BEFORETHE U.S. DEPARTMENT OFTRANSPORTATION OFFICE OFHEARINGS

WASHINGTON, D.C.

DeltaAirLines, Inc. Alleged Violations of 14 CFRPart257 and 49 U.S.C. 

### §41712 EnforcementProceeding Served January7, 2015 DOT-OST-2014-0229

ANSWER OFDELTAAIRLINES PreliminaryStatement Delta Air Lines denies that it engaged in unfair or deceptive practices as alleged in the Complaint filed on December 23, 2014. The relevant statute and regulation state that an air carrier offering a code-shared flight must make certain disclosures "priorto the purchase of a ticket," 49 U.S.C. §41712(c), or "before booking transportation," 14 C.P.R. §257.5(b). The Complaint relies solely on eight "secret shopper" calls placed by DOT employees, in which the callers made brief inquiries about certain flights then "closed each conversation without booking a flight." Complaint ,-[ 28. Under the unambiguous text ofthe statute and regulation, however, Delta had up until booking or purchase to make the required disclosures. Because the secret shoppers voluntarily discontinued their calls without ever attempting to make a booking or purchase a ticket, the evidence cited in the Complaint is insufficient as a matter oflaw to show that Delta violated 49 U.S.C. §41712(c) or 14 C.P.R.§ 257.5(b). Even ifthe Complaint did allege facts that stated a violation, the $660,000 civil penalty sought in the Complaint is grossly excessive and contrary to law. The Complaint

1 Answer ofDeltaAir Linesimpermissibly seeks to double-count civil penalties for the exact same conduct. It also fails to establish thatthe conduct alleged here is sufficiently "similar" to previous alleged violations to tack on a third set of civil penalties for violating a 2010 consent order. Moreover, there is no basis whatsoever for imposing the maximum civil penalty of $27,500 per violation. No actual customer was harmed by Delta's purported violations. And the Complaint fails to specify exactly when during each phone call Delta should have made the code-share disclosures in orderto avoid liability. Itviolates the mostbasic principles of notice and due process to seek significant civil penalties when the Department itself cannot articulate any coherent theory ofwhen the alleged violations occurred or when it was too late for Delta to avoid a violation by making the required disclosures. RESPONSES TO SPECIFIC ALLEGATIONS Deltaresponds to the individually-numbered allegations ofthe Complaint as follows: Jurisdiction andApplicable Law 1. Denied. 2. Admitted. 3. Admitted. 4. The statute cited in paragraph 4 speaks for itself. 5. The statute cited in paragraph 5 speaks for itself. 6. The regulation cited in paragraph 6 speaks for itself. 7. The statutes and regulations cited in paragraph 7 speak for themselves. 8. The statute cited in paragraph 8 speaks for itself.

2 Answer ofDeltaAir Lines9. The statutes and regulations cited in paragraph 9 speak for themselves. 10. The statutes and regulations cited in paragraph 10 speak for themselves. Background and EnforcementHistory 11. Delta admits that code-sharing is a common practice among air carriers, and that one type ofcode-sharing involves flights operated by a regional carrier that are marketed by a mainline carrier such as Delta as a part of its global air transportation network. The regional carrier may be separately owned and managed, or may be a wholly-owned subsidiary ofthe mainline carrier. Within Delta's network, such flights

are operated by regional carriers under the Delta Connection brand. Delta uses the Delta Connection carriers where appropriate to serve expected demand within its global network. This includes but is not limited to flights to airports and smaller cities not served bythe mainline carrier. Except as admitted, paragraph 11 is denied. 12. Delta admits that the Delta Connection flights are operated with smaller aircraftthan Deltamainline flights. Except as admitted, paragraph 12 is denied. 13. The policy statement cited in paragraph 13 speaks for itself. 14. The notice ofproposed rulemaking cited in paragraph 14 speaks for itself. 15. The notice ofproposed rulemaking cited in paragraph 15 speaks for itself. 16. The notice ofproposedrulemaking cited in paragraph 16 speaks for itself. 17. Deltais withoutknowledge sufficientto admit or deny paragraph 1 7. 18. The final rule cited in paragraph 18 speaks for itself. 19. The final rule cited in paragraph 19 speaks for itself. 20. The regulatorypreamble cited in paragraph 20 speaks for itself.

