[Federal Register Volume 79, Number 100 (Friday, May 23, 2014)]
[Proposed Rules]
[Pages 29969-30002]
[FR Doc No: 2014-11993]

Vol. 79

Friday,

No. 100

May 23, 2014

Part III

 Department of Transportation

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14 CFR Parts 234, 244, et al.

Transparency of Airline Ancillary Fees and Other Consumer Protection
Issues; Proposed Rule

Federal Register / Vol. 79 , No. 100 / Friday, May 23, 2014 /
Proposed Rules

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Parts 234, 244, 250, 255, 256, 257, 259, and 399

[Docket No. DOT-OST-2014-0056]
RIN 2105-AE11

Transparency of Airline Ancillary Fees and Other Consumer
Protection Issues

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

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department is seeking comment on a number of proposals to
enhance protections for air travelers and to improve the air travel
environment, including a proposal to clarify and codify the
Department's interpretation of the statutory definition of ``ticket
agent.'' By codifying the Department's interpretation, the Department
intends to ensure that all entities that manipulate fare, schedule, and
availability information in response to consumer inquiries and receive
a form of compensation are adhering to all of the Department's consumer
protection requirements that are applicable to ticket agents such as
the full-fare advertising rule and the code-share disclosure rule.
    This NPRM also proposes to require airlines and ticket agents to
disclose at all points of sale the fees for certain basic ancillary
services associated with the air transportation consumers are buying or
considering buying. Currently, some consumers may be unable to
understand the true cost of travel while searching for airfares, due to
insufficient information concerning fees for ancillary services. The
Department is addressing this problem by proposing that carriers share
real-time, accurate fee information for certain optional services with
ticket agents.
    Other proposals in this NPRM to enhance airline passenger
protections include: Expanding the pool of ``reporting'' carriers;
requiring enhanced reporting by mainline carriers for their domestic
code-share partner operations; requiring large travel agents to adopt
minimum customer service standards; codifying the statutory requirement
that carriers and ticket agents disclose any airline code-share
arrangements on their Web sites; and prohibiting unfair and deceptive
practices such as undisclosed biasing in schedule and fare displays and
post-purchase price increases. The Department is also considering
whether to require ticket agents to disclose the carriers whose tickets
they sell in order to avoid having consumers mistakenly believe they
are searching all possible flight options for a particular city-pair
market when in fact there may be other options available. Additionally,
this NPRM would correct drafting errors and make minor changes to the
Department's second Enhancing Airline Passenger Protections rule to
conform to guidance issued by the Department's Office of Aviation
Enforcement and Proceedings (Enforcement Office) regarding its
interpretation of the rule.

DATES: Comments must be received by August 21, 2014. Comments received
after this date will be considered to the extent practicable.

ADDRESSES: You may file comments identified by the docket number DOT-
OST-2014-0056 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., Room W12-140, Washington, DC
20590-0001.
     Hand Delivery or Courier: The Docket Management Facility
is located on the West Building, Ground Floor, of the U.S. Department
of Transportation,1200 New Jersey Ave. SE., Room W12-140, between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
     Fax:<PHONE_NUMBER>.
    Instructions: You must include the agency name and the Docket
Number DOT-OST-2014-0056 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, a business, a 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: Kimberly Graber or Blane A. Workie,
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_ADDRESS>or<EMAIL_ADDRESS>(email).

SUPPLEMENTARY INFORMATION:

Executive Summary

1. Purpose of the Regulatory Action

    The U.S. Department of Transportation (DOT) is issuing this notice
of proposed rulemaking (NPRM) to improve the air travel environment of
consumers based on its statutory authority to prohibit unfair or
deceptive practices in air transportation, 49 U.S.C. 41712. The
Department is taking action to strengthen the rights of air travelers
when purchasing airline tickets from ticket agents, ensure that
passengers have adequate information about regional carriers'
operations to make informed decisions when selecting flights, increase
notice to consumers of some of the fees carriers charge for optional or
ancillary services, and prohibit unfair and deceptive practices such as
post-purchase price increases and undisclosed biasing in fare and
schedule displays.

2. Summary of Regulatory Provisions

------------------------------------------------------------------------
                 Subject                      Proposed rule
------------------------------------------------------------------------
1.......  Codification of the   Codifies the Department's broad
           Department's          interpretation of the statutory
           Interpretation of     definition of the term ``ticket agent''
           ``Ticket Agent''.     to include Global Distribution Systems
                                 (GDS), websites with flight metasearch
                                 engines, and similar intermediaries in
                                 the sale of air transportation, if the
                                 intermediary is compensated in
                                 connection with the sale of air
                                 transportation.
2.......  Disclosure of         Two alternative proposals regarding
           Certain Ancillary     disclosure of fee information for basic
           Fee Information to    ancillary services.
           Consumers (``GDS
           Issue'').
                                    Proposal 1:
                                    Requires carriers to disclose fee
                                    information for basic ancillary
                                    services to all ticket agents to
                                    which a carrier provides its fare
                                    information, including GDSs.

