[Federal Register Volume 59, Number 229 (Wednesday, November 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29590]
[[Page Unknown]]
[Federal Register: November 30, 1994]
_______________________________________________________________________
Part VIII
Department of Transportation
_______________________________________________________________________
Office of the Secretary
_______________________________________________________________________
14 CFR Parts 380, 381, and 399
Special Event Tours; Final Rule
DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Parts 380, 381, and 399
[Docket No. 49385]
RIN 2105-AC03
Special Event Tours
AGENCY: Office of the Secretary, DOT.
ACTION: Final rule.
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SUMMARY: The Department expands its rules on Super Bowl tours to cover
air tours to other types of special events. The new rule requires that
operators of tours to special events that are promoted as including
admission to the event must have those event tickets in hand or under
contract before they advertise or sell the tours, and that they must
refund the entire tour price to any customer who does not receive a
promised event ticket. This rule also extends the charter rule's
prohibition on last-minute price increases to non-charter special event
tours. This initiative arises as a result of problems on certain tours
to the 1994 Rose Bowl on which participants did not receive game
tickets that were promoted as being included in the package, or were
required to make additional payments in order to receive tickets.
EFFECTIVE DATE: This final rule is effective December 7, 1994.
FOR FURTHER INFORMATION CONTACT: Tim Kelly, Consumer Affairs Division/
I-25, Office of the Secretary, Room 10405, Department of
Transportation, 400 Seventh Street S.W., Washington, DC 20590.
Telephone (202) 366-5952.
SUPPLEMENTARY INFORMATION:
The ANPRM
In conjunction with the Rose Bowl football game that was played in
Pasadena, California on January 1, 1994, a large number of fans of the
University of Wisconsin (one of the two teams participating in the
game) purchased package tours to California. Many of those tours were
promoted as including a ticket to the Rose Bowl game. However, a
significant number of these individuals either did not receive the game
tickets that they had been promised and did not gain admission to the
game, or were required to make an additional payment after they arrived
in Pasadena in order to obtain their tickets.
On January 27, 1994, the Department issued an Advance Notice of
Proposed Rulemaking in this proceeding (published February 1, 1994; 59
FR 4614). In this notice, we stated that we were tentatively proposing
to issue a new rule which would contain the procedures of the
Department's rules on Super Bowl tours and extend these rules to
include air tours to other types of special events where admission to
the event is advertised as being included in the package.
The Department's rules on Super Bowl tours are contained in Title
14 of the Code of Federal Regulations, Part 380 and section 399.87.
These rules came about following problems with game tickets for Super
Bowl tours in the late 1970's (see 45 FR 1856, January 9, 1980). The
rules were limited to the Super Bowl because that was the only event
where such problems had surfaced.
Part 380 contains the rules for Super Bowl tours on Public Charter
flights:
Section 380.2 defines a Super Bowl charter as a charter
flight that is represented by its charter operator as including tickets
to the National Football League's Super Bowl game as part of its ground
package.
Section 380.18a states that a Super Bowl charter may not
be advertised unless the operator has submitted verification to the
Department\1\ that the operator (1) is in physical possession of enough
Super Bowl game tickets to provide them for a substantial number of
seats on the charter, or (2) has a contract with the NFL or with an NFL
team for such a number of game tickets, or (3) has a contract with
another person who has a contract with the NFL or an NFL team for such
a number of game tickets.
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\1\References to ``the Board'' in Part 380 refer to the Civil
Aeronautics Board, the Department's predecessor in aviation economic
and consumer matters. The Department of Transportation now
administers this rule as authorized by the Civil Aeronautics Board
Sunset Act of 1984 (P.L. 98-443; 98 Stat. 1703).
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Section 380.18a also states that a Super Bowl charter may
not be sold unless the operator has submitted verification to the
Department that the operator has possession of, or contracts for,
enough game tickets to provide one to every person who is to receive
one under the terms of the operator/participant contract for the
charter.
Section 380.31(c) states that if an operator receives a
booking for which he or she does not have possession of or a contract
for a game ticket, the operator must return that participant's money
within 3 days, unless the participant has authorized the operator in
writing to retain the payment while the operator seeks additional
tickets.
Sections 380.32(s), 380.33(a)(5) and 380.33(e) state that
if Super Bowl game tickets are not supplied when promised, the affected
participant must be sent a refund of the price of the entire charter
package within 14 days after the return flight.
In addition to the Super Bowl rules in Part 380, the Department has
a policy statement at 14 CFR section 399.87 which states that it shall
be an unfair or deceptive practice within the meaning of section 411 of
the Federal Aviation Act [now 49 U.S.C. Sec. 41712] to advertise or
sell an air tour that is promoted as including a ticket to the Super
Bowl game unless the operator has tickets or contracts for tickets in
the manner described in 14 CFR 380.18a (see above). The principal
purpose of this policy statement is to reach tours operated on
scheduled air service, which are not covered by the Part 380 charter
rules. The Part 399 policy statement mirrors section 380.18a, but does
not include the other Part 380 provisions described above. Most
importantly, it does not include the requirement that the entire tour
price be refunded if a game ticket is not provided.
Like current section 399.87, the new rule tentatively proposed in
the ANPRM would apply to tours on all forms of air transportation, not
just charters. Like the existing Super Bowl charter rules in Part 380,
it would require the tour operator to refund the entire tour price to
any participant who does not receive a promised event ticket, even if
the tour were not on a charter. The proposed rule would also pick up
the procedures of section 380.31(c) of the charter rule, which requires
an operator to refund any money received for a booking within 3 days if
the operator has no contract for an event ticket for that person,
unless the person has authorized the operator in writing to retain the
payment while the operator seeks a ticket.
Comments on the ANPRM
The Department received comments from 11 organizations and 7
individuals. The great majority of the comments favored adoption of a
rule in this area.
On the subject of the type of special event that should be covered
by the rule, several of the comments discussed only sports events as
the context for the rule. Other commenters stated that the context of
the rule should be broader than that. The American Society of Travel
Agents (ASTA) said that it should apply to all events where a
separately-purchased ticket is necessary for admission to the event.
