Order 2013-11-6

 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

On the Seventh day of November, 2013

American Airlines, Inc.

Docket OST 2013-0004

Served November 7, 2013

Violations of 14 CFR 399.84(a) 

and 49 U.S.C. § 41712 

CONSENT ORDER

This order concerns violations by American Airlines, Inc., (American) 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 American to cease and desist from 

future similar violations and assesses the carrier $20,000 in civil penalties.

Applicable Law

On April 25, 2011, the Department issued a set of rules designed to enhance protections 

for air travel consumers that, among other things, required airlines to comply with the 

Department’s full-fare advertising rule as written. The Department’s revised full-fare 

advertising rule, 14 CFR 399.84(a), which became effective on January 26, 2012, 

prohibits any advertising or solicitation for passenger air transportation, an air tour, or an 

air tour component that does not state the entire price to be paid by the consumer. The 

full-fare advertising rule mandates that the price advertised for passenger air 

transportation include all government-imposed taxes and fees and all mandatory airlineand ticket agent-imposed fees. Violations of 14 CFR 399.84 constitute unfair and 

deceptive practices in violation of 49 U.S.C. § 41712. To assist in applying the new fullfare rule, on May 17, 2012, the Office of Aviation Enforcement and Proceedings 
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(Enforcement Office) issued guidance on the use of the term “free” in air fare 

advertisements.1 

In relevant part, the May 2012 guidance states that a fare may not be advertised as “free” 

unless it is truly free of all government-imposed taxes and fees collected by the carrier, as 

well as any mandatory carrier-imposed charges. The guidance specifically addressed the 

issue of how carriers may advertise fares where the consumer pays only taxes and 

government fees. Such fares are not truly “free” to the consumer, even though they are 

free of carrier charges. The Enforcement Office noted that carriers could advertise a fare 

as “free of carrier charges,” or “without carrier charges,” provided that taxes and 

government fees are properly disclosed, and there are, in fact, no carrier charges. 

By emphasizing the phrase “free of carrier charges,” the Enforcement Office intended to 

convey that the word “free” (either standing alone or with qualifiers such as footnotes or 

asterisks) did not adequately convey to consumers that a fare was not truly “free.” In 

contrast, an advertisement stating that a fare is “free of carrier charges” does prominently 

convey this message. If the advertisement states that a fare is “free of carrier charges,” 

then the nature and amount of the taxes and fees to be paid may be disclosed in the body 

of the advertisement through an asterisk next to the phrase and text elsewhere in the 

advertisement as described in the September 2003 guidance (see footnote 1). 

The Enforcement Office views any failure to adhere to the May 2012 guidance with 

respect to the use of the term “free” in advertisements to constitute a violation of section 

399.84 and an unfair and deceptive trade practice and an unfair method of competition in 

violation of 49 U.S.C. 41712. 

Facts

In January and February 2013, American conducted an advertising campaign to promote 

its service to ski resort destinations. On February 7, 2013, American conducted an email 

ad campaign that included a link to an advertisement with a headline stating, “Our 

biggest ski sale of the season. Save hundreds on flight + ski resort packages, plus kids 

can fly free!*” In fine print at the bottom of the page, American described the terms and 

conditions applicable to the packages. In that fine print, American disclosed that the fare 

 1 In a September 4, 2003, notice, “Disclosure of Additional Fares, Charges, and Restrictions on Air Fares in 

Advertisements, Including ‘Free’ Airfares,” published when carriers were still permitted to break out

certain taxes and fees from advertised fares, the Enforcement Office also provided guidance regarding 

advertising “free” fares. The notice stated, in relevant part, that “the existence of conditions related to 

‘free’ tickets should be noted prominently and proximately to the offer of a free ticket, at a minimum 

through the use of an asterisk or other symbol that directs the reader’s attention to the information 

explaining the conditions in easily readable print elsewhere in the advertisement.” At that time, since most 

airfare advertisements did not include taxes and government-imposed fees in the fare, the nature and 

amount of those charges was permitted to be disclosed along with other fare restrictions by an asterisk next 

to the fare that referred to text elsewhere in the advertisement. However, in the context of the new full-fare 

rule, which requires that taxes and fees be included in advertised fares, it would be unfair and deceptive not 

to prominently disclose that a “free” fare is only free of carrier charges if that is the case. 
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was “without carrier charges,” and described the taxes and fees that the consumer would 

have to pay for a child to travel. 

In a second advertisement sent to its AAVacations email subscribers, American included 

a banner headline stating “Ski trips up to $450 off,” with the words “even cooler: kids fly 

free!(1)” In smaller font, a footnote in the advertisement stated, “without carrier charges; 

conditions apply.” In fine print at the bottom of the page, American described the terms 

and conditions applicable to the packages. In that fine print, American disclosed that the 

fare was “without carrier charges,” and described the taxes and fees that the consumer 

would have to pay for a child’s airfare. 

These two advertisements failed to comply with the May 2012 guidance and full-fare rule 

because they failed to adequately convey that the fare was not truly free. Specifically, the 

body of each advertisement failed to state that the fare was only free of carrier charges. 

In a third advertisement issued through its NetSAAver weekly email, American stated: 

“It’s the black diamond of ski sales: Save hundreds plus learn how kids can fly free with 

a ski package(1)!” The footnote in this advertisement stated that “conditions apply,” 

directed the consumer to American’s web site for details, and provided a link. This 

advertisement failed to properly disclose, or even mention, that to obtain the ostensibly 

“free” airfare, a consumer had to pay taxes and fees.

