[Federal Register Volume 64, Number 166 (Friday, August 27, 1999)]
[Rules and Regulations]
[Pages 46818-46821]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21998]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Parts 257, 258 and 399
[Docket Nos. OST-95-179, OST-95-623, and OST-95-177]
RIN 2105-AC10, 2105-AC17
Petitions Involving the Effective Dates of the Disclosure of
Code-Sharing Arrangements and Long-Term Wet Leases Final Rule, and the
Disclosure of Change-of-Gauge Services Final Rule.
AGENCY: Office of the Secretary (OST), Department of Transportation.
ACTION: Final rule and notice of effective and compliance dates.
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SUMMARY: On March 15, 1999, we issued two new rules, the Disclosure of
Code-Sharing Arrangements and Long-Term Wet Leases Rule, 14 CFR part
257 (``Code-Share Rule''), and the Disclosure of Change-of-Gauge
Services Rule, 14 CFR part 258 (``Change-of-Gauge Rule''), to enable
consumers to make informed choices about their air transportation and
to travel without undue confusion. Both rules were to take effect on
July 13. On July 9, in response to petitions to delay the rules'
effective date, we issued a Final Rule and Notice of Proposed
Disposition (see 64 FR 38111, July 15, 1999), delaying the effective
date for both rules until August 25, 1999, and giving interested
parties until July 30 to comment on our proposal to delay the
compliance date of portions of both rules further, until March 15,
2000. We are adopting our proposal as a final rule, as clarified below,
and amending both disclosure rules to reflect the new compliance dates.
DATES: The effective date of 14 CFR part 257, published at 64 FR 12851-
12852 (March 15, 1999), and new Sec. 257.6, published herein, is August
25, 1999. The date on which compliance with Sec. 257.5(a),
Sec. 257.5(b) (insofar as compliance requires reprogramming by Computer
Reservations Systems), and Sec. 257.5(c) is mandatory is March 15,
2000; compliance with all other sections is mandatory as of August 25,
1999.
The effective date of 14 CFR part 258, published at 64 FR 12860
(March 15, 1999), and new Sec. 258.6, published herein, is August 25,
1999. The date on which compliance with Sec. 258.5(c) is mandatory is
March 15, 2000; compliance with all other sections is mandatory as of
August 25, 1999.
The removal of 14 CFR 399.88, published at 64 FR 12852 (March 15,
1999), is effective August 25, 1999.
FOR FURTHER INFORMATION CONTACT: Betsy L. Wolf, Senior Trial Attorney,
Office of Aviation Enforcement and Proceedings (202-366-9359), Office
of the General Counsel, U.S. Department of Transportation, 400 Seventh
Street, S.W., Washington, DC 20590.
SUPPLEMENTARY INFORMATION:
Background
On March 15, 1999, we adopted two new disclosure rules, the Code-
Share Rule and the Change-of-Gauge Rule, under 49 U.S.C. Sec. 41712,
our authority to prohibit unfair and deceptive practices and unfair
methods of competition. The rules will protect consumers of air
transportation by ensuring that they are told the nature of service
they are considering before they decide to buy it and then by giving
them written information to help them avoid confusion and mishaps, such
as missed flights or connections, during their transportation. Each
rule codifies and augments existing disclosure requirements for air
carriers 1 and also sets new disclosure requirements for
ticket agents. Among other things, the Code-Share Rule (14 CFR Part
257) requires air carriers involved in code-sharing arrangements or
long-term wet leases to identify those arrangements in the written or
electronic schedule information they provide to the public, in the
Official Airline Guide and comparable publications, and in Computer
Reservations Systems (``CRSs'') with an asterisk or comparable mark and
to disclose the transporting carrier's corporate name and any other
name under which the service is held out to the public (Sec. 257.5(a)).
