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
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
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
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
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
• Transportation conducted pursuant to a single ticket.
• A carrier or its agents knowingly selling two tickets covering
• 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.