                                    Proposal 2:
                                    Requires carriers to disclose fee
                                    information for basic ancillary
                                    services to all ticket agents to
                                    which a carrier provides its fare
                                    information and which sell air
                                    transportation directly to
                                    consumers; this would exclude ticket
                                    agents that arrange but don't sell
                                    air transportation, such as GDSs.
                                Both proposals would:
                                    Define basic ancillary
                                    services as first checked bag,
                                    second checked bag, one carry-on
                                    item, and advance seat selection, to
                                    the extent these options are offered
                                    by the carrier.
                                    Not require a carrier to
                                    allow ticket agents to sell these
                                    services; or if a carrier permits
                                    ticket agents to sell those
                                    services, it would not require
                                    carriers to charge the same fee for
                                    the service as the agents. If a
                                    carrier is not selling the service
                                    through a ticket agent, the carrier
                                    and ticket agent are responsible for
                                    disclosing to consumers when and how
                                    fees should be paid, and for baggage
                                    fees, must honor the fee quoted at
                                    the time of purchase.
                                    Require all ticket agents
                                    and airlines that provide fare
                                    information to consumers to also
                                    provide fee information for basic
                                    ancillary services to consumers.
                                    This information should be made
                                    available to the consumer at the
                                    point in which fares are being
                                    compared.
                                    Prohibit ticket agents with
                                    existing contractual agreements with
                                    a carrier for the distribution of
                                    the carrier's fare and schedule
                                    information from charging additional
                                    or separate fees for distribution of
                                    information about basic ancillary
                                    services--i.e., a ticket agent
                                    cannot unilaterally change contract
                                    terms to require additional payments
                                    to upload and disseminate the
                                    required ancillary service fee
                                    information. Existing contracts
                                    should be honored until the contract
                                    expires unless mutually renegotiated
                                    by the parties.
3.......  Expansion of          Expands the pool of reporting carriers
           Reporting Carriers    from any carrier that accounts for at
           for Service Quality   least 1% of domestic scheduled
           Data.                 passenger revenue to any carrier that
                                 accounts for at least 0.5% of domestic
                                 scheduled passenger revenue.
                                (This definition would cover carriers
                                 such as Spirit Airlines, Allegiant
                                 Airlines, and Republic Airlines.)
4.......  Data Reporting for    Requires reporting carriers to include
           Domestic Code-Share   data for their domestic scheduled
           Partner Operations.   flights operated by their code-share
                                 partners:
                                    On-time Performance
                                    Mishandled Baggage
                                    Oversales
5.......  Customer Service      Requires large ticket agents (those with
           Commitments (Large    annual revenue of $100 million or more)
           Ticket Agents).       to adopt certain customer service
                                 commitments, including a commitment to:
                                    Provide prompt refunds where
                                    ticket refunds are due, including
                                    fees for optional services that
                                    consumers purchased from them but
                                    were not able to use due to flight
                                    cancellation or oversale situation;
                                    Provide an option to hold a
                                    reservation at the quoted fare
                                    without payment, or to cancel
                                    without penalty, for 24 hours;
                                    Disclose cancellation
                                    policies, seating configurations,
                                    and lavatory availability on
                                    flights;
                                    Notify customers in a timely
                                    manner of itinerary changes; and
                                    Respond promptly to customer
                                    complaints.
6.......  Transparency in       Amends the Department's code-share
           Display of Code-      disclosure regulation to codify the
           Share Operations as   statutory requirement that carriers and
           Required by 49        ticket agents must disclose any code-
           U.S.C. 41712(c).      share arrangements on their Web sites.
                                 Requires disclosure on the first
                                 display presented in response to a
                                 search of a requested itinerary for
                                 each itinerary involving a code-share
                                 operation. Disclosure must be in a
                                 format that is easily visible to a
                                 viewer.
7.......  Disclosure of the     Seeks comments regarding whether:
           Carriers Marketed
           (Applies to Large
           Travel Agents Only).
                                    To require large ticket
                                    agents to maintain and display lists
                                    of carriers whose tickets they
                                    market and sell; and if required,
                                    how to disclose the carriers that
                                    are marketed and sold by the ticket
                                    agent.
8.......  Prohibition of        Prohibits undisclosed biasing by
           Display Bias.         carriers and ticket agents in any
                                 Internet displays of the fare and
                                 schedule information of multiple
                                 carriers.
9.......  Prohibition on Post-  Revises the existing prohibition on post-
           Purchase Price        purchase increases with respect to the
           Increases For         price of ancillary services that are
           Ancillary Services.   not purchased with the air
                                 transportation so carriers and other
                                 sellers of air transportation are only
                                 prohibited from increasing the price
                                 for the carriage of baggage. The price
                                 for other ancillary services not
                                 purchased at the time of ticket
                                 purchase may be increased until the
                                 consumer purchases the service itself.
------------------------------------------------------------------------

3. Summary of Preliminary Regulatory Analysis

    Summary of Monetized Costs and Monetized Benefits Over 10 Years,
                         Discounted at 7 Percent
                              [Millions $]
------------------------------------------------------------------------
               Provisions                      Costs         Benefits
------------------------------------------------------------------------
1: Definition of ticket agent...........             N/A             N/A
2: Disclosure of certain ancillary fees          $ 46.15          $ 25.1
 information to consumers...............
3 & 4: Reduce reporting threshold to               29.75             N/A
 0.50% and submit additional set of
 reports that includes code-share
 partners...............................
5: Minimum customer service standards               2.97             N/A
 for ticket agents......................
6: Display bias prohibition.............             N/A             N/A
7: Disclosure of code-share segments in              N/A             N/A
 schedules, advertisements and
 communications with consumers..........
8: Disclosure of carriers marketed......             N/A             N/A
9: Prohibition of post-purchase price                N/A             N/A
 increase for ancillary services........
                                         -------------------------------
    Total (Proposed Provisions).........           80.51            25.1
------------------------------------------------------------------------

    The quantifiable costs of this rulemaking exceed the quantifiable
benefits. However, when unquantified costs and benefits are taken into
account, we anticipate that the benefits of this rulemaking would
justify the costs. It was not possible to measure the benefits of the
proposals in this rulemaking, except for the benefits for provision 2.
For example, there are a number of unquantified benefits for the
proposals such as improved on time performance for newly reporting
carriers and code-share flights of reporting carriers, improved
customer goodwill towards ticket agents, and greater competition and
lower overall prices for ancillary services and products. There are
also some unquantified costs such as increased management costs to
improve carrier performance, increased staff time to address consumer
complaints, and decreased carrier flexibility to customize services,
though we believe these costs would be minimal. If the value of the
unquantified benefits, per passenger, is any amount greater than one
cent and the unquantified costs are minimal as anticipated, then the
entire rule is expected to be net beneficial.

