WASHINGTON, DC – The Business Travel Coalition (BTC) expressed strong support of US Senator Richard Blumenthal’s (D-Conn) amendment to HR 636, the FAA Reauthorization Act, which will restore a private right of action for consumers and State Attorneys General when airlines engage in unfair or deceptive acts or practices or unfair methods of competition. This amendment will likely be considered on the Senate floor this week, or early next.
The right to sue when harmed is fundamental and is one that the U.S. Congress never intended to have stripped from airline consumers when it deregulated the industry in 1978. Moreover, it is a right that consumers exercise in every other consumer-facing industry to discourage market participants from abusing their rights.
All these years after the airline industry was deregulated, consumers find themselves in a unique predicament. Despite economic harm, such as the recently and secretly implemented fare-rule changes for multi-city trips that can quadruple ticket prices, consumers have no right to recover damages when harmed by unlawful conduct. Airlines face miniscule fines for those consumer abuses that the U.S. Department of Transportation (DOT) decides to pursue. The U.S. airlines had 2014 revenue of $169 billion and civil penalties imposed and negotiated of $2.7 million. A “slap on the wrist” does not begin to describe this consumer injustice.
The Airline Deregulation Act of 1978 (ADA) has a section on federal preemption intended to prevent the “balkanization” of the airline industry by foreclosing on the ability of States to regulate prices, routes or services. After canvassing the lengthy Congressional record, it can be said with complete confidence that there was no discussion – none – of Congress intending or even recognizing that consumers might have no right to sue airlines for damages for unfair or deceptive practices as a result of adoption of the then-new statutory provision preempting State law.
Indeed, in 1976 the U.S. Supreme Court maintained that there was nothing contained in the Civil Aeronautics Board’s (CAB) statutory language – its authority established through the Civil Aeronautics Authority Act of 1938 – that would preempt a consumer lawsuit for unfair and deceptive practices. In Nader v. Allegheny Airlines, Inc. the Court in its ruling said the following:
At page 426 U. S. 291
(a) There is no irreconcilable conflict between the Act’s scheme and the common law remedy; both may coexist as contemplated by the Act’s saving clause, which provides that “[n]othing contained in this Act shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this Act are in addition to such remedies.”
(b) No power to immunize a carrier from common law liability can be inferred from § 411’s language; where Congress has sought to confer such power, it has done so expressly, as in § 414 of the Act.
Importantly, Section 41712, which governs unfair and deceptive practices and unfair methods of competition in commercial aviation, was moved in its entirety – word for word – into the ADA from the CAB’s mandate, but unfortunately, DOT is not empowered to make consumers financially whole. The present net result of airlines being shielded from all claims for damages for unfair and deceptive practices, to a degree that affords them a privileged position, appears to be an unintended consequence as courts worked out the scope of ADA preemption of State law.
Now that airlines have radically consolidated the industry, consumers are at the highest risk of abuse since deregulation in 1978. Essentially, airlines are immunized from the threat of lawsuits for damages from deceptive marketing practices or unfair methods of competition. Changing this, airlines will contend, would result in burdensome lawsuits in all 50 States. However, that’s exactly what every other industry faces and, like those industries, airlines have smart executives and lawyers who will modify their airlines’ anti-consumer policies and practices to avoid lawsuits.
Airlines ask at every opportunity to be treated like every other industry. The time has come to fulfill that request and modify the ADA to return it to alignment with the legislative intent of Congress.