The RG Travel Companies, which were involved in sending 1,700 Wisconsin
fans to the 1994 Rose Bowl, stated that the rule should cover any
special event ``where a good possibility exists that the demand for
tickets will exceed the supply * * *'' In a similar vein, the Pasadena
Tournament of Roses commented that the rule should apply to any event
with limited admission. The National Tour Association (NTA,
representing motorcoach tour operators) and Congressman Robert Andrews
of New Jersey expressed the opinion that the rule should not be limited
to sports events. Ms. Arlene Caldwell said that the rule should cover
any tour that claims to include a ticket to the event, and Mr. Donald
Hamilton stated that it should apply to any event for which tour
packages are sold.
All of the commenters that expressed an opinion on whether the rule
should apply to both charter and scheduled transportation felt that it
should apply to both forms of air service. Those commenters were the RG
Travel Companies, NACA, the NHL, ASTA, the NCAA, FBA, the Pasadena
Tournament of Roses, and the Wisconsin Attorney General.
The ANPRM asked whether the rule should contain only the
advertising and sale restrictions of sections 380.18a and 399.87 of the
current Super Bowl rule, or whether it should also contain the ``money
back guarantee'' of sections 380.32 and 380.33 and/or the ``booking
rejection'' and ``contingent booking'' procedures of section 380.31(c).
Except for NTA, all commenters that expressed a position on this
question felt that some form of regulation along these lines was
appropriate. NTA stated that the majority of its members that responded
to a poll on this matter felt that regulation of special-event tours
should not be a responsibility of the government, but the association
said that in the event a rule is adopted it favors the ``booking
rejection'' and ``contingent booking'' procedures of section 380.31(c).
ASTA and the Wisconsin Attorney General also expressed support for
the ``booking rejection'' and ``contingent booking'' procedures. They
favored the ``money back guarantee'' as well, as did the RG Travel
Companies, the National Air Carrier Association (NACA, an organization
of charter airlines), the NHL, NCAA, FBA, and Pasadena Tournament of
Roses. The Tournament of Roses stated that this guarantee should apply
``at any time prior to departure'' if it is clear tickets will not be
forthcoming. FBA commented ``the greater the remedy available, the less
likely that tour packagers will create the problem by promoting
packages that may not be legitimate.''
NACA said that there should be an exception to the ``money back
guarantee'' for situations of force majeure and acts of God, such as
the earthquake in San Francisco that forced postponement of the World
Series. Similarly, the NHL stated that if the event is canceled or
substantially altered after the tour begins, consumers should be
entitled only to a refund of the face value of the event ticket, but
that if such cancellation or alteration takes place before departure,
the operator should be required to inform the consumers, who would have
the right to cancel (presumably with a full refund).
Congressman Andrews was also in favor of the ``money back
guarantee,'' as well as a requirement for tour operators to disclose
whether event tickets are guaranteed or tentative. However, he stated
that any rule that would totally prohibit marketing of a special-event
tour until the tour operator has event tickets in hand would not be
practical. Tickets for many such events are not available until less
than two weeks before the event, he pointed out, but other arrangements
(e.g., air and hotel) must be made before that. NTA, the NCAA and the
Wisconsin Attorney General stated that the current restrictions against
marketing Super Bowl tours until the operator has game tickets in hand
or under contract should be included in the new rule.
In discussing the ``money-back guarantee,'' the ANPRM asked if the
rule should contain procedures to protect the operator from having to
refund the entire tour price if a participant doesn't receive promised
admission to something like a welcoming cocktail party. Of those who
commented on the issue, NTA, the NHL, ASTA, the Pasadena Tournament of
Roses said that operators should not be required to refund the entire
tour price over failure to provide something like a promised welcoming
cocktail party. NACA and the Wisconsin Attorney General stated that the
rule should require the value of undelivered ancillary events to be
refunded, but should not require a refund of the entire tour price. FBA
and the Wisconsin Attorney General both pointed out that certain events
on a special event tour (e.g., the Tournament of Roses parade on a Rose
Bowl tour) are integral to the experience for which the tour was
organized while other events on the same tour (e.g., a side trip to
Disneyland) are not. These two commenters suggest that integral events
be protected by the ``money back guarantee'' of the total tour price,
but not other events.
The ANPRM sought comment on whether the rule should ban last-minute
or post-departure price increases for admission to the event, one of
the problems that allegedly occurred on the 1994 Rose Bowl tours. All
commenters who offered an opinion on this subject felt that last-minute
price increases should be regulated in some manner. The RG Travel
Companies, NACA, the NCAA, ASTA, the Wisconsin Attorney General and Mr.
Donald Hamilton stated that last-minute price increases should be
banned. FBA and the Pasadena Tournament of Roses said that price
increases at any time following purchase should be prohibited unless
the consumer receives written notice that the operator reserves this
right. The Pasadena Tournament of Roses also suggested that
participants who cancel within a few days of notification of a price
increase be entitled to a full refund. The Wisconsin Attorney General
commented that on tours to special events, ``last-minute or post-
departure price increases are common and are tantamount to extortion''
because other options may be sold out.
The NHL stated that, in general, price increases should be banned
unless the face value of the ticket has been increased subsequent to
departure of the tour. However, for events with short lead times such
as the Stanley Cup playoffs, the NHL said that the rule should permit
tours on which participants are required to agree to purchase event
tickets at the yet-unknown face price plus a service fee, as long as
the consumer is given prominent notice of this fact.
Some tours are promoted in conjunction with a special event, but do
not include, and do not represent that they include, admission to the
event. For example, there have been tours to the Super Bowl host city
during the Super Bowl weekend that prominently feature ``Super Bowl''
in the headline of advertisements and flyers, but which do not include
game tickets. The ANPRM asked whether the new rule should ban this
practice, or require affirmative, prominent disclosure that admission
to the event is not included.
All of the commenters that expressed an opinion on this issue felt
that it should be regulated in some manner. The RG Travel Companies
stated that they favored either banning the practice or requiring
disclosure. The NCAA urged affirmative, prominent disclosure, ``if such
tours are to be allowed at all.'' All others who commented on this
point recommended prominent disclosure. The NHL and Pasadena Tournament
of Roses submitted specific suggestions for minimum required typeface
size for advertisements for such tours.
