Order 95-7-46

UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D.C.

SERVED JULY 28, 1995

TRANS WORLD AIRLINES, INC.

Violations of 49 U.S.C. §41712 and
	14 CFR 399.84 

This consent order concerns violations of the advertising requirements in 14 CFR 399.84 and 49 U.S.C. § 41712 by Trans World Airlines, Inc. (TWA). This order directs TWA to cease and desist from future violations and to pay compromise civil penalties.

As a U.S. certificated air carrier, TWA is subject to the Department's policy on price advertising embodied in 14 CFR 399.84. When advertisements do not conform to the requirements of section 399.84, they also violate 49 U.S.C. § 41712, the statutory provision which prohibits unfair or deceptive practices or unfair methods of competition. Section 399.84 requires that any advertising or solicitation which states a price for air transportation must state the entire price to be paid. The Department's Office of Aviation Enforcement and Proceedings (Enforcement Office) has, as a matter of enforcement policy, permitted carriers to advertise each-way fares that are available only when purchased for round-trip travel so long as the disclosure of the round-trip purchase requirement in the advertisement is prominent and proximate to the advertised fares (i.e., clear -- text print must be large enough to alert a reader to the actual fare -- and conspicuous -- text must be located close to the fare; for example, if the fares are listed in a box, the disclosure should appear within the box).

On January 8, 1995, TWA published an each-way fare advertisement which appeared on page D-6 of the Washington Post (Post). The disclosure advising consumers that the each-way fares were only available when purchased for round-trip travel was not prominent and proximate, i.e., clear and conspicuous. Specifically, the disclosure text was in fine print positioned outside the fare box graphic. TWA was contacted by the Department's Aviation Consumer Protection Division and warned that the Post advertisement did not meet the requirements of section 399.84. However, on February 1, 1995, TWA printed another each-way fare advertisement, this time on page A-19 in the New York Times National, which also did not comply with section 399.84. In that instance, the fare was advertised prominently as "each way," but disclosure of the round-trip purchase requirement was printed in fine print at the bottom of the page, even further away from the advertised fare than in the January 8 Post advertisement.

With respect to another matter, on March 15, 1995, TWA published an advertisement on page F-9 of the Post. That ad listed fares to a number of cities and in bold and large print proclaimed "Spend 45% Less Green This St. Patrick's Day," thereby indicating to the reasonable consumer that the fares listed were 45% lower than the lowest comparable fares available before the advertised sale. In fact in 13 of the 20 markets covered in the ad, the listed fares were not 45% off the lowest fares with comparable restrictions that were available before the sale. Furthermore, the ad neither clearly and specifically described the fare that was being used for the 45% off sale comparison nor explained to consumers that the 45% off claim did not apply to the lowest priced discount fares in the market. Therefore, consumers were likely to be confused about the actual savings.

In mitigation, TWA states that it believes it complied with the percentage-off advertising guidelines as outlined in the Secretary's industry letter dated December 20, 1994. TWA interpreted the Secretary's letter to require the benchmark fare for the percentage-off sale to be generally available and either identified and described in the ad or comparable, in terms of similar restrictions, to the advertised fare. Although TWA's interpretation is plausible, TWA misinterpreted the meaning of the Secretary's letter. In fact, the benchmark fare must either be fully described and identified in the ad or, if not identified, it must be the lowest available comparable fare. This interpretation is the only one which adequately protects consumers against deceptive practices in line with the requirements of 49 U.S.C. § 41712. With respect to the prominence and proximity issue, TWA, in its defense, states that it immediately stopped publishing its advertisements once it was informed of the Department's concerns.

The Enforcement Office has considered the information provided by TWA regarding its interpretation of the benchmark fare requirements and has decided not to pursue enforcement action, beyond a warning, with respect to the carrier's percentage-off advertisements.1 However, it continues to believe that enforcement action is warranted in connection with the each-way fare advertising violations. In this connection, the Enforcement Office and TWA have reached a settlement of this matter. TWA consents to the issuance of an order to cease and desist from future violations of 49 U.S.C. § 41712 and section 399.84 of the Department's regulations (14 CFR 399.84) and to the assessment of $30,000 in compromise of potential civil penalties as described below. The Enforcement Office believes that the assessment of a civil penalty of $30,000 is warranted in light of the nature and circumstances of the violations at issue here and the mitigating circumstances described by TWA. Of the assessed civil penalty, $15,000 shall be paid under the terms described below. The remaining $15,000 will be forgiven if TWA promptly remits payment and refrains from further violations of the price advertising requirements of 14 CFR 399.84 for a year from the service date of this order. This order and the penalty it assesses will provide an adequate deterrence to future noncompliance by TWA, as well as by other domestic and foreign air carriers.

This order is issued under the authority contained in 49 CFR 1.57a and 14 CFR 385.22.

ACCORDINGLY,

1. Based on the above discussion, we approve this settlement and the provisions of this order as being in the public interest;

2. We find that TWA violated 14 CFR 399.84 by failing to prominently and proximately disclose that each-way fares in its January 8, 1995, and February 1, 1995, advertisements, which appeared in the Washington Post (Post) and New York Times National, respectively, were only available when purchased for round-trip travel;

3. We find that by engaging in the conduct and violations described in paragraph 2 above, TWA also violated 49 U.S.C. § 41712;

4. TWA, and all other entities owned or controlled by or under common ownership with TWA, and their successors and assignees, are ordered to cease and desist from violations of 49 U.S.C. § 41712 and 14 CFR 399.84;

5. TWA is assessed $30,000 in compromise of potential civil penalties that might otherwise be assessed for the violations found in paragraphs 2 and 3 of this order. Of this amount, $15,000 shall be paid within 15 days of this date of issuance of this order by wire transfer. The remaining $15,000 shall be suspended for one year following the service date of this order and shall be forgiven unless TWA fails to comply with the payment provisions of this order or violates the requirements of section 399.84 or this order during the year following service of this order, in which case the entire unpaid portion of the $30,000 assessed penalty shall become due and payable immediately; and

6. Payment shall be made by wire transfer through the Federal Reserve Communications System, commonly known as "Fed Wire," to the account of the U.S. Treasury. The wire transfer shall be executed in accordance with the instructions contained in the Attachment to this order. Failure to pay the penalty as ordered will subject TWA to assessment of interest, penalty, and collection charges under the Debt Collection Act, and possible enforcement action for failure to comply with this order.

BY:

			ROSALIND A. KNAPP
			 Deputy General Counsel

[1] The Office of Aviation Enforcement and Proceedings sent out an industry letter on July 14, 1995, to reemphasize and clarify the percentage-off advertising guidelines contained in the Secretary's December 20, 1994, letter.