GPSOLO April/May 2010
Travel and Tourism Law
With travel and tourism being the number one service industry in most countries, as well as one of the largest and fastest-growing industries in the world, I am always surprised that so few lawyers are aware of this specialty and that there are so few travel law practitioners. Lawyers who are looking to broaden their horizons—and their client base—will find that a travel law practice will provide them with a never-ending source of business, as well as the unique opportunity to travel the world while familiarizing themselves with diverse areas of the legal profession.
Certainly the brochure photos of exotic destinations and beautiful people enjoying life on beaches, yachts, and tourist destinations the world over represent more interesting areas to work with than, let’s say, the current rash of property foreclosures. I can tell you from firsthand knowledge that representing travel consumers injured or deceived is rewarding, I have been a travel and tourism lawyer for more than 35 years. Vacation travel agents sell dreams, not travel, and when consumers do not get what they bargained for, they often need a lawyer to negotiate or litigate on their behalf.
Key Laws Regulating Travel
Travel law describes the nexus of federal, state, common law, and international laws that regulate the day-to-day workings of the travel industry. The need for a body of law specific to the travel industry became evident with the deregulation of the industry in the 1970s. When the federally mandated deregulation process was finished, the travel industry found itself in need of a central source of legal guidance where it could turn for its travel-specific issues, and the field of travel law was born. Travel law incorporates elements of contract law, employment issues, tourism and hospitality procedures, anti-trust rules, regulatory and agency compliance, and knowledge of certain international treaties into a comprehensive guide for the travel industry.
State “seller of travel” laws. It is also important to be aware that certain states, known as “seller of travel” states, have enacted registration programs and financial security requirements that travel companies, travel agencies, and tour promoters must comply with prior to selling, or offering to sell, travel services.
Right now California, Florida, Hawaii, Iowa, Nevada, and Washington are the only seller of travel states, but this list does change from time to time as some states either decide to jump on the seller of travel bandwagon or, for various reasons, decide to repeal their seller of travel laws. Nevada is the most recent state to join the seller of travel “club”; its regulations date to 2001. As of today, only Ohio, Oregon, and Texas have had seller of travel statutes and repealed them—either because regulatory agency support for the travel agency law has wavered in the face of concerted efforts by travel agency associations to have the statute repealed or because the state, for financial reasons, decided that it was not cost effective.
It is important to keep up to date on developments in the state statutes; as recently as 2007 both Washington and California repealed and/or amended certain sections of their seller of travel statutes. California revised its law to include travel membership and discount programs, adding on a $100,000 bond for those companies that apply. Travel clubs and discount buying organizations must comply with separate requirements in California, Missouri, Nevada, and Virginia.
Although seller of travel regulations vary from state to state, every license- issuing state requires registration, fees, and compliance with some financial security regulation or statute. Some states offer options to meet the financial security requirements by providing a letter of credit or a certificate of deposit or by maintaining a bond or trust account. Other states offer exemptions from the financial security requirement, particularly favoring those sellers of travel that are airlines reporting corporation (ARC)–appointed agencies.
Other state-specific legislation. A common potential legal malpractice issue for general practitioners dabbling in travel law is failing to inform their travel agent clients about special industry regulations such as California Business and Professions Code 17550, which requires even foreign country sellers of travel to register with California if their websites say they “can, have, may, or will assist with sale of air or sea or ground in excess of $300.” You might be wondering if this is an illegal long-arm statute, or if this regulation (which has misdemeanor and felony implications, as well as cease-and-desist powers) is void on vagueness grounds. Unfortunately, these issues have not been decided because none of the apprehended alleged violators have wanted to appeal their initial orders and fines.
All lawyers practicing in the field also need to be aware of Florida’s body of travel regulations. It is especially important for lawyers dealing with disputes with cruise lines because most contracts for carriage on cruise ships contain forum selection clauses mandating Dade County, Florida, as the venue for all disputes arising out of the contracts. Many lawyers are unable to find Florida’s travel law regulations, so they believe they don’t exist, but the educated lawyer knows that they can be found by perusing Florida’s Department of Agriculture Code.
Airline passenger “bill of rights” laws. An airline passenger “bill of rights” law is, just like it sounds, a statute that regulates the treatment of passengers by airlines. I have for many years advocated the passage of a federal passenger bill of rights, but unfortunately it has failed to come to fruition. The most common type of legislation being discussed today involves the treatment of passengers while still on the tarmac in flight-delay situations. New York, as recently as 2008, had this type of law on the books. The New York statute required airlines to give food, water, clean toilets, and fresh air to passengers stuck in delayed planes. It was struck down by the Second U.S. Circuit Court of Appeals for encroaching on the federal government’s exclusive right to control the “price, route, or service” of an air carrier as exclusively granted the federal government by the Airline Deregulation Act of 1978.
