### BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. Benjamin Edelman, Third-party Complainant



### v. American Airlines, Inc. ) ) ) ) ) ) ) 

### Docket DOT-OST-2013-0024

ANSWER OFAMERICAN AIRLINES, INC. Comments with respect to this document shouldbe addressed to:

Alec Bramlett, Esq. Senior Litigation Attorney AMERICAN AIRLINES, INC. P.O. Box 619616 MD 5675 DFWAirport, Texas 75161

Dated: March 22, 2013 Robert P. Silverberg, Esq. SILVERBERG, GOLDMAN & 

### BIKOFF, LLP 1101 30th Street, NW Suite 120 Washington, DC 20007 Tel: 202-944-3300 E-Mail: rsilverberg@sgbdc.com Attorneys for AMERICAN AIRLINES, INC.Benjamin Edelman, BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

Third-party Complainant ) ) ) ) ) ) ) Docket DOT-OST-2013-0024 V. American Airlines, Inc.



### ANSWER OF AMERICAN AIRLINES, INC. American Airlines, Inc. ("American") hereby answers the complaint filed by Benjamin Edelman ("Mr. Edelman" or "complainant") alleging that American misrepresented airline imposed fees as taxes, thereby violating 49 U.S.C. §41712. Except to the extent indicated, American denies the allegations. The Supplement hereto sets out, in compliance with Rule 408(b), the specific admissions and denials as required even though the structure ofthe complaint does not lend itselfto such precise pleading. Ifthere is any factual statementthat is not specifically addressed in this answer including the supplement, it shouldbedeemed as having been denied. I. INTRODUCTION American urges the Departmentto decline to institute a formal enforcement proceeding based onMr. Edelman's complaint. Forthe most part, the complaint alleges conduct that occurred priorto April 21, 2012, when the Department's relevant enforcement policytook effect. Specifically, DOT provided carriers and ticket agents a reasonable opportunity (byApril 21, 2012) to revise their advertising and websites to conform to its February 21, 2012 Notice "Additional Guidance on Airfare/Air Tour Price Advertisements" (77 Feg.Reg. 11618, February 27, 2012; hereinafter "DOTNotice" or "Notice"). Enforcement action based on ticket price

### Answer ofAmerican Airlines, Inc. March 22,2013 Page 2 of 16 quotations priorto April21, 2012 wouldbe inconsistent with the Notice. Further, the complaint otherwise fails to state a claim for which reliefmaybe grantedby seeking refunds that are beyond DOT's authority to order, there being no private right ofaction under 49 U.S.C. §41712. See Statlandv. AmericanAirlines, Inc., 998 F.2d 539, 541 (ih Cir. 1993)([§ 411, later renumbered §41712] "does not create a private rightto sue"); Polansky v. Trans WorldAirlines, Inc., 523 F.2d 332, 338-40 (3d Cir. 1975)("aprivate remedy maynot be implied from [§41712's statutorypredecessor]"). The complaint also fails to. demonstrate that American's conductresulted in actual material consumer deception. The onlyissue is whether a telephone reservations agent orin writtenpost-transaction correspondence, American accurately distinguishedbetween taxes and airline imposed fees. Initiation ofa formal enforcementproceedingwould notbein the public interest since the conduct complained ofhasbeen addressed. A. 

### Backgroundto the Complaint Mr. Edelman sent a letter to American's General Counsel onDecember 31, 2011 seeking

a refund of$8,261.60 for three separate air fare purchases hemade on aa.com in 2011. He argued thathe shouldreceive a refundbecause the receipt that aa.com generated afterhebought the ticket identifiedBA's fuel surcharge as a tax. Forthe reasons set forth in American's January 11, 2012 response to Mr. Edelman (Complaint, Attachment 4) American denied his request and demonstrated that the nonconsequential mislabeling ofan interline carrier's charge

on a post-purchase receipt was not deceptive. American's response also contained a detailed description ofthe AA.com bookingpath which clearly and correctlylabeled all applicable taxes and carrier imposed charges. This detail was available and was in addition to the prominent display ofthe fullamount ofthe ticketpricepriorto the time ofpurchase. Mr. Edelman,Answer ofAmerican Airlines, Inc. March 22, 2013 Page 3 of 16 apparently not satisfied with American's refusal to issue a refund (even though he did not substantiate any deception at the time hemadehis purchase decisionbased on the quoted full ticketprice) subsequently lodged informal complaints with DOT onJanuary 14, 2012 and June 17, 2012. 1 Complaint, p. 

### 1. To thebest ofAmerican's knowledge, DOT took no action in connection with these informal complaints, and should not do so in connection with the instant formal complaint. B. American is in Compliance with the Price Advertising Rule In all channels through whichAmericanmakes airtravel available for sale, American makes every effort to be accurate and complete when consumers are making theirpurchase decisions. The currentprice advertisingrule has beenin effect and enforced since January 25, 2012. With onepossible exception, the complainant does not allege that he was not quoted the full ticketprice (including all taxes and fees) priorto making a purchase orwhen "testing" the American reservations system (almost alwaysbycalling the AAdvantage Executive Platinum desk). Theprimaryobjective oftheprice advertising rule is to require carriers to quotethe entire ticketprice in advertisements and solicitations. IfDOT cannot find American actually deceived any consumer regarding the full amount to bepaid for his orher air transportation, then the complaint shouldbe dismissed and Mr. Edelman should be advised ofDOT'sreason for its determination. Anyinadvertentmischaracterization ofa component ofa ticket price that may have occurred after April 21, 2012 does notjustify a formal investigation as Americanhas already taken steps to address the possibilitythat a con'sumer would not be correctly advised of the nature ofany carrier imposed fee.

1 Therecords ofAmerican show that from time to time Mr. Edelman corresponded with American seeking refunds for various reasons and on several occasions American agreed to do so as an accommodation to Mr. Edelman.

### Answer ofAmerican Airlines, Inc. March 22, 2013 Page 4 of16 C. American Provides its Reservations Agents with Accurate and Complete Ticket Price Information Including Taxes and Carrier Imposed Fees American has provided to its reservations agents (including the AAdvantage Executive Platinum desk with which Mr. Edelman mainly communicated) all oftheinformation necessary to fully and accurately address customer questions regarding the amount ofapplicable taxes and carrier imposed fees included in the full price ofa ticket. While itis possible that telephone reservations agents responding to Mr. Edelman's questions maynothave accurately stated the nature ofall such charges when Mr. Edelman made his oral inquiries, American's computerized fare quote system was and is accurate and correctly distinguishes between a tax and a carrier imposed fee with respect to ticket prices on flights operatedbyAmerican. Theticketprice information quotedbyAmerican for travel on American and for travel on other carriers booked through American is supplied to American from its contractor, Sabre. Sabre, inturn, obtains air ticketprice information, including all associated taxes and carrier imposed fees, from tariffpublisherATPCO. Ticketprice details, including the amount oftaxes and carrier imposed fees, are then populated inAmerican's computerized price displays, with each tax and fee assigned an industry standard two-letter code, separatelylisted in a cell titled "Fare Details." Ifrequested by a customer, the reservations agent uses this detailed information to address the customer's questions. While Mr. Edelman's complaint alleges that on occasion agents responding to his questions did not distinguish taxes from carrierimposed fees, American is confident that ithas always provided its agents the tools necessary to correctlyrespond to customerinquiries on the elements that comprise the full ticketprice

. Whentaking abookingbytelephone for travel on a codeshare or interlinepartner, the fare detail codes as providedbythe partner airline and its tariffbased informationpopulates

