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21 November 2007
[Federal Register: November 20, 2007 (Volume 72, Number 223)]
[Proposed Rules]
[Page 65237-65246]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20no07-13]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Part 250
[Docket No. DOT-OST-01-9325]
RIN No. 2105-AD63
Oversales and Denied Boarding Compensation
AGENCY: Office of the Secretary (OST), Department of Transportation
(DOT).
ACTION: Notice of Proposed Rulemaking (NPRM).
-----------------------------------------------------------------------
SUMMARY: The Department of Transportation (DOT or Department) is
proposing to amend its rules relating to oversales and denied boarding
compensation to increase the limits on the compensation paid to
``bumped'' passengers, to cover flights by certain U.S. and foreign air
carriers operated with aircraft seating 30 to 60 passengers, which are
currently exempt from the rule, and to make other changes. Such changes
in the rule, if adopted, would be intended to maintain consumer
protection commensurate with developments in the aviation industry.
DATES: Comments are requested by January 22, 2008. Late-filed comments
will be considered to the extent practicable.
ADDRESSES: You may file comments identified by the docket number DOT-
OST-01-9325 by any of the following methods:
Federal eRulemaking Portal: go to http://www.regulations.gov
and follow the online instructions for submitting
comments.
Mail: Docket Management Facility, U.S. Department of
Transportation, 1200 New Jersey Ave., SE., West Building Ground Floor,
Room W12-140, Washington, DC 20590-0001.
Hand Delivery or Courier: West Building Ground Floor, Room
W12-140, 1200 New Jersey Ave., SE., between 9 a.m. and 5 p.m. ET,
Monday through Friday, except Federal Holidays.
Fax: (202) 493-2251.
Instructions: You must include the agency name and docket number
DOT-OST-01-9325 or the Regulatory Identification Number (RIN) for the
rulemaking at the beginning of your comment. All comments received will
be posted without change to http://www.regulations.gov, including any
personal information provided.
Privacy Act: Anyone is able to search the electronic form of all
comments received in any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). You may review DOT's
complete Privacy Act statement in the Federal Register published on
April 11, 2000 (65 FR 19477-78), or you may visit http://DocketsInfo.dot.gov
.
Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov or to the street
address listed above. Follow the online instructions for accessing the
docket.
FOR FURTHER INFORMATION CONTACT: Tim Kelly, Aviation Consumer
Protection Division, Office of the General Counsel, Department of
Transportation, 1200 New Jersey Ave., SE., Washington, DC 20590, 202-
366-5952 (voice), 202-366-5944 (fax), tim.kelly@dot.gov (e-mail).
SUPPLEMENTARY INFORMATION:
Background
Part 250 establishes minimum standards for the treatment of airline
passengers holding confirmed reservations on certain U.S. and foreign
carriers who are involuntarily denied boarding (``bumped'') from their
flights because they have been oversold. In most cases, bumped
passengers are entitled to compensation. Part 250 contains limits on
the amount of compensation that is required to be provided to
passengers who are bumped involuntarily. The rule does not apply to
flights operated with aircraft with a design capacity of 60 or fewer
passenger seats.
In adopting the original rule in the 1960's, the Civil Aeronautics
Board (the Department's predecessor in aviation economic regulation)
recognized the inherent unfairness in carriers selling more
``confirmed'' ticketed reservations for a flight than they have seats.
Therefore, the CAB sought to reduce the number of passengers
involuntarily denied boarding to the smallest practicable number
without prohibiting deliberate overbooking or interfering unnecessarily
with the carriers' reservations practices. Air travelers
[[Page 65238]]
receive some benefit from controlled overbooking because it allows
flexibility in making and canceling reservations as well as buying and
refunding tickets. Overbooking makes possible a system of confirmed
reservations that can almost always be honored. It allows airlines to
fill more seats, reducing the pressure for higher fares, and makes it
easier for people to obtain reservations on the flights of their
choice. On the other hand, overbooking is the major cause of oversales,
and the people who are inconvenienced are not those who do not show up
for their flights, but passengers who have conformed to all carrier
rules. The current rule allocates the risk of denied boarding among
travelers by requiring airlines to solicit volunteers and use a
boarding priority procedure that is not unjustly discriminatory.
In 1981, the CAB amended the oversales rule to exclude from the
rule all operations using aircraft with 60 or fewer passenger seats.
(ER-1237, 46 FR 42442, August 21, 1981.) At the time of that
proceeding, the impact of the rule on carriers operating small aircraft
was found to be significant. If a passenger was denied boarding on a
typical small aircraft short-haul flight and subsequently missed a
connection to a long-haul flight, the short-haul carrier usually had to
compensate the passenger in an amount equal to twice the value of the
passenger's remaining ticket coupons to his or her destination, subject
to a maximum limitation. For example, if the short-haul fare was $50
and the connecting long-haul fare was $500, the first carrier often had
to pay the passenger denied boarding compensation in an amount far
greater than $50, depending on whether alternate transportation could
be arranged to arrive within a short time, despite the minimal fare
that the first carrier received for its flight. The problem was
exacerbated by the fact that most commuter airline flights at the time
were on small turboprop and piston engine aircraft which were affected
by weight limitations in high temperature/humidity conditions to a
greater extent than jets and, therefore, might require bumping even
when the carrier did not book beyond the seating capacity of the
aircraft.
Part 250 has tended to reduce passenger inconvenience and financial
loss occasioned by overbooking without imposing heavy burdens on the
airlines or significant costs on the traveling public. In focusing only
on the treatment of passengers whose boarding is involuntarily denied,
we have avoided regulating carriers' reservations practices. Overall,
it appears that the rule has served a useful purpose; however, in light
of recommendations from various sources, including Congress and major
airlines themselves, we are proposing to revise certain aspects of the
rule that may be outdated. In view of the passage of time since the
rule was last revised and changes in commercial air travel over that
time, we are seeking comment on whether we should increase the
compensation maximums and extend the rule to cover a broader range of
aircraft, or whether we should adopt other more fundamental changes to
the rule. The Department is also seeking comment on certain other
changes of lesser impact that are under consideration.
The Current Denied Boarding Compensation Rule
The purpose of the Department's denied boarding compensation rule
is to balance the rights of passengers holding reservations with the
desirability of allowing air carriers to minimize the adverse economic
effects of ``no-shows'' (passengers with reservations who cancel or
change their flights at the last minute). The rule sets up a two-part
system. The first encourages passengers to voluntarily relinquish their
confirmed reservations in exchange for compensation agreed to between
the passenger and the airline. The second requires that, where there is
an insufficient number of volunteers, passengers who are bumped
involuntarily be given compensation in an amount specified in the rule.
In addition, the Department requires carriers to give passengers notice
of those procedures through signs and written notices provided with
tickets and at airports, and to report the number of passengers denied
boarding to the Department on a quarterly basis.
