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ULS. Deoartment of Assistant secretary . •.; ,;-, -. -, - , ^, 12G0 New Jersey Ave . S E 

Ttansportotlon 

Office of the Secretary ,. . | ^^ ... ^ . 

of Transportation ' •- - • " ' '" ^ ' 

July 20, 2011 

Roy Goldberg 

Counsel for Southwest Airlines Co. 

Sheppard MuUin Richter & Hampton LLP 

1300 I Street, NW 

Washington, D.C. 20005-3314 

Dear Mr. Goldberg: 

This is in response to your letter dated July 8, 2011 on behalf of Southwest Airlines Co. 

("Southwest") requesting that the U.S._Department of Transportation (the "Department" or 

"DOT") postpone or stay the October 24, 2011 effective date of certain provisions of its final 

rule enhancing airline passenger protections. Enhancing Airline Passenger Protections, 76 Fed. 

Reg. 23,110 (Apr. 25, 2011), pending judicial review by the United States Court of Appeals for 

the District of Columbia Circuit. On June 15 and 16, 2011, respectively. Spirit Airlines, Inc. 

("Spirit") and Allegiant Air LLC ("Allegiant") (collectively "Petitioners") sought judicial review 

of this rule. On July 13, 2011, Southwest filed an unopposed motion for leave to intervene in 

support of Petitioners only as to the full fare advertising provision of the final rule, 76 Fed. Reg. 

at 23,166 (to be codified at 14 C.F.R. § 399.84(a)). The Court has not yet acted on Southwest*s 

intervention motion. 

As an initial matter, the Department notes that other interested parties, who have not filed 

petitions for review, have requested that the Department extend the effective date of the final 

rule, or certain provisions of the final rule. Upon review of those requests, the Department has 

decided to extend the effective date of certain provisions of the final rule, including the full fare 

advertising provision at issue here, to January 24, 2012. The Department's decision to extend 

the effective date of those provisions will appear shortly in the rulemaking docket and on DOT*s 

website, and will subsequently be published in the Federal Register. Because the Department is 

extending the effective date of the full fare advertising provision, a stay is not warranted under 

applicable law. Nonetheless, the Department has given careful consideration to your request, but 

has concluded that there is no basis for granting a stay. 

The Department's final rule on enhancing airline passenger protections contains many new 

requirements to improve the air travel environment for consumers, expanding upon the passenger 

rights included in its first consumer rulemaking. The rule (1) increases the number of carriers 

that are required to adopt tarmac delay contingency plans and the airports at which they must 

adhere to the plan's terms; (2) increases the number of carriers that are required to report tarmac 

delay information to the Department; (3) expands the group of carriers that are required to adopt, 

follow, and audit customer service plans and establishes minimum standards for the subjects all 
carriers must cover in such plans; (4) adds carriers to those required to include their contingency 

plans and customer service plans on their websites; (5) increases the number of carriers that 

must respond to consumer complaints; (6) enhances protections afforded passengers in oversales 

situations, including increasing the maximum denied boarding compensation airlines must pay to 

passengers bumped from flights; (7) strengthens, clarifies and codifies the Department's 

enforcement policies concemmg air transportation price advertising practices; (8) requires 

carriers to notify consumers of optional fees related to air transportation and of increases in 

baggage fees; (9) prohibits post-purchase price increases; (10) requires carriers to provide 

passengers timely notice of flight status changes such as delays and cancellations; and (11) 

prohibits carriers from imposing unfair contract of carriage choice-of-forum provisions. Only 

this Department can adopt consumer-protection regulations to protect airline passengers as states 

are preempted from regulating in this area' and the Federal Trade Commission (FTC) Act by its 

own terms carmot be enforced against U.S. and foreign air carriers. Further, no private right of 

action exists for airline consumers to enforce the pertinent provisions of Title 49 in the courts. 

Southwest contends that the full fare advertising provisions of the rule imlawfully ends the 

practice of peimitting sellers of air transportation to exclude government taxes and fees from the 

advertised price. The entire rule is scheduled to take effect on August 23, 2011, except for the 

provisions related to full fare advertising which were to become effective on October 24, 2011. 

