2014-10-14

 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 17th day of October, 2014

Cathay Pacific Airways Limited Docket OST 2014-0001

Served October 17, 2014

Violations of 14 CFR 399.84(a) and

 49 U.S.C. § 41712

CONSENT ORDER

This order concerns violations by Cathay Pacific Airways Limited (Cathay Pacific) of the 

full-fare advertising rule, 14 CFR 399.84(a), and the statutory prohibition against unfair 

and deceptive practices, 49 U.S.C. § 41712. It directs Cathay Pacific to cease and desist 

from future similar violations and assesses the carrier $260,000 in civil penalties.

Applicable Law

As a foreign air carrier, Cathay Pacific is subject to the advertising requirements of 14 

CFR 399.84(a). On April 25, 2011, the Department issued a set of rules designed to 

enhance protections for air travel consumers which, among other things, require airlines 

to comply with the Department’s full-fare advertising rule as written. The full-fare rule 

requires that the price advertised for passenger air transportation includes all governmentimposed fees and taxes and all mandatory airline and ticket-agent imposed fees.1

Violations of section 399.84 constitute an unfair and deceptive practice and unfair 

method of competition in violation of 49 U.S.C. § 41712. 

 1 This provision was codified in 14 CFR 399.84(a), which took effect on January 26, 2012.
2

The Department’s full-fare advertising regulation covers websites selling air 

transportation marketed to U.S. consumers. More specifically, the rule applies to 

advertisements of foreign carriers, among others, that are marketed to U.S. consumers for 

air transportation within, to, or from the United States.2 The Office of Aviation 

Enforcement and Proceedings (Enforcement Office) has issued detailed guidance 

regarding the applicability of the full-fare rule. To determine whether a particular 

advertisement or website is marketed to U.S. consumers, the Enforcement Office looks to 

various factors, including whether the seller has an option on its website that 

differentiates sites or pages designed for U.S. or other consumers.

3

Facts

In response to a consumer complaint, the Enforcement Office investigated the fare 

advertising on Cathay Pacific’s U.S. customer-facing website.

4 The Enforcement Office 

found that in May 2014, Cathay Pacific advertised fares in its initial fare matrix that did 

not include mandatory taxes and fees. Specifically, when consumers searched for fares 

from non-U.S. points to the United States, the Cathay Pacific website first displayed a 

fare matrix that did not include carrier surcharges and government imposed fees and 

taxes. After choosing a flight and proceeding through the booking process, consumers 

were presented with much higher fares for the same flight. Cathay Pacific admitted to the 

Enforcement Office that such flights did not include mandatory fees and taxes for a 

significant period of time because Cathay Pacific did not believe that the full-fare rule 

applied to fares on flights originating outside the United States. By not advertising the 

full-fare to be paid by the consumer in the initial fare matrix on its U.S. website, Cathay

Pacific violated 14 CFR 399.84(a) and engaged in unfair and deceptive practices in 

violation of 49 U.S.C. § 41712.

Mitigation

In mitigation, Cathay Pacific states that, for travel originating in the United States, 

Cathay Pacific’s website has, for all relevant periods, displayed the full fare at the outset, 

including taxes, fees, and carrier surcharges. 

 2 Answers to Frequently Asked Questions Concerning the Enforcement of the Second Final Rule on 

Enhancing Airline Passenger Protections, Section IX, Questions 1 and 4, (Last updated on June 15, 2012), 

available at https://www.dot.gov/airconsumer/aviation-rules. 

3 Those factors include but are not limited to whether the fares are displayed in U.S. dollars, whether sales 

can be made to persons with addresses or telephone numbers in the United States, whether the website is in 

English, whether the seller uses banner advertisements or highlights special deals for flights to or from the 

United States, and whether the seller has an option on its website that differentiates sites or pages designed 

for U.S. or other consumers. See Answers to Frequently Asked Questions Concerning the Enforcement of 

the Second Final Rule on Enhancing Airline Passenger Protections, Section IX, Questions 1 and 4, (Last 

updated on June 15, 2012), available at https://www.dot.gov/airconsumer/aviation-rules.