The ANPRM solicited comment on the economic burdens of such a rule,
and asked whether it would be impractical for events where the
participants are known only a week in advance, e.g. the NCAA Final
Four.
All of the parties that commented on this issue agreed that the
rule can and should apply to events in which the participants are not
known until shortly before the event. The RG Travel Companies commented
that commitments centering around a particular team could be made
contingent on that team qualifying for the event. The NHL stated that
the rule may be burdensome for organizers of short-lead-time tours, but
that this is justified by the benefit to consumers.
ASTA, like NACA, said that the degree of advance notice is not
relevant, and that an operator who markets an event-oriented tour
before the participants are known should simply disclose that event
tickets are not included in the advertised price. FBA commented that
participating teams in college bowl games are generally known at least
a month in advance, and also that any experience the Department has had
with Super Bowl tours would be instructive, as the competing teams in
that game are sometimes determined only a week before the game.
Several commenters pointed out that even though the participating
teams in the NCAA Final Four (the example given in the ANPRM) are
determined only the weekend before, the tickets are sold out months
beforehand. Thus, the fact that the participants are not known until
the final week has minimal impact on the availability of tickets and
the feasibility of tours. The Pasadena Tournament of Roses asserted
that any economic burden resulting from this rule would fall on ticket
brokers and tour operators who buy event tickets from individuals in
order to resell them. The Wisconsin Attorney General stated that
consumer protection may be even more important in cases where event
participants are determined at the last minute, because consumers have
less time to investigate their options.
The Air Transport Association (ATA, an association of large
scheduled airlines) filed a comment stating that it expressed no
opinion about whether, or to what extent, the current Super Bowl rules
should be made applicable to tours to other special events. However,
ATA said that DOT should not make air carriers responsible for assuring
that tour operators comply with the new rule. NACA echoed this view,
stating that carriers should not be made the guarantors of tour
operators.
The NPRM
The Department issued a Notice of Proposed Rulemaking in this
proceeding on October 6, 1994 (published October 13, 1994; 59 FR
51881). The proposed rule was very similar to that described in the
ANPRM, which in turn closely tracks the existing rules for Super Bowl
tours.
The rule proposed in the NPRM would apply to any tour that is
organized for the purpose of attending a sporting, social, religious,
educational, cultural, political or other event of a special nature and
limited duration, which exists for reasons apart from the tour itself,
and which is represented by the operator of the tour as including
admission to that event. We stated that we did not wish to engage in
line-drawing of the type that would be required were we to publish a
list of specific events that would be covered by the rule. In addition,
we said in the NPRM that we saw no justification for limiting the
applicability of the rule to sporting events. Few commenters
specifically suggested such a limitation, although a number of them
offered sports contests as examples of the type of event that should be
covered.
We stated that we agreed with the comments that suggested that the
rule should apply to any event where a separate ticket is required for
admission to the event or where there is limited admission. The
proposed rule would apply to any tour to an event of the type described
at the beginning of the previous paragraph in which the tour operator
has represented that the tour includes admission to the event. If the
event is free, or attendance is unlimited, the operator should have no
trouble furnishing tickets and this rule will impose no burden. On the
other hand, if tours are promoted to an unusually popular event of a
non-sporting nature, those tour participants would be just as
disappointed at not receiving the promised admission to the event that
constituted the entire purpose of their trip as would a fan traveling
to a bowl game.
We tentatively concluded in the NPRM that the rule should apply to
both charter and scheduled air transportation, as well as to any other
form of air service meeting the statutory definition of ``air
transportation'' that may develop in the future. Thus, we proposed to
apply it to ``scheduled, charter, and other air transportation.''
The proposed rule would apply to all interstate (i.e., domestic)\2\
air transportation, and to foreign (i.e., international) air
transportation originating at a point within the United States.
Applying the rule only to outbound international flights is consistent
with the approach taken in the existing Public Charter rule (see 14 CFR
380.23) and with the ``country of origin'' concept of regulation of
international air transportation. As a policy matter, the Department
has less of an interest in applying this rule to tours originating in
foreign countries whose participants are largely or exclusively foreign
citizens.
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\2\The statutory term ``overseas air transportation,'' which
referred to domestic transportation to or from U.S. territories or
possessions, was abolished in a recent recodification of
transportation laws. Such transportation is now included in the
definition of ``interstate air transportation,'' and consequently
would be covered by this proposed rule.
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The rule that we proposed would apply to any operator of a tour
that meets the rule's definition of a Special Event Tour, regardless of
whether that operator is a direct air carrier (i.e., an airline), an
indirect air carrier (e.g., a Public Charter operator), or a ticket
agent (as defined in 49 U.S.C. Sec. 40102, e.g., a scheduled-service
tour operator, including a travel agent acting as a tour operator). The
proposed rule would apply to both U.S. and foreign entities that act as
operators of Special Event Tours, just as current Sec. 399.87 does.
With regard to the comments of ATA and NACA, neither the ANPRM nor
the NPRM proposed that this rule should include provisions that
obligate direct air carriers to assure that tour operators comply with
the rule. Except where an airline might choose to directly operate a
Special Event Tour (i.e., to become the tour operator), a direct air
carrier of a Special Event Tour would incur no greater or lesser
obligations under this rule than it has in its capacity as a common
carrier either certificated under 49 U.S.C. Sec. 41101 or holding a
foreign air carrier permit issued under 49 U.S.C. Sec. 41301 (formerly
sections 401 and 402 of the Federal Aviation Act).
As we had suggested in the ANPRM, the NPRM proposed to carry over
the provisions from the existing Super Bowl rule that prohibit
advertising or sale of such tours before game tickets are in hand or
under contract. These provisions would be expanded to apply to all
special events. This approach was supported by the comments on the
ANPRM, and involves no novel processes since the existing procedures
have been in place in the Super Bowl rule for 15 years.
