American Fined for Failing to Disclose Oversales Voucher Fees

The U.S. Department of Transportation today assessed a civil penalty of $90,000 against American Airlines for failing to disclose that vouchers given to passengers for voluntarily giving up their seat on oversold flights could be redeemed only after paying as much as a $30 ticketing fee.

This is the first penalty issued by the Department against an airline for failing to disclose fees or other restrictions on the use of oversales vouchers.

“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.”

Under DOT’s oversales, or “bumping,” rules, 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 DOT’s Aviation Enforcement Office found that American offered passengers travel vouchers worth specific dollar amounts as compensation for voluntary bumping. When awarding the vouchers, American did not tell passengers they would have to pay a ticketing fee to redeem the vouchers by telephone or at airport ticket counters, or that the vouchers could not be redeemed on the carrier’s internet site. American stopped requiring fees for tickets purchased by phone using vouchers about four years ago but continued to require fees for tickets acquired at airport counters until late last year, and even today passengers cannot use bumping vouchers to purchase tickets online. The carrier also did not tell passengers that vouchers used for tickets purchased by telephone had to be mailed to the carrier for processing as much as three weeks before the departure date.

The consent order is available on the Internet at www.regulations.gov, docket DOT-OST-2011-0003.