The Civil Aeronautics Board (CAB) first required payments to bumped
passengers 45 years ago. In Order No. E-17914, dated January 8, 1962,
the CAB conditioned its approval of ``no-show penalties'' for confirmed
passengers on a requirement that bumped passengers be compensated. An
oversales rule was adopted in 1967 as 14 CFR Part 250 (ER-503, 32 FR
11939, August 18, 1967) and revised substantially in 1978 and 1982
after comprehensive rulemaking proceedings (ER-1050, 43 FR 24277, June
5, 1978 and ER-1306, 47 FR 52980, November 24, 1982, respectively). The
key features of the current requirements are as follows:
(1) In the event of an oversold flight, the airline must first seek
volunteers who are willing to relinquish their seats in return for
compensation offered by the airline.
(2) If there are not enough volunteers, the airline must use non-
discriminatory procedures (``boarding priorities'') in deciding who is
to be bumped involuntarily.
(3) Most passengers who are involuntarily bumped are eligible for
denied boarding compensation, with the amount depending on the price of
each passenger's ticket and the length of his or her delay. If the
airline can arrange alternate transportation that is scheduled to
arrive at the passenger's destination within 2 hours of the planned
arrival time of the oversold flight (4 hours on international flights),
the compensation equals 100% of the passenger's one-way fare to his or
her next stopover or final destination, with a $200 maximum. If the
airline cannot meet the 2 (or 4) hour deadline, the compensation rate
doubles to 200% of the passenger's one-way fare, with a $400 maximum.
This compensation is in addition to the value of the passenger's
ticket, which the passenger can use for alternate transportation or
have refunded if not used.
(4) There are several exceptions to the compensation requirement.
Compensation is not required if the passenger does not comply fully
with the carrier's contract of carriage or tariff provisions regarding
ticketing, reconfirmation, check-in, and acceptability for
transportation; if an aircraft of lesser capacity has been substituted
for operational or safety reasons; if the passenger is offered
accommodations in a section of the aircraft other than that specified
on the ticket, at no extra charge (a passenger seated in a section for
which a lower fare is charged is entitled to an appropriate refund); or
if the carrier arranges comparable transportation, at no extra cost to
the passenger, that is planned to arrive at the passenger's next
stopover or final destination not later than 1 hour after the planned
arrival time of the passenger's original flight.
(5) A passenger who is denied boarding involuntarily may refuse to
accept the denied boarding compensation specified in the rule and seek
monetary or other compensation through negotiations with the carrier or
by private legal action.
(6) Carriers must post counter signs and include notices with
tickets to alert travelers of their overbooking practices and the
consumer protections of the rule. In addition, they must provide a
detailed written notice explaining their oversales practices and
boarding priority rules to each passenger involuntarily denied
boarding, and to any other person requesting a copy.
[[Page 65239]]
(7) Every carrier must report, on a quarterly basis, data on the
number of denied boardings on flights that are subject to Part 250.
Discussion
On July 10, 2007, the Department published an Advance Notice of
Proposed Rulemaking (ANPRM) seeking comment on several issues
associated with the oversales rule. We received over 1,280 comments in
response to the ANPRM. About 20 of the comments were from
organizations, with the rest from individuals. Most of the comments
from the organizations, including those from air carriers and
organizations representing air carriers, expressed the opinion that the
rule serves a useful purpose and had benefited the industry and the
public. Many of the individual comments did not express an opinion on
the specific issues discussed in the ANPRM but rather urged that
overbooking be banned, described their own negative air travel
experiences, or commented on other issues (e.g., flight delays).
In this Notice of Proposed Rulemaking we are not proposing to ban
overbooking as many individual commenters urged. As indicated in the
section above entitled ``The Current Denied Boarding Compensation
Rule,'' air travelers receive some benefit from controlled overbooking.
Overbooking makes possible a system of confirmed reservations that can
almost always be honored. It allows airlines to fill more seats,
reducing the pressure for higher fares, and makes it easier for people
to obtain reservations on the flights of their choice. We are not aware
of levels of consumer harm that require such a sweeping solution at
this time, and banning overbooking is beyond the scope of our
objectives in this proceeding. We believe that the additional oversale
protections that we are proposing here will address the principal
issues related to this regulation that require action by the
Department.
The issues that were presented in the ANPRM and a summary of the
comments appear below.
The Maximum Amount of Denied Boarding Compensation
It has been over 20 years since the rule was last revised, and the
existing $200 and $400 limits on the amount of required denied boarding
compensation for passengers involuntarily denied boarding have not been
raised since 1978. The Department has received recommendations from
various sources that it reexamine its oversales rule and, in
particular, the maximum amounts of compensation set forth in the rule.
In this regard, in a sense-of-the-Senate amendment to the Department of
Transportation and Related Agencies Appropriations Act of 2000, Public
Law 106-69, the Senate noted its sense that the Department should amend
its denied boarding rule to double the applicable compensation amounts.
Legislation has also been introduced in Congress to require the
Department to review the rule's maximum amounts of compensation. (See
S. 319, reported in the Senate April 26, 2001.) In addition, in his
February 12, 2000, Final Report on Airline Customer Service
Commitments, the Department's Inspector General (IG) recommended, among
other things, that the airlines petition the Department to increase the
amount of denied boarding compensation payable to involuntarily bumped
passengers. In response thereto, and citing the length of time since
the maximum amounts of denied boarding compensation were last revised,
the Air Transport Association (the trade association of the larger U.S.
airlines) filed a petition with the Department on April 3, 2001,
requesting that a rulemaking be instituted to examine those amounts.\1\
(Docket DOT-OST-01-9325). Most recently, the IG on November 20, 2006,
issued his ``Report on the Follow-up Review Performed of U.S. Airlines
in Implementing Selected Provisions of the Airline Customer Service
Commitment'' in which the IG recommended that we determine whether the
maximum denied boarding compensation (DBC) amount needs to be increased
and whether the oversales rule needs to be extended to cover aircraft
with 31 through 60 seats.
---------------------------------------------------------------------------
\1\ It is important to note that the maximum involuntary denied
boarding amounts set forth in Part 250 are amounts below which
carriers cannot set their maximum compensation. Airlines have been
and continue to be free, as a competitive tool, to set their maximum
compensation levels at amounts greater than that provided in the
Department's rule. With the exception of JetBlue Airways, whose
recently changed policy is described below, we are not aware of any
carrier that has elected to do so.
---------------------------------------------------------------------------
The CAB's decision in 1978 to double the maximum amount of denied
boarding compensation to $400 was based on its determination that the
previous maximum was inadequate to redress the inconvenience to bumped
passengers and that the increase would provide a greater incentive to
carriers to reduce the number of persons involuntarily bumped from
their flights. Following promulgation of the amendment to the rule in
1978 requiring the solicitation of volunteers and doubling the
compensation maximum, the overall industry rate of involuntary denied
boardings per 10,000 enplanements in fact declined for many years.
