Thursday, December 10, 2009
As discussed last month on the blog, see "New Passenger Rights Enforcement," the Department of Transportation set something of a precedent by issuing fines to Continental Airlines, Mesaba Airlines, and ExpressJet for their role in the highly publicized stranding of 47 passengers on the tarmac in August of this year. There's a new story out discussing the fines and their possible ramifications that is well worth reading. See Jay Boehmer, Tarmac Delay Triggers DOT Fine Precedent, Bus. Travel News, Dec. 7, 2009 (available here). As the story discusses, the three airlines were fined a total of $175,000 for engaging in "unfair and deceptive practices" due to their failure to follow Continental's "Airlines Customer First Commitments" published on its website. According to 49 U.S.C. § 41712:
On the initiative of the Secretary of Transportation or the complaint of an air carrier, foreign air carrier, or ticket agent, and if the Secretary considers it is in the public interest, the Secretary may investigate and decide whether an air carrier, foreign air carrier, or ticket agent has been or is engaged in an unfair or deceptive practice or an unfair method of competition in air transportation or the sale of air transportation. If the Secretary, after notice and an opportunity for a hearing, finds that an air carrier, foreign air carrier, or ticket agent is engaged in an unfair or deceptive practice or unfair method of competition, the Secretary shall order the air carrier, foreign air carrier, or ticket agent to stop the practice or method.
Notice, however, that this provision only permits the Secretary to order a halt to an air carrier's deceptive or unfair business practices. It says nothing about issuing monetary penalties. As the DOT order makes clear, the fines levied were agreed upon "in the interest of compromise and settlement" in order "to avoid the substantial burdens of litigation." See Continental Airlines, Inc., Consent Order, Dkt. No. OST-2009-0001 (Nov. 24, 2009), at 3. It remains unclear what criteria the DOT may use in the future to determine a "passenger rights" violation through the exercise of its § 41712 authority and what the penalities for such violations would be. It is also not clear to what extent the DOT will pursue future "passenger rights" cases. The discretion lies with the DOT. The result, unfortunately, is more regulatory uncertainty for the airlines.