Background

    This NPRM addresses several recommendations to the Department
regarding aviation consumer protection as well as two issues identified
in the second Enhancing Airline Passenger Protections final rule. In
that final rule, the Department instituted many passenger protections
including expanding the rules regarding lengthy tarmac delays to non-
U.S. carriers, requiring U.S. and non-U.S. carriers to adopt and adhere
to minimum customer service standards, increasing the amounts of
involuntarily denied boarding compensation, enhancing Web site
disclosures for baggage fees and other ancillary service fees, and
prohibiting post-purchase price increases. See 76 FR 23110 (April 25,
2011). However, the Department declined to impose a requirement on
airlines to provide their fee information for ancillary services to
Global Distribution Systems (GDSs), stating that the Department needed
to learn more about the complexities of the issue. This NPRM addresses
the issue of disclosure of ancillary services fee information.
Additionally, subsequent to the publication of the 2011 final rule, in
response to questions received regarding the post-purchase price
increase rule, the Department's Office of Aviation Enforcement and
Proceedings (Enforcement Office) issued Guidance on Price Increases of
Ancillary Services and Products not Purchased with the Ticket on
December 28, 2011 available at http://www.dot.gov/airconsumer. In that
guidance, the Enforcement Office noted the Department's decision to
revisit in this NPRM the rule as it relates to post-purchase price
increases for certain ancillary services not purchased with the ticket.
    This NPRM also addresses certain recommendations made by two
Federal advisory committees--the Future of Aviation Advisory Committee
(FAAC) and the Advisory Committee on Aviation Consumer Protection. The
FAAC was established on April 16, 2010, with the mandate to provide
information, advice, and recommendations to the Secretary of
Transportation on ensuring the competitiveness of the U.S. aviation
industry and its capability to address the evolving transportation
needs, challenges, and opportunities of the global economy. On December
15, 2010, the FAAC delivered a report to the Secretary with 23
recommendations. FAAC Recommendation 11 addressed disclosure of
ancillary service fees, code-share operations, and air travel
statistics. This NPRM incorporates many aspects of FAAC Recommendation
11. For more information regarding the FAAC, please visit http://www.dot.gov/faac.
    More recently, on May 24, 2012, the Advisory Committee on Aviation
Consumer Protection was established to advise the Secretary in carrying
out activities related to airline customer service improvements. On
October 22, 2012, this Committee submitted its first set of
recommendations to the Secretary on a wide range of aviation consumer
issues, including adopting FAAC Recommendation 11, which urged greater
transparency in the disclosure of ancillary fees and code-share
operations. This NPRM addresses the recommendations by the Committee to
ensure transparency in air carrier pricing, to require on-time
performance data be reported to the Department for all flights and
airlines, and to mandate disclosures by online travel agencies and
other agents as to which carriers' services they sell. Records relating
to the advisory committee, including a transcript and minutes of its
meetings and its full recommendation report, are contained in the
Department's docket, which is available at http://www.regulations.gov
under docket number DOT-OST-2012-0087.

Notice of Proposed Rulemaking

1. Clarifying the Definition of ``Ticket Agent''

    This NPRM proposes a regulatory definition for the statutory term
``ticket agent'' to clarify for the industry what type of entity the
Department considers to be a ticket agent and to ensure that its
consumer protection regulations apply to all entities that hold out
airfare, schedule, and availability information to consumers. Consumers
and stakeholders in the air transportation industry have identified
relatively new entities, such as meta-search engines, as primary
information sources and entry points for the purchase of air
transportation. However, such entities do not consistently provide the