The rule also requires air carriers and ticket agents to disclose this
information orally to prospective passengers before booking
transportation (Sec. 257.5(b)) and then to provide this information in
a written notice once a consumer has booked a flight involving a code-
share arrangement or a long-term wet lease (Sec. 257.5(c)). The Change-
of-Gauge rule (14 CFR part 258) has comparable requirements for service
with one flight number that requires a change of aircraft en route
(Sec. 258.5). For many if not most air carriers and for all ticket
agents, the ability to comply fully with the above requirements hinges
on the CRSs' capability both to display all of the relevant information
and to print it as the required written notice.
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\1\ As used in this discussion, the term ``air carriers'' means
both U.S. carriers and foreign carriers.
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The rules were scheduled to take effect on July 13. Beginning in
late April, we received several petitions
[[Page 46819]]
from air carriers and trade associations asking that we delay the
rules' effective date. Most petitioners based their requests on the
CRSs' inability to accomplish all necessary reprogramming by July 13
due to two factors: one, their having initially underestimated the
magnitude of this task, and two, their needing now to devote the bulk
of their information systems resources to anticipating and avoiding
problems during the transition to the year 2000 (``Y2K''). Most
petitioners asked that both rules be made effective March 15, 2000. The
United States Tour Operators Association, Inc. (``USTOA''), which said
that its members cannot begin to reprogram their own ``front-end
information systems'' until after the CRSs are reprogrammed, requested
an additional grace period for its members of six months.
While recognizing that the information systems used by the air
transportation industry must be prepared to continue functioning
normally through the turn of the year, we also recognized that the need
for effective disclosure of code-share service, long-term wet-lease
service, and change-of-gauge service has been pressing and is likely to
increase as air carriers' relationships and operations grow ever more
complex. Balancing these two concerns, in a Final Rule and Notice
issued July 9, 1999 (see 64 FR 38111 (July 15, 1999), we delayed the
effective date of both rules until August 25; we proposed that
compliance with those portions of the new rules that codify existing
requirements and those portions with which air carriers and ticket
agents can comply without awaiting CRS reprogramming be mandatory as of
August 25, and we proposed that compliance with those portions of the
new rules with which air carriers and ticket agents cannot comply until
CRS reprogramming is completed be mandatory as of March 15, 2000, as
requested. We also proposed to refrain as a matter of discretion from
enforcing both rules in their entirety against USTOA's members until
September 15, 2000. We gave interested parties until July 30 to comment
on our proposed disposition.
The sections of Part 257 for which we proposed to make compliance
mandatory as of August 25 because carriers and ticket agents can comply
with them without further CRS reprogramming are the following:
Sec.
257.1 Purpose.
257.2 Applicability.
257.3 Definitions.
257.4 Unfair and Deceptive Practice.
257.5 Notice requirement.
(b) Oral notice to prospective consumers (in part): oral notice
before booking transportation involving a code-share arrangement (1)
of the fact that the selling carrier is not the transporting carrier
and (2) of the transporting carrier's identity (as shown by its two-
letter designator code in CRS displays).
(d) Advertising.
We proposed that compliance with the following sections of Part 258
be mandatory as of August 25:
Sec.
258.1 Purpose.
258.2 Applicability.
258.3 Definitions.
258.4 Unfair and Deceptive Practice.
258.5 Notice requirement.
(a) Notice in schedules.
(b) Oral notice to prospective consumers.
The sections of Part 257 for which we proposed to make compliance
mandatory as of March 15, 2000, because carriers and ticket agents
cannot comply with them without further CRS reprogramming are the
following:
Section 257.5 Notice requirement.
(a) Notice in schedules.
(b) Oral notice to prospective consumers (in part): the
remaining elements of this section--i.e. (1) identification of the
transporting carrier in code-share arrangements by its corporate
name and any other name under which the service is held out to the
public and (2) all required disclosures for long-term wet leases.
(c) Written notice.
We proposed that compliance with the following section of Part 258
be mandatory as of March 15, 2000:
Section 258.5 Notice requirement.
(c) Written notice.