Until 2007, the rate for the past decade has been slightly below the
level of involuntary bumping reported 10 years ago. In this regard,
55,828 passengers were involuntarily bumped from their flights in 2006
on the 19 largest U.S. airlines (carriers whose denied boarding rate is
tracked in the Department's monthly Air Travel Consumer Report \2\).
Additional passengers were bumped by other airlines, whose denied
boarding rate is not tracked in this report but whose bumped passengers
are subject to the maximum compensation rates in the DOT rule. The
annual rate of involuntary denied boardings per 10,000 enplanements in
2006 for the carriers tracked in the report is the highest since 2000,
and that trend continues in the rate for 2007 to date. Involuntary
denied boarding rates from the Air Travel Consumer Report for the past
ten years and 2007 to date appear below:
---------------------------------------------------------------------------
\2\ This report tracks the denied boarding rate of air carriers
that each account for at least 1% of domestic scheduled-service
passenger revenues for the previous year. Consequently, the list of
carriers whose performance is tracked in this report can change from
year to year.
------------------------------------------------------------------------
Invol. DB's
Year per 10,000
passengers
------------------------------------------------------------------------
1997....................................................... 1.06
1998....................................................... 0.87
1999....................................................... 0.88
2000....................................................... 1.04
2001....................................................... 0.82
2002....................................................... 0.72
2003....................................................... 0.86
2004....................................................... 0.86
2005....................................................... 0.89
2006....................................................... 1.01
2007 through 3rd quarter................................... 1.21
------------------------------------------------------------------------
(The table above has been updated from the one published in the ANPRM to
include data for 2007 to date.)
Likely contributing to this upward trend is the fact that flights
are fuller: from 1978 to 2006 the system-wide load factor (percentage
of seats filled) for U.S. airlines increased from 61.5% to 79.2%, with
most of this increase taking place since 1994. The most-recently
reported monthly load factors have hovered in the mid-80% range.
With respect to the denied boarding compensation limits, inflation
has eroded the $200 and $400 limits that were established in 1978.
Using the Consumer Price Index for All Urban Consumers (CPI-U, the
basis for the inflation adjustor in the Department's domestic baggage
liability rule, 14 CFR 254.6), the July 2007 ANPRM noted that
[[Page 65240]]
$400 in 1978 was worth $128 as of February 2007 ($125 as of October
2007). See the Bureau of Labor Statistics Inflation Calculator at
http://www.bls.gov/cpi/home.htm. Stated another way, in order to have
the same purchasing power today as in 1978, $400 would have needed to
be $1,248 in February 2007 and $1,279 as of October 2007.
At the same time, however, air fares have not risen to the same
extent as the CPI-U. While historical comparisons of air fares are
problematic, one frequently-used index for changes in air fares is
passenger yield. Yield is passenger revenue divided by revenue
passenger miles--the revenue collected by airlines for carrying one
passenger for one mile. According to the Air Transport Association,
system-wide nominal yield (i.e., not adjusted for inflation) for all
reporting U.S. air carriers was 8.29 cents per revenue passenger mile
in 1978 and 12.00 cents per revenue passenger mile in 2005 (latest
available data at the time of the ANPRM)--an increase of 44.8%. The
figure for 2006, which became available after the ANPRM was published,
is 12.69 cents, an increase of 53.1% from the 1978 figure.
Applying the CPI-U calculation to the current $200 and $400 DBC
limits that were established in 1978 would produce updated limits of
$624 and $1,248 respectively at the time of the ANPRM. However, the
ANPRM noted that applying the 44.8% increase in passenger yield through
2005 to the current $200 and $400 limits would produce updated limits
of $290 and $580 respectively ($306 and $612 if the 2006 yield figure
is used). It is important to note that the $200 and $400 figures in
Part 250 are merely limits on the amount of denied boarding
compensation; the actual compensation rate is 100% or 200% of the
passenger's fare (depending on how long he or she was delayed by the
bumping). In the ANPRM, the Department requested comment on whether the
maximums in the rule should be increased so that that a higher
percentage of denied boarding compensation payments are not ``capped''
by the limits.
Consequently, in the ANPRM we sought comment on five options with
respect to the limits on the amount of denied boarding compensation, as
well as any other suggested changes:
(1) Increase the $200/$400 limits to approximately $624 and $1,248
respectively, based on the increase in the CPI as described above;
(2) Increase the $200/$400 limits to approximately $290 and $580
respectively, based on the increase in passenger yield as described
above;
(3) Double the maximum amounts of denied boarding compensation from
$200 to $400 and from $400 to $800;
(4) Eliminate the limits on compensation altogether, while
retaining the 100% and 200% calculations;
(5) Take no action, i.e. leave the current $200/$400 limits in
place.
It is important to note that none of these proposals would
necessarily require carriers to offer more compensation to the great
majority of passengers affected by overbooking because most such
situations are handled through voluntary compensation, typically at the
departure gate. Nor would they affect the significant proportion of
involuntarily bumped passengers--possibly the majority--with fares low
enough that the formula for involuntary denied boarding compensation
would not reach the proposed new limits. Finally, even with respect to
involuntarily bumped passengers whose denied boarding compensation
might increase with higher maximums, many such passengers accept a
voucher for future travel on that airline (usually in a face amount
greater than the legally required denied boarding compensation) in lieu
of a check. Carriers make such offers because vouchers do not have the
same value as cash compensation given high rates of non-use and
inventory-management restrictions.
Comments
The vast majority of the comments in the docket are from
individuals (as opposed to organizations). On the issue of the denied
boarding compensation monetary limits, 79 of these individual
commenters favored option 1--increase these limits to
approximately $624 and $1,248 based on the increase in the CPI. 20 of
the individual commenters were in favor of option 3, doubling
the current limits to $400 and $800. Another 146 individual commenters
expressed the opinion that the current limits should be increased but
did not cite a specific amount. Two individual commenters favored an
increase in the limits based on the increase in passenger yield (air
fares), and three said that the limits should be eliminated (option
4). None of the individual comments indicated that the
Department should take no action (option 5).
In its comments, the Air Transport Association (which represents
the larger U.S. airlines) presented arguments it said justify the
practice of overbooking and keeping compensation level as they now are.
ATA noted that on most oversold flights there are enough volunteers and
consequently no involuntary denied boardings. The organization stated
that the real cost of air fares (i.e., adjusted for inflation) has
fallen since the denied boarding compensation limits were last
adjusted. According to ATA, the current caps are likely to exceed the
required compensation levels (i.e., 100% or 200% of the bumped
passenger's fare) in the large majority of cases. ATA believes that no
adjustment in the compensation caps is warranted at this time, but if
there is an adjustment, it should be based on the change in yield (air
fares) because, the association asserted, denied boarding compensation
amounts have always been tied to the passenger's fare.
The International Air Transport Association, which represents
international airlines worldwide, supported ATA's position that there
should be no change in the limits. The Regional Airline Association
shared this view as well. Like ATA, RAA went on to say that if the
Department does adjust the limits it should do so based on the air
fare/yield index rather than the CPI because denied boarding
compensation has always been tied to airline ticket prices. The
Association of Asia Pacific Airlines supported an increase in the caps
based on the fare/yield index, for the same reasons cited by ATA and
RAA.
