NEW YORK — Continental Airlines agreed Friday to pay a civil penalty of $250,000 to settle allegations of consumer protection violations brought against it by the Department of Transportation. The carrier also agreed to implement a number of service improvements.
The violations related to refunds, compensation for being "bumped" from an overbooked flight, baggage handling claims and failing to disclose that portions of some Continental flights were actually made on small commuter planes instead of jetliners.
The department indicated that it is also examining consumer protection practices of "a number of other airlines," but it did not identify them.
Houston-based Continental voluntarily paid the penalty--which was three times greater than any ever levied by the department or the Civil Aeronautics Board before the latter agency shut down in 1984.
Continental President Thomas G. Plaskett said the violations were largely the result of its acquisition of People Express and Frontier Airlines in the past year.
"We believe the vast majority of these problems are behind us," Plaskett told reporters.
He said Continental agreed to pay the negotiated penalty of $250,000 "rather than engage in protracted litigation."
Continental has the worst passenger complaint record of any U.S. airline thus far this year, according to government statistics. In 1986, Continental passengers filed 727 complaints, giving it the sixth-worst record in the industry. Counting People Express and New York Air, which it acquired in 1986 but had not yet consolidated with Continental, it had a total of 1,966 complaints last year.
Thus far this year, Continental has had 2,936 complaints filed with the department.
The Transportation Department said that Continental had not always processed requests for refunds of tickets paid by credit card within seven business days or by cash within 20 days.
The agency also said Continental employees failed to provide a required notice to passengers when compensation was denied and failed to tell passengers that the tickets offered when they were bumped were for standby travel only. (Continental said Friday that it no longer offers standby vouchers.)
Steps Taken to Resolve Problem
In addition, the Transportation Department's Office of Aviation Enforcement and Proceedings and the Office of Consumer Affairs, which conducted the the investigation, said they had found that the airline's employees sometimes did not inform passengers that they might be flying a carrier other than Continental and that Continental's procedures regarding baggage complaints needed improvement.
Continental, the Transportation Department said, has taken steps to resolve the problems. Those have included the investment of $60 million in modern baggage systems, increasing its consumer-relations department from 57 to 150 employees and adding a customer service program.