By failing to adequately convey that its “Kids Fly Free” fares were not truly “free,” 

American failed to state the entire price to be paid by the consumer to the air carrier as 

required by 14 CFR 399.84(a). By violating section 399.84(a), American also committed 

an unfair and deceptive practice in violation of 49 U.S.C. § 41712. 

Mitigation

In mitigation, American states that only a total of 15 “Kids Fly Free” travel packages 

were purchased, and neither it nor the Department can correlate any of those purchases to 

the three particular advertisements that are the subject of this consent order. American 

further states that the maximum of potential taxes and government fees associated with 

each of the 15 travel packages purchased is less than $50. Given the lack of evidence of 

consumer reliance on the allegedly improper advertisements at issue, and the minimal 

amount of taxes involved, American’s position is that enforcement action is unwarranted.

Additionally, American points out that the May 17, 2012, Department-issued guidance 

relating to “free” fare advertising did not expressly provide that carriers must state “free 

of carrier charges” or “without carrier charges” in any specific place in the advertisement 

with any minimum level of prominence. According to the carrier, it is only in this 

Consent Order, issued more than a year after the May 17, 2012, Guidance, that the 

Department has stated what it meant to convey in its May 17, 2012, guidance document 

where it states that the Enforcement Office “intended to convey that the word ‘free’

(either standing alone or with qualifiers such as footnotes or asterisks) did not adequately 

convey to consumers that a fare was not truly ‘free’.” For the first time, American 

argues, the DOT is saying in this Consent Order that only disclosure that free means free 
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of carrier charges in the body of the ad will satisfy the DOT 2012 Guidance. See 

Consent Order, footnote 1, and also page 3.

It is American’s view that, if as a result of the January 2012 effective date of 14 CFR 

399.84, followed by the issuance of the 2012 Guidance the Department stated that the 

reference to “free of carrier charges” or similar phrases was required in the body of any 

solicitation and not in the detailed terms of the offer, even if made prominent by use of an 

asterisk, then the industry would have been on notice of the Department’s position and 

taken steps to comply in future promotions. According to American, fundamental 

considerations of fairness and due process are not being observed when the Department 

has to restate in a consent order what its original intent was when issuing industry 

guidance and then applying its clarifying view of the rule on a retroactive basis in the 

context of individual carrier enforcement action.

American strongly believes that the first two advertisements noted above in fact meet the 

guidance material that the Department had made available to carriers as of the date the 

subject advertisements were published, and that the Department’s decision to impose a 

civil penalty in this case, based on criteria the Department has articulated for the first 

time only in this Consent Order itself, is not appropriate. As to the third advertisement, 

American believes that the link to the promotion website page where the details of the 

promotion where set out met the letter and spirit of the Department’s disclosure policy. 

American admits no violation of either 14 CFR 399.84 or 49 U.S.C. 41712. However, in 

the interests of settling this matter without engaging in protracted litigation, American 

has agreed to this compromise settlement. 

Decision

The Department takes compliance with the consumer protection provisions of Federal 

aviation statutes and regulations very seriously. The Enforcement Office has carefully 

considered the information provided by American but continues to believe that 

enforcement action is warranted. Notwithstanding American’s quibbling about the 

clarity of the Enforcement Office’s 2012 guidance, the carrier boldly and prominently 

advertised fares as “free” when they were not, a clear violation of section 399.84(a) and 

section 41712. The Enforcement Office and American have reached a settlement of this 

matter in order to avoid litigation. American consents to the issuance of an order to cease 

and desist from future similar violations of 49 U.S.C. § 41712 and 14 CFR 399.84(a) and 

to the assessment of $20,000 in compromise of potential 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 serves the public interest. It represents a strong deterrent 

to future noncompliance with the Department’s advertising requirements.

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

ACCORDINGLY,
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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 American Airlines, Inc., violated 14 CFR 399.84(a) by 

advertising a price for air transportation without stating the entire price to be

paid by the consumer to the air carrier;

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

above, American Airlines, Inc., engaged in an unfair and deceptive practice 

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

4. We order American Airlines, Inc., and its successors and assignees to cease 

and desist from future similar violations of 49 U.S.C. § 41712 and 14 CFR 

399.84(a). Failure to comply with this cease and desist provision shall 

subject American Airlines, Inc., and its successors and assignees to further 

enforcement action; 

5. We assess American Airlines, Inc., $20,000 in lieu of civil penalties that 

might otherwise be assessed for the violations described in ordering 

paragraphs 2 and 3, above. Of this total penalty amount, $10,000 shall be 

due and payable within thirty (30) days of the date of the issuance of this 

order. The remaining portion of the civil penalty amount, $10,000, shall 

become due and payable immediately if, within one year of the date of 

issuance of this order, American Airlines, Inc., violates this order’s cease and 

desist provisions or fails to comply with the order’s payment provisions, in 

which case American Airlines, Inc., may be subject to additional enforcement 

action for violation of this order; and

6. Payment shall be made through Pay.gov to the account of the U.S. Treasury 

in accordance with the instructions contained in the Attachment to this order. 

Failure to pay any portion of the penalty as ordered shall subject American 

Airlines, Inc., to the assessment of interest, penalty, and collection charges 

under the Debt Collection Act.
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This order will become a final order of the Department ten days after its service date 

unless a timely petition for review is filed or the Department takes review on its own 

initiative.

BY:

SAMUEL PODBERESKY

Assistant General Counsel for

Aviation Enforcement and

 Proceedings

An electronic version of this document is available at 

www.regulations.gov