The National Air Carrier Association commented that no change in
the compensation limits is necessary. If the Department were to make a
change, this organization said that it would reluctantly support an
increase based on fares/yields (option 2) or eliminating the
caps altogether (option 4). NACA noted that adopting option
4 would remove the need for periodic adjustments in the caps,
which was another issue on which the ANPRM had sought comment.
The American Society of Travel Agents states that adjusting the
compensation limits based on the CPI is workable but acknowledges a
disconnect between air fares and the CPI. Consequently, ASTA favors
doubling the current limits, to strike a balance between the CPI and
yield options and because of the simplicity of this approach.
The Airports Council International--North America also favors
doubling the caps, to $400 and $800. ACI-NA was concerned that the CPI
option would set a limit that is inappropriately high while a limit
based on air fares would capture only passengers with an ``average''
fare.
Qantas Airways and Qatar Airways supports an increase on the caps
that is
[[Page 65241]]
based on fares/yields. Air Pacific, JetBlue Airways, and Air Tahiti Nui
oppose any increase, with the latter carrier emphasizing the industry's
costs and slim profits. JetBlue, which notes that it does not
intentionally oversell flights, points out that when it must
unexpectedly deny boarding involuntarily, it pays the passenger
$1,000--considerably more than the current regulatory formulas and
limits and more than most of the proposed limits. JetBlue urges the
Department to allow carrier competition to govern denied boarding
compensation limits in this manner.
The International Airline Passengers Association advocates option
3, doubling the current limits. Like other commenters, it
submits that air fares are not generally tied to inflation.
The Air Crash Victims Families Group advocated increasing the
compensation limits ``to the standard/value existing at the time the
Regulation is put into force'' without specifying a methodology for the
update. This group also urged the Department to ban overbooking with
respect to prepaid tickets, harmonize its rule with the oversales rule
of the European Community, mandate uniform boarding priorities for all
carriers, and eliminate the exception to compensation for passengers
bumped as a result of substitution of aircraft of lesser capacity.
The Coalition for an Airline Passengers Bill of Rights suggests
that the Department mandate denied boarding compensation in a flat
amount of $1,000 regardless of the passenger's fare or the length of
his/her delay--essentially the JetBlue policy.
As indicated earlier, in 2006 over 55,000 passengers were denied
boarding involuntarily by the 19 carriers that were tracked at that
time in the Department's Air Travel Consumer Report (i.e., the 17
largest U.S. air carriers and two voluntarily reporting carriers). We
assume that an increase in the regulatory maximums would result in an
increase in amounts paid to such passengers but we requested comment on
the likely financial impact, including both the direct impact
(increased cash compensation), and the indirect impact resulting from
either lower overbooking rates or higher voluntary compensation levels.
Although we received useful general comments, commenters provided very
little data supporting the conclusion that any of the increases in
denied boarding compensation on which we requested comment would have a
significant financial impact on any segment of the industry.
Response to Comments
The Department has decided to propose to amend its oversales rule
to double the limits on involuntary denied boarding compensation from
$200 to $400 for passengers who are rerouted within two hours (four
hours internationally) and from $400 to $800 for passengers who are not
rerouted within these timeframes. As many commenters pointed out, there
is a significant air-fare component to the denied boarding compensation
formula (100%/200% of the bumped passenger's fare), and air fares have
risen less than the CPI. As indicated above, system-wide nominal yield
(not adjusted for inflation) for all reporting U.S. air carriers, which
is a frequently used index for changes in air fares, was 8.29 cents per
revenue passenger mile in 1978 and 12.69 cents per revenue passenger
mile in 2006, an increase of 53.1%. Nonetheless, we will not propose
the ``fares/yield'' option from the ANPRM as the sole method for
updating the compensation caps.
Denied boarding compensation is intended in part to compensate for
the passenger's inconvenience, lost time, and lost opportunities. The
value of these considerations is linked to general inflation as well as
to the cost of air fares. Therefore, the arguments of the carrier
organizations about the decline in real (i.e., inflation-adjusted) air
fares during that period are somewhat off the mark, because consumers
live with some of the consequences of denied boarding in today's
dollars, not 1978 dollars. As we indicated in the ANPRM, 30 years of
inflation have also taken their toll on the value of the existing
limits. As noted above, $400 in 1978 is worth $128 today, based on the
change in the CPI-U. Therefore, we propose to base part of an increase
in the compensation caps on the CPI-U.
By proposing to double the existing limits we would blend these two
approaches. The proposed limits fall between the higher figures that
would be produced by the CPI option and the lower numbers that would
result from the ``fares/yield'' option. We seek comment on this
proposal, including any comments and justifications that were not
already provided in response to the ANPRM about alternative amounts or
methodologies.
Periodic Adjustment of the Limits
In the ANPRM we also requested comment on whether we should amend
the rule to include a provision for periodic adjustments to the denied
boarding compensation maximums, as is required by our baggage liability
rule (14 CFR part 254). As in the case of the baggage rule, we stated
that the Department could review the CPI-U every two years, and adjust
the maximum amounts accordingly. The new maximum DBC amounts could be
rounded to the nearest $50, for simplicity. We suggested that any
increase could be announced by publishing a notice in the Federal
Register rather than first publishing a proposed rule to effectuate an
increase. We requested comment on this approach.
Comments
All 34 of the individuals who commented on this issue believed that
the compensation limits should be adjusted on a regular basis.
Many of the comments from organizations noted that denied boarding
compensation is based on the bumped passenger's air fare and that air
fares have risen more slowly than the CPI-U. RAA in particular stated
that CPI can and often does move in the reverse direction of airline
``yields'' (average fares). ATA opposed any periodic adjustment in the
compensation caps. ASTA supports periodic adjustment based on the CPI
as described in the ANPRM. The Association of Asia Pacific Airlines
opposes adding an adjustment mechanism to the rule and recommends
amending the caps only when necessary. The Air Crash Victims Families
Group and the Coalition for an Airline Passengers Bill of Rights
support regular CPI-based adjustment of the caps. The International
Airline Passengers Association states that the caps ``should be tied to
a periodic review process to enable adjustments if necessary.''
Response to Comments
If the rule is adopted as proposed, we plan to institute a
procedure of reviewing the compensation caps every two years. As part
of this review, the Department would determine if the compensation caps
should be adjusted based on both the CPI and the change in fare yields
as we did in proposing the doubling of the caps to $400 and $800 in
this NPRM (see above). We are, however, not proposing the approach
described in the ANPRM of the periodic adjustment in the compensation
caps being automatic (no additional comment period provided). Instead,
we plan to institute a de novo rulemaking each time we seek to adjust
the DBC maximum amount to allow the public an opportunity to provide
input to the Department as to whether there are any reasons (not
anticipated at the time of this rulemaking) not to increase the DBC
[[Page 65242]]
maximum amounts based on DOT's analysis. We seek comment on the
advantages or disadvantages of the Department continually adjusting the
denied boarding compensation maximum amounts through notice and comment
rulemaking. Also, commenters who think that the proposed two-year
period for considering adjustments to the compensation caps is not
appropriate, or believe the frequency should be more or less than two
years, should explain why and suggest alternate approaches.
