[Federal Register Volume 59, Number 189 (Friday, September 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24168]
[[Page Unknown]]
[Federal Register: September 30, 1994]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Part 254
[Docket No. 49330; Notice 94-14]
RIN 2105-AC07
Domestic Baggage Liability
AGENCY: Office of the Secretary, Department of Transportation.
ACTION: Notice of Proposed Rulemaking (NPRM).
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SUMMARY: The Department is proposing to amend its rule governing the
amount by which certain U.S. air carriers may limit their liability to
passengers for lost, damaged, and delayed baggage. This action is in
response to a petition by Public Citizen and Aviation Consumer Action
Project to increase the minimum liability limit from $1,250 to $1,850
per passenger. The Department is also requesting comment on two
alternate proposals: (1) to raise the minimum limit to $1,850 with a
mechanism that automatically provides for periodic future increases, or
(2) to raise the minimum liability limit to $2,000.
DATES: Comments are requested by November 29, 1994. Late-filed comments
will be considered only to the extent practicable.
ADDRESSES: Comments should be sent, preferably in triplicate, to Docket
Clerk, Docket No. 49330, Department of Transportation, 400 7th Street,
SW, Room 4107, Washington, DC 20590. Comments will be available for
inspection at this address from 9 a.m. to 5:30 p.m., Monday through
Friday. Commenters who wish the receipt of their comments to be
acknowledged should include a stamped, self-addressed postcard with
their comments. The Docket Clerk will date-stamp the postcard and mail
it back to the commenter.
FOR FURTHER INFORMATION CONTACT: Diane Mobley or Joanne Petrie, Office
of Regulation and Enforcement, Office of the General Counsel, U.S.
Department of Transportation, 400 7th Street SW, Room 10424,
Washington, DC 20590. (202) 366-9306.
SUPPLEMENTARY INFORMATION:
Background
Consumer baggage problems in air travel remain a common occurrence.
Reports submitted to the Department by the major airlines indicate that
over 2.2 million mishandled baggage reports were filed by passengers in
1993, although it is unknown how many of those reports resulted in
claims for compensation. When baggage is lost, damaged, or delayed, the
airlines are prohibited by federal regulation (14 CFR Part 254) from
limiting their liability to less than $1,250 per passenger for provable
damages.\1\
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\1\The rule applies to flights on large aircraft (aircraft
designed to carry more than 60 passengers), and to any flight
segment included on the same ticket as a flight segment using large
aircraft.
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The amount of the minimum liability limit was last amended by a
final rule effective April 10, 1984, issued by the Civil Aeronautics
Board (CAB) before its ``sunset'' (ER-1374, 49 FR 5065, February 10,
1984). The $1,250 figure was calculated based upon the percentage
increase in the Consumer Price Index for all Urban Consumers (CPIU)
between the date of the previous amendment and September 1983. When
setting the limit, the CAB attempted to balance the amount necessary to
cover the value of most passengers' baggage while still allowing the
airlines to protect themselves from extraordinary claims.
On December 22, 1993, the Department received a petition for
rulemaking from Public Citizen and Aviation Consumer Action Project to
increase the minimum liability limit in order to account for inflation
since the 1984 amendment. The petitioners suggest that the limit should
be raised to $1,850, calculated by increasing the current $1,250 limit
proportionate with the increase in the CPIU from 1983 until the
approximate time a new final rule would take effect (estimated to be
one year from the date of the petition). A letter in support of the
petition was filed by Mr. Michael Kees, a consumer who recently
suffered a loss in excess of the liability limit, who asserts that a
more realistic limit today would be $2,500.
The Bureau of Labor Statistics reports that in September 1983, the
CPIU was 100.7 (using a 1982-84 = 100 reference base). As of April
1994, the CPIU had increased by 46.4 percent to 147.4. Stated
differently, the purchasing power of a $1,250 maximum baggage claim
award in 1983 had eroded to $854 in April 1994 dollars. To keep up with
the 46.4 percent increase in the CPIU as of April 1994, the minimum
liability limit would have to increase to $1,830. The Department
believes that in addition to the direct monetary effect on consumers,
an unrealistically low minimum liability limit invites the airlines
simply to pay the claims rather than to address the causes of lost,
damaged, and delayed baggage. The Department therefore proposes to
raise the minimum liability limit to $1,850 as suggested in the
petition, and seeks comment on this proposal. Carriers are requested to
submit the following data on domestic baggage claims for calender year
1993 as well: (1) the total number of domestic\2\ baggage claims for
reimbursement and the total amount claimed (i.e., the amount that the
claimants requested); (2) the total amount paid by the carrier in
settling those claims; and (3) the number and total dollar amount of
such claims that exceeded $1,250, and the number and total dollar
amount that exceeded $1,850. This information will help the Department
to assess the economic burden of the proposal on the affected airlines.
