Order 2012

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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 Twenty

- Third day of January, 2012

Asiana Airlines Docket OST 2012

- 0002

Served January 23 , 2012

Violations of 49 U.S.C. § 41712 an d

14 CFR 399.84

CONSENT ORDER

This consent order concerns an Internet advertisement by Asiana Airlines (Asiana) that

violate s the full

- fare advertising requir ements specified in 14 CFR 399 .84

, as well as 49

U.S.C. § 41712, which prohibit s u nfair and deceptive practices. It directs Asiana to cease
and desist from fut ure violations of section 399 .84 and s ection 41712 and assesses the

carrier a compromise civil penalty of $ 70 ,000

.

Applicable Law

As a foreign air carrier, Asiana 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 ca se 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. Thus, for example, 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 d isplayed

, 2) include only2

general statements regarding the existence of such taxes and fees , or 3) separately state

carrier

- imposed fees, such as fuel surcharges, 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. 1

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 and directly takes the viewer 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. 2

Facts and Conclusions

For a period of time in the Fall 2011, Asiana’s website, displayed advertisements stating “Los Angeles...Ho Chi Minh City From $517,” “Beijing From $498,” “Manila From $517,” “Shanghai From $489,” and “Phnom Penh From $556.” Below these fares was a link stating “Additional taxes, fees, and other restrictions may apply,” which took the

consumer to a landing page that stated, “ Special Fares,” with a description of applicable taxes and fees in the fine print at the bottom of the page, w hich was on a different screen. Thus, consumers were not notified of the additional taxes and fees applicable to the advertised “Los Angeles” sale fares , including a carrier

- imposed fuel

- surcharge, until after they arrived at the landing page and only if they scrolled down to the bottom of the

next screen. Asiana’s failure to provide proper notice of taxes and fees that may legally be stated separately from the base fare and its failure to include all carrier

- imposed charges in the advertised base fare s violate 14 CFR 399.84 and 49 U.S.C. § 41712. 3

Mitigation

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, whi ch is effective January 26, 2012

, airlines and ticket agents must include all government taxes and fees in every advertised fare. The Department’s long

- standing p rohibition on omitting carrier

- or agent

- imposed charges, such as f uel surcharges or convenience fees, from advertised

fares remains in effect.

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

manner: “ $ 2 60 + Taxes and Fees” with the phrase “ T axes and F ees” set of f 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 Advertise ments, Including ‘Free’ Airfares,” dated September 4, 2003; and “Prohibition on Deceptive Practices in the Marketing of Airfares to the Public Using the Internet,” d ated January 18, 2001, available at: http:airconsumer.ost.dot.gov/rules/guidance.htm

.

3 Se e, e.g., US Airways, Inc., Violations of 49 U.S.C. § 41712 and 14 CFR 399.84, Order 2011

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- 2 (June 2, 2011); Delta Air Lines, Inc. Violations of 49 U.S.C. § 41712 and 14 CFR 399.84, Order 2010

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- 30 (May 28, 2010).3

In mitigation, Asiana takes seriously its respon sibility to comply with DOT regulations

a nd enforcement case precedent. Moreover, Asiana states that it is strongly committed to promoting its fares and services in a transp arent and understandable manner and in no way intended to mi slead any would

- be passenger. The carrier asserts that i t never received any consumer compliant with respect to the special fare advertising in question, which was available only for a re latively short period of time. Asiana believes the promotional fare advertising in quest ion was an isolated incident, the result of a simple misunderstanding by one or two individuals with respect to how to use a hyperlink to

prov ide notice of taxes and charges. Asiana states that it previously had trained its marketing and Internet personnel to ensure compliance with section 399.84 as interpreted by the Department in enforcement cases, but this one advertising offer did not comply with that training. Immediately after being notified by the Department, Asiana terminated its special far e advert ising an d asserts that it directed its I nternet marketing d epartment to conduct a comprehensive review of its website to ensure it meets regulatory requirements

a nd enforcement case precedent. Asiana states that it also conducted a review of other

advertis ing media . I n lig ht of this comprehensive review and Asiana’s training of its personnel, Asiana is confident that it will comply with Department enforcement case precedent in the future and that it will avoid even inadvertent violations

.

Decision

The Department views compliance with the Federal aviation statutes a nd regulations very seriously. The Enforcement Office has carefully considered the inf ormation pro vided by

Asiana and continues to believe that en forcement action is warranted. The En forcement

Office and Asiana have reached a settlement of this matter in order to avoid litigation. Without admitting or denying the violati ons described above, Asiana 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 $ 70, 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 Asiana Airlines violated 14 CFR 399.84 by advertising fares that failed

to st ate the entire price to be paid;4

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

Asiana Airlines engaged in unfair and deceptive practice s and unfair method s of competit ion in violation of 49 U.S.C. § 41712;

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

, their suc cessors, affiliates, 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

Asiana Air lines and its successors and assignees to possible further enforcement action;

5. We asses s Asiana Airlines $ 70 ,000 in compromise of civil penalties that might

otherwise be assessed for the violations described above. Of this total penalty amount, $35,000 shall be due and payable within 30 days of the date of issuance of this order. The remaining $35,000 shall become due and payable immediately if Asiana Airlines violates this order’s cease and desist provisions within one year following the date of issuance of this order, or fails to comply with the o rder’s payment provisions ; and

6. We order Asiana Airlines to r emit the payme nt assessed in ordering 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 Asiana Airlines

, 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.

B Y:

ROSALIND A. KNAPP Deputy General Counsel

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