In addition to the provision that prohibits advertising or sale of
a Super Bowl tour until game tickets are in hand or under contract, the
Super Bowl charter rule requires Super Bowl charter operators to
include in the prospectus that is required to be filed with the
Department for all Public Charters a certification that they have the
game tickets in hand or else a copy of the contract for the game
tickets. We did not propose to carry over this additional filing
requirement to the new rule. The underlying requirement to have the
tickets or ticket contracts before advertising or sales commence would
remain and would be enforceable without the filing provision. Moreover,
in those instances deemed necessary, we have ample authority under 49
U.S.C. Sec. 41708 (formerly section 407(a) of the Federal Aviation Act)
to require such information to be provided. The Super Bowl rules that
apply to scheduled-service tours have never required a filing of this
type. Since the NPRM proposed consolidating regulation of this type of
tour in a single rule, we stated that we saw no justification for
having a filing requirement for charter tours but not scheduled-service
tours, nor did we see a need to impose a new paperwork burden on
scheduled-service tour operators. This tentative decision was
consistent with the Paperwork Reduction Act and with the Department's
proposal in Docket 48341 (57 FR 42864) to eliminate unnecessary
paperwork burdens on charters.
Congressman Andrews expressed concern that any rule that would
prohibit marketing of a tour until tickets are in hand would not be
practical, since tickets for many events are not available until a
couple of weeks in advance but other arrangements (e.g., air and hotel)
must be made before that. However, neither the existing nor proposed
rules requires that tickets be in hand before marketing is allowed; the
operator can simply have a written contract for the tickets.
The proposed rule also incorporated the so-called ``booking
rejection'' and ``contingent booking'' procedures currently found in
section 380.31(c) of the Super Bowl charter rule, and expanded them to
apply to all events and to all forms of air transportation. These
provisions require operators to return unsolicited bookings for which
they don't have event tickets unless a tour participant authorizes the
operator in writing to retain the participant's payment while the
operator attempts to obtain more event tickets. We are modifying this
slightly to allow for situations in which participants agree to take
the tour without an event ticket; the operator would be required to
obtain the participant's written acknowledgment of this understanding.
One of the key provisions of the Super Bowl charter rule is the
requirement for the operator to refund the total tour price to any
participant who does not receive a promised game ticket, even if the
participant uses all of the other tour features. The ANPRM tentatively
proposed to incorporate this provision in the new rule, but also asked
for comment on whether the rule should contain only the ``booking
rejection'' and ``contingent booking'' procedures without the ``money
back guarantee.'' However, the comments solidly supported the ``money
back guarantee,'' and we incorporated it in the proposed rule. We
stated that we agreed with the Football Bowl Association that strong
consumer remedies will also have the effect of deterring the promotion
of non-legitimate tour packages.
In its comments on the ANPRM, NACA stated that there should be an
exception to the ``money back guarantee'' for situations of force
majeure and acts of God, such as the earthquake in San Francisco that
caused postponement of the World Series several years ago. The NHL
suggested that if the event is canceled or substantially altered,
participants should be entitled only to a refund of the face value of
the event, not the total tour price. We replied in the NPRM that it was
never our intent to make the tour operator the guarantor of the event
itself. The ``money back guarantee'' in the existing Super Bowl charter
rule kicks in ``if game tickets are not supplied.'' The rule we
proposed in October would require refunds ``* * * if promised admission
to the [event] is not furnished by the tour operator * * *'' These
provisions are directed toward potential problems with ticket
distribution, not with the event itself. If people who have tickets are
able to attend the event and Special Event Tour participants are shut
out because they don't have tickets, the ``money back guarantee'' would
apply. On the other hand, if nobody with a ticket can use it during the
period of the tour because the event itself was canceled or postponed,
the ``money back guarantee'' would not apply.
We stated in the NPRM that we wished to make it clear that we are
talking only about problems with the event itself, not about any or all
problems that the tour operator might view as beyond its control.
Failure of a ticket broker to deliver tickets to the tour operator, we
said, would not invalidate the ``money back guarantee.''
In the NPRM we stated that we agreed with the NHL that if the event
is canceled consumers should receive a refund for the portion of their
tour price that applied to the event that they paid for but did not
receive. However, we said, mandating such a partial refund in a
situation where the event itself did not take place and where there
were no problems with ticket distribution was beyond the scope of this
proceeding, and would best be dealt with in the context of contract law
or other applicable existing law.
The ANPRM solicited comment on whether the rule should include
procedures to protect the tour operator from having to refund the total
tour price to participants who don't receive promised admission to an
``event'' like a welcoming cocktail party. Most commenters who
addressed this issue were opposed to requiring a refund of the entire
tour price in these circumstances. Some suggested that participants so
affected simply be entitled to a refund of the value of that ancillary
event. Two commenters urged that a tour operator's failure to deliver
admission to ancillary events that are integral to the experience for
which the tour was organized (e.g., the Tournament of Roses parade on a
Rose Bowl tour) should entitle the participant to a refund of the total
tour price.
In raising this issue in the ANPRM, the Department had intended to
focus on the situation of a tour that would not normally be thought of
as a Special Event Tour but which held out admission to an ``event'' as
one of its features, e.g., a welcoming cocktail party on a 5-day
package to the Bahamas. If the definition of ``special event'' had been
broad, we were concerned that the rule might have the effect of
requiring refunds of the entire price on such tours after failure to
deliver a relatively minor and low-value component. The comments on the
ANPRM shed light on another issue: multiple ``events'' on a true
Special Event Tour.
We stated in the NPRM that we agreed with the commenters that
failure to deliver a relatively minor feature should not result in a
refund of the total tour price. We also felt that this rule should be
limited to tours that are organized around an event, not to events that
occur in the normal course of the typical vacation tour. Accordingly,
in the NPRM we limited the scope of the proposed rule in two ways.
First, there was a definition of ``Special Event Tour'' in proposed
Sec. 381.5 which was broad yet specific; it limited the applicability
of the rule to tours to sporting, social, religious, educational,
cultural, political or other event of a special nature and limited
duration, which exist for reasons apart from the tour itself. Second,
the ``money back guarantee'' in proposed Sec. 381.11 would apply only
to the primary event for which a Special Event Tour is organized.
