Order 2011

- 1

- 1

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

O n the 4 th day of January, 2011

Aerovías de Mé x i co , S.A. de C.V. Docket OST 2011

- 0003

Served January 4 , 2011
Violations of 49 U.S.C. § 41712 and

14 CFR 399.84

CONSENT ORDER

This consent order concerns Internet advertisements by Aerovías de Méx i co, S.A. de C.V. (Aeromexico) that violate d the full fare advertisement requirements specified in 14 CFR Part 399 as well as 49 U.S.C. § 41712, which prohibits unfair and deceptive practices. It d irects Aeromexico to cease and desist from future violations of Part 39 9 and Section 41712, and assesses the carrier a compromise civil penalty of $ 60 ,000.

Applicable Law

As an air carrier, Aeromexico is subject to the advertising requirements of Part 399 of the Department’s rules. Under section 399.84 of those rules, any advertising by an air carrier that states a price for air transportation is considered to be an unfair or deceptive practice

or unf air method of competition in violation of 49 U.S.C. § 41712 unless the price stated is the entire price to be paid by the customer to the air carrier for such air transportation. Under long

- standing enforcement case precedent, the Department permits taxe s and fees, such as passenger facility charges and departure taxes, that are collected by carriers and other sellers of air transportation to be stated separately in advertisements, so long as the charges are levied by a government entity and are collected on a per passenger basis. Thus, for example, passenger facility charges (PFC) and international departure taxes, with proper disclosure, may be stated separately from the advertised base fare, but thefederal transportation excise tax, which is assessed as a percentage of the ticket price, i.e.,

on a n ad valorem basis, and carrier or agent

- imposed fees and charges, such as fuel surcharges or insurance surcharges, may not be stated separately from the advertised base

fare. 1

Further, i n Internet adverti sing displays, the full fare may be stated on the first screen that displays fares or a base fare may be displayed so long as the existence and amount of permissible separately

- stated additional charges are prominently disclosed on that page or through a c learly presented hyperlink t hat take s the consumer directly to a place on

another page showing the nature and amounts of those charges. Failure to comply with these requirements violates section 399.84 and Department case precedent and constitutes

an unfa ir and deceptive trade practice

. 2

In addition, as detailed in 49 CFR Part 1510, there are specific disclosure requirements pertaining to the September 11 th Security Fee of $2.50 per enplanement on passengers of domestic and foreign carriers in air transportation originating at airports in the United States. Pursuant to section 1510.7, air carriers and foreign air carriers are specifically required to identi fy and ensure that their agents identify this fee as the “September 11 th
Security Fee” in all advertisements and solicitations for air transportation where it is not

included in the advertised base fare. This office considers the failure of a carrier or t icket agent to identify the September 11 th Security Fee as required by section 1510.7 to constitute a separate and distinct unfair and deceptive practice in violation of 49 U.S.C. § 41712. 3

Facts and Conclusions

Recently Aeromexico posted Internet fare advertisements on its website that quoted prices for numerous airfares that did not include applicable fuel surcharges

. By failing to include fuel surcharges in its base fares, Aeromexico violated 14 CFR 399.84 and engaged in an unfai r and deceptive practice and unfair method of competition in violation of 49 U.S.C. § 41712.

F urther, on Aeromexico ’ s Internet website, when consumers initiate d a search for round

trip airfares

, the search process beg a n after clicking on the “Book Now” button. The

consumer would then be taken to a page showing a range of days with their preferred

1 See, e.g., Roni Herskovitz, Individually, and Ultimate Fares, Inc. , OST Docket 2009

- 0002, Order 2009

- 11

- 8 (Nov. 9, 2009). See also Department notices entitled Disclosure of Airfare Variations: Web vs. Other Sources; Surcharges that may be Listed Separately in Advertisements (Nov. 4, 2004); Disclosure of Additional Fees, Charges, and Restrictions on Airfare Advertisements, Including ‘Free’ Airfares (Sept. 4, 2003); and Prohibition on Deceptiv e Practices in Marketing of Airf ares to the Public Using the Internet (Jan. 18, 2001). All notices are availabl e at http://airconsumer.ost.dot.gov/rules/guidance.html

.

2 See, e.g., Air Jamaica, Ltd. , Violations of 49 U.S.C. § 41712 and 14 CFR 399.84 , Order 2008

- 12

- 25 (December 30, 2008).

3 See, e.g.
, A Better Fare, LLC, Violations of 49 U.S.C. § 41712 and 14 CFR 399.84 , Order 2003

- 1

- 12 (Jan. 16, 2003).travel date (hereinafter “Dates Page”). For each date, Aeromexico list ed the lowest available fare on the route. However, the D ates Page contain ed only a general statement that “[t]axes or additional fees are not included.” Thus consumers were unable to determine the full fare to be paid at the first point at which Aeromexico disp l ay ed a fare. Further, the September 11 th Security Fee is among the taxes and fees that were not in the fares on the Dates Page.

