[Federal Register Volume 83, Number 180 (Monday, September 17, 2018)]
[Rules and Regulations]
[Pages 46867-46878]
[FR Doc No: 2018-18345]

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Parts 295 and 298

RIN No. 2105-AD66
[Docket No. DOT-OST-2007-27057]

Increasing Charter Air Transportation Options

AGENCY: Office of the Secretary (OST), Department of Transportation
(DOT).

ACTION: Final rule.

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SUMMARY: The Department of Transportation (DOT or Department) is
issuing a final rule to facilitate innovation and growth in the air
charter industry while strengthening the legal protections provided to
consumers of charter air transportation. First, this rule allows ``air
charter brokers'' as principals or bona fide agents to provide single
entity charter air transportation of passengers. Second, it requires
air charter brokers to make certain disclosures including those
responsive to a National Transportation Safety

Board (NTSB) recommendation and to make other disclosures upon request.
Third, it enumerates certain practices by air charter brokers as
prohibited unfair or deceptive practices or unfair methods of
competition. Fourth, this rule requires air taxis and commuter air
carriers that sell charter air transportation to make certain
disclosures including those responsive to an NTSB recommendation and
other disclosures upon request. Fifth, it enumerates certain practices
by an air taxi or commuter air carrier as prohibited unfair or
deceptive practices or unfair methods of competition. At the same time,
the Department is not adopting a proposal to codify exemption authority
allowing indirect air carriers to engage in the sale of air
transportation related to air ambulance services. Nor is it adopting a
proposal to codify that certain air transportation services performed
under contract with the Federal Government are in common carriage.

DATES: This rule is effective February 14, 2019.

FOR FURTHER INFORMATION CONTACT: Jonathan Dols, Deputy Assistant
General Counsel, Office of the Assistant General Counsel for Aviation
Enforcement and Proceedings, Department of Transportation, 1200 New
Jersey Ave. SE, Washington, DC 20590,<PHONE_NUMBER> (phone), 202-366-
7152 (fax), [email protected]. You may also contact Lisa Swafford-
Brooks, Chief, Aviation Licensing and Compliance Branch, Office of the
Assistant General Counsel for Aviation Enforcement and Proceedings,
U.S. Department of Transportation, 1200 New Jersey Ave. SE, Washington,
DC 20590,<PHONE_NUMBER> (phone),<PHONE_NUMBER> (fax),
[email protected].

SUPPLEMENTARY INFORMATION:

Background

    On September 30, 2013, the Department published a notice of
proposed rulemaking (NPRM) in the Federal Register, 78 FR 59880, in
which it addressed the following areas: (1) An NTSB recommendation for
air taxis and commuter air carriers to make certain disclosures and a
prohibition on certain practices by air taxis and commuter air
carriers; (2) the creation of a new class of indirect air carrier, a
requirement for these entities to make certain disclosures, and a
prohibition on certain practices by these entities; (3) the authority
of indirect air carriers to engage in sale of air transportation
related to air ambulance services; and (4) a clarification regarding
air services performed under contract with the Federal Government.
    The Department's proposal to act in response to the NTSB
recommendation built upon an advance notice of proposed rulemaking
(ANPRM) published in the Federal Register on January 26, 2007, 72 FR
3773. The Department received 23 comments in response to the ANPRM,
which were summarized in the NPRM.
    The Department received 21 comments in response to the NPRM,
including one comment representing the views of multiple entities. Of
these, 18 comments were from members of the industry, including direct
and indirect air carriers, as well as associations representing both
direct and indirect air carriers and other aviation businesses.
Specifically, these comments represented the views of the Air Charter
Association, the Air Medical Operators Association, Air Methods, the
Association of Air Medical Services, Blue Feather Charter, Chapman
Freeborn, Corporate Flight Management, CSI Aviation, Flex Jet, Flight
Options, Jet Logistics, Jet Solutions, the National Air Carrier
Association, the National Air Transportation Association (NATA), the
National Business Aviation Association (NBAA), Premier Aviation
Charter, Public Charters Inc., Sentient Jet, Sentient Jet Charter, and
Ultimate Jetcharters. One comment was from Consumers Union, a consumer
rights organization; one comment was from the American Society of
Travel Agents (ASTA), an association representing travel agents; and
another comment was made anonymously. Three comments addressed the NTSB
recommendation, 17 addressed the creation of a new class of indirect
air carrier, six addressed air ambulance services, and one addressed
air services performed under contract with the Federal Government.
    In general, almost all commenters supported the proposals regarding
the NTSB recommendation, the creation of a new class of indirect air
carrier, and codifying the exemption authority for air ambulance
services. These comments also provided suggested changes to the
Department's proposals. The one comment regarding air services
performed under contract with the Federal Government objected to the
Department's proposal on that topic in its entirety. The section-by-
section analysis will describe each provision of the final rule and
respond to the comments received.

Comments and Responses

1. New Class of Indirect Air Carrier

A. Recognition of an ``Air Charter Broker'' Class of Indirect Air
Carrier (14 CFR 295.1, 295.3, 295.5, 295.7, 295.10, 295.12)
    The NPRM: In the NPRM, the Department proposed to recognize a class
of indirect air carrier to be named ``air charter brokers'' that are
permitted as principals in their own right to engage in single entity
charter air transportation aboard large and small aircraft pursuant to
exemptions from certain provisions of Subtitle VII of Title 49 of the
United States Code. The Department proposed allowing this class of
indirect air carrier to self-identify, rather than establish a formal
licensing or registration scheme. The Department solicited comment on
the establishment of such a scheme, particularly whether one should
apply to non-U.S. citizen air charter brokers. In addition, the
Department sought comment on whether ``single entity charter'' should
include individuals who self-aggregate to form a single entity charter
and whether including self-aggregated groups in this definition would
require a change to the definition of a single entity charter in 14 CFR
212.2.
    Comments: The comments received by DOT demonstrated general support
for the recognition of a new class of indirect air carrier. There was
some support for expanding the definition of ``air charter broker'' to
include ``bona fide agents.'' NBAA noted that charter customers using
the services of an air charter broker acting as an agent were no less
deserving of consumer protections than customers of air charter brokers
acting as indirect air carriers. Further, NATA encouraged the
Department to harmonize the regulatory language regarding disclosures
required by air taxi operators/commuter air carriers and by air charter
brokers.
    Support for a registration scheme, on the other hand was mixed.
Entities that favored the creation of a registry commented that self-
identification might not adequately protect consumers because
unscrupulous air charter brokers could easily change names, that a
registry could be used to ensure minimum standards among air charter
brokers (e.g., a certain level of insurance or bonding), and that a
registry would provide consumers and DOT with contact information for
and basic information about the regulated entities. Some commenters
stated that such a registry would be inexpensive to maintain, while
others stated it would