A similar bill, entitled the “Airline Passenger Bill of Rights Act of 2009,” is now in front of the Senate and Congress but has failed to be passed by either body as of this time. It is still important for travel lawyers, and travelers in general, to be aware of the lack of traveler protection in these situations and encourage their legislators to enact protections, at the very minimum, for passengers trapped on planes in these protracted flight-delay situations.
Common Travel-Related Issues
As discussed above, travel lawyers should be prepared to deal with a host of issues involving diverse areas of practice; to give you a better understanding of day-to-day practice in the field, however, I now will describe some specific travel-related issues you are likely to encounter.
Lost or damaged baggage. Almost everyone has dealt, either directly or indirectly, with some sort of lost or damaged baggage scenario. The more complex baggage cases now can involve the interplay of treaties, federal law, and the interpretation of Department of Transportation (DOT) regulations. Although the DOT has increased the maximum baggage recovery to $3,300 since 2009, the contracts of carriage on the airline websites attempt to severely limit what lost items are compensable since the Montreal Convention placed a $9.07 per pound maximum on baggage compensation. Typical limitations are heirlooms, all electronics, photo items, cash, and jewelry. Fortunately, the DOT just issued notice that the limitations on these items are invalid up to the $3,300 limit for carriers to and from the United States. Also, the carrier must not arbitrarily limit compensation for reimbursement for lost or delayed baggage items needing to be replaced. Previously, carriers were telling passengers that the items had to be purchased within 24 hours and only on outbound portions of the trip.
People also often wonder who is responsible if more than one carrier handled their missing baggage (i.e., there was a connection on a different airline and their bags had been checked through to their final destination). Courts have uniformly held the first carrier who tagged the item at check-in to be responsible for the loss.
Consumer disclosure notices. When representing sellers and providers of travel and travel services, one of the most common tasks my office is asked to do is to draft consumer disclosure notices (some non-industry counsel call these disclaimers), which must be tailored to the services they provide. When representing a client who provides any sort of adventure travel services, it is important that these disclaimers contain clauses for assumption of risks, limitations of liability, and acknowledgement of risks in boldface type. All tour operators and providers should have these particular clauses. At the end of the disclosure notice should be a quid pro quo to the effect that the tour operator relied on the passenger’s agreeing to assume the risks, and without this passenger’s acceptance of the risks “the tour would have cost more” (i.e., the money saved provides binding consideration for assuming the risks).
Downloadable free examples are available on my firm’s website ( www.travellaw.com). But beware: Whenever my international associates see cleverly worded consumer disclosure notices that can be interpreted as “anti-consumer,” they immediately remind me that all such notices are prohibited under EU directives; U.S. inbound tour operators must be cognizant of this risk-management issue.
The full-fare advertising rule. The full-fare advertising rule is a federal consumer protection law enforced by the DOT that was established to prevent and punish deceptive advertisements. The rule mandates that whenever a carrier or its ticket agent states a price for air transportation, the full price be stated. Put simply, the price advertised is the price that the customer must pay. If this is not true and the total cost of the ticket exceeds the advertised price, then the advertisement is likely in violation.
The full-fare advertising rule applies only to ads that quote a specific price for air tickets, including ads for tours that include airfare in the quoted price. Government- imposed or approved taxes and fees may be excluded from the quoted fare if proper disclosures are provided. These disclosures must be comprehensive and should give consumers a clear picture of the total cost of the air ticket. Fees that are not imposed by the government (e.g., fuel surcharges or service fees) must be included in all advertised fares.
The law provides for a maximum of $27,500 in civil penalties per day while the violation is ongoing. There is a small business exception built into the law to reduce fines, but it has out-of-date requirements that are often exceeded in this modern era. When a violation has been outstanding for weeks or even months, these penalties accumulate, and violators are often faced with hundreds of thousands—even millions—of dollars in potential fines. During the past year, there has been a crackdown on violations of the full-fare advertising rule, including a recent million-dollar fine to a discount air Internet site, so it is import to be familiar with the rule’s requirements.
Human resources, intellectual property, employment, and regulatory law are all parts of a practice in the travel law industry, but as a practitioner in the field, you have to be able to adapt them as the situation dictates. My firm’s website has hundreds of terms, definitions, and articles on the subject, and they are all free to access because we always welcome new travel lawyers. Use them and learn from them as an extension to this article, and you can have your own successful travel law practice in no time.
Alexander Anolik, Esq., is a San Francisco 35-year veteran travel and tourism lawyer and is general counsel to the Association of Retail Travel Agents. He has taught travel law at Cornell Law School, San Francisco State University, San Francisco Law School, University of Hawaii, and Golden Gate University and is the author of The Law and the Travel Industry, The Frequent Traveler’s Guide, and Traveler’s Rights: Your Legal Guide to Fair Treatment and Full Value (Legal Survival Guides). He may be reached at email@example.com.