3 Answer ofDeltaAir Lines21. Paragraph 21 states legal conclusions for which no response is required. To the extent a response is required, denied. Further denied that Delta has been "on notice" ofthe purported obligations discussed in paragraph 21. 22. Paragraph 22 states legal conclusions for which no response is required. To the extent a response is required, denied. Further denied that Delta has been "on notice" ofthe purported obligations discussed in paragraph 22. 23. Paragraph 23 states legal conclusions for which no response is required. To the extent a response is required, denied. 24. The DOT orders cited in paragraph 24 speak for themselves. Denied that Deltahas been "placed on notice" ofany purported "obligations" discussedtherein. 25. The DOT consent order cited in paragraph 25 speaks for itself. Denied that the allegations in the Complaint are "similar" to the alleged violations in the 2010 consent order. Facts GivingRise to This Action 26. Delta lacks knowledge sufficientto admit or deny paragraph 26. 27. Delta lacks knowledge sufficientto admit or deny paragraph 27. 28. Delta lacks knowledge sufficientto admit or deny paragraph 28. Claim for Relief 29. Denied. 30. Denied. 31. Denied.

4 Answer ofDeltaAirLinesPrayer for Relief Delta denies that the Department is entitled to any ofthe reliefprayed for in the Complaint. OPPOSITION TO AND MITIGATION OF CIVIL PENALTIES Pursuant to 14 C.P.R. § 302.408(b), Delta intends to rely upon the following arguments in opposition to, or in mitigation of, the civil penalties sought in the Complaint: 1. The Complaint should be dismissed in its entirely with prejudice because the facts allegedtherein fail to show that Delta engaged in any unfair ordeceptive acts or practices. In particular, the facts alleged in the Complaint are insufficient as a matter of law to show that Delta failed to make required code-share disclosures "before booking transportation" or "priorto the purchase ofa ticket." 2. Delta should not be assessed a civil penalty because it has not been given sufficiently clear notice of exactly when the code-share disclosures purportedly should have been made. 14 C.P.R. § 257.5 and 49 U.S.C. §41712(c) simply require disclosure atsomepoint "before booking transportation" or "prior to the purchase ofa ticket." Yet the Complaint suggests that Delta should have made the disclosures at an (unspecified) earlier point. The Complaint fails to identify exactly when in each ofthe eight phone calls Delta should have made the code-share disclosures in order to achieve compliance. It is fundamentally unfair and contrary to basic principles ofnotice and due process to impose significant monetarypenalties when Delta has complied with the requirements of the statute and regulation as written and lacks clear guidance about what it should have done differentlyto avoid liability.

5 Answer ofDeltaAirLines3. The civil penalties sought in the Complaint are contraryto lawbecause the Complaint impermissibly double-counts the alleged violations. The Complaint seeks separate penalties for: (1) alleged violations of 49 U.S.C. §41712(c) and 14 C.P.R. §257.5; and (2) alleged violations of49 U.S.C. §41712(a). See Complaint**~~** 29, 30. But all ofthese provisions pertain to the same general prohibition on "unfairor deceptive practice[s]" in§ 41712(a). Section 41712(c) states that it "shall be an unfair or deceptive practice under subsection (a)" ifcarriers fail to make the required code-share disclosures. And 14 C.P.R. §257.4 states that a failure to "follow the requirements of this part" (which include §257.5) is "prohibited as unfair and deceptive in violation of 49 US.C. § 41712." Thus, even if Delta is found to have violated the code-share disclosure requirements, it should be liable for only one setofcivil penalties. 4. The Complaint seeks the maximum civil penalty of $27,500 for each alleged unfair or deceptive practice. Even ifDelta is found to have violated the statute or regulation, it would be unjust, unreasonable, and contrary to law to impose the maximum civil penaltyfor each violation because, interalia:

a. DOT fails to identify any actual Delta customer who was deceived or confused by the manner in which Delta discloses code-share arrangements. The alleged violations thus did not result in any actual harm or deception to consumers. b. Delta takes its code-share disclosure obligations very seriously. Even though§ 41712(c) and§ 257.5(b) merely require disclosure at some point before purchase or booking, Delta encourages its reservation agents to make the disclosures as early in the call as possible. Indeed, even though