be costly to maintain. Of the comments in favor of the establishment of
a registration scheme, some favored requiring only U.S.-citizen air
charter brokers to register, others favored requiring only foreign-
citizen air charter brokers to register, and still others favored
requiring all air charter brokers to register.
    The Department received over a half-dozen comments regarding the
proposed definition of ``single entity charter,'' all but one of which
supported the inclusion of individuals who self-aggregate to form a
single entity. NBAA proposed making clear that this class of indirect
air carrier does not include ``fractional ownership program managers''
and ``in-house corporate travel departments,'' and proposed definitions
of those two terms. The Air Charter Association of North America
expressed concern that the proposed definition was overly broad and
undermined consumer protections, including those found in DOT's rule
governing public charters, 14 CFR part 380.
    DOT Response: The Department is finalizing its proposed rule to
recognize an ``air charter broker'' class of indirect air carrier.
Because many commenters raised a valid point that charter customers
deserve the same consumer protections whether they use air charter
brokers who are acting as indirect air carriers or as bona fide agents,
the Department has decided to widen its definition of air charter
broker to include bona fide agents and, further, to define that term by
regulation. Based on the multiple comments received, this is a natural
outgrowth of the NPRM. The Department is also harmonizing, to the
extent practicable, the regulatory language regarding disclosures
required by air taxi operators/commuter air carriers and by air charter
brokers.
    The Department has decided not to create a registry of air charter
brokers, either U.S. or non-U.S. citizens. After thoroughly reviewing
the arguments raised in favor of and in opposition to such a registry,
DOT has determined that at this time the potential benefits are ill-
defined. The Department may revisit this issue in the future should the
need become apparent. The Department notes, however, that this
rulemaking does not preclude voluntary registration or
``certification'' through third parties. For example, air charter
brokers may determine that voluntary membership in an association or
organization provides the same benefits cited in the comments favoring
the creation of a DOT-run registry.
    Finally, recognizing the support of most commenters to including
self-aggregated individuals within the definition of ``single entity
charter,'' DOT adopts its proposed definition, but limits the ability
of individuals to form self-aggregated groups only to flights to be
operated using small aircraft. Thus, there is no need to change the
definition of single entity charter in 14 CFR 212.2, since that part is
not applicable to any flights performed by a commuter air carrier, air
taxi operator, or certificated air carrier operating ``small aircraft''
under Part 298. Further, it acknowledges concerns, including those of
the Air Charter Association of North America that the definition as
proposed in the NPRM unnecessarily broadens the definition of a single
entity charter and could undermine the consumer protections in the
Department's rule governing public charters, 14 CFR part 380. In
addition, the Department is making a non-substantive change by removing
the word ``passenger'' from its ``air charter broker'' definition so
that it references ``single entity charter,'' a term defined by
regulation, rather than ``single entity passenger charter.'' The
Department has decided not to accept NBAA's proposals regarding
``fractional ownership membership program managers'' and ``in-house
corporate travel departments'' because those two entities do not
provide common carriage air transportation and are therefore already
excluded from the scope of this rule.
B. Disclosures (14 CFR 295.20, 295.23, 295.24, 295.26)
    The NPRM: In the NPRM, the Department proposed to require that an
air charter broker disclose clearly and conspicuously in any
solicitation materials its status and the fact that it is not a direct
air carrier and will use an authorized direct air carrier to provide
the transportation it offers. The Department also proposed requiring
written disclosure of (1) the corporate name of the direct air carrier
in operational control of the aircraft and any other names in which the
carrier holds itself out to the public (as recommended by the NTSB);
(2) the capacity in which the air charter broker is acting; (3) the
existence of any corporate or business relationships with a particular
direct air carrier; (4) the aircraft type; (5) the total cost of air
transportation paid to the air charter broker; (6) the existence of any
other amount charged by third parties for which the charterer will be
responsible for paying directly; and (7) the existence or absence of
liability insurance held by the air charter broker covering the
charterer and passengers and property on the charter flight, and the
monetary limits of such insurance. Further, the Department sought
public comment on whether any additional disclosures should be
required.
    Under the proposed rule, any required disclosure must be made
within a ``reasonable'' time, defined as enough time for the charterer
to make an informed decision as to whether to accept the change.
Failure to provide notice within a ``reasonable'' time would entitle
the consumer the option of receiving a full refund. The Department
sought comment on whether to provide a specific time frame for the
disclosures and whether to require some sort of confirmation of receipt
of the disclosures. In addition, DOT solicited comment on whether the
refund requirements of 14 CFR part 374 should apply to air charter
brokers.
    Comments: The comments received in response to the disclosure
proposals ran the gamut, with some support for and some objection to
each of the seven proposed disclosures. When expressing support for a
disclosure, commenters generally cited a consumer need to possess that
information. When expressing opposition to a disclosure, commenters
generally asserted that consumers would not benefit from that
information. In particular, many commenters noted that consumers need
not learn the identity of the aircraft's owner so long as they know the
name of the direct air carrier. In addition, some commenters stated
that because most customers of air charter brokers are sophisticated
consumers with significant bargaining power, the proposed disclosures
would be better handled through a negotiated contract. In response to
the disclosure of insurance (or lack thereof), several commenters
suggested that DOT not only require disclosure, but require that air
charter brokers maintain a certain level of insurance. Finally, NATA
requested that the Department clarify the meaning of ``any corporate or
business relationship between the air charter broker and the direct air
carrier.'' The NBAA further requested that the disclosure of such
relationships be limited to those ``which may have a substantial
bearing upon the air charter broker's selection of a direct air
carrier.'' Finally, Chapman Freeborn Airchartering questioned at what
level of detail any required itemization must be made.
    Both industry and ASTA provided comments against establishing a
fixed time in which air charter brokers must disclose any changes in
the air transportation arrangements. These comments explained that it
would be an unworkable requirement, as some

changes could be very last-minute and thus too late to comply with the
prescribed time frame while others could become known far in advance
thus rendering the time frame unnecessarily restrictive.
    Most commenters expressed opposition to requiring that air charter
brokers obtain some form of confirmation of the receipt of any changes
to the required disclosures. These commenters stated that obtaining
confirmation would not be practicable, as some consumers may simply
decline to confirm receipt, and would create an undue burden for air
charter brokers forced to obtain one.
    Comments regarding DOT's proposal to subject air charter brokers to
the refund requirements of 14 CFR part 374 indicated general
disapproval. Most commenters wanted parties to negotiate refund
provisions in the original contract. These commenters noted that
customers of air charter brokers are sophisticated parties with
significant bargaining power, that Part 374 may prove unworkable in the
air charter broker context, and that DOT should not substitute its
judgment for that of individuals in the marketplace. Several suggested
that DOT could require refund provisions be disclosed in the original
contract rather than impose Part 374 by default. The minority of
commenters who expressed support for this portion of the NPRM stated
that consumers of air charter broker services deserve the same
protections as consumers of other forms of air transportation.
    DOT Response: Of the seven proposed disclosures, the Department is
requiring three and making three others required upon request. Having
considered the comments both for and against the proposal, the
Department believes that on the whole consumers, regardless of
sophistication level, would benefit from an increased amount of
information. The Department is not requiring that the type of the
aircraft be disclosed since it believes that information is already a
part of most charter negotiations. The Department is clarifying what
type of ``corporate or business relationship between the air charter
broker and the direct air carrier'' must be disclosed upon request by
adding the example of a pre-existing contract between the two entities.
Further, the Department is adopting in part NBAA's suggestion that this
definition be further refined by adding language that the relationship
must have a ``bearing'' on the transaction. Finally, the Department is
changing the language of the disclosure upon request relating to costs
to make clear that detailed itemization is not required.
    The Department is not requiring that air charter brokers maintain a
certain level of insurance. The Department is aware that most air
charter brokers already maintain a certain level of insurance as a good
business practice. Establishing a minimum level of insurance would
therefore not add additional protection for consumer funds.
    The Department agrees with industry and ASTA that regulating the
time frame in which disclosures must be made is impracticable, for the
reasons provided by those commenters. Therefore, the Department adopts
the ``within a reasonable time after such information becomes
available'' standard as proposed in the NPRM. The Department has
clarified in the final rule that it is within a reasonable time of
becoming available ``to the air charter broker.'' A ``reasonable'' time
would be enough time for the charterer to make an informed decision as
to whether he or she wants to accept the additional information or the
change. For example, should the direct air carrier to operate the
flight change one week prior to the flight date, the Department would
find it ``reasonable'' for notice to be given within 24 hours after
such information becomes available to the air charter broker. On the
other hand, the Department would not find it ``reasonable'' for notice
to be given two hours before departure in such a circumstance, since
that would not give the charterer time to make an informed decision as
to whether to accept the change. At that point, the charterer would
already likely be fully prepared for the flight and may in fact already
be en route to the airport.
    Having reviewed the public comments, the Department has decided not
to add a requirement that air charter brokers obtain written
confirmation that the required disclosures were made or that charterers
received notice of any changes to the information that must be
disclosed or of any information that was not known at the time the
contract was entered. The Department appreciates the burden such a
requirement would place on air charter brokers and that some consumers
may simply ignore requests for confirmation. Furthermore, such a
requirement is likely not necessary since, as several commenters noted,
the original signed contract may serve as confirmation that the air
charter broker made, and that the consumer received, the required
disclosures. The Department notes, however, that air charter brokers
are free to obtain such confirmations as a method of guarding against
claims that they did not make the disclosures.
    The Department has considered the arguments against applying the
refund requirements of 14 CFR part 374 to air charter brokers. The
Department nevertheless believes that these requirements are not overly
burdensome on air charter brokers, as their crux is establishing a time
frame in which refunds should be processed, and provide consumers with
useful protections. The Department believes that these are important
consumer protections. As such, the Department is adopting the proposed
rule on refunds.
C. Enumerated Unfair and Deceptive Practices (14 CFR 295.22 and 295.50)
    The NPRM: In the NPRM, the Department proposed to enumerate ten
prohibited unfair and deceptive practices and unfair methods of
competition by air charter brokers. First, air charter brokers may not
misrepresent themselves as direct air carriers. Second, air charter
brokers must not use their names and slogans in connection with the
name of the direct air carrier in such a manner that may confuse
consumers as to the status of the air charter broker. Third, air
charter brokers must not misrepresent the service, type of aircraft, or
itinerary. Fourth, air charter brokers must not misrepresent the
qualifications of pilots or the safety record and certification of
pilots, aircraft, and air carriers. Fifth, air charter brokers must not
make misrepresentations regarding insurance. Sixth, air charter brokers
must not misrepresent the cost of the air transportation. Seventh, air
charter brokers must not misrepresent membership in or involvement with
organizations that audit air charter brokers or direct air carriers.
Eighth, air charter brokers must not represent that they possess a
contract with a direct air carrier until they have received a binding
commitment from the direct air carrier. Ninth, air charter brokers must
not sell or contract for air transportation that they know cannot be
legally performed by the entity that is to operate the air
transportation. Tenth, air charter brokers must not misrepresent the
requirements that must be met by charterers to qualify for charter
flights. The Department solicited comments on which, if any, of these
should be enumerated in the final rule. In addition, the Department
asked the public to comment on a potential record-keeping requirement
to ensure compliance with the proposed regulations.
    Comments: Members of the public expressed widely divergent views on