The Small-Aircraft Exclusion
The oversales rule originally issued by the CAB did not contain an
exclusion for small aircraft. In 1981 that agency amended Part 250 to
exclude operations with aircraft seating 60 or fewer passengers. The
CAB determined that without this exclusion the denied boarding rule
imposed a proportionately greater financial and operational burden on
these small-aircraft operators than on carriers operating larger
aircraft. In addition, because of the lower revenues generated by these
small aircraft, the financial burden of denied boarding compensation
placed certificated carriers operating aircraft with 60 or fewer seats
at a competitive disadvantage relative to commuter carriers (non-
certificated) operating similar equipment and on similar routes which
were not subject to Part 250. The number of flights that was excluded
by the amendment was small and most such flights were operated by small
carriers that operated small aircraft exclusively. Thus, Part 250
currently applies to certificated U.S. carriers and foreign carriers
holding a permit, or exemption authority, issued by the Department,
only with respect to operations performed with aircraft seating more
than 60 passengers.
While largely exempt from the denied boarding rule, the regional
airline industry has experienced tremendous growth. According to the
Regional Airline Association \3\, passenger enplanements on regional
carriers have increased more than 100% since 1995, and regional
airlines now carry one out of every five domestic air travelers in the
United States. RAA states that revenue passenger miles on regional
carriers have increased 40-fold since 1978 and increased 17 percent
from 2004 to 2005 alone. Regional jets have fueled much of the recent
growth. According to RAA, from 1989 to 2004 the number of turbofan
aircraft (regional jets) in the regional-airline fleet increased from
54 to 1,628 and regional jets now make up 59% of the regional-carrier
fleet. Although many regional jets have more than 60 passenger seats
and thus are subject to Part 250, the ubiquitous 50-seat and smaller
regional jet models have driven much of the growth of the regional-
carrier sector. Moreover, most regional jets are operated by regional
carriers affiliated with a major carrier via a code-share agreement
and/or an equity stake in the regional carrier. RAA asserts that 99% of
regional airline passengers traveled on code-sharing regional airlines
in 2005.
---------------------------------------------------------------------------
\3\ See http://www.raa.org.
---------------------------------------------------------------------------
DOT statistics demonstrate the growth in traffic on flights
operated by aircraft with 31 through 60 seats. The ANPRM provided
statistics through the fourth quarter of 2005, but information for 2006
has subsequently become available. From the fourth quarter of 2002
(earliest available consistent data) to 4Q 2006 the number of flights
using aircraft with 31 through 60 seats increased by 13.5% while the
number of flights using aircraft with more than 60 seats rose only
3.4%. The number of passengers carried on flights using aircraft with
31 through 60 seats increased by 34.9% from 4Q 2002 through 4Q 2006,
while the number of passengers carried on flights using aircraft with
more than 60 seats rose by only 12.1% during that period.\4\
---------------------------------------------------------------------------
\4\ DOT Form 41, schedule T-100.
---------------------------------------------------------------------------
The increased use of jet aircraft in the 30-to-60 seat sector
accompanied by the increase in the ``branding'' of those operations
with the codes and livery of major carriers has blurred the distinction
between small-aircraft and large-aircraft service in the minds of many
passengers. There would seem to be little, if any, difference to a
consumer bumped from a small aircraft or a large aircraft--the effect
is the same. The Department therefore sought comment on whether we
should extend the consumer protections of Part 250 to these flights
(including flights of non-certificated commuter air carriers) and thus
scale back the small-aircraft exception that was added to the rule in
1981. Specifically, the Department requested comment on whether it
should reduce the seating-capacity exception for small aircraft from
``60 seats or less'' to ``less than 30 seats'' and add commuter
carriers to the list of carriers to which Part 250 applies. Since the
Department is aware that many regional carriers already voluntarily
provide DBC to passengers bumped from their 30-to-60-seat aircraft,
commenters were specifically asked to include in their comments data
regarding oversales and denied boarding compensation in operations with
aircraft having 30 through 60 seats by both certificated and non-
certificated carriers, to the extent it is available.
Comments
All 155 individuals who commented on this issue advocated extending
the rule to aircraft with 30 through 60 seats. A couple of these
commenters said it should only be extended to aircraft that operate
flights in the name of a major carrier. More than half of the 155
individual commenters on this issue said that the rule should also
apply to aircraft with fewer than 30 seats.
Among the organizations that commented, ATA urges the Department
not to change the current exception for aircraft with 60 or fewer
seats. It asserts that these aircraft not only are more susceptible
than larger airplanes to unpredictable operational constraints, but
that these aircraft often operate at smaller airports where shorter
runways can limit capacity on hot days. RAA echoed the latter comment
and also quoted from the preamble to the Civil Aeronautics Board's 1981
oversales exemption for aircraft with 60 or fewer seats that
acknowledged that these aircraft were ``assuming an increasingly
significant role in the national air transportation system'' but
concluded that the denied boarding compensation levels in the
regulation would be a disproportionate penalty relative to the typical
short-haul fare. RAA also noted the costs of complying with the same
FAA rules as operators of larger aircraft and the disproportionate cost
impact of suggested per-aircraft user fees.
The Air Carrier Association of America (which represents certain
low-fare airlines), the American Society of Travel Agents, the
Association of Asia Pacific Airlines and JetBlue Airways are in favor
of extending the oversales rule to operations using aircraft with 30
through 60 seats for the reasons described in the ANPRM. JetBlue notes
that even large aircraft are susceptible to load limits based on heat
and altitude, and it asserts that 57% of the flights operated in August
2007 for American, Continental, Delta, Northwest, United and U.S.
Airways were on regional jets. [Some of those regional jets no doubt
have more than 60 seats and thus are already subject to the oversales
rule, but many are not.] ACAA provided data showing that regional jets
account for half or nearly half of all departures at most hub airports.
It notes that regional jets with more than 60 seats are subject to the
rule while those with 60 or fewer seats are not.
Peninsula Airways urges the Department not to extend the rule to
[[Page 65243]]
commuter operations solely within the state of Alaska, or in the
alternative to expand the rule only to regional jets, e.g., by
extending the regulation to aircraft with 35 or more seats rather than
30 or more, thereby continuing to exempt the vast majority of propeller
aircraft. Hawaii Island Air recommended that the rule only be extended
to 30-through-60 seat aircraft operated by a carrier that also operates
large aircraft.
