99-7753. Second Extension of Computer Reservations Systems Regulations  

  • [Federal Register Volume 64, Number 60 (Tuesday, March 30, 1999)]
    [Rules and Regulations]
    [Pages 15127-15129]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 99-7753]
    
    
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    DEPARTMENT OF TRANSPORTATION
    
    Office of the Secretary
    
    14 CFR Part 255
    
    [Docket No. OST-99-5132]
    RIN 2105-AC75
    
    
    Second Extension of Computer Reservations Systems Regulations
    
    AGENCY: Office of the Secretary, DOT.
    
    ACTION: Final rule.
    
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    SUMMARY: The Department is revising its rules governing airline 
    computer reservations systems (CRSs) to change the rules' expiration 
    date for a second time. This revision changes the date from March 31, 
    1999, to March 31, 2000, to keep the rules from terminating on March 
    31, 1999. The rules will thus remain in effect while the Department 
    continues out its reexamination of the need for CRS regulations. The 
    Department finds that the current rules should be maintained because 
    they are necessary for promoting airline competition and helping to 
    ensure that consumers and their travel agents can obtain complete and 
    accurate information on airline services. The Department previously 
    extended the rules from December 31, 1997, to March 31, 1999.
    
    DATES: This rule is effective on March 31, 1999.
    
    FOR FURTHER INFORMATION CONTACT: Thomas Ray, Office of the General 
    Counsel, U.S. Department of Transportation, 400 Seventh St. SW., 
    Washington, DC 20590, (202) 366-4731.
    
    SUPPLEMENTARY INFORMATION: Our CRS rules have always had an expiration 
    date to ensure that we would periodically review the need for the rules 
    and their effectiveness. In a 1997 rulemaking we changed the rules' 
    expiration date from the original sunset date, December 31, 1997, to 
    March 31, 1999. 62 FR 66272 (December 18, 1997).
        We will not be able to complete our reexamination of the current 
    rules by March 31, 1999. Because we believed that the current rules 
    should be maintained pending our reexamination of the need for rules, 
    we proposed to change the rules' expiration date to March 31, 2000, and 
    gave interested persons an opportunity to comment on that proposal. 64 
    FR 9457 (February 26, 1999). We received comments from Amadeus Global 
    Travel Distribution, Worldspan, the Association of Asia Pacific 
    Airlines, and America West Airlines, all of which supported the 
    proposal, as did Southwest Airlines, which filed a late reply.
    
    Background
    
        As explained in our notice proposing to revise the rules' 
    expiration date, we have found that CRS rules are necessary to protect 
    airline competition and to ensure that consumers can obtain accurate 
    and complete information on airline services. 64 FR 9458-9459. CRSs 
    have become essential for the marketing of airline services for almost 
    all airlines operating in the United States, and market forces do not 
    discipline the price and quality of service offered airlines by the 
    CRSs. Travel agents rely on CRSs to provide airline information and 
    bookings for their customers, and almost all airlines receive most of 
    their bookings from travel agencies. The travel agencies' typical 
    exclusive or predominant use of one system compels each airline to 
    participate in an agency's system if it wishes to have its services 
    readily saleable by that agency. Each system, moreover, is controlled 
    by airlines or airline affiliates, who could use them to unreasonably 
    prejudice the competitive position of other airlines or to provide 
    misleading or inaccurate information to travel agents and their 
    customers. For these reasons, we adopted rules regulating CRS 
    operations in the United States, 57 FR 43780 (September 22, 1992). 64 
    FR 9458-9459.
        Our rules included a sunset date, December 31, 1997, to ensure that 
    we would reexamine whether the rules remained necessary and whether 
    they were effective. 57 FR 43829-43830 (September 22, 1992). We have 
    begun a reexamination of our current rules by publishing an advance 
    notice of proposed rulemaking that invited interested persons to 
    comment on whether we should readopt the rules and, if so, with what 
    changes. 62 FR 47606 (September 10, 1997). Almost all of the parties 
    responding to our advance notice of proposed rulemaking have urged us 
    to maintain CRS rules, although these parties also argued that various 
    changes should be made to the rules, mostly to strengthen them. 64 FR 
    9458.
    
