South African Airways and tour operator fined over misleading pricing

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The U.S. Department of Transportation (DOT) has fined South African Airways and ticket agent Destination Southern Africa US$75 000 for deceptive price advertising.

South African Airways was fined US$55 000 while Destination Southern Africa, which promotes air travel packages for South African Airways as well as its own tours, was fined US$20 000 on October 24.
“When passengers shop for an airline ticket or air tour, they have a right to know the full price they will have to pay,” said U.S. Transportation Secretary Ray LaHood. “We expect airlines and ticket agents to treat their passengers fairly, and we will take enforcement action when they violate our price advertising rules.”

An investigation by the Department’s Aviation Enforcement Office found that ads on both companies’ websites failed to adequately disclose government taxes and fees that were in addition to the advertised fare. The ads also did not properly disclose that the air and hotel tour prices were available only with double occupancy. When consumers clicked on a link next to the fare listed on the homepage, they were taken to a second page where they could select a specific vacation package. Only after making a selection were they taken to a third page where they could see the taxes and fees and the requirement for double occupancy.

The websites violated DOT rules requiring any advertising that includes a price for air transportation to state the full price to be paid by the consumer, including all carrier-imposed surcharges. The only exceptions currently allowed are government-imposed taxes and fees that are assessed on a per-passenger basis, such as passenger facility charges, which may be stated separately from the advertised fare, but must be clearly disclosed in the advertisement so that passengers can easily determine the full price they must pay.

Internet fare listings may disclose these separate taxes and fees through a prominent link next to the fare stating that government taxes and fees are extra, and the link must take the viewer directly to information where the type and amount of taxes and fees are displayed. The Department also requires advertisements for air transportation to clearly state major restrictions that apply to the fares. These rules apply to both U.S. and foreign carriers as well as ticket agents.

Last month’s penalties follow a US$20 000 fine in September 2010 against Lion World Travel, another ticket agent marketing tours for South African Airways, for violating the Department’s full-fare advertising rule.

Under DOT’s recently adopted consumer rule that enhances protections for air travelers, carriers and ticket agents will be required, among other things, to include all government taxes and fees in every advertised fare beginning January 24, 2012.

Flag carrier South African Airways is the largest airline in South Africa. It flies to 36 destinations worldwide from its hub at OR Tambo International Airport, using a fleet of 59 aircraft.

Late last month MPs commended the South African Airways for its impressive performance during the 2010/11 financial year. Despite worldwide economic challenges, the airline made R782 million in profits and contributed R11.7 billion to the Gross Domestic Product (GDP) as tourists flocked into the country, the state BuaNews agency reports.

In the same period, it also created 58 000 South African jobs and trained 2 243 employees of the SAA Group among several other up-skilling initiatives, Bua claims. The company has also announced that soon it would launch its own pilot training academy.

SAA chief executive Siza Mzimela said that SAA faced tough competition from Middle Eastern airlines for its targeted African market. She explained that these airlines ignored global economic trends and “negotiate a high number of traffic rights with African states”.



She also expressed concern about the oil price, which hovered above US$100 per barrel, citing that fuel made up about a third of their costs. MPs said that they were pleased with the organisation’s performance. However, they also encouraged them to correct those areas of concern highlighted by the AG, such as internal controls on performance and financial matters.