Government fines Continental, Hawaiian and US Airways for consumer rule violations

By | August 10th, 2009

continentalThe Transportation Department has fined three airlines for consumer rule violations, signaling a new “get-tough” approach to the airline industry, if not in practice, then at least in principle.

The government assessed civil penalties against Continental Airlines, Hawaiian Airlines and US Airways — the later two for failing to disclose their code-sharing arrangements with other airlines. Continental, which is in the news today for keeping passengers trapped on a plane more than nine hours, was dinged for not revealing the full price of an advertised fare.

Are these actions, taken with last month’s fines, the sign of a new activist DOT? Maybe.

In a press release, Transportation Secretary Ray LaHood had strong words for the offending airlines. “At the Department of Transportation we take the rights of airline passengers seriously, and we will take enforcement action when airlines violate our consumer protection rules.”

Let’s get to the specifics of the violations.

Continental Airlines’ offense is perhaps the most serious. Here are the details of its violation (PDF):

For a period of time, Continental advertised fares on the main “Special Offers” webpage and on subsequent pages internal to that section of the website that did not contain appropriate notice of the amount or nature of additional taxes and fees that were excluded from the advertised fare at the first point in which the fares were displayed or at least via a hyperlink that would take consumers directly to a webpage or pop-up that contains the appropriate notice. Potential customers were presented initially with a page listing choices of base fares that applied to various featured destinations, only to be shown on a subsequent page the amount of taxes and fees that were in addition to those base fares.

Furthermore, Continental quoted numerous fares for travel between various featured destinations followed only by the statements “each way” or “one-way.” For example, one quoted fare advertised, “Europe Summer Sale fares starting at $186 each way,” and another stated, “Explore the stunning natural scenery of Canada with fares starting at $93 one way.” Despite the fact that such fares were available only if purchased on a roundtrip basis, Continental failed to provide the clear and conspicuous disclosures of the roundtrip purchase requirement proximate to the advertised fares required by the Department’s long-standing enforcement case precedent. It was only after selecting a “special offer” and being taken to a subsequent webpage that consumers were made aware of the existence of the roundtrip purchase requirement.

Continental is having a really bad day, when it comes to customer service.

Next up: US Airways (PDF).

In January and March 2009, Enforcement Office staff made a number of telephone calls to US Airways’ reservations line to determine if US Airways employees were advising consumers of the code-share status of US Airways flights operated by other carriers as required by section 257.5(b). The US Airways reservations agents answering those calls failed to disclose the code-share status of the flights in question during a substantial number of those calls.

The penalty: A $75,000 fine, half of which must be paid in 15 days and the other half of which must be paid if US Airways repeats the violation.

And here’s Hawaiian’s (PDF):

In January, February and March of 2009, Enforcement Office staff made a number of telephone calls to Hawaiian Airlines’ reservations line to determine if, as required by section 257.5(b), the carrier’s employees were advising consumers of the code-share status of Hawaiian Airlines flights operated by other carriers. The Hawaiian Airlines reservations agents answering those calls failed to disclose the code-share status of the flights in question during a substantial number of those calls.

The airline must pay $50,000, half of which will be forgiven if it doesn’t repeat the violation.

These fines come on the heels of last month’s actions against Delta Air Lines and United for code-sharing and denied-boarding violations.

But what do they mean?

Well, you’ve gotta hand it to the new Transportation Secretary for his Clint Eastwood impression. But the numbers tell a different story. These fines are nothing to the airlines. They don’t hurt, even for an industry that’s losing millions. (Remember, they still make billions of dollars in revenue — they just haven’t figured out a way to keep the money.)

No, the tough talk needs to be backed up by big, non-negotiable fines. That will be a sign that this DOT is really on the side of consumers.

(Photo: caribb/Flickr Creative Commons)

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