    Our Proposed Extension of the CRS Rules
    
        Our inability to complete our reexamination of the rules by the 
    original sunset date, December 31, 1997, caused us to change the sunset 
    date to March 31, 1999. 62 FR 66272 (December 18, 1997).
        We proposed again to change the expiration date for the rules to 
    March 31, 2000, so that they would remain in effect pending our 
    reexamination of our rules, since we could not complete that 
    reexamination by March 31, 1999. 64 FR
    
    [[Page 15128]]
    
    9457 (February 26, 1999). The time and procedures required for that 
    process made it impossible for us to meet that deadline. The proposed 
    temporary extension of the current rules would maintain the status quo 
    until we determine which rules, if any, should be adopted. As we 
    explained, maintaining the rules in effect appeared to be necessary to 
    protect airline competition and consumers against unreasonable 
    practices. A short-term extension of the rules would protect airline 
    competition and consumers against the injuries that would otherwise 
    occur, given our earlier findings on the market power of the systems 
    and each airline owner's potential interest in using its affiliated CRS 
    to prejudice the competitive position of other airlines. Furthermore, 
    allowing the current rules to expire could be disruptive, since the 
    systems, airlines, and travel agencies have been conducting their 
    operations in the expectation that each system will comply with the 
    rules. 64 FR 9458.
        Finally, we noted that maintaining the rules in effect appeared 
    necessary to meet the United States' obligations under various treaties 
    and bilateral air services agreements to assure foreign airlines a fair 
    and equal opportunity to compete. 64 FR 9459.
        We stated that we regret our inability to finish the reexamination 
    of the rules by March 31, 1999. Recognizing the importance of having 
    CRS rules that reflect current industry conditions, we explained that 
    our review has taken more time than anticipated, in part due to recent 
    developments in airline distribution. In addition, we have had to 
    address other airline competition issues that appeared to be more 
    urgent. We recognize that several parties were alleging that the 
    compelling need for certain additional CRS regulations required us to 
    act promptly on those issues without waiting for the completion of the 
    overall reexamination of the rules. We are considering whether there 
    were issues that should be addressed before we complete our overall 
    reexamination of the rules. 64 FR 9458.
        Due to the need to make the proposed amendment effective by March 
    31, 1999, we shortened the comment period to fourteen days. 64 FR 9457.
    
    Comments
    
        Four parties filed comments. The commenters are Amadeus Global 
    Distribution System (``Amadeus''), Worldspan, America West Airlines, 
    and the Association of Asia-Pacific Airlines (``Asia-Pacific 
    Association''). Worldspan does not object to the proposed extension of 
    the current rules, and the other three parties endorse our tentative 
    conclusion that CRS rules remain necessary. Worldspan and the Asia-
    Pacific Association agree that our on-going review of our current rules 
    will be a complex process and must be done carefully.
        Three of the commenters urge us, however, to act promptly on some 
    CRS issues before we complete our overall review of the rules. Amadeus 
    contends that we should adopt a rule prohibiting the tying of a travel 
    agency's ability to sell corporate discount fares with its choice of 
    the system affiliated with the airline offering the discount fares. 
    Worldspan objects to a piecemeal revision of the current rules; 
    Worldspan asserts, however, that, if any issue is considered before the 
    completion of the rules' overall reexamination, that issue should be 
    the extension of the mandatory participation rule, 14 CFR Part 
    255.7(a), to cover airlines like Southwest that market one system 
    without participating in other systems. America West argues that we 
    should act immediately on its pending petitions for rules addressing 
    the systems' high booking fees and the problems created for airlines by 
    Internet booking services.
        Southwest filed a reply which supports our proposed extension of 
    the rules and argues that Worldspan's proposed rule would injure both 
    Southwest and airline travellers.
    