### AnswerofAmerican Airlines, Inc. March 22, 2013 Page 5 of 16 American's price displays. Americanhas no ability or authority to assign different two-letter codes for taxes and fees otherthan those assigned bythe partner airline. Ifa partner carrier supplies fare information and describes a fee in a particularmanner, American would not and could not question the amount ordescription ofthe item. American does not and is under no dutyto review the fare breakdown providedbyits interline orcode sharepartners and reasonably presumes the details oftheir fare calculations are accurate. II. GENERAL RESPONSE TO SPECIFIC ALLEGATIONS The complaintmakes several allegations regarding specific transactions ortest calls and groups the allegations bytype ofticketing transactions or carrier inquiry, which we address in turnbelow. A. Revenue Tickets Booked Through American's Telephone Reservations System The complaint alleges two instances when Mr. Edelman was advised that a portion ofthe total ticketprice consisted of"taxes"butwhich he believes included carrierimposed charges. One instance was when Mr. Edelman called AAreservations on June 26, 2012 and the other instance involved a transaction he initiated onApril 20, 2011 (priorto the effective date ofthe price advertising rule). Complaint, pages 1-2; Attachments 1 and 9. In both cases Mr. Edelman completed the transactions and there is no allegation that he was deceived at anypoint as to the total price ofthe transportationhepurchased. As to the June 26, 2012 transaction, and as described above, the reservations agent with whom Mr. Edelman spoke had the accurate informationbut, according to Mr. Edelman's complaint, the agent did not correctlyrelayto the customerthat a portion ofthe quoted taxes included carrier imposed fees. American has taken and will continueto take steps to see that its agents provide customers with precise information that distinguishes taxes from carrier imposedAnswer ofAmerican Airlines, Inc. March 22, 2013 Page 6 of 16 fees. In any event, the eTicket confirmation receivedbyMr. Edelman for this transportation stated the correct amount oftaxes and carrierimposed fees. As to the April20, 2011 transaction Mr. Edelman was orally advised and it was subsequently shown inthe eTicket Itinerary and Receipt Confirmation (Complaint, Attachment 1) thattaxes of$792.10 were included in the full ticketprice. This allegation involves a ticket receipt form that was in priorusebut was revisedbyAmerican inthe summer of2011, as detailed in American's initial response to Mr. Edleman's refund request. Complaint, Attachment 4. American's receipts nowreflect the fare, the amount oftaxes and carrier imposed fees, and the total ticketprice. Instituting a formal proceeding to lookinto matters that have long since been addressed is not a productive use ofthe Department's limited resources. B. Circle Tickets Mr. Edelmanrefers to two tickets hepurchased for anotherperson from the AAAround the World Desk on February 10, 2012 and March 21, 2012 and claims that the taxes quotedupon his inquiryincluded fuel surcharges. Both ofthese transactions occurred priorto the April21, 2012 enforcement date establishedbythe DOTNotice. Again, Mr. Edelman completedboth transactions and is notheard to complain thathe lacked the full ticketprice information onwhich to basehis purchase decision and the eTicket confirmation would have stated the correct amount oftaxes and carrier imposed fees. C. Award Bookings Mr. Edelmanpresents four examples where hemadetest calls inquiring about AA Award travel and states thatAmerican misquoted the amount ofthe applicable taxes associated with the

### Answer ofAmericanAirlines, Inc. March 22, 2013 Page 7 of 16 requested award travel. 2 

### Ofthe four test calls, two wereplaced after the effective date ofthe DOT Notice. Mr. Edelman states that "as best I cantell" the agents with whom he spoke all included fuel surcharges when quoting the amount ofthe applicable taxes. As previously described, American's price displays allowreservations agents to breakout taxes and carrier imposed fees. Thus, the complainthas at mostpointedto the need for American to emphasizeto its reservations agents to properly conveythe information ontheir computer displays when responding to specific customer inquiries bytelephone. 3 

### Again,·Mr. Edelman was not deceivedbyincorrect answers sincehe did not, in fact, complete any ofthetransactions that werethe subject ofhis test calls.4 

### As to the reference inthe complaint to actual award travel bookings on March 17, 2011 and May 30, 2011 and the related eTicket Itinerary & 

### Receipt Confirmations (Complaint, Attachment 2) both transactions were conducted and completedbefore the DOT Notice enforcement date and before American revised the format ofits eTicket receipt. D. Reaccommodation AfterFlight Cancellation The complaint also questions whether consumers receive accurate information regarding the imposition oftaxes in situations when American offers to reaccommodatepassengers when their originallybooked flights did not operate ora class ofservice is no longer offered. All of the allegations in this section ofthe complaint are stated as beingbased on what others told Mr.

2 

### A consumer claim ofdeception or a violation of49 U.S.C. §41712 is problematic when the consumer is not actually intending to make a purchase or otherwise obtain award travel benefits. 3 

### As noted previously, American continues to take efforts to enhance the training ofits telephone reservations agents to ensure the accuracy ofticketprice quotations. 4 

### The complaint characterizes anyunintentional misstatement as to the amount oftaxes and fees applicable to a particular transaction as a "false" statement and implies that American intended to deceive the customer. There is nothing in the complaint to prove oreven suggest that American purposefully chose to ignore orhide the accurate ticketprice information from its reservations agents inorder to deceive customers.Answer ofAmerican Airlines, Inc. March 22,2013 Page 8 of 16 Edelman eitherby e-mail ortelephone about what these unnamed individuals were in tum advised byAmerican during the process ofbeingreaccommodated. The complaint does not contain and neither American nor the Departmenthas thebenefit ofany such correspondence between Mr. Edelman and these unidentified individuals as to theirrecollections ofwhat they

were advised at the time the reaccommdations werebeing offered. Simplyput, the quality ofthe facts alleged in this section is insufficient to establish a violation ofanyregulation. 

### SeeAir America, Inc. EnforcementProceeding, Order 86-3-11, December 18, 1985; 5 U.S.C. § 556(d)("[a] sanction may not be imposed orrule or order issued except on consideration ofthe whole record orthose parts thereofcited by a party and suppmiedby and in accordance with the reliable, probative, and substantial evidence."). This section ofthe complaint is based on double hearsay that simply cannot support a decision on the pa1i ofthe Department to proceed to a fom1al enforcement proceeding. E. Around the World Bookings on oneworld Mr. Edelman states that the "plan andbook" function ofthe oneworld website incorrectly describes carrier imposed fees as taxes. As the Departmentmaybe aware, oneworld Management Company, on behalfofthe oneworld member airlines, created a website that allows

customers to plan and book "round-the-world" ("RTW") flights using the services ofthe 19 oneworldmembers. This booking tool is the product ofoneworld Management Company and

not American Airlines. Mr. Edelman used the oneworldbooking tool and presents the results ofa test transaction

as Attachments 5, 6 and 7 ofthe complaint. Although the complainant concedes that a breakdown oftaxes and carrier surcharges is providedby oneworld (see Attachment 7), American nonetheless raised the issue with the oneworld Management Company and asked that

### Answer ofAmerican Airlines, Inc. March 22,2013 Page 9 of 16 the websiteberevised to clarifythat the non-fareportion ofthe total quoted ticketprice is made up of"taxes and carrier surcharges/fees" (this line item previously read "taxes").5 

### As a result, customerwho now wish to seethebreakdown ofthe taxes and carrierimposed fees related to a RTW ticket will observe that what was formally described as "multiple surcharges" or "surcharge" is now labeled "multiple carrier surcharges/fees" and the "Total" line was changed to ''total taxes and carrier surcharges" from simply "taxes". These revisions should eliminate anyunintended confusion regarding the non-fare portions ofRTWfares quoted onthe oneworld website. F. Unjustified Fuel Surcharges The complaint acknowledges that American's web based consumer informationclearly states that fuel surcharges imposedbyBritish Airways applyto award travel arranged through American. Complaint, page 6 quoting letter from American's General Counsel to Mr. Edelman (Complaint, Attachment 4). 6 

### ButMr. Edelman goes onto complainthatthe amount ofthe fuel surcharge "is not a reasonable estimate ofthe per-passenger fuel costs incurredbythe carrier above some baseline." 

### Id. The complainant offers no support for this element ofhis claim other than to state the allegation. In any event, the fees associated with award travelbookedby American on another airline are within the discretion ofthat airline. In the case ofaward travel

on British Airways, American merely collects the fuel surcharge imposedbyBritish Airways for suchtravel.

5 

### Attachment 7 is a screen shot ofthe oneworld website displaying all ticket price components underthe heading "taxes and surcharges information". 6 

### In this section ofthe complaint, thereferenced transaction tookplace priorto the Notice's enforcement deadline.

### Answer ofAmerican Airlines, Inc. March 22,2013 Page 10 of 16 The DOT Notice containing guidance on fuel surcharges does notrequire a carrier to offer ajustification ofthefuel surcharge in any advertisements or solicitations containing ticket prices thatmayinclude a carrier fuel surcharge.7 

### The guidance does state that charges for particular services mustreflect the actual costs ofthe service covered. While American can question DOT's statutory authorityto regulate the amount ofcarrier imposed charges, suffice it to saythat there is no reading ofthe Notice that would impose on American a duty tojustify, economically or otherwise, the amount charged the passengerbyBritish Airways for fuel in connection with award travel onBritish Airways. G. Responses to Customer Inquiries The complaint makes the whollyunsubstantiated claim that American misrepresents a carrier imposed fee as a tax to deter "consumers from uncovering and pursuing valid claims against AA." Complaint, page 7. The complaint contains no evidence ofany intentional misstatements offacts and, indeed, American has taken steps to see that its telephone reservations have thetools and information necessaryto correctly and accuratelyrespond to customerinquiries. Further, it is unclear what claim a consumerwould have even ifan error is made in advising a customer as to the nature ofan elementto the ticketprice as long as the

consumer is, in fact, provided the full price ofthe ticketprior to the time the purchase decision is made. While errors mayhave occurred when reservations agents unintentionally misstated the precise nature ofa component ofa ticketprice (even though theyhavethe resources to provide accurate information) such a mistake does notjustify a refundprovided the customerwas not

