The VIOLATIONS
On October 22, 2013, the U.S. Department of Transportation (DOT) accessed fines against two ticket agents for violating the Department’s rules on disclosure of code-share flights. DOT issued a $125,000 fine against Carlson Wagonlit Travel and a $65,000 fine against Frosch International Travel, and both companies were ordered to cease and desist from further violations. The amount of the fines was based on the specific circumstances of the individual cases.
“No one wants to arrive to their gate and learn for the first time that the airline they thought was operating their flight actually sold them a ticket for another airline,” said U.S. Transportation Secretary Anthony Foxx. “We will continue to make sure that all companies selling air transportation are transparent with consumers and will take enforcement action when they fail to disclose code-sharing arrangements.”
Under code-sharing, an airline sells seats on flights using its designator code, but the flights are operated by a separate airline.
In this case, DOT’s Aviation Enforcement Office made telephone calls to a number of agents during January and February of 2013 and inquired about booking certain flights. During these calls, the reservations agents for both companies failed to disclose that the flights were being operated under code-share arrangements. The agents identified only the name of the airline marketing the flight and not the name of airline operating the flight. This violated DOT rules requiring airlines and ticket agents to inform consumers if a flight is operated under a code-share arrangement, as well as disclose the corporate name of the transporting airline and any other name under which the flight is offered to the public.
DOT takes enforcement action when necessary against companies that sell air transportation based on consumer complaints and the Department’s own internal investigations. DOT has now issued six fines for code-sharing violations in 2013, totaling $430,000.
The LAWS
See “Unfair and deceptive practices and unfair methods of competition” 49 U.S.C. § 41712 and 14 CFR 257.5.
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 communication 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 the 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 and deceptive trade practice in violation of section 41712, unless, in conjunction with that holding out or sale, carriers and agents follow certain requirements, including those of section 257.5(b).
(b) Oral notice to prospective consumers. In any direct oral communication in the United States with a prospective consumer and in any telephone calls placed from the United States concerning a flight that is part of a code-sharing arrangement or long-term wet lease, a ticket agent doing business in the United States or a carrier shall tell the consumer, before booking transportation, that the transporting carrier is not the carrier whose designator code will appear on the ticket and shall identify the transporting carrier by its corporate name and any other name under which that service is held out to the public.
A “ticket agent” is “a person (except an air carrier, 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).
The TAKEAWAY
So, why is “code-sharing disclosure” so important and taken so seriously? In general, it was a “you’re getting what you paid for” consumer protection initiative.
You want to know what airline you’re getting! “That’s the artificial horizon, which is better than the actual horizon.” -Steven Wright as the pilot in So I Married an Axe Murderer (1993).
In 1999, the DOT adopted new regulations that require airlines and ticket agents to disclose to consumers whether an air transportation service will be operated pursuant to a code-share arrangement, as well as whether services operated under a single flight number will in fact entail a change of aircraft en route. Nevertheless, such regulations (as often is the case) came with a debate of cost-benefit analysis, i.e. would the imposition of significant costs on airlines and ticket agents, arguably passed along to the consumers themselves, justify the benefits of “protection” derived from the passengers? Maybe.
Take the example of the transparency of Continental Connection Flight 3407, the flight that crashed on February 12, 2009, in Clarence Center, New York (five miles short of its destination, Buffalo-Niagara International Airport) that killed 50 people. The plane was owned by Colgan Air Inc., but it was doing business as a Continental Connection flight. The NTSB ruled pilot error caused the crash, and the investigation explored a wide range of factors that may have contributed to the tragedy, including the crew’s training, and their sleeping and commuting patterns. Full transparency about airline code-sharing was a major component of the families’ complaints, leading to a code-sharing amendment as part of the Airline Safety and Federal Aviation Administration Extension Act of 2010, wherein website disclosure must be made “on the first display of the website following a search of a requested itinerary in a format that is easily visible to a viewer.”
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