Delta Partner Saudia Fined by the DOT Over Their New Los Angeles Flight

Saudia started flying Los Angeles – Jeddah this year, three days a week.

That’s great because they’re a Delta partner, and they are among the airlines offering the most award space of any in the world. Want to take a whole family from the US to India in business class using Delta miles? Saudia is your play.

The Department of Transportation, though, recently won a (cough) victory for consumers.

  • The US and Saudi Arabia has an Open Skies agreement.
  • Normally a foreign carrier needs Department of Transportation approval to operate a route to the US
  • The Open Skies Agreement exempts Saudia from this requirement.
  • But a 1997 DOT regulation says that an airline exempt from the requirement must obtain an exemption from the DOT before advertising and selling tickets on the route.

Saudia apparently didn’t know about this requirement. They found out about it, and applied for and received the exemption (that they were entitled to) prior to commencing service.

But they had publicized the service and even sold tickets before the DOT granted the exemption that the Open Skies Agreement provided to Saudia.

See, Saudia doesn’t need DOT permission. But they need the DOT’s permission to not seek permission.

As a result, the Department of Transportation and Saudia have agreed on a $50,000 fine — $25,000 payable now, and $25,000 forgiven if the airline behaves itself for the next year.

The notion of ‘prioritizing enforcement’ has been much in the news lately. Apparently that news hasn’t yet filtered down to the DOT.


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. yes, well, it’s up to Saudia to know what the regulations are and abide by them, so I don’t have much sympathy. These DOT rules are there for a reason – to keep LCC like RyanAir out of the US, and to protect the US Airlines. Many jobs could be in danger otherwise, as many airlines elsewhere are government-subsidized, so it would not be a fair competition. Many of these middle-eastern airlines would not survive without government help, as that helps them keep their prices lower than they should be. I also keep reading about how poorly they pay and treat flight attendants, US airlines can’t do that either. Do you think that an airline can put a shower on board an A380 and still stay in business, without some government support?

  2. @augias wrote “These DOT rules are there for a reason – to keep LCC like RyanAir out of the US, and to protect the US Airlines” In other words, they’re terribly anti-consumer.

  3. @Gary: I think it’s a bit more complex than that. If many thousands of airline employees keep their jobs and make a decent wage, that means they pay their taxes and spend their money (rather than collecting unemployment). The money they spend stimulates the economy which is good for all of us. Giving our money to RyanAir or Airlines that are subsidized by foreign governments would be good for each of us only in the short term as we’d save a few bucks, but eventually if it gets out of hand it’ll come to bite us. Increased competition is really good, but only if it’s fair. Competition between Spirit, Southwest and Delta is pretty fair for example, but it’s not good for us for foreign governments waging economic battle against US companies by giving their own corporations cash infusions.

  4. @augias. This is not the place to discuss whether free trade hampers (your view) or encourages economic growth – that’s for economic papers. The post was about ridiculous and unnecessary red tape, which clearly does damage an economy, and the egregious enforcement of that red tape. A DOT which had the best interests of the country in mind would a) not enforce that left-over rule and b) as soon as it was brought to its attention, strike it from the rulebook.

    And incidentally i’m not aware of anyone who suggests that RyanAir is state subsidised, whereas there’s a strong argument that US airlines are state subsidised because of 1) the Fly America Act and 2) the peculiar US bankruptcy procedures. Perhaps they should be banned from flying to countries which are not so generous to their own airlines.

  5. Gary: “Article putting an airline in a bad light; how can I somehow work DELTA into the title of the post?”

    Again, the Delta smearing on here is becoming unreal.

  6. @Nick I am DEFENDING Saudia here, how am I smearing Delta? It’s how most people will understand and relate to Saudia and why they matter and why I think it’s great they’ve got this LAX flight because it’s a really great use of Skymiles!

  7. DOT probably spent more than $25K to make Saudia go through all this. I am not saying that Saudia should not have been made to follow the rules but at least make the fine worthwhile tax payer money.

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