7 

### The Notice states that fuel surcharges mustbebased on a reasonable estimate oftheperpassenger fuel cost incurredbythe charging carrier. While footnote 2 oftheNotice suggests a written form such disclosure maytake in a carrier advertisement or solicitation, the suggested language is not mademandatory. Further, there is no suggestion that such a lengthy explanation ofthe fuel surcharge would have to be communicated to customers making inquirybytelephone.Answer ofAmerican Airlines, Inc. March 22, 2013 Page 11 of 16 deceived as to the total purchaseprice ofthe ticket at the time ofpurchase. The complaint nowhere alleges that customers did not receive accurate information regarding the total ticket price. Therefore, it is more than an exaggeration to claim that American was seeking to deter claims by "misrepresenting" certain elements ofan air fare. The complaintrefers to Attachment 8 which appears to be an e-mail to American inquiring about the amount ofthe taxes shown onreceipts in connection with the purchase of three tickets byMr. Edelman. Attachment 9 contains American's reply. It is correct that British Airways fuel surcharges applicable to all three tickets were inadvertently described as a "fuel tax collection byBritish Airways" when such was not the case. The sums stated are the fuel surcharges imposed by American's code share partner. This was an unfortunate lapse on the part ofAmerican, but it occurred in American's correspondence to Mr. Edelman sent to him seven months or more after the date ofpurchase. Hence, there can beno claim that there was any deception ofthepurchaserregarding the sale ofthese three tickets. It should also be noted that the transaction took place in 2011, well before the DOT's ticketprice rule became effective and, perforce, before DOT's guidance in the Notice became enforceable. In short, American did not violate the regulation or statute in connection with responding to these customerinquiries. 8 H. Full Ticket Price Quotes for Award Travel In this section ofthe complaint, Mr. Edelman claims American did not provide him a full price quote at the timehe made an initial inquiry about the cost ofaward travel. Complaint,

8 This section ofthe complaint refers to an unrecorded telephone conversation between a colleague ofMr. Edelman and an American telephone reservations agent on a date that is not provided. Apart from being a report ofa second hand conversation based onthe colleague's recollection as then described to Mr. Edelman, the complaint provides no details ofthe award travel purchasedbythe colleague and lacks the specificitynecessaryto establish thebasis for any further investigation or for any finding ofa violation.Answer ofAmerican Airlines, Inc. March 22, 2013 Page 12 of 16 pages 8-9.9 Specificallyhe claims thathe was not advised ofthe $25 telephone reservations charge, although he concedes that when he called backto actually obtain the award travel thathe

was correctly advised. American imposes a $25 charge when an awardbooking is taken overthe American telephone reservations system. AAdvantage Executive Platinum members are not charged a fee for telephonebookings for eitherrevenue or award tickets redeemed for member's travel. Mr. Edelman states onpage 8 ofthe complaint thathis first call to Americanwas on behalfof"relatives" and not for himself. While there is no recording ofthe call to verifythe details ofthis telephone exchange, if there was an indication to the reservations agent on the AAdvantage Executive Platinum desk that the miles were to beused for anotherperson, thenthe agent should have advised Mr. Edelman ofthe applicable fee during the first telephone contact. Since virtually all calls to the AAdvantage Executive Platinum desk arebymembers for their own travel, such that no telephonereservations fees normally apply, the first agent maynothave completelyunderstood the nature ofthe transaction and, therefore, the agent mayhave inadvertently failed to mention the applicable telephone reservations fee. 10 In any event, accordingto Mr. Edelman, American correctlydisclosedthe booking fee during the second ofthe two telephone calls and, most importantly, this disclosure was madeprior to the customer's purchase ofaward travel. I. Alleged Counsel Mischaracterizations In his complaint Mr. Edelman takes issue with the legal position takenbyAmerican in correspondence with Mr. Edelmanregarding the scope and intent ofthe DOTNotice.

9 Mr. Edelman acknowledges thathe does nothave recordings ofthis call and American cannot verifythe accuracy ofthe details ofthe call madeto the Americanbythe complainant. 10 Inthe absence ofanyrecording ofthis telephone conversation American does not concede a violation ofthe regulations.

### Answer ofAmerican Airlines, Inc. March 22,2013 Page 13 of 16 Complaint, Attachments 4 and 13. Although included in the complaint, there is no specific allegation that the legal position taken byAmerican in its correspondence to Mr. Edelman is in any way actionable. The core issue at the time ofthese prior exchanges between counsel for American and Mr. Edelman was the applicability ofthe DOTNotice to the facts ofhis prior writtenrequests for refunds. American, like all other carriers, has the right to assert and rely upon its own reasonable interpretation ofDOT guidance documents and otherrules and regulations. Apparently, the thrust ofthis section ofthe complaint is simplyto get on record that Mr. Edelman disputes American's reading ofthe Notice. The DOT Notice is clear. TheNotice sets out the DOT view that descriptions ofcarrier imposed fees mustbe accurate and notmislead the consumer. The Notice was issued to address whattheDOT perceived was an industry-wide issue that came to light after DOT's currentticket advertising rule first became effective on January 25, 2012. Specifically, DOT was concerned about the display ofair fare components being described as "taxes"that also include carrier imposed charges. Recognizing that carriers require areasonableperiod oftime to revise their websites and other advertising mediato reflect DOTpolicyon certain advertising and solicitation issues, the Department stated clearly as follows: "The [enforcement] office will provide those subject to the full fare advertising rule and. 49 U.S.C. 41712 60 days subsequentto the date ofthis notice to ensure they are in compliancebefore instituting enforcement actionrelated to the issues coveredbythis notice." Mr. Edelman argues that despite the clearly stated enforcementpolicy ofthe Notice not to apply the new guidance retroactively, the Department should nonetheless institute enforcement action for alleged violations that mayhave occurredpriorto the DOT set enforcement deadline. His position is obviouslyinconsistent with theplain intent ofthe DOTAnswer ofAmerican Airlines, Inc. March 22,2013 Page 14 of 16 Notice quoted above. Indeed, whatpurpose would be servedbyoffering carriers a reasonable opportunityto adjust their websites ifcarriers were atthe sametime also subjectto enforcement action for transactions thatpredate the enforcement deadline? The DOT could have announced it intended to immediatelyinstitute enforcement cases as described in the Notice should theybe found inthe marketplace, but declined to do so recognizing the obvious unfairness ofnot providingthe time necessary for the carriers to makethe necessary advertising and website adjustments and otherwiseto train their staffs to complywiththe DOT's newly-issued guidance. Mr. Edelman's reading ofthe Notice is verymuch wide ofthe mark and cannot support a DOT decision to proceedto a formal inquiry. J. ReliefSought As previouslydiscussed, the complaint seeksreliefthat goesbeyond thejurisdictionof the DOT to impose. But even as to the allegations ofviolations of49 U.S.C. §41712 after April 21, 2012, the complaint lacks sufficientweight tojustifya formal proceeding. Although individual reservations agents and others may still have exhibited some confusion overthe meaning ofthe ticketprice components the details ofwhich are contained inAmerican's reservations systems, the evidence ofsuch confusion producedbyMr. Edelman does not warrant

a formal investigation. Thematter shouldbe closedbyissuance ofan Order dismissing the complaint in accordance with Rule 406(a)(1). As regards Mr. Edelman's claim that DOT should order American to issuerefunds to ticketpurchasers ifa carrierimposed fee was characterized as

a tax, suchreliefis beyondthe DOT'sjurisdictionto orderbecause there is no privateright of action underthe federal transportation statute. 

### Stat/and v. AmericanAirlines, Inc., 998 F.2d 539, 541 (7th Cir. 1993).

### Answer ofAmerican Airlines, Inc. March 22, 2013 Pagel5of16 As to Mr. Edelman's request that DOT refer the matterto taxing authorities for investigation ofalleged tax fraud, no such referrals are warranted or necessary. Finally, the complaint asks DOT to issue additional guidance as needed to clarify the intent ofthe Notice and the conduct it would find as violative of§41712. American would leave itto the Department to determine ifany additional guidance is needed over and above that contained in the Notice. K. 