Disposition of Comments
We received comments from the Air Transport Association of America,
Inc. (``ATA''), Amadeus Global Travel Distribution, S.A., the Regional
Airline Association (``RAA''), and the following air carriers:
Aeropostal Alas de Venezuela, C. por A., Air New Zealand Limited,
American Eagle Airlines, Inc. and Executive Airlines, Inc. d/b/a
American Eagle, Continental Airlines, Delta Air Lines, Qantas Airways
Limited, and US Airways, Inc. ATA, Amadeus, RAA, Continental, Delta,
and US Airways support the Department's approach. Aeropostal asks that
we delay the compliance date of the requirement that print
advertisements disclose long-term wet leases (Sec. 257.5(d)) until
March 15, 2000. Air New Zealand and Qantas ask that we similarly delay
the compliance date of any requirement that cannot be met until
carriers reprogram their own internal reservations systems. American
Eagle and Executive state that they will not need the waiver they
requested earlier and were granted in the notice (see 64 FR 38111 at
38112 (July 15, 1999)) if the March 15, 2000, compliance date is
adopted as proposed. Finally, US Airways requests clarification of the
disclosure requirement for print advertisements (Sec. 257.5(d)).
Aeropostal, the flag carrier of Venezuela, states that it is only
permitted to provide transportation between Venezuela and the United
States by means of a wet lease arrangement or a code-sharing
arrangement with an authorized carrier from another country. All of its
U.S.-Venezuela service is therefore subject to the Code-Share Rule. If
the rule's advertising requirement takes effect before March 15, 2000,
Aeropostal maintains, the discrepancy between the detailed disclosure
in its print advertisements and the more limited information available
to travel agents through their CRSs will cause confusion for consumers
who call travel agents and will result in lost business. Aeropostal
seeks a delay in the advertising requirement's compliance date in order
that consumers and travel agents will be working with the same
information.
We will deny Aeropostal's request. The information its
advertisements will provide on the nature of its services and the
identity of the transporting carrier is critical to consumers' ability
both to choose intelligently among transportation options and to avoid
confusion during their journeys. As Sec. 257.4 of the Code-Share rule
states, holding out or selling code-share or long-term wet-lease
services without making the required disclosures is an unfair or
deceptive practice or an unfair method of competition in violation of
49 U.S.C. 41712. The public interest thus requires that we not delay
the effective date of any provision that does not entail CRS
reprogramming. Furthermore, we do not share Aeropostal's concern that
travel agents will not be able to field consumers' questions about
Aeropostal's services. As experienced professionals, travel agents are
familiar with industry practices and can be expected to know enough
about wet leases and how to find details on particular wet-lease
services to explain them to consumers without having the information on
their CRS screens. Code-share services are already listed in CRSs with
the transporting carrier identified by its designator code: all that
the Code-Share Rule adds to existing requirements is to specify that
carriers must disclose both the transporting carrier's corporate
[[Page 46820]]
name and any other name under which the service is held out to the
public.
Air New Zealand and Qantas raise an issue that we did not consider
when we issued our July 9 proposal. The Code-Share and Change-of-Gauge
Rules apply to air carriers not only in their capacity as providers of
air transportation and sellers of their own services but also in their
capacity as sellers of the services of other air carriers. In the
latter capacity, they are serving the function of a ticket agent. Any
carrier that uses a CRS governed by 14 CFR part 255 as its internal CRS
has the same information available to it as CRSs' travel agent
subscribers have and is thus in a position to comply now with those
parts of the new rules' oral disclosure requirements that do not
require CRS reprogramming. In particular, such a carrier has the
capability of informing a passenger before booking transportation that
another carrier's service is a code-share service and naming the
transporting carrier. It likewise has the capability of informing a
passenger before booking transportation that another carrier's service
entails a change of aircraft en route. Air New Zealand and Qantas,
however, are not such carriers. Each of them has an internal
reservations system that is not a CRS governed by 14 CFR part 255, and
the only code-share or change-of-gauge services that these systems
currently display as such are those of Air New Zealand and Qantas
themselves, respectively. In order to comply with the new rules' oral
and written notice requirements, both carriers will need to reprogram
their internal reservations systems, which they will not be able to do
by August 25. They therefore request that the compliance date of
Sec. 257.5(b) and Sec. 258.5(b) be delayed for carriers situated as
they are until March 15, 2000.
