Order 2012-10-2 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

On the Fifth day of October, 2012

Jetstar Airways Pty Limited Docket OST 2012-0002

Violations of Article 17 of the 

 Montreal Convention and 49 U.S.C. § 41712 Served October 5, 2012

 

CONSENT ORDER

This consent order concerns violations by Jetstar Airways Pty Limited (Jetstar), an 

Australian air carrier, of Article 17 of the Montreal Convention (Convention) and the 

statutory prohibition against unfair and deceptive trade practices, 49 U.S.C. § 41712,

involving the carrier’s blanket exclusion on reimbursement for a class of items contained 

in lost bags on Jetstar flights to or from the United States. It directs Jetstar to cease and 

desist from future similar violations of Article 17 and section 41712, and assesses the 

carrier a compromise civil penalty of $30,000.

Applicable Law

The Convention sets forth rules on certain international flights that govern air carrier 

liability for lost, delayed, and damaged checked baggage.1

 Article 17 of the Convention 

provides that carriers are liable for loss of or damage to checked baggage in the custody 

of the carrier, except to the extent that the loss or damage “resulted from an inherent 

defect, quality, or vice” of the baggage. Under the Convention, carriers may cap their 

liability for lost, delayed, or damaged checked baggage, but Article 22 requires that any 

such cap be no lower than 1,131 Special Drawing Rights (SDRs).2

 1

Convention for the Unification of Certain Rules for International Carriage by Air, adopted on May 28, 

1999. The Convention entered into force for the United States of America on November 4, 2003, and for

Australia on January 4, 2009.

2

Inflation Adjustments to Liability Limits Governed by the Montreal Convention Effective December 30, 

2009, 74 Fed. Reg. 59017 (Nov. 16, 2009) available at http://airconsumer.dot.gov/rules/guidance.htm.
2

The Convention does not permit blanket exclusions or otherwise allow carriers to 

disclaim liability for any class or category of item, such as jewelry, electronics, or high 

value goods that they have accepted for transport as checked baggage. Rather, such 

exclusions contravene Article 17 because they have the effect of limiting—with respect 

to items falling within their ambit—a carrier’s liability to an amount lower, i.e., zero, 

than the minimum level required by Article 22. (By notice dated March 26, 2009, the 

Department reminded all airlines engaged in foreign air transportation3 of this 

proscription and gave them 90 days from the date of the notice to revise their tariffs, 

statements, and policies related to baggage liability.)

4

 Under Departmental enforcement 

case precedent, violations of Articles 17 also constitute unfair and deceptive practices and 

unfair methods of competition in violation of 49 U.S.C. § 41712.5

 In addition, Article 26 

states that any contractual provision tending to relieve the carrier of liability or to fix a 

lower liability than set forth in the Convention is null and void. 

Facts

According to Article 7.4 of Jetstar’s contract of carriage, passengers:

“must not include in [their] checked Baggage: fragile, delicate or perishable 

items, computers, items with a special value, such as money, jewelry, precious 

metals, silverware, negotiable papers, share certificates, securities or other 

valuable documents, cameras, electronic equipment, commercial goods or 

business documents, or passports and other travel documents. As [Jetstar’s] 

liability is limited (see 14), [it] will not be liable for any inconvenience or 

Damage [passengers] suffer if [they] have ignored [Jetstar’s] requirements and 

included the item/s as Checked Baggage.”

Article 14.3(a) of Jetstar’s contract of carriage provides:

Except to the extent required by law, [Jetstar is] not liable for Damage to items 

which [passengers] are asked not to include in... checked baggage (under 7.4).

While we note that Article 14.3 includes language that appears to condition the blanket 

exclusion set forth in Article 7.4, Jetstar’s response to the Department acknowledged that 

their policy regarding baggage liability “to comply with all applicable laws had not been 

applied consistently.” 

 3

“Foreign air transportation” means the transportation of passengers or property by aircraft as a common 

carrier for compensation... between a place in the United States and a place outside the United States when 

any part of the transportation is by air. 49 U.S.C. § 40102(a)(23). 

4

Guidance on Airline Baggage Liability and Responsibilities of Code-share Partners Involving 

International Itineraries, 74 Fed. Reg. 14837 (Mar. 26, 2009), available at 

http://airconsumer.dot.gov/rules/guidance.htm.

5

 See, e.g., Emirates, Violations of Articles 17 and 19 of the Montreal Convention and 49 U.S.C. § 41712, 

Order 2011-8-24 (Aug. 30, 2011). 
3

Mitigation

Jetstar states that it takes its responsibilities to comply with all applicable laws and 

regulations very seriously, including the Montreal Convention and the Department’s 

rules. Jetstar notes that it has cooperated fully with the Department with respect to this 

matter.

Jetstar asserts that it conducted its own thorough review of the airline’s baggage claim 

handling policies and practices. As a result of this review, Jetstar clarified the wording in 

its Conditions of Carriage and in its internal policies and procedures. Jetstar also states 

that it retrained relevant employees and third-party contractors to ensure that they 

understand and are able to correctly apply the baggage liability policy.

Decision

The Enforcement Office has carefully considered the information provided by Jetstar but 

continues to believe that enforcement action is warranted. The Enforcement Office and 

Jetstar have reached a settlement of this matter in order to avoid litigation. Without 

admitting or denying the violations described above, Jetstar consents to the issuance of an 

order to cease and desist from future violations of Article 17 of the Montreal Convention 

and 49 U.S.C. § 41712 and to the assessment of $30,000 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 the size and sophistication of the carrier and serves the 

public interest. It represents a strong deterrent against future noncompliance with the 

Montreal Convention by Jetstar, as well as by other air carriers and foreign air carriers. 

This order is issued under the authority contained in 49 CFR Part 1.

ACCORDINGLY,

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

this order as being in the public interest;

2. We find that Jetstar Airways Pty Limited violated Article 17 of the Montreal 

Convention by seeking to limit its liability resulting from a blanket exclusion on 

reimbursement for a class of items contained in lost baggage, as described above;

3. We find that by engaging in the conduct and violations described in ordering 

paragraph 2, above, Jetstar Airways Pty Limited has also violated 49 U.S.C.

§ 41712; 

4. We order Jetstar Airways Pty Limited and all other entities owned or controlled 

by or under common ownership with Jetstar Airways Pty Limited and their 

successors and assignees, to cease and desist from violations of Article 17 of the 
4

Montreal Convention and 49 U.S.C. § 41712. Failure to comply with this cease 

and desist provision shall subject Jetstar Airways Pty Limited and its successors and 

assignees to further enforcement action;

5. We assess Jetstar Airways Pty Limited $30,000 in compromise of civil penalties that 

might otherwise be assessed for the violations described above. Of this total penalty 

amount, $15,000 shall be due and payable within 30 days of the date of issuance of 

this order. The remaining $15,000 shall become due and payable immediately if 

Jetstar Airways Pty Limited violates this order’s cease and desist provision 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 Jetstar Airways Pty 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 Jetstar Airways Pty 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:

SAMUEL PODBERESKY

Assistant General Counsel for

 Aviation Enforcement and Proceedings

(SEAL)

An electronic version of this document is available at

www.regulations.gov