PeoplExpress, the company that is seeking to start a new airline under that name, has already run afoul of the Transportation Department’s enforcement office, while its application for airline rights is still being processed.
According to the DOT, the company violated a ban on premature advertising by soliciting memberships for its “Club Travelati,” whose members would receive discount offers and other benefits.
Although PeoplExpress said it believes the promotion was appropriate, it agreed to settle the matter by paying a $10,000 penalty.
In its cease-and-desist order, the DOT’s enforcement office noted that the company sold 130 memberships before it withdrew the offer from its website on March 27.
In its defense, PeoplExpress said it was careful to explain that the membership benefits would not become effective until the airline began service, but the DOT said “offering future discounts” is a violation of the requirement that applicants for airline rights refrain from advertising or sales activity until they receive an effective certificate to fly.