Additionally

, Aeromexico’s website display ed certain highlighted specials with air fares, e.g., Los Angeles to San Jose del Cabo starting from $118 US “Each Way Based on

Round

- Trip Purchase,” but did not include notice of any additional taxes and fees except for a general disclosure at the bottom of the page that appear ed to pertain to the special fare as well as to a series of other special fare listings. Aeromexico also exclud ed carrier

imposed charges from the fares on its flight Dates Page, such as fuel surcharges.

By failing to provide any notice of the existence, nature and amount of the above taxes and fees applicable to these fares at the first point the fare s w ere discl osed to consumers,

Aeromexico violated 14 CFR 399.84 and engaged in an unfair and deceptive practice and unfair method of competition in violation of 49 U.S.C. § 41712. Moreover, the September 11 th Security Fee wa s one of the additional taxes and fees that was not included in the advertised price and was not disclosed as required

, which constitute d a separate and distinct violation of section 41712.

Mitigation

In mitigation, Aeromexico states that the failure of its website and Internet booking engine to display all fare components in accordance with Departm ent policy was

unintentional. According to Aeromexico, w hen the Enforcement Office advised Aeromexico of its concerns, the carrier revised its website and immediately contacted the

third

- party vendor on which it had relied to develop the relevant booking engine displays. Aeromexico states that it directed that vendor to modify the displays promptly and introduced internal controls to better oversee Aeromexico fare advertising. Finally,

Aeromexico point s out that it cooperated fully with the Department in resolving this matter and reaffirms its goal of providing potential customers with full and transparent fare information that meets the Department’s requirements.

Decision

The Office of Aviation Enfor cement and Proceedings (Enforcement Office) has carefully considered the information provided by Aeromexico , but continues to believe that

enforcement action is warranted. The Enforcement Office and Aeromexico have reached

a settlement of this matter in o rder to avoid litigation. Aeromexico , without admitting or denying any violation, consents to the issuance of this order to cease and desist from future violations of 49 U.S.C. § 41712 and Part 399 of the Department’s regulations, and

to the assessment of $ 60 ,000 in compromise of potential civil penalties otherwise

assessable pursuant to 49 U.S.C. § 46301.This compromise assessment is appropriate considering the nature and extent of the violations described herein and serves the public interest. It re presents an adequate deterrence to future noncompliance with the Department’s advertising requirements by

Aeromexico , as well as by other air carriers and foreign air carriers.

This order is issued under the authority contained in 49 CFR 1.57a and 14 CFR 385.15.

ACCORDINGLY,

1. Based on the above discussion, we approve this settlement and the provisions of this order as being in the public interest;

2. We find that Aerovías de Méx i co, S.A. de C.V. violated 14 CFR 399.84 by causing to be published air fare advertisements that failed to state the entire price to be paid by the consumer at the first point at which the fare was displayed ;

3

. We find that by engaging in th e conduct described in o rdering paragraph 2

, above

, and by not identifying in its Internet advertisements the September 11 th Security

Fee

, as required by 49 CFR 1510.7

, Aerovías de Méx i co, S.A. de C.V. also engaged in an unfair and deceptive practice and unfair method of competit ion in

violation of 49 U.S.C. § 41712;

4

. We order Aerovías de Méx i co, S.A. de C.V. and all other entities owned or controlled by or under common ownership with Aerovías de Méx i co, S.A. de

C.V. and their successors and assignees, to cease and desist from further violations of 14 CFR 399.84 and 49 U.S.C. § 41712;

5

. We assess Aerovías de Méx i co, S.A. de C.V. a compromise civil penalty of $ 60 ,000 in lieu of civil penalties that might otherwis e be assessed for the violations found in ordering paragraphs 2 and 3 , above. Of this total penalty amount, $30,000 shall be due and payable within thirty ( 30 ) days of the date of

the issuance of this order. Any unpaid portion of the assessed civil penalt y shall be due and payable immediately if Aerovías de Méx i co, S.A. de C.V. vi o lates this order’s cease and desist or payment provisions during the 12 months following the service date of this order; and6

. Payment shall be made by wire transfer through the Federal Reserve Communication System, commonly known as “Fed Wire,” to the account of the U.S. Treasury . The wire transfer shall be executed in accordance with the

instructions contained in the Attachment to this order. Failure to pay the compromise penalty assessment as ordered shall subject Aerovías de Méx i co, S.A. de C.V. to an assessment of interest, penalty, and collection charges under the Dept Collection Act, and to possible enforcement action for failure to comply with th is order.

This order will become a final order of the Department 10 days after its service date unless a timely petition for review is filed or the Department takes review on its own

motion.

BY:

ROSALIND A. KNAPP Deputy General Counsel

(SEAL )

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