QANTAS AIRWAYS – CABOTAGE CONSENT ORDER
April 23, 2018
On March 28, 2018, Qantas Airways Ltd (Qantas) entered into a Consent Order Agreement with DOT. Although Qantas admitted to no wrongdoing, the underlying action focused on DOT’s position that Qantas had engaged in cabotage (the carriage by air of local traffic for compensation or hire by foreign air carriers between two points in the United States) between 2015 and 2016. It is DOT’s position that cabotage is a violation of 49 U.S.C. §§ 41301 and 40109 and also constitutes unfair and deceptive practices and unfair methods of competition in violation of 49 U.S.C. § 41712.
In the Consent Order, DOT stated that Qantas conducted unauthorized cabotage operations after it held out and enplaned revenue passengers on flights that it operated between two points within the United States. These passengers were then transported on connecting Qantas codeshare flights operated by a U.S. or another foreign air carrier to points outside the United States. “Specifically, Qantas’ U.S.-facing website held out, and accepted reservations and payments from passengers for, flights from John F. Kennedy International Airport (JFK) to Fa’a’ā International Airport (PPT) in Tahiti, French Polynesia, with a connection at Los Angeles International Airport (LAX).” Under the codeshare arrangement, the first leg from JFK to LAX was operated by Qantas on Qantas’ aircraft. However, in order to continue on to PPT, passengers deplaned at LAX and continued as Qantas codeshare passengers on board aircraft operated by other carriers. “Additionally”, according to DOT, “Qantas’ U.S.-facing website also held out, and accepted reservations and payments from passengers for, flights from JFK to Auckland International Airport (AKL) in New Zealand, with a connection at LAX.” The first leg of the flights from JFK to LAX was operated by Qantas on Qantas’ aircraft. However, in order to continue on to AKL, passengers deplaned at LAX and continued as Qantas codeshare passengers on board aircraft operated by other carriers.
According to DOT, the sum of these actions resulted in unauthorized cabotage and unfair and deceptive business practices. The Consent Order assessed a civil penalty of $125,000 against the airlines.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622) or Drew Derco (dderco@eckertseamans.com, 202-659-6665).
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