BEFORE THE 

U.S. DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

Mike Borsetti, 

Third-party Complainant 

v. 

American Airlines, Inc. 

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Docket DOT-OST-2015-0087 

ANSWER OF AMERICAN AIRLINES, INC. 

Communications with respect to this document should be addressed to: 

HowardKass 

Vice President- Regulatory Affairs 

AMERICAN AIRLINES, INC. 

1101 17th Street, N.W. 

Washington, D.C. 20036 

Alec Bramlett 

Managing Director 

Legal and Government Affairs 

AMERICAN AIRLINES, INC. 

MD 5675, P.O. Box 619616 

DFW Airport, Texas 76261 

Dated: May 22,2015 

Robert P. Silverberg 

SILVERBERG GOLDMAN, LLP 

1101 30th Street, N.W. 

Suite 300 

Washington, D.C. 20007 

Tel: (202) 944-3300 

E-mail: rsilverberg@sgbdc.com 

Attorneys for 

AMERICAN AIRLINES, INC. 
BEFORE THE 

U.S. DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

Mike Borsetti, 

) 

) 

) 

) 

) 

) 

) 

Third-party Complainant 

Docket DOT -OST -2015-0087 

v. 

American Airlines, Inc. 

ANSWER OF AMERICAN AIRLINES, INC. 

American Airlines, Inc. ("American") hereby answers the third-party complaint filed by 

Mike Borsetti ("Mr. Borsetti" or "Complainant") seeking American to (i) reformat its form of eticket confirmation and receipt and (ii) make refunds to Mr. Borsetti and other award travel 

customers of any foreign taxes imposed by Japan, Italy and the United Kingdom and collected by 

American at rates above those established by law and to cease any alleged over-collections. 

American hereby denies that its form of e-ticket confirmation and receipt is inconsistent with 

section 399.83 of the DOT Statements of General Policy (14 C.P.R. §399.83) as alleged. 

With respect to the allegations that American is not correctly collecting the Italy or 

United Kingdom imposed taxes or fees for award travel by children under 12 years of age, 

American has determined that for frequent flyer program (AAdvantage) tickets only, a computer 

programming issue appears to have possibly resulted in the collection of the full amount of such • 

taxes imposed by the United Kingdom even though passengers under the age of 12 are exempt 

from payment of the U.K. Air Passenger Duty ("APD") if traveling in the lowest class of service, 

but only with respect to travel commencing after May 1, 2015. Prior to this date, children 2 

years or younger were exempt from the tax provided they were not allocated a separate seat 

before boarding the aircraft. 
Answer of American Airlines, Inc. 

Page 2 of 11 

In the case of the Italian Embarkation Tax, children below 2 years of age are exempt 

from the tax and the amount of the tax is discounted by 50% for children between the age of2 

and 12, and therefore passengers under age 12 traveling on award tickets may have paid the 

higher tax. No similar over-collections occurred in connection with award travel from Japan as 

the provisions ofthe Japan Government Passenger Services Facilities Charge (coded as "SW") 

allowing for a child discount does not apply to award travel on American. 

In connection with its inquiry into this matter, American believes that any over collection 

of foreign taxes occurred in very narrow circumstances. Specifically, if an over collection 

occurred it would have been in connection with children traveling from Italy on award tickets as 

revenue ticketed passengers were properly charged. In the case of the U.K. APD, the over 

collection that may have occurred is only with respect to children 2 years or younger traveling on 

award tickets, and since May 1, 2015, children between 2 and 11 years of age but only if the 

award ticket was for transportation in the "lowest class of travel." Accordingly, American 

reasonably believes that the number of impacted passengers will be low. 

American has started the process to make any necessary computer programming changes 

to bring its relevant fee collection criteria based on the age of the passenger and class of service 

in line with taxing authority rules in Italy and the United Kingdom and to do so as promptly as 

possible. American is also creating a process to identify passengers that will be traveling on 

award tickets that may have inadvertently been charged more than the applicable Italian 

Embarkation Tax or the U.K. Air Passenger Duty and to issue to any such passengers an 

appropriate refund. Further, American is researching its records regarding child passengers who 

have already traveled on award tickets from Italy and the United Kingdom to determine if it over 

collected the Italian Embarkation Tax or the U.K. Air Passenger Duty, and to the extent 
Answer of American Airlines, Inc. 

