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S.C. COMPANIA NATIONALA DE TRANSPORTURI AERIENE ROMANE TAROMs.a. 224F Calea Bucurestilor Henri Coanda International Airport 

### llfov Romania



## v/

Mr. Benjamin EDELMAN Third-party complainant 169Walnut St. Brookline, MA02445

BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF AVIATION ENFORCEMENT AND PROCEEDINGS WASHINGTON D.C. Docket DOT-OST-2013

ANSWER OF TAROM s.a.

### 1/THE COMPLAINT OF Mr. BENJAMIN EDELMAN
The complaint of Mr. Edelman is based on the quotation as seen on December 13, 2013 on the Tarom's web site and the ticket rate as shown by Tarom s.a. for aticket NewYork JFK to Bucharest, Romania. The fare quote shows Euro 265,00- as the airline fare and Euro 300,70- taxes ora total ticket price of Euro 565,70-. On 'information and belief' of Mr. Edelman there is no 'tax' of Euro 300,70- on this route. The compliant in fact is based on the sentence that 'taxes, fees and charges' are all included in a 'tax box'. The compliant is based on the DOT rules not allowing airlines to redefine or disclaim the word 'tax'. The complaint urges the Departmentto directTarom to refund to passengers all funds collected as 'taxes' but not remitted to government entities, to assess appropriate civil penalties and to referthe matterto foreign tax authoritiesfor investigation of possible tax fraud.



### II/ EUROPEAN COMMUNITY LEGISLATION
TAROM is a European Community Carrier and as such has to comply with the relevant EC Regulations and Directives governingthe information on rates and fares totheir passengers. The compliance with the EC Regulations and Directives is checked and controlled by the competent authorities ofthe EU MemberStates. EC Regulation 1008/2008 on common rules forthe operation ofair services in the European Community and Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market (the :uPC Directive') regulate airlines price information. The relevant provisions are as follows:


### A.l.Art. 23ofRegulation 1008/2008. A.l.l. Pursuant to Art. 23 of Regulation 1008/2008 each carrier, when operating from an airport located in the territory ofa memberstate, has to indicate the final price oftheflight ticket, including the applicable conditions for airservices. This regulation has been inforce since November01, 2008.

--·----·-····--- ------·Art 23 provides thatthe final price should be indicated from the beginning ofthe booking process. In addition, a detailed breakdown ofthe price elements should be specified provided they have been added to the airfare: a/the airfare orair rate b/taxes c/ airport charges d/other charges, surcharges orfees, such as those related to security orfuel. The article also stipulates that any optional price supplements shall be communicated in a clear, transparent and unambiguous way atthe start ofthe booking process and their acceptance bythe customer should be made on an 'opt-in' basis.

A.2.2. The implications are as follows: 1/Thetotal price is clear at all times ofthe booking process. The price firstadvertised on a website or othertypes of media should be the final amountthe consumer will have to pay, including all TFC's (Taxes, fees, charges) which are unavoidable and foreseeable atthe time ofthe publication. 2 All taxes, fees-<!nd cha_rges-'!Med_to_the_baslc airlaJ"e_sbmtld_he_sp_ecified indhlidually a oreal<aown st\oul8 oe prov18e8. For tliose airlines aaaing TFC's to tne oasic airfare, fne different charges must be clearly distinguished. All TFC's cannot be presented in a lump sum without specifyingthe price elements.