Response to Comments
For the reasons described in the ANPRM, we are proposing to extend
the applicability of the oversales rule to flights using aircraft with
30 or more seats. Since the time that the CAB exempted this sector of
the industry from the rule in 1981, the vast majority of operations at
this level have become affiliated and integrated with the ``brand'' of
a major carrier. A higher percentage of these flights than was the case
in 1981 are operated with larger aircraft in this under-60 seat
exempted range (to a large extent regional jets), and are affected by
weather constraints less frequently than aircraft with less than 30
seats. In recent times, aircraft with 30 through 60 seats have been
substituted for larger airplanes on numerous routes. The vast majority
of the traffic that would be covered by this initiative is carried by
airlines that are owned by or affiliated with a major carrier or its
parent company. Moreover, a significant amount, if not most, of the
service on such flights is provided under a ``fee-for-service''
arrangement, where a major carrier dictates the market, the schedule,
and the price of the flight, and the tickets may not even be sold under
the regional carrier's code so that the passenger's contract of
carriage covering the transportation is solely with the major carrier.
In such circumstances, the flights are for all legal and practicable
purposes flights of the major carrier, not the regional airline, in
which case the major carrier is responsible for providing denied
boarding compensation on the flights of the smaller carrier. While we
are sensitive to the operational challenges faced by operators of
aircraft with 30 through 60 seats, we now believe that consumers who
purchase transportation in this aircraft class are entitled to the
protections of the oversales rule. Because this is a proposal, however,
we invite additional comment on the issue of the seating capacity of
the aircraft to which the rule should apply.
Boarding Priorities and Notice to Volunteers
Boarding priority rules determine the order in which various
categories of passengers will be involuntarily bumped when a flight is
oversold. Part 250 states that boarding priority rules must not provide
any undue or unreasonable preference. The IG in his 2000 report
identified possible ambiguities in the Department's requirements
regarding boarding priority rules, and he recommended that we provide
examples of what we consider to be an undue or unreasonable preference.
The IG was also concerned that the amounts of compensation provided
passengers who are involuntarily bumped was in some cases less than the
face value of vouchers given to passengers who volunteer to give up
their seats. He therefore recommended, in addition to raising the
maximum compensation amounts for involuntarily bumped passengers, as
discussed above, that we require carriers to disclose orally to
passengers, at the time the airline makes an offer to volunteers, what
the airline is obligated to pay passengers who are involuntarily
bumped.
Our boarding priority requirement was designed to give carriers the
maximum flexibility to set their own procedures at the gate, while
affording consumers protection against unfair and unreasonable
practices. Thus, the rule (1) requires that airlines establish their
own boarding priority rules and criteria for oversale situations
consistent with Part 250's requirement to minimize involuntary bumpings
and (2) states that those boarding priority rules and criteria ``shall
not make, give, or cause any undue or unreasonable preference or
advantage to any particular person or subject any particular person to
any unjust or unreasonable prejudice or disadvantage in any respect
whatsoever.'' (14 CFR 250.3(a))
Although we are not aware of any problems resulting from this rule
as written, we agree that guidance regarding this provision would be
useful to the industry and public alike.
Accordingly, in the ANPRM we requested comment on whether the
Department should list in the rule, as examples of permissible boarding
priority criteria, the following:
A passenger's time of check in (first-come, first-served);
Whether a passenger has a seat assignment before reaching
the departure gate for carriers that assign seats;
A passenger's fare;
A passenger's frequent flyer status; and
Special priorities for passengers with disabilities,
within the meaning of 14 CFR part 382, or for unaccompanied minors.
We stated in the ANPRM that the five examples proposed here are
illustrative only, and not exclusive. We did not intend by these
examples to foreclose the use by carriers of other boarding priorities
that do not give a passenger undue preference or unjustly prejudice any
passenger.
Accurately notifying passengers of their rights in an oversale
situation is important, so that they can make an informed decision.
Part 250 already contains requirements designed to accomplish that
objective and to protect passengers from being involuntarily bumped if
they have not been accorded adequate notice. Section 250.2b(b)
prohibits a carrier from denying boarding involuntarily to any
passenger who was earlier asked to volunteer without having been
informed about the danger of being denied boarding involuntarily and
the amount of compensation that would apply if that occurred. While
this provision would appear to provide adequate incentive for airlines
to provide complete notice to passengers who are asked to volunteer,
and to protect those passengers not provided such notice, we see some
merit in making this notice requirement more direct. Accordingly, we
seek comment on whether we should amend section 250.2b to affirmatively
require that, no later than the time a carrier asks a passenger to
volunteer, it inform that person whether he or she is in danger of
being involuntarily bumped and, if so, the compensation the carrier is
obligated to pay.
Comments
There were only a handful of individual comments on the issue of
boarding priorities; most of them favored the Department's proposal.
There was virtually no comment from individuals about the volunteer
notice.
Most of the commenters from the airline industry and IAPA stated
that it is not necessary to list specific permissible boarding
priorities. Some of the industry commenters said that they do not
oppose this as long as it's clear that the list is illustrative and
does not restrict carriers from having other boarding priorities.
(Boarding priorities must be disclosed in the written notice required
by section 250.9 of the rule.) The Air Crash Victims Families Group
urged the Department to mandate uniform boarding priorities for all
carriers. The Coalition for an Airline Passenger Bill of Rights stated
that carriers should be required to make
[[Page 65244]]
boarding priorities more widely available; it also urges the Department
to prohibit boarding priorities that are based on the passenger's fare.
The industry commenters as a group opposed the proposal to provide
additional notice to volunteers, stating that it was unduly
restrictive. The consumer organizations did not comment on this issue.
Response to Comments
For the reasons articulated in the ANPRM and summarized above, and
consistent with the recommendation of the IG, we propose to revise the
rule to affirmatively require that, no later than the time a carrier
asks a passenger to volunteer, it inform that person whether he or she
is in danger of being involuntarily bumped and, if so, the compensation
the carrier is obligated to pay, and to list the following examples of
permissible boarding priority criteria:
A passenger's time of check in (first-come, first-served);
Whether a passenger has a seat assignment before reaching
the departure gate for carriers that assign seats;
A passenger's fare;
A passenger's frequent flyer status; and
Special priorities for passengers with disabilities,
within the meaning of 14 CFR part 382, or for unaccompanied minors.
As we stated in the ANPRM, we propose that these five examples be
illustrative only, and not exclusive.
Reporting
Section 250.10 of the current rule requires all carriers that are
subject to Part 250 to file a quarterly report (Form 251) on oversale
activity. Due to staffing limitations, for many years the only carriers
whose oversale data have been routinely reviewed, entered into an
automated system, or published by the Department are the airlines that
are subject to the on-time performance reporting requirement. Those are
the U.S. carriers that each account for at least 1 percent of total
domestic scheduled-service passenger revenues--currently 20 airlines
(see 14 CFR 234). For a current list of these carriers, see the
Department's Air Travel Consumer Report at http://airconsumer.ost.dot.gov/reports/index.htm.
