The U.S. Transportation Department fined American Airlines $90,000 for failing to disclose a fee charged to passengers who redeem vouchers they get for voluntarily giving up seats on overbooked flights.
An investigation by the federal agency found that American didn’t tell passengers they would have to pay a $30 fee to redeem such vouchers by telephone or at airport ticket counters. The airline also didn’t disclose that the vouchers could not be redeemed on its website.
Airlines are allowed to oversell flights because some passengers usually cancel at the last minute. But before bumping passengers, the airlines must ask for volunteers to give up their seats in exchange for compensation. The Transportation Department requires airlines to notify passengers about any fees and restrictions at that time.
In the three months that ended June 30, nearly 18,000 passengers flying on American voluntarily gave up seats in exchange for vouchers or cash, according to federal statistics.
American stopped charging a fee to redeem the voucher over the phone about four years ago. But it did not disclose that passengers who redeem the vouchers over the phone must make the arrangements and mail the voucher to the carrier as much as three weeks before the departure date.
Until late last year, the airline charged the $30 fee to redeem the voucher at airport counters, and passengers still cannot use the vouchers to buy tickets online. The airline says it no longer charges a redemption fee.
“We are confident that our voucher policies now fully comply,” American Airlines spokesman Tim Smith said. This is the first penalty assessed against American over violations of consumer protection rules since 2003, according to the Transportation Department.
Under the agreement between the Transportation Department and American, the airline will pay half the fine within 30 days and the other half only if it continues to violate the agency’s full-disclosure rules regarding ticket vouchers.