However, as noted above, the Department has decided to extend the effective date of the full fare 

advertising provisions, as well as the other provisions Petifioners challenge along with certain 

other provisions, to January 24, 2012. 

The Department has the authority to postpone the effective date of rules when it "finds justice so 

requires." 5 U.S.C. § 705. The factors to be considered in determining whether a postponement 

or stay is warranted are: (1) the likelihood that the party seeking the stay will prevail on the 

merits; (2) the likelihood that the moving party will be irreparably harmed absent a stay; (3) the 

prospect that others will be harmed if a stay is granted; and (4) the public interest in granting the 

stay. See, e.g., CSX Transp., Inc v. Williams, 406 F.3d 667, 670 (D.C. 2005); Washington Metro. 

Area Transit Commission v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C. Cir. 1977). A stay is 

considered "an extraordinary remedy that should be granted only when the party seeking relief, 

by a clear showing, carries the burden of persuasion." Cobellv. Norton, 391 F.3d251, 258 (D.C. 

Cir. 2004). We apply these four criteria in evaluating a request to DOT for a stay of a DOT 

final action pending judicial review. We have considered the arguments made in your stay 

request and concluded that you have not demonstrated that a stay is warranted in this instance. 

I, Petitionera Are Not LikeW To Succeed On The Merits. 

Petitioners and Southwest contend that the full-fare advertising rule is defective because it 

violates the Petitioners' commercial free speech rights protected by the First Amendment. They 

also challenge as arbitrary and capricious the Department's change in its enforcement policy 

regarding price advertising, which previously permitted carriers to quote advertised base fares 

49 U.S.C. 41713 ("..States may not enact or enforce a law. regulation, or other provision having the force 

and effect of law related to a price, route, or service of an air carrier..."), see Mora/es v. Trans World Airline, 504 

U.S. 374, n2S.Ct.2031. U9L.Ed.2d 157(1992). 
separately from non-ad valorem government imposed taxes and fees collected on a per passenger 

basis. DOT disagrees with these allegations. 

The First Amendment does not extend to commercial speech that does not "accurately inform the 

public about lawful activity" or is "more likely to deceive the public than to inform it." Central 

Hudson Gas & Elec. Co. v. Public Service Comm'n ofN.Y., AAl U.S. 557, 566 (1980). When 

commercial speech concerns a lawful activity and is not misleading, the Department may impose 

restrictions on it only when its interest in regulating speech is substantial, the regulation directly 

advances the governmental interest asserted, and the regulation is not more extensive than is 

necessary to serve that interest. Id. 

The contention that Southwest's First Amendment rights are violated appears to be based on its 

mistaken belief that the Department has not established through evidence in the record that fare 

advertising that excludes government taxes and fees is misleading. This is not the case. As we 

explained in responding to comments in the final rule, we have received complaints from 

consumers regarding fare advertising "some of which specifically mention feeling deceived 

when they are not quoted the full price to be paid after an initial inquiry." 76 Fed. Reg. 23110, 

23143 (Apr. 25, 2011). We also noted that "comments from individual commenters and persons 

participating in Regulation Room show consumers feel deceived when the total price, including 

taxes and fees, is not quoted to them after an initial fare inquiry." Id. In addition, we explained 

that consumers need a full picture of the total price to be paid in order to compare fares and 

routings as "carriers and online travel agencies have started to offer more complicated routings 

with multiple connections in order to provide the 'lowest* airfare to consumers'* and that "with 

these changes in routings, taxes and fees can increase and become a significant portion of the 

price to be paid by consumers." Id. Further, the rulemaking record makes it clear that "in recent 

years, carriers are increasingly unbundling the cost of air travel, which further obscures the total 

fare to be paid by the consumer." Id. The Department believes that not requiring that the 

advertised price include all mandatory fees including government taxes and fees when 

combined with the increasingly common practice of unbundling the cost of air travel makes it 

difficult if not impossible for an ordinary person viewing an advertisement to determine the total 

amount to be paid for the transportation. 