### So-Called Aggravating Factors The complaint concludes by asserting that DOT should, in considering the merits ofthe complaint take into account what are described as "aggravating factors." None ofthese so-called factors can fairly be characterized as aggravating or worthy ofweight in the determination ofthe Department whether to conduct a formal proceeding. For example, while American is certainly a large domestic and international air carrier (as asserted byMr. Edelman), the size ofthe carrier is not a determinative factor. There is no evidence that the "nature and extent" ofthe alleged violations elevates the need for enforcement action. As explained, American has always provided the necessarytools to its reservations agents about fare components including taxes and canierimposed fees. While the complaint may allege that in some ofthe post-April21, 2012 communications with Mr. Edelman reservations agent mayhavemistakenlyidentified a carrier fee as a tax, American continues to enhance the training ofits agents to accurately respond to customer inquiries with the data available to them that correctly distinguishes between government taxes and carrier imposed fees. Mr. Edelman's exaggerated claims of"intentional concealment" are contradicted bythe accuracy ofthe information that is correctly included in American fare quote displays and on

### Answer ofAmerican Airlines, Inc. March 22,2013 Page 16 of 16 eTicketreceipts. Mr. Edelman even goes so far as to take umbrage at the contents ofletters to him from American's legal counsel whenthose communications were simply stating American's reasonable interpretation ofDOT policy. American strives to treat all ofits customers fairly. American's records showthat Mr. Edelman has been thebeneficiary ofthis policy as accommodations in the form ofrefunds and advantage miles havebeenmade to Mr. Edelman onnumerous occasions inthe past. American's unwillingness to provide refunds whenthe facts do not warrant such a remedy cannotbe characterized as an aggravating factor as claimedbyMr. Edelman. WHEREFORE, for all ofthe reasons set forth above, American Airlines, Inc. respectfully requests the Department dismiss the complaint in accordance with Rule 406(a)(1). Respectfully submitted, SILVERBERG, GOLDMAN & 

### BIKOFF, L.L.P. Attorneys for**AM~AN AIRL~ES,** 

# ,C.

By: 

# k

# £.11! ...J.d..&; Robert P. Silverberg Dated: March 22,2013SUPPLEMENT TO THE ANSWER OFAMERICAN AIRLINES, INC. 

### Pursuant to 14 C.P.R. §§302.405(a) and 302.408(b), American Airlines, Inc. ("American") hereby provides its specific admissions and denials and affirmative defenses to the third-party complaint filed with the Department by Benjamin Edelman ("Mr. Edelman" or "complainant") on February4, 2013. Admissions and Denials 

### As noted in American's answer, to the extent that there is any factual statement or allegation that is not specifically admitted or denied herein, it should be deemed as having been denied as any failure to respond to a specific contention is the result ofthe difficulty in laying out an answer when the complaint is in the form as was filed with the Department. However,**i~** 

### an attempt to format the complaint in a manner that will allow American to provide specific admissions or denials to the allegations contained therein, American has attached hereto a copy of the complaint with each of the paragraphs numbered. The numbered paragraphs below correspond to the hand numbered paragraphs in the attached complaint. As a preliminary matter it should be noted that the complaint either generally describes telephone conversations between American reservations agents with Mr. Edelman or refers to recorded conversations between Mr. Edelman and American found

on the complainant's website. However, the website recordings appear to have been edited and American now lacks the information necessary to verify as accurate those portions of the recorded conversations preserved by Mr. Edelman. Under these circumstances and with one exception American cannot accept, for purposes ofadmittingSupplement to Answer ofAmerican Airlines, Inc. March 22, 2013 Page 2 of 11

or denying the specific allegations, that the recordings fairly portray the entire telephone conversation between the complainant and American. 1. Except to the extent otherwise indicated below, American denies that its staff and systems mischaracterize carrier-imposed surcharges as "tax" or has otherwise violated DOT rules regarding price advertising or 49 U.S.C. §41712. American lacks sufficient knowledge to admit ordenythe remainder ofthe allegations in this paragraph. 2. American lacks sufficient knowledge to admit or deny whether complainant is restating his outstanding complaints to DOT regarding American. Except to the extent otherwise indicated below, American denies that it has committed any violations related to price advertising including violations of 14 C.F.R §399.84(a) or 49 U.S.C. §41712. 3. American admits that complainant requests that DOT impose sanctions on American for alleged violations of49 U.S.C. §41712. However, except to the extent otherwise indicated below, American denies the implication in this paragraph that it has engaged in any unfair or deceptive practices and further denies that sanctions are warranted. 4. American admits that this paragraph contains a partial transcription ofan audio recording found on the following website: http://www.benedelman.org/ airfare-advertising/americanairlines.html. American further admits that on June 26, 2012 complainantbooked a business class ticket bytelephone with American for the following itinerary: CDG-BOS-JFK-SCL-JFK-BOS-LHR-CDG that included a flight segment on British Airways. American lacks sufficient knowledge to admit or deny the remainder of

### Supplement to Answer ofAmerican Airlines, Inc. March 22, 2013 Page 3 of 11 the allegations m 

### this paragraph, but notes that the E-

### Ticket Confirmation sent to complainant stated an amount for all "Taxes and Carrier-Imposed Fees." 5. American admits that when a person calls its telephone reservation numbers that a recorded message is played at the beginning ofthe telephone call stating that "this call may be recorded." American denies, however, that this statement authorizes anyone other than American to record the telephone calls. American admits that there are audio recordings on the following website: http://www.benedelman.org/airfare-advertising/americanairlines.html, but, with one exception, lacks sufficient knowledge to admit or deny whether the recordings are complete and accurate recordings ofcomplainant's telephone calls to American. 6. American admits that the American E-Ticket Confirmation included in the complaint as Attachment 1, which includes certain flight segments operated by British Airways, states "792.10" under the heading "TAX." American admits that the correspondence from American Customer Service included in the complaint as Attachment 9 indicates that this ticket included a "$502 fuel tax collection by British Airways." However, American denies the implication in this paragraph that it violated 14 C.P.R. §399.84(a) or 49 U.S.C. §41712 by doing so. American lacks sufficient knowledge to admit or denytheremainder ofthe allegations in this paragraph. 7. American denies the allegations in this paragraph. 8. American denies the implication in this paragraph that it violated 14 C.P.R. §399.84(a) or 49 U.S.C. §41712. American lacks sufficient knowledge to admit

or denythe remainder ofthe allegations in this paragraph.

### Supplement to Answer ofAmerican Airlines, Inc. March 22, 20 13 Page 4 of 11 9. American admits that this paragraph contains a partial transcription ofan audio recording found on the following website: http://www.benedelman.org/ airfare-advertising/americanairlines.html. American denies the implication in this paragraph that it 

### violated 14 C.F.R. §399.84(a) or 49 U.S.C. §41712. American lacks sufficientknowledge to admit or deny the remainder ofthe allegations in this paragraph. 10. American admits that Attachment 2 to the complaint includes an American E-Ticket Confirmation, dated May 30, 2011, for an AAdvantage awards booking for flights operated by British Airways for the following itinerary: BRU-LHRDXB. American admits that Attachment 2 to the complaint includes an American ETicket Confirmation, dated March 17, 2011, for two AAdvantage awards bookings for the following itinerary with the second flight segment operated by British Airways: JFKLHR-SIN. American further admits that theE-Ticket Confirmation, dated May 30, 2011, states "383.50" under the heading "TAX" and that the E-Ticket Confirmation, dated March 17,2011, states "311.50" twice under the heading "TAX." However, American denies the implication in this paragraph that it violated 14 C.F.R. §399.84(a) or 49 U.S.C. §41712 by doing so. American lacks sufficient knowledge to admit or deny the remainder ofthe allegations in this paragraph. 11. American admits that Attachment 3 to the complaint includes an e-mail from complainant to American's Senior Vice President and General Counsel, Gary Kennedy, that referenced the AAdavantage awards bookings described in paragraph 1 0 above and requested a refund. American admits that Attachment 4 to the complaint includes a letter from Mr. Gary Kennedy to complainant, dated January 11, 2012, in which Mr. Kennedy, among other things, described the reasons why under American's

### Supplement to Answer ofAmerican Airlines, Inc. March22, 2013 Page 5 of 11 prior E-Ticket itinerary/receipt format customers were not deceived in making mileage redemption decisions or when purchasing tickets. American denies the implication in this paragraph that it violated 14 C.F.R. §399.84(a) or49 U.S.C. §41712. American lacks sufficient knowledge to admit or denythe remainder ofthe allegations in this paragraph. 12. American admits that this paragraph contains a transcription of an audio recording found on the following website: http://www.benedelman.org/ airfare-advertising/americanairlines.html. American denies the implication in this paragraph that it violated 14 C.F.R §399.84(a) or49 U.S.C. §41712. 13. American admits that this paragraph contains a transcription ofan audio recording found on the following website: http://www.benedelman.org/ airfare-advertising/americanairlines.html. American denies the implication in this paragraph that it violated 14 C.F.R. §399.84(a) or49 U.S.C. §41712. 14. American admits that this paragraph contains a transcription of an audio recording found on the following website: http://www.benedelman.org/ airfare-advertising/americanairlines.html. 15. American admits that this paragraph contains a transcription of an audio recording found on the following website: http://www.benedelman.org/ airfare-advertising/americanairlines.html. 16. American denies the implication in this paragraph that it violated 14 C.F.R. §399.84(a) or49 U.S.C. §41712. 17. American lacks sufficient knowledge to admit or deny the allegations in this paragraph.

### Supplement to Answer ofAmerican Airlines, Inc. March 22, 2013 Page 6 ofll 18. American admits that since June 2012 it has ceased operating on certain routes and has downgauged the aircraft it uses on certain other routes, which resulted in American reaccommodating some of its passengers on flights operated by British Airways. American denies the implication in this paragraph that it violated 14 C.F.R. § 399.84(a) or 49 U.S.C. §41712. American lacks sufficient knowledge to admit or deny the remainder ofthe allegations inthis paragraph. 19. American lacks sufficient knowledge to admit or deny the allegations in this paragraph. 20. American denies the implication in this paragraph that it violated 14 C.P.R. § 399.84(a) or 49 U.S.C. §41712. American lacks sufficient knowledge to admit

ordeny the remainder ofthe allegations in this paragraph. 21. American denies the implication in this paragraph that it violated 14 C.F.R.§ 399.84(a) or 49 U.S.C. §41712. American lacks sufficient knowledge to admit

ordeny the remainder ofthe allegations in this paragraph. 22. American admits that around-the-world air travel is advertised on the following website: http://www.oneworld.com/. American denies the allegation that the booking tool systematicallymischaracterizes carrier imposed fees as taxes. 23. American admits the allegations in this paragraph. 24. American admits that Attachment 5, Attachment 6 and Attachment 7 to the complaint appear to be screen shots of webpages from the booking process on the http://www.oneworld.com website, which webpages have recently been revised by the oneworld Management Company at American's request to eliminate any unintended confusion regarding the non-fare portions of any around-the-world fares quoted.

