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 30th day of June

, 2011

Globester, LLC Docket OST 2011

- 0003

Served June 30, 2011
Violations of 49 U.S.C. § 41712 an d
14 CFR Parts 399 and 257

CONSENT ORDER

This consent order concerns Internet advertisements by Globester, LLC ( Globester )

, that
violate d the Department’s full

- fare advertising requirements specified in 14 CFR Part 399, the Department’s code

- share disclosure rule, 14 CFR Part 257, and the statutory prohibition against unfair and deceptive practices, 49 U.S.C. § 41712 . It directs
Globester to cease and desist from fut ure violations of Part s 399 and 257 and s ection 41712, and assesses Globester a compromise civil penalty of $ 4 0 ,000.

Applicable Law

Globester is a ticket agent 1

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). that sells air transportation and is therefore subject it to the advertising requirements of Part 399 of the Department’s rules and the prohibitions of2

49 U.S.C. § 41712 on engaging in unfair and deceptive practices and unfair methods of competition . Pursuant to 14 CFR 399.84, advertisements specifying airfares must state the full price to be paid by the consumer. Under long

- s tanding 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 the base fare in advertisements, so long as such tax es 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 adver tisement where a fare is presented so that consumers can immediately determine the full fare to be paid. 2

In Internet advertising displays, taxes and fees that may be properly 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 place on a separate screen, where the nature and amount of taxes and fees are prominently and immediately displayed. 3 Thus, 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, 2) include only general statements regarding the existence of such taxes and fees, or 3) separately state
ad valorem taxes or non

- government imposed fees, such as a tick et agent’s “se rvice fee ,” do not comply with section 399.84 or the Department’s enforcement case precedent. 4

Additionally, as detailed in 49 CFR Part 1510, there are specific disclosure requirements pertaining to the September 11 th Security Fee of $2.50 per enplanement on passengers of domestic and foreign carriers in air transportation originating at airports in the United
States. Pursuant to se ction 1510.7, air carriers and foreign air carriers are specifically required to identify this fee as the “September 11 th Security Fee” in all advertisements and solicitations for air transportation where it is not included in the advertised base fare.
Th e Department considers the failure of a carrier or ticket agent to identify the September Violations of section 399.84 constitute unfair and deceptive practices in violation of
section 41712.

2 On April 20, 2011, the Department issued a rule changing its enforce ment 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 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 fees, from advertised
fares remains in effect.

3 For example, 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 place on a separate screen, where the nature and amoun t 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 A dditional 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, a vailable at: http:airconsumer.ost.dot.gov/rules/guidance.htm.

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

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- 25 (December 30, 2008).3

11 th Security Fee as required by the rule to constitute a separate and distinct unfair and deceptive practice in violation of 49 U.S.C. § 41712. 5

Finally , Globester i s also subject to the Department’s code

- share disclosure requirements

. Section 257.4 of the Department’s code

- share disclosure rule states that the holding out or sale of scheduled passenger air transportation involving a code

- sharing arrangement is

an u nfair and deceptive trade practice in violation of 49 U.S.C. § 41712 unless, in conjunction with that holding out or sale, a ticket agent follows certain notice requirements, including those of 14 CFR 257.5(d). The specific terms of section 257.5(d) requir e that print advertisements, including those published on the Internet, “prominently disclose that the advertised service may involve travel on another carrier,” “clearly indicate the nature of the service in reasonably sized type,” and “identify all poten tial transporting carriers... by corporate name and by any other name under which that service is held out to the public.”

Facts and Conclusions

An investigation by the Office of Aviation Enforcement and Proceedings (Enforcement Office) revealed a significant lack of compliance by Globester with the Department’s
full

- fare advertising rule. From at least August of 2010 through the early part of 201 1

, Globester failed to properly disclose to consumers that additional taxes and fees applied
to fares advertised on its Internet website

, www.globester.com

, and it failed to include the 7.5 percent Federal excise tax, as well as its own service fee, i n its advertised fares.

More specifically, Globester advertised a number of fares on its homepage but failed to notify consumers that additional taxes and fees would be added to the advertised fare s

. F ollowing a search of a requested itinerary, Globester advertised fares at the top if its flight itinerary page via a fare matrix

. While an aster isk was placed next to the fares contained in the fare matrix, and the language “(*) Fare are exclusive of taxes and fees” appeared at the bottom of the fare matrix , the quoted language was not a hyperlink and consumers had no way of knowing either the amount or the nature of the taxes and fees that would be applied to the advertised fares

.
Globester also advertised, on its flight itinerary page, a list of fares that corresponded
with the fares it listed in its fare matrix. Next to the fares was a “+ Taxes & Fees” hyperlink , which displayed a pop

- up in which the amount of the taxes and fees and the
full fare was disclosed

. The pop

- up , however, did not display the nature of the taxes and
fees that were excluded from the advertised fare. Globester’s failure to disclose the nature of the advertised fares on its flight itinerary page consequently resulted in
Globester failing to inform consumers that it excluded the September 11 th Security Fee from the fares advertised on the flight itinerary page , as required by 49 CFR 1510.7

, which constitutes a separate violation of 49 U.S.C. § 41712. Finally, the fares that
Globester adver tised on both the homepage of www.globester.com and on the website’s

5 See , e.g. , A Better Fare, LLC, Violations of 49 U.S.C. § 41712 and 14 CFR 399.84 , Order 2003

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flight itinerary pages excluded Globester’s service fee and the 7.5 percent Federal excise

t ax, which are taxes and fees that may not be broken

- out from the base fare.