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\2\A ``domestic'' claim for this purpose is one that is subject
to Part 254. For example, a claim concerning a problem that occurred
on a domestic segment of an international trip would not be included
since such transportation is governed by the Warsaw Convention
rather than by Part 254.
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In addition to the proposal to increase the minimum baggage
liability limit to $1,850, the Department requests comment on two
alternate proposals: (1) to raise the minimum limit to $1,850 with a
mechanism that automatically provides for periodic future increases, or
(2) to raise the minimum liability limit to $2,000.
The first alternate proposal is an automatic adjustment of the
minimum liability limit every other year, calculated in proportion to
any change in the CPIU. When the minimum liability limit was last
amended in 1984, the CAB considered and rejected a rule that would
automatically adjust the liability limit based on some specified
economic measure. The CAB believed that such an approach might be
unduly confusing for consumers and that it would be administratively
burdensome on carriers to constantly revise tickets and internal
guidance. The Department requests comment on whether, with the
increasing sophistication of and reliance on computers, periodic
adjustment of the minimum liability limit would pose less of a burden
on the industry today. A more frequent adjustment would make the limit
more responsive to changes in the economy. Comment is also requested on
whether there would be a need to provide for additional public comment
before each adjustment rather than simply announcing each new rate by
publication in the Federal Register, and whether there is some other
method that would be preferable to changes in the CPIU for calculating
appropriate future changes in the minimum liability limit. As indicated
above, the CPIU was the basis used by the CAB to calculate the 1984
increase to $1,250. Prior to 1984, the CPIU was considered, along with
actual baggage claim data, to set the minimum liability limit. That
data has not been collected since the deregulation of the airline
industry.
The Department also requests comment on its second alternate
proposal, to increase the minimum baggage liability limit to $2,000.
Under the current system, which includes notice requirements,
passengers are expected to be aware of the minimum limit and not pack
any items of greater value in their luggage unless they desire to
purchase excess valuation or are personally willing to incur the risk.
This is not to say that carriers would automatically pay $2,000 to
passengers claiming lost, damaged, or delayed baggage. We wish to make
clear that, as is the case today, our proposal would set the amount
below which carriers could not limit their potential liability for
provable damages. Thus, carriers could still decline to pay unjustified
claims or pay only for damages actually shown. A $2,000 limitation
would have the advantages of covering most items passengers are likely
to pack in baggage, and being easy for passengers to remember because
it is a round number. A collateral benefit of a $2,000 minimum limit
would be that, in the event of future inflation, the limit would not
become obsolete soon after issuance. It would also allow longer-term
planning than an $1,850 limit, which might reduce administrative costs
to the airlines for training, ticket stock, and computer programming.
The Department recognizes that carriers will require some period of
time to use up existing ticket stock, print new tickets, and implement
other necessary changes under any of the alternatives. The Department
seeks comment on whether 60 days from issuance of a final rule is a
sufficient time for implementation. In the case that excess ticket
stock poses a particular problem for the airlines, the Department
requests comment on whether the use of a sticker or an addendum stuffed
in the ticket envelope would provide adequate notice of the new limit.
The Department also seeks comment on whether a bifurcated
implementation would be feasible (e.g., new minimum dollar limit
effective in 30 days; implementation of revised notice requirement
effective in 60 days, or upon exhaustion of existing ticket stock). In
the case that the automatically adjusting limit is selected, the
Department requests comment on whether a 30-day implementation period
would be sufficient for future adjustments under that proposal. In any
event, in view of the publication of the instant proposal, the
Department encourages carriers to exercise prudence in placing large
orders for ticket stock or ticket jackets.
The notice requirement has been clarified to better explain that
written notice of the liability limit must be provided whenever air
transportation is sold, whether or not the airline actually issues a
ticket to the passenger. This is in response to the recent switch to a
ticketless system by a few carriers. Written notice must still be
provided to the passenger in conjunction with the sale of the travel,
even though there is no traditional ``ticket'' that the notice can be
printed on.