information that the Department views as vital to consumer protection
such as code-share disclosure. For example, consumers may begin their
search for air transportation options by selecting their flights on one
Web site and then completing their purchase on another Web site and, in
the process, not be provided disclosures regarding code-share
operations, baggage fee information, and other consumer protection
information that the Department requires air carriers, foreign air
carriers, and ticket agents provide to consumers early in the process.
    The Department is considering codifying in its regulations its
interpretation of the statutory definition of ``ticket agent'' to make
clear that all entities involved in the sale or distribution of air
transportation, including those intermediaries that do not themselves
sell air transportation but arrange for air transportation and receive
compensation in connection with the sale of air transportation, are
ticket agents subject to the Department's regulations regarding the
display of airfare information. The definition would include all
commercial entities that are involved in arranging for the sale of air
transportation through the Internet (among other channels), regardless
of whether an entity received a share of revenue from a third party for
transactions that originated on the entity's Web site, or the entity
charged a commission for each transaction that originated on its Web
site, or the entity was simply compensated on a cost-per-click for
advertisements, or was compensated on some other basis.
    The means by which airline itineraries are commonly displayed and
sold has changed dramatically and continues to evolve. New entities
that were not previously involved in the distribution of air
transportation are now an important source of information for consumers
as well as a means of distribution for carriers. Online entities, such
as Web sites that provide a variety of travel information, advertising,
and links as well as meta-search engines that provide flight search
tools including fare and schedule information, are now frequently used
by consumers to research airfares and schedules and to connect to the
airline or travel agent Web site that ultimately books and/or fulfills
the consumer's ticket purchase. Meanwhile, some airlines provide direct
electronic access to their own internal systems providing fare,
schedule, and availability information to certain Internet entities
with the condition that when displaying that carrier's flight
itineraries in flight search results, the entity must provide a link
only to the airline's Web site and not to travel agent Web sites that
have similar information. Staff members from the Department have been
informed that, in some cases, entities such as meta-search engines and
other Web sites that operate flight search tools receive a commission
or some other compensation for transactions that originate on their Web
sites, for example, from a flight search tool that allowed the consumer
to select a particular itinerary. However, in other cases, entities
that are involved in arranging for air transportation by allowing a
consumer to select an itinerary using a flight search tool are
compensated for advertising and not for the individual transaction. But
regardless of the manner of compensation, consumers are increasingly
relying on those Internet entities in making their air transportation
purchasing decisions. In some cases, these Internet entities display
schedules, fares and availability but direct consumers to other Web
sites to purchase and are not the final point of sale for an airline
ticket. They may be earning revenue through advertising sales and
providing flight search capabilities based on data gathered from other
sources. These entities would be included under our proposed definition
of ticket agent along with traditional ticket agents. The Department
seeks comment on the differences between traditional ticket agents and
entities that provide flight search tools but direct consumers to
another site to finalize their purchase. Are there considerations
regarding entities that are not the final point of sale for air
transportation that should be considered in connection with the
regulations proposed in this rulemaking? DOT also seeks comment on the
impact on these entities of complying with the Department's existing
regulations applicable to ticket agents. For example, what are the
impacts on ticket agents that are not the final point of sale for air
transportation of the regulations in 14 CFR 399.80 (e.g., prohibition
against misrepresentation of quality or kind of service, type or size
of aircraft, time of departure or arrival, and so forth; prohibition
against misrepresentation of fares and charges)? Are those impacts
different from the impacts on traditional ticket agents or other agents
that have a different business model?
    As noted above, consumers may begin their search by selecting their
flights on one Web site and then completing their purchase on another
Web site and, in the process, bypass the pages containing disclosures
regarding code-share operations, baggage fee information, and other
consumer protection information that the Department requires air
carriers, foreign air carriers, and ticket agents to provide to
consumers before an air transportation purchase is finalized.
Accordingly, the Department is considering a definition of ``ticket
agent'' that would clarify that global distribution systems, meta-
search Internet sites that offer a flight search tool and are
compensated for advertisements that are displayed on the same Web site
(even if the advertising content is not directly related to air
travel), and other such compensated intermediaries, regardless of the
manner in which they are compensated for their role in arranging air
transportation, are ticket agents for the purposes of the Department's
air transportation consumer protection regulations. Such a broad
definition would ensure that all commercial entities that receive
compensation in connection with air transportation advertising/
marketing and that are involved in arranging for air transportation
would be required to provide consumers with certain essential
information early in the process (e.g., information regarding code-
share operations, disclosure about baggage fees). A broad definition of
``ticket agent'' would better ensure passengers are protected
regardless of the path they choose to arrange for air transportation.
Additionally, this rulemaking proposes to prohibit ticket agents from
incorporating undisclosed bias into their displays, and solicits
comment on whether ticket agents should be required to disclose
information about incentive payments and/or identify the carriers the
ticket agent markets or does not market.
    We are not aware of whether there is a widespread problem of
consumers being confused by Web sites that do not sell tickets but do
provide fare, schedule, and availability information that consumers are
relying on in planning their travel. However, we believe that there is
a risk of harm because some Web sites do not provide all of the
disclosures required by the Department. We seek comment from any
consumers who have faced these types of problems.
    Past litigation has made clear that GDSs are ticket agents. Sabre
v. Department of Transportation, 429 F.3d 1113 (D.C. Cir. 2005).
However, meta-search engines that offer a flight search tool have
entered into the marketing and distribution of fare and schedule
information. In addition, new entities have emerged that receive direct
or indirect compensation from the advertising and/or sale of air
transportation, while offering flight

search tools and fare displays. The Department sees a benefit in
clarifying that those entities are ticket agents, regardless of whether
or not they are the final point of sale for air transportation, and are
required to comply with air transportation consumer protection
regulations that apply to ticket agents. Additionally, at this point,
the Department cannot predict the new types of entities that will
engage in the marketing and distribution of fare and schedule
information or how the marketing and distribution of fare and schedule
information will change with new developments in technology. However,
it appears that some of these entities may have taken, or will take in
the future, a quasi-GDS role. Accordingly, the Department believes its
regulations should be clear and should apply equally to entities that
are new to the air transportation marketplace as well as existing
entities already involved in the marketing and distribution of air
transportation. To be clear, only entities operating Web sites that
provide flight search tools that manipulate, manage, and display fare,
schedule, and availability information and are tools that the Web site
operator creates or manipulates and has ultimate control over would be
covered. For example, entities such as Kayak and Google that offer
flight search tools with fare, schedule, and availability information
would be covered. An entity that operated a Web site that simply
displayed airfare advertisements without actual flight search
capability under its control would not be covered.
    The Department seeks comment on whether the definition of ``ticket
agent'' should be codified in the regulation so as to clarify the
Department's view that it is a broad term and includes entities such as
meta-search engines that provide a flight search tool and other Web
sites that act as intermediaries between consumers and the ultimate
entity that sells the air transportation, whether an airline or another
ticket agent. The Department also seeks comment on whether the proposed
definition of a ticket agent, which includes an entity that arranges
for or sells air transportation for compensation (regardless of the
form of compensation), is sufficiently broad and meets the Department's
goal of encompassing the variety of entities that use the Internet to
arrange for the sale of air transportation. For example, under the
proposed definition, an entity that provides a flight search tool that
allows consumers to select an itinerary that can be purchased on
another site and displays air transportation advertisements for which
the entity is compensated on a ``cost-per-click'' basis would fall
under the definition of a ticket agent. The Department also seeks
comment on whether the definition of a ticket agent should include all
entities that operate flight search tools that display itineraries and
allow consumers to begin the booking process but are not compensated
for the specific transaction. We also request comments on the costs and
benefits to consumers, airlines, meta-search engines, and other
entities involved in arranging for and selling air transportation, of
codifying the definition of ``ticket agent'' to include air
transportation intermediaries such as meta-search engines that offer a
flight search tool.
    As a related matter, the Department is considering whether carriers
should be prohibited from restricting the information provided by
ticket agents when those ticket agents do not sell air transportation
directly to consumers but rather provide consumers with different
airlines' flight information for comparison shopping. For example, the
Department has been informed that some carriers may not allow certain
entities with Web sites that operate flight search tools to display the
carrier's fare, schedule and availability information. Should carriers
be prohibited from imposing restrictions on ticket agents that prevent
ticket agents from including a carrier's schedules, fares, rules, or
availability information in an integrated display?
    Also, we understand that a number of carriers restrict the links
ticket agents may place next to a particular flight itinerary on a
display, and in many cases only permit a link to the carrier's own Web
site. Why might carriers place such restrictions on travel agents?
Should the Department require carriers to allow ticket agents to
provide links to the Web sites of the entities listed in an integrated
display, including non-carrier Web sites?

