An air charter broker entered into a consent order with the DOT on August 10, 2007 to resolve allegations by the DOT that the charter broker had unlawfully engaged in an unfair and deceptive trade practice and an unfair method of competition in violation of 49 U.S.C. 41712. According to the Consent Order, the DOT believed that the air charter broker had marketed and sold air transportation services ultimately operated by a company that did not hold proper authority from the Department. DOT has found entities that have facilitated the unlawful common carriage operations of third-parties to have themselves engaged in an unfair and deceptive practice and an unfair method of competition in violation of 49 U.S.C. 41712 when the they knew or should have known that the unlicensed entities lacked economic authority.
In this case, the DOT alleged that the the charter broker entered into a “charter marketing agreement” with a non-common carrier that owned and operated a single executive-configured Boeing 737 pursuant to 14 C.F.R. Part 125. Both the broker and the carrier believed that the carrier’s aircraft was going to be added to an air-carrier certificate that would allow it to be operated for charter flights. The charter broker marketed use of the aircraft for charter and, in fact, secured charter flights on behalf of two customers. However, the carrier was unable to have its aircraft added to the air-carrier’s certificate and, unfortunately, performed the charter flights previously booked by the charter broker anyway.
The DOT concluded that the unauthorized common carriage operations were the fruit of the charter broker’s marketing efforts, which the charter broker undertook with knowledge that the carrier did not have economic authority. As a result, the charter broker was an instrument of the carrier’s illegal activity and, by facilitating the carrier’s illegal conduct, it engaged in an unfair and deceptive trade practice and an unfair method of competition in violation of section 41712.
This case represents the continuing fallout of FAA’s/DOT’s heightened scrutiny of air charter broker’s and charter operators. Air charter brokers would do well to familiarize themselves with the DOT’s Notice Regarding The Role of Air Charter Brokers in Arranging Air Transportation