O rder 2013

- 5

- 15

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

On the Twenty

- Third day of May

, 2013

JTB USA , Inc.

Docket OST 2013

- 0004

Served: May 23, 2013 Violations of 49 U.S.C. § 41 712 and

14 CFR Part 257

C ONSENT O RDER

This consent order concerns violations by JTB USA, Inc.

, when it failed to disclose code

share arrangements as required by 49 U.S.C. § 41712(c) and 14 CFR Part 257 during telephone airline reservation calls . Thes e failures also constitute separate and distinct violations of 49 U.S.C. § 41712(a), the statutory prohibition against unfair and deceptive practices,. The order directs JTB USA to cease and desist from future violations of Part

257 and section 41712 and assesses $ 6 0 ,000 in civil penalties.

Applicable Law

JTB USA is a ticket agent 1 and is therefore subject to the detailed code

- share disclosure requirements found in 49 U.S.C. § 41712(c) and 14 CFR 257. 5(b)

. Under section 41712(c), any “ ticket agent, air carrier, foreign air carrier, or other person offering to sell tickets for air transportation on a flight of an air carrier ” is required to disclose “ whether verbally in oral communicatio n or in writing in written or electronic communication, prior to the purchase of a ticket [,] the name of the air carrier providing the air transportation; and if the flight has more than one segment, the name of each air carrier providing the air transportation for each such flight segment. ” Failure to disclose th e required information is an unfair or deceptive practice in violation of section 41712

. Section 257.4 of the code

- share disclosure rule states that the holding out or sale of scheduled passenger air transportation involving a code

- sharing arrangement is an unfair

a nd deceptive trade practice in violation of 49 U.S.C. § 41712

, unless, in conjunction

1 A “ticket agent” is “a person (except an air carr ier, a foreign air carrier, or an employee of an air carrier or foreign air carrier) that as a principal or agent sells, offers for sale, negotiates for, or holds itself out as selling, providing, or arranging for air transportation.” 49 U.S.C. § 40102(a)( 45).2

with that holding out or sale, carriers and agents follow certain requirements, including those of 14 CFR 257.5(b). With regard to oral communications concerning a fligh t that is part of a code

- sharing arrangement, section 257.5(b) states that a ticket agent or carrier must disclose to prospective consumers

, before they book the flight

, the existence of the

code

- share arrangement, the corporate name of the transporting ca rrier, and any other name under which the flight is held out to the public. Violations of section 257.5 (b) constitute unfair and deceptive trade practices and unfair methods of competition in violation of 49 U.S.C. § 41712.

Facts and Conclusion

An inves tigation by the Office of Aviation Enforcement and Proceedings (Enforcement Office) revealed a significant lack of compliance by JTB USA with section 257.5 (b) of the Department’s code

- share rule and 49 U.S.C. § 41712 (c)

. For a period of time during

Januar y and February of 20 13

, Enforcement Office staff made a number of telephone

calls to JTB USA as potential purchasers and inquired about booking a flight. During

these calls, t he JTB USA r eservations agents answering the se calls completely failed to

make t he required disclosure regarding code

- share arrangements for the flights in question. Specifically, when discussing flights marketed by one carrier but operated by

another with the callers

, JTB USA ’s reservation agents only identified the marketing

carrie r and did not identify the corporate name of the carrier operating the flight or any other name under which the flight wa s operated, even when prompted by the caller. The telephone calls indicated that JTB USA generally failed to inform consumers booking flights involving code

- share arrangements of the identity of the airline that would actually operate the aircraft on which the consumer would be flying.

Mitigation

In mitigation, JTB USA states that it takes seriously its obligation to comply with the Department’s consumer protection rules and 49 U.S.C. § 41712 as implemented and construed by the Department. JTB USA states that it believed all of its agents in the United States were aware of the requirements in section 41712(c) and 14 CFR 257.5(b) to

d isclose the name of the operating carrier and any trade name by which the operating carrier provides transportation. In particular, JTB USA states that it does not believe any agent has failed to disclose the operating carrier for a flight conducted under an international code

- share; the Department’s investigation was limited to code

- share flights

in selected domestic markets. JTB USA states that it also believes that a few of its agents mistakenly believed that disclosing the trade name of the operating carrier, such as United Express or Delta Connection, was sufficient disclosure. JTB USA states that it has no record of any customer complaint that a JTB USA ticket agent failed to disclose the operating carrier. JTB USA states that although the Departme nt’s investigation likely involved only one or two JTB USA ticket agents, after being notified of the Department’s investigation JTB USA issued a memorandum to all agents in the United States reiterating the code

- share disclosure requirements and providing practical guidance to ensure compliance prospectively. JTB USA states that its supervisory agents will personally address these requirements with each agent. Accordingly, JTB USA states3

that it can assure the Department that it is now in full compliance with these requirements and will faithfully observe them in the future.

Decision

We view seriously the failure of JTB USA to disclose code

- shar ing arrangements as required by 49 U.S.C. § 41712 (c) and 14 CFR 257. 5(b). Accordingly, after carefully

consid ering all of the facts in this case, including those set forth above, the Enforcement Office believes that enforcement action is warranted. In order to avoid litigation, JTB

USA agrees to the issuance of this order

, to cease and desist from future similar

violations of 49 U.S.C. § 41712 and 14 CFR 257 .5(b)

, and to the assessment of $ 60 ,000 in compromise of potential civil penalties that otherwise might be imposed pursuant to 49 U.S.C. § 46301 . We believe that this compromise assessment is appropriate in v iew of the nature and extent of the violations in question, serves the public interest , and provides

a strong deterrent to non

- compliance with the statute and the Department’s code

- share

disclosure rule

.

This order is issued under the authority contained in 49 CFR Part 1

.

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 by failing to disclose code

- sharing arrangements as prescribed in 49 U.S.C. § 41712 (c) and 14 CFR 257.5(b), JTB USA, Inc.

, violat ed 1 4 CFR 257.5(b) and engaged in an unfair and deceptive practice in violation of section 41712 ;

3. We order JTB USA, Inc., and all other entities owned or controlled by or under common ownership with JTB USA, I nc., its successors an d assignees to cease and desist

from further violations of 49 U.S.C. § 41712 and 14 CFR 257 .5(b);

4. We assess JTB USA, Inc., $ 6 0 ,000 in compromise of civil penalties that might

otherwise be assessed for the violations found in orderin g paragraph 2 above . Of this total penalty amount

, $10,000 shall be due and payable within thirty (30) days of the date of the issuance of this order; $10,000 shall be due and payable within sixty (60) days of

the date of issuance of this order ; and $10,0 00 shall be due and payable within ninety (90) days of the date of issuance of this order. The remaining portion of the civil penalty amount, $30,000, shall become due and payable immediately if, within one year of the
date of issuance of this order, JTB USA, Inc., violates this order’s cease and desist provisions or fails to comply with the order’s payment provisions, in which case JTB USA, Inc., may be subject to additional enforcement action for violation of this order;

and4

5. P ayment shall be made throug h Pay.gov to the account of the U. S. Treasury in

accordance with the instructions contained in the Attachment to this order

. Failure to pay any portion of the penalty as ordered shall subject JTB USA, Inc., to the assessment of interest, penalty, and col lection charges under the Debt Collection Act

.

6. 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.

B Y:

SAMUEL PODBE RESKY

Assistant General Counsel for

Aviation Enforcement and Proceedings

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