2. Display of Ancillary Service Fees Through All Sales Channels

Need for Rulemaking

    Many services or products previously included in the price of an
airline ticket such as checked baggage, advance seat assignments and
priority boarding are now sold separately. Traditional and online
travel agents generally access their airline ticket inventory through
large Global Distribution Systems (GDSs) and often do not have access
to the fees associated with ancillary services/products and thus cannot
disclose this information to consumers without looking directly at
carriers' Web sites. In discussions with the Department, consumers and
corporate travel companies have identified the lack of complete
transparency of fees for unbundled services and products as a problem.
Specifically, when consumers are making decisions on whether to
purchase air transportation and if so, from which entity, they continue
to have difficulty determining the total cost of travel because the
fees for the basic ancillary services are not available through all
sales channels. This lack of transparency also creates challenges in
the corporate and managed travel community. Currently, approximately
50% of air transportation is booked through a channel that involves a
ticket agent rather than the airline's own reservation agents or its
Web site, whether it is through a traditional brick-and-mortar travel
agency, a corporate travel agent, or an online travel agency.\1\
Consumers and corporate travel companies often search various Web sites
to try to determine the fees for ancillary services. They have raised
concerns with the Department regarding how the lack of clear disclosure
of ancillary fees makes it difficult to determine the true cost of
travel and compare different airline flight and fare options.
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    \1\ According to estimates by PhoCusWright (2011), 31 percent of
passengers purchased tickets through Travel Management Companies
(TMCs) (e.g., American Express, Carlson Wagonlit), and 16 percent
via an online travel agency (OTA). Since both TMCs and OTAs use GDSs
to book air tickets, the share of passengers who will benefit from
improved salience on ancillary service fees would be the total of
both ticket distribution channels (47 percent), unless TMCs or OTAs
connect directly to airlines. Other higher proxy estimates were also
found. InterVISTAS estimated that 50 percent of US national round
trip passengers book their ticket via a GDS.
---------------------------------------------------------------------------

    In the NPRM that led to the second Enhancing Airline Passenger
Protections rule, the Department reiterated its goal of increasing
notice to consumers of the fees carriers charge for optional or
ancillary services, including checked baggage fees and carry-on baggage
fees, by proposing a series of disclosure requirements related to
ancillary service fees. When drafting the disclosure regime in the
second Enhancing Airline Passenger Protections rule, the Department
recognized that a problem in the marketplace existed because ticket
agents did not have access to real-time and accurate fee data for
ancillary services. Therefore, in the NPRM, the Department asked
whether it should require that carriers provide fee information for
ancillary services and products to the GDSs in which each carrier
participates, in an up-to-date and useful fashion. Although the