This report provides data
for these airlines in four areas: On-time performance, baggage
mishandling, oversales, and consumer complaints. The oversale data for
that report are derived from the Form 251 reports mandated by Part 250.
The data in the Form 251 reports filed by the other carriers is not
keypunched, summarized, published, or routinely reviewed.
In the ANPRM the Department requested comment on whether it should
revise section 250.10 to relieve all carriers of this reporting
requirement except for the airlines whose data is being used, i.e.,
U.S. carriers reporting on-time performance under Part 234. Those
airlines account for the vast majority of domestic traffic and
bumpings, so the Department will still receive adequate information and
the public will continue to have access to published data for the same
category of carriers as before. Such action would be consistent with
the Paperwork Reduction Act and the Regulatory Flexibility Act. It
would also result in consistent carrier reporting requirements for all
four sections of the Air Travel Consumer Report.
Comments
Only four of the individual commenters expressed an opinion on this
issue; all four of them favored the Department's proposal. ATA and
JetBlue believe that this reporting requirement should be retained. The
other industry commenters supported the proposal to eliminate this
requirement for all but the ATCT-reported carriers. The consumer
organizations did not weigh in on this issue.
Response to Comments
For the reasons articulated in the ANPRM and summarized above, we
propose to revise the rule to relieve all carriers of this reporting
requirement except for ``reporting carriers'' as defined in 14 CFR
234.2 and any carrier that voluntarily submits data pursuant to section
234.7 of that part. At the present time this is 20 airlines.
Regulatory Notices
A. Executive Order 12866 (Regulatory Planning and Review) and DOT
Regulatory Policies and Procedures
This action has been determined to be significant under Executive
Order 12866 and the Department of Transportation Regulatory Policies
and Procedures. It has been reviewed by the Office of Management and
Budget under that Order. A preliminary discussion of possible costs and
benefits of the proposed rule is presented above and in the
accompanying Regulatory Evaluation. The Regulatory Evaluation concluded
that the benefits of the proposals appear to exceed the costs. A copy
of the Regulatory Evaluation has been placed in the docket.
B. Executive Order 13132 (Federalism)
This Notice of Proposed Rulemaking has been analyzed in accordance
with the principles and criteria contained in Executive Order 13132
(``Federalism''). This notice does not propose any regulation that: (1)
Has substantial direct effects on the States, the relationship between
the national government and the States, or the distribution of power
and responsibilities among the various levels of government; (2)
imposes substantial direct compliance costs on State and local
governments; or (3) preempts state law. Therefore, the consultation and
funding requirements of Executive Order 13132 do not apply.
C. Executive Order 13084
This notice has been analyzed in accordance with the principles and
criteria contained in Executive Order 13084 (``Consultation and
Coordination with Indian Tribal Governments''). Because none of the
options on which we are seeking comment would significantly or uniquely
affect the communities of the Indian tribal governments and would not
impose substantial direct compliance costs, the funding and
consultation requirements of Executive Order 13084 do not apply.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an
agency to review regulations to assess their impact on small entities
unless the agency determines that a rule is not expected to have a
significant economic impact on a substantial number of small entities.
Certain elements of these proposed rules may impose new requirements on
certain small air carriers, but the Department believes that the
economic impact would not be significant. All air carriers have control
over the extent to which the rule impacts them since they control their
own overbooking rates. Carriers can mitigate the cost of denied
boarding compensation by obtaining volunteers who are willing to give
up their seat for less compensation than what the rule mandates for
passengers who are bumped involuntarily, and by offering travel
vouchers in lieu of cash compensation.
The vast majority of the traffic that would be covered by the
oversales rule for the first time as a result of the options on which
we seek comment is carried by airlines that are owned by or affiliated
with a major carrier or its parent company. Moreover, a significant
amount, if not most, of the service on such flights is provided under a
``fee-for-service'' arrangement, where a major
[[Page 65245]]
carrier dictates the market, the schedule, and the price of the flight,
and the tickets may not even be sold under the regional carrier's code
so that the passenger's contract of carriage covering the
transportation is solely with the major carrier. In such circumstances,
the flights are for all legal and practical purposes flights of the
major carrier, not the regional airline, in which case the major
carrier is responsible for providing denied boarding compensation on
the flights of the smaller carrier. The monetary costs of most of these
options result in a corresponding dollar-for-dollar monetary benefit
for members of the public who are bumped from their confirmed flights
and for small businesses that employ some of them. The options provide
an economic incentive for carriers to use more efficient overbooking
rates that result in fewer bumpings while still allowing the carriers
to fill seats that would go unsold as the result of ``no-show''
passengers. It is worth noting that one of the options on which we are
seeking comment relieves an existing reporting requirement for all but
the largest carriers. For all these reasons, I certify that this rule,
if adopted, would not have a significant economic impact on a
substantial number of small entities.
E. Paperwork Reduction Act
The provisions that we are proposing impose no new information
reporting or recordkeeping necessitating clearance by the Office of
Management and Budget. They relieve a reporting requirement for many
carriers that are currently subject to that requirement. One required
handout that airlines distribute to bumped passengers would require
minor revisions.
F. Unfunded Mandates Reform Act
The Department has determined that the requirements of Title II of
the Unfunded Mandates Reform Act of 1995 do not apply to this notice.
List of Subjects in 14 CFR Part 250
Air carriers, Consumer protection, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, we propose to amend 14
CFR part 250 as follows:
PART 250--[AMENDED]
1. The authority citation for part 250 continues to read as
follows:
Authority: 49 U.S.C. chapters 401, 411, 413, 417.
2. Section 250.1 is amended by removing the definition of ``large
aircraft'' and revising the definition of ``Carrier'' to read as
follows:
Sec. 250.1 Definitions.
* * * * *
Carrier means:
(1) A direct air carrier, except a helicopter operator, holding a
certificate issued by the Department pursuant to 49 U.S.C. 41102 or
that has been found fit to conduct commuter operations under 49 U.S.C.
41738, authorizing the scheduled transportation of persons; or
(2) A foreign route air carrier holding a permit issued pursuant to
49 U.S.C. 41302, or an exemption from that provision, authorizing the
scheduled foreign air transportation of persons.
* * * * *
3. Section 250.2 is revised to read as follows:
Sec. 250.2 Applicability.
This part applies to every carrier, as defined in Sec. 250.1, with
respect to flight segments using an aircraft that has a designed
passenger capacity of 30 or more passenger seats, operating in
interstate air transportation or foreign air transportation with
respect to nonstop flight segments originating at a point within the
United States.
4. In Sec. 250.2b paragraph (b) is amended by removing the last
sentence and adding a new first sentence to read as follows:
Sec. 250.2b Carriers to request volunteers for denied boarding.
* * * * *
(b) Every carrier shall advise each passenger solicited to
volunteer for denied boarding, no later than the time the carrier
solicits that passenger to volunteer, whether he or she is in danger of
being involuntarily denied boarding and, if so, the compensation the
carrier is obligated to pay if the passenger is involuntarily denied
boarding.