Page 3 of 11 

American's records identify any such over collections, it will determine the best way to initiate a 

refund of the excess taxes. Under the circumstances where American will make the necessary 

programming changes and issue refunds, no purpose would be served by instituting a formal 

enforcement proceeding as remedial actions are already being taken by the carrier.' 

Accordingly, American respectfully requests for the reasons set forth below that the Department 

dismiss the complaint in whole and issue an order so stating in accordance with §302.406(a)(2). 

I. American's e-Ticket Confirmation and Receipt Is 

Not Inconsistent With Any DOT Regulation 

As noted, the Borsetti complaint raises two distinct issues, the first being the claim that 

the form of American's "eTicket & Receipt Confirmation" ("Receipt") is inconsistent with 

§399.83 of DOT's Statements of General Policy (14 C.F.R. §399.83) because the document 

"omit[s] critical information about the ticket purchased." Complaint, p. 1.2 Mr. Borsetti claims 

that the omission of the information he deems important causes consumer harm. Complaint, p. 

2. 

Section 399.83 states as follows: 

§ 399.83 Unfair or deceptive practice of air carrier, foreign air carrier, or ticket 

agent in orally confirming to prospective passenger reserved space on scheduled 

flights. 

It is the policy of the Board to consider the practice of an air carrier, foreign air 

carrier, or ticket agent, of stating to a prospective passenger by telephone or other 

1 The Department should note that with respect to all tickets presented for transportation, no 

over-collection of foreign government fees has ever benefited American as the Company 

remitted all of the fees collected from its passengers with the understanding that it was correctly 

collecting such levies. 

2 The Complaint alleges that the Receipt lacks the fare basis and ticket designator for each 

segment; the fare calculation line which contains information on stopover limitations, the amount 

and type of surcharges levied, and whether a higher intermediate point fare was paid; 

information regarding endorsement and restriction annotations; the breakdown of taxes, fees and 

carrier-imposed charges; the date and place of issue; and ticket validity dates. 
Answer of American Airlines, Inc. 

Page 4 of 11 

means of communication that a reservation of space on a scheduled flight in air 

transportation is confirmed before a passenger has received a ticket specifYing 

thereon his confirmed reserved space, to be an unfair or deceptive practice and an 

unfair method of competition in air transportation or the sale thereof within the 

meaning of section 411 of the Act, unless the tariff of the particular air carrier or 

foreign air carrier provides for confirmation of reserved space by the means so 

used. 

The rule, which dates back to action taken by the Civil Aeronautics Board ("CAB") in 

1973, requires by its clear and unambiguous terms that it would be an unfair or deceptive 

practice and an unfair method of competition were a carrier to state to a customer that space on a 

scheduled flight was confirmed prior to the time the passenger actually receives the ticket for 

travel indicating that space has been confirmed. Recognizing that the clear text of the Policy 

Statement does not support his complaint, Mr. Borsetti argues in footnote 1 that the "only 

reasonable interpretation" of this section of the DOT's Statements of General Policy is that the 

rule requires the carrier to provide each customer a "complete copy of the electronic ticket 

record" as stored in the carrier's electronic reservations system. In fact, the rule, whether it was 

being interpreted in 1973 when first adopted, or in 2015, simply cannot be read to put the gloss 

on it as does the Complainant. 

The purpose of the rule, as explained by the CAB when it adopted the policy statement 

(first applicable to U.S. air carriers and subsequently to foreign air carriers), is to protect the 

public against air carriers and their agents from representing that a reservation for future travel 

has been confirmed when, in fact, it has not, and to extend the remedy of denied boarding 

compensation to those holding reservations that were confirmed in any manner provided for in 

the carrier's tariff. The history and purpose ofthe rule have absolutely nothing to do with the 
Answer of American Airlines, Inc. 

Page 5 of 11 

information a carrier must provide a customer when issuing an e-ticket confirmation. 39 Fed. 