We also dispute the claim that the prohibition on the practice of excluding government taxes and 

fees is arbitrary and capricious because, according to these carriers, nothing in the rulemaking 

record supports a reversal of policy relied on by the airline industry which the Department 

reaffirmed in 2006. The contentions of the Petitioners and Southwest are not accurate. The 

Department proposed to end the practice of permitting sellers to exclude government taxes and 

fees from the advertised price because of concern that "in many cases consumers are not easily 

able to determine the total cost of air transportation services or are deceived regarding the true 

price." 75 Fed. Reg. 32318, 32327 (June 8, 2010). The Department was also concerned that 

"[gjiven technological iimovations and new methods of communication, carriers and ticket 

Nothing in the current regulation prohibits carriers from informing the public of the taxes and fees the 

government imposes on air travel. These taACS and fees, which have proliferated in number and increased in amount 

assessed over the years, may be stated separately or through links or "pop-ups" on websites that display the total 

price. 
agents are finding new and creative ways to advertise airfares, some of which circumvent the 

spirit if not the letter of the full-price advertising rule and Department enforcement policy." Id. 

A review of the enforcement orders issued by the Department demonstrates this point, that is, 

that the landscape relating to airfare advertising has changed since 2006 when the Department 

withdrew a notice of proposed rulemaking ("NPRM") in which it considered eliminating the 

taxes and fees exception. From 2001 to 2006, the Department issued 56 enforcement orders 

relating to advertising, with assessed penalties of $1,877,000. This is contrasted with the past 

three and a half years (2007 through July 11, 2011), during which the Department has issued 52 

advertising orders with assessed penalties totaling $2,656,000. The increase in enforcement 

orders concerning advertising is related to the technological innovations mentioned in the 

NPRM, including the increased use of the Internet and other means used for searching for 

airfares.^ In 2006, two of the advertising orders issued by the Enforcement Office dealt with 

Internet advertising. That number has steadily increased over the last three years: in 2007, four 

orders dealt with internet advertising; in 2008, ten orders; in 2009, eight orders; in 2010, sixteen 

orders; and, so far in 2011, twelve orders. With the advent of mobile technology, Twitter, 

Facebook, and other methods to advertise fares, there is an even greater likelihood that carriers 

and ticket agents will find new and creative, and in some cases deceptive, ways to advertise 

airfares further circumventing the Department's enforcement policy. 

In addition to the reasons mentioned above for changing the Department's price advertising 

policy, the Department's regulatory evaluation explains that consumers are likely to benefit in 

several ways from a requirement that the price advertised include govenmient taxes and fees. 

"The first benefit is the time saved for those consumers beginning a ticket purchase that is later 

abandoned once the full fare is known. These beneficiaries see a fare advertised (in print, on 

television, etc.) that does not include all taxes and fees and decide to make the effort to purchase 

a ticket based on the advertised price, only to find that the full-fare price is 'too high' and no 

longer worth purchasing." Final Regulatory Analysis, Consumer Rulemaking: Enhancing 

Airline Passenger Protections II, p. 56. The regulatory evaluation also notes that "passengers 

who purchase tickets from websites that did not previously present full fares up front will benefit 

by (1) saving time that would previously have been spent searching for the full fare on single or 

multiple websites to be able to compare full-fare prices or (2) avoiding being attracted by lower, 

incomplete fares and then not fully taking into account the full fare when it is subsequently 

revealed, which in turn may lead to less than optimal purchasing decisions." Id. 

In sum, the requirement that the price advertised include all mandatory fees including 

government taxes and fees does not violate the First Amendment and is not arbitrary and 

capricious, but a measured response to the need to prevent misleading and deceptive 

•* For example, in 2008, the Department issued an order assessing a compromise civil penalty of $50,000 

against Allegiant for not including convenience fees in initial base fares displayed in website advertisements despite 

such convenience fees being mandatory for on-line bookings. Similarly, in 2009, the Department issued an order 

assessing a compromise civil penalty of $375,000 against Spirit for a number of violations of our consumer 

protection regulations, including its display of fares on its website that did not include certain carrier-imposed fees 

in the advertised "base fare." Both carriers were directed to cease and desist from future similar violations. See 

Allegiant Airlines (Order 2008-9-18. September 15, 2008) and Spirit Airlines (Order 2009-9-8, September 17. 

2009). 
advertisements. Thus, the Department concludes that Petitioners and Southwest have not 

demonstrated a likelihood of success on the merits with respect to this provision of the final rule. 