    Decision
    
        We will change the rules' sunset date to March 31, 2000, as we 
    proposed. Amadeus, Worldspan, America West, the Asia Pacific 
    Association, and Southwest support our proposal, and no one has 
    objected to it. The analysis underlying our proposal is consistent both 
    with the findings made by us in earlier CRS rulemakings and with the 
    position of almost all parties in the underlying rulemaking (Docket 
    OST-97-2881) that CRS rules are still necessary. We will consider, 
    however, whether CRS regulations are still needed as part of our 
    overall reexamination of the CRS rules.
        America West, Amadeus, and Worldspan each urge us to act quickly on 
    the specific rule proposals of interest to it. We will consider their 
    requests as part of our review of the comments and reply comments filed 
    in the proceeding for reexamining all of the CRS rules. While we 
    appreciate their interest in obtaining expedited action on certain 
    issues, we note that their requests are generally controversial and 
    opposed by other commenters.
    
    Effective Date
    
        We have determined for good cause to make this amendment effective 
    on March 31, 1999, rather than thirty days after publication as 
    required by the Administrative Procedure Act, 5 U.S.C. 553(d), except 
    for good cause shown. Maintaining the current rules in effect on a 
    continuing basis requires us to make this amendment effective by March 
    31, 1999. Since the amendment preserves the status quo, it will not 
    require the systems, airlines, and travel agencies to change their 
    operating methods. As a result, making the amendment effective less 
    than thirty days after publication will not burden anyone.
    
    Regulatory Process Matters
    
    Regulatory Assessment
    
        This rule is a nonsignificant regulatory action under section 3(f) 
    of Executive Order 12866 and has not been reviewed by the Office of 
    Management and Budget under that order. The proposal is also not 
    significant under the regulatory policies and procedures of the 
    Department of Transportation, 44 FR 11034 (February 26, 1979).
        In our notice of proposed rulemaking, we tentatively determined 
    that maintaining the current rules should impose no significant costs 
    on the CRSs. Since the systems have already taken all the steps 
    necessary to comply with the rules' requirements on displays and 
    functionality, continuing to comply with those rules would not impose a 
    substantial burden on the systems. Keeping the rules in effect would 
    benefit participating airlines, since they would otherwise be subjected 
    to unreasonable terms for participation, and consumers, who might 
    otherwise be given incomplete or inaccurate information on airline 
    services. The rules also contain provisions that are designed to 
    prevent abuses in the systems' competition with each other for travel 
    agency subscribers. 64 FR 9459.
        In our notice we also pointed out that our last comprehensive CRS 
    rulemaking included an economic analysis that we believe remains 
    applicable to our extension of the rules' expiration date. We concluded 
    that no new economic analysis appeared to be necessary, but we stated 
    that we would consider comments from any party on that analysis before 
    we again revised the rules' sunset date. 64 FR 9459.
        No one filed comments on the economic analysis. We will therefore 
    base this rule on the analysis used in our last comprehensive CRS 
    rulemaking. We will prepare a new
    
    [[Page 15129]]
    
    economic analysis as part of our review of the existing rules, if we 
    determine that rules remain necessary.
        This rule does not impose unfunded mandates or requirements that 
    will have any impact on the quality of the human environment.
    
