Order 2012

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UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

O n the Twenty

- Third da y of January , 2012

Polskie Linie Lotnicze LOT S.A. Docket OST 2012

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Served January 23 , 2012

Violations of 49 U.S.C. § 41712 an d

14 CFR 399.84

CONSENT ORDER

This consent order concerns Internet advertisement s by Polskie Linie Lotnicze LOT S.A.

, (LOT) that violate the advertising requir ements specified in 14 CFR 399 .84

, as well as

49 U.S.C. § 41712, which prohibit s u nfair and deceptive practices and unfair methods of competition

. It directs LOT to cease and desist from fut ure violations of section 399 .84

and s ection 41712 and assesses the carrier a compromise civil penalty of $60,000

.

Applicable Law

As a foreign air carrier, LOT is subject to the advertising requirements of Part 399 of the Department’s rules. Pursuant to 14 CFR 399.84, carriers advertising airfares must state the full price to be paid by the consumer. Under long

- standing enforcement case precedent, the Department has allowed taxes and fees collected by carriers and ticket agents, such as passenger facility charges and departure taxes, to be stated separately from base fares in advertisements, so long as such taxes and fees are levied by a government entity, are not ad valorem in nature, i.e., not assessed as a percentage of the fare price, are collected on a per

- passenger basis, and their ex istence and amounts are clearly indicated at the first point in the advertisements where a fare is presented so that2

consumers can immediately determine the full fare to be paid. 1 Thus, for example, fare advertisements that 1) fail entirely to identify the existence and amount of separate additional taxes and fees at the first point at which a fare is displayed, or 2) include only general statements regarding the existence of such taxes and fees do not comply with section 399.84 or the Department’s enforcem ent case precedent. Violations of section

399.84 constitute an unfai r and deceptive practice and unfair method of competition in violation of 49 U.S.C. § 41712. 2

In Internet advertising displays, taxes and fees that properly may be stated separately from the advertised fare may be disclosed through a prominent link placed adjacent to the stated fare that notes that taxes and fees are extra and directly takes the vi ewer to the bottom of the screen, or to a pop

- up or a place on a separate screen, where the nature and amount of taxes and fees are prominently and immediately displayed. 3

Facts and Conclusions

For a period of time in the f all of 2011

, LOT displayed ad v ertisements on its website that did not provide any information on additional taxes and fees. Rather, once the consumer clicked on the advertised fare, he or she was taken to a landing page where sample routes and prices were displayed, as well as fine pr int on a separate screen reached only after scrolling to the bottom of the page

, which explained the nature and amounts of additional

taxes and fees. LOT ’ s failure to provide proper notice of taxes and fees that may legally

be stated s eparately from the fare violated 14 CFR 399.84 and 49 U.S.C. § 41712

.

Mitigation

In mitigation, LOT states that it always strives to fully comply with the Department’s

rules and that it placed fare advertisements on its web

- page in good faith and in the belief

1 On April 20, 2011, the Department issued a rule changing its enforcement policy with respect to section 399.84 to require that airlines and ticket agents comply with the rule as written. Under this new enforcement policy, wh i ch is effective January 26, 2012, airlines and ticket agents must include all government taxes and fees in every advertised fare. The Department’s long

- standing p rohibition on omitting carrier

- or agent

- imposed charges, such as fuel surcharges or convenien ce fees, from advertised

fares remains in effect.

2 See, e.g., US Airways, Inc ., Violations of 49 U.S.C. § 41712 and 14 CFR 399.84, Order 2 011

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- 2 (June 2,

2011 ); Delta Air Lines, Inc

, . Violations of 49 U.S.C. § 41712 and 14 CFR 399.84 Order 2010

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- 30 (Ma y 28, 2010);

3 For example, under current policies, a carrier or ticket agent could advertise a flight in the following

manner: “ $ 2 60 + Taxes and Fees” with the phrase “ T axes and F ees” set off as a hyperlink that takes the viewer directly to the bottom of the screen or to a pop

- up or a place on a separate screen, where the nature and amount of taxes and fees are prominently and immediately displayed. See Department notices entitled “Disclosure of Air Fare Variations: Web vs. Other Sources, Surch arges that May be Listed Separately in Advertisements,” dated November 4, 2004; “Disclosure of Additional Fees, Charges, and Restrictions on Air Fares in Advertisements, Including ‘Free’ Airfares,” dated September 4, 2003; and “Prohibition on Deceptive Pra ctices in the Marketing of Airfares to the Public Using the Internet,” d ated January 18, 2001, available at: http:airconsumer.ost.dot.gov/rules/guidance.htm

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tha t they were compliant with applicable regulations. Additionally, LOT asserts that it did

not intend to mislead customers and upon notification of the issue by the Department

, took immedi ate steps to modify its website as well as the related internal editing procedures and automation processes. LOT further states that it has fully cooperated with the Department with regard to this inquiry. Furthermore, LOT asserts that its efforts to ensure full compliance with the Department’s ru les and regulations will be supported by

the launch of a new and redesigned website in January 2012.

Decision

The Department views compliance with the Federal aviation statutes a nd regulations very seriously. The Enforcement Office has carefully considered the inf ormation pro vided by

LOT and continues to believe that en forcement action is warranted. The En forcement

Office and LOT have reached a settlement of this matter in order to avoid litigation. Without admitting or denying the violati ons desc ribed above, LOT consents to the

issuance of this order to cease and desist from future violation s of 49 U.S.C. § 41712 and

14 CFR 399 .84 and to the assessment of $60,000 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 serves the public interest. It represents a strong deterrent against future noncompliance with the Department’s advertising requirements.

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

ACCORDINGLY,

1. Based on the above information, we approve this settlement and the provisions of this order as being in the public interest;

2. We find that Polskie L inie Lotnicze LOT S.A. violated 14 CFR 399.84 by advertising

fares that failed to st ate the entire price to be paid;

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

Polskie Linie Lotnicze LOT S.A. engaged in an unfair and deceptive practice and

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

4. We order Polskie Linie Lotnicze LOT S.A.

, and all other entities owned or controlled by, or under common ownership and control with LOT and its suc cessors, affiliates, and assignees , to cease and desist from further similar violations of 14 CFR 399.84

and 49 U .S.C. § 41712. Failure to comply with this cease and desist provision shall subject LOT and its successors , affiliates, and assignees to possible furthe r enforcement action;

5. We asses s Polskie Linie Lotnicze LOT S.A. $60,000 in compromise of civil penalties that might otherwise be assessed for the violations described above. Of this total penalty amount, $30,000 shall be due and payable within 30 days of the date of4

issuance of this order. The remaining $30,000 shall become due a nd payable immediately if LOT 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 order’s

pay ment provisions ; and

6. We order Polskie Linie Lotnicze LOT S.A. to r emit the payme nt assessed in ordering paragraph 5 above by wire transfer through the Federal Reserve Communications System, commonly known as "Fed Wire," to t he account of th e U.S. Treasury in

accordance with the instructions contained in the a ttachment to this order. Failure to pay the penalty as order ed shall subject LOT to the assessment of interest, penalty, and collection charges under the Debt Collection Act, and to additional enforce ment 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

motion.

B Y:

ROSALIND A. KNAPP Deputy General Counsel

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