what practices, if any, should be enumerated as unfair and deceptive.
Two commenters stated that DOT should enumerate only one unfair and
deceptive practice and unfair method of competition: That air charter
brokers must not misrepresent themselves as direct air carriers. A
third commenter expressed a view along these lines, noting that DOT
should merely continue its existing enforcement policy of finding an
unfair or deceptive practice or unfair method of competition when an
air charter broker misrepresents itself as a direct air carrier. A
fourth mirrored these comments but also supported enumerating as unfair
or deceptive the practice of telling consumers that the broker
maintains a certain level of insurance that it does not, in fact,
maintain. Three commenters supported all the proposed enumerated unfair
and deceptive practices. Another commenter opposed this portion of the
proposal in its entirety. In addition, FlexJet asked that the
Department clarify that it is not unfair or deceptive to advertise a
price that changes due to circumstances beyond the air charter broker's
control.
    The Department received input regarding a record retention
requirement. CSI Aviation expressed support for a requirement, noting
that pursuant to Internal Revenue Service requirements, records are
maintained for seven years following the date of transportation. NATA
proposed a two-year retention requirement. The Air Charter Association
voiced support for a retention requirement without proposing a time-
frame.
    DOT Response: The Department is making changes to its proposed rule
to harmonize language where appropriate with the text of the section
enumerating prohibited unfair and deceptive practices by air taxis/
commuter air carriers, 14 CFR 298.90. The significant amount of
enforcement activity in this area has led the Department to find such
enumeration necessary. In fact, the Department believes that codifying
certain actions as unfair or deceptive will lower the amount of
enforcement action necessary, as all air charter brokers will be fully
aware of what behavior is prohibited. In turn, this will level the
playing field for those air charter brokers that do not misrepresent
themselves or any part of their services. In response to FlexJet's
query, the Department notes that the final rule requires that an air
charter broker have a binding contract with a direct air carrier or
direct foreign air carrier before representing such to the public. As a
result, the largest portion of the charter transportation cost should
already be established at the point where FlexJet's question arises.
The final rule already provides air charter brokers with flexibility in
quoting total costs and DOT does not believe greater flexibility is
needed, despite FlexJet's request.
    The Department is choosing at this time not to require a specific
record retention period, but may revisit this issue if it becomes clear
that efforts to enforce this part are impeded by a lack of such a
period, air charter brokers are evading their disclosure obligations to
charterers, or charterers are otherwise being harmed.

2. Air Taxis and Commuter Air Carriers

A. Disclosures (14 CFR 298.80)
    The NPRM: In the NPRM, the Department proposed to amend 14 CFR part
298 to prohibit air taxis and commuter air carriers from soliciting or
executing contracts for single entity charter air transportation to be
performed by another carrier without first providing clear and
conspicuous written disclosure to the person or entity that contracts
for that air transportation of: (1) The corporate name of the direct
air carrier in operational control of the aircraft and any other names
in which the carrier holds itself out to the public (as recommended by
the NTSB) (2) the capacity in which the air taxi is acting in
contracting for the air transportation; (3) the existence of any
corporate or pre-existing business relationship with the direct air
carrier that will be in operational control of the aircraft; (4) the
make and model of the aircraft to be used; (5) the total cost of the
air transportation, including carrier- and government-imposed fees and
taxes; and (6) the existence of any fees and their amounts, if known,
charged by third parties for which the charterer will be responsible
for paying directly. In addition, should the operating carrier change,
the Department proposed requiring that written notice be provided to
the charter customer when the change becomes known. Should reasonable
notice not be given, the Department proposed that the charter customer
be entitled to a full refund. The Department sought comment on whether
it should set a specific timeframe for such notice and whether it
should require carriers to obtain confirmation of receipt of that
notice and, if so, what type of confirmation.
    Comments: Of the three comments on this topic, those from NATA and
NBAA generally supported the Department's proposed disclosure
requirements, albeit with some changes and clarifications. For example,
both sought clarification of what type of ``corporate or business
relationship'' must be disclosed and NBAA sought clarification on
whether the parties could agree in writing to forgo certain
disclosures. Furthermore, NATA suggested that the Department harmonize
the disclosure requirements imposed on air taxi operators/commuter air
carriers and on air charter brokers.
    NATA also commented that the Department should refine the
requirement that air taxi operators and commuter air carriers disclose
the total cost. As proposed, the regulation indicates that government-
imposed taxes and fees must be disclosed only as they apply to the
total cost of air transportation but not as they apply to any fees
(e.g., landing fees and fuel) charged by third parties for which the
charterer will be responsible for paying directly. In addition, NATA
suggested that the Department change its ``make and model'' references
to ``type of aircraft'' in order to use an industry standard term.
    Neither association advocated for a specified time frame in which
disclosures must be made, noting that the fact-specific situations
require a flexible ``reasonable time'' standard like that originally
proposed by the Department. Moreover, neither advocated for a
regulation requiring the confirmation of the receipt of the proposed
disclosures.
    On the other hand, the comment filed jointly by Corporate Flight
Management, Public Charters Inc., and Ultimate Jetcharters opposed all
the Department's proposed disclosure requirements. They asserted that
the Department failed to provide evidence of objectionable practices by
air taxis and commuter air carriers that would provide a rationale for
the proposed rule, noting that the NTSB had advocated only the limited
disclosure of the name of the operating carrier and the type of
aircraft. In the absence of a demonstrated need for greater regulation,
the commenters suggested that DOT allow market forces to work,
particularly in this situation, where DOT has acknowledged that the
consumers are sophisticated entities. Moreover, they asserted that the
Department could rely on its existing enforcement mechanisms should
problems arise.
    DOT Response: The Department is amending 14 CFR part 298 to require
air taxis and commuter air carriers to make three disclosures and to
make three more upon request. The Department appreciates the comments
it received and has incorporated the suggestions of NATA and NBAA into
the final rule. First, the Department harmonizes the regulatory
language regarding