In the ANPRM, the Department solicited comment on whether the rule
should ban last-minute or post-departure price increases, something
which occurred on certain tours to the 1994 Rose Bowl. The great
majority of the comments on this subject favored banning such
increases. Some commenters said no price increase should be permitted
unless the tour operator has reserved this right in writing and allows
participants to cancel and receive a full refund in the event of a
price increase.
We stated in the NPRM that we had decided to incorporate into the
proposed rule the price increase provisions of the Department's Public
Charter rule (14 CFR 380.33). While it is not our intent in this
proceeding to address all potential sources of consumer harm on Special
Event Tours, the issue of price increases is directly related to the
issue of ticket availability. Almost any event ticket is procurable if
the price is right; if we do not regulate price increases in the
Special Event Tour rule, tour operators would always be able to acquire
event tickets at greatly inflated prices and then simply increase the
price to the participant to cover it. Since a ticket has been offered
in this situation, the ``money back guarantee'' would not come into
play.
The proposed provisions on price increases, modeled on similar
provisions in the charter rule, state that if a given participant is
assessed price increases for the tour that in the aggregate are more
than 10 percent above his or her original tour price, the participant
shall have the right to cancel and receive a full refund (i.e., no
cancellation penalties would apply). No price increases in any amount
would be permitted less than 5 days before departure (as opposed to 10
days in the charter rule, recognizing the fact that Special Event Tours
often have shorter lead times than the typical charter). This would
eliminate both last-minute and post-departure price hikes. Finally,
proposed Sec. 381.11 specifies that the promised event ticket must be
furnished at the price that was agreed to before departure or else the
operator is subject to the ``money back guarantee'' just as if he had
not provided the ticket at all.
In its comments on the ANPRM the NHL stated that for events with
short lead times such as the Stanley Cup playoffs, the rule should
permit tours on which participants are required to agree to purchase
event tickets at the yet-unknown face price plus a service fee, as long
as the consumer is given prominent notice of this fact. We replied in
the NPRM that as an initial matter, a tour would not be covered under
this rule at all if the event ticket were simply held out as an option
rather than as a mandatory feature. However, where the participant must
agree to buy the event ticket, such tours are clearly Special Event
Tours since the tour operator is representing that admission to the
event is included in the tour (even if the price of that admission is
not yet known and consequently any price that is advertised for that
tour is not the full tour price).
However, nothing in the proposed rule would explicitly prohibit a
transaction of this type. The operator would still have to have the
requisite number of event tickets under contract before advertising or
sales could begin; in other words, the variable must be price, not
availability. Beyond that, the proposed rule requires that tour
participants must receive promised event tickets ``at the tour price
agreed to before departure'' or else the participant is entitled to a
refund of the total tour price. If a participant agrees to a price
consisting of a known value p plus an unknown value x, and the operator
delivers the tour (including the event ticket) at that price, the
operator has satisfied the requirements of the rule.
The ANPRM sought comment on whether the rule would be impractical
for events where the participants are known only a week in advance,
such as the NCAA Final Four. All of the parties that commented on this
issue thought that this should not be a problem, and that the rule
should apply. As noted above, several commenters pointed out that the
Final Four sells out months in advance even though the participating
teams are not determined until the week before. Also, as FBA noted, the
contestants in the Super Bowl have been determined only the week before
on several occasions, and that does not appear to have either harmed
the marketability of Super Bowl tours or resulted in additional
consumer problems.
Comments on NPRM; Final Rule
In response to the NPRM we received individual comments from six
organizations, plus identical letters from the National Association of
Ticket Brokers and 38 of its members.
The Football Bowl Association (representing all 19 post-season
college football bowl games) and the National Collegiate Athletic
Association filed comments repeating the support that these
organizations had expressed for the rule in their comments on the
ANPRM. However, both organizations also expressed disagreement with the
Department's tentative decision not to apply the ``money back
guarantee'' to secondary events on a Special Event Tour, such as a
ticket to the Tournament of Roses Parade on a Rose Bowl tour. The FBA
stated that such events are part of the Bowl Game ambience and might be
just as important to some as tickets to the game itself. The NCAA said
that in the case of multi-game tournaments, questions may arise
concerning whether the primary event is the entire tournament or only
the final championship game. The NCAA suggested that the words ``and
tournaments'' be added to the list of examples of events contained in
Sec. 381.5.
We will not adopt these suggestions. As we said in the NPRM,
identifying the primary event on a Special Event Tour will seldom be a
matter of debate, but identifying secondary events that are ``integral
to the experience'' of the tour would be a far more subjective
exercise. Tour participants who do not receive promised admission to a
secondary event may have a contractual right to a refund of the value
of that event, and they can pursue that claim with the tour operator.
By declining to incorporate the commenters' suggestion in the rule we
are not suggesting that a consumer would not as a matter of contract
law in certain circumstances be entitled to a full refund in situations
other than failure to receive a promised ticket to the primary event.
We are merely not establishing as a matter of regulation a guarantee of
a full refund beyond those instances in which a ticket to the primary
event is not provided.
As for multi-game tournaments, the rule as proposed should be able
to deal with this situation. If the tour operator held out admission to
``the NCAA Final Four,'' the operator would be obligated to provide
tickets to all three Final Four games (the two semi-final games plus
the final). On the other hand, if what was held out was admission to
the championship game on Monday night, there would be no reason for
tour participants to assume that they were also going to receive
tickets to the semi-final games on the previous Saturday.
In the NPRM we proposed to incorporate in the new rule the
provisions in the existing Public Charter rule on price increases (14
CFR 380.33). These provisions allow participants to cancel and receive
a full refund if the tour price is increased more than 10 percent, and
prohibit price increases in any amount during the last ten days before
departure. We proposed to apply the ban on price increases to the last
five days before departure in the Special Event Tours rule, recognizing
that these tours often have shorter lead times than the typical
charter. In comments on the NPRM the price increase provisions were
supported by the Football Bowl Association and the NCAA; there were no
other comments on this point. We are finalizing this provision as
proposed except that for the ban on price increases we have decided to
remain with the ten-day period specified in the provision on which this
requirement is modeled (Sec. 380.33 of the charter rule) rather than
reducing it to five days in the Special Event Tours rule as proposed in
the NPRM. Although Special Event Tours may be organized on shorter
notice than the typical charter, most Special Event Tours are marketed
significantly more than ten days before departure. Being presented with
a price increase only five days before departure is unjustifiably
disruptive, and this is just as true of Special Event Tours as other
tours. Operators of Public Charters to special events have been subject
to the ten-day requirement for years, and incorporating this provision
in the Special Event Tours rule should not constitute an unreasonable
burden. In addition, the requirement to have tickets in hand or under
contract may result in fewer unanticipated cost increases for tour
operators for this component of the tour.
