Order 2011-2-14

 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C.

Issued by the Department of Transportation

On the Twenty-Eighth day of February, 2011

Docket OST -2011-0003

Served February 28, 2011

CONSENT ORDER

This consent order concerns violations of 49 U.S.C. § 41712, which prohibits unfair and 

deceptive trade practices and unfair methods of competition, by American Airlines, Inc.,

(American) for failure to disclose the amount of fees and use restrictions on travel vouchers 

offered and provided as denied boarding compensation (DBC) to passengers who 

volunteered to give up their seats in oversales situations. This consent order directs 

American to cease and desist from such further violations and assesses American a 

compromise civil penalty of $90,000.

Applicable Law

As an air carrier, American must fully disclose fees and significant use restrictions in 

connection with offers and solicitations for passenger air transportation, including those 

made with respect to compensation to volunteers in oversales situations. We consider 

instances in which notice of fees or significant terms of an offer are withheld, obscured, or 

disclosed only after the customer has accepted to be an unfair and deceptive practice and 

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

Facts and Conclusions

An investigation by the Office of Aviation Enforcement and Proceedings (Enforcement 

Office) found that for a number of years American offered travel vouchers as compensation 

to passengers who volunteered to give up their seats in oversales situations without 

adequate disclosure of applicable fees and significant use restrictions. During this period, a 

ticketing fee was added to the cost of each ticket purchased through American’s telephone 

reservations line or at American airport ticketing locations, including tickets purchased

when using travel vouchers provided as voluntary DBC. American ceased adding ticketing 

fees for tickets purchased through the reservations line when using such vouchers about 

four years ago, but continued adding a $30.00 ticketing fee to the cost of each ticket 

 

American Airlines, Inc.

Violations of 49 U.S.C. § 41712
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purchased with such vouchers at American airport ticketing locations until late 2010. At 

all times relevant to this matter, travel vouchers provided as voluntary DBC could not be 

redeemed on American’s Internet web site. Thus, until American eliminated the ticketing 

fee for tickets purchased through its telephone reservations line, the vouchers could not be 

redeemed without incurring a ticketing fee, and until late 2010, the vouchers could not be 

redeemed at airport ticketing locations without incurring a fee. Although a notice appeared

on the voucher stating that a “ticketing fee may apply,” no fee amount was stated and no 

information was given as to when the fee applied. Thus, fee amounts and certain other 

restrictions were not disclosed at the time of the voucher offers, resulting in passengers

accepting these vouchers as voluntary DBC at what was less than the bargained-for 

amount. 

The Enforcement Office also found that American’s internal reference document on 

oversales volunteer solicitations gave no instruction to agents on disclosing certain 

significant limitations on redeeming vouchers. There were no guidelines, for example, to 

inform passengers that vouchers could not be used for ticket purchases online or that 

vouchers applied to tickets purchased by telephone had to be mailed in for processing 12-

21 days before the departure date. Passenger complaints reviewed by the Enforcement 

Office indicated that passengers generally learned about fees and certain redemption 

restrictions only after trying to purchase tickets with the vouchers. It appears, for example,

that passengers first learned of restrictions on the use of vouchers (e.g., the 12-21 day 

processing time) and the amount of the ticketing fee when they contacted American’s 

telephone reservations agents to redeem the vouchers. Our findings further indicate that 

reservations agents did not always accurately disclose policies and procedures concerning 

the use of vouchers, resulting in significant inconvenience and expense to some consumers.

Mitigation

In mitigation, American believes that applying the general prohibition against unfair and 

deceptive practices found in 49 U.S.C. 41712 to this matter in the absence of specific 

regulations or guidance on these issues is inherently subjective. American contends that 

this case is therefore distinguishable from enforcement cases where carriers have violated 

an explicit regulation or guidance. 

American also believes that any consumer problems associated with voucher distribution in 

oversales situations were minimal. The carrier maintains that since April 2007, passengers 

who received travel vouchers in return for giving up a seat could realize the full value of 

the voucher unless they chose to redeem at an airport. American points out that it 

eliminated the airport ticketing fee two months before the Enforcement Office first 

contacted American on this matter. American states that it issues approximately 250 of the 

subject travel vouchers per day. The carrier further states that the number of complaints it 

received from its “top tier” customers about issues associated with the redemption of travel 

vouchers was very small. American believes this to be an indicator that the number of 

similar complaints from its non-top tier customers, if discernible, would also be minor in 

magnitude.
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American underscores its excellent record of compliance with the Department’s consumer

regulations and guidance. Despite periodic audits of both American and American Eagle 

for compliance with the Department's consumer protection rules, no enforcement orders 

have arisen from these audits, or in any other context, since 2003. With respect to denied 

boarding compensation, American notes that it consistently ranks favorably in the 

Department's monthly air travel consumer reports.

Decision

The Enforcement Office has carefully considered all of the information available to it, 

including the cooperation of American and the changes in procedures it has implemented, 

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

the Enforcement Office and American have reached a settlement of this matter. Without 

admitting or denying the violations described above, American agrees to the issuance of 

this order to cease and desist from future violations of 49 U.S.C. § 41712. American

further agrees to the assessment of $90,000 in compromise of potential civil penalties

otherwise assessable against it.

This compromise assessment is appropriate in view of the nature and extent of the 

violations in question, serves the public interest, and establishes a strong deterrent to future 

similar unlawful practices by American and other air carriers.

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

ACCORDINGLY, 

1. Based on the above discussion, we approve this settlement and the provisions of the 

order as being in the public interest.

2. We find that American Airlines, Inc., violated 49 U.S.C. § 41712 by failing to fully 

and accurately disclose the amount of fees and significant use restrictions applicable to 

travel vouchers offered and provided to passengers as compensation for voluntary denied 

boarding at the time the offers were made. 

3. We order American Airlines, Inc., and all other entities owned and controlled by or 

under common ownership with American Airlines, Inc., and its successors and assignees to 

cease and desist from such further violations of 49 U.S.C. § 41712.

4. We assess American Airlines, Inc., a compromise civil penalty of $90,000 in lieu of 

civil penalties that might otherwise be assessed for the violations described in ordering 

paragraph 2, above. Of this total assessed penalty, $45,000 shall be due and payable within 

thirty days of the issuance of this order. The remaining $45,000 shall become due and 

payable if American Airlines, Inc., 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 payment 

provisions of this order, in which case the entire unpaid portion of the $90,000 assessed 

penalty shall become due and payable immediately.
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5. We order American Airlines, Inc., to pay the penalty by wire transfer through the 

Federal Reserve Communications System commonly known as "Fed Wire," in accordance 

with paragraph 4 above to the account of the U.S. Treasury as described in the attached 

instructions. Failure to pay the penalty as ordered shall subject American Airlines, Inc., to 

the assessment of interest, penalty, and collection charges under the Debt Collection Act 

and to possible additional 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 initiative.

BY:

ROSALIND A. KNAPP

Deputy General Counsel

(SEAL) 

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