disclosures applicable to air taxi operators/commuter air carriers in
14 CFR 298.80 with those applicable to air charter brokers in 14 CFR
295.24. The Department clarifies what type of ``corporate or business
relationship between the air taxi operator or commuter air carrier and
the direct air carrier'' must be disclosed upon request. The Department
adopts in part NBAA's suggestion that the definition of a corporate or
business relationship be further refined by adding language that the
relationship must have a ``bearing'' on the transaction. The Department
disagrees with NBAA's suggestion that the rule indicate that parties
may agree in writing to forgo certain disclosures because allowing
parties to contract away these protections would severely limit the
benefits of the rule.
    In addition, based on NATA's suggestion, DOT is adding language to
14 CFR 298.80(a)(5) to clarify that air taxi operators and commuter air
carriers must disclose upon request any government-imposed taxes and
fees levied on expenses collected by third parties (e.g., landing fees
and fuel) and paid directly by the charterer. Further, the Department
is not requiring the type of aircraft to be disclosed since it believes
that information is already a part of most charter negotiations.
    The Department appreciates the positive feedback received regarding
its ``reasonable time'' standard for making the required disclosures
and, having received no alternative suggestions, adopts that standard.
As the comments noted, because each situation is fact-specific, it
would be difficult to enact a workable specific time frame for
disclosures. The Department clarifies in the final rule that it is
within a reasonable time of becoming available ``to the air or commuter
air carrier.'' For this same reason, the Department clarifies in the
final rule that in an exigent circumstance particular to a passenger
the required disclosures do not have to be made prior to the start of
the air transportation. In addition, the Department is not adding a
requirement that air taxi operators and commuter air carriers obtain
written confirmation that the required disclosures were made and that
charterers received notice of any changes to the information that must
be disclosed or of any information that was not known at the time the
contract was entered. The Department notes, however, that air taxi
operators and commuter air carriers are free to obtain such
confirmations as a method of guarding against claims that they did not
make the disclosures.
    The Department thoroughly considered the comments of Corporate
Flight Management, Public Charters Inc., and Ultimate Jetcharters.
Nevertheless, DOT agrees with NTSB that disclosures are necessary to
enhance consumer protection in charter air transportation. Furthermore,
DOT also believes that there are significant benefits regarding
additional disclosures to charterers when weighing their air
transportation options to know the capacity in which the air taxi or
commuter air carrier is acting in contracting for the air
transportation, the existence of any corporate or business relationship
between the air taxi or commuter air carrier and the direct air carrier
that will be in operational control of the flight that bears on the
selection of the direct air carrier, the type of aircraft to be used
for the flight, the total cost of the air transportation, and the
existence of any fees and their amounts that are collected by third
parties that the charterer will be responsible for paying directly. The
Department firmly believes that within this regulatory framework, the
market will continue to work, allowing parties to freely contract with
each other. In fact, these required disclosures, many of which are
already made as good business practices and/or customer service
gestures, will provide a more level playing field for all air taxis and
commuter air carriers, thus contributing to the correction of any
existing market failures.
B. Enumerated Unfair and Deceptive Practices (14 CFR 298.90)
    The NPRM: The NPRM proposed to prohibit certain practices as unfair
or deceptive or unfair methods of competition by air taxis and commuter
air carriers. Specifically, these misrepresentations involved the
entity in operational control of the aircraft, the quality of the
aircraft involved, the schedule and itinerary, the insurance carried,
the fares or charges levied, the presence of a contract for a specific
air carrier or aircraft, and the legal impossibility of completing the
specific flight.
    Comments: Only the NATA and NBAA comments addressed the
Department's proposal to enumerate for air taxis and commuter air
carriers certain unfair and deceptive practices and unfair methods of
competition. Both associations supported the proposal in its entirety.
    DOT Response: The Department is adopting the proposed 14 CFR
298.100 and codifying it as 14 CFR 298.90. However, the Department is
making changes to its proposed rule to harmonize language where
appropriate with the text of the section enumerating prohibited unfair
or deceptive practices by air charter brokers, 14 CFR 295.50. This
includes enumerating misrepresentations as to the qualifications and
the safety records of pilots, aircraft, and air carriers; membership
in, involvement with, and standards set by auditing organizations; the
requirements that charterers must meet to qualify for charter flights;
and the use of names, trade names or slogans. The Department already
considers such misrepresentations by air carriers, including air taxis
and commuter air carriers, to be prohibited under 49 U.S.C. 41712. The
Department believes that codifying these and other actions as unfair or
deceptive will forestall enforcement action as all air taxis and
commuter air carriers will be fully aware of what behavior is
prohibited. In addition, the second and third enumerated unfair or
deceptive practices contained significant overlap. Thus, these
subsections are changed in the final rule so that each is a distinct
unfair or deceptive practice or unfair method of competition.

3. Air Ambulance Services

    The NPRM: Since 1983, the Department has authorized entities that
arrange air ambulance services as indirect air carriers to engage in
the sale of air transportation through a blanket exemption granted by
the CAB in Order 81-1-36, 99 C.A.B. 801 (1983). In the NPRM, the
Department proposed to codify that exemption. In addition, based upon
the number of enforcement actions taken for violations of this
exemption authority, as well as the licensing requirements of 49 U.S.C.
41101 and the statutory prohibition on unfair and deceptive practices
and unfair methods of competition, 49 U.S.C 41712, the Department
proposed in the NPRM to apply to indirect air carrier air ambulances
the same enumerated prohibited practices proposed for air charter
brokers in Sec.  295.50, but not to apply to indirect air carrier air
ambulances the disclosure requirements applicable to air charter
brokers. DOT invited comments on this proposal in general, as well as
comments regarding whether any of the specific provisions in section
295.24 should apply to indirect air carrier air ambulances.
    Comments: All commenters expressed general support for the
codification of the Department's long-standing exemption. Air Methods
addressed the application of the enumerated prohibited practices in
295.50 to indirect air carrier air ambulances by proposing that an
indirect air medical program name or logo on an aircraft not be
considered misleading, so long as the

name of the direct air carrier is displayed in accordance with 14 CFR
119.9(b). Many commenters expressed opposition to applying to air
ambulance services the disclosure requirements applied to air charter
brokers. Among the reasons given for excluding air ambulance services
from these requirements, commenters cited a lack of passenger need and
the possible delayed provision of care that could result. The Air
Charter Association and the Association of Air Medical Services, on the
other hand, disagreed and instead commented that air ambulances should
be subjected to the same disclosure requirements as air charter
brokers. Moreover, the latter group commented that it would be
beneficial for air charter brokers to disclose their medical training
level to consumers so that those consumers can better judge the
broker's ability to determine the appropriateness of various aspects of
flight, e.g., aircraft type, medical staffing, pressurization, etc.
    DOT Response: The Department appreciates the general support
expressed for the codification of its long-standing exemption, but
chooses not to do so at this time. The Department will be studying this
area further, including reviewing air ambulance complaints to determine
what, if any, disclosure or other consumer protection requirements are
appropriate in this area for direct and indirect air carrier air
ambulances. Our decision here does not in any way alter the authority
for entities that arrange air ambulance services as indirect air
carriers to engage in the sale of air transportation under the blanket
exemption granted by the CAB in Order 81-1-36, 99 C.A.B. 801 (1983).