We will accommodate Air New Zealand, Qantas, and any similarly
situated carrier in the same way that we are accommodating USTOA:
rather than complicate matters by codifying different compliance dates
for different classes of sellers of air transportation, we will simply
refrain as a matter of discretion from enforcing Sec. 257.5(b) and
Sec. 258.5(b) against carriers whose internal reservations systems do
not display the code-share and change-of-gauge services of other
carriers for their sales of such services prior to March 15, 2000. This
approach is fair to the carriers and should not affect consumers to any
significant degree. Air New Zealand estimates that only approximately
0.0135 percent of the bookings on its internal reservations system are
made in the U.S. for code-share flights between third-party carriers.
The carrier estimates that the level of its third-party carrier change-
of-gauge bookings, more difficult to quantify, is even lower.
Qantas raises another issue: it seeks assurance that our decision
to delay the compliance date of Sec. 257.5(a), the requirement
concerning notice in schedules of code-share and long-term wet-lease
arrangements, to March 15, 2000, applies to all information whose
inclusion depends on reprogramming carriers' internal reservations
systems. The carrier also asks us to delay until March the compliance
date of Sec. 258.5(a), the parallel requirement for change-of-gauge
service, which we tentatively decided should be August 25. Qantas's
request reflects a misunderstanding of the rules. As used in
Sec. 257.5(a) and Sec. 258.5(a), the term ``computer reservations
system'' means a CRS governed by 14 CFR part 255; it does not mean
carriers' internal reservations systems. Carriers offering change-of-
gauge service are already required to indicate the change of aircraft
in their CRS listings, so no delay in the compliance date of
Sec. 258.5(a) is warranted. We are delaying the compliance date of
Sec. 257.5(a)--in its entirety--because it requires carriers to list
new information in CRSs and because the CRSs cannot display this
information until they are reprogrammed.
US Airways requests clarification of the Code-Share Rule's
advertising requirement (Sec. 257.5(d)). With code-sharing
relationships that involve 9 ``US Airways Express'' carriers, some
2,500 daily US Airways Express departures, and 170 airports, US Airways
seeks a means of implementing this requirement that presents the
relevant information without confusing its customers. The carrier
states that it frequently lists services for multiple city-pairs in one
advertisement as a cost-effective, competitive means of informing the
public of low fares. While such an advertisement serves primarily to
promote US Airways' own jet service, in some cases, the advertised fare
in a city-pair may be available in addition on another routing operated
partly or entirely by a US Airways Express carrier, and some travelers
may prefer this latter service. Under these circumstances, US Airways
plans to use the following language in its advertisements in
reasonably-sized print (i.e., not in fine-print fare conditions):
These fares are available on US Airways. Depending upon your
travel needs, alternative routings may be available at the same
fares, with all or part of the service on regional aircraft operated
by US Airways Express Carriers Allegheny, Air Midwest, CCAIR,
Chautauqua, CommutAir, Mesa, Piedmont, PSA or Trans States Airlines.
Call your travel consultant for details.
US Airways maintains that in the context of the new rules' other
requirements, the above language will give consumers ``complete,
concise, readable, and accurate information about their air
transportation options.''
In the circumstances outlined by US Airways, the language it
proposes will satisfy the Code-Share Rule's requirements for print
advertisements. The treatment of Sec. 257.5(d) in the rule's preamble
(see 64 FR 12838 at 12848 (March 15, 1999)) might literally be
interpreted as precluding US Airways' approach and requiring instead
that the carrier at least use symbols for each individual city-pair to
identify all possible transporting carriers and combinations of
carriers. We believe, however, that in these particular circumstances,
such an advertisement would be needlessly complex and would cause
consumers undue confusion. Therefore, for an advertisement in which the
advertising carrier offers service in its own right in every city-pair
listed as well as code-share service in one or more of these city-
pairs, the carrier may comply with Sec. 257.5(d) by including the
language proposed by US Airways (with the appropriate carriers' names,
of course), or equivalent language,2 in reasonably-sized
print. For an advertisement in which the advertising carrier does not
offer service in its own right in every city-pair listed, however, the
rule requires that the transporting carrier(s) be specified for each
city-pair.