The ANPRM noted that some tours are promoted in conjunction with a
special event, but do not include, and do not represent that they
include, admission to the event. The ANPRM solicited comment on whether
the new rule should ban this practice, or whether it should specify a
form of required disclosure. Most of the comments on the ANPRM favored
requiring disclosure of the fact that an event ticket is not included.
In the NPRM, however, we proposed not to regulate these tours. The FBA
and the NCAA have objected to this tentative decision; both
organizations urge a disclosure requirement. We have decided not to
include a provision of this type. Consumers solicited for such tours
are able to determine from the advertising material that an event
ticket is not held out as included; this is distinguishable from the
situation of a tour participant who paid for an event ticket and then
didn't receive it. Should any particular tour deceptively imply that
event tickets are included when in reality they are not, the Department
has authority to take enforcement action and will not hesitate to do
so. For example, 49 U.S.C. Sec. 41712 (formerly section 411 of the
Federal Aviation Act) prohibits unfair and deceptive practices or
unfair methods of competition, and 14 CFR 399.80(f) declares that it is
unfair or deceptive for a ticket agent to misrepresent fares, charges
or services in connection with air transportation.
The Attorney General of the Commonwealth of Pennsylvania filed
comments in support of the proposed rule. However, he said that tour
operators should be required to disclose the protections available
under this rule to all tour participants, in writing. He noted that
such disclosure is currently required in section 380.32(s) of the
Department's regulations, but that the NPRM proposed to eliminate this
provision.
Section 380.32(s) is one of the provisions of the Public Charter
portion of the Super Bowl rule. The NPRM proposed to rescind the Super
Bowl rule, since it would be replaced by the new Part 381. A disclosure
requirement for Part 381 of the type suggested by the Pennsylvania
Attorney General was not proposed in the ANPRM or the NPRM, or in any
previous comments in this proceeding. While section 380.32(s) has
required specific disclosure of the protections of the Super Bowl rule
on charter flights, there has never been a corresponding requirement
for tours on scheduled service, and we see no reason to impose one now.
The past notice for Super Bowl tours using charter air transportation
had been incorporated in the operator-participant contract, an
extensive document that was already required on all publicly-sold
charters. There has been no required contract for Super Bowl tours (or
other tours) on scheduled service, and we are not aware of any problems
related to lack of notice on past tours of this type. With our action
here, which will apply the protections of the new Part 381 broadly to
all types of Special Event Tours on both scheduled and charter service,
we see no need for a requirement that specific notice be given
consumers of the rule's protections.
The American Society of Travel Agents filed a comment urging the
Department to adopt the rule as proposed. The Air Transport Association
reiterated the comment that it made in response to the ANPRM that it
expressed no opinion about whether, or to what extent, the current
Super Bowl rules should be made applicable to tours to other special
events. However, ATA said that DOT should not make air carriers
responsible for assuring that tour operators comply with the new rule.
Concerning ATA's comment, the ANPRM and the NPRM did not propose,
and the final rule does not include, any provisions that obligate
direct air carriers to assure that tour operators comply with the rule.
Except where an airline might choose to directly operate a Special
Event Tour (i.e., to become the tour operator), a direct air carrier of
a Special Event Tour will incur no greater or lesser obligations under
this rule than it has in its capacity as a common carrier either
certificated under 49 U.S.C. 41101 or holding a foreign air carrier
permit issued under 49 U.S.C. 41301 (formerly sections 401 and 402 of
the Federal Aviation Act). Of course, all direct air carriers will
remain subject to 14 CFR 380.40 where charter air transportation is
used, including charters that constitute Special Event Tours. Section
380.40 provides that a direct air carrier shall not perform a Public
Charter unless it has made a reasonable effort to verify that all
provisions of the Public Charter rule (14 CFR Part 380) have been
complied with and that the charter operator's authority has not been
suspended by the Department.
We received identical letters from the National Association of
Ticket Brokers and 38 individual ticket brokers. These commenters
stated that the conditions of the proposed rule could not be met by
either tour operators or ticket brokers. They said that in most cases
the venue would not have the event tickets in hand sufficiently in
advance of the event to make the proper distribution. They also
commented that many venues will not deal with the ticket broker or tour
operator directly, thus requiring the latter entities to procure
tickets on the secondary market. They indicated that the proposed rule
would have a chilling effect on the brokerage industry.
Event USA, a ticket agency and tour provider, commented that the
proposed rule is broad and over-reaching. The January 1994 Rose Bowl
problem was an isolated instance and did not represent a trend, this
commenter claimed. According to Event USA, for many events the tickets
are not distributed until shortly before the event and there is no
meaningful prospect for contracts. ``[K]nowing what orders the operator
has, he can then determine what to buy as they are physically
available, rather than buying those on a speculation basis.'' The
commenter suggested that the rule be limited to the ``money back
guarantee'' and a requirement for tour operators to have a contract for
event tickets with ``established and reliable sources of tickets.''
The comments of the ticket brokers have not persuaded us to
decrease the level of protection proposed in the NPRM. The rule does
not require tour operators to have tickets in hand, as long as they
have contracts (in the manner described in the rule) for tickets. In
addition, the rule does not require a tour operator to have a contract
for all the tickets it will ever need before it can begin advertising;
advertising can commence as soon as the operator has contracts for
tickets for ``a substantial number of seats on the tour.''
