Mediaboss Marketing

Start-up carrier PEOPLExpress has received a $10,000 fine from the Department of Transportation. That comes even as the airline's application to be certified as an air carrier is still pending.

Travel Weekly reports the DOT dinged the company because it "violated a ban on premature advertising by soliciting memberships for its 'Club Travelati. ' "

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According to a DOT filing on penalty, PEOPLExpress did not comply with regulations "prohibiting an applicant for new or amended authority from advertising the air transportation covered by its application until the application has been approved by the Department."

As part of its advertising, PEOPLExpress sold "more than" 130 Club Travelati memberships before suspending sales on March 27, according to Travel Weekly.

The DOT noted in its filing that PEOPLExpress' prospective Club Travelati members were promised, "among other things, the opportunity to receive after scheduled service began 'ULTRA-LOW discount offers' and discount certificates to be used towards their first 'PEOPLExpres ticket for any scheduled flight or fare.' "

PEOPLExpress felt it did not violate regulations since it stated any discounts would be future benefits and would not become active until the airline received all needed regulatory approvals.

The DOT ruled against the airline.

WAVY TV of Virginia reports "PEOPLExpress settled this matter without admitting violations, in order to avoid litigation, and agreed to immediately eliminate all web content related to the Club."

In the filing, PEOPLExpress is said to have agreed to the settlement also in the hopes of putting "this issue behind it to avoid any delay to the consideration of its pending application for certificate authority before the Department."

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DOT fines would-be start-up PEOPLExpress