### Supplementto Answer ofAmerican Airlines, Inc. March 22, 2013 Page 7 of 11 American denies the implication in this paragraph that it violated 14 C.P.R. §399.84(a) or 49 U.S.C. §41712. American lacks sufficient knowledge to admit or deny the remainder ofthe allegations in this paragraph. 25. American notes that at its request the oneworld Management Company recently revised certain of the webpages displayed during the booking process on the http://www.oneworld.com website to eliminate any unintended confusion regarding the non-fare portions of any around-the-world fares quoted on the oneworld website. American denies the implication in this paragraph that it violated 14 C.P.R. §399.84(a) or 49 U.S.C. §41712. American lacks sufficient knowledge to admit or deny the remainder ofthe allegations in this paragraph. 26. American notes that at its request the oneworld Management Company recently revised certain of the webpages displayed during the booking process on the http://www.oneworld.com website to eliminate any unintended confusion regarding the non-fare portions of any around-the-world fares quoted on the oneworld website. American denies the implication in this paragraph that it violated 14 C.P.R. §399.84(a) or 49 U.S.C. §41712. 27. American admits that it has referred in certain website locations to "fuel surcharges" imposed byBritish Airways for AAdvantage award travel on flights operated byBritish Airways. American denies the implication in this paragraph that it violated 14 C.P.R. §399.84(a) or 49 U.S.C. §41712 because the fuel surcharge imposed by British Airways allegedly was not a reasonable estimate ofthe per-passenger fuel costs incurred bythe carrier above somebaseline.

### Supplementto Answer ofAmerican Airlines, Inc. March 22, 2013 Page 8 of 11 28. American admits that the DOT Notice titled "Additional Guidance on Airfare/Air Tour Price Advertisements," dated February 21, 2012 (77 Fed. Reg. 11618, February 27, 2012) (the "DOT Notice"), contains the statements quoted in this paragraph. However, American denies the implication in this paragraph that the DOT Notice requires American to provide a statement on its website or elsewhere regarding a costbasedjustification for fuel surcharges, especiallythose imposed by another carrier. 29. American admits that it sometimes refers to the British Airways fuel surcharge as "carrier-imposed fees." American denies the implication that it violated 14 C.F.R. §399.84(a) or 49 U.S.C. §41712 because the fuel surcharge imposed by British Airways allegedly was not a reasonable estimate ofthe per-passenger fuel costs incurred by British Airways above a baseline. American further denies the implication that it violated 14 C.F.R. §399.84(a) or 49 U.S.C. §41712 because American did not provide a statement on its website or elsewhere regarding a cost-based justification for the fuel surcharges imposedbyBritish Airways. 30. American denies the allegations in this paragraph. 31. American admits that Attachment 8 to the complaint is a copy of a correspondence from complainant to American in which he requested information regarding the amount of taxes imposed on three tickets. American admits that Attachment 9 to the complaint contains a response to complainant from American Customer Relations in which the British Airways fuel surcharge was inadvertently described as a "fuel tax collection by British Airways." American denies the implication that it intentionally mischaracterized the British Airways fuel surcharge to deterSupplement to Answer ofAmerican Airlines, Inc. March22, 2013 Page 9 of 11 customers from investigating alleged violations by American or that it otherwise violated 14 C.F.R. §399.84(a) or 49 U.S.C. §41712. 32. American lacks sufficient knowledge to admit or deny the allegations in this paragraph. 33. American lacks sufficient knowledge to admit or deny the allegations in this paragraph. 34. American admits that the DOT Notice and 14 C.F.R. §399.84(a) contain the statements quoted in this paragraph and that the DOT Notice otherwise speaks for itself. 35. American lacks sufficient knowledge to admit or deny the allegations in this paragraph. 36. American admits that Attachment 10 is correspondence to American in which it was suggested that the telephone ticketing fee was invalid because the fee allegedly was not disclosed in the first price quote and requested that the ticketing fee be refunded. American admits that Attachment 11 to the complaint contains two responses from AAdavantage Customer Service declining the refund request. American denies the implication that it violated 14 C.F.R. §399.84(a) or49 U.S.C. §41712 byits actions. 37. American cannot admit or deny complainant's allegations regarding the alleged telephone call. See response to paragraph 35. Accordingly, American denies the implication that it violated 14 C.F.R §399.84(a) or 49 U.S.C. §41712. American admits it did not refund the ticketing fee, but states that it did provide a travel voucher in the amount of$50.

### Supplement to Answer ofAmerican Airlines, Inc. March 22,2013 Page 10 of11 38. American admits that this dispute regarding the telephone ticketing fee arises from a redemption ofmiles for award travel by complainant from an AAdvantage account that was not in his name. 39. American admits that the complaint includes the attachments indicated in this paragraph. American denies the implication that it violated 14 C.F.R. §399.84(a) or 49 U.S.C. §41712. 40. American admits that Mr. Carl Nelson cited the DOT Notice in his June 26, 2012 correspondence to complainant and that American takes the position that the DOT Notice did not become effective until April 21, 2012. American denies that it has mischaracterized applicable DOT policy and also denies the implication that it violated 14 C.F.R. §399.84(a) or49 U.S.C. §41712. 41. American denies the allegations ofthis paragraph. 42. American admits that complainant asks the Department to exercise its authority under 49 U.S.C. §41712 and to open an investigation ofAmerican. However, to the extent not otherwise admitted herein, American denies that it violated 14 C.F.R. § 399.84(a) or49U.S.C. §41712. 43. American admits that complainant asks the Department to order American to make refunds to ticket purchasers of all monies allegedly represented to ticket purchasers as "taxes" or government-imposed fees but not actually remitted to governments. However, American denies that the Department has the authority to order American to make refunds. American also denies to the extent not otherwise admitted herein the implication that it violated 14 C.F.R. §399.84(a) or49 U.S.C. §41712.

### Supplementto Answer ofAmerican Airlines, Inc. March 22, 2013 Page 11 of 11 44. American admits that complainant asks the Department to impose civil penalties on American. American denies that civil penalties are warranted. 45. American admits that complainant asks the Department to refer this matter to appropriate U.S. and foreign tax collection agencies for investigation of alleged possible tax fraud or other violations oftax law. American denies that it has engaged in tax fraud or otherwise violated U.S. or foreign tax laws. 46. American admits that complainant asks the Department to issue any guidance or revised regulations needed to clarify to other airlines and ticket agents that these practices are allegedlyunfair and deceptive in violation of49 U.S.C. §41712. 47. American admits that complainant urges the Department to consider the so-called "Aggravating Factors" listed in page 10 ofthe complaint. However, American denies the implication that the so-called "Aggravating Factors" should be given any weightbythe Department.

Affirmative Defenses 

### 1. The complaint fails to state a claim upon whichreliefcan be granted. 2. Complainant lacks a privateright ofaction under 49 U.S.C. §41712. 3. The complaint is moot. 4. Complainant lacks standing to allege violations without evidence or first hand knowledge ofthe allegation ofviolations.Department ofTransportation Communications with respect to this document should be directed to:

Office ofAviation Enforcement and Proceedings Benjamin Edelman, Esq. 169 Walnut St. Brookline, MA 02445 617-359-3360 ben@benedelman.org

American Airlines Multiple Price-Advertising Violations of 49 U.S.C. § 41712 and 14CFR 399.84{a) } ) } } ) ) }



## ----------------------------------------------------------------------- ) February 4, 2013 Docket

______ _

!1-American Airlines staff and systems continue to mischaracterize carrier-imposed surcharges as "tax" and otherwise continuetoviolate DOT rules as to price advertising. Recall my complaint ofJanuary 14, 2012 in which I demonstrated AA makingthese mischaracterizations as early as March 2011 {and likely earlier). Recall also my complaint ofJune 17, 2012, in which I demonstrated AA mischaracterizing fuel surcharge as tax in telephone bookings ofordinary paidtickets, in telephone bookings ofcircle tickets, in telephone bookings ofaward tickets, in reaccomodatlon after cancellation, and in AA.COM fare quotes. !.Inthis further complaint, I restate my outstanding complaints as toAA and provide evidence thatthese and otherviolations are ongoing.

.... 

