[Federal Register Volume 77, Number 38 (Monday, February 27, 2012)]
[Notices]
[Pages 11618-11620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-4546]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary


Additional Guidance on Airfare/Air Tour Price Advertisements

AGENCY: Office of the Secretary, Department of Transportation.

ACTION: Notice providing additional guidance on airfare/air tour price 
advertisements.

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SUMMARY: The Department is publishing the following notice providing 
additional guidance on airfare/air tour price advertisements.

FOR FURTHER INFORMATION CONTACT: Nicholas Lowry, Attorney, Office of 
Aviation Enforcement and Proceedings (C-70), 1200 New Jersey Ave. SE., 
Washington, DC 20590, (202) 366-9349.

Additional Guidance on Airfare/Air Tour Price Advertisements

    This notice provides additional guidance to airlines and ticket 
agents that market prices for air transportation, air tours, or tour 
components in connection with air transportation regarding the full 
fare advertising rule. It describes several airline and ticket agent 
practices that the Office of Aviation Enforcement and Proceedings 
(Enforcement Office) considers to violate section 399.84 and/or to be 
unfair and deceptive and/or an unfair method of competition in 
violation of 49 U.S.C. 41712. The purpose of this notice is to urge 
voluntary compliance by airlines and ticket agents and to announce the 
office's intention to pursue enforcement action where it discovers such 
practices, as appropriate.

Separate Listing of Taxes and Carrier Fees

    If a vendor chooses to make available information regarding the 
amount of taxes and/or fees that are included in the full fare, the 
disclosure must accurately distinguish between taxes and government 
fees on the one hand and carrier-imposed fees on the other. In 
addition, with respect to information about carrier-imposed fees 
included in the full fare, such disclosure must accurately represent 
the actual cost of the item for which the charge is assessed and must 
not otherwise be deceptive.
    Under past policy that expired on January 25, 2012, fare 
advertisements were permitted to state, separately from the base fare, 
government fees and charges that were not ad valorem in nature. 
Carrier-imposed charges, such as fuel or security surcharges, had to be 
included in the base fare initially presented to consumers on Web site 
displays, but carriers were allowed to break out these charges, along 
with all government taxes and fees, in subsequent screens or through 
pop-ups or hyperlinks. We have found, in reviewing airline Web sites, 
that many Web sites which detailed additional fees labeled all 
additional charges, government and carrier-imposed, as taxes when in 
fact carrier-imposed fees were often the major portion of these fees. 
Such displays were deceptive and in violation of section 41712.
    The Department's new consumer rule, ``Enhancing Airline Passenger 
Protections,'' 76 FR 23110 (Apr. 25, 2011), requires, among other 
things, that the first price quote presented must be the full price, 
including all taxes, fees and all carrier surcharges. This full price 
provision became effective January 26, 2012. In response to concerns 
expressed by carriers, the Department made clear in the preamble to the 
rule that advertisers are free to advise the public in price 
solicitations about government taxes and fees as well as carrier- or 
agent-imposed fees that are included within the single total price, so 
long as that notice is not deceptive. For example, as we explained in 
the final rule, sellers of air transportation may have pop-ups or links 
adjacent to an advertised price to take the consumer to a listing of 
such charges, or they may display these charges on the same page in a 
less prominent manner than the total price if they prefer.\1\ In 
particular, the Department noted that any such charges must be 
displayed on a per-passenger basis, accurately reflect the actual costs 
of the service covered, and not otherwise be deceptive. (14 CFR 399.84, 
76 FR 23110, 23143). When a cost component is described as a fuel 
surcharge, for example, that amount

[[Page 11619]]