Reg. 38095 (Oct. 29, 1974)? 

Without debate, there are certain DOT rules that mandate the display of fares and other 

required information, including all applicable taxes and carrier-imposed fees as found in 

§399.84(a) and the requirement to display required baggage fees and other optional fees as 

required by §399.85. There is no requirement, however, that carrier-issued receipts contain the 

information Mr. Borsetti claims is mandated by his tortured interpretation of §399.83.4 Indeed, 

his suggestion that carriers must, not may, provide a "breakdown oftaxes, fees and 'carrierimposed charges'" is contrary to §399.84(a) that expressly makes it mandatory that the total 

ticket price be shown in ads and quoted in fair displays on carrier websites. Although the rule 

also allows for fares to be broken down into their constituent parts if a carrier chooses to provide 

this information, such additional fare displays must, by rule, be less prominent than the display 

of the total price including all taxes, fees and carrier-imposed charges.5 The Borsetti position 

requiring that the breakdown of the fare and its components be detailed is contrary to §399.84(a). 

3 Indeed, as §399.83 was adopted in the early 1970's, the CAB could never have contemplated 

that tickets would be capable of being issued directly to customers by electronic means. 

4 When DOT last amended the so-called "full fare rule" as part of the Second Final Rule on 

Enhancing Airline Passenger Protections (76 Fed. Reg. 23166 (April25, 2011)), it also put into 

effect numerous additional consumer disclosure requirements, including requirements related to 

e-ticket confirmations. If the Department had wanted to mandate the specific data elements that 

must be contained inane-ticket confirmation or receipt as those listed in the Complaint on page 

2, it could easily have done so, but did not. Any attempt to shoehorn the Complainant's wish list 

of additional and mandatory data points to be contained in every receipt into a reading of the 

requirements of §399.83 must fail. 

5 Section 399.84(a) states: Although charges included within the single total price listed (e.g., 

government taxes) may be stated separately or through links or "pop ups" on websites that 

display the total price, such charges may not be false or misleading, may not be displayed 

prominently, may not be presented in the same or larger size as the total price, and must provide 
Answer of American Airlines, Inc. 

Page 6 ofll 

The procedural pathway for addressing the concerns of the Complainant as it relates to 

post -purchase disclosures is to file a request for initiation of a rulemaking proceeding in 

accordance with §302.16 ("Petitions for rulemaking") and not by initiating individual third-party 

enforcement action. If a rulemaking petition were to be filed by the Complainant, and if the 

Department were to find the position of Mr. Borsetti compelling, then DOT can exercise its 

discretion and institute a rulemaking proceeding, bearing in mind that aspects of the information 

Mr. Borsetti insists must be disclosed has already been determined by the Department to be 

optional. 

II. The Reduced Japan Government Passenger Services 

Facilities Charge Does Not Apply To American Award Travel 

The Complainant alleges that American did not correctly collect the Japan Government 

Passenger Services Facilities Charge (coded as SW) for children between the ages of2-11 when 

using AAdvantage award miles. Complaint, p. 3. According to the Complainant, the Japan 

Passenger Services Facilities Charge applicable to international travel for children between the 

years of 2-11 is 50% less than the adult charge. While the Complainant is partially correct, the 

determination of whether the 50% discount applies is not only based upon the age ofthe traveler, 

but requires the child to be traveling on a "child fare ticket." If not, the full rate of the Passenger 

Services Facilities Charge is applicable and is to be collected by the carrier. American's local 

tax counsel in Japan has confirmed to the Company that the issue of ticket classification is a 

matter left to the discretion of the air carrier. 

In the case of award travel, and unlike the availability in certain markets of child fares 

that are lower than adult fares, there is no lesser mileage redemption rate offered for children 

cost information on a per passenger basis that accurately reflects the cost of the item covered by 

the charge. §399.84(a). 
Answer of American Airlines, Inc. 

