Order 2011

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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 Second day of June , 2011

Continental Airlines, Inc. Docket OST 2011

- 0003

Served June 2

, 2011

Violations of 49 U.S.C. § 41712 an d

14 CFR 399.84

CONSENT ORDER

This consent order concerns violations by Continen tal Airlines, Inc.

, (Continental) of the

full

- fare advertising requirements specified in 14 CFR 399.84 and the statutory prohibition against unfair and deceptive practices, 49 U.S.C. § 41712. This order directs

Continental to cease and desist from future violations of section 399.84 and section 41712, and assesses the carrier a compromise civil penalty of $ 1 20,000

.

Applicable Law

As an air carrier, Continental is subject to the advertising requirements of Part 399 of the Department’s rules. To ensure there is no unfair or deceptive practice in the purchase of air transportation and consumers are given accurate and complete fare information on which to base their airline travel plans, 14 CFR 399.84 requires that advertisements specifying airfares state the full price to be paid by the consumer. Under long

- standing enforcement case p recedent, 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 the base fare in advertisements, so long as such taxes and fees are levied by a government entity, and 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 existence and amounts are clearly indicated at the first point in the advertisement where a fare is2

presented. 1 Thus, for example, fare advertisements that 1) fail to identify the existence and amount of separate additional taxes and fees, 2) include only general statements regarding the existence of such taxes or fees, or 3) separately state carrier

- imposed fees, such as fuel surcharges, do not comply with section 399.84 or the Department’s enforcement case precedent. Violations of section 399.84 constitute unfair and deceptive practices in violation of 49 U.S.C. § 41712. 2

In print advertisements , an asterisk or other symbol placed proximate to the advertised fare may refer the reader to the bottom of the advertisement where the nature and amount of the fees that may be stated separately are shown. In Internet advertising displays, taxes

and fees that are permitted to 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 viewer to the bottom of the screen, to a pop up

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

Facts and Conclusions

A recent review of Continental ’s website by the Office of Aviation Enforcement and Proceedings (Enforcem ent Office) disc losed instances where Continental failed to comply with the Department’s full

- fare advertising rule with respect to fuel surcharges

for the “nearest airports” feature on its website

. As an example, a consumer conducting a

search for round

- trip airfare from San Jose, California, to San Salvador, El Salvador, was taken to a landing page titled “Select Departing Flight,” showing flights ope rating on that

route

. On the landing page above the list of avai lable flights, the consumer was given the option for fares from “nearby airports” from $298 , excluding taxes and fees

. Upon selecting the “ nearby airports ” option, the consumer was taken to another landing page listing flights and corresponding fares, whe re a flight departing from San Francisco was listed for $298 , excluding taxes and fees

. If the consumer selected that flight, he or she

was taken to a third page, where the lowest fare for that flight was now listed as $538,

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, which is e ffective October 24, 2011, airlines and ticket agents must include all government taxes and fees in every advertised fare. The Department’s long

- standing prohibition on omitting carrier

- or agent

- imposed charges, such as fuel surcharges or convenience fee s, from advertised

fares remains in effect.

2 See, e.g., Air Jamaica, Ltd., Violations of 49 U.S.C. § 41712 and 14 CFR 399.84 , Order 2008

- 12

- 25 (December 30, 2008).

3 For example, a carrier or ticket agent could advertise a flight in the following ma nner: “$260 +

Taxes and Fees ” with the phrase “Taxes and Fees” set off as a hyperlink that takes the viewer directly to

th e bottom of the screen or to 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, Surcharges that May be Listed Separately in Ad vertisements,” 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 Practices in the Marketing of Airfares to th e Public Using the Internet,” dated January 18, 2001, available at: http:airconsumer.ost.dot.gov/rules/guidance.htm.3

excluding taxes and fees, rath er than $298. This significant difference was due to Continental having excluded so

- called “fuel surcharges” of $240 from the fare of $298 that it initially advertised. During the time period when the fuel surcharges were omitted

from the initial fare ad vertised through Continental’s “nearby airports” option, a significant number of consumers reviewed the option and purchased their airfare through the option.

By failing to include fuel surcharges in the advertised fare where it was first presented

Continental violated the full

- fare advertising requirements specified in 14 CFR 399.84 and the statutory prohibition against unfair and deceptive practices, 49 U.S.C. § 41712.

Mitigation

In mitigation, Continental states that it is fully committed to compliance with the Department’s full

- fare advertising requirements and the deficiencies in the “nearby airports” feature of its website were unintentional and inadvertent technology failures and were promptly and fully corrected. Although these failures existed on Continental’s website involving this “nearby airports” feature, Continental states that o ther booking paths available on the website i nclude d the fuel surcharge in the advertised amount of the

fare. Continental further states that its website a lso advises the consumer in numerous locations throughout the booking path that additional taxes and fees , including fuel surcharges, may apply , and certain booking paths may advise a consumer up to seven different times of the potential for additional tax es and fees to be paid by the consumer, and all such notices are given in advance of the consumer making a purchase. According to Continental, a ll of these facts demonstrate Continental’s commitment to full compliance and its website design has been based on disclosures that fulfill the Department’s full

- fare advertising rule.

Decision

The Enforcement Office has carefully considered the inf ormation provided by

Continental and continues to believe that enforcement action is warranted. The Department views compliance with the Federal aviation statutes and Department regulations and orders very seriously. The En forcement Office and Continental have reached a settlement of this matter in order to avoid litigation. Without admitting or denying the violati ons described above, Continental consents to the issuance of this order to cease and desist from future violation of 49 U.S.C. § 41712 and 14 C FR 399 .84, and to the assessment of $ 120,000 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 Depart ment’s advertising requirements by Continental and other sellers of air transportation.

This order is issued under the authority in 49 CFR 1.5 7a and 14 CFR 385.15.4

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 Continental Airlines, Inc., violated 14 CFR 399.84 by advertising in a

manner th at failed to include the fuel surcharge in the advertised fare ;

3. We find that

, by engaging in the conduct described i n paragraph 2 above, Continental Airlines, Inc., engaged in unfair and deceptive trade practices and unfair methods of competition in viola tion of 49 U.S.C. § 41712;

4. We order Continental Airlines, Inc., and all other entities owned or controlled by, or

under common owners hip and control with Continental Airlines, Inc. , their successors, affiliates, and assigns, to cease and desist from furth er similar viol ations of 49 U.S.C. § 41712 and 14 CFR 399.84;

5. Continental Airlines, Inc., is assessed $120,000 in compromise of civil penalties that might otherwise be assessed for the violations described in or dering paragraphs 2 and

3 above

. Of this total am ount, $60 ,000 shall be due and payable within 30 days of the

date of issuance of this consent order. The remaining $6 0,000 shall become due and payable immediate ly only if Continental Airlines, Inc., violates this order’s cease and

desis t or payment provisions during the 12 months following the service date of this order, and Continental Airlines, Inc., also may be subject to further enforcement action for failure to comply with this order; and

6. We order Continental Airlines, Inc.

, to pay the compromise civil penalty assessed in ordering paragraph 6 , above, by wire transfer through the Federal Reserve Communications System, commonly known as "Fed Wire," to the account of the U.S. Treasury. The wire transfer shall be executed in acco rdance with the instructions contained in the Attachment to this order. Failure to pay the compromise penalty

ass essment as ordered will subject Continental Airlines, Inc

., to an assessment of interest, penalty, and collection charges under the Debt Collec tion Act, and to possible enforcement action for failure to comply with this order.5

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