[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]
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