O rder 2013

- 8

- 26

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation On the Twenty

- Ninth day of August

, 2013

STA Travel, Inc. Docket OST 2013

- 0004

Served: August 29, 2013 Violations of 49 U.S.C. § 41 712 and

14 CFR Part 257

C ONSENT O RDER

This consent order concerns violations by STA Travel , Inc. (“ STA ”)

, when it failed to

disclose code

- share arrangements as required by 49 U.S.C. § 41712(c) and 14 CFR Part

257 during telephone airline reservation calls . These failures also constitute separate and distinct violations of 49 U.S.C. § 41712(a), the statutory prohibition against unfair and deceptive practices

. The order directs STA to cease and desist from future violat ions of

Part 257 and section 41712

, and assesses $ 40,000 in civil penalties.

Applicable Law

STA is a ticket agent 1 and is therefore subject to the detailed code

- share disclosure requirements 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 “ whether 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 carrier 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 of the code

- share disclosure rule 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 violation of 49 U.S.C. § 41712

, unless, in conjunction

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 arrang ing for air transportation.” 49 U.S.C. § 40102(a)(45).2

with that holding out or sale, carriers and agents follow certain requirements, including

those of 14 CFR 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

code

- share arrangement, t he 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 in

violation of 49 U.S.C. § 41712.

Facts and Conclusion

An investigation by the Office of Aviation Enforcement and Proceedings (Enforcement Office) revealed a lack of compliance by STA 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 and February of 20 13

, Enforcement Office staff made a number of telephone calls to STA as potential purchasers and inquired about booking a flight. During the se calls, t he STA reservations agents answering the calls failed to make the required disclosure regarding

code

- share arrangements for the flights in question. Specifically, when discussing flights marketed by one carrier but operated by another with the callers

, STA ’s reservation

agents only identified the mark eting carrier and did not identify the corporate name of the carrier operating the flight or any other name under which the flight was operated, even when prompted by the caller.

The Department interprets Section 257.5(b) and 49 U.S.C. § 41712(c) to req uire that oral

code

- share disclosures 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. The telephone calls indicated that STA generally failed to inform consumers booking flights involving code

- share arrangements of the identity of the airline that would actually operate the aircraft on which the consumer would be flying.

Mitigation

In mitigation, STA Travel states that it ta kes seriously its responsibility to comply with DOT regulations. STA travel does not believe that it violated any code

- share disclosure

mandates because no bookings were made nor were any reservations held during the telephone surveys conducted by DOT Enf orcement staff. Nonetheless, STA Travel is willing to modify its practices in a way that best serves its customers and minimizes any

confusion about code

- share flights. STA Travel has implemented a more stringent code

share training methodology to ensure a ll necessary disclosures are provided to customers. STA Travel is confident that the new training methodology will help avoid any allegations of code

- share violations going forward.3

Decision

We view seriously the failure of STA to disclose code

- shar ing arrangements as required by 49 U.S.C. § 41712 (c) and 14 CFR 257. 5(b). Accordingly, after carefully considering all of the facts in this case, including those set forth above, the Enforcement Office

believes that enforcement ac tion is warranted. In order to avoid litigation, STA 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 $ 40,000 in compromise of potential civi l 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 deterren t to non

- compliance with the statute and the 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

thi s order as being in the public interest;

2. We find that by failing to disclose code

- sharing arrangements as prescribed in

49 U.S.C. § 41712(c) and 14 CFR 257.5(b), S TA Travel, Inc., violat ed 14 CFR 257.5(b) and engaged in an unfair and deceptive trade pract ice in violation of 49 U.S.C. § 41712 ;

3. We order STA Travel, Inc. , and all other entities owned or controlled by or under common ownership with STA Travel, Inc. , 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 STA Travel, Inc., $ 40,000 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, $5 ,000 shall be due and payabl e within thirty (30) days of the date o f the issuance of this order; $5 ,000 shall be due and payable within sixty (60) days of the date

o f issuance of this order; and $1 0,000 shall be due and payable within ninety (90) days of the

date of issuance of this order. The remaining portion of the civ il penalty amount, $2 0,000, shall become due and payable immediately if, within one year of the date of issuance of this
order, STA Travel, Inc., violates this order’s cease and desist provisions or fails to comply

w ith the order’s payment provisions, in which case STA Travel, Inc.

, may be subject to
additional enforcement action for violation of this order; 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 STA Travel, Inc., to the assessment of interest, penalty, and collection charges under the Debt Collection Act

.4

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.

B Y:

SAMUEL PODBERESKY

Assistant General Counsel for

Aviation Enforcement and Proceedings

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