## 11 hereby request that DOT docketthis complaint as a requestfor DOTto exercise its authority under49 USC 41712 to investigate and impose sanctions on American Airlines forthe unfair and deceptive practices described herein. Ongoing Misrepresentations by American Airlines Telephone Representatives: Ordinary Paid Bookings 

# 4 On June 26, 2012, I booked aticket by telephone with an American Airlines telephone representative. (Itinerary: CDG-BOS-JFK-SCL-JFK-BOS-LHR-CDG in business class.) After confirmingthe desired flights, discussion proceeded as follows: Edelman: Could you reviewthe fare and tax? Agent: Certainly. OK, I'm showingthatthefare in US dollars is 4828, and 708.20taxes. I have a digital recording ofthis call. 1 Contrarytothe agent's statement, I believethemajority ofthe $708.20 consists ofcarrier-imposed fees, not "taxes." (I reach that conclusion by cross-checking the itinerarywith a near-identical itinerary quoted via the ITA Matrixsite, which itemizes applicabletaxes and carrier-imposed surcharges.) Note thatthisticket includes only a single 216 mile segment on British 

# S' 1Throughout,

# q~otes are verbatim transcriptions from digital call recordings, except where otherwise indicated. AA's automatic answering system authorized me to record the calls: "this call may be recorded." All call recordings are posted to my public web site at http://www.benedelman.org/airfare-advertising/americanairlines.html

. 1Airways- countering any suggestion that AA's mischaracterizing of carrier-imposed surcharges is limited totravel wholly or substantially on BA. 

# b Nor is this the first instance in which AA representatives have overstated the amount of "tax" on a paid booking. In April 2011, I contacted an AA telephone representative to book paid business class travel BOS-LHR-CPH-LHR-DEL-MUM-BAH-LHR-CPH-LHR-BOS-ORD-SEA. The agent orally quoted "tax" of $792.10. Thee-ticket confirmation and receipt was in accord, listing "tax" ofthat amount. See Attachment 1. In fact, as best I can tell the majority ofthis amount is carrier-imposed surcharge, not any actual tax. (Attachment 9 indicates thatthere were $502 offuel surcharge at issue, albeitthere mischaracterized by an AA representative as "fuel tax collection" as discussed in thesubsequent section "AA Affirmatively Misrepresenting Its Practices In Response to Customer Inquiries.") 

# 1No DOT rule has ever allowed an airline to mischaracterize carrier-imposed surcharge as "tax," neither before purchase (e.g. in telephone fare quotes) or afterthefact (in e-ticket confirmation and receipt). AA's statements in this regard were at all times false and unlawful. Ongoing Misrepresentations by American Airlines Telephone Representatives: Circle Tickets 

# <J On February 10, 2012, I purchased a first class Circle Pacific ticketfrom the AA Around The World Desk for my colleague -**~** The agent quoted thefare and "tax." Mindful ofthe prospect of carrier-imposed surcharges mischaracterized as tax, I specifically asked the agent "Arethose genuine taxes, orfees?" The agent replied: ''Taxes." (These quotes are my recollections. Iwas unableto record this call, but I was thinking abouttaxes versus carrier-imposed surcharges and Itherefore noted the agent's statements with extra care.) Via a subsequent written inquiryto AA Customer Relations, I learned thatthe amount characterized as "tax" actually included $364 of "fuel surcharge." 

# qTo obtain further documentation ofAA Around The World Desk staff mischaracterizing carrier-imposed surcharges as tax, on March 21, 2012 I requested a newticketfollowing the same itinerary Mr.**~** booked. On March 22 I called back (as instructed) to receive a fare quote. (Circle fares require next-day fare quotes.) The March 22 agent told me: "The base fare is 15204even, thetaxes are 669.03." Based on my correspondence with AA Customer Relations as tothe pricing of Mr.**~** sticket, I am confidentthatthe quoted $669.03 of "taxes" included a fuel surcharge of more than $350. I have a recording ofthis call. I made a digital call recording ofthis agent's misrepresentation. Ongoing Misrepresentations by American Airlines Telephone Representatives: Award Bookings J()MyJanuary 14, 2012 complaint to DOTflagged the problem ofAA mischaracterizing as "tax" certain carrier-imposed surcharges AA collects for award travel on BA. My recollection is thatAA telephone representatives consistently mischaracterized these fees as "tax" (including in my personal bookings of March 17, 2011 ("tax" of$311.50 per passenger on aticketforJFK-LHR-SIN with the second segment on BA) and May 30, 2011 ("tax" of$383.50 on BRU-LHR-DXB). The contemporaneous AA receipts in each instance listthese amounts as "tax" (not "tax and carrier-imposed surcharge" orthe like). See Attachment 2. I recall AA representatives in each instance usingthe simple word "tax" in the course of quoting each ofthese fares.

AA Price Advertising Violations 2\\ I broughtthese historic award bookings to the attention ofAA General Counsel Gary Kennedy and requested a refund forthe amounts wrongfully charged to me. See Attachment 3. In his letter of January 11, 2012, Mr. Kennedy claimed that AA never made such misrepresentations priorto consumers' purchase; he argued that any misrepresentations occurred only after purchase (e.g. in passenger receipts) and therefore could not influence customers' decisions to book. See Attachment 4. Mr. Kennedy's claim was inconsistent with my personal experience. To rebut his claim, I made a series of recorded test calls including calls ofJanuary 14, 2012, March 21, 2012, and July 13, 2012. In each call, AA telephone representatives falsely quoted "tax" that was actually a carrier-imposed surcharge. Below, I quote verbatim from these calls (with emphasis added to mark agents' false statements): \t.January 14, 2012: AA recording: Welcome to the Advantage Executive Platinum Desk! This call may be recorded. Agent: American Airlines, Executive Desk. Edelman: Yes, wanted to make a reservation for new award travel. Agent:.Airight, where would you like to go? Edelman: From Boston to London, Heathrow. Agent: On what date?

Edelman: March 13th Agent: March 13th, okay. Edelman: I'd like to do it on First class, so it'll be on BA please. Agent: All right

.... It's for how many? Two? Edelman: Just for me. Agent: And what's your return date? Edelman: March 13th forthe outbound. Agent: Right. Edelman: And March 20th forthe return. Agent: All right, round trip in first class. It's going to be atotal of 125 thousand miles and it's giving me taxes of $938.80.

## ~March 21,2012: AA recording: Welcome to the Advantage Executive Platinum Desk! This call may be recorded. Agent: American Airlines. Edelman: Yes, for a new award traveL Agent: Yes, I can help you Mr.Edelman. Edelman: From Boston to London. Edelman: Date oftravel, May 22nd. Agent: 22nd May, how many passengers? Edelman: Just one, myself.

AA Price Advertising Violations 3Agent: What cabin? Edelman: First class please. Agent: Okay, from Boston to London, I have the economy and business, unlessyou are looking at the BA flights. They have First class on them. Edelman: BA would be great, thankyou! Agent: Is this for oneway or roundtrip? Edelman: One way. Agent: Okay, so we are looking at 62,500 miles one way, taxes $347.70. And is this going to be foryourself? Edelman: Yes for me. Agent: All right. 11July 13, 2012:

/ AA recording: This call may be recorded. Agent: American Airlines, Executive Platinum Desk

... Edelman: Yes, for new award travel, from Boston to London. Agent: Travel on what day? Edelman: On August 9th, in First please. Agent: So you've (inaudible) First? Hold on. How many passengers traveling? Edelman: Just one. Agent:.And return? Edelman: Justthe one way would be great. Agent: You're looking at $347.70 in taxes, which credit card did you wantto use? 

### \J To confirm thatthese misrepresentations are ongoing, I performed afurthertest call on January 19, 2013: AA recording: Welcome tothe Advantage Executive Platinum Desk! This call may be recorded. Agent: American Airlines, Executive Platinum Edelman: Yes, for a new award travel for myself. Agent: Umm-hmm. Edelman: From Boston to London, in First class please. Agent: Okay, forwhich day please? Edelman: September 1 51 , Agent: September 1st, First class award ticket. One moment. Edelman: Ithink BA has the non-stop there, so that would be great. Agent: Okay, no problem sir. Agent: When are you planning to come backfrom London to Boston? AA Price Advertising Violations 4Edelman: September 5th please. Agent: And also, with the BA flight also? Edelman: Yes, please. Agent: And I do have a mile saver. Itis sixtytwo and a half [thousand] each way, so total miles would be 125,000, and you do have, you know, paying some taxon this, itis $1156.20. 

# IG As best I can tell, in each test call, agents falsely quoted "tax" thatwas actually a carrier-imposed surcharge. For example, in the January 19, 2013 test call, AA seeks to collect afuel surcharge of$414 in each direction (for BOS-LHR travel in business class orfirst class}. Thus, $828 ofthe $1156.20 is not genuine "tax" but carrier-imposed surcharge- fully 71.6% ofthe specified "tax." The priortest calls were similar in agents' falsely quoting "tax" thatwas actually a carrier-imposed surcharge. 2 Ongoing Misrepresentations byAmerican AirlinesTelephone Representatives: Reaccommodation After Cancellation 

# \1 MyJune 17, 2012 complaint reported numerous consumers reporting AA telephone representatives mischaracterizing carrier-imposed surcharges as "tax" in the course of providing reaccommodation after flight cancellation. I subsequently interviewed some ofthese consumers by email andtelephone. They systematically report AA staff using the word "tax" to describe the additional amounts payable. 

