O rder 2013

- 10

- 9

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation On the Twenty

- Second day of October

, 2013

Carlson Wagonlit Travel

, Inc. Docket OST 2013

- 0004

Served: October 22, 2013

Violations of 49 U.S.C. § 41 712 (a) and

14 CFR Part 257

C ONSENT O RDER

This consent order concerns violat ions by Carlson Wagonlit Travel

, Inc.

, (Carlson) when

it failed to disclose code

- share arrangem ents as required by 49 U.S.C. § 41712(c) and 14

CFR Part 257 du ring 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 Carlson to cease and desist from future

violations of Part 257 and section 41712

, and assesses $ 125 ,000 in civil penalties.

Applicable Law

Carlson 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)

. U nder 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 writ ten 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 fli ght 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 invol ving a code

- sharing arrangement is an unfair and deceptive trade practice in violation of section 41712

, unless, in conjunction with that

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, ne gotiates for, or holds itself out as selling, providing, or arranging for air transportation.” 49 U.S.C. § 40102(a)(45).2

holding out or sale, carriers and agents follow certain requirements, including those of

section 257.5(b). With regar d 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, the 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

section 41 712.

Facts and Conclusion

An investigation by the Office of Aviation Enforcement and Proceedings (Enforcement Office) revealed a lack of compliance by Carlson with section 257.5 (b) of the Department’s code

- share rule and section 41712 (c)

. For a period o f time during January and February of 20 13

, Enforcement Office staff made a number of telephone calls to

Carlson as potential purchasers and inquired about booking a flight. During these calls,

t he Carlson 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

, Carlson ’s reservation agents only identified the marketing carrier and did not identify the corporate name of the carrier operating the flight or any other name under which the flight is operated

.

Mitigation

In mitigation, Carlson states that it takes seriously its obligation to comply with the Department’s co nsumer protection rules and 49 U.S.C. § 41712. Carlson states that it believed all of its agents in the United States were aware of the requirements in section 41712(c) and 14 CFR 257.5(b) to disclose the name of the operating carrier and any trade name by which the operating carrier provides transportation. Carlson states that it has no record of any customer complaint that a Carlson ticket agent failed to disclose the operating carrier. Carlson states that although the Department’s investigation likely

in volved only a few Carlson ticket agents, after being notified of the Department’s investigation, Carlson issued a memorandum to all agents in the United States reiterating

the code

- share disclosure requirements and providing practical guidance to ensure

co mpliance prospectively. Carlson states that its supervisor agents will personally address these requirements with each agent. Carlson states that it has required all agents to retake

code

- share training and has updated its employee policies to re quire agen ts to take code

share refresher training on an annual basis. Carlson states that it has provided all agents with an updated script with model code

- share disclosure language to use when communicating with consumers over the telephone. Finally, Carlson state s that it has incorporated code

- share disclosure compliance into call monitoring evaluation and performance analysis and advised employees that failure to comply with the code

- share disclosure polices may result in potential disciplinary action.3

According ly, Carlson states that it can assure the Department that it has engaged in substantial mitigation and is now in full compliance with these requirements and will faithfully observe them in the future.

Decision

We view seriously the failure of Carlson 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 action is warranted. In order to avoid litigation, Carlson

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 $ 125 ,000 in compromise of potential civil penalt ies that might otherwise be due and payable . We believe that this compromise assessment is appropriate in view of the nature and extent of the violations in question and Carlson’s mitigation efforts. This compromise assessment serves the public interest , a nd provides a strong deterrent 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 settleme nt and the provisions of this 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) , Carlson Wagonlit Travel, Inc., violated 14 CFR 257.5(b) and enga ged in an unfair and deceptive trade practice in violation of 49 U.S.C. § 417 1 2;

3. We order Carlson Wagonlit Travel

, Inc., and all other entities owned or controlled by or under common ownership with Carlson Wagonlit Travel

, Inc., its successors and assigne es
, to cease and desist from further violations of 49 U.S.C. § 41712 and 14 CFR

257 .5(b) ;

4. We assess Carlson Wagonlit Travel, Inc., $ 125 ,000 in compromise of civil penalties that might otherwise be assessed for the violations found in ordering paragraph 2 above

. Of this total penalty amount, $20,834 shall be due and payable within thirty days of the

date of the issuance of this order; $20,833 shall be due and payable within six ty ( 6 0) days

of the date of the issuance of this order; and $20,833 shall be du e and payable within ninety (90) days of the date of issuance of this order. The remaining portion of the civil penalty amount, $62,500 , shall become due and payable immediately if, within one year of the date of issuance of this order, Carlson Wagonlit Tr avel, Inc.

, violates this order’s cease and desist provisions or fails to comply with the order’s payment provisions, in4

which case Carlson Wagonlit Travel, Inc.

, may be subject to additional enforcement action for violation of this order; and

5. P ayment sha ll 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 Carlson Wagonlit Travel, Inc.

, to the

assessme nt of interest, penalty, and collection charges under the Debt Collection Act

.

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.

B Y:

SAMUEL PODBERESKY

Assistant General Counsel for

Aviation Enforcement and Proceedings

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