Regulatory Analyses and Notices
The Department has determined that this action is not a significant
regulatory action under Executive Order 12866 or under the Department's
Regulatory Policies and Procedures. A regulatory evaluation that
examines the projected costs and impacts of the proposal has been
placed in the docket. The Department certifies that this rule, if
adopted, would not have a significant economic impact on a substantial
number of small entities. Few airlines are classified as small
entities. However, since the rule could apply to small carriers to the
extent that they interline with large carriers, the Department seeks
comment on whether there are unidentified small entity impacts that
should be considered. If comments provide information that there are
significant small entity impacts, the Department will prepare a
regulatory flexibility analysis at the final rule stage. The Department
does not believe that there would be sufficient federalism implications
to warrant the preparation of a federalism assessment.
List of Subjects in 14 CFR Part 254
Air carriers, Consumer protection, Freight, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, the Department proposes
to amend 14 CFR Part 254 as follows:
PART 254--[AMENDED]
1. The authority citation for Part 254 continues to read as
follows:
Authority: Secs. 204, 403, 404, and 411, Pub. L. 85-726, as
amended, 72 Stat. 743, 758, 760, 769; 49 U.S.C. 1324, 1373, 1374,
1381.
2. Section 254.4 would be revised to read as follows:
Sec. 254.4 Carrier liability.
On any flight segment using large aircraft, or on any flight
segment that is included on the same ticket as another flight segment
that uses large aircraft, an air carrier shall not limit its liability
for provable direct or consequential damages resulting from the
disappearance of, damage to, or delay in delivery of a passenger's
personal property, including baggage, in its custody to an amount less
than $1850 for each passenger.
3. Section 254.5 would be revised to read as follows:
Sec. 254.5 Notice requirement.
On any flight segment using large aircraft, or on any flight
segment that is included on the same ticket as another flight segment
that uses large aircraft, an air carrier shall provide to passengers,
by conspicuous written material included on or with its ticket or other
written notice that is issued in conjunction with the sale of the
transportation, either:
(a) Notice of any monetary limitation on its baggage liability to
passengers; or
(b) The following notice: ``Federal rules require any limit on an
airline's baggage liability to be at least $1850 per passenger.''
Alternative Proposal 1
4. Section 254.4 would be revised to read as follows:
Sec. 254.4 Carrier liability.
On any flight segment using large aircraft, or on any flight
segment that is included on the same ticket as another flight segment
that uses large aircraft, an air carrier shall not limit its liability
for provable direct or consequential damages resulting from the
disappearance of, damage to, or delay in delivery of a passenger's
personal property, including baggage, in its custody to an amount less
than the current Federal Minimum Liability Limit per passenger that is
in effect on the date of the flight. The Federal Minimum Liability
Limit will be re-calculated every other year, based on the percentage
change in the Consumer Price Index for All Urban Consumers since the
previous adjustment, and published in an announcement in the Federal
Register.
5. Section 254.5 would be revised to read as follows:
Sec. 254.5 Notice requirement.
On any flight segment using large aircraft, or on any flight
segment that is included on the same ticket as another flight segment
that uses large aircraft, an air carrier shall provide to passengers,
by conspicuous written material included on or with its ticket or other
written notice that is issued in conjunction with the sale of the
transportation, either:
(a) Notice of any monetary limitation on its baggage liability to
passengers; or
(b) The following notice: ``Federal rules currently require any
limit on an airline's baggage liability to be at least [insert the
current Federal Minimum Liability Limit in effect on the date the
notice is provided] per passenger.'' This limit is periodically revised
by the Department of Transportation based on changes in the Consumer
Price Index for All Urban Consumers. Therefore, a different limit may
be in effect on the date of your flight.
Alternative Proposal 2
6. Section 254.4 would be revised to read as follows:
Sec. 254.4 Carrier liability.
On any flight segment using large aircraft, or on any flight
segment that is included on the same ticket as another flight segment
that uses large aircraft, an air carrier shall not limit its liability
for provable direct or consequential damages resulting from the
disappearance of, damage to, or delay in delivery of a passenger's
personal property, including baggage, in its custody to an amount less
than $2000 for each passenger.
7. Section 254.5 would be revised to read as follows:
Sec. 254.5 Notice requirement.
On any flight segment using large aircraft, or on any flight
segment that is included on the same ticket as another flight segment
that uses large aircraft, an air carrier shall provide to passengers,
by conspicuous written material included on or with its ticket or other
written notice that is issued in conjunction with the sale of the
transportation, either:
(a) Notice of any monetary limitation on its baggage liability to
passengers; or
(b) The following notice: ``Federal rules require any limit on an
airline's baggage liability to be at least $2000 per passenger.''
Issued in Washington, DC on September 26, 1994.
Patrick Murphy,
Acting Assistant Secretary for Aviation and International Affairs.
[FR Doc. 94-24168 Filed 9-29-94; 8:45 am]
BILLING CODE 4910-62-P