4. Air Services Provided Under Contract With the Federal Government

    The NPRM: The Department proposed to codify the longstanding view
of its Office of Aviation Enforcement and Proceedings that contracts
with the Federal Government arranged under a GSA Schedule are in fact
in common carriage and subject to DOT jurisdiction.
    Comments: CSI Aviation (CSI), the sole commenter on this portion of
the NPRM, disagreed with the Department's proposal in its entirety. CSI
stated that DOT failed to explain why air charter brokers operating
under a GSA Schedule required economic authority from the Department.
To the contrary, CSI argued that air transportation services conducted
pursuant to the GSA Schedules were not common carriage but were, in
fact, private carriage. In addition, CSI commented that because the GSA
Schedules are governed by the Federal Acquisition Regulations, CSI (and
similarly situated parties) are already subject to a consumer
protection regime far more comprehensive that the regime proposed by
DOT. For example, the Federal Acquisition Regulations subject violators
to liquidated damages, nonpayment, and even criminal prosecution.
Moreover, CSI asserted that the DOT proposal would interfere with GSA's
contracting practices.
    DOT Response: The Department is deferring action on this proposal
as it is not clear that additional action is necessary. First, the
dearth of feedback on this portion of the NPRM makes it more difficult
for the Department to consider the various viewpoints of all
stakeholders; the views of the only stakeholder to comment had
previously been made clear in Federal court. Second, the paucity of
feedback received from stakeholders in the years following the
litigation that prompted the proposed codification indicates that the
existing consumer protection regime may suffice at this time as
asserted by CSI. Third, by having only imperfect information available
to it, the Department risks taking action that may have unintended
consequences. The Department stresses, however, that it may revisit
this issue in the future. It may, for example, receive more input from
stakeholders or see that changes in Federal Government procurement
practices and rules have changed the level of protection afforded
consumers.

Regulatory Analyses and Notices

A. Executive Order 12866 (Regulatory Planning and Review) and DOT
Regulatory Policies and Procedures

    This proposed rule is not a significant regulatory action under
section 3(f) of E.O. 12866 (58 FR 51735, October 4, 1993), Regulatory
Planning and Review, as supplemented by E.O. 13563 (76 FR 3821, January
21, 2011), Improving Regulation and Regulatory Review. Accordingly, the
Office of Management and Budget (OMB) has not reviewed it under that
Order. It is also not significant within the meaning of DOT regulatory
policies and procedures (DOT Order 2100.5 dated May 22, 1980; 44 FR
11034 (February 26, 1979)).
    The final rule is in part an enabling regulatory action, which
would eliminate existing regulatory barriers by recognizing air charter
brokers as a new class of indirect air carrier, and would allow air
charter brokers as principals to provide single entity charter air
transportation of passengers. By removing current regulatory barriers
to the sale of single entity charters by air charter brokers, the rule
is expected to result in a reduction in the opportunity costs currently
incurred by those air charter brokers that would prefer to act as a
principal, thereby resulting in a cost savings for these air charter
brokers. The magnitude of these potential costs savings cannot be
estimated, in part because under the rule the decision by an air
charter broker to act as a principal rather than as an agent is
discretionary. Therefore, the number of air charter brokers affected by
the enabling aspects of rule and that may experience a cost savings
cannot be estimated.
    The final rule establishes requirements for actions and disclosures
to be made by air charter brokers that result in more accurate and
transparent information about brokered air transportation transactions
being present in the marketplace for charterers. This includes
disclosures that are to be made by air taxi operators that may be
selling air charter flights that are operated by some other direct air
carrier. The total annual costs of the information disclosure
provisions of the final rule are estimated to range from $1.3 million
to $2.7 million, with a mid-range estimate of $2.0 million expressed in
2017 dollars.
    The Department believes that the final rule will result in benefits
from the information disclosure requirements and from the enumeration
of prohibitions on specific types of unfair or deceptive practices by
air charter brokers, air taxis, and commuter air carriers. These
benefits cannot be quantified however.
    Additional details regarding the cost savings, costs, and benefits
of the final rule can be found in the Regulatory Impact Analysis (RIA)
for the final rule which is available in the Docket for this
rulemaking.\1\
---------------------------------------------------------------------------

    \1\ U.S. Department of Transportation (DOT), Office of the
Secretary (OST). ``Increasing Charter Air Transportation Options.
Final Rule. Regulatory Impact Analysis (RIA).'' June 2018. Available
in Docket DOT-OST-2007-27057 at https://www.regulations.gov.
---------------------------------------------------------------------------

B. Executive Order 13771 (Reducing Regulation and Controlling
Regulatory Costs)

    This rule is not an E.O. 13771 regulatory action because this rule
is not significant under E.O. 12866.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (RFA) (5 U.S.C. 601 et seq.)
requires Federal agencies to consider the effects of their regulatory
actions on small businesses and other small entities, and to minimize
any significant economic impact. When an agency issues a rulemaking
proposal, the RFA requires

the agency to ``prepare and make available for public comment an
initial regulatory flexibility analysis'' which will ``describe the
impact of the proposed rule on small entities'' (5 U.S.C. 603(a)).
Section 605 of the RFA allows an agency to certify a rule, in lieu of
preparing an analysis, if the proposed rulemaking is not expected to
have a significant economic impact on a substantial number of small
entities.
    In the NPRM (78 FR 59880), in lieu of preparing an Initial
Regulatory Flexibility Analysis under section 603(a) of the RFA to
assess the impact of the rule, the Department performed a certification
analysis under section 605(b) of the RFA and certified that the rule
will not have a significant economic impact on a substantial number of
small entities.\2\ \3\ No comments were received regarding this
certification or on the threshold economic analysis and its underlying
assumptions that were presented in the NPRM.
---------------------------------------------------------------------------

    \2\ U.S. Department of Transportation (DOT), Office of the
Secretary (OST). ``Enhanced Consumer Protections for Charter Air
Transportation. Notice of Proposed Rulemaking.'' 78 FR 59880.
September 30, 2013. Available at: https://www.gpo.gov/fdsys/pkg/FR-2013-09-30/pdf/2013-23142.pdf (accessed May 21, 2018).
    \3\ Regulatory Impact Analysis for Enhanced Consumer Protections
for Charter Air Transportation. Notice of Proposed Rulemaking.
Available at: https://www.regulations.gov/contentStreamer?documentId=DOT-OST-2007-27057-0028&attachmentNumber=1&contentType=pdf (accessed May 21, 2018).
---------------------------------------------------------------------------

    The threshold economic analysis that was performed for the
certification of the proposed rule under section 605(b) of the RFA
determined that although a substantial number of air charter brokers
would likely be considered small entities that would be affected by the
rule, the economic impact on these small entities would not constitute
a significant economic impact on these small entities relative to
either gross revenues or profit. The primary changes made to the final
rule from the proposed rule include the elimination of provisions that
in the proposed rule would have applied to air ambulance services, and
to certain air transportation services performed under contract to the
Federal government. The elimination of these provisions does not
substantively alter the economic analysis and certification of the rule
under the RFA as compared to that performed for at the proposed rule
stage, other than to remove one class of regulated entity, air
ambulance services, that under the final rule are no longer affected
and would no longer be subject to disclosure requirements or other
provisions. The remaining provisions of the final rule still affect the
same classes of regulated entities including air charter brokers, air
taxis, and commuter air carriers, and affect these entities in
essentially the same manner and to the same extent in terms of the
costs and benefits of the rule.
    Accordingly, the Secretary of Transportation certifies that this
final rule will not have a significant economic impact on a substantial
number of small entities.