II. Petitioners and Southwest Have Not Demonstrated That Thev Would Suffer 

Irreparable Harm in the Absence of a Stay 

In order to obtain a stay. Petitioners and Southwest must also demonstrate that diey will suffer 

irreparable harm absent a stay of the effective date of the amendments pending judicial review. 

Irreparable injury is the essential predicate for a request for a stay of agency action pending 

review. 5 U.S.C. § 705. Indeed, "[t]he basis for injimctive relief in the federal courts has always 

been ureparable harm and inadequacy of legal remedies." Sampson v. Murray, 415 U.S. 61, 88 

(1974), quoted in Wisconsin Gas Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985). 

Petitioners' and Southwest's contentions of irreparable harm rest in part on their claim that a 

violation of the First Amendment automatically results in irreparable harm. However, when the 

irreparable harm alleged "is inseparably linked'* to a claim of a First Amendment violation, the 

irreparable harm determination first requires an analysis of Petitioners' likelihood of success on 

the merits. See, e.g., Newsome v. Albemarle County School Board, 354 F.3d 249, 254-55 (4th 

Cir. 2(X)3); Giovani Carandola, Ltd. v. Bason, 303 F.3d 507, 511 (4th Cir. 2002). Here, 

Petitioners cannot simply assert a "per se" finding of irreparable harm because, as set forth 

above, they have failed to establish a likelihood of success on the merits of their First 

Amendment claim under Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n ofN.Y., 

447 U.S. 557 (1980) and its progeny. 

Petitioners and Southwest also allege they will suffer irreparable economic injury in the form of 

compliance costs, lost opportunity costs, and damage to their corporate system/identities imless 

there is a stay of the effective date pending judicial review. The D.C. Circuit imposes "a high 

standard for irreparable injury." Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290, 

297 (D.C. Cir. 2006). "[T]he injury 'must be both certain and great; it must be acmal and not 

theoretical." Id. (quoting Wise. Gas Co., 758 F.2d at 674). Also,"[t]he moving party must show 

*[t]he injiuy complained of is of such imminence that there is a 'clear and present' need for 

equitable relief to prevent irreparable harm.'" Id. (citations, brackets, and internal quotation 

marks omitted). 

Under this standard, Petitioners and Southwest have failed to meet their burden. Without 

providing supporting evidence, Petitioners contend that they will suffer irreparable harm because 

they "will be forced to dramatically change or abandon the marketing, distribution and pricing 

models that allowed them to keep ticket prices low." They mention Spirit's $9 Fare Club 

program and state that the fare advertising rule would have significant negative impact on this 

program as it would require the carrier to include government taxes and fees and if purchased on 

the internet a convenience fee which would "reduce Spirit's subscription revenues and force 

ticket prices to rise." Petitioners add that "[ajdvertising low base fares is essential for attracting 

customers and increasing demand in the market served." They argue that the rule leaves "little 

distinction between the low fare carriers and legacy carriers." 
Southwest echoes Petitioners' allegations of irreparable harm through a conclusory declaration 

submitted by Dave Ridley, a Southwest senior vice president. Southwest contends that 

complying with the full fare advertising provisions of the final rule will require significant labor 

and financial compliance costs. Southwest also alleges it will be "uniquely hurt" by the final 

rule due to recent changes to its "Rapid Rewards" frequent flyer program. Southwest contends 

that the full fare advertising provisions will require "wholesale changes" to the Rapid Rewards 

program and increased compliance costs, and will result in consumer confusion. 

We find Petitioners' and Southwest's arguments seriously flawed, and reject their claim that they 

will suffer irreparable economic harm for various reasons. The full fare advertising provisions 

do not cause ticket prices to rise as Petitioners assert - the passenger would have had to pay for 

the government taxes and fees and if purchased on the internet a convenience fee (in Spirit's 

case) whether or not the full fare advertising rule existed. The full fare requirement simply 

ensures the passenger is aware of the total ticket price earlier. As for the argument that 

displaying the full fare could reduce Spirit's subscription revenues, we agree that it is possible 

that a passenger may not be as interested in the $9 Fare Club program when they realize that the 

actual cost of travel is more than $9. However, die impact of the full fare advertising rule on 

Spirit for its $9 Fare Club program is no different than the impact on other carriers, including 

legacy carriers, who would also be required to display all the mandatory fees associated with air 

travel in the ticket price. This was fully considered in the Department's regulatory evaluation. 

