[Federal Register Volume 69, Number 219 (Monday, November 15, 2004)]
[Notices]
[Pages 65676-65677]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-25253]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary


Notice of Disclosure

AGENCY: Office of the Secretary (OST), Department of Transportation.

ACTION: Notice on disclosure of higher prices for airfares purchased 
over the telephone via telephone reservations centers or at airline 
ticket offices, and surcharges that may be listed separately in fare 
advertisements.

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SUMMARY: The Department is publishing the following notice disclosure 
of higher prices for airfares purchased over the telephone via 
telephone reservations centers or at airline ticket offices, and 
surcharges that be listed separately in fare advertisements.

FOR FURTHER INFORMATION CONTACT: Nicholas Lowry, Attorney, Office of 
Aviation Enforcement and Proceedings (C-70), 400 7th Street, SW., 
Washington, DC 20590 (202) 366-9349.
    This notice is intended to provide guidance on two matters related 
to compliance with 14 CFR 399.84, the Department's rule on full fare 
advertising, and the underlying statutory proscription in 49 U.S.C. 
41712 against unfair and deceptive trade practices. First, we address 
the disclosure in fare advertisements of higher prices, recently 
introduced by several air carriers, for tickets purchased at ticket 
counters or by telephone.\1\ Second, by this notice, we are advising 
carriers of the current policy of the Office of Aviation Enforcement 
and Proceedings (Aviation Enforcement Office) with regard to the 
disclosure of ``government-approved'' surcharges.
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    \1\ Some carriers have referred to this increase in the price 
for tickets bought from them over the telephone or at a ticket 
counter as a ``service fee'' or by a similar phrase. However, in the 
context of the full fare advertising rule, such carrier-imposed 
``fees'' are a part of the fare and must be treated as such in 
airfare advertising.
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    A number of air carriers and foreign air carriers have recently 
started charging higher prices for tickets purchased by telephone or at 
ticket offices. Such airlines advertise base fares on the Internet or 
in print or other media, make the advertised fares available for 
purchase via the Internet only, and charge higher prices if customers 
purchase their tickets via an airline's telephone reservation system or 
at its airport or city ticket counter. Section 399.84 mandates that the 
advertised fare be the full fare to be paid by the customer. Any 
practice of excluding from advertised fares extra ``fees'' charged to 
customers that purchase tickets over the telephone through airline 
reservation centers, or at airport or city ticket counters, therefore, 
would violate 14 CFR 399.84, and constitute an unfair and deceptive 
trade practice and an unfair method of competition in violation of 49 
U.S.C. 41712.
    In order to avoid enforcement action, carriers and their agents who 
charge more for tickets not purchased over the Internet (e.g. by 
telephone or at ticket offices) must prominently disclose to customers 
that specific fares advertised are available only for tickets purchased 
via the Internet. In addition, we believe that 49 U.S.C. 41712 and 14 
CFR 399.84 require carriers to state in such advertising that tickets 
cost more than the advertised price if purchased over the telephone or 
at an airport or city ticket office. Moreover, we believe it would be 
informative and beneficial for consumers if carriers also state the 
amount of the increased price in the advertisements, for example, by 
stating that tickets cost $5 more if purchased by telephone or at an 
airport or city ticket office. However, this increase in price may not 
be characterized as a carrier-imposed ``fee'' lest the advertisement 
run afoul of the full fare advertising rule.\2\ Accordingly, the 
Aviation Enforcement Office will pursue enforcement action with regard 
to the advertisements in question if the increased fare is merely 
described in terms of a service, processing, administrative, ticketing 
center, call center, or similar carrier-imposed ``fee.''
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    \2\ The full-fare advertising rule was adopted in large part to 
eliminate the prior practice where sellers of air transportation hid 
the true price of tickets by listing ``service fees'' in the fine 
print of advertisements. The Aviation Enforcement Office, therefore, 
does not believe the increased price of tickets purchased at ticket 
counters or by telephone should be referred to in terms of a 
``service fee'' in fare advertisement because this could lead to 
significant confusion and a return to the prior unacceptable 
advertising practice.
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    Carriers, however, may use the aforementioned ``fee'' terms when 
describing the additional charge for telephone and/or ticket counter 
purchases in contexts that do not list specific fares and are thus not 
subject to 14 CFR 399.84. Carriers may disclose such charges and refer 
to them as ``fees,'' for example, in an audio introduction on an 
airline telephone reservation system, stating that tickets purchased 
over the telephone via the airline telephone reservation system, and/or 
at airline ticket counters, are subject to an additional carrier-
imposed ``fee,'' so long as the total fares eventually quoted to 
consumers include the ``fee.''
    A second topic we wish to address relates to ``government-approved 
surcharges.'' In the past, we have not pursued enforcement action 
against carriers that listed in fare advertisements ``government-
imposed and government-approved'' surcharges separately from the base 
fare quotations, so long as the existence of these

[[Page 65677]]

surcharges and their amounts were stated elsewhere in the 
advertisement. The ``government-approved'' surcharges were limited to 
security surcharges approved in the mid-1980's that affected foreign 
air transportation only and were approved by both the foreign 
government involved and the U.S. government. Recently, tariff 
regulation, owing to expanded open-skies agreements and other factors, 
has been revised to the extent that there is no longer a consistent 
practice of joint approvals of surcharges, in many instances resulting 
in the filing of tariffs that may include surcharges that are approved 
by only one government. In addition, the desire of carriers to pass on 
the higher costs of certain expenses discretely, such as insurance and 
fuel, has led to such expenses being filed separately from the ``base'' 
fare in tariffs, a situation that the Department cannot effectively 
monitor.\3\ In view of these developments, the Enforcement Office will 
no longer allow the separate listing of ``government-approved'' 
surcharges in fare advertising. We will consider the separate listing 
of such charges in fare advertisements an unfair and deceptive trade 
practice and unfair method of competition in violation of 14 CFR 399.84 
and 49 U.S.C. 41712 and will pursue enforcement action where such 
violations are found. With respect to ``government-imposed'' 
surcharges, for example PFCs and foreign airport charges, however, our 
policy remains that such charges may be omitted from the fare 
quotations provided that they are not ad valorem in nature, that they 
are collected on a per-passenger basis, and that their existence and 
amount are clearly indicated in the advertisement so that the consumer 
can determine the full fare to be paid.
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    \3\ In open-skies and other markets governed by bilateral 
agreements containing double-disapproval pricing articles, the 
Department has exempted carriers from fare filing. See 14 CFR part 
293. See also, Letter from Paul L. Gretch, Director of International 
Aviation, to air carriers dated October 14, 2004, which was 
distributed electronically by ATPCO to its members.
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    Questions concerning this notice or the applicability of the 
Department's fare advertising rules may be addressed to the Office of 
Aviation Enforcement and Proceedings.

    Dated: November 5, 2004.
Samuel Podberesky,
Assistant General Counsel for Aviation Enforcement and Proceedings.

    An electronic version of this document is available on the World 
Wide Web at http://dms.dot.gov/reports and http://airconsumer.ost.dot.gov/rules/index.htm.

[FR Doc. 04-25253 Filed 11-12-04; 8:45 am]
BILLING CODE 4910-62-P