A.2. Articles 5-7 ofthe Unfair Commercial Practices Directive. The UCP Directive protects consumers' economic interestsfrom unfaircommercial practices. It contains a general prohibition on unfair commercial practices and describes two main categories of unfaircommercial practices in more detail: misleading commercial practices and aggressive commercial practices. Art. 5 ofthe Directive specifies that practices are to be considered 'unfair' ifthey are contrarytothe requirements of professional diligence and materiallydistort orare likely to materially distortthe economic behavior ofaconsumer, i.e. preventing a consumerfrom making an informed choice. According to art. 6 an action is misleading when it contains false information or in any way deceives or is likelyto deceive the average consumer in relation to a numberofelements, including the price orthe manner in which the price is calculated. (art. 6.1.)Art. 7 provides that omissions should be regarded as misleading when they do not provide material information thatthe average consumer needs to make a purchase decision or ofa trader provides the information in an unclear and ambiguous way. Moreover, art. 7.4. stipulates that in the case ofan invitation to purchase the price ofthe product orservice inclusive oftaxes must be provided. A commercial practice is only misleading ifthe action oromission cause a consumer to take a transactional decision that he/shewould not have taken otherwise, cfr. Art. 6.1 and 7.1. According to the UCP Directive, failure to provide customers with clear, appropriate and complete information relating to the price and any other cost associated with the provision ofa service may constitute an unfair practice. Airlines must provide customers with the information they need in atimely and clear manner in orderto make an informed choice. This information includes the prices and all unavoidable taxes, fees, charges and surcharges. According to art. 6ofthe UCPDirective, which refers tothe presentation ofthe price ofthe product orservice orthe manner in which it is calculated, the following actions can be regarded as misleading: Incorrect calculation offees and taxes in the price ofthe ticket, Presenting costs which are contributingto the aircarrier's general income as taxes and feesJmposellbiJ olheLboilles According to art. 7 ofthe Directive the following actions by airlines can be regarded as misleading omissions: The final price ofthe flight ticket does not include all the unavoidable taxes, charges and fees which are to be paid by the consumer {p.e. booking fees orfuel surcharge), No clear and easily accessible information on the refundability ofcharges, fees and taxes.


### A.3. Conclusion. According to European law, clear information aboutthefinal price ofaservice should be provided from the beginning ofthe reservation process. All taxes and fees should be named so as notto mislead the consumer by implyingthat charges imposed by the airline are in fact imposed by other bodies, airports orgovernments. It is also required that all fees should be correctly calculated.
Ill/ COMPLIANCE OF THE INFORMATION PROVIDED WITH EC REGULATION 1008/2008AND DIRECTIVE 2005/29/EC
As known by all airlines, airlines and airports are using differentterms to describe the same types ofTFC's.In the lATA TAX LIST the key terms taxes, charges and fees have been defined as: TAX: an impostfor raising revenue forthe general treasury and which will be used for general public purposes. CHARGE: an impostfor raising revenue for specific aviation related facilities or services. FEE: another name for 'tax' or 'charge' depending upon whatthe revenue is used for as defined. (Taxes and charges are similarly defined in ICAO Doc 9082.3) By using the Tarom's reservation tool and passing all reservation steps, the consumer is informed abouttaxes, charges and fees, all together separated from the ticket rate in a 'tax box'. This 'tax box' can be renamed as a 'TFC box' ifthis wording would contribute to transparency ofthe ticket price. The relevant legislation aims to a correct information ofthe consumer by separating the basic air rate from taxes, fees and charges. The information to the passengers is not misleading ifthe consumer can see the breakdown ofthe rate as advertised by the airline and the breakdown ofthe rate is compliant with art. 23 of EC Regulation 1008/2008. Underthe system as applied by Tarom, TFC's (Taxes, Fees and Charges) are all included in a 'tax box', as partoftb_e**totaLtickeLrate_witb_abLE~akdoWJLon_theJ:icket** The accusation as made by Mr. Edelman on possible tax fraud or misleading information to consumers is without any further proofeven indication. It results from a reportfrom the European Commission that detailed information on exactly whatthe price covers is of little or no use to the passenger. The passenger only needs information on the total price and the size ofthe refund for unused tickets, i.e. airport charges and government taxes imposed on passengers. To ensure transparency for both consumers and regulatory bodies it is importantthatthe different airport charges and governmenttaxes imposed per passenger is specified in the ticket price. Other price information is howevergenerally superfluous forthe passenger. It has to be mentioned thatTAROM does not operate to/from U.S.A. with its own flights, but only as marketing partner underathird country code-share agreement with Air France. At present, TAROM uses an e-commerce solution provided by athird party company, Amadeus IT Group S.A., as an 'SaaS' ('Software as a Service') solution. Being an 'SaaS' solution, TAROM has a limited control in terms ofcustomization or modification ofthe existing solution and onlythe third party provider (in our case Amadeus IT Group S.A) is entitled to modify orcustomize the solution for a specific request. At the moment, TAROM presents to the end-user the total amount oftaxes which are not broken down by components duringthe reservation process, but they are specified on the ticket, in the FARE CALCULATION box. Following Mr. Benjamin Edelman' complaintthe specialists ofTAROM have already contacted Amadeus in orderto find a solution to breakdown theTFCs.Accordingto our current agreement with Amadeus IT Group S.A. and to the Amadeus internal procedure which requires that an internal ticket (Work Order, here referred to as WO) must be opened for any customization or product implementation, TAROM's specialists have opened the WO number07882716 dated 10January 2014, related to the modification ofthe internet booking engines to clearly indicate the breakdown oftheTFC's. TAROM has also requested Amadeus to develop or implementforTAROM the solution already implemented for another airline using the same internet booking engine. The so called Fuel Surcharge entered in TAROM tickets into theTAX box undertheYQ code is an amountfixed from time to time by TAROM and aimed to partially recover the fuel price fluctuation. It is officiallyfiled and distributed to all CRS's through ATPCO (Airline Tariff Publishing Co).
We would like to assure you thatTAROM makes all efforts in orderto be complying with the applicable regulations. We take all the necessary measures to ensure that clear information aboutthe breakdown ofTFC's on thefinal price ofa service will be presented to the enduser on ourwebsite.