Department did not propose rule text, it invited comment on the ``GDS
proposal.'' The comment period closed on September 24, 2010.
    The Department received numerous comments regarding the GDS
proposal from interested industry parties and consumer advocacy groups
both before and after the closing of the comment period. The comments
demonstrated to the Department that before it issued a final rule it
needed more information on the contractual and historical relationships
between the GDSs and the carriers, as well as an in-depth cost-benefit
analysis of such a requirement. Therefore, in the Final Rule for
Enhancing Airline Passenger Protections published in the Federal
Register on April 25, 2011, 76 FR 23110, the Department did not include
a requirement that carriers provide all ancillary service fee
information to GDSs. Instead, it stated that it would continue to
consider the issue, gather more information, and defer final action on
this topic.
    In the 2011 final rule, the Department did impose various
disclosure requirements on both carriers and travel agents via the new
14 CFR 399.85. However, in recognition of the fact that the Department
had not required the dissemination of ancillary service fee information
through GDSs and, therefore, agents would not necessarily have access
to the most up-to-date and accurate ancillary service fee information,
the Department promulgated different baggage disclosure requirements
for ticket agents from those required of carriers. For example, the
rule allows ticket agents with Web sites marketed to consumers in the
United States to disclose baggage fees through hyperlinks displayed
with itinerary search results and included in e-ticket confirmations
which link to static lists. Also, 14 CFR 399.85(a) requires carriers
but not ticket agents to disclose on their homepage for three months
any change to their baggage fees. Additionally, under 14 CFR 399.85(d),
carriers must provide a listing of all optional service fees on one Web
page. There must be a link to that listing on the homepage. Agents are
not required to have this listing, as they do not necessarily have
access to all carriers' current optional service fee information on a
real-time basis.
    While the Department considers the disclosure requirements in its
2011 final rule to be a step in the right direction, these requirements
do not fully address the problem of lack of transparency of ancillary
services and products. Consumers who book transportation through a
ticket agent still do not receive accurate and real-time information
about fees for ancillary services and products and are unable to
determine the total cost of travel. Consumers also can't use the list
of optional services and fees that airlines post on their Web site to
determine the cost of travel since airlines generally provide a range
of fees for ancillary services aside from baggage and acknowledge that
the fees vary based on a number of factors such as the type of aircraft
used, the flight on which a passenger is booked or the time at which a
passenger pays for the service or product. Further, the list of
optional services and fees that the airlines post on their Web sites
are static lists. In many cases, it is not possible for consumers to
know the specific fees that would apply to them based on these lists as
there are numerous possible fare and fee combinations and routings for
any given trip. With respect to baggage, the existing disclosure
requirements mandate specific information, but passengers must still
review lengthy and complex charts to determine the exact fee that they
would be charged for their baggage.
    The Department remains of the view that as carriers continue to
unbundle services that used to be included in the price of air
transportation, passengers need to be protected from hidden and
deceptive fees and allowed to price shop for air transportation in an
effective manner. However, we lack sufficient data to be able to
quantify the extent of this problem for consumers. We request comment
from consumers about whether it is difficult to find baggage and seat
assignment fee information and how much of an impact this has on their
ability to comparison shop among carriers. The Department also requests
comment from consumers on whether and how much the fee disclosures
required of carriers and travel agents in Passenger Protections II have
improved their ability to find information on fees.
    Consumers and consumer groups have reiterated to the Department
through comments in the second Enhancing Airline Passenger Protections
rulemaking and comments to the docket for the Advisory Committee on
Aviation Consumer Protection the difficulty in determining the specific
fees that apply to ancillary services. Additionally, members of
Congress, representing their constituents, have expressed support for
full disclosure of ancillary fees during the rulemaking period for the
second Enhancing Airline Passenger Protections rule. The Department
also receives consumer complaints that reflect the confusion consumers
experience regarding fees for ancillary services, particularly in
connection with baggage and seat assignments. For example, consumers
complain that when shopping for air transportation they do not know how
much it will cost them to book seats together for family members or to
transport all of their baggage. Similarly, representatives of business
travelers complain that it is difficult to advise clients on the best
and most cost-effective flights because the fee information for seat
assignments or baggage is not readily available. Additionally, the
issue has been raised at meetings of the Advisory Committee on Aviation
Consumer Protection by various industry stakeholders and consumer
advocates. The Department believes that regulation is needed to address
the lack of transparency regarding the true cost of air transportation
and is proposing to require that fees for certain ancillary services be
disclosed to consumers through all sale channels. The Department seeks
input on this proposal as well as any innovative solutions that we may
not have considered to address the problem of lack of transparency.

Current Airline Distribution System

    In the final rule that was issued on April 25, 2011, the Department
announced its intention to address in a future rulemaking the
transparency of ancillary fees at all points of sale. Since that time,
the Department has met with numerous stakeholders with an interest in
the distribution of ancillary service fee information and conducted an
inquiry regarding current distribution models as well as the
contractual and historical relationships between the GDSs and the
carriers. Representatives of carriers, GDSs, consumer advocacy
organizations, and trade associations, as well as other interested
entities, including third-party technology developers, have met with
Department staff to explain their views. They have also provided
information to the Department's economists. The description of the
current airline distribution system provided below is largely based on
the information that the Department received from these stakeholders.
    Today, airlines sell airfares in two ways: Directly through their
Web sites, call centers, or employees at airports or indirectly through
ticket agents. Approximately 50% percent of airline tickets are
purchased indirectly through ticket agents, whether it is through a
traditional brick-and-mortar travel agency, a corporate travel agent,
or an online travel agency. Ticket agents that display or sell air
transportation

typically get the fare, schedule and availability information about the
air transportation through a GDS. In the United States, three GDSs
(Sabre, Travelport and Amadeus) control the distribution of the airline
product for the ticket agent channel. In recent years, Sabre had more
than 50 percent of the market, Travelport had approximately 40 percent
and Amadeus had less than 10 percent of the market in the U.S. though
Amadeus has a much larger percentage of the market worldwide.
    Most U.S. airlines use GDSs to distribute their products. Some low
cost carriers \2\ such as Southwest participate on a selective basis in
GDSs while other low cost carriers do not use GDSs, presumably because
there are costs attached to each transaction. GDSs charge airlines a
booking fee based on the total number of flight segments in the
consumer's itinerary. Airlines presently pay booking fees that can
range from a few dollars to much more for each flight segment. For
example, if a booking fee is $5 per segment and a passenger purchases
an itinerary that consists of four flight segments, the airline will be
charged approximately $20 in booking fees. A transaction through an
airline's own system costs the carrier less. However, GDSs have
emphasized that there have been substantial discounts of domestic
booking fees for the major airlines since 2005.
---------------------------------------------------------------------------

    \2\ Low-cost carriers operate under a generally recognized low-
cost business model, which may include a single passenger class of
service, limited in-flight services, and use of smaller and less
expensive airports.
---------------------------------------------------------------------------

    Nevertheless, airlines have expressed frustration about paying what
they view as more in fees to GDS than the value they feel they receive
now that technology provides new ways of selling fares and ancillary
services. Still these airlines are not able to forgo using GDSs to
aggregate flight schedule and fare information because airlines earn a
large percentage of their revenue from business travelers, and the
majority of the world's managed business travel is booked through
travel management companies which use GDSs. Unlike Southwest, the
legacy carriers do not have the option to participate on a selective
basis in GDSs (i.e., only for business travel). Overall, airline
revenue from the GDS channel is higher than direct channels mainly due
to the greater proportion of high-yield business bookings.\3\
---------------------------------------------------------------------------

