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 Eighteent h day of August , 2011

Ethiopian Airlines Enterprise Docket OST 2011

- 0003

Served August 18 , 2011

Violations of 49 U.S.C. § 41712 an d

14 CFR 399.84

CONSENT ORDER

This consent order concerns Internet advertisements by Ethiopian Airlines Enterprise ( Ethiopian Airlines) that violate d the advertising requirements specified in 14 CFR Part

399

, as well as 49 U.S.C. § 41712, which prohibit s unfair and deceptive practices. It

directs Ethiopian Airlines to cease and desist from fut ure violations of Part 399 and

s ection 41712, and assesses the carrier a compromise civil penalty of $ 5 0,000

.

Applicable Law

As a foreign air carrier, Ethiopian Airlines is subject to the advertising requirements of Part 399 of the Department’s rules. Pursuant to 14 CFR 399.84, advertisements specifying 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 the base fare in advertisements, so long as such ta xes 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 adve rtisements where a fare is presented so that consumers can immediately determine the full fare to be paid. Thus, fare advertisements that 1) fail entirely to identify the existence and amount of separate additional taxes and fees , 2) include only general statements regarding the2

existence of such taxes or fees, or 3) separately state carrier

- imposed fees, such as fuel or insurance surcharges, do not comply with section 399.84 or the Department’s enforcement case precedent. 1 Violations of section 399.84 co nstitute 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 additional charges that properly may be stated separately from the advertised fares are disclosed. With respect to Internet fare listings, such additional charges 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 the bottom of the screen, or 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

Additionally , 49 CFR Part 1510 specifies disclosure requirements pertaining to the September 11 th Security F ee of $2.50 per enplanement on passengers of domestic and foreign carriers in air transportation originating at airports in the United States. Pursuant

to sect ion 1510.7, air carriers and foreign air carriers are required to identify this fee

verbatim as the “September 11 th Security Fee” in all advertisements and solicitations that

do not includ e the f ee in the adverti sed base fare. T he failure of a carrier to identify the September 11 th Securit y Fee as required by the rule constitute s a separate and distinct violation of 49 U.S.C. § 41712. 4

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, 20 12 , 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

fare s remains in effect.

2 See, e.g.

, Continental Airlines, Inc

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

2011

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- 1 ( June 2, 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 “ 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 prominentl y 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

Restr ictions 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 .os t.dot.gov/rules/guidance.htm

.

4 See, e.g., Sceptre Tours, Inc., Violations o f 49 U.S.C. § 41712 and 14 CFR 399.84, Order 2010

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- 23 (Ju ne 28, 2010).3

Facts and Conclusions

For a period of time in 2011

, consumers searching Ethiopian Airlines’ website for round

trip flights from a point in the United States to a point outside the United States using one of two alternative booking paths provided on the website, labeled “ S earch by fare

, ” were not provided with the entire price to be paid at the first point a fare w as displayed

. Rather, the fare Ethiopian Airlines initially displayed was subject to “additional

taxes/fees” and the webpage displaying such fare did not provide any information describing the se additional taxes and fees, including identifying the September 11 th
Security Fee

, nor was this information presented to consumers in one of the acceptable

alternative methods described above. Therefore, consumers did not learn of the full fare amount until just prior to purchasing the fare

. Addi tionally, E thiopian Airline s failed to

include a significant carrier

- imposed fuel surcharge in the advertised fare when it first was displayed, further misleading consumers with an artificially low initially advertised

fare

.

Ethiopian Airlines’ failure to provide proper notice to consumers of the nature and amount of separately stated taxes and fees in any of the acceptable wa y s described above

and its failure to include fuel surcharges in the initially advertised fare violate d 14 CFR 399.84 and 49 U.S.C. § 41712. Furthermore

, Ethiopian Airlines’ failure to label the “September 11 th Security Fee” verbatim as described above violate d 49 U.S.C. § 41712

.

Mitigation

In mitigation, Ethiopian Airlines maintains that it takes its obligations under the Department’s full fare advertising rule very seriously with the determination to provide the general public full, fair and transparent information to assist its customers objectively

on Ethiopian Airlines ’ pricing policies. According to Ethiopian Airlines, its actions were inadvertent, unintentional and mostly through oversight, and the violations were not committed deliberately in an attempt to conceal or mislead its customers or to violate any of the Dep artment’s rules and regulations

. Furthermore, Ethiopian Airlines points out that its total online sales generated by the activities at issue amounted to only 1.9 percent
of its total sales volume in the United States.

When the Office of Aviation Enforc ement and Proceedings (Enforcement Office) advised Ethiopian Airlines of its concerns with pricing information d isplayed on Ethiopian

Airlines’ website

, Ethiopian Airlines states it took immediate remedial action to bring its website into compliance with t he Department’s rules, regulations and statutory authority

. Ethiopian Airlines also states that it has cooperated completely and promptly with the Department in amicably resolving this matter and has also taken steps internally by instituting checks and balances in its controls so as to better monitor and oversee its advertising practices and, therefore, better ensure Ethiopian Airlines ’ adhere nce to the Department’s directives, policies and regulations at all times.4

Decision

The Department views com pliance with the Federal aviation statutes a nd regulations very seriously. The Enforcement Office has carefully considered the inf ormation pro vided by Ethiopian Airlines and continues to believe that en forcement action is warranted. The

En forcement Office and Ethiopian Airlines have reached a settlement of this matter in order to avoid litigation. Without admitting or denying the violati ons described above, Ethiopian Airlines 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 $ 5 0,000 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 Ethiopian Airlines Enterprise 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, and by not identifying in its Internet advertisements the September 11 th Security Fee, as required by 49 CFR 1510.7, Ethiopian Airlines E nterprise also engaged in an unfair and deceptive practice and unfair method of competition in violation of 49 U.S.C. § 41712;

4. We order Ethiopian Airlines Enterprise and all other entities owned or controlled by, or under common ownership and control with Ethiopian Airlines Enterprise

, its successors, affiliates, and assigns, to cease and desist from further similar violations

of 49 U .S.C. § 41712 and 14 CFR 399.84. Failure to comply with this cease and desist provision shall subject Ethiopian Airlines Enterprise and its successors and assignees to further enforcement action;

5. We asses s Ethiopian Airlines Enterprise a civil penalty of $ 5 0,000 in compromise of civil penalties that might otherwise be assessed for the violations des cribed above . Of this total penalty amount, $25,000 shall be due and payable within 30 days of the date

of the issuance of this order. The unpaid portion of the assessed civil penalty shall be due and payable immediately if Ethiopian Airlines Enterprise violates thi s order’s cease and desist or payment provisions during the 12 months following the service

date of this order ; and5

6. We order Ethiopian Airlines Enterprise to r emit the payment ordered in 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 Ethiopian Airlines Enterprise to th e 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

unle ss 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