However, before a tour operator sells someone a tour that includes
a ticket to the event, the operator must have a contract for the event
ticket (or the ticket itself) for that individual. That is the entire
point of the rule. It is designed to make clear that tour operators
must end the practice of selling something that they do not have rights
to at the time they sell it. This is consistent with Department
deceptive practice rules (see 14 CFR 399.80 (c), (f) and (j)), as well
as rules that prohibit the sale of air transportation until the
provider has the required authority (see 14 CFR 201.5 and 14 CFR
380.25(a)). To that extent, the process described by Event USA is
backwards; we wish to make clear the fact that we will not accept a
situation where, on air tours that are promoted as including a ticket
to a special event, the tour operator sells seats on the tour first and
then attempts to find enough event tickets for those customers. Indeed,
while the prohibition here is made specific to special events, such a
deceptive practice has long been prohibited in a broad sense under
current regulations (see 14 CFR 399.80 (c), (f) and (j)).
We note that the proposed requirement for tour operators to have
event tickets in hand or under contract was supported by the NCAA in
its comments on the ANPRM. The Football Bowl Association (representing
all 19 post-season college bowl games) and the Pasadena Tournament of
Roses, while not commenting specifically on the proposed requirement
for firm contracts or tickets in hand, did not take exception to this
provision and urged adoption of the rule.
We can appreciate the concerns of many ticket brokers that they may
not be able to conduct business with tour operators in the same manner
as they have in the past. However, it is also possible that the new
Part 381 may influence a realignment of the distribution channels
traditionally tapped by tour operators, for example by creating a
motivation for event organizers to deal directly with ticket brokers or
tour operators in order to facilitate the availability of tickets for
event participants who use air tours. Nevertheless, experience has
shown that the existing system is fraught with risk for consumers and
that, when problems occur, significant inconvenience if not substantial
financial harm is likely. The rights of consumers to be adequately
informed about an offer and to receive what they are promised outweighs
the concerns expressed by those who feel the new rule may alter the way
they must do business.
We note that there is nothing in the new rule that would prevent a
tour operator from obtaining a contract for event tickets from a ticket
broker who has obtained a written commitment from a series of
individuals (e.g., alumni who are entitled to tickets but who aren't
going to the game) who in turn each have a written commitment for game
tickets from the ultimate distributor of the game tickets or an
organization that receives such tickets directly from the distributor
(e.g., a bowl committee, conference, or university). We would also like
to emphasize that the rule applies only where a ticket to the event has
been held out as a component of the tour that is being purchased. Tour
operators remain free to use the same methods to obtain event tickets
that they have in the past as long as they disclose that an event
ticket is not a component of the tour, and that the operator will
attempt to obtain the event ticket for the participant on an ``as
available'' basis. (Once the operator represents to a participant that
he has found the participant an event ticket, however, the operator
must either have the ticket in hand or have a contract for it in the
manner required by Part 381. In addition, the ``money back guarantee''
in Part 381 will apply from the point that the operator has represented
that he has located and reserved a ticket for that individual.)
In summary, we are issuing the rule as proposed in the NPRM, except
for a minor change in the language in Sec. 381.7(c) made for purposes
of clarity and changing the ban on price increases in Sec. 381.13 to
apply to the last ten days before departure instead of the last five
days, consistent with the same provision in the Public Charter rule (14
CFR Part 380).
Regulatory Analyses and Notices
This rule will be effective seven days after being published in the
Federal Register. The seven day period will allow tour operators time
to obtain ticket contracts that comply with the rule. A lengthier
period between the publication and effective dates is not called for.
The final rule is virtually unchanged from the proposed rule described
in the NPRM; between the NPRM published in October and the ANPRM
published last January, there has been ample notice of the Department's
intentions in this proceeding. Air tours to college football bowl games
have been popular in the past, and one such bowl was the reason that
this rulemaking was initiated. The bowl season is only weeks away, and
it is important for the consumer protections of this rule to be put in
place as soon as possible lest consumers be financially harmed. The
Department is already investigating several current special-event air
tour promotions and is concerned that the risk of harm is real and
significant.
This rule is considered to be non-significant under DOT regulatory
policies and procedures, 44 FR 11034. The proposal would have minimal
economic impact, and accordingly no regulatory evaluation has been
prepared. It is not subject to review by the Office of Information and
Regulatory Affairs pursuant to Executive Order 12866.
The NPRM has been analyzed in accordance with the principles and
criteria contained in Executive Order 12612, and it has been determined
that it does not have sufficient federalism implications to warrant the
preparation of a Federalism Assessment.
I certify that the rule will not have a significant economic impact
on a substantial number of small entities.
List of Subjects
14 CFR Part 380
Charter flights, Reporting and recordkeeping requirements, Surety
bonds.
14 CFR Part 381
Charter flights, Consumer protection.
14 CFR Part 399
Administrative practice and procedure, Air carriers, Air rates and
fares, Air taxis, Consumer protection, Small businesses.
Accordingly, the Department is amending 14 CFR Chapter II as
follows:
1. Part 381 is added to read as follows:
PART 381--SPECIAL EVENT TOURS
Sec.
381.1 Purpose.
381.3 Applicability.
381.5 Definition.
381.7 Advertising.
381.9 Sales.
381.11 Refunds.
381.13 Price increases.
Authority: 49 U.S.C. 40113(a) and 41712.
Sec. 381.1 Purpose.
The purpose of this part is ensure that air travelers who have
purchased tours to special events will receive the promised admission
to the event. This part expands the ``Super Bowl rule'' to other
events.
Sec. 381.3 Applicability.
This part applies to Special Event Tours that are in interstate air
transportation, or in foreign air transportation originating at a point
in the United States. This part applies to U.S. and foreign operators
of Special Event Tours, whether they be air carriers or ticket agents.
This part applies to scheduled, charter, and other air transportation.
Sec. 381.5 Definition.
Special Event Tour means a tour that is organized for the purpose
of attending a sporting, social, religious, educational, cultural,
political or other event of a special nature and limited duration,
which exists for reasons apart from the tour itself, and which is
represented by the operator of the tour as including admission to that
event. Examples of such events include, but are not limited to, college
and professional sporting events, the Olympics, concerts, the Passion
Play in Oberammergau, etc.