    \3\ GDSs process 64 percent of the total U.S. airline gross
sales by revenue. PhoCusWright, The Role and Value of the Global
Distribution Systems in Travel Distribution, 2009.
---------------------------------------------------------------------------

    Airlines' efforts to reduce their reliance on GDSs and transition
to direct connections with travel agents have also been difficult. By
direct connect, we are referring to agreements between an airline and a
travel agent in which the airline provides fare, schedule and
availability information to the travel agent directly, bypassing GDSs.
Various airlines have reported to the Department that they as well as
new-entrant travel technology firms, such as Farelogix, have had
difficulty in facilitating direct connections to ticket agents because
of highly restrictive agreements between GDSs and ticket agents.
Similar assertions were made by other third party technology providers.
GDSs have contracts with both airlines and travel agents for use of
their services. These contracts tend to be long-term agreements that
are renewed every 3 to 5 years. Historically, contracts between
carriers and the GDSs generally provided that carriers compensate the
GDSs per flight segment booked. These contracts also generally require
that carriers offer the same fares through GDSs that are offered
through other channels, even if it is cheaper for the carrier to
distribute the fares in a different manner, such as direct connect.
Contracts between travel agencies and GDSs generally provide for
incentive payments to travel agencies for booking travel through GDSs.
GDSs also provide travel agencies with the technology used for mid- and
back- office solutions such as quality control and office accounting.
GDSs do not view the contracts as a barrier to entry for travel
technology firms. They assert that the direct connect services will
succeed or fail based on whether they meet the needs of travel agencies
and the consumers they serve.
    It is also worth noting that IATA has filed an application with the
Department for approval of its Resolution 787, the agreement that
establishes the framework for its New Distribution Capability (NDC).
NDC would be based on a common XML based technical standard for direct
connect services. Airlines contend that this new standard would allow
airlines to custom-tailor product offers that would include different
combinations of ancillary services in addition to air transportation
and would include a total price. The new standard, if approved by the
Department, will be available for use by any party. While the
Department acknowledges that carriers are working towards technological
solutions to distribute information, such solutions are prospective.
Additionally, even if a standard is agreed upon, its use is optional
and the information transmitted using the standard would be determined
by each carrier. Accordingly, the development of a standard would not
solve the immediate problem that some current consumers are not
receiving the information that they need to determine the total cost of
travel including the cost of certain ancillary services.
    While fare, schedule, and availability information is currently
provided by the airlines to the GDSs, and by GDSs to the agents that
display and sell to consumers, information about the cost of ancillary
services is not typically shared. One reason, as it has been explained
to Department staff by airline representatives, is that GDSs do not
have the modern technology airlines need to merchandise and sell their
products the way they choose. The GDSs disagree with the airlines'
assessment and contend that they are capable of handling the most
complex airline transactions and have worked with airlines, airline
associations, and airline-owned intermediaries like ATPCO, ARC and IATA
to establish technical standards for the distribution of their
products, including ancillary offerings. While expressing a general
willingness to distribute ancillary products to travel agents subject
to assurances that the technology is in place to conduct transactions
in an efficient and cost[hyphen]effective manner, airlines expressed
the need for the flexibility to do so on terms that meet their business
needs. Airlines prefer to negotiate with the GDSs for the business
terms acceptable to them. They argue that market forces and not
government mandates are the best way to ensure that information about
ancillary services and fees reaches consumers using the travel agent
channel.
    Various airlines and airline associations have also asserted to the
Department that if it were to require carriers to provide ancillary
service fee information to all ticket agents that the carrier permits
to distribute its fare and schedule information, including GDSs, the
Department would reinforce the existing distribution patterns and
stifle innovation in the air transportation distribution marketplace.
These carriers argue that since existing business arrangements provide
significant benefits to most ticket agents, including GDSs, those
entities would strive to retain existing distribution technology and
transaction patterns. The carriers have also expressed concern that if
they are required to provide information to GDSs, the GDSs will use
existing contractual agreements and market power to pressure carriers
to provide the

information in the existing format for fare filing. If that occurs,
some stakeholders allege that carriers would no longer have sufficient
financial incentive to invest in new distribution technologies which
might ultimately provide more useful and responsive information to
consumers by allowing carriers to differentiate their services from
competitors. GDSs have disputed the carriers' assertions and contend
that Department action is needed because airlines and ticket agents
have been unable come to agreements that would allow fee information
about ancillary services to be disclosed to consumers at all points of
sale.
    We agree with the GDSs that there is a need for rulemaking because
we believe that consumers continue to have difficulty finding ancillary
fee information. The Department is striving to find the most beneficial
disclosure rule for consumers while avoiding any adverse impact on
innovations in the air transportation marketplace, contract
negotiations between carriers and their distribution partners, and a
carrier's ability to set its own fees and fares in response to its own
commercial strategy and market forces. Also, despite the disputes
regarding contract terms and distribution methods, both carriers and
GDSs have assured the Department that they share our goal of
transparency of ancillary service fee information.

Request for Public Input on Airline Fees

    Given our continuing concern that consumers may not be getting
sufficient information about carriers' fees, we solicit comment from
consumers on the following questions:
     Do you have a problem finding fee information? And if so,
how significant is that problem? If you have a problem finding fees,
how does it affect your ability to comparison shop?
     What types of fees would you most like to have more
information about during the shopping process, prior to purchase?
     When would you like to see that information displayed in
your search process--as soon as you see a list of fares or later in the
process? How would you like to see the information regarding ancillary
fees displayed--as a link, as a specific dollar amount shown with the
airfare quote, as a table or menu on the homepage or flight search
results list? Should the Department require a standardized format for
disclosure?
     Do you feel that our proposed disclosure requirements
would improve your search experience? Have we selected the most
ancillary fees that are most important to your decision making process?
Will disclosure of all these fees at the point of search cause further
confusion on ticket agent Web sites (as defined in this proposal), or
diminish your user experience (because of screen clutter, diminished
usability features, etc.)?
     Is either of our co-proposals outlined below likely to
make fees easy to find?

