Chapter § 2.01 INTRODUCTION

• Jurisdiction: United States
• Publication year: 2021

§ 2.01 Introduction

[1] Problem Areas

Common airline passenger problems involve physical injuries,¹ unruly passengers,² inadequate security at the airports³ and on the aircraft,⁴ overly complex airline fare pricing,⁵ delayed or canceled flights,⁶ airline overbooking,⁷ discrimination,⁸ lost, damaged, delayed and mishandled baggage,⁹ death or injury of pets,¹⁰ refusals to accept certain items of baggage,¹¹ restrictions on carry-on baggage,¹² unfair clauses in the contract of carriage,¹³ limiting liability for lost or damaged baggage,¹⁴ schedule changes and flight delays¹⁵ restricting claims,¹⁶ changing the terms of the contract of carriage,¹⁷ restrictions on reservations and check-in times and refusals to carry,¹⁸ misrepresentations including failing to disclose necessary¹⁹ and accurate information,²⁰ deceptive and misleading advertising,²¹ the failure of Public Charter tour operators and charter air carriers to deliver contracted for travel services,²² the failure to comply with the requirements of the Air Carrier Access Act in meeting the needs of disabled passengers²³ and price fixing and other violations of federal and state antitrust statutes.²⁴ The D.O.T. has addressed a number of these issues.²⁵

The legal treatment of these problems depends upon whether the passenger was on a domestic flight or an international flight governed by the Montreal Convention or its progeny.²⁶ The rights and remedies of domestic airline passengers are based on state and federal common law and statutes as well as the regulations of the Department of Transportation.

Airline transportation services are marketed directly by air carriers at airports, airline ticket offices and over the Internet²⁷ or through retail travel agents,²⁸ wholesalers, charter tour operators,²⁹ Internet travel sellers³⁰ and charter air carriers.³¹ In addition to complex pricing programs such as yield management,³² airline marketing features frequent flyer bonus programs,³³ non-refundable tickets,³⁴ ticketless travel,³⁵ cross bordering, back-to-back, hidden-city ticketing and point beyond schemes,³⁶ computer reservations systems,³⁷ code sharing arrangements,³⁸ airport airline clubs,³⁹ mandatory airline service reporting⁴⁰ and hub-and-spoke route systems.⁴¹ Understanding the way in which air transportation services are marketed to the general public can be helpful in creating successful consumer litigation and, where appropriate, shifting liability to solvent and available defendants.⁴²

In addition to these substantive areas of domestic airline law, counsel should consider other issues which have an important impact upon airline passenger litigation such as jurisdiction,⁴³ forum non conveniens,⁴⁴ choice of law,⁴⁵ Foreign Sovereign Immunities Act,⁴⁶ Death on the High Seas Act⁴⁷ and multi-district litigation.⁴⁸

[2] Airline Deregulation

[a] Airline Business: From Flying Utilities to Astounding Money Maker

Notwithstanding the promise of greater operating efficiency implicit in the Airline Deregulation Act,⁴⁹ the continuing consolidation of domestic airlines,⁵⁰ and the promotion of international marketing alliances,⁵¹ it seems clear that the major domestic airlines, influenced by powerful labor unions and "stifling work rules"⁵² may be incapable of earning a reasonable profit.⁵³ The larger domestic airlines, with the notable exceptions of Southwest Airlines⁵⁴ and JetBlue⁵⁵ and a growing number of English, European⁵⁶ and Asian airlines,⁵⁷ may be best viewed as inefficient "flying utilities" trying to "offer everything to passengers,"⁵⁸ resented by their customers,⁵⁹ treated by the government as a "prodigal child,"⁶⁰ relying on Chapter 11 bankruptcy filings to reduce costs and limit contractual obligations.⁶¹ Even the September 11, 2001, disaster⁶² resulted in legislation seeking to protect the airlines from financial ruin.⁶³

Although the smaller domestic airlines⁶⁴ have the potential of offering better service and lower fares, many of these airlines have low economic survivability⁶⁵ because of the marketing power of the larger airlines⁶⁶ and their proclivity to discourage competition,⁶⁷ problems with regulators,⁶⁸ financial instability⁶⁹ and mismanagement.⁷⁰ The existence of the small airlines is necessary to force the major airlines to lower fares.⁷¹ In Europe, for example, budget airlines are growing and meeting a need for no frills, low cost air transportation.⁷² However, the economic fragility of the smaller U.S. airlines defeats the very purpose of the Airline Deregulation Act since they can not stay in business long enough to have any long term systemic effect on the inefficient, price gouging major airlines.