Sec. 381.7 Advertising.
No operator of a Special Event Tour or agent of such an operator
shall conduct, or cause or allow to be conducted, any advertising,
solicitation or other promotion for a Special Event Tour unless:
(a) The operator is in physical possession of enough tickets for
admission to the event to provide such tickets for a substantial number
of seats on the tour; or
(b) The operator has entered into a written contract with an
organization that is the distributor of such tickets or an organization
that receives such tickets directly from the distributor (e.g., a bowl
committee; football conference, league or team; concert promoter or
arena; etc.), the terms of which provide for that organization to
furnish the operator enough admission tickets to provide such tickets
for a substantial number of seats on the tour; or
(c) The operator has entered into a written contract with another
person or organization that has a written contract or series of written
contracts with the distributor of such tickets or with an organization
that receives such tickets directly from the distributor, the terms of
which provide for that organization (the organization with which the
operator has contracted) to furnish the operator enough admission
tickets to provide such tickets for a substantial number of seats on
the tour.
Sec. 381.9 Sales.
(a) Except as provided in paragraph (b) of this section:
(1) No operator of a Special Event Tour shall accept money for a
seat on a Special Event Tour, or authorize an agent to accept such
money, unless the operator has physical possession of, or written
contracts (in the manner described in Sec. 381.7) for, a ticket for
admission to the event for that individual. To the extent that the
operator receives an unsolicited booking for which the operator does
not have physical possession of or written contracts for a ticket for
admission to the event, any payment accompanying that booking must be
returned within 3 business days.
(2) Upon acceptance of the money for a sale, the operator must
reserve one event ticket for that individual. An operator may not sell
more seats on the tour than it has event tickets in hand or under
contract. (An operator need not continue to reserve an event ticket for
an individual who withdraws from the tour by providing notice to the
operator or by being notified by the operator that the individual's
participation has been canceled due to failure to remit a required
installment payment.)
(b) An operator of a Special Event Tour may accept a booking and
payment from an individual for whom the operator does not have an event
ticket in hand or under contract if that individual agrees in writing
that he or she understands that no event ticket has been reserved for
him or her. This agreement shall specify whether the person has agreed
to participate in the tour without an event ticket and/or the operator
has agreed to attempt to acquire an event ticket for this person. If
the two parties agree that the operator will attempt to acquire an
event ticket, the agreement shall specify any penalties that will apply
if the individual later cancels because an event ticket did not become
available. If the operator notifies this person that an event ticket
has become available, that person shall enjoy all the other protections
of this part from that time.
Sec. 381.11 Refunds.
If promised admission to the primary event for which a Special
Event Tour was organized is not furnished by the tour operator, at the
tour price agreed to before departure (including any increases that the
participant has accepted pursuant to Sec. 381.13(a)), the operator must
provide each tour participant affected in this way a refund of the
total tour price. This refund is to be provided within 14 calendar days
after the scheduled return date of the tour.
Sec. 381.13 Price increases.
(a) Should the tour operator increase a participant's tour price by
more than 10 percent (aggregate of all increases to that participant),
that participant shall have the option of canceling his or her
participation in the tour and receiving a full refund within 14 days
after the cancellation.
(b) The tour operator shall not increase the tour price to any
participant less than ten days before departure.
PART 380--PUBLIC CHARTERS
2. The authority citation for part 380 continues to read as
follows:
Authority: Secs. 101(3), 204, 401, 402, 407, 416 and 1102, Pub.
L. 85-726, as amended, 72 Stat. 737, 743, 754, 757, 766, 771, 797
(49 U.S.C. 1301, 1324, 1371, 1372, 1377, 1386, 1502).
Sec. 380.2 [Amended]
3. Remove the definition for Super Bowl charter in Sec. 380.2.
4. Amend Sec. 380.18 by adding a new paragraph (f) to read as
follows:
Sec. 380.18 Charters for special events.
* * * * *
(f) Where the charter operator represents that the charter includes
admission to the special event, the charter shall comply with part 381
of this subchapter.
Sec. 380.18a [Removed]
5. Remove Sec. 380.18a.
Sec. 380.28 [Amended]
6. Amend Sec. 380.28 by removing paragraph (a)(4).
7. Amend Sec. 380.31 by revising paragraphs (b) and (c) to read as
follows:
Sec. 380.31 General requirements for operator-participant contracts.
* * * * *
(b) The contract form may include a space that participants may
check to authorize the charter operator to retain their money while
attempting to make other arrangements for them if there is no space
available on the flight or on specific alternative flights they have
requested.
(c) If there is no space available on the flight or specific
alternative flights requested by the participant, the operator shall
return all the participant's money within 7 days after receiving it
unless the participant, in accordance with paragraph (b) of this
section, has authorized the operator to retain the payments while the
operator attempts to make other arrangements for the participant. If
the operator retains the payments while attempting to make other
arrangements for the participant, it shall notify the participant of
the fact within 7 days after receiving the payments, but in no event
later than the departure. For the purpose of the time periods in this
paragraph, receipt of money by a travel agent on behalf of a charter
operator will not be considered as receipt by the operator.
* * * * *
Sec. 380.32 [Amended]
8. In Sec. 380.32(s), remove the second sentence and remove the
period at the end of the first sentence and add a semi-colon in its
place.
Sec. 380.33 [Amended]
9. In Sec. 380.33, remove paragraph (a)(5).
PART 399--STATEMENTS OF GENERAL POLICY
10. The authority citation for Part 399 continues to read as
follows:
Authority: 49 U.S.C. 1301, 1302, 1305, 1324, 1371, 1372, 1373,
1374, 1375, 1376, 1377, 1378, 1379, 1381, 1382, 1384, 1386, 1461,
1481, 1482, 1502 and 1504, unless otherwise noted.
Sec. 399.87 [Removed and reserved]
11. Remove and reserve Sec. 399.87.
Issued this 23rd day of November, 1994 at Washington, DC.
Patrick V. Murphy,
Acting Assistant Secretary for Policy and International Affairs.
[FR Doc. 94-29590 Filed 11-29-94; 8:45 am]
BILLING CODE 4910-62-U
