Jetrader - September/October 2010 - 30

were filed with American in June 2010, with more than 1 million reports filed with the top 18 reporting airlines. Substantial revenue is at risk, in addition to increased administrative costs to process refund claims if American loses. A loss would undoubtedly affect how all airlines approach this issue. But does the case have merit? Every passenger ticket issued on a U.S. carrier is subject to the carrier’s conditions or contract of carriage. American’s and all U.S. airlines’ conditions of carriage

address their liability for lost, damaged or delayed baggage. For American, the passenger must notify the airline and file a claim. American’s basic liability is limited to the lesser of the actual value of the baggage or $3,300. The passenger may purchase excess valuation insurance to a total value of $5,000. While the refund of baggage fees is not expressly addressed in American’s conditions of carriage, a passenger is not precluded from claiming a refund of the fee with the damage or loss claim. The

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complaint does not state what process, if any, the plaintiff followed other than making a verbal request for a refund of the baggage fee which was denied. If, after making a formal claim, a bag (whether damaged or not) is ultimately delivered and the passenger is compensated for any damage or delay, the conditions of carriage should shield American from liability for the express contract claim alleged in the complaint. Whether American must refund the fee if the bag is lost or destroyed is less clear. Other allegations could prove more difficult for American to defend. The complaint argues that by charging a baggage fee separate from the ticketed airfare, American may have created a new and separate contract, similar to a shipping charge. American may therefore not have earned the fee if they failed to deliver the bag as the complaint alleges was impliedly represented and promised—on time and undamaged. The question remains, and this suit will no doubt seek to answer, what is promised, if anything, by charging a fee and will the airlines’ contracts of carriage shield them from liability when they charge a baggage fee separate and distinct from the airfare? Whatever the outcome, the airline industry is no doubt watching, particularly given the potential class action status of the suit. Don Mitchell is a partner with the law firm of Smith, Gambrell & Russell, LLP and concentrates his practice in U.S. and cross-border aviation equipment finance transactions and litigation. Please e-mail any questions, comments or suggestions for future topics to: dbmitchell@sgrlaw. com. ©2010 Donald B. Mitchell “Ancillary revenue” includes revenue generated from, among other things, baggage fees, change fees and the sale of on-board meals and entertainment. 2 As of this writing, Southwest Airlines does not charge a baggage fee for up to two pieces per ticketed passenger, subject to weight and size limitations. 3 As of this writing, American had not filed a responsive pleading in the case. 4 This article does not address whether U.S. federal law preempts any state law based claims.
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Table of Contents for the Digital Edition of Jetrader - September/October 2010

Jetrader - September/October 2010
A Message from the President
Contents
Calendar/New
Q&A: Dr. Alan Epstein
Commercial Outlook is Up as Economies Rebound
Crisis, What Crisis?
The Big Question
Funding Fundamentals
Is That a Lawsuit in Your Luggage?
AFRA Sets Ambitious Challenge for Aircraft Recycling Sector
Road to Recovery
Remembering Hafthor Hafsteinsson
License to Fly
Aircraft Appraisals
From the ISTAT Foundation
Aviation History
Advertiser.com/Advertiser Index
Jetrader - September/October 2010 - Jetrader - September/October 2010
Jetrader - September/October 2010 - Cover2
Jetrader - September/October 2010 - A Message from the President
Jetrader - September/October 2010 - 4
Jetrader - September/October 2010 - Contents
Jetrader - September/October 2010 - 6
Jetrader - September/October 2010 - Calendar/New
Jetrader - September/October 2010 - 8
Jetrader - September/October 2010 - Q&A: Dr. Alan Epstein
Jetrader - September/October 2010 - 10
Jetrader - September/October 2010 - 11
Jetrader - September/October 2010 - Commercial Outlook is Up as Economies Rebound
Jetrader - September/October 2010 - 13
Jetrader - September/October 2010 - 14
Jetrader - September/October 2010 - 15
Jetrader - September/October 2010 - Crisis, What Crisis?
Jetrader - September/October 2010 - 17
Jetrader - September/October 2010 - 18
Jetrader - September/October 2010 - 19
Jetrader - September/October 2010 - 20
Jetrader - September/October 2010 - The Big Question
Jetrader - September/October 2010 - 22
Jetrader - September/October 2010 - 23
Jetrader - September/October 2010 - Funding Fundamentals
Jetrader - September/October 2010 - 25
Jetrader - September/October 2010 - 26
Jetrader - September/October 2010 - 27
Jetrader - September/October 2010 - 28
Jetrader - September/October 2010 - Is That a Lawsuit in Your Luggage?
Jetrader - September/October 2010 - 30
Jetrader - September/October 2010 - 31
Jetrader - September/October 2010 - AFRA Sets Ambitious Challenge for Aircraft Recycling Sector
Jetrader - September/October 2010 - 33
Jetrader - September/October 2010 - 34
Jetrader - September/October 2010 - 35
Jetrader - September/October 2010 - Road to Recovery
Jetrader - September/October 2010 - 37
Jetrader - September/October 2010 - 38
Jetrader - September/October 2010 - Remembering Hafthor Hafsteinsson
Jetrader - September/October 2010 - 40
Jetrader - September/October 2010 - 41
Jetrader - September/October 2010 - 42
Jetrader - September/October 2010 - License to Fly
Jetrader - September/October 2010 - 44
Jetrader - September/October 2010 - Aircraft Appraisals
Jetrader - September/October 2010 - 46
Jetrader - September/October 2010 - From the ISTAT Foundation
Jetrader - September/October 2010 - Aviation History
Jetrader - September/October 2010 - 49
Jetrader - September/October 2010 - Advertiser.com/Advertiser Index
Jetrader - September/October 2010 - Cover3
Jetrader - September/October 2010 - Cover4
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