The U.S. Department of Transportation is fining Delta Air Lines $200,000 for under-reporting mishandled baggage.
The DOT said Delta misclassified and misreported the number of bags that were mishandled -- including bags that were delayed, lost, stolen or damaged.
The problem is that Delta's policy when it settled damaged bags with replacement bags, its agents did not enter the claim into a system called "WorldTracer," which was used to calculate the rate of mishandled baggage submitted to the federal government. The company's policy was also that it preferred damaged bags to be settled with replacement bags.
The result was that those claims for damaged bags were not included in Delta's mishandled baggage reports filed with the U.S. Department of Transportation.
Atlanta-based Delta acknowledged the problem and said it "immediately updated" its policy for damaged bags once notified by the DOT.
The airline said the effect of the omitted claims on its ranking for baggage handling performance was limited. Delta ranked fourth in baggage handling performance in 2012 and 2013, and it would likely have slipped to fifth if it included all of the bag claims. The company said its ranking would likely not have changed in 2014 and 2015.
In the most recent monthly federal Air Travel Consumer Report, Delta ranked 5th for baggage handling in May 2017, when it had 1.67 reports of mishandled bags per 1,000 passengers. Virgin America and Alaska Airlines ranked 1st and 2nd, followed by Spirit, JetBlue and Delta. Southwest ranked 10th out of 12 carriers.
Atlanta-based ExpressJet, a Delta Connection carrier, had the worst baggage handling performance in May, with 3.45 reports of mishandled bags per 1,000 passengers.
DOT said Delta's violation on mishandled baggage reporting occurred "for a significant period of time" and affected the accuracy of Delta's data available to the public.
Thus, it "constitutes unfair and deceptive practices and unfair method of competition," the agency said.
"We have carefully considered the facts of this case, including the explanation provided by Delta, and continue to believe enforcement action is necessary," the DOT said in its consent order that directed Delta to cease and desist from future violations and assessed the $200,000 "compromise civil penalty."
But the airline will likely not have to pay the full amount to the government.
As part of the settlement, Delta is making improvements to its system for reporting mishandled bags and is spending about $1.2 million to update its Fly Delta app to allow passengers to report a mishandled bag through the app. After filing a report, a passenger will also be able to track their bag and decide whether to pick it up at the airport or have it delivered.
Delta must pay $100,000 to the government within 30 days, and it can get a $100,000 credit for expenditures for the mobile app.
The DOT said it also fined American Airlines $250,000 for failing to make timely refunds to passengers and fined Frontier Airlines $400,000 for violating oversales and disability rules.
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