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Law360 (February 20, 2020, 7:04 PM EST) -- The U.S. Department of Transportation said Thursday it intends to clarify what qualifies as unfair and deceptive practices by airlines and ticket agents, an effort to boost air traveler protections while also formalizing an appeals process for businesses accused of slippery practices.
The department's notice of proposed rulemaking, which U.S. Transportation Secretary Elaine Chao announced at the the International Air Transport Association Legal Symposium in New York on Thursday, comes as aviation industry stakeholders navigate a web of regulatory and legal concerns such as the coronavirus crisis, climate change, safety certifications and liability.
Chao explained that the proposed rule would provide greater clarity and certainty to regulated entities and others on what's an unfair or deceptive practice and what would trigger a DOT enforcement action against an airline or ticket agent.
"Many have urged the department to align its definitions of unfairness and deception with the principles set forward by the Federal Trade Commission and to ensure that the department's enforcement practices and regulations stay within the scope of the department's statutory authority," Chao said. "And importantly, this proposal would codify the practice of offering airlines and ticket agents the opportunity to be heard and to present relevant evidence before the department makes a determination regarding a potential unfair or deceptive practice."
According to the DOT, the move makes sense because the regulator's ability to enforce many aviation consumer protection regulations, such as the tarmac delay or overbooking rule, is based on the DOT's authority to prohibit unfair and deceptive practices.
The proposed rule would codify the DOT's existing practice of offering airlines and ticket agents the opportunity to be heard and to present relevant evidence before the DOT takes any enforcement action for an alleged unfair or deceptive practice, according to the agency.
Thursday's gathering of airline executives, aviation attorneys and other industry stakeholders also touched on the broader regulatory and legal landscape and how airlines are dealing with the coronavirus crisis that originated from Wuhan, China.
According to an initial tally from the IATA, the novel coronavirus outbreak — now officially called COVID-19 — is likely to trigger about $29.3 billion in revenue losses for carriers worldwide in 2020, representing a 4.7% hit to global demand.
Asia-Pacific region carriers specifically might see $27.8 billion in revenue losses in 2020 with the bulk of that hitting Chinese-registered carriers because $12.8 billion in revenue losses are expected in the Chinese domestic market alone, the IATA said.
Meanwhile, carriers outside the Asia-Pacific region are expected to register an estimated $1.5 billion in revenue losses for the year — assuming the loss of demand is limited to markets linked to China, according to the IATA.
"These are challenging times for the global air transport industry. Stopping the spread of the virus is the top priority. Airlines are following the guidance of the World Health Organization and other public health authorities to keep passengers safe, the world connected, and the virus contained," IATA's Director General and CEO Alexandre de Juniac said Thursday. "Airlines are making difficult decisions to cut capacity and in some cases routes. Lower fuel costs will help offset some of the lost revenue. This will be a very tough year for airlines."
--Editing by Amy Rowe.
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