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\2\ Carriers may ask our Office of Aviation Enforcement and
Proceedings to review proposed advertisements in order to make
certain that any equivalent language complies with the advertising
requirement in both letter and spirit.
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In closing, we once again encourage the CRSs and the carriers to
complete their reprogramming as quickly as possible, and we encourage
any affected parties that can comply with the Code-Share Rule and the
Change-of-Gauge Rule in their entirety before they become effective in
their entirety to do so.
Regulatory Analyses and Notices
The Department has determined that this action is not an
economically significant regulatory action under Executive Order 12866
or the Department's Regulatory Policies and Procedures, and it has not
been reviewed by the Office of Management and Budget. This rule is
significant under the Department's Regulatory Policies and Procedures
because of congressional and public interest. The
[[Page 46821]]
rule does not impose unfunded mandates or requirements that will have
any effect on the quality of the human environment. A summary of the
regulatory analyses of the rules whose effective date is being extended
here was published at 64 FR 12850-12851 and 12859, March 15, 1999. Also
published there were discussions of the rules' effects on small
businesses and their Federalism and Paperwork Reduction Act
implications. Apart from the Y2K implications recently brought to light
and addressed above and in the July 9 proposal, the determinations made
previously are not significantly affected by the limited extensions of
the effective date made here.
List of Subjects in 14 CFR Parts 257 and 258
Air carriers, Foreign air carriers, Ticket agents, and Consumer
protection.
For the reasons set forth in the preamble, the Department amends
Title 14, Chapter II, Subchapter A, Parts 257 and 258 as follows:
PART 257--DISCLOSURE OF CODE-SHARING ARRANGEMENTS AND LONG-TERM WET
LEASES
1. The authority citation for Part 257 continues to read as
follows:
Authority: 49 U.S.C. 40113(a) and 41712.
2. Section 257.6 is added to read as follows:
Sec. 257.6 Effective and compliance dates.
(a) This Part is effective as of August 25, 1999.
(b) Compliance with the following sections is mandatory as of
August 25, 1999:
(1) Sec. 257.1, Sec. 257.2, Sec. 257.3, Sec. 257.4, Sec. 257.5(d),
and Sec. 257.6.
(2) Sec. 257.5(b) to the extent that it requires sellers of air
transportation to give consumers oral notice before booking
transportation involving a code-share arrangement
(i) Of the fact that the selling carrier is not the transporting
carrier and
(ii) Of the transporting carrier's identity (as shown by its two-
letter designator code in CRS displays).
(c) Compliance with the following sections is mandatory as of March
15, 2000:
(1) Sec. 257.5(a) and Sec. 257.5(c) in their entirety.
(2) Sec. 257.5(b) insofar as it requires sellers of air
transportation to give consumers
(i) Oral notice before booking transportation involving a code-
share arrangement of the transporting carrier's corporate name and any
other name under which the service is held out to the public and
(ii) The same disclosures for long-term wet leases as for code-
sharing arrangements.
PART 258--DISCLOSURE OF CHANGE-OF-GAUGE SERVICES
3. The authority citation for Part 258 continues to read:
Authority: 49 U.S.C. 40113(a) and 41712.
4. Section 258.6 is added to read as follows:
Sec. 258.6 Effective and compliance dates.
(a) This Part is effective as of August 25, 1999.
(b) Compliance with the following sections is mandatory as of
August 25, 1999: Sec. 258.1, Sec. 258.2, Sec. 258.3, Sec. 258.4,
Sec. 258.5(a), Sec. 258.5(b), and Sec. 258.6.
(c) Compliance with Sec. 258.5(c) is mandatory as of March 15,
2000.
Issued in Washington, DC on August 18, 1999, under authority
delegated by 49 CFR 1.56a(h)2.
A. Bradley Mims,
Acting Assistant Secretary for Aviation and International Affairs.
[FR Doc. 99-21998 Filed 8-25-99; 8:45 am]
BILLING CODE 4910-62-P
