and British Airways” listed in the 

section entitled “The Proposed Alliance Will Create Significant New Consumer Benefits”

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.

Submitted via regulations.gov on 21 March 2013

/s/

Mike Borsetti

 

i

American Airlines currently markets its program with a video appearing at 

http://www.aa.com/i18n/AAdvantage/programInformation/main.jsp and available directly at

http://link.brightcove.com/services/player/bcpid1335016593001?bckey=AQ~~,AAABDmhAyHE~,UBpv5ReJC5dAwUeG7ebCLCtymWCHLb-&bctid=1416302117001

As typical with the marketing of these programs, just the first minute of the video contains all of these aspirational 

messages

 

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Joint Application of AMERICAN AIRLINES, INC., BRITISH AIRWAYS PLC, FINNAIR OYJ, IBERIA LÍNEAS AÉREAS DE 

ESPAÑA, S.A, ROYAL JORDANIAN AIRLINES under 49 U.S.C. §§ 41308 and 41309 for approval of and antitrust 

immunity for alliance agreements (Document DOT-OST-2008-0252-0001), Page 16. Same statement repeated on 

page 23.
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