An air freight forwarder today entered into a consent order with the DOT to resolve allegations by DOT that the air freight forwarder had unlawfully held itself out as a direct provider of air transportation. According to the Consent Order the DOT believed that the air freight forwarder had violated 49 U.S.C. 41101 and 41712 and 14 CFR Part 296. DOT also considered the air freight forwarder’s unauthorized holding out of air service an unfair and deceptive trade practice and an unfair method of competition in violation of 49 U.S.C. 41712.
The air freight forwarder registered under 14 CFR Part 296 as an indirect air carrier (engaging indirectly in air transportation of property, and using for the whole or any part of such transportation the services of an air carrier or a foreign air carrier that directly engages in the operation of aircraft under a certificate, regulation, order, or permit issued by the Department as specified in 14 CFR 296.3). Part 296 exempts indirect cargo air carriers that comply with its provisions from, among other things, the certificate requirement found in 49 U.S.C. 41101. However, regardless of the exemption, operating, advertising, or otherwise holding out air service without having the requisite economic authority is still considered a violation of 14 CFR 296.10 and 49 U.S.C. 41101.
The Consent Order alleged that the air freight forwarder had held out direct air transportation by sending an e-mail solicitation that included language representative of a direct air carrier. The e-mail allegedly stated that the air carrier had “22 planes based across the country” and it referred to its “fleet…of long-range Falcons…Convairs…and 727’s.” It also stated that its “new high bypass Falcons fly direct to anywhere in the United States to Mexico” and advised its customers to “remember that we have the ONLY long-range Falcon 20’s aircraft in the industry.”
In an attempt to mitigate the DOT’s claims, the air freight forwarder changed its advertising to specifically state that it was not operating the aircraft and also advised that it had not intended to hold itself out as a direct air carrier. It also noted that the customers to whom it sent the e-mail would have been aware that it was not operating the aircraft. To resolve the DOT investigation, the air freight forwarder agreed to cease and desist from holding itself out as providing direct air transportation in violation of the cited statutes and it also agreed to pay a civil penalty.
This Consent Order is instructive for indirect air carriers and brokers, whether freight or charter. The DOT will look at all of the circumstances to determine whether someone is “holding out air transportation”. Indirect carriers are well advised to review their advertising and marketing to ensure that they will not be viewed as “holding out.”