6 Answer ofDeltaAir Linesthe Office's secret shoppers never attempted to make bookings or purchases, Delta's reservation agents still provided the code-share disclosures in 22 out of30 test calls. And, consistent with §41712(c) and §257.5(b), Delta'spolicy is to provide the required code-share disclosures before booking a reservation or selling a ticket, so that customers will have an opportunity to choose a different flight before booking transportation or buying a ticket ifthey do not wish to travel on the codeshare carrier. This policy is designed to ensure that all customers are provided with the information they need to make informed decisions before booking and ticketpurchase.

c. Delta did not commit any intentional or knowing violations ofthe statute

or regulation. Delta adopted its current policy in good-faith reliance on the text of§ 41712(c) and§ 257.5(b), which simply requires disclosure at

some point "before booking" or "priorto the purchase ofaticket." 5. Delta is not liable for civil penalties for alleged violations ofthe Consent Order issued on July 9, 2010 in Docket OST-2010-0005. The Consent Order required Delta to cease and desist from "further similar violations." The allegations in the Complaint are not "similar" to the alleged violations discussed in the Consent Order. The Consent Order involved alleged deficiencies in Delta's electronicschedule information in the wake ofthe 2008 Delta-Northwest merger. This Complaint, in contrast, involves alleged deficiencies in Delta's disclosures during telephone calls with reservation agents that took place nearly five years after the conduct that gave rise to the Consent Order.

7 Answer ofDeltaAir LinesOther than the fact that they broadly involve code-share flights, there is absolutely nothing "similar" aboutthe two sets ofalleged violations. CONCLUSION Delta categorically denies that any of the allegations in the Complaint reflect violations of 49 U.S.C. §41712 or 14 C.P.R. §257.5. In the alternative, even if a violation is shown, Delta denies that it is liable for civil penalties in the amounts sought in the Complaint.

J. ScottMcClain Jon-PeterF. Kelly DELTAAIRLINES, INC. 1030 DeltaBoulevard Department981 Atlanta, GA 30354 (404) 773-6514 scott.mcclain@delta.com jonpeter.f.kelly@delta.com Respectfully submitted,

Paul D. Clement JeffreyM. Harris BANCROFTPLLC 1919 M Street, NW, Ste. 470 Washington, D.C. 20036 (202) 234-0090 pclement@bancroftpllc.com jharris@bancroftpllc.com

Counsel for DeltaAirLines, Inc.

8 Answer ofDeltaAirLinesCERTIFICATE OF SERVICE I hereby certifythaton January 7, 2015, the original and one copy ofthe foregoing Answer ofDeltaAirLines werehand-deliveredto: U.S. DepartmentofTransportation Dockets Operations, M-30 WestBuilding, Ground Floor Room W12-10 1200NewJerseyAvenue, S.E. Washington, DC 20590 I further certifythatone copy ofthe foregoing documentwashand-deliveredto: BlaneA. Workie Assistant General Counsel for AviationEnforcement and Proceedings, C-70 U.S. DepartmentofTransportation 1200NewJerseyAvenue, S.E. (W96-431) Washington, DC 20590 Robert Gorman SeniorTrial Attorney Office ofAviation Enforcement and Proceedings, C-70 U.S. DepartmentofTransportation 1200NewJerseyAvenue, S.E. (W96-413) Washington, DC 20590 The HonorableJ.E. Sullivan Administrative LawJudge U.S. DepartmentofTransportation Office ofHearings, M-20 1200NewJerseyAvenue, S.E. (Ell-310) Washington, DC 20590

s/JeffreyM. Harris JeffreyM. Harris

9 Answer ofDeltaAirLines