O rder 2013

- 10

- 10

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation On the Twenty

- Second day of October

, 2013

Frosch International Travel , Inc. Doc ket OST 2013

- 0004

Served: October 22, 2013 Violations of 49 U.S.C. § 41 712 and

14 CFR Part 257

C ONSENT O RDER

This consent order concerns failures by Frosch International Travel , Inc. (“Frosch”) to
disclose code

- share arrangements during telephone conversations. Disclosure is required by 49 U.S.C. § 41712(c) and 14 CFR Part 257 during airline reservation calls . These

failures t o fully and time ly disclose also violat e d 49 U.S.C. § 41712(a), a statutory prohibition against unfair and deceptive pract ices

. This order directs Frosch to cease and

desist from future violations of Part 257 and section 41712

, and assesses $ 65 ,000 in civil penalties.

Applicable Law

Frosch is a ticket agent 1 and is therefore subject to the code

- share disclosure requirement s found in 49 U.S.C. § 41712(c) and 14 CFR 257. 5(b)

. Under section 41712(c), any “ ticket agent, air carrier, foreign air carrier, or other person offering to sell tickets for air transportation on a flight of an air carrier ” is required to disclose “ whethe r verbally in oral communicatio n or in writing in written or electronic communication, prior to the purchase of a ticket [,] the name of the air carrier providing the air transportation; and if the flight has more than one segment, the name of each air carr ier providing the air transportation for each such flight segment. ” Failure to disclose th e required information is an unfair or deceptive practice in violation of section 41712

. Section 257.4 states that the holding out or sale of scheduled passenger air transportation involving a code

- sharing arrangement is an unfair and deceptive trade practice in

1 A “ticket agent” is “a person (except an air carrier, a foreign air carrier, or an employee of an air carrier or foreign air carrier ) that as a principal or agent sells, offers for sale, negotiates for, or holds itself out as selling, providing, or arranging for air transportation.” 49 U.S.C. § 40102(a)(45).2

violation of 49 U.S.C. § 41712

, unless, in conjunction with that holding out or sale,

carriers and agents follow certain requirements, including those of 14 CF R 257.5(b). With regard to oral communications concerning a flight that is part of a code

- sharing arrangement, section 257.5(b) states that a ticket agent or carrier must disclose to prospective consumers before they book the flight the existence of the c ode

- share arrangement, the corporate name of the transporting carrier, and any other name under which the flight is held out to the public. Violations of section 257.5(b) constitute unfair and deceptive trade practices and unfair methods of competition i n violation of 49 U.S.C. § 41712.

Facts and Conclusion s

An investigation by the Office of Aviation Enforcement and Proceedings (Enforcement Office) revealed a lack of full compliance by Frosch with section 257.5 (b) of the Department’s code

- share rule and 49 U.S.C. § 41712 (c)

. For a period of time during January 20 13

, Enforcement Office staff made a number of telephone calls to Frosch as potential purchasers and inquired about booking flight s

. In almost all of the calls, Frosch reservation agents failed to disclose both the corporate and the marketing name s of the transporting carrier

, as required by the rule . In one call, the agent disclosed both the corporate and the marketing name s of the carrier, but only after being prompted by the

Enforcement Offic e staff caller. During three calls , Frosch agents disclosed either the corporate or the marketing name of the carrier, but again only after being prompted by

the caller.

The Enforcement Office considers section 257.5(b) and 49 U.S.C. § 41712(c) to requ ire

that oral code

- share disclosure s be provided whenever an agent first mentions a code

share flight in response to a specific consumer inquiry

, including inquiries that may involve only a request for information

. I n t he test calls to Frosch

, the agent s failed to timely inform the caller s of the identity of the airline that would actually operate the aircraft on which the consumer would be flying if that flight were booked

, despite the callers identifying the code

- share flight as being of interest to them

.

Mitigation

In mitigation, Frosch states that it considers compliance with regulatory requirements

essential and strives to meet or exceed requirements in every instance . Upon learning of

the Enforcement Office’s concerns in this matter , Frosch sta tes that it immediatel y notified all of its agents of th ose concerns and provided specific guidance (supplementing previous guidance) on when and how code

- share disclosures should be made . Frosch

also states that it arranged for managers in each of its of fices to counsel agents directly to ensure compliance and instituted an internal test

- call program to verify the results.

Frosch is confident the above steps have eliminated any problem.

Frosch observes that 49 U.S.C. § 41712 (c) requires code

- share d isclosure “prior to the purchase of a ticket.” Fros c h also notes that 14 CFR 257 .5(b) states that code

- share disclosure must take place “prior to booking transportation.” Frosch believes that3

Enforcement Office guidance on the timing of code

- share disclo sure did not adequately clarify that code

- share disclosure should take place during the initial information

gathering stage, at the first mention of a code

- share flight. Frosch believes that, particularly in the absence of more explicit guidance from the Enforcement Office, its

agents complied substantially with the code

- share rule.

Decision

The Enforcement Office view s seriously the failure of Frosch to properly disclose code

shar ing arrangements as required by 49 U.S.C. 41712(c) and 14 CFR 257. 5(b).

A ccordingly, after carefully considering all of the facts in this case, including those set forth above, the Enforcement Office believes that enforcement action is warranted. In order to avoid litigation, and without admitting or denying that any violation occurred,

Frosch agrees to the issuance of this order

, to cease and desist from future similar

violations of 49 U. S.C. § 41712 and 14 CFR 257.5(b)

, and to the assessment of $ 65 ,000 in compromise of potential civil penalties that otherwise might be imposed pursuant to
49 U.S.C. § 46301 . We believe that this compromise assessment is appropriate in view of the nature and extent of the violations in question

, serves the public interest , and provides a strong deterrent to non

- compliance with the statute and th e Department’s

code

- share disclosure rule

.

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. W e find that by failing to properly disclose code

- sharing arrangements as required by 49 U.S.C. § 41712(c ) and 14 CFR 257.5(b), Frosch International Travel , Inc.

, violat ed

14 CFR 257.5(b) and engaged in an unfair and deceptive practice in violation of

49 U. S.C. § 41712 ;

3. We order Frosch International Travel

, Inc., all other entities owned or controlled by or under common ownership with Frosch International Travel

, Inc., and its successors and assignees

, to cease and desist from further violations of 49 U.S.C . § 41712 (c) and

14 CFR 257 .5(b) ;

4. We assess Frosch International Travel , Inc.

, $ 65 ,000 in compromise of civil penalties that might otherwise be assessed for the violations found in ordering paragraph

2 above

. O f this total penalty amount, $ 32,5 00 sha ll be due and payable within thirty ( 30 ) days after the service date o f this order. The remaining $ 32,5 00 shall be paid if Frosch International Travel, Inc.

, violates this order’s cease and desist provisions during4

the twelve ( 12 ) months following the ser vice date of this order, and Frosch International Travel, Inc.

, may be subject to further enforcement action; and

5. P ayment 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 Frosch International Travel , Inc.

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

.

This order will become a final order of the De partment ten ( 10 ) days after its service date unless a timely petition for review is filed or the Department takes review on its own

motion.

B Y:

SAMUEL PODBERESKY

Assistant General Counsel for

Aviation Enforcement and Proceedings

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