The Transportation Department has assessed
$185,000 in civil penalties on three tour operators for allegedly
violating its fare advertising rules and is believed to be pursuing
cases against at least three others.
The actions
prompted the U.S. Tour Operators Association to launch an
aggressive campaign to negotiate clearer guidelines from the
DOT.
The three
operators, Trafalgar Tours, Uniworld River Cruises and Viking River
Cruises, settled with the DOT by agreeing to pay fines and to avoid
future violations. The fine was $85,000 for Trafalgar, $50,000 for
Uniworld and $50,000 for Viking.
In all the cases,
as is typical in settlements of DOT consent orders, the companies
are paying half the fine immediately; the remainder will be waived
if they avoid further violations for the next year.
The DOT said it was
"working with the industry to ensure future compliance" but did not
elaborate on what working with the industry would entail, other
than a continuing "dialogue." But the DOT did say it "has found
that some tour operators may be unaware of our price advertising
rules."
According to USTOA
President Bob Whitley, the association first met with the DOT on
April 11 to discuss the challenges tour operators face in dealing
with the guidelines.
The DOT's
guidelines cover all airline, tour operator and travel agent
advertisements for air travel or for packages that include air
travel. They generally require that any ad stating a price must
include the entire price to be paid, including all surcharges, such
as airline fuel surcharges.
Whitley told Travel
Weekly that compliance wasn't always possible.
"One airline
increased its surcharge three times in 10 days," he said. "It's
impossible to change those prices, especially when tour operators
print their brochures for tours that are running 18 months later.
That was our first problem: They were citing members for printing
the wrong price."
The second problem
was how prices were posted on tour operators' Web sites, he
said.
"What they don't
understand is that we're having some problems on the Internet,"
said Whitley. "They think you can change prices instantly, but tour
operators aren't, by and large, big technical
companies."
In the most recent
enforcement actions, the DOT took issue with the operators'
advertising in mailers, e-mails and brochures and on Web
sites.
According to the
DOT, all three operators excluded fuel surcharges from the
advertised price and listed them separately along with other taxes
and fees.
The order also
cited them for failing to include an "appropriate" notice or, for
online prices, a "prominent and proximate" hyperlink leading
shoppers to text disclosing the taxes and fees that were excluded
from the advertised price.
In Uniworld's case,
the DOT said the online advertisements included 13 different links
at the bottom of the page. To get to the taxes-and-fees text, a
user had to know to click on the "Terms & Conditions" link and,
from that page, click on the "Your Flight" link to find out the
fuel surcharges and the fact that other taxes and fees could add
$335 to the price.
In Trafalgar's
case, the DOT noted that Trafalgar's price guarantee, which stated
"in essence" that no price increase would be made once a deposit
for the tour had been paid, specifically excluded fuel
surcharges.
In their defenses,
Trafalgar, Uniworld and Viking told the DOT they took their
obligations under the DOT's full-fare advertising rule seriously
and did not violate it intentionally.
Viking pointedly
said in its response to the DOT that no passengers had complained
about its advertising practices.
All three companies
agreed to remedial actions to address the DOT's concerns and to
comply with the rules, including modifications to their respective
Web sites.
Trafalgar told the
DOT it took corrective action "as soon as it learned that the rule
is applicable to operators of air tours, which it learned through
recent enforcement actions against other tour
companies."
Uniworld said its
corrective actions included instructions to reservations agents to
provide specific information on changes in displayed prices. It
also added to its existing brochures and subsequent mailings a new
information sheet/letter that explains the alterations it has made
in its fare advertising.
Viking told the DOT
it had revised its practices and its materials, retrained its
employees and destroyed a substantial number of noncompliant
brochures.
Viking also
suggested that the DOT do more to educate tour operators by issuing
more guidance on the full-fare rule.
Meanwhile, the
USTOA has enlisted the law firm of Pillsbury Winthrop Shaw Pittman
and is awaiting a response from the DOT on a proposal for a new
disclaimer for tour operator brochures.
The USTOA wants
tour operators to be able to include this disclaimer: "Although
prices are current at the time of printing or listing, airlines
frequently change their prices as a result of fare increases and/or
fuel surcharges. Therefore, prices may differ when you book your
travel and are not guaranteed until full payment is received.
Please call for our most current prices."
The USTOA is
communicating with its members any additional information or
clarifications it has received from or about the DOT's guidelines
by distributing advisory notices.
But, said Whitley,
the issue reflects a larger problem the tour operator industry has
with airline pricing.
"What we want from
the airlines is that when they contract a price with a tour
operator, they are committed to that price," said
Whitley.
"The airlines keep
changing [their prices], and that's very difficult for the tour
operator industry to keep up with. The tour operator has to eat
that, because they can't go back to people and change the price
once they've paid in full."
To contact the reporters who wrote this article, send e-mail
to Michelle Baran at [email protected] or Andrew Compart
at[email protected].