D. Executive Order 13132 (Federalism)

    This final rule has been analyzed in accordance with the principles
and criteria contained in Executive Order 13132 (``Federalism''). This
final rule does not include any provision that: (1) Has substantial
direct effects on the States, the relationship between the national
government and the States, or the distribution of power and
responsibility among the various levels of government; (2) imposes
substantial direct compliance costs on State and local governments; or
(3) preempts State law. States are already preempted from regulating in
this area by the Airline Deregulation Act, 49 U.S.C. 41713. Therefore,
the consultation and funding requirements of Executive Order 13132 do
not apply.

E. Executive Order 13084

    This final rule has been analyzed in accordance with the principles
and criteria contained in Executive Order 13084 (``Consultation and
Coordination with Indian Tribal Governments''). Because this final rule
does not significantly or uniquely affect the communities of the Indian
Tribal governments or impose substantial direct compliance costs on
them, the funding and consultation requirements of Executive Order
13084 do not apply.

F. Paperwork Reduction Act

    This rule adopts new information collection requirements subject to
the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 49 U.S.C. 3501 et
seq.). (PRA) The Department will publish a separate notice in the
Federal Register inviting the Office of Management and Budget (OMB),
the general public, and other Federal agencies to comment on the new
and revised information collection requirements contained in this
document. As prescribed by the PRA, the requirements will not go into
effect until OMB has approved them and the Department has published a
notice announcing the effective date of the information collection
requirements.

G. 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 rule.

H. National Environmental Policy Act

    The DOT has analyzed the environmental impacts of this action
pursuant to the National Environmental Policy Act of 1969 (NEPA) (42
U.S.C. 4321 et seq.) and has determined that it is categorically
excluded pursuant to DOT Order 5610.1C, Procedures for Considering
Environmental Impacts (44 FR 56420, Oct. 1, 1979). Categorical
exclusions are actions identified in an agency's NEPA implementing
procedures that do not normally have a significant impact on the
environment and therefore do not require either an environmental
assessment (EA) or environmental impact statement (EIS). See 40 CFR
1508.4. In analyzing the applicability of a categorical exclusion, the
agency must also consider whether extraordinary circumstances are
present that would warrant the preparation of an EA or EIS. Id.
Paragraph 3.c.5 of DOT Order 5610.1C incorporates by reference the
categorical exclusions for all DOT Operating Administrations. This
action is covered by the categorical exclusion listed in the Federal
Highway Administration's implementing procedures, ``[p]romulgation of
rules, regulations, and directives.'' 23 CFR 771.117(c)(20). The
purpose of this rulemaking is to eliminate a regulatory barrier to the
sale of charter air transportation while providing consumers with
information to make informed purchasing decisions. The agency does not
anticipate any environmental impacts, and there are no extraordinary
circumstances present in connection with this rulemaking.

    Issued this 20th day of August 2018, in Washington, DC, under
authority delegated in 49 CFR 1.27(n).
Steven G. Bradbury,
General Counsel.
    For the reasons set forth above, 14 CFR chapter II is amended as
follows:

0
1. Add Part 295 to read as follows:

PART 295--AIR CHARTER BROKERS

Subpart A--General
Sec.
295.1 Purpose.
295.3 Applicability.
295.5 Definitions.
295.7 Agency relationships.
Subpart B--Exemption Authority
295.10 Grant of economic authority; exemption from the Statute.

295.12 Suspension or revocation of exemption authority.
Subpart C--Consumer Protection
295.20 Use of duly authorized direct air carriers.
295.22 Prohibited unfair or deceptive practices or unfair methods of
competition.
295.23 Advertising.
295.24 Disclosures.
295.26 Refunds.
Subpart D--Violations
295.50 Enumerated unfair or deceptive practices or unfair methods of
competition.
295.52 Enforcement.

    Authority: 49 U.S.C. Chapters 401, 411, 413, and 417.

Subpart A--General

Sec.  295.1   Purpose.

    Air charter brokers, defined as an indirect air carrier, foreign
indirect air carrier or a bona fide agent, provide indirect air
transportation of passengers on single entity charters aboard large and
small aircraft. This part grants exemptions to such air charter brokers
from certain provisions of Subtitle VII of Title 49 of the United
States Code (Transportation), and establishes rules, including consumer
protection provisions, for the provision of such air transportation by
air charter brokers.

Sec.  295.3   Applicability.

    This part applies to any person or entity acting as an air charter
broker as defined in this part with respect to single entity charter
air transportation that the air charter broker, as an indirect air
carrier, foreign indirect air carrier, or a bona fide agent, holds out,
sells or undertakes to arrange aboard large and small aircraft.

Sec.  295.5   Definitions.

    For the purposes of this part:
    (a) Air transportation means interstate or foreign air
transportation, as defined in 49 U.S.C. 40102(a)(5), 40102(a)(23), and
40102(a)(25).
    (b) Air charter broker means a person or entity that, as an
indirect air carrier, foreign indirect air carrier, or a bona fide
agent, holds out, sells, or arranges single entity charter air
transportation using a direct air carrier.
    (c) Bona fide agent means a person or entity that acts as an agent
on behalf of a single entity charterer seeking air transportation or a
direct air carrier seeking to provide single entity charter air
transportation, when such charterer or direct air carrier, as
principal, has appointed or authorized such agent to act on the
principal's behalf.
    (d) Charterer means the person or entity that contracts with an air
charter broker, direct air carrier, or foreign direct air carrier, for
the transportation of the passengers flown on a charter flight.
    (e) Charter air transportation means charter flights in air
transportation authorized under Part A of Subtitle VII of Title 49 of
the United States Code.
    (f) Direct air carrier and foreign direct air carrier mean a U.S.
or foreign air carrier that provides or offers to provide air
transportation and that has control over the operational functions
performed in providing that transportation.
    (g) Indirect air carrier and foreign indirect air carrier mean a
person or entity that, as a principal, holds out, sells, or arranges
air transportation and separately contracts with direct air carriers
and/or foreign direct air carriers.
    (h) Single entity charter means a charter for the entire capacity
of the aircraft, the cost of which is borne by the charterer and not
directly or indirectly by individual passengers, except when individual
passengers self-aggregate to form a single entity for flights to be
operated using small aircraft.
    (i) Statute means Subtitle VII of Title 49 of the United States
Code (Transportation).
    (j) Large aircraft means any aircraft originally designed to have a
maximum passenger capacity of more than 60 seats or a maximum payload
capacity of more than 18,000 pounds.
    (k) Small aircraft means any aircraft originally designed to have a
maximum passenger capacity of 60 seats or fewer or a maximum payload
capacity of 18,000 pounds or less.

Sec.  295.7   Agency relationships.

    An air charter broker acting as an indirect air carrier or foreign
indirect air carrier may choose to act as a bona fide agent in
individual cases where a charterer, direct air carrier, or foreign
direct air carrier has expressly authorized such agency relationship.

Subpart B--Exemption Authority

Sec.  295.10   Grant of economic authority; exemption from the statute.

    To the extent necessary to permit air charter brokers, acting as
indirect air carriers or foreign indirect air carriers, to hold out,
sell, and undertake to arrange single entity charter air
transportation, such air charter brokers are exempted from the
following provisions of Subtitle VII of Title 49 of the United States
Code, except for the provisions noted, only if and so long as they
comply with the provisions and the conditions imposed by this part: 49
U.S.C. 41101-41113, 49 U.S.C. 41301-41313, and 49 U.S.C. 41501-41511.
Air charter brokers are not exempt from the following provision: 49
U.S.C. 41310 (nondiscrimination) with respect to foreign air
transportation.

Sec.  295.12   Suspension or revocation of exemption authority.

