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US DOT Fines American for Undisclosed Voucher Fees

Monday, February 28, 2011 - 04:08 PM

UPDATED: With response from American Airlines

(Alex Goldmark, Transportation Nation) The U.S. Department of Transportation fined American Airlines $90,000 Monday for charging passengers undisclosed voucher fees. Airlines routinely offer free flight vouchers as an incentive to give up a seats on oversold flights. A DOT investigation found that American was not telling passengers about restrictions, including a $30 ticketing fee, on the use of those flight vouchers.

This is the first time the DOT has issued a fine on an airline for failing to disclose fees.

“When passengers volunteer to give up their seat on an oversold flight, they are entitled to be fully compensated – not to find out later that they’re getting $30 less,” said U.S. Transportation Secretary Ray LaHood.  “Passengers deserve to be treated fairly when they fly, and especially when they’ve volunteered to give up their seat because the airline overbooked their flight.”

In a statement the DOT explained the rules for "bumping" and vouchers this way: "an airline must first seek volunteers willing to give up their seat on an oversold flight before bumping passengers involuntarily.  The carrier may offer any type or amount of compensation agreed to by the volunteer, in contrast to involuntary bumping situations, where DOT rules require airlines to pay passengers cash compensation in most cases."

An investigation by the DOT’s Aviation Enforcement Office found that American offered travel vouchers valued at specific dollar amounts as compensation for voluntary bumping.  However, when awarding the vouchers, the DOT found, American did not tell passengers about a ticketing fee required to redeem the vouchers, nor that the vouchers could not be redeemed on the carrier’s internet site.

The DOT stresses that the process for redeeming oversales flight vouchers remains more cumbersome and complicated than purchasing a ticket or redeeming other flight vouchers.

Tim Smith, company spokesperson for American Airlines says this is largely old news. American stopped charging any booking fees for using an oversales voucher more than four years ago he points out. "Plus we stopped charging any service charge for booking a voucher at the airport" and on the phone.

The reason phone bookings are an issue is that there is normally a charge to book a ticket at the airport or over the phone as opposed to the internet. Smith stresses that American made all these changes before the DOT contacted them about it. "We stopped it because we realized it was a problem" four years ago. "That's the government in action for you."

"We, like everyone else were charging a ... service charge to book through a reservations agent on the phone. And there was no exemption for vouchers." So around 2007, he says, "We realized that this wasn't good because we were giving them the voucher for giving up their seat" and they shouldn't be charged a fee to re-book.

He added that American only actually has to pay $45,000 up front, and fully expects the Airline to be forgiven for the obligation to pay the other half under the terms of the consent order (linked below) as it is already in compliance with the terms of the order. He points out this is the first consent order they've received in eight years.

One change that will result from the DOT action, Smith says, is that American Airlines vouchers will now say right on the printed paper, that there are no booking fees and offer instructions on how to book, without a fee of course.

Here's a PDF of the DOT complaint.

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