In two relatively recent cases, Delta Air Lines (Delta) and Deutsche Lufthansa (Lufthansa) have been fined by the Department of Transportation (DOT) for not fulfilling their reimbursement responsibilities. In the case of Delta the consent order was ordered because the airline limited its compensation to below the $3,300 regulatory limit. Lufthansa faced a similar issue on international rules for lost/delayed luggage.
Back in October 2010, DOT served a consent order on Delta punishing them for not properly reimbursing passengers for lost/delayed baggage and for deceptive practices.
The regulation in question notes that an airline “shall not limit its liability for provable direct or consequential damages [emphasis added]” relating to lost, damaged or delayed baggage to less than $3,300 per passenger. Docket OST 2010-0005 dealt with this issue.
Delta did just that in a brochure that they used to explain baggage liabilities. The language in the brochure indicated that Delta’s reimbursable responsibility was limited to a certain amount per day, categorically limiting passengers’ reimbursable amounts regardless of the “provable direct or consequential damages.”
For a period of time well after January 2010, Delta distributed a pamphlet to consumers through select airport stations entitled Baggage Information that purported to limit Delta’s liability for passenger expenses incurred due to delay of baggage to a level below the minimum set in Part 254. The pamphlet stated that Delta “will not authorize any expense reimbursement” when a passenger’s delayed baggage is expected to reach the passenger within 24 hours. The pamphlet also stated that the carrier’s liability is capped at “USD 25 per day for necessities after the first 24 hours up to a maximum of USD 125 per ticketed customer” while a passenger is away from his or her permanent residence. The Enforcement Office believes that passengers who read the pamphlet may have been dissuaded from seeking reimbursement to which they were entitled. Moreover, in a number of instances in which passengers whose bags were delayed sought reimbursement, Delta applied the exclusions and limitations set forth in the pamphlet.
As stated above, Delta may not limit its liability for provable direct or consequential damages relating to lost, damaged, or delayed baggage to less than $3,300 per passenger. By categorically limiting reimbursement of passenger expenses, Delta violated 14 CFR Part 254 and 49 U.S.C. § 41712.
In a stiff penalty, DOT assessed Delta $100,000 for this transgression. As is normally the case, one half of the fine is forgiven if the airline does not repeat the infraction.
In an international case, just released in mid-June 2011, DOT takes on Lufthansa for a similar statement of limitation for their liabilities regarding lost/delayed baggage. This order is Docket OST 2011-0003, Violations of Article 19 of the Montreal Convention and 49 U.S.C. § 41712. Here is the applicable regulation:
Article 19 of the Montreal Convention (Montreal) provides that a carrier is liable for damage occasioned by delay in the carriage by air of baggage, except to the extent that it proves that it took all reasonable measures to prevent the damage or that it was impossible to take such measures.1 Article 22 currently sets the liability limit for damages associated with delayed passenger baggage at 1,131 Special Drawing Rights (SDRs) for each passenger.
Furthermore, Article 26 states that any provision tending to relieve a carrier of liability or to fix a lower limit than that which is laid down in the Convention is null and void. Violations of the Montreal Convention constitute unfair or deceptive business practices and unfair methods of competition in violation of 49 U.S.C. § 41712.
Special Drawing Rights $1=SDR 1.59
After receiving a consumer complaint, the Office of Aviation Enforcement and Proceedings (Enforcement Office) investigated the Lufthansa policies and practices when dealing with monetary claims for delay in delivering checked baggage. The Enforcement Office learned that Lufthansa was indeed limiting reimbursement to one-half of the passenger claimed expense using original receipts associated with a delay in checked baggage.
Sometimes Lufthansa advised numerous passengers seeking refunds of money spent when their luggage was delayed that Lufthansa would reimburse only 50 percent of the cost of clothing items and 100 percent of the cost of toiletries and underwear. Basically, Lufthansa’s made up its own rules to limit its liability for damage caused by baggage delay to less than the minimum 1,131 SDRs (US$1,798) required by the Montreal Convention.
DOT has held that Lufthansa (and any other airlines) cannot arbitrarily limit the damages paid to less than the minimum declared by the Montreal Convention. Passengers should have been reimbursed their full costs up until the minimum limit of compensation noted by the law.
Lufthansa was fined $50,000 with half to paid immediately and half suspended based on no violation of this rule for one year.
The message here is clear. DOT is involved in enforcement of current regulations — both U.S. and international. If you have any questions or feel that your case was not handled properly by the airlines, file a complaint with DOT.
DOT will normally forward the complaint to the airlines for resolution and if it deals with violations of regulations, the Enforcement Division will investigate.