    Small Business Impact
    
        The Regulatory Flexibility Act of 1980, 5 U.S.C. 601 et seq., was 
    enacted by Congress to ensure that small entities are not unnecessarily 
    and disproportionately burdened by government regulations. The act 
    requires agencies to review proposed regulations that may have a 
    significant economic impact on a substantial number of small entities. 
    For purposes of this rule, small entities include smaller U.S. and 
    foreign airlines and smaller travel agencies.
        Our notice of proposed rulemaking set forth the reasons for our 
    proposed extension of the rules' expiration date and the objectives and 
    legal basis for that proposed rule. We also noted that keeping the 
    current rules in force would not modify the existing regulation of 
    small businesses. We referred to the final rule in our last 
    comprehensive CRS rulemaking, which contained an analysis that we used 
    to determine that the rules would not have a significant economic 
    impact on a substantial number of small entities. In proposing to 
    revise the sunset date to March 31, 2000, we reasoned that that 
    analysis appeared to remain valid for that proposed extension. We 
    therefore adopted that analysis as our tentative regulatory flexibility 
    statement but stated that we would consider any comments filed on that 
    analysis in connection with this proposal. 64 FR 9459-9460.
        We tentatively concluded that maintaining our existing CRS rules 
    would primarily affect two types of small entities, smaller airlines 
    and travel agencies. We further noted that the rule would also affect 
    all small entities that purchase airline tickets, since airline fares 
    may be somewhat lower than they would otherwise be, although the amount 
    may not be large, if our CRS rules allowed airlines to operate more 
    efficiently than they otherwise would. 64 FR 9459.
        Keeping the rules in effect would benefit smaller airlines that 
    have no ownership interest in a CRS, since the rules prohibit certain 
    potential system practices that could injure their ability to operate 
    profitably and compete successfully. The rules provide important 
    protection to smaller airlines, for example, by barring display bias 
    and discriminatory booking fees. If there were no rules, the systems' 
    airline owners could use them to prejudice the competitive position of 
    other airlines. Ibid.
        The CRS rules additionally affect the operations of smaller travel 
    agencies, primarily by prohibiting certain CRS practices that could 
    unreasonably restrict the travel agencies' ability to use more than one 
    system or to switch systems. The rules prohibit CRS contracts that have 
    a term longer than five years, give travel agencies the right to use 
    third-party hardware and software, and prohibit certain types of 
    contract clauses, such as minimum use and parity clauses, that restrict 
    an agency's ability to use multiple systems. By prohibiting display 
    bias based on carrier identity, the rules also enable travel agencies 
    to obtain more useful displays of airline services. 64 FR 9459-9460.
        We invited interested persons to address our tentative conclusions 
    under the Regulatory Flexibility Act in their comments submitted in 
    response to this notice of proposed rulemaking. 64 FR 9460.
        No one filed comments on our Regulatory Flexibility Act analysis. 
    We will adopt the analysis set forth in the notice of proposed 
    rulemaking.
        Our proposed rule contained no direct reporting, recordkeeping, or 
    other compliance requirements that would affect small entities. There 
    are no other federal rules that duplicate, overlap, or conflict with 
    our proposed rules.
        The Department certifies under section 605(b) of the Regulatory 
    Flexibility Act (5 U.S.C. 601 et seq.) that this regulation will not 
    have a significant economic impact on a substantial number of small 
    entities.
    
    Paperwork Reduction Act
    
        This rule contains no collection-of-information requirements 
    subject to the Paperwork Reduction Act, Public Law 96-511, 44 U.S.C. 
    Chapter 35.
    
    Federalism Implications
    
        This rule will have no substantial direct effects on the States, on 
    the relationship between the national government and the States, or on 
    the distribution of power and responsibilities among the various levels 
    of government. Therefore, in accordance with Executive Order 12812, we 
    have determined that the proposed rule does not have sufficient 
    federalism implications to warrant preparation of a Federalism 
    Assessment.
    
    List of Subjects in 14 CFR Part 255
    
        Air carriers, Antitrust, Consumer protection, Reporting and 
    recordkeeping requirements, Travel agents.
    
        Accordingly, the Department of Transportation amends 14 CFR Part 
    255, as follows:
    
    PART 255--[AMENDED]
    
        1. The authority citation for part 255 continues to read as 
    follows:
    
        Authority: 49 U.S.C. 40101, 40102, 40105, 40113, 41712.
    
        2. Section 255.12 is revised to read as follows:
    
    
    Sec. 255.12  Termination.
    
        Unless extended, the rules in this part shall terminate on March 
    31, 2000.
    
        Issued in Washington, D.C. on March 25, 1999, under authority 
    delegated by 49 CFR 1.56a (h) 2.
    Patrick V. Murphy,
    Deputy Assistant Secretary for Aviation and International Affairs.
    [FR Doc. 99-7753 Filed 3-29-99; 8:45 am]
    BILLING CODE 4910-62-P
    
    
    

Document Information

Effective Date:
3/31/1999
Published:
03/30/1999
Department:
Transportation Department
Entry Type:
Rule
Action:
Final rule.
Document Number:
99-7753
Dates:
This rule is effective on March 31, 1999.
Pages:
15127-15129 (3 pages)
Docket Numbers:
Docket No. OST-99-5132
RINs:
2105-AC75
PDF File:
99-7753.pdf
CFR: (1)
14 CFR 255.12