Indeed, we noted that one of the benefits of the full fare advertising rule is "the time saved for 

those consumers begiiming a ticket purchase that is later abandoned once the full fare is known." 

We explain that these individuals "see a fare advertised (in print, on television, etc.) that does not 

include all taxes and fees and decide to make the effort to piu-chase a ticket based on the 

advertised price, only to find that the full-fare price is 'too high' and no longer worth 

purchasing." Final Regulatory Analysis, Consumer Rulemaking: Enhancing Airline Passenger 

Protections II, p. 56. 

To the extent Southwest contends its Rapid Rewards program will be impacted, absent any 

explanation or evidence of the nature of the required changes, Southwest's assertions are entitled 

to little weight. While we acknowledge that the rule requires some changes to advertising 

practices, which will likely require changes to Southwest's website, it is far from self-evident 

that there would be a dramatic cost associated with altering Southwest's website to accommodate 

these requirements by alerting customers earlier in the purchase process of taxes and fees that 

already must be calculated, disclosed, and collected at the time of purchase. We noted in the 

preamble to the April 25, 2011 rule that "sellers of air transportation are constantly updating their 

fare matrices and the methods by which they display fares." See 76 Fed. Reg. 23143 (Apr. 25, 

2011). In addition, we are now giving carriers until January 24, 2012 (9 months from the date 

the final rule was issued) to comply with the full-fare advertising provisions, allowing them to 

use their business judgment to determine the most cost-effective time and maimer to make any 

necessary adjustments. 

Southwest's allegations do not establish irreparable harm under the high standards required by 

applicable law. Accordingly, the Department finds that Southwest will not suffer irreparable 

harm in the absence of a stay pending judicial review. 
III. Substantial Harm to Other Parties Would Occur If a Slav Is Granted, and Issuance 

of a Stay Would Harm the Public Interest 

Petitioners and Southwest must further demonstrate that no other parties will be harmed if a stay 

is granted, and that a stay would serve the public interest. Petitioners and Southwest argue that a 

stay would not impose any substantial harm on any other person and that a stay would serve the 

public interest by maintaining existing consumer protection rules and practices in place pending 

judicial review. 

These factors tip decisively in favor of denying a stay. Beyond the interests of Petitioners and 

Southwest, who disagree with the full fare rule provisions, they fail to demonstrate how a stay 

would not harm other parties and serve the public interest. Here, the government shares with the 

public a strong interest in timely implementation and enforcement of air passenger consumer 

protection regulations. The Department is not persuaded that the public will be confused if the 

amendments change as a result of judicial review, or that the public will benefit by air carriers' 

continued deceptive practices. To the contrary, the interests of other parties and the public are 

best served by enhancing protections for airlines passengers as set forth in the final rule. Airlines 

and sales agents currently have widely varying practices regarding which taxes and fees are 

included in quoted prices, and Petitioners and Southwest do not explain how obtaining 

consistency would confuse, rather than aid. consumers. 

Moreover, if the Department were to issue a stay that would delay implementation of the 

amendments beyond the new effective dates, airline passengers will suffer injury by the practices 

that the amendments seek to eliminate in the air travel environment. See, e.g., Serono 

Laboratories, Inc. v. Shalala, 158 F.3d 1313, 1326 (D.C. Cir. 1998) (ureparable harm to plaintiff 

arising from challenged regulation, balanced against similar harm to a diird party if the stay is 

granted, resulted in a "wash" on the factor of irreparable harm). Accordingly, the Department 

rejects the contention that the issuance of a stay in this matter would not harm other parties and 

serve the public interest. 

IV. Conclusion 

The Department has reviewed Southwest's request for a stay of the effective date of the 

amendments, and finds that it has failed to satisfy any of the four criteria required for an agency 

to grant a stay pending judicial review. Accordingly, the Department finds that justice does not 

require a stay in this matter. 

Sincerely yours, y"^^ j 

9^duj2^uLy 

Susan Kurland 

Assistant Secretary for 

Aviation and International Affairs