Our investigation also revealed a significant lack of compliance by Globester with section
257.5 of the Department’s code

- share disclosure rule . During at least the latter hal f of 2010, Globester failed to properly disclose the existence of code

- sharing arrangements when advertising code

- share flights operated on behalf of a major air carrier by a regional
air carrier on its Internet website

, www.globester.com . Specifically, it did not display the corporate names of the transporting carriers and any other names under which those flights were held out to the public on its flight itinerary pages. Globester’s failure to properly disclose the existence of code

- sharing arrangements and the names of the transporting carriers resulted in consumers having no way of knowing the identity of the
airline that would actually operate the aircraft on which the y would be flying.

Mitigation

In mitigation, Globester states, with respect to the Department’s advertising requirements, that it always showed the full fare on its p urchase page before a customer made a purchase. Globester states that it never intended to mislead its customer s and tha t

a ny omission of taxes and fees from the base fare was not intentional . Globester states
that as soon as its advertising deficiencies were identified it corrected its website.

With respect to the Department’s code

- share disclosure regulations, Globester states that
it relied on its Global Distribution System (GDS) to provide the flight information on its website, www.globester.com

. Globester states that because its GDS did not provide the
code

- share information, it w as unable to display the information on its website.
Globester states that in cases when the operating carrier was a wholly

- owned subsidiary of the marketing carrier, its GDS did not provide the name for the operating carrier,
which is the reason that i t did not display the name of the operating carrier in such cases. Globester states that it displayed the required data on its website a s soon as its GDS provide d the code

- sh are information

.

Decision

The Enforcement Office has carefully considered the information pro vided by Globester and continues to believe that enforcement action is warranted. The Department views compliance with the Federal aviation statutes a nd regulations very seriously. The
Enforcement Office and Globester have reached a settlement of this matter in order to avoid litigation. Without admitting or denying the violations described above, Globester
consents to the issuance of this order to cease and desist from future violation s of 49 U.S.C. § 41712 and 14 CFR Part 399 and 257 and to the assessment of $ 4 0,000 in compromise of potential civil penalties otherwise due and payable pursuant to 49 U.S.C. § 46301.5

This compromise assessment is appropriate considering the nature and extent of the
violations described h erein 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 ab ove information, we approve this settlement and the provisions of this order as being in the public interest;

2. We find that Globester, LLC

, violated 14 CFR 399.84 by advertising fares that
failed to st ate the entire price to be paid;

3. We find that Globester, LLC

, violated 14 CFR 257.5(d) by failing to disclose
code

- sharing arrangements as required;

4. We find that by engaging in the conduct and violations described in ordering paragraphs 2 and 3 above and by failing to properly disclose the September 11 th security fee , Globester, LLC

, engaged in an unfair and deceptive trade practice and unfair method of competition in violation of 49 U.S.C. § 41712;

5. We order Globester, LLC

, and all other entities owned or controlled by, or under common ownership and control with Globester, LLC

, their successors, affiliates, and assigns, to cease and desist from further similar violations of 49 U.S.C. § 41712

, 14 CFR 399.84

, and 14 CFR 257.5 ;

6. We asses s Globester, LLC

, $ 4 0,000 in compromise of civil penalties that might
otherwise be assessed for the violations des cribed in ordering paragraphs 2

, 3 and 4, above . Of this total penalty amount, $2 0

, 0 00

, shall be due and payable as
follows: $ 2 ,000 shall be due and payable within 60 days of the date of issuance of this order; and six additional payments of $3,000 each shall be due and payable

on October 1, 2011, January 1, 201 2, April 1, 2012, July 1, 2012, October 1, 2012, and January 1, 201 3

. The remaining portion of the civil penalty amount, $20

, 0 00, shall become due and payable if, before January 15, 2013 , Globester, LLC, violates this order’s cease and desist provisions or fails to comply with this order’s payment provisions, in which case , Globester, LLC, may become subject
to additional enforcement action for violation of the order; and

7. P ayment s shall be made 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 Globester, LLC

, to the assessment of interest, penalty, and collection charges under the Debt Collection Act, and t o possible additional enforcement action for failure to comply with this order.6

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

mot ion.

BY:

ROSALIND A. KNAPP

Deputy General Counsel

(SEAL)

An electronic version of this document is available at

www.regulations.gov