Document ID: DOT-OST-1998-20-0268-0002
Agency: dot
Document Type: Notice
Title: Advertisements of Percentage Discounts on the Internet and Disclosure of Insurance Surcharges and Security Fees
Posted Date: 2002-06-05T04:00Z

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, DC

	

Advertisements of Percentage Discounts on the Internet and

Disclosure of Insurance Surcharges and Security Fees

	

NOTICE

The Office of Aviation Enforcement and Proceedings (“Enforcement
Office”) has become aware of a number of advertising practices on
Internet travel sites which may constitute unfair or deceptive trade
practices in violation of 49 U.S.C. § 41712 and related Department
rules.  The purpose of this notice is to clarify the applicability of
section 41712 and our advertising rule, 14 CFR 399.84, to the use of
banner ads announcing percentage-off discounts and sale fares.  This
notice also addresses the disclosure of insurance surcharges and
security fees in print and Internet fare advertisements.  

In a letter addressed to airlines and travel industry associations dated
December 20, 1994, then-Secretary Peña gave notice of the
Department’s position on a number of consumer issues, including those
involving certain airfare advertising practices.  The Secretary
clarified that discount sales which offered a percentage off must
indicate the benchmark fare to which the discount applied and that that
benchmark fare must be an actual fare available for purchase at the time
of the sale or just prior to the discount sale.  As stated in the
December 20, 1994, letter: 

Advertisements sometimes promote air fares in terms of a percentage
savings (e.g. “Save up to 50%”).  However, many such ads make it
impossible to determine what the advertised fare is being compared to
and how the percentage savings are calculated.  

 

Consumers are entitled to real savings to match what the promotions
promise.  It is thus the Department’s position that “percentage
off” ads are deceptive unless (1) the “benchmark” fare (the fare
to which the advertised fare is being compared) was offered for sale in
reasonable quantities for a reasonable period immediately prior to the
ad for the new fare, and (2) either the ad clearly identifies and
describes the “benchmark” fare, or the “benchmark” fare is a
discount fare comparable to the advertised fare, with similar
restrictions.  

This notice is intended to clarify our enforcement policy with regard to
“banner” percentage-off advertisements that appear on Internet
sites, some of which are not themselves travel sites (i.e., travel agent
or airline sites) but subsequently lead the reader to such sites.  In
some cases, after clicking on the banner, a consumer is sent to the site
of a major Internet travel agent.  Once transferred to this location,
there is no indication which fares are subject to the stated percentage
discounts.  Generally, a consumer is led from a banner apparently
promising a large percentage reduction in fares to an Internet travel
agent’s site that has a standard front page inquiry form which seeks
information on a consumer’s travel plans.  However, the site makes no
mention of the percentage discount sale, much less gives an indication
of the markets or carriers to which the sale may apply or the applicable
benchmark fares.  Moreover, there is no way for a consumer to request a
list of fares that are subject to the percentage-off sale, nor does the
consumer know after providing specific travel plans if the fare quoted
is one of the advertised percentage-off fares.

This notice is to advise Internet travel vendors that, although banner
advertisements on their own sites or on other sites are permissible, the
banner, if it offers a percentage discount, must lead the consumer,
within a short sequence of links, to a screen that displays the markets,
carriers, and a description of the pertinent benchmark fares to which
the discount applies.  In addition, banner advertisements which do state
a price should (1) provide notice if the advertised fares do not include
all taxes and fees and state the amount of those taxes and fees, and (2)
list all significant fare conditions in the advertisement or state that
conditions apply with a link to another screen or pop-up display that
describes those conditions.  If the banner advertisement states a price
that is an each-way price that is only available with a round-trip
purchase, that fact must be stated in the banner advertisement itself.

A second topic which we wish to address is the listing of insurance
surcharges and security fees in fare advertisements.  All insurance
surcharges, since they are not government-imposed or -approved fees
assessed on a per-passenger basis, must be included in the advertised
price.  As the Department has indicated in a number of consent orders
and in guidance provided to the industry since 1994, only those fees
that meet both criteria, that is, are both government-imposed or
-approved fees and are assessed on a per-passenger basis, may be
excluded and be stated separately from the advertised fare.  With
respect to security fees, 49 C.F.R. 1510.7 precludes the separate
listing of any security fees other than the September 11th Security Fee.
 These guidelines apply to both printed and Internet advertising.  

Questions regarding this notice may be addressed to the Office of
Aviation Enforcement and Proceedings (C-70), 400 7th St., S.W.,
Washington, D.C. 20590. 

By:

Samuel Podberesky

Assistant General Counsel for

  Aviation Enforcement and Proceedings

Dated:  June 5, 2002

(SEAL)

An electronic version of this document is available on the World Wide
Web at http://dms.dot.gov/reports

	The Department has allowed taxes and fees collected by carriers and
other sellers of air transportation, such as passenger facility charges
(PFCs) and departure taxes, to be stated separately in fare
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 basis, and their existence and amount are clearly
indicated in the advertisement so that the consumer can determine the
full fare to be paid.  However, any fuel surcharges, as well as ad
valorem taxes, must be included in the advertised fare.  By Notice of
December 17, 2001, the Department set out the very limited circumstances
in which travel agent service fees may be stated separately from the
advertised fare on internet sites. (See, the Department website at  
HYPERLINK "http://www.dot.gov/airconsumer" 
http://www.dot.gov/airconsumer ).

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