4 Cathay Pacific’s website has several language/region options and to search airfares on the Cathay Pacific 

website, a consumer must first select the “Country/Region” option the consumer wishes to use. The version 

of the website at issue here is identified as the “United States” option.
3

Cathay Pacific further states that with respect to fares originating outside the United 

States, including roundtrip travel originating and terminating outside the United States, it 

reasonably believed that those fares were not marketed to U.S. consumers. Cathay 

Pacific states that it interpreted the Department’s rules and guidance to mean that if a 

consumer accesses Cathay Pacific’s U.S. website and books a fare for a trip originating 

outside the United States, such as a roundtrip fare that originates and terminates outside 

the United States, then that passenger was not considered a “U.S. consumer” for 

marketing purposes. Moreover, Cathay Pacific points out that its U.S. website displayed 

fares originating outside the United States in the currency of the country in which the fare 

originated and that Cathay Pacific’s website and the servers used to operate its website 

are located in Hong Kong.

Cathay Pacific states that notwithstanding its previous understanding as to the geographic 

reach of the full-fare advertising rule, it fully cooperated with the Department and 

promptly implemented remedial measures to avoid any appearance that it violated section 

399.84(a). Cathay Pacific states that its U.S. website now fully complies with the fullfare advertising rule. Moreover, the carrier states that it has never received a complaint 

that its U.S. website violated the full-fare advertising rule, and until now, it has never 

been subject to a civil penalty through an enforcement action brought by the Department. 

Decision

The Enforcement Office has carefully considered the information provided by Cathay

Pacific, but continues to believe enforcement action is warranted. In order to avoid 

litigation, Cathay Pacific has agreed to settle this matter with the Enforcement Office and 

enter into this consent order directing Cathay Pacific to cease and desist from future 

similar violations of 14 CFR 399.84(a) and 49 U.S.C. § 41712, and assessing $260,000 in 

compromise of potential civil penalties otherwise due and payable pursuant to 49 U.S.C. 

§ 46301. The compromise assessment is appropriate considering the nature and extent of 

the violations described herein and serves as a deterrent to Cathay Pacific and other 

carriers.

This order is issued under the authority contained in 14 CFR Part 1.

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 Cathay Pacific Airways Limited violated 14 CFR 399.84(a) by failing to 

include mandatory taxes and fees in the initial fare matrix on its U.S. website; 

3. We find that by engaging in the conduct described in ordering paragraph 2, above, 

Cathay Pacific Airways Limited engaged in unfair and deceptive practices and unfair 

methods of competition in violation of 49 U.S.C. § 41712; 
4

4. We order Cathay Pacific Airways Limited, its successors, its affiliates, and all other 

entities owned by, controlled by, or under common ownership and control with 

Cathay Pacific Airways Limited, its successors, its affiliates, and its assigns to cease 

and desist from further similar violations of 14 CFR 399.84(a) and 49 U.S.C. 

§ 41712;

5. We assess Cathay Pacific Airways Limited $260,000 in compromise of civil penalties 

that might otherwise be assessed for the violations described in ordering paragraphs 2 

and 3, above. Of this total penalty amount, $130,000 shall be due and payable within 

thirty (30) days of the date of issuance of this order. The remaining portion of the 

civil penalty amount, $130,000, shall become due and payable immediately if, within 

one year of the date of issuance of this order, Cathay Pacific Airways Limited 

violates this order’s cease and desist provisions or fails to comply with the order’s 

payment provisions, in which case Cathay Pacific Airways Limited may be subject to 

additional enforcement action for violation of this order; and

6. We order Cathay Pacific Airways Limited to pay the penalty through Pay.gov to the

account of the U.S. Treasury. Payments shall be made in accordance with the 

instructions contained in the Attachment to this order. Failure to pay the penalty as 

ordered shall subject Cathay Pacific Airways Limited to the assessment of interest, 

penalty, and collection charges under the Debt Collection Act and to further 

enforcement action for failing 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.

BY:

BLANE A. WORKIE

Acting Assistant General Counsel for

 Aviation Enforcement and Proceedings

An electronic version of this document is available at 

www.regulations.gov