Date: 16 January
CC: Mr. Benjamin Edelman
Attachments: TAROM electronicticket sample Confirmation ofAmadeus regarding the WO no. 07882716 requested on 10January 2014

### Ana Maria lonescu From: Sent: Dana Chiriac [dana.chiriac@tarom.ro] 16 ianuarie 2014 14:23 To: Subject: 'Ludo Sauwen'; 'Tarom Legal'; 'Anamaria lonescu'; 'Margareta Vasilevschi'; 'Monica Hustiuc' FW: WO 07882716- URGENT
Dear All, Please find belowthe information we havejust received from Amadeus. With my best regards, Dana

Daniela Eugenia Chiriac Distribution Manager Commercial Division Campania Nationala de Transporturi Aeriene Romane TAROM S.A. 224F Galea Bucurestilor, Otopeni, l!fov County, Romania Phone: (40-21) 2041264/ Fax: (40-21) 2014727 dana.chiriac@tarom.ro; www.tarom.ro
Please consider yourenvironmental responsibility before printing this**e~mail.**
From: Alvaro Diez [mailto:adiez@amadeus.com] 

### Sent: 16 ianuarie 2014 14:17 To: dana.chiriac@tarom.ro 

### Cc: 'Ghassan Teffaha'; 'Monica Hustiuc' 

### Subject: RE: WO 07882716 - URGENT Dear Dana Good to hearfrom you! Yes, it has been received and I have forwarded internally. I made clear this is urgent Iwill keep you posted as soon as I hear anything Thanks Best Regards Alvaro Diez Account Manager Airline Account Mgl Europe &Africa Amadeus IT Group SA T: +34 628259073 (ext. 7348 1704) adiez@amadeus.com http:f/www.amadeus.com 

# aMaDEUS Yourterchooklgy panner

1From: To: "Dana Chiriac" <dana.chiriac@tarom.ro> '"Alvaro Diez"' <adiez@amadeus.com> Cc: Date: "'Ghassan Teffaha"' <qhassan.teffaha@amadeus.com>, "'Monica Hustiuc"' <monica.hustiuc@tarom.ro> 01116/2014 01:13 PM Subject: RE: WO 07882716- URGENT



### DearAlvaro, As the below matter becomes very urgent for us and both Ghassan and Jochen are out ofthe office, could you please confirm that Amadeus received our wo number07882716 dated 

### 10January 

### 2014, related to the modification ofthe internet booking engines to clearly indicate the breakdown ofthe TFC's? Please be advised that it is extremely important for us to receive the concerned confirmation today. Looking forward to hearingfrom you, manythanks and best regards, Dana

Daniela Eugenia Chirja Commercial Division Campania Nationala de Transporturi Aeriene Romane TAROM S.A. 224F Galea Bucuresti!or, Otopeni, l!fov County, Romania Phone: (40-21) 2041264/ Fax: (40-21) 2014727 dana.chiriac@tarom.ro; www.tarom.ro

