American Airlines fined for tacking on fees to redeem overbooking vouchers

The Transportation Department on Monday issued its first-ever penalty on an airline for failing to disclose fees or restrictions on vouchers given to passengers for voluntarily giving up their seat on oversold flights.

American Airlines was assessed a $90,000 civil penalty for charging customers a ticketing fee for as much as a $30 for redeeming vouchers after agreeing to give up their seats on overbooked flights. 

"When passengers volunteer to give up their seat on an oversold flight, they are entitled to be fully compensated, not to find out later that they’re getting $30 less," said Transportation Secretary Ray LaHood.

Under the department's oversales rules, an airline must first seek volunteers willing to give up their seat on an oversold flight before bumping passengers involuntarily. The carrier can offer any type or amount of compensation agreed to by the volunteer, compared with involuntary bumping situations, where airlines are required to compensate passengers in cash.

An investigation by the department's Aviation Enforcement Office found that American offered passengers travel vouchers worth specific dollar amounts as compensation for voluntary being bumped, but failed to inform them of the fees for redeeming the vouchers by telephone or at airport ticket counters. Passengers also weren't informed that the vouchers can't be redeemed on the airline's website. 

Although American stopped requiring fees for tickets purchased by phone using vouchers about four years ago, the company continued to require fees for tickets acquired at airport counters until late last year. Passengers still can't use the vouchers to purchase tickets online.  

The carrier also did not tell passengers that vouchers used for tickets purchased by telephone had to be mailed to the carrier for processing as much as three weeks before the departure date.