    The Department reserves the power to alter, suspend, or revoke the
exemption authority of any air charter broker acting as an indirect air
carrier, without a hearing, if it finds that such action is in the
public interest or is otherwise necessary to protect the traveling
public.

Subpart C--Consumer Protection

Sec.  295.20   Use of duly authorized direct air carriers.

    Air charter brokers are not authorized under this part to hold out,
sell, or otherwise arrange charter air transportation to be operated by
a person or entity that does not hold the requisite form of economic
authority from the Department and appropriate safety authority from the
Federal Aviation Administration and, if applicable, a foreign safety
authority. Air charter brokers are not authorized under this part to
hold out, sell, or arrange air transportation to be performed by a
direct air carrier or direct foreign air carrier that the direct
carrier is not authorized in its own right to hold out, sell, or
operate. Only direct air carriers that are citizens of the United
States as defined in 49 U.S.C. 40102(a)(15) may provide direct air
transportation operations in interstate or intrastate air
transportation.

Sec.  295.22   Prohibited unfair or deceptive practices or unfair
methods of competition.

    An air charter broker shall not engage in any unfair or deceptive
practice or unfair method of competition.

Sec.  295.23   Advertising.

    (a) All solicitation materials and advertisements, including
internet web pages, published or caused to be published by air charter
brokers shall clearly and conspicuously state that the air charter
broker is an air charter broker, and that it is not a direct air
carrier or a direct foreign air carrier in operational control of
aircraft, and that the air service advertised shall be provided by a
properly licensed direct air carrier or direct foreign air carrier.
    (b) Air charter brokers may display their name and logo on aircraft
provided the name of the direct air carrier is displayed prominently
and clearly on the aircraft and consumers are not otherwise misled into
thinking that the

air charter broker is a direct air carrier or direct foreign air
carrier.

Sec.  295.24   Disclosures.

    (a) Before entering a contract for a specific flight or series of
flights with charterers, air charter brokers must disclose to the
charterer the information in paragraphs (a)(1),(2), and (6) of this
section. Before entering a contract for a specific flight or series of
flights with charterers, air charter brokers must, upon request of the
charterer, disclose to the charterer the information in paragraphs
(a)(3), (4), and (5) of this section. The six disclosures may be
accomplished through electronic transmissions.
    (1) The corporate name of the direct air carrier or direct foreign
air carrier in operational control of the aircraft on which the air
transportation is to be performed and any other names in which that
direct carrier holds itself out to the public.
    (2) The capacity in which the air charter broker is acting in
contracting for the air transportation, i.e., as an indirect air
carrier, indirect foreign air carrier, as an agent of the charterer, or
as an agent of the direct air carrier or direct foreign air carrier
that will be in operational control of the flight.
    (3) If the air charter broker is acting as the agent of the
charterer, the air charter broker must disclose the existence of any
corporate or business relationship, including a preexisting contract,
between the air charter broker and the direct air carrier or direct
foreign air carrier that will be in operational control of the flight
that may have a bearing on the air charter broker's selection of the
direct carrier that will be in operational control of the flight.
    (4) The total cost of the air transportation paid by the charterer
to or through the air charter broker, including any air charter broker
or carrier-imposed fees or government-imposed taxes and fees. Specific
individual fees, taxes, or costs may, but are not required to be
itemized.
    (5) The existence of any fees and their amounts collected by third-
parties, if known (or a good faith estimate if not known), including
fuel, landing fees, and aircraft parking or hangar fees, for which the
charterer will be responsible for paying directly.
    (6) The existence or absence of liability insurance held by the air
charter broker covering the charterer and passengers and property on
the charter flight, and the monetary limits of any such insurance.
    (b) If any of the information in paragraph (a) of this section that
is required to be disclosed to the charterer or requested by the
charterer to be disclosed is not known at the time the contract is
entered into or changes thereafter, air charter brokers must provide
the information to the charterer within a reasonable time after such
information becomes available to the air charter broker, such that the
charterer has enough time to make an informed decision as to whether to
accept the additional information or accept the change.
    (c) If the information in paragraph (a) of this section that is
required to be disclosed to the charterer or requested by the charterer
to be disclosed is not provided to the charterer within a reasonable
time after such information becomes available to the air charter
broker, air charter brokers must provide the charterer with the
opportunity to cancel the contract for charter air transportation,
including any services in connection with such contract, and receive a
full refund of any monies paid for the charter air transportation and
services.
    (d) In all circumstances, air charter brokers must disclose prior
to the start of the air transportation the information in paragraph (a)
of this section that is required to be disclosed or that the charterer
has requested to be disclosed.
    (e) If the information in paragraph (a) of this section that is
required to be disclosed to the charterer or requested by the charterer
to be disclosed changes after the air transportation covered by the
contract has begun, air charter brokers must provide information
regarding any such changes to the charterer within a reasonable time
after such information becomes available to the air charter broker.
    (f) If the changes in information described in paragraph (e) of
this section are not provided to the charterer within a reasonable time
after becoming available to the air charter broker, air charter brokers
must provide the charterer with the opportunity to cancel the remaining
portion of the contract for charter air transportation, including any
services paid in connection with such contract, and receive a full
refund of any monies paid for the charter air transportation and
services not yet provided.

Sec.  295.26   Refunds.

    Air charter brokers must make prompt refunds of all monies paid for
charter air transportation when such transportation cannot be performed
or when such refunds are otherwise due, as required by 14 CFR 374.3 and
12 CFR part 226 for credit card purchases, and within 20 days after
receiving a complete refund request for cash and check purchases.

Subpart D--Violations

Sec.  295.50   Enumerated unfair or deceptive practices or unfair
methods of competition.

    (a) Violations of this Part shall be considered to constitute
unfair or deceptive practices or unfair methods of competition in
violation of 49 U.S.C. 41712.
    (b) In addition to paragraph (a) of this section, the following
enumerated practices, among others, by an air charter broker are unfair
or deceptive practices or unfair methods of competition in violation of
49 U.S.C. 41712:
    (1) Misrepresentations that may induce members of the public to
reasonably believe that the air charter broker is a direct air carrier
or direct foreign air carrier when that is not the case.
    (2) Misrepresentations as to the quality or kind of service or type
of aircraft.
    (3) Misrepresentations as to the time of departure or arrival,
points served, route to be flown, stops to be made, or total trip-time
from point of departure to destination.
    (4) Misrepresentations as to the qualifications of pilots or safety
record or certification of pilots, aircraft, or air carriers.
    (5) Misrepresentations that passengers are directly insured when
they are not so insured. For example, where the only insurance in force
is that protecting the direct air carrier or air charter broker in
event of liability.
    (6) Misrepresentations as to fares or charges for air
transportation or services in connection therewith.
    (7) Misrepresentations as to membership in or involvement with an
organization that audits air charter brokers, direct air carriers, or
direct foreign air carriers, or that the air charter broker or any
direct carriers to be used for a particular flight meets a standard set
by an auditing organization.
    (8) Representing that a contract for a specified direct air
carrier, direct foreign air carrier, aircraft, flight, or time has been
arranged without a binding commitment with a direct air carrier or
direct foreign air carrier for the furnishing of such transportation as
represented.
    (9) Selling or contracting for air transportation while knowing or
having reason to know or believe that such air transportation cannot be
legally performed by the direct air carrier or foreign direct air
carrier that is to perform the air transportation.

    (10) Misrepresentations as to the requirements that must be met by
charterers to qualify for charter flights.
    (11) Using or displaying or permitting or suffering to be used or
displayed the name, trade name, slogan or any abbreviation thereof, of
the air charter broker in advertisements, on or in places of business,
or on or in aircraft or any other place in connection with the name of
an air carrier or foreign air carrier or with services in connection
with air transportation, in such manner that it may mislead or confuse
potential consumers with respect to the status of the air charter
broker.