5. Section 250.3(b) is added to read as follows:
Sec. 250.3 Boarding priority rules.
* * * * *
(b) The Department has determined that acceptable boarding priority
factors may include, but are not limited to, the following:
(1) A passenger's time of check in;
(2) Whether a passenger has a seat assignment before reaching the
departure gate for carriers that assign seats;
(3) The fare paid by a passenger;
(4) A passenger's frequent-flyer status; and
(5) A passenger's disability or status as an unaccompanied minor.
6. Section 250.5(a) is revised to read as follows:
Sec. 250.5 Amount of denied boarding compensation for passengers
denied boarding involuntarily.
(a) Subject to the exceptions provided in Sec. 250.6, a carrier to
whom this part applies as described in Sec. 250.2 shall pay
compensation to passengers denied boarding involuntarily from an
oversold flight at the rate of 200 percent of the fare (including any
surcharges and air transportation taxes) to the passenger's next
stopover, or if none, to the passenger's final destination, with a
maximum of $800. However, the compensation shall be one-half the amount
described above, with a $400 maximum, if the carrier arranges for
comparable air transportation [see section 250.1], or other
transportation used by the passenger that, at the time either such
arrangement is made, is planned to arrive at the airport of the
passenger's next stopover, or if none, the airport of the passenger's
final destination, not later than 2 hours after the time the direct or
connecting flight from which the passenger was denied boarding is
planned to arrive in the case of interstate air transportation, or 4
hours after such time in the case of foreign air transportation.
* * * * *
7. Section 250.9(b) is revised to read as follows:
Sec. 250.9 Written explanation of denied boarding compensation and
boarding priorities.
* * * * *
(b) The statement shall read as follows:
Compensation for Denied Boarding
If you have been denied a reserved seat on (name of air
carrier), you are probably entitled to monetary compensation. This
notice explains the airline's obligation and the passenger's rights
in the case of an oversold flight, in accordance with regulations of
the U.S. Department of Transportation.
Volunteers and Boarding Priorities
If a flight is oversold (more passengers hold confirmed
reservations than there are seats available), no one may be denied
boarding against his or her will until airline personnel first ask
for volunteers who will give up their reservation willingly, in
exchange for a payment of the airline's choosing. If there are not
enough volunteers, other passengers may be denied boarding
involuntarily in accordance with the following boarding priority of
(name of air carrier): (In this space the carrier inserts its
boarding priority rules or a summary thereof, in a manner to be
understandable to the average passenger.)
[[Page 65246]]
Compensation for Involuntary Denied Boarding
If you are denied boarding involuntarily, you are entitled to a
payment of ``denied boarding compensation'' from the airline unless:
(1) you have not fully complied with the airline's ticketing, check-
in and reconfirmation requirements, or you are not acceptable for
transportation under the airline's usual rules and practices; or (2)
you are denied boarding because the flight is canceled; or (3) you
are denied boarding because a smaller capacity aircraft was
substituted for safety or operational reasons; or (4) you are
offered accommodations in a section of the aircraft other than
specified in your ticket, at no extra charge (a passenger seated in
a section for which a lower fare is charged must be given an
appropriate refund); or (5) the airline is able to place you on
another flight or flights that are planned to reach your next
stopover or final destination within one hour of the planned arrival
time of your original flight.
Amount of Denied Boarding Compensation
Passengers who are eligible for denied boarding compensation
must be offered a payment equal to their one-way fare to their
destination (including connecting flights) or first stopover of four
hours or longer, with a $400 maximum. However, if the airline cannot
arrange ``alternate transportation'' (see below) for the passenger,
the compensation is doubled ($800 maximum). The fare upon which the
compensation is based shall include any surcharge and air
transportation tax.
``Alternate transportation'' is air transportation (by any
airline licensed by DOT) or other transportation used by the
passenger which, at the time the arrangement is made, is planned to
arrive at the passenger's next scheduled stopover of four hours or
longer or, if none, the passenger's final destination, no later than
2 hours (for flights between U.S. points, including territories and
possessions) or 4 hours (for international flights) after the
passenger's originally scheduled arrival time.
Method of Payment
Except as provided below, the airline must give each passenger
who qualified for involuntary denied boarding compensation a payment
by cash or check for the amount specified above, on the day and at
the place the involuntary denied boarding occurs. If the airline
arranges alternate transportation for the passenger's convenience
that departs before the payment can be made, the payment shall be
sent to the passenger within 24 hours. The air carrier may offer
free or discounted transportation in place of the cash payment. In
that event, the carrier must disclose all material restrictions on
the use of the free or discounted transportation before the
passenger decides whether to accept the transportation in lieu of a
cash or check payment. The passenger may insist on the cash/check
payment or refuse all compensation and bring private legal action.
Passenger's Options
Acceptance of the compensation may relieve (name of air carrier)
from any further liability to the passenger caused by its failure to
honor the confirmed reservation. However, the passenger may decline
the payment and seek to recover damages in a court of law or in some
other manner.
* * * * *
Sec. 250.10 [Amended]
8. In the first sentence of Sec. 250.10, the word ``carrier'' is
replaced with the phrase ``reporting carrier as defined in 14 CFR 234.2
and any carrier that voluntarily submits data pursuant to section 234.7
of that part.''
9. Section 250.11(a) is revised to read as follows:
Sec. 250.11 Public disclosure of deliberate overbooking and boarding
procedures.
(a) Every carrier shall cause to be displayed continuously in a
conspicuous public place at each desk, station and position in the
United States which is in the charge of a person employed exclusively
by it, or by it jointly with another person, or by any agent employed
by such air carrier or foreign air carrier to sell tickets to
passengers, a sign located so as to be clearly visible and clearly
readable to the traveling public, which shall have printed thereon the
following statement in boldface type at least one-fourth of an inch
high:
Notice--Overbooking of Flights
Airline flights may be overbooked, and there is a slight chance
that a seat will not be available on a flight for which a person has a
confirmed reservation. If the flight is overbooked, no one will be
denied a seat until airline personnel first ask for volunteers willing
to give up their reservation in exchange for compensation of the
airline's choosing. If there are not enough volunteers, the airline
will deny boarding to other persons in accordance with its particular
boarding priority. With few exceptions, including failure to comply
with the carrier's check-in deadline (carrier shall insert either ``of
---- minutes prior to each flight segment'' or ``(which are available
upon request from the air carrier)'' here), persons denied boarding
involuntarily are entitled to compensation. The complete rules for the
payment of compensation and each airline's boarding priorities are
available at all airport ticket counters and boarding locations. Some
airlines do not apply these consumer protections to travel from some
foreign countries, although other consumer protections may be
available. Check with your airline or your travel agent.
* * * * *
Issued this 15th day of November, 2007, at Washington, DC.
Michael W. Reynolds,
Deputy Assistant Secretary for Aviation and International Affairs.
[FR Doc. 07-5761 Filed 11-15-07; 4:15 pm]
BILLING CODE 4910-9X-P