Order 2010-1-13

UNITE D STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

On the 15 th day of January, 2010

United Air Lines, Inc. Docket OST 2010-0005

Served January 15, 2010 Violations of 49 U.S.C. § 41712, 14 CFR 399.84,

and Order 2009-8-17

CONSENT ORDER

This consent order concerns vi olations by United Air Lines, Inc., (UAL) of the full fare advertisement requirements specified in 14 CFR Part 399 and the statutory prohibition against unfair and deceptive practices, 49 U. S.C. § 41712. Further, UAL is subject to Order 2009-8-17, 1 in which it agreed to cease and desist from violations of Part 399. The

instant order directs UAL to cease and desist from future violations of Part 399, section 41712, and Order 2009-8-17, and assesses the car rier a compromise civil penalty of $30,000.

UAL, as an air carrier, is subject to the a dvertising requirements of Part 399 of the Department’s rules. Under section 399.84 of t hose rules, any advertising by an air carrier that states a price for air transportation is co nsidered to be an unf air or deceptive practice or unfair 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 carrie r for such air transportation. Under long-standing enforcement case precedent, the Department permits taxes and fees, such as passenger facility ch arges 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 or approved by a government entity, are not ad valorem in nature, are collected on a per-passenger ba sis, and their existence and amount are clearly indicated so that consumers can determine the full fare to be paid. Thus, the Federal excise tax (FET) of 7.5 percent, an ad valorem tax, must be included in in itial fare quotes appearing on a company’s website.

For approximately 60 hours on its Internet we bsite, UAL failed to include the FET on the initial search results webpage in which air fares were displayed to consumers. After

1 United Air Lines, Inc., Violations of 49 U.S.C. § 41712 and 14 CFR 399.84 , Order 2009-8-17 (August 25, 2009)– 2–

being contacted by the Office of Aviation Enforcement and Proceedings (Enforcement Office), UAL quickly changed its website to comply with 14 CFR 399.84. By excluding the FET from fares at the first point in whic h those fares were view able on its website to consumers, UAL violated section 399.84 and e ngaged in an unfair or deceptive practice and unfair method of competition in violation of 49 U.S.C. § 41712.

This is UAL’s second recent violation of the Department’s full fare advertisement regulations. In Order 2009-8-17, issued August 25, 2009, UAL was found to have

violated 14 CFR 399.84 and 49 U. S.C. § 41712 by publishing air fare advertisements that failed to properly hyperlink th e excluded taxes in a manner that clearly indicated the entire price to be paid by the consumer at the first point at which the fare was displayed and by publishing each-way air fares that were available only when bought for roundtrip travel without clear and conspi cuous disclosure of the roundtrip purchase requirement in

the advertisement. Order 2009-8-17 directed UAL to cease and desist from further violations of the full fare advertisement regul ations and assessed UAL a civil penalty of $75,000. Under the terms of that order, UAL wa s required to make an initial payment of $37,500 and, if it violated the order within one year, to make an additional payment of $37,500. UAL paid the additional $37,500 on December 22, 2009.

In mitigation, UAL states that it is strongly committed to promoting its fares and services in a clear and readily comprehensible manner, and that it has cooperated fully with the Department in this matter. UAL further states that its failure to include the excise tax in the base fare display for this extremely brief period was wholly unintentional and the result of an inadvertent programming error. Furthermore, although the excise tax was inadvertently excluded from the base fare disp lay, UAL points out that it was included in the total price quoted to passengers on all fa re displays on its website, and as such consumers were ultimately able to clearly identif y the total price to be paid for any fare at all times. Nevertheless, upon learning of th e inadvertent programming error, UAL took

immediate and extensive action to correct the matter.

The Enforcement Office has carefully consid ered the information provided by United Air Lines, Inc., but continues to believe th at enforcement action is warranted. The Enforcement Office and United Air Lines, Inc., have reached a settlement of this matter in order to avoid litigation. In order to avoid litigation, and without admitting any violation, United Air Lines, Inc., consents to th e issuance of this order to cease and desist

from future violations of 49 U.S.C. § 41712, Part 399 of th e Department’s regulations,

and Order 2009-8-17 and to the assessment of $30,000 in compromise of potential civil penalties otherwise due and payable 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 pub lic interest. It represents an adequate deterrence to future noncompliance with the Department’s adve rtising requirements by United Air Lines, Inc., as well as by othe r air carriers and foreign air carriers.– 3–

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 United Air Lines, Inc., violated 14 CFR 399.84 by causing to be published air fare advertisements that excluded ad valorem taxes from the initial fare displays;

3. We find that by violating 14 CFR 399.84, Un ited Air Lines, Inc., violated the cease and desist provisions of Order 2009-8-17;

4. We find that by violating 14 CFR 399.84 as described in ordering paragraph 2 and 3, above, United Air Lines, Inc., ha s engaged in an unfair and deceptive practice and unfair method of competiti on in violation of 49 U.S.C. § 41712;

5. We order United Air Lines, Inc., and a ll other entities owned or controlled by or under common ownership with United Air Lines, Inc., and their successors and assignees, to cease and desist from violations of 49 U.S.C. § 41712, 14 CFR 399.84, and Order 2009-8-17;

6. We assess United Air Lines, Inc., a comp romise civil penalty of $30,000 in lieu of civil penalties that might otherwise be assessed for the violations found in ordering paragraphs 2 and 3, above, which shall be due and payable within 15 days from the date of issuance of this orde r. Failure to pay th e penalty as ordered shall subject United Airlines, Inc., to the assessment of interest, penalty, and collection charges under the Debt Collect ion Act, and to possible additional enforcement action for failure to comply with this order; and

7. 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 in accordance with the attached instructions.

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 ta kes review on its own

motion.

BY:

ROSALIND A. KNAPP Deputy General Counsel (SEAL)

An electronic version of this document is available on the World Wide Web at www.regulations.gov– 4–