DOT fines Asiana for violating cabotage laws

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WASHINGTON -- The Transportation Department imposed a $750,000 fine on Asiana Airlines, the largest fine ever assessed against an airline for unauthorized air service, and offered advice to agents on how to avoid booking an illegal itinerary.

In a consent order, the DOT said Seoul, South Korea-based Asiana Airlines used the Internet, advertisements and agents to sell tickets for service from Guam (a U.S. territory) and Saipan (a U.S. commonwealth) to the U.S. via Seoul.

The DOT said the sales took place over several years and violated U.S. laws against cabotage; i.e., the carriage of traffic between U.S. points by a foreign airline.

The DOT said the promotion of the cabotage service included a May 2001 newspaper ad in Guam that promoted an opportunity to "enjoy shopping during short stopovers in Seoul" on Guam-U.S. flights via Seoul.

Asiana also regularly distributed memoranda to agents in Guam and Saipan listing its sale prices on various routes to U.S. cities via Seoul, the DOT said. Also, through sales offices in the U.S., Asiana offered commissions to agents for selling tickets for service between the U.S., Guam and Saipan, the DOT said.

Cabotage schedules also could be constructed on the airline's Web site and on Orbitz, the DOT said.

The DOT reached an agreement with Asiana in which half the $750,000 fine will be forgiven if Asiana avoids violations for the next three years.

Asiana, penalized in July 1998 for cabotage on cargo routes, neither admitted nor denied the alleged passenger service violations.

The DOT said Asiana blamed the alleged violations on a "lack of knowledge permeating all levels of its management about what constitutes cabotage" and has "exhibited a cooperative and compliant attitude" in taking steps to avoid future violations.

An Asiana spokesman said the airline did not intentionally violate the cabotage rules, which he said were unclear regarding service from Guam and Saipan.

He noted the DOT said, in a press release about the Asiana order, that it is investigating several other carriers in the market.

According to the Official Airline Guide, other foreign carriers flying out of Guam and Saipan include Korean Air, All Nippon Airways, Air Japan, Philippine Airlines and China Airlines.

No action is being taken against the agents involved in the Asiana cabotage bookings, a DOT spokesman said.

The DOT, however, did include some advice for both airlines and agents in its consent order against Asiana.

The DOT said it "does not intend to preclude air carriers from continuing standard interline agreements that are common in the industry and are not used to circumvent the cabotage prohibition."

It added, "We also do not intend to preclude travel agents from issuing separate tickets on separate carriers as long as the issuance of such tickets is not pursuant to an explicit or tacit arrangement with one or both air carriers to facilitate cabotage service."

The DOT also said it is "not likely to pursue enforcement action except in straightforward cases."

Those "straightforward cases" could include:

• Continuous transportation, including short stopovers that are incidental to or otherwise do not break the continuity of the trip.

• Transportation conducted pursuant to a single ticket.

• A carrier or its agents knowingly selling two tickets covering cabotage service.

• A carrier or its agents promoting cabotage service via the Internet or other advertising.

• A carrier explicitly or tacitly accepting, benefiting from or participating in a "substantial arrangement" with a third party to conduct cabotage operations.

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