Ad Gaffe Costs Virgin America $25,000 Fine

The U.S. Transportation Department slapped a $25,000 fine on new entrant Virgin America for failing to state in some early advertisements last year that it was not yet authorized to fly.

The DOT normally prohibits new entrants from advertising or taking deposits until they have all required operating rights, but carriers often obtain waivers of that rule to enable them to build up advance bookings in the days immediately before their launch date. Virgin America received such a waiver last July, but it was subject to the condition that all advertisements stated that government approvals were still pending.

The DOT claims that several ads appeared on July 19, 2007, without the required notice. Virgin America quickly pulled the ads and reassured the DOT that all passengers who made early reservations were advised that the flights were subject to government approval.

In a cease-and-desist order, the DOT noted that Virgin America “was placed on direct notice of, and agreed to comply with,” the disclosure requirement, and determined that a $25,000 penalty was warranted.