Page 7 ofll 

traveling on AAdvantage award miles. Hence, American does not classify an AAdvantage 

award ticket as a "child fare ticket" and consequently American collects, as it must, the full 

Japan Passenger Services Facilities Charge when passengers of any age travel on an award ticket 

and when presented for travel remits the full amount ofthe charge to the proper governmental 

authorities. Accordingly, American denies it over-collected the Japan Passenger Services 

Facilities Charge when issuing the award travel documents to the Complainant's child as alleged 

in paragraphs 12 and 13.c. ofthe Complaint and therefore American urges this aspect of the 

Complaint be dismissed with prejudice. 6 

III. The Italian Embarkation Tax 

The Complainant is correct in noting the applicability of the Italian Embarkation Tax 

imposed by the Government of Italy. American has been collecting and remitting the correct 

amount of the embarkation tax for children traveling on revenue tickets, meaning that the tax is 

completely waived for children 2 years of age and under, and for children between 2 and 12 

years of age a 50% reduction ofthe tax is applicable. 

American has also determined that the tax discount or waiver based on the age of the 

passenger would apply to children traveling on an award ticket in the same manner it would 

apply to a child traveling on a revenue ticket. To the extent American may have inadvertently 

collected the incorrect amount of the Embarkation Tax when passengers redeem miles for award 

travel, the sums collected were nonetheless remitted in full to the taxing authorities when the 

6 Although the Complaint does not specifically call out whether the booking described in 

paragraph 12 of the Complaint was for award travel (as is clear from a reading of paragraph 

13.c.), American has determined based on the ticket number provided by the Complainant (but 

redacted from the public version of the Complaint) that the transportation document was issued 

in connection with award travel. 
Answer of American Airlines, Inc. 

Page 8 ofll 

award ticket was presented for transportation and, hence, American received no benefit even if it 

inadvertently imposed a tax on child travel that was higher than Italy mandated. 

American believes the root cause of the tax calculation issue was an AA.com computer 

program that did not distinguish between adult passengers and child passengers traveling on 

award tickets departing airports in Italy. The Embarkation Tax was correctly collected, in the 

lower amounts, when a passenger purchased a revenue ticket (assuming the booking passenger 

correctly selected the correct passenger type during the AA.com booking process). American 

has started the process to reprogram the AA.com software to take into account the age of the 

prospective passenger whether or not they are traveling on a revenue ticket or an award ticket. 7 

American is also creating a process to identify passengers that will be traveling on award tickets 

that may have inadvertently been charged more than the applicable Italian Embarkation Tax and 

to issue to any such passengers an appropriate refund. Further, as noted, American is researching 

its records regarding child passengers who have already traveled on award tickets from Italy to 

determine if it over collected the Italian Embarkation Tax, and to the extent American's records 

identify any such over collections, it will determine the best way to initiate a refund of the excess 

taxes.8 

IV. United Kingdom Air Passenger Duty 

In paragraph 16 of the Complaint, Mr. Borsetti, although not having actually purchased a 

ticket, claims that a search for economy class travel using award miles from London to Los 

7 In accordance with TSA requirements, American requests the full names of all passengers and 

their dates of birth. However, the date of birth information supplied to TSA is separate from the 

AA.com pricing module that calculates fares and applicable taxes. Nor is the AA.com computer 

currently set up to utilize the customer-supplied passenger type (by age) information for award 

ticketed passengers when calculating the taxes and fees applicable to such award travel. 

8 American will issue any refunds as may be warranted to Mr. Borsetti based on an analysis of 

the award tickets for travel from Italy described in the Complaint. 
Answer of American Airlines, Inc. 

Page 9 of 11 

Angeles quotes the same amount oftotal taxes and fees for two adults as it does for one adult and 

one child (age 2-11 ). As noted, the tax in question is the United Kingdom Air Passenger Duty 

("APD") applicable to international departures from U.K. airports. Infants under 2 years of age 

and not allocated a separate seat are exempt from payment of the APD. Excise Notice 550 

§3.1.2 (February 27, 2015). With respect to departures from the U.K. on or after May 1, 2015, 

children under 12 years of age are likewise exempt from payment of the APD, but only if travel 

is in the "lowest class of travel." !d. 