Sec.  295.52   Enforcement.

    In case of any violation of any of the provisions of the Statute,
or of this part, or any other rule, regulation, or order issued under
the Statute, the violator may be subject to a proceeding under 49
U.S.C. 46101 before the Department, or 49 U.S.C. 46106-46108 before a
U.S. District Court, as the case may be, to compel compliance. The
violator may also be subject to civil penalties under the provisions of
49 U.S.C. 46301, or other lawful sanctions, including revocation of the
exemption authority granted in this part. In the case of a willful
violation, the violator may be subject to criminal penalties under the
provisions of 49 U.S.C. 46316.

PART 298--EXEMPTIONS FOR AIR TAXI AND COMMUTER AIR CARRIER
OPERATIONS

0
2. The authority citation for Part 298 is revised to read as follows:

    Authority:  49 U.S.C. 329 and chapters 401, 411, and 417.

0
3. Revise Sec.  298.80 to read as follows:

Sec.  298.80  Disclosures.

    (a) Before entering a contract for a specific flight or series of
flights with charterers, air taxi operators and commuter air carriers
must disclose to the charterer the information in paragraphs (a)(1) and
(2) of this section. Before entering a contract for a specific flight
or series of flights with charterers, air taxi operators and commuter
air carriers must, upon request of the charterer, disclose to the
charterer the information in paragraphs (a)(3), (4), and (5) of this
section. The disclosures may be accomplished through electronic
transmissions.
    (1) That the flight will be performed by another direct air carrier
or direct foreign air carrier if that is the case. The corporate name
of the direct air carrier or direct foreign air carrier in operational
control of the aircraft on which the air transportation is to be
performed and any other names in which that direct carrier holds itself
out to the public.
    (2) If the flight is to be performed by another direct air carrier
or direct foreign air carrier, the capacity in which the air taxi
operator or commuter air carrier is acting in contracting for the air
transportation, i.e., as a principal, as an agent of the charterer, or
as an agent of the direct air carrier that will be in operational
control of the flight.
    (3) If the flight is to be performed by another direct air carrier
or foreign direct air carrier and the air taxi operator or commuter air
carrier is acting as the agent of the charterer, the air taxi operator
or commuter air carrier must disclose the existence of any corporate or
business relationship, including a preexisting contract, between the
air taxi operator or commuter air carrier and the direct carrier that
will be in operational control of the flight that may have a bearing on
the air taxi operator's or commuter air carrier's selection of the
direct carrier that will be in operational control of the flight.
    (4) The total cost of the air transportation paid by the charterer
to or through the air taxi operator or commuter air carrier, including
any carrier-imposed fees or government-imposed taxes and fees. Specific
individual fees, taxes, or costs may, but are not required to be
itemized.
    (5) The existence of any fees and their amounts collected by third
parties, if known (or a good faith estimate if not known), including
fuel, landing fees, and aircraft parking or hangar fees for which the
charterer will be responsible for paying directly.
    (b) If any of the information in paragraph (a) of this section that
is required to be disclosed to the charterer or requested by the
charterer to be disclosed is not known at the time the contract is
entered into or changes thereafter, air taxi operators and commuter air
carriers must provide the information to the charterer within a
reasonable time after such information becomes available to the air
taxi operator or commuter air carrier, such that the charterer has
enough time to make an informed decision as to whether to accept the
additional information or accept the change.
    (c) If the information in paragraph (a) of this section that is
required to be disclosed to the charterer or requested by the charterer
to be disclosed is not provided to the charterer within a reasonable
time after such information becomes available to the air taxi operator
or commuter air carrier, air taxi operators and commuter air carriers
must provide the charterer with the opportunity to cancel the contract
for air transportation, including any services in connection with such
contract, and receive a full refund of any monies paid for the charter
air transportation and services.
    (d) Except in exigent circumstances particular to a passenger, air
taxi operators and commuter air carriers must disclose prior to the
start of the air transportation the information in paragraph (a) of
this section that is required or requested to be disclosed.
    (e) If the information in paragraph (a) of this section that is
required to be disclosed to the charterer or requested by the charterer
to be disclosed changes after the air transportation covered by the
contract has begun, air taxi operators and commuter air carriers must
provide information regarding any such changes to the charterer within
a reasonable time after such information becomes available to the air
taxi operator or commuter air carrier.
    (f) If the changes in information described in paragraph (e) of
this section are not provided to the charterer within a reasonable time
after becoming available to the air taxi operator or commuter air
carrier, air taxi operators and commuter air carriers must provide the
charterer with the opportunity to cancel the remaining portion of the
contract for charter air transportation, including any services paid
for in connection with such contract, and receive a full refund of any
monies paid for the charter air transportation and services not yet
provided.

0
4. Add Subpart I, consisting of Sec. Sec.  298.90 and 298.92, to read
as follows:

Subpart I--Violations

Sec.  298.90  Prohibited unfair or deceptive practices or unfair
methods of competition.

    (a) Violations of this Part shall be considered to constitute
unfair or deceptive practices or unfair methods of competition in
violation of 49 U.S.C. 41712.
    (b) In addition to paragraph (a) of this section, the following
enumerated practices, among others, by an air taxi operator or commuter
air carrier are unfair or deceptive practices or unfair methods of
competition in violation of 49 U.S.C. 41712:
    (1) Misrepresentations that may induce members of the public to
reasonably believe that the air taxi operator or commuter air carrier
will be, or is, in operational control of a flight when that is not the
case.
    (2) Misrepresentations as to the quality or kind of service or type
of aircraft.

    (3) Misrepresentations as to the time of departure or arrival,
points served, route to be flown, stops to be made, or total trip-time
from point of departure to destination.
    (4) Misrepresentations as to the qualifications of pilots or safety
record or certification of pilots, aircraft, or air carriers.
    (5) Misrepresentations that passengers are directly insured when
they are not so insured. For example, where the only insurance in force
is that protecting the air taxi operator or commuter air carrier in the
event of liability.
    (6) Misrepresentations as to fares or charges for air
transportation or services in connection therewith.
    (7) Misrepresentations as to membership in or involvement with an
organization that audits direct air carriers or that the direct air
carrier to be used for a flight meets a standard set by an auditing
organization.
    (8) Representing that a contract for a specified direct air
carrier, aircraft, flight, or time has been arranged without a binding
commitment with a direct air carrier for the furnishing of such
transportation as represented.
    (9) Selling or contracting for air transportation while knowing or
having reason to know or believe that such air transportation cannot be
legally performed by the direct air carrier or foreign direct air
carrier that is to perform the air transportation.
    (10) Misrepresentations as to the requirements that must be met by
charterers in order to qualify for charter flights.
    (11) Using or displaying or permitting or suffering to be used or
displayed the name, tradename, slogan or any abbreviation thereof, of
an air charter broker in advertisements, on or in places of business,
or on or in aircraft or any other place in connection with the name of
the air taxi or commuter air carrier in such manner that it may mislead
or confuse potential consumers with respect to the status of the air
charter broker.

Sec.  298.92   Enforcement.

    In case of any violation of the provisions of the Statute, or this
part, or any other rule, regulation, or order issued under the Statute,
the violator may be subject to a proceeding pursuant to section 46101
of the Statute before the Department, or sections 46106 through 46108
of the Statute before a U.S. District Court, as the case may be, to
compel compliance therewith; or to civil penalties pursuant to the
provisions of section 46301 of the Statute; or, in the case of a
willful violation, to criminal penalties pursuant to the provisions of
section 46316 of the Statute; or other lawful sanctions including
revocation of operating authority.

[FR Doc. 2018-18345 Filed 9-14-18; 8:45 am]
 BILLING CODE 4910-9X-P