American Airlines faces potential enforcement proceedings for deceptive pricing practices, following a complaint to the US Department of Transportation that alleges the carrier deliberately misrepresented the amount of tax that applies to its fares.
Benjamin Edelman, an associate professor at Harvard Business School, filed a complaint to the DOT on 20 March, calling on the US government to begin a formal investigation and impose deterrent fines on the carrier for overstating and falsely misrepresenting its fare charges over a five-year period.
The complaint alleges that American Airlines intentionally tells its customers that the price of a journey includes a tax, which is actually a fee imposed by the carrier.
“AA’s statement of ‘tax’ are [sic] inaccurate and literally false. There should be no serious dispute that these false statements are unlawful,” the complaint said, claiming that the alleged deceptive practices violate the country’s price advertising laws.
“AA’s misrepresentations undermine public policy and accountability. When AA tells consumers that taxes are larger than is actually the case, AA invites passengers to conclude that there is no point trying to shop around, for this journey or future journeys, as any other carriers would surely have to charge the same tax.”
The complaint added that the carrier’s allegedly false pricing statements encourage passengers to blame governments or airports for high carrier fees.
American Airlines has been criticised for its pricing practices before, by the same complainant.
Edelman originally protested to the DOT in 2011, accusing the carrier of misrepresenting the taxes that applied to its fares. The carrier entered into a consent order with the DOT in 2013, promising to address the alleged deceptive pricing violations, after the DOT rejected the airline’s justifications for its behaviour.
The DOT then commenced enforcement proceedings in December 2016 after issuing a consent decree the same month, because American Airlines continued mischaracterising its carrier surcharges as taxes on award flight bookings.
In his latest complaint, Edelman alleges that American Airlines has failed to cease what he characterised as unlawful behaviour.
“For a period now stretching to five years, AA staff and systems have repeated substantially the same misrepresentation, in each instance misrepresenting an airline fee as a ‘tax’,” the complaint said.
“The impermissibility of AA’s misstatements is particularly clear in light of unambiguous DOT guidance and AA’s two consent decrees on this very subject.”
He said significant fines would be appropriate to “reiterate the seriousness of both the underlying violations and the remarkable continuation of the violations even after promising DOT that the problems were in the past.”
American Airlines did not respond to requests for comment.
Counsel to AA
Silverberg Goldman & Bikoff
Partner Robert Silverberg in Washington, DC