Continental Airlines fined $20,000 for ads
November 1, 1993
WASHINGTON (AP)—Continental Airlines was fined $20,000 for misleading ads that promised discount fares to Europe when few seats were available at the cheap rate, the Transportation Department said Sunday.
The department said the fine—while not particularly severe—signals a new federal activism to help consumers combat so-called ‘‘low-fare, no-fair’‘ practices.
‘‘Low fares are good for consumers, but only when there are seats available,’‘ Transportation Secretary Federico Pena said. ‘‘Deceptive ads inconvenience the consumer and undermine the credibility of the entire airline industry.’‘
A vigorous campaign against deceptive airline ads could prove significant, particularly in light of a Supreme Court ruling last year that barred states from regulating airline fare advertising.
The high court said it’s the federal government’s job to make sure consumers are not duped, ruling the federal Airline Deregulation Act of 1978 pre-empts states from enforcing laws to protect consumers against false or misleading ads.
The Transportation Department said Continental cooperated in the investigation and agreed not to advertise deceptively again.
‘‘While Continental felt there were sufficient seats, the department disagreed,’‘ said Continental spokesman Ned Walker. ‘‘To avoid costly litigation, we chose to pay the fine.’‘
The agency issued similar orders earlier this year. In one case, USAir was fined $5,000, and in the other Icelandair was ordered to stop running deceptive ads but was not fined.
In the Continental case, the carrier’s newspaper ads in February offered discount fares from Newark International Airport to various European cities.
For example, a one-way seat from Newark to Paris was offered for $274 during the spring and fall and $324 during the summer. The figures represent approximately a 25 percent discount.
When Transportation Department investigators called Continental for seats, they found that few if any were available at the special rates.
Also, Continental did not mention in the ads that the low fares were not available during significant periods—from July 28 to Aug. 31 heading toward Europe and from July 14 to Aug. 14 to the United States.
When airlines advertise low fares, the department said, they must make a reasonable number of seats available at that rate throughout the entire sales period.
Even if more than 70 percent of the seats sold during the sale period are discount tickets, the department said, an airline cannot run a final ad offering the special rate in the closing days of the sale period when only a few seats are left.
A department official who requested anonymity said what is reasonable depends on the circumstances of the sale. But typically the guideline would require that 10 percent of the seats be available at all times for the discount, he said.
In the USAir case, the carrier ran the last of five ads in February for discount service from New York’s LaGuardia Airport to Sarasota, Fla., when only one seat was left at that rate.
Icelandair was cited for advertising special low winter rates to Luxembourg without telling customers the fare was not available from Dec. 12 to Dec. 24.