# ~Please consideryourenvironmental responsibility before printing this e-mail. From: Ghassan Teffaha [mailto:qhassan.teffaha@amadeus.com] Sent: 

### 16 ianuarie 

### 2014 13:36 To: Dana Chiriac Cc: Jochen Allstadt; 'Monica Hustiuc' Subject: Re: WO 

### 07882716

- URGENT


### Hi Dana, Will ask a!varo

From: "DanaChiriac" [dana.chiriac@tarom.ro] Sent: 01116/2014 12:48 PMZE2 To: Ghassan Teffaha 2

### Cc: Jochen Allstadt; "'MonicaHustiuc'" <monica.hustiuc@tarom.ro> Subject: 

### RE: WO 07882716- URGENT Dear Ghassan, I havejust received an "out-of-the-office reply from Jochen
... Is there anybody else that could help us today? Thank you, Dana

Daniela Eugenia Chiriac Distribution Manager Commercial Division Campania Nationala de Transporturi Aeriene Romane TAROM S.A. 224F Galea Bucurestilor, Otopeni, llfov County, Romania Phone: (40-21) 20412641 Fax: (40-21) 2014727 dana.chiriac@tarom.ro;www.tarom.ro

# ~Please consideryour

# ~nvironmental responsibility before printing this e-mail. From: Dana Chiriac [mailto:dana.chiriac@tarom.ro] 

### Sent: 16 ianuarie 2014 12:42 To: 'Jochen Allstadt' 

### ·· ···**··ec""Gbassali=li!ffiin~IS'loiuca-:Eicisw~~~~~~~~~~~~~~~~~~~~~~~~~=:;;=~~** 

### Subject: FW: WO 07882716 - URGENT Dear Jochen 1 As the below matter becomes very urgentfor us and Ghassan is out ofthe office, could you please confirm that Amadeus received ourwo number 07882716 dated 10January 2014, related to the modification ofthe internet booking engines to clearly indicate the breakdown ofthe TFC's? Looking forward to hearingfrom you, manythanks and best regards, Dana

Daniela Eugenia Chiriac Distribution Manager Commercial Division Campania Nationala de Transporturl Aeriene Romane TAROM SA 224F Calea Bucurestilor, Otopeni. llfov County, Romania Phone: (40-21) 2041264 I Fax: (40-21) 2014727 dana.chiriac@tarom.ro; V>NJW.tarom.ro

# ~Please consider your environmental responsibility before printing this e-mail. From: Dana Chiriac [mailto:dana.chiriac@tarom.ro] 3

### Sent: 15 ianuarie 2014 17:17 

### To: 'Ghassan Teffaha'; 'Monica Hustiuc' 

### Subject: RE: WO 07882716 - URGENT Thank you, Ghassan! Very much appreciated, Dana

Daniela Eugenia Chiriac Distribution Manager Commercial Division Campania Nationala de Transporturi Aeriene Romane TAROM S.A. 224F Catea Bucurestilor, Otopeni, llfov County, Romania Phone: (40-21) 2041264 I Fax: (40-21) 2014727 dana.chiriac@tarom.ro;www.tarom.ro 

# J:j Please consider your environmental responsibility before printing this e-mail. From: Ghassan Teffaha [mailto:qhassan.teffaha@amadeus.com] 

### Sent: 15 ianuarie 2014 16:47 

### To: Dana Chiriac; 'Monica Hustiuc'**Subjed~e~WQ QZ~821±6=URGE;**  

### Hi Dana, Will check with Jochen

From: 

### "DanaChiriac" [dana.chiriac@tarom.ro] Sent: 

### 01/15/2014 04:23PMZE2 To: 

### Ghassan Teffaha; '"MonicaHustiuc"' <monica.hustiuc@tarom.ro> Subject: 

### RE: WO 07882716- URGENT Hi; Ghassan! As already mentioned by Monica, this confirmation is extremely important and urgentfor us, as we need to use it as a prooffor a legal complaint initiated by an American lawyer at DOT. As our response should be filed with DOT by the end ofthis week, I am afraid thatwe cannot wait until nextTuesday. Could you please let us know ifthere is anybody else in Amadeus that could help us in this respect? Manythanks foryour kind assistance and best regards, Dana

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