Order 2011-10-18

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

On the Twenty-Sixth day of October, 2011

LAN Airlines, S.A. Docket OST 2011-0003

Violations of 49 U.S.C. § 41712 and Served October 26, 2011

 14 CFR 399.84 

CONSENT ORDER

This consent order concerns violations by LAN Airlines, S.A., (LAN) a foreign air 

carrier, 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. It directs 

LAN to cease and desist from future violations of section 399.84 and section 41712 and 

assesses the carrier a compromise civil penalty of $50,000. 

Applicable Law

As a foreign air carrier, LAN 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 existence and amounts are 

clearly indicated at the first point in the advertisements where a fare is presented so that 

consumers can immediately determine the full fare to be paid.1 Thus, for example, fare 

 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 effective January 24, 2012, airlines and ticket agents must include all 
2

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 enforcement case precedent. Violations of section 

399.84 constitute unfair and deceptive practices 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. The link must directly take the viewer 

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 2011, LAN employed a program on its website that allowed 

consumers to search for flights by exact dates or by flexible dates. In responding to 

searches using either method, LAN provided air fare quotes, either through a fare listing 

or a fare matrix. The quotes, which represented the first time fares were presented to 

consumers, noted that the fares did not include taxes and fees, but LAN failed to disclose 

at that time the nature and amount of those taxes and fees in any of the acceptable ways 

described above. LAN’s failure to provide proper notice of taxes and fees that may

legally be stated separately from the fare violates 14 CFR 399.84 and 49 U.S.C. § 41712.

 Mitigation

In mitigation, LAN states that it is strongly committed to complying with all Department 

rules and regulations. LAN states that a format change to its website resulted in an 

unintentional change in the manner in which fare conditions were displayed. LAN 

asserts that it continues its long-standing dedication to the fair treatment of all its 

customers. According to LAN, its website was developed to provide customers and the 

public in general a transparent, user-friendly site with current information related to 

 

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 fees, from advertised 

fares remains in effect.

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

2011-3-5 (March 18, 2011). 

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

following manner: “$260 + Taxes and Fees” with the phrase “Taxes and Fees” 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, Surcharges 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 Practices in the Marketing of Airfares to the Public Using the Internet,” dated

January 18, 2001, available at: http:airconsumer.ost.dot.gov/rules/guidance.htm.
3

LAN, to offer support 24 hours a day, seven days a week, and to provide continuous 

access to LAN’s latest fares and promotions.

LAN further states that it cooperated fully with the Department during the investigation 

of this matter and took immediate action to correct the discrepancies. The carrier also 

asserts that it took additional steps (e.g, reviewed its website implementation processes, 

established additional internal audits by different company divisions, and reinforced its

yearly trainings to personnel) to ensure continued compliance with the Department’s 

rules, as well as other applicable regulations affecting advertising in the United States.

Decision

The Office of Aviation Enforcement and Proceedings (Enforcement Office) has carefully 

considered the information provided by LAN Airlines, S.A., but continues to believe that 

enforcement action is warranted. The Enforcement Office and LAN Airlines, S.A., have 

reached a settlement of this matter in order to avoid litigation. Without admitting or 

denying the violations described above, LAN Airlines, S.A., consents to the issuance of 

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

14 CFR 399.84 and to the assessment of $50,000 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 LAN Airlines, S.A., violated 14 CFR 399.84 by advertising fares that 

failed to state the entire price to be paid;

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

LAN Airlines, S.A., engaged in unfair and deceptive practices and unfair methods of 

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

4. We order LAN Airlines, S.A., and all other entities owned or controlled by, or under 

common ownership and control with LAN Airlines, S.A., their successors 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 LAN Airlines, S.A., and its successors and assignees to further enforcement 

action;
4

5. We assess LAN Airlines, S.A., $50,000 in compromise of civil penalties that might 

otherwise be assessed for the violations described above. Of this total penalty amount,

$25,000 shall be due and payable in two equal installments of $12,500. The first 

installment of $12,500 shall be due and payable within 15 days of the date of issuance 

of this order. The second installment of $12,500 shall be due and payable within 45 

days of the date of issuance of this order. The remaining $25,000 shall be due and 

payable immediately if LAN Airlines, S.A., violates this order’s cease and desist or 

payment provisions within one year of the issuance of this order; and

6. We order LAN Airlines, S.A., to remit the payments ordered in paragraph 5 above by 

wire transfer through the Federal Reserve Communications System, commonly 

known as “Fed Wire,” to the account of the U.S. Treasury in accordance with the 

instructions contained in the attachment to this order. Failure to pay the penalty as 

ordered shall subject LAN Airlines S.A., to the assessment of interest, penalty, and 

collection charges under the Debt Collection Act, and to additional enforcement 

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.

BY:

ROSALIND A. KNAPP

Deputy General Counsel

(SEAL)

An electronic version of this document is available at 

www.regulations.gov