Jetrader - Summer 2014 - 45

dle...
Bun
Down
Unbundled fees are here to stay
By Don Mitchell, Partner, Smith, Gambrell & Russell, LLP

R

Road warriors rejoice! Unbundled airfares
have made travel simpler and cheaper. Now
you pay only for what you want. If that's
just a seat and the clothes on your back
for a weeklong business trip, you should be
happy. Indeed, the most unbundled carrier
in the U.S. should have the happiest travelers. According to a recent report by the
U.S. Public Interest Research Group (PIRG)
Education Fund, it doesn't.1
The airline's response is that an uneducated consumer is their worst customer.
They intend to teach their customers just
how to fly them.2 BloombergBusinessweek
reported that the airline declared 2014
its "Year of the Customer." The goal, an
airline spokeswoman said, is, "to reduce
complaints by helping customers learn
about how to fly Spirit to go where they
want and keep more money in their pocket."
According to the U.S. PIRG report,
the majority of complaints to the U.S.
Department of Transportation (DOT) from
2009 through 2013 related to "flight problems." These include delays, cancellations
and on-time performance. But unbundling
has spurred a new wave of complaints and
lawsuits attacking ancillary fees-the fees
that helped turn the airlines' perennial
losses into reliable profits.

Earlier Jetrader articles highlighted two
lawsuits, one against American concerning
baggage fees and a second against Spirit
concerning its "Passenger Usage Fee" or
PUF.3 Each of the suits sought class action
status putting big dollars at risk. There are
others. But a recent decision by the U.S.
Supreme Court and additional regulation
by the U.S. Department of Transportation
(DOT) and Congress may signal the beginning of the end of such suits filed in
response to the unbundling of airfares.
First, a brief primer. The U.S.
Constitution makes federal laws the
supreme laws of the 50 United States. State
laws that conflict with federal law are "preempted." Preemption can be express, in the
language of the law, or implied. What the
U.S. Congress doesn't regulate is left to
the states. The U.S. Airline Deregulation
Act (ADA) moved U.S. airlines from protected "public utilities" to independent
competitors.
The ADA expressly prohibits states
from, "enact[ing] or enforc[ing] a law,
regulation or other provision having the
force and effect of law related to [an air
carrier's] price, route or service." Tickets
sold in the U.S. are subject to an airline's
contract of carriage. This is incorporated

into each ticket purchased and is available
from each airline, typically on its website. A passenger's rights and an airline's
liability in connection with its contractual
obligation to provide air services are governed (and limited) by this contract, as
ultimately regulated by the DOT. The DOT
does not provide a mechanism for direct
compensation to passengers-they can
only require that it be provided. Customers
aren't entirely without recourse for a
breach of DOT regulations. They can file
a complaint with the DOT but are unable
to seek damages for a violation of DOT's
regulations.4
In order to recover meaningful compensation for airline customers, lawyers
have fashioned creative arguments to avoid
preemption. But since preemption is viewed
broadly, the courts have resisted allowing
claims generally related to what and how
an airline charges for its services.
Believing that the WorldPerks program
rules gave Northwest too much discretion
in terminating his membership, a highflying rabbi brought suit under a noncontract state law theory alleging breach
of an implied duty of good faith and fair
dealing. The U.S. Supreme Court decided
in April that the claim was preempted by
Jetrader * Summer 2014 45



Jetrader - Summer 2014

Table of Contents for the Digital Edition of Jetrader - Summer 2014

Q&A: John Slattery
ISTAT Asia Focuses on Challenges, Opportunities of the Region
State of the Regions: Asia Pacific
Cape Town: Global Treaty Expands Thanks to Benefits Offered, Advanced Information Base
ISTAT Americas 2014
In Memory of Gilbert W. Speed
A Long Overdue Thank You
Bundle…Down
East Meets West in Istanbul
A Message from the President
Calendar/News
ISTAT Foundation
Aviation History
Aircraft Appraisals
Advertiser.com
Advertiser Index
Jetrader - Summer 2014 - cover1
Jetrader - Summer 2014 - cover2
Jetrader - Summer 2014 - 3
Jetrader - Summer 2014 - 4
Jetrader - Summer 2014 - A Message from the President
Jetrader - Summer 2014 - 6
Jetrader - Summer 2014 - 7
Jetrader - Summer 2014 - 8
Jetrader - Summer 2014 - Calendar/News
Jetrader - Summer 2014 - 10
Jetrader - Summer 2014 - Q&A: John Slattery
Jetrader - Summer 2014 - 12
Jetrader - Summer 2014 - 13
Jetrader - Summer 2014 - ISTAT Asia Focuses on Challenges, Opportunities of the Region
Jetrader - Summer 2014 - 15
Jetrader - Summer 2014 - 16
Jetrader - Summer 2014 - 17
Jetrader - Summer 2014 - 18
Jetrader - Summer 2014 - 19
Jetrader - Summer 2014 - State of the Regions: Asia Pacific
Jetrader - Summer 2014 - 21
Jetrader - Summer 2014 - 22
Jetrader - Summer 2014 - Cape Town: Global Treaty Expands Thanks to Benefits Offered, Advanced Information Base
Jetrader - Summer 2014 - 24
Jetrader - Summer 2014 - 25
Jetrader - Summer 2014 - ISTAT Americas 2014
Jetrader - Summer 2014 - 27
Jetrader - Summer 2014 - 28
Jetrader - Summer 2014 - 29
Jetrader - Summer 2014 - 30
Jetrader - Summer 2014 - 31
Jetrader - Summer 2014 - 32
Jetrader - Summer 2014 - 33
Jetrader - Summer 2014 - 34
Jetrader - Summer 2014 - 35
Jetrader - Summer 2014 - 36
Jetrader - Summer 2014 - 37
Jetrader - Summer 2014 - 38
Jetrader - Summer 2014 - In Memory of Gilbert W. Speed
Jetrader - Summer 2014 - 40
Jetrader - Summer 2014 - 41
Jetrader - Summer 2014 - A Long Overdue Thank You
Jetrader - Summer 2014 - 43
Jetrader - Summer 2014 - 44
Jetrader - Summer 2014 - Bundle…Down
Jetrader - Summer 2014 - 46
Jetrader - Summer 2014 - ISTAT Foundation
Jetrader - Summer 2014 - Aviation History
Jetrader - Summer 2014 - 49
Jetrader - Summer 2014 - 50
Jetrader - Summer 2014 - 51
Jetrader - Summer 2014 - 52
Jetrader - Summer 2014 - Aircraft Appraisals
Jetrader - Summer 2014 - 54
Jetrader - Summer 2014 - 55
Jetrader - Summer 2014 - 56
Jetrader - Summer 2014 - East Meets West in Istanbul
Jetrader - Summer 2014 - Advertiser Index
Jetrader - Summer 2014 - cover3
Jetrader - Summer 2014 - cover4
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