### \<'6 Since myJune complaint, there have been additional cancellations and downgrades inthe AA network, giving rise tofurther cancellations and recommendation on BA. For example, duringfall 2012, AA cancelled all ofits flights to Belgium. Multiple consumers reportthat AA telephone representatives have soughtto collect additional"tax" when reaccomodating affected passengers on BA. For example, in a public message posted in September 2012, one consumer reported that AA representatives "want[ed] to charge methe BA taxes even though they [AA] cancelled the flights." This consumer's message specifically indicates thatAA representatives used the exact word "tax" in describingthe additional amount payable. \qSimilarly, duringfall 2012, AA permanently downgraded an ORD-LHR flightfrom 777 to 763, removing the First Class cabin ofservice. For a First Class passenger seeking reaccomodation on a BA flight ORDLHR in the same class ofservice that AA originallyticketed and confirmed, AA representatives (both an initial agent and a supervisor) told the passenger that additional"tax" was payable fortravel on BA. I interviewed this passenger and specifically confirmed thatAA representatives used the exact word "tax" in describing the additional amount payable. 

## C).9 Recall also the multiple similar reports, from multiple independent consumers, that I conveyed in my complaint ofJuly 17, 2012, including passengers affected by cancellation ofservice ORD-DEL, JFK-BUD, and MAD-JNB, in each instance reaccomodated on British Airways but in each instance required by AA to pay asubstantial"tax" forthat alternative routing. I interviewed various affected consumers and found experiences similarto that described above.

2 Recordings ofall ofthese calls are posted to my public 'o/eb site at http://www.benedelman.org/airfareadvertising/americanairlines.html

. AA Price Advertising Violations

. 5

# '2-\ 1do not knowwhether AA would be within its rights to require that a customer pays a carrier-imposed surcharge when a customer is rebooked on British Airways as a result of aflight cancellation or removal ofthe class ofservice for which the customer holds a ticket and confirmed reservation. But I am confident thatAA may not mischaracterize BA-imposed surcharges as "tax" in the course ofa reaccomodation. <l.'Zongoing Misrepresentation byAround-The-World Booking ofCarrier-Imposed Surcharges as "Tax" - forTickets Issued by AA AA advertises around-the-world airtravel via the tool at http://rtw.oneworld.com/. This tool systematically mischaracterizes carrier-imposed surcharges as "tax." These amounts can be substantial -regularly morethan $1000 on asingle ticket, and I believe in some instances morethan $2000.

### ~If a passenger chooses an itinerarywith the first segment on AA, AA charges the customer's credit card and issues the entire ticket. According to a statementwithin the booking tool, AA also serves as the ticketing airline ifthefirst segment is on JL, JO, RJ, or 57. (See http://www.oneworld.com/flights/planbook-online/?faq0nly=1 at heading "FAQ"- "Who is myticketing airline?")

## '~I have quoted avariety ofaround-the-worldtickets using this tool. For example, on January 21, 2013, I quoted a coach ticketJFK-LHR-DXB-LHR-ARN-LHR-SIN-HKG-NRT-HKG-YVR with thefirst segment on AA. Taxes were quoted at $1222.16 USD. See Attachment 5. I clicked the "Proceed" button and received the lengthy itinerary and fare quote shown in Attachment 6, reiterating the $1,222.16 quote of ''Taxes." There, the word "Taxes" appeared as a hyperlink. I clicked this link, receiving the itemization in Attachment 7. The top three lines ofthat itemization report "Tax description unavailable (YRVB)" of $200, "Airline Fuel Surcharge" of$559, and "Multiple Surcharges" of$213, 

# 1,bAs best I can tell there are no actual governmenttaxes totalingthe $1222.16 "tax" charged on this itinerary. Rather, I believe the majority ofthe $1,222.16 "tax" -specifically, the $200, $559, and $213 characterized as "tax description unavailable" and "surcharge"- are actually carrier-imposed surcharges. Thus, 79.5% ofthe $1,222.16 "tax" is not actually tax but rather carrier-imposed surcharge. 

## 1{,Crucially, the initial disclosures (as shown in Attachments 5 and 6) mischaracterize the amounts at issue as "taxes", not "taxes and surcharges" orthe like. Moreover, every user using this booking tool must see the screens in Attachments 5 and 6; in contrast, the information in Attachment 7 is shown only if users specifically click the "Taxes" hyperlinktoview details. Thus, even though Attachment 7 describes the surcharges within a page entitled "taxes and surcharges information", most users are unlikelytosee this screen. Moreover, the "and surcharges" label appears only in HTMLtitle, not in page textinsufficiently prominentto cure the false statements made previously. Indeed, atthe same time that the "taxes and surcharges" label appears atthetop ofthe page (indicating that some ofthe listed charges are "surcharges" ratherthan taxes), the wording "TaxBreakdownPopUp" appears immediately below (in the popup's URL bar), again falsely indicating that everything in the listing is a "tax." Even more galling, the top line item "tax description unavailable" indicates that the $200 there at issue is a "tax" when in fact it is a carrier-imposed surcharge- compounding and furtheringthe misrepresentation. Finally, even on the mostfavorable view, the statements in Attachment 7 still fall short ofapplicable DOT rules: Note the absence ofthe crucial words "carrier-imposed" as well as the

AA Price Advertising Violations 6failure to include statements substantiatingthe surcharge amounts ("On average our passengers paid

..." orsimilar). These omissions are in sharp contrastto the requirements ofAdditional Guidance on Airfare/AirTour Price Advertisements (http://airconsumer.dot.gov/r"ules/Notice.Taxes.fees.sam.dl.13.website.pdf ). Fuel Surcharges of Impermissible Amounts and Not Supported with Required Calculations 

# z1 Historically, to the extentthatAA has accurately characterized carrier-imposed surcharges associated with travel on British Airways, AA has called these amounts "fuel surcharges." See e.g. the web page quoted within Gary Kennedy's January 11, 2012 letterto me (Attachment 4): "How much is the British Airways fuel surcharge?", "Is the British Airways fuel surcharge refundable if I cancel my plans?", "The U.S. government has determined that collection ofa fuel surcharge makes award tickets subject to certain taxes" (emphasis added). But the surcharge at issue was not a reasonable estimate ofthe perpassenger fuel costs incurred by the carrier above some baseline. See the evidence in my companion complaint, "complaint as to price advertising violations by British Airways."

### fl,~The DOT has instructed that airlines must substantiate fuel surcharges with statements supportingthe surcharge amounts. Specifically, the DOT instructs: "For example, descriptions such as the following would be acceptable: 'Fare includes afuel surcharge. On average our passengers paid $xx.xx more for fuel during 2011 in theirticket price than they did in 2000;' or 'Fares include a charge forfuel. On average in 2011 our passengers paid $xx.xx forfuel as a partoftheirticket price.'" See Additional Guidance on Airfare/AirTour Price Advertisements (available at http://airconsumer.dot.gov/rules/Notice.Taxes.fees.sam.dl.13.website.pdf ).**~C(**At present, itseems AA sometimes characterizesthe surcharge at issue as "carrier-imposed fees" without a commentas to the reason for such fees (i.e. no reference to "fuel"). However, at any time when AA used the label "fuel surcharge" to describe these fees, I believe even that term was impermissible in thatthefees at issue were not reasonable estif!Jates of per-passenger fuel costs above a baseline. I believethatterm was further impermissible in thatAA has never provided the required calculation as to the basis ofthe calculation. Furthermore, as I present in the section "Ongoing Misrepresentation by Around-The-World Booking ofCarrier-Imposed Surcharges as "Tax" -forTickets Issued by AA", in some instances (including around-the-world bookings), AA continues to use the label "airline fuel surcharge" to characterize a portion ofthe carrier-imposed surcharges at issue. AAAffirmatively Misrepresents Its Practices In Response to Customer Inquiries

### ~0 I am particularly alarmed to see AA staff affirmatively misrepresentingthe carrier's practices vis-a-vis carrier-imposed surcharges in response to customer inquiries. These misrepresentations have the inevitable and intended effect ofdeterring consumers from uncovering and pursuing valid claims against AA. 

# n,\ I began my investigation ofAA surcharge collection by contacting AA Customer Relations. In an electronic inquirythrough AA.COM, I noted unexpectedly large tax on several recenttickets. (See Attachment 8.) An AA customer service representative replied with an itemization of "fuel tax collection by British Airways" on the specified itineraries. See Attachment 9. Of course there was never any "fuel tax" in that amount; instead, the AA representative gave this false designation to a carrier-imposed AA Price Advertising Violations 7surcharge. The natural effect ofthis misrepresentation, and I believe the intended effect, was to deter a customer from further investigating aviolation by AA.