must actually reflect a reasonable estimate of the per-passenger fuel 
costs incurred by the carrier above some baseline calculated based on 
such factors as the length of the trip, varying costs of fuel, and 
number of flight segments involved.\2\ Another example of a 
solicitation likely to deceive and therefore prohibited under the rule 
is a presentation of a fare as a ``total'' fare if it does not include 
government taxes and fees or other mandatory charges.
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    \1\ See also Office of Aviation Enforcement and Proceedings, 
DOT, Answers to Frequently Asked Questions, at 22 (Aug 19, 2011, 
revised Sept. 6, 2011, and Oct 19, 2011), available at http://airconsumer.ost.dot.gov/rules/EAPP_22_FAQ --10-19-2011.pdf.
    \2\ For example, descriptions such as the following would be 
acceptable: ``Fare includes a fuel surcharge. On average our 
passengers paid $xx.xx more for fuel during 2011 in their ticket 
price than they did in 2000;'' or ``Fares include a charge for fuel. 
On average in 2011 our passengers paid $xx.xx for fuel as a part of 
their ticket price.'' Of course, such assertions must be based on 
the carrier's actual paid enplanements and fuel expenditures.
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    It has come to our attention that some carriers and ticket agents 
are providing notice of the cost components of airfares on their Web 
site reservations systems in ways that are unfair and deceptive in 
violation of section 41712. In some instances, the advertiser appears 
to properly include government taxes and fees, as well as mandatory 
carrier- or agent-imposed fees, in the initial fare quotations and 
itinerary selections. However, on the page confirming the itinerary 
selection, or on the fare quotation purchase page, where component 
costs are displayed, a general category contains costs described as 
``Taxes'' or ``Taxes incl 9/11 fee'' that actually include a carrier's 
``fuel surcharge'' and/or other fees not imposed by a government. In 
one particular example, the total fare for a U.S-Europe trip appears to 
be properly listed as $769.41 on the initial itinerary pages, but the 
confirming page describes the total as being composed of a ``Price'' of 
$170 and ``Taxes incl 9/11 fee'' of $599.41. A further description of 
the ``Taxes incl 9/11 fee'' discloses that the amount of $599.41 
includes an amount of $476 described as a ``fuel surcharge'' and an 
amount of $33.78 described as a ``Passenger service charge 
international.'' These charges are not government-imposed taxes and 
fees, and it is an unfair and deceptive practice and an unfair method 
of competition in violation of section 41712 to lead consumers to 
believe that they are.\3\
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    \3\ We note that section 1104 of the FAA Modernization and 
Reform Act of 2012, Public Law 112-94, 126 Stat.11 (2012), includes 
an amendment to the tax code that also may bear on what may be 
included under a breakout of taxes in airfare advertising.
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    In another example of non-government charges being included in an 
amount described as ``taxes,'' advertisers present a category described 
as ``taxes and fees'' where the amount in that category includes not 
only government-imposed taxes and fees but carrier- or agent-imposed 
fees, the latter of which may include ``fuel surcharges,'' 
``convenience'' fees, or other mandatory fees. Combining government-
imposed taxes and fees with those imposed by carriers or agents is 
likely to confuse consumers and deceive them into believing the 
government taxes and fees associated with their airfare are higher than 
they actually are. Therefore, advertisers who desire to separately list 
government taxes and fees as well as carrier- or agent-imposed fees 
should ensure that they are not lumped together and described as 
``taxes and fees.'' Language such as ``Taxes and carrier-imposed fees'' 
would be acceptable, for example.
    Moreover, using the particular example noted above, we wish to 
remind carriers that amounts listed as charges for particular services 
must accurately reflect the actual costs of the service covered. 
Therefore, the ``fuel surcharge'' of $476 in the above example, which 
is associated with a transatlantic trip originating in New York City, 
must be an accurate reflection of the fuel cost over some reasonable 
baseline for an individual passenger for that trip and the carrier 
should be prepared to detail the services and costs per passenger 
associated with its ``Passenger service charge international.''
    In a similar vein, we have observed that carriers may add ``fuel 
surcharges'' or other fees to their frequent flyer ticket offerings, 
some in an amount of several hundred dollars. Any such charges assessed 
also must be fairly disclosed and an accurate reflection of the actual 
costs as described above.

Advertising Each-Way Fares Based on a Roundtrip Purchase

    Under section 399.84(b), airlines and ticket agents are permitted 
to advertise airfares on an each-way basis when a roundtrip purchase is 
required provided that the roundtrip-purchase requirement is clearly 
and conspicuously noted in the advertisement and is stated prominently 
and proximately to the each-way fare amount. The Department has 
historically allowed the marketing of each-way fares because it 
facilitates the pricing and sale of ``open jaw'' itineraries (outbound 
flights to one city and return flights from a different one, e.g. 
Washington to Amsterdam with the return flight from Paris to 
Washington). Such marketing also can provide consumers better fare 
information where different prices exist for outbound and return 
flights because one is in the high season or on a weekend and the other 
flight is not.
    In the past, we have noted understandable variations in the price 
of outbound and return flights sold on an each-way basis. For example, 
fares could vary based on whether the travel was during high, low or 
shoulder seasons, whether it was on a weekend or a weekday or whether 
it was on flights during peak holiday periods or on other busy travel 
days. Fares also could vary depending on the number of segment-related 
taxes and government fees that might apply and for international travel 
the varying U.S. and foreign arrival and connecting point taxes and 
government fees that might apply. Until recently the variation in each-
way fares by direction was not a regulatory concern.
    Subsequent to the January 26, 2012, effective date of the full fare 
advertising rule we observed that one carrier was offering outbound 
each-way fares to European points that appeared to be deceptively low 
in comparison to the return flight fares. In one case an outbound 
Washington to Paris fare on February 22, 2012, was advertised at $102 
with a return flight on February 29, 2012, advertised at $629 or more 
than 600% higher. Even more troubling, a seat on the same February 29 
flight was being offered for only $233 if it was bought as part of a 
Paris-originating roundtrip to Washington. The only reasonable 
explanation for such variations is that the carrier intended to bait 
the passenger with an unrealistically low outbound fare and to induce 
passengers to buy the roundtrip ticket at a substantially higher price 
than any reasonable person would expect at the beginning of the search 
process. We view such tactics as being unfair and deceptive and 
amounting to an unfair method of competition.
    The requirements and guidance discussed above, it should be noted, 
extend to travel agents and other non-airline vendors of air 
transportation. Questions regarding this notice may be addressed to the 
Office of Aviation Enforcement and Proceedings (C-70), 400 7th St. SW., 
Washington, DC 20590. The office will provide those subject to the full 
fare advertising rule and 49 U.S.C. 41712 60 days subsequent to the 
date of this notice to ensure they are in compliance before instituting 
enforcement action related to the issues covered in this notice.
    An electronic version of this document is available at http://www.regulations.gov.


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     Dated: February 21, 2012.
Samuel Podberesky,
Assistant General Counsel for Aviation Enforcement and Proceedings.
[FR Doc. 2012-4546 Filed 2-24-12; 8:45 am]
BILLING CODE 4910-9X-P