The U.S. Department of Transportation (“DOT”) has statutory authority to regulate any “unfair or deceptive practice or an unfair method of competition in air transportation or the sale of air transportation.”  Pursuant to this authority, the DOT has adopted rules, published guidelines, and issued orders that have established a wide-ranging program of regulation for advertising by air carriers, travel agents, and tour operators.

            This article is intended to provide a basic introduction to the DOT’s advertising regulations.  The DOT regularly issues guidelines and orders that clarify its existing standards and address new issues, and the precise effect of the regulations will be determined by the specific facts and context of an advertisement.  Therefore, this article should not be relied on as a legal opinion or advice.  The law firm of Zuckert, Scoutt & Rasenberger, L.L.P. is available to consult with interested parties about air transportation advertising issues.

Introduction

            The DOT’s advertising regulations apply to all air carriers and travel agents that do business in the United States.  Although the DOT only has statutory authority to regulate advertising about air transportation, and not related services (such as cruises, hotels, and rental cars), the DOT does regulate advertising about travel packages that include air transportation, even if they also include related services.

            The DOT’s advertising standards apply to all forms of communication, including traditional media, such as newspapers and television; new media, such as the world wide web and e-mail; and specialized media, such as press releases, billboards, and trade publications such as the Official Airline Guide.

            The DOT’s advertising standards are enforced by the Office of Aviation Enforcement and Proceedings.  The Office regularly monitors advertisements in all forms of media to determine if they comply with the DOT’s standards and are internally consistent.  The Office has the authority to take a variety of actions, including sending a warning letter; entering into a consent order (pursuant to which the advertiser usually agrees to pay a settlement); or initiating an enforcement action, which can direct that advertising be terminated and require the advertiser to pay a fine.

The Full-Price Rule

            As a general matter, the DOT requires all advertising to clearly state the full price that a consumer must pay for the advertised services.  In particular, only certain taxes and fees can be listed separately from a fare in advertising; all other taxes and fees must be included in the fare.

            The DOT allows per-person, government-imposed taxes and fees to be listed separately from a fare, provided that the amounts of such taxes and fees is clearly stated elsewhere in the advertising.  These taxes and fees include Passenger Facilities Charges (PFCs); the portion of the federal excise tax that is assessed on a per-segment basis; international departure taxes; customs and immigration fees; and foreign airport taxes.  (However, if an advertiser so chooses, some or all of these taxes and fees can be included in the fare; they are not required to be listed separately.)

            In contrast, taxes and fees that are assessed on an ad valorem basis, such as the portion of the federal excise tax that is assessed on a percentage basis, must be included in the advertised fare.  Any airline-imposed surcharges, such as “fuel surcharges” and “insurance surcharges,” also must be included in the advertised fare.  In addition, any fees that are collected as part of a travel package which are not imposed by the government on a per-person basis also must be included (such as taxes assessed on hotel rooms and rental cars, as well as hotel “linen charges” or “energy charges”).

            When taxes and fees are listed separately from a fare, the advertising should clearly identify both their nature and amount; for example, in the case of PFCs, advertising can state that “up to $18 per round-trip in passenger facility charges may be collected in addition to the advertised price.”

Purchase and Use Restrictions

            Advertising should mention all significant restrictions on the purchase and use of a fare, including:

• One-Way Fares – Advertising must provide a prominent and proximate notice if a fare advertised at a one-way price is only available as part of a round-trip purchase.

• Blackout Dates – Advertising must disclose if seats are not available at the advertised price on specific dates.  As a general matter, a reasonable number of seats must be available at the advertised price.

• Length of Stay– Advertising must disclose minimum and maximum stay restrictions, such as a Saturday-night stay requirement.

• Advance Purchase Conditions – As a general matter, if no time limitations are stated, a fare should be available for at least 72 hours after an advertisement is published.

•  Refundability/Change Conditions – Advertising must disclose if a fare is non-refundable and if changes are allowed, and specify the fees for refunds or changes.

The September 11th Security Fee

            Since 2002, air carriers have been required to collect the “September 11th Security Fee” from passengers ($2.50 per segment; maximum $5.00 one-way, $10.00 round-trip).  Because this is a tax imposed by the government on a per-person basis, it can be listed separately from a fare in advertising.  However, the DOT requires the fee to be identified specifically as the “September 11th Security Fee” if it is listed separately.  Air carriers also can list separately a security tax imposed by a foreign government, but should not list separately any carrier-imposed “security” or “insurance” surcharge.

Travel Agent Service Fees

            As a general matter, any service fee charged by a travel agent should be included in the fare that is advertised to consumers.  However, the DOT has allowed some variations by travel agents on the world wide web that display a “matrix” of fares, subject to specific restrictions.

Code-Share and Change-of-Gauge Services

            An airline must disclose if a flight actually will be operated by another airline, or if a flight with a single flight number actually involves a change of aircraft en route.  These disclosures must not only be included in advertising, but also be provided directly to the consumer when a ticket is purchased.

On-Time Performance Advertising

            If an airline cites its on-time performance in advertising, it must also cite the data used in the  calculation (usually official DOT data), the time period for the calculation, and the airlines to which its performance is being compared.  In addition, as a general matter, airlines should not publish unrealistic flight schedules.

Public Charters

             Special rules apply to advertising for public charters.  In particular, it must identity of the charter operator and identify the air carrier that will actually operate the flights.  If the advertising includes a price, it must also refer consumers to or include a copy of the public charter’s operator-participant contract.

The Internet

            As a general matter, the same standards apply to advertising on the world wide web and in e-mail that do to advertising in traditional media.  For example, any fares listed by an online travel agent should actually be available for purchase.  However, the DOT has allowed some variations that take advantage of the new media.  For example, in Internet advertising, taxes and fees that are not included in a fare can be listed on a separate web page or pop-up box if the advertising provides a notice that not all taxes and fees are included in the fare, and provides a prominent and proximate hyperlink to that information.

Chain of Responsibility

            The DOT takes the position that an air carrier shares responsibility for how its fares are presented to the public by travel agents, ad agencies, or other partners.  The DOT has assessed significant fines against air carriers for violations that were caused solely by other parties.

Additional Enforcement Issues

            Although the historic focus of the Office of Aviation Enforcement and Proceedings has been advertising issues, it also enforces other DOT regulations, including the requirements that air carriers file periodic reports with DOT.  In addition, in recent years it has assessed significant fines against air carriers that have violated the DOT’s regulations governing the accommodation of passengers with disabilities, and that have held out services for which they lacked authority.

Questions?

            There are many specialized advertising issues that are not discussed in this article, and the DOT regularly issues guidelines and orders that clarify its existing standards and address new issues.  For additional advice or information about air transportation advertising issues, please contact Jol A. Silversmith at (202) 973-7918 or via e-mail at jasilversmith@zsrlaw.com.