### ~Z.My colleague

### ~

# cJI recently redeemed AA miles for award travel in part on British Airways. Aware ofthe issue flagged in this complaint based on his personal discussions with me, Mr.

# <II objected when the AA telephone agent characterized a large charge as "tax." Specifically, Mr.

# cJI recalls making roughly the following statementtothe agent: "You should clarify to customers that only a portion ofthose charges are atax, while mostofthem are discretionary charges that BA/ AA elects to collectfrom its members. I imagineyou have weekly meetings during which you speak with your supervisors about customerfeedback, you mightwarn them thatthis may be putting AA at risk ofa lawsuit." Mr.

# cJI is confidentthat he was polite and nonconfrontational in this remark. Mr.

# cJI reports thatthe agent replied roughly "I can'ttalkto you with this attitude" and disconnected his call without assisting him further. '

### 3~Even routine discussions with AA telephone representatives include misrepresentations ofcarrier surcharge as "tax" in response to customer inquiries. For example, in section "Ongoing Misrepresentations by American Airlines Telephone Representatives: Circle Tickets" above, I noted a large "tax" quote on a circle ticket; I asked the agent "Arethose genuinetaxes, orfees?" and the agent replied: "Taxes." Ofthe consumers I interviewed who had suffered cancellations and reaccomodation on BA, at least one had spoken with a supervisor, and affected consumers tell methatAA representatives and supervisors universally used the word "tax" in characterizingthe fees at issue. AATelephone Representatives Fail to Disclose All Applicable Fees inthe First Fare Quote

## ~'(AA telephone representatives are failing to comply with the DOT's requirement that "the first price quote presented must be thefull price, including all taxes, fees and all carrier surcharges" (emphasis added). See "Additional Guidance on Airfare/AirTour Price Advertisements" (http:Uairconsumer.ost.dot.gov/rules/Notice.Taxes.fees.sam.dl.13.website.pdf), restating and clarifying 14CFR 399.84which was amended, effectiveJanuary 26, 2012, to allow onlythose airfare quotes where "the price stated is the entire price to be paid" (emphasis added} and disallowing any quotes where additional compulsory charges are omitted.

# )~On or about May lS, 2012, I called AA telephone reservations (Executive Platinum desk} to make an award reservation for award travel for relatives. Atthe conclusion ofthat call, an agent advised me of the required miles and applicable taxes ($5 per person). The agent mentioned noticketingfee or other required fees. When I later called back to ticketthe reservation, the agent noted a compulsory telephoneticketingfee of$25 per passenger. Unfortunately I do not have recordings ofthese calls.

## '!>~ In subsequent correspondence with AA, Iflagged the DOT rules noted above, notedthatthe telephone ticketingfee was invalid because itwas not disclosed inthe first price quote, and asked that the ticketingfee be refunded. See Attachment 10. In awritten reply, AA declined to refund thefee and attempted to recast the dispute as whether or not I was "made aware oftheticketing charge priorto the issuance ofthe ticket." See Attachment 11. It is true thatthe second AA representative mentioned thefee, so thefee was made known priorto my purchase oftheticket (as AA argues}, butthat is

AA Price Advertising Violations 8irrelevant under DOT rules: Underthe authority cited in the preceding paragraph, AA must disclose applicable required fees in the first fare quote. 

# >1 AA has never denied thatthe firsttelephone agent said nothing ofanytelephone booking fee. Under the new regulation, any fees not included in the first fare quote are impermissible and unlawful- a pointwhich 1capably conveyed to AA, including with afull documenttitle, relevant verbatim quote, publicly-available URL, and concise summary. Nonetheless, to date AA has refused to refund this fee. 

# JfS' (Irrelevant for present purposes, but apparent in Attachments 10 and 11: This dispute arises out ofa redemption of miles from mywife's AA frequent flier account. But I made the booking myself, with her authorization. I report the relevantfacts ofthe booking, including AA's statements and omissions, based on my personal first-hand knowledge.) AA Counsel Mischaracterize Applicable DOT Requirements 

## jCC I initially alerted AA to these violations in a December 31, 20111etterto Gary Kennedy (Attachment 3). Myfurther correspondence with AA consists of Mr. Kennedy's reply ofJanuary 11, 2012 (Attachment 4), my reply of March 25, 2012 (Attachment 12), a reply from AA Associate General Counsel Carl Nelson of June 26, 2012 (Attachment 13), and myfinal reply ofJune 29, 2012 (Attachment 14). 

# tfJ' Mr. Nelson's letter is particularly notable in that it affirmatively mischaracterizes applicable DOT policy. In response to myshowing ofAA staff mischaracterizing carrier-imposed surcharges as {(tax," priorto purchase, Mr. Nelson cites DOT February 21, 2012 guidance and argues thatthis guidance became effective after my March 25 letter- attemptingto use the DOT guidance (and its delayed effective date) as a barrier to liabilityto a consumerfor AA's prior unlawful actions.

## ~{ AA's reliance on the DOT's February 21 guidance is misplaced. Nothing in that guidance permitted AA to mischaracterize carrier-imposed surcharges as "tax" at any time -- neithl:!r before nor afterthe effective date ofthe February 21 guidance. Indeed, the DOT's February 21 notice explicitly confirms the impropriety ofthe practices that prompted me to write: "Such displays were deceptive and in violation ofsection 41712" (emphasis added)- indicatingthatthe false statements were unlawful when made, notthatthe statements would become unlawful only as ofsome future date. Mr. Nelson also mischaracterizes the 60-day period referenced in the DOT's notice. The notice clearly indicates thatthe delay applies onlyto commencement of DOT enforcement action: {(The office will provide

... 60 days [delay]

... before instituting enforcement action." In particular, the 60-day period in no way cures liabilityfor prior unlawful conduct. A consumer with avalid claim, as to unlawful practices occurring before or after April 21, simply is not hindered from bringingthat claim by reason ofthe DOT's decision notto institute enforcement action until that date. AA should not have argued anything the contrary. Resolution 

### • • I askthatthe Department ofTransportation:

# U.~1) Exercise its authority under 49 USC 41712 to open an investigation ofAmerican Airlines for having engaged in, and continuingto engage in, the unfair ordeceptive practices described above;

AA Price Advertising Violations 9

# t(~(2) Order American Airlines to refund to ticket purchasers all monies represented to ticket purchasers as "taxes" or government-imposed fees, but not actually remitted to governments;

# ~~ (3) Impose appropriate civil penalties on American Airlines; 

## ,..**~,)(4)** Refer this matterto appropriate US and foreign tax collection agencies for investigation of possible tax fraud or otherviolations oftax law in non-payment to governments of monies collected as "taxes" or government-imposed fees; and

## ~&{5) Issue any guidance or revised regulations needed to clarify to other airlines and ticket agents, and to preclude any future claim ofambiguity, that these practices are unfair and deceptive in violation of49 

### usc 41712. Aggravating Factors

### ~1 In setting a penalty against American Airlines forthis conduct, I urge the Department to consider the following aggravating factors, each ofwhich calls for a larger penalty: a) The sophistication and size ofAmerican Airlines. b) The nature and extent ofthe violations, specifically that AA has mischaracterized fuel surcharge as "tax" for at least 22 months (starting in March 2011, per Attachment 1to my December 31, 2011 complaint to Gary Kennedy, or perhaps earlier; continuing through the present). c) The fact that AA continued to mischaracterize fuel surcharge as "tax" even 11 months afterthe DOT's February 21, 2012 notice specifically reminded carriers that they must never do so. d) The scope ofAA's misrepresentations spanning thefull gamut ofAA's customer-facing operations including telephone bookings ofordinary paid tickets, telephone bookings ofcircle tickets, telephone bookings of award tickets, reaccomodation after cancellation, AA.COM fare quotes, and online aroundthe-world fare quotes. e) Intentional concealment, in that multiple AA representatives mischaracterized fuel surcharge as "tax" in multipie inquiries by individual consumers. f) The fact that AA counsel falsely claimed that the misrepresentations at issue occurred only after a consumer made a purchase (Kennedy letter ofJanuary 11, 2012). g) The fact thatAA counsel mischaracterized the DOT's February 21, 2012 notice as in some way permitting carriers to mischaracterize fuel surcharge as "tax" until 60 days after that notice {Nelson letter ofJune 26, 2012).

AA Price Advertising Violations 10h) AA's repeated refusal to refund amounts mischaracterized to me, despite my specificwritten request supported by compelling documentation and proof.

AA Price Advertising Violations Submitted February 12013, 

### /sf Benjamin Edelman

11

### CERTIFICATE OF SERVICE 

### I hereby certify that I have on this 

### 22nd day of March 

### 2013, served a copy of the foregoing Answer ofAmerican Airlines, Inc. by e-mail uponthe following persons: Benjamin Edelman, Esq. 169 Walnut Street Brookline, MA

### 02445 ben@benedelman.org Samuel Podberesky, Esq. Assistant General Counsel for Aviation Enforcement & 

### Proceedings U.S. Department ofTransportation sam. odberes dot. ov