American has confirmed that children less than 12 years of age traveling on revenue 

tickets from the U.K. to the U.S. after May 1, 2015 are not charged the APD, provided they are 

booked in the lowest class of travel. However, as the AA.com website for award travel (but not 

revenue travel) is not currently programmed in such a way as to distinguish for U.K. tax 

calculation purposes the prospective passenger by age, American appears to be currently 

collecting the APD for all award passengers departing the U.K. irrespective of their age. 

Therefore, there is a very small subset of passengers younger than 12 years of age departing on 

American from U.K. airports and traveling in the lowest class of service having redeemed award 

miles since May 1, 2015 that may have been charged the APD. In response to the very recent 

change in the APD regulations, American has started the process of reprogramming its 

computers to recognize the age and class of service of the award traveler departing the U.K. and 

to apply the APD exemption for those under 12 years of age as has been accomplished when a 

revenue booking is made. Further, as noted above, a process is being developed to identify 

passengers that will be traveling on award tickets in order to issue to them any appropriate 

refund. As also noted above, American is researching its records regarding child passengers who 

have already traveled on award tickets from the U.K. to determine if it over collected the APD, 
Answer of American Airlines, Inc. 

Page 10 ofll 

and to the extent American's records identifY any such over collections, it will determine the best 

way to initiate a refund ofthe excess taxes. Given the remedial steps being taken by American 

to address the APD collection issue, the DOT need not and should not take any further action in 

response to the Complaint. 

V. Conclusion 

While the Complaint of Mr. Borsetti raises an issue with respect to the collection of 

certain local departure type taxes on award tickets issued to children, American has demonstrated 

that, contrary to the claims of the Complainant, American is properly collecting and remitting the 

Japanese Passenger Services Facilities Charge applicable to award passengers. With respect to 

Italy and U.K. departure fees, American is taking steps to reprogram its computers to be able to 

distinguish the ages of award travelers and collect or not the applicable departure tax based on 

the age of the passenger and, in the case of the U.K. APD, the class of service. Going forward, 

and until the computers can be reprogrammed, any such inadvertent over-collection from 

passengers who will be traveling on award tickets will be identified by American and issued a 

refund. Further, as noted, American is researching its records regarding child passengers who 

have already traveled on award tickets from Italy and the U.K. to determine if it over collected 

the Italian Embarkation Tax or the U.K. APD, and to the extent American's records identifY any 

such over collections, it will determine the best way to initiate a refund of the excess taxes. 

Finally, American believes that any over collection of foreign taxes that may have 

occurred was only in very narrow circumstances (i.e., children traveling from Italy on award 

tickets and, in the case of the U.K. APD, children traveling from the U.K. on award tickets, but 

only since this past May 1, 2015 when the expanded exemption went into effect and only if the 
Answer of American Airlines, Inc. 

Page 11 of 11 

award ticket was for transportation in the "lowest class of travel"). Accordingly, American 

anticipates that the number of impacted passengers will be low. 

WHEREFORE, for all ofthe reasons set forth above, American Airlines, Inc. respectfully 

requests the Department dismiss the complaint in Docket DOT-OST-2015-0087 in accordance 

with Rule 406(a)(2). 

Respectfully submitted, 

SILVERBERG GOLDMAN, L.L.P. 

Attorneys for 

AMERICAN AIRLINES, INC. 

Dated: May 22, 2015 
CERTIFICATE OF SERVICE 

I hereby certifY that I have on this 22nd day of May 2015, served a copy of the foregoing 

Answer of American Airlines, Inc. by e-mail upon the following persons: 

Mike Borsetti 

101 California Street 

Suite 4100 

San Francisco, CA 94 U 1 

mike@borsetti.com 

Blane Workie 

Assistant General Counsel for 

Aviation Enforcement & Proceedings 

U.S. Department of Transportation 

blane.workie@dot.gov 

Kimberly Graber 

Branch Chief 

Consumer Protection and Competition Law 

Aviation Enforcement & Proceedings 

U.S. Department of Transportation 

kimberly.graber@dot.gov 

Charles E. Smith 

Senior Trial Attorney 

Office of the General Counsel 

U.S. Department of Transportation 

charles.smith@dot.gov