Delta’s Fight on DOT Code-Share Disclosure: A Good Thing for Agents?

Since the Department of Transportation (DOT) imposed stricter rules on the disclosure by airlines and ticket sellers of code-sharing arrangements, several airlines and some high-profile travel agencies have been fined for failure to inform the buyer of the identity of an operating carrier.

The fines have totaled nearly $1.6 million, according to the DOT.

The department uses “secret shoppers” – DOT staffers posing as customers – to ferret out violations of the rules, which state that the airline or ticket seller must disclose a code-sharing arrangement before the ticket is purchased.

Assessing fines
If the seller fails the test, the DOT generally negotiates a settlement. It has said that fines are assessed according to the particular circumstances of each case.

In most cases, half the fine is waived if the violator refrains from further offenses for one year.

Delta Air Lines is the latest carrier to be caught in the DOT’s secret shopper dragnet, but it is refusing to play ball with the DOT.

The carrier says the secret shopper callers hung up before making any bookings therefore, no violations were committed. Delta is taking its case before an administrative law judge for a decision on the case.

An easier time for agents?
If Delta prevails, travel agencies may have an easier time of dealing with the DOT’s regulations.

Until then, they should play it safe and address code-share issues early in the conversation.

The DOT’s oral code-share disclosure rule states that in any direct oral communication or in any telephone calls concerning a flight that is part of a code-sharing arrangement, a carrier:

“shall tell the consumer, before booking transportation, that the transporting carrier is not the carrier whose designator code will appear on the ticket and shall identify the transporting carrier by its corporate name and any other name under which that service is held out to the public.”

Delta’s position: no booking, no foul
In a Notice of Enforcement Proceeding, the DOT said that in 2013 and 2014, Delta failed to make the full, required code-share disclosures during eight separate telephone conversations out of a total of 30 secret shopper calls.

In a motion to dismiss the case, Delta noted that the DOT “readily concedes that its secret shoppers had no intention of ever booking a ticket,” and that they closed each conversation without booking a flight.

“There is no reason to believe that Delta’s reservation agents would not have made the required disclosures at some point before booking transportation,” it said.

Delta also noted that the secret shoppers easily could have made bookings without incurring any costs, either by taking advantage of 24-hour grace period mandated by the DOT or by purchasing a refundable ticket.

“Either way, given that the Office was purporting to enforce a regulation that is expressly tied to booking, it is baffling that the secret shoppers would close each conversation without booking a flight,” the carrier said.

‘Grossly excessive’?
The DOT is seeking a $660,000 civil penalty, which Delta called “grossly excessive,” given that no consumer was harmed by its actions.  

The department arrived at that figure by claiming Delta violated two regulations with the same behavior and added a third set of civil penalties for violating a 2010 consent order. It also seeks to impose the maximum penalty of $27,500 per violation.

In recent years, the DOT has fined a few airlines and more than a dozen on- and offline agencies for violating the disclosure rule.

Alaska Airlines agreed to a fine of $150,000, “in order to avoid litigation, and without admitting or denying that any violation occurred,” last summer.

The fines imposed on agencies have ranged from $20,000 on the Automobile Club of New York to $125,000 on Carlson Wagonlit.

Delta said the cases “prove nothing other than the fact that the targets of the investigations chose to settle rather than litigate.”