In the blink of an eye the U.S. airline business has turned itself into an astounding moneymaker. The reasons are simple. First, the continuing consolidation of U.S. airlines has meant less competition (see Section 2.11 infra) and an increase in antitrust litigation. Equally important has been the unbundling of airline services including charges for baggage and other so-called amenities. In In re Delta/AirTran Baggage Fee Antitrust Litigation⁷³ the Court noted that "For many years, the purchase of an airline ticket generally encompassed all or most of the services associated with air travel. In the early-to-mid-2000s, however, some airlines began to charge separate fees for services and products ancillary to the purchase of a seat, such as meals and snacks, premium beverages, call-center booking, airport ticketing and curbside check-in. In 2006 and 2007, low-cost carriers led the way in introducing fees for passengers' checked luggage. Allegiant introduced a $2-per-bag fee in November 2006; Spirit began charging for two or more checked bags in February 2007 and then for first, second, and third checked bags in May 2007; and Virgin America began charging for second checked bags in August 2007. In January 2008, even Southwest, which markets itself as the 'bags fly free' airline, introduced a fee for a third-checked bag. Before long, legacy airlines began to follow suit. In February and March 2008, every carrier except Alaska announced the introduction of fees second-checked bags. . . . American Airlines then became the first legacy carrier to introduce a first-bag fee announcing on May 21, 2008 that it would implement a $15 first-bag fee."

Ten years later U.S. airlines are now serious money machines. In Josephs— "Travelers paid airlines a record $4.6 billion last year to check their baggage" (http://www.msn.com)⁷⁴ —it was noted that "Many travelers aren't packing light, a habit that is a boon to airlines. Travelers paid U.S.commercial carriers a record $4.57 billion last year in checked bag fees, according to a U.S. Department of Transportation report released on Monday. It's an eye-popping figure, but the pace of growth from 2016 to 2017—6 percent—is less than half of that from 2015 to 2016. While some passengers may have decided to wear a dress or shirt more than once on a vacation to avoid packing too much, or are using some co-branded credit cards to get a free checked bag, travelers may still find on some trips they'll have to pay up to check their suitcases."

[b] A Brief History of Airline Deregulation

The spectacular growth of the travel industry in recent decades is directly related to the availability of low cost air transportation. In the early 1970s, the cost of air transportation was significantly reduced within the context of charter flights and charter tours.⁷⁵ In the late 1970s, the reduction in air fares quickly spread to the scheduled air carriers as well.⁷⁶ There can be little doubt that the Airline Deregulation Act of 1978⁷⁷ encouraged competitive air fares which meet the ever increasing demands of travelers. The rapid movement of large numbers of travelers to anywhere in the world has catapulted the travel industry from a "cottage" industry serving the rich to the second largest industry in this country.

As noted by the Supreme Court in Northwest, Inc. v. Ginsberg⁷⁸ "Before the enactment of the ADA (Airline Regulation Act of 1978), the Federal Aviation Act of 1958 empowered the Civil Aeronautics Board to regulate the interstate airline industry. Pursuant to this authority, the Board closely regulated air carriers, controlling among other things, routes, rates and services. . . . Since the Federal Aviation Act contained a saving provision preserving pre-existing statutory and common-law remedies . . . air carriers were also regulated by the States."

The Airline Deregulation Act of 1978⁷⁹ was intended to substantially change the manner in which domestic air transportation is marketed and delivered to the general public and change the nature of the contract of carriage between the airline and the passenger. With respect to marketing, the Civil Aeronautics Board (CAB) set forth a broad policy objective:

"With the Airline Deregulation Act . . . Congress rewrote the operating assumptions in the airline industry. Government oversight of fares and services was replaced with reliance upon the market forces to determine which carriers provided services and at what prices. . . . Absent a demonstration that the public would be better served by solutions that cannot be attained in a competitive environment, the air transportation marketing industry must be opened to the normal operation of market forces." ⁸⁰

With respect to the contract of carriage and the rights and remedies of airline passengers the broad policy objective was to scrap the tariff system, antitrust immunity and the enforcement of liability disclaimers in favor of the common law.⁸¹

The CAB began deregulating the domestic airline industry in 1975,⁸² three years prior to the enactment of the Airline Deregulation Act, and continued to do so up to January 1, 1985 when the sunset provisions of the Act were implemented and the Civil Aeronautics Board officially closed its doors,⁸³ transferring some functions to the Department of Transportation.⁸⁴ The sale of airline tickets was...