Proposed Solutions and Alternatives Considered

    Based on the information gathered, the Department is co-proposing
two regulatory texts and seeking input regarding those two proposals.
One proposal is to require each carrier to distribute certain ancillary
service fee information to all ticket agents (including GDSs) that the
carrier permits to distribute its fare, schedule, and availability
information. Carriers would not be required to distribute ancillary fee
information to any GDS or other ticket agent that the carrier did not
permit to distribute its fare, schedule, and availability information.
Additionally, under this proposal, the Department would not require
carriers to allow ticket agents to sell/transact its ancillary services
to consumers but rather would require carriers to provide ``usable,
current and accurate'' information on fees for certain ancillary
services to all ticket agents so this information can be disclosed to
consumers at all points of sale. Each airline would continue to
determine where and how its ancillary services may be purchased. For
instance, if a carrier chooses to allow a ticket agent to sell its
ancillary services directly to consumers, we expect that the carrier
and ticket agent would determine through negotiation whether the ticket
agent would offer the ancillary services at the same prices that the
carrier offers those services. In other words, the proposal would
require airlines to provide certain ancillary fee information to ticket
agents, including GDSs, in order to enable disclosure to consumers of
fees associated with certain ancillary services at all points of sale
but would not require that these ancillary services be transactable.
Carriers and ticket agents would negotiate regarding the ability of
ticket agents to sell a carrier's ancillary services and the price at
which those services would be sold.
    The second proposal is similar to the first in all ways except one.
Unlike the first proposal, the second would omit the requirement that
the information on ancillary fees be distributed to GDSs or other
intermediaries since GDSs and similar intermediaries would not be
subject to any direct consumer notification requirements. Instead, the
second alternative would require carriers to distribute certain
ancillary service fee information to all ticket agents that the carrier
permits to distribute its fare, schedule, and availability information
if the ticket agent sells the carrier's tickets directly to consumers.
Although this proposal would not require carriers to provide ancillary
fee information to entities that act as intermediaries and do not deal
directly with the public such as GDSs, GDSs are the source through
which most travel agents obtain their fare information, so as a
practical matter, they may be the most efficient vehicle currently
available for carriers to use for dissemination of information on
ancillary fees. Additionally, the second proposal would not require
carriers to provide ancillary fee information to entities such as meta-
search tools like Kayak and Google.
    The Department has proposed these two options as it remains of the
view that as carriers continue to unbundle services that used to be
included in the price of air transportation, passengers need to be
protected from hidden and deceptive fees and allowed to price shop for
air transportation in an effective manner. The Department believes that
failing to disclose basic ancillary service fees in an accurate and up-
to-date manner before a consumer purchases air transportation would be
an unfair and deceptive trade practice in violation of 49 U.S.C. 41712.
    Under both proposals, the Department recognizes that not all
ancillary service fee information needs to be available through all
channels. However, there are certain basic services that are intrinsic
to air transportation that carriers used to include in the cost of air
transportation but that they now often break out from the airfare, and
the cost of those services is a factor that weighs heavily into the
decision-making process for many consumers. We consider these basic
ancillary services to consist of the first and second checked bag, one
carry-on item and advance seat selection. This rulemaking would require
U.S. and foreign air carriers to distribute to ticket agents the fees
for these basic ancillary services. However, carriers would not be
required to provide ticket agents information about individual
customers, such as their frequent flyer status or type of credit card
though these factors may impact the fee for an ancillary service.
Carriers would, of course, be required to provide ticket agents the fee
rules for particular passenger types (e.g., military, frequent flyers,
or credit card holders). Under the proposal, the failure of airlines to
share this fee information

in an up-to-date and accurate fashion would be considered an unfair and
deceptive trade practice in violation of 49 U.S.C. 41712.
    As the requirement for carriers to distribute this information to
agents would not be helpful to consumers without a disclosure
requirement, the Department is also proposing to require all carriers
and agents to disclose the fees for these basic ancillary services
before the passenger purchases the air transportation. Airlines and
agents that have Web sites marketed towards U.S. consumers must
disclose, or at a minimum display by a link or rollover, the fees for
these basic ancillary services on the first page on which a fare is
displayed in response to a specific flight itinerary search request in
a schedule/fare database. To comply with this proposed requirement,
airlines and agents would have to modify their Web sites to display
these basic ancillary service fees adjacent to the fare information on
the first page on which a fare for the requested itinerary is
displayed. We solicit comment on whether the Department should require
the ancillary service fee information to be disclosed only upon the
consumer's request, or require that the information be provided in the
first screen that displays the results of a search performed by a
consumer. The Department also seeks comments on whether it should limit
the applicability of the disclosure requirement only to agent and
carrier Web site displays marketed to members of the general public, or
whether the disclosure requirement should include agent and carrier Web
site displays that are not publicly available (e.g., displays used by
corporate travel agents).
    Under both co-proposals, the fee information disclosed to consumers
for a carry-on bag, the first and second checked bag, and advance seat
assignment would need to be expressed as specific charges. Airlines
would be required to disclose customer-specific fees for these services
to the extent the customer provides identifying information, and if the
customer does not provide that information, must disclose itinerary-
specific fees. Ticket agents would be required to disclose itinerary-
specific fees for these services. Ticket agents may also arrange/
negotiate with the airlines to obtain data that would enable them to
give customer-specific fees for basic ancillary services. ``Customer-
specific'' refers to variations in fees that depend on, for example,
the passenger type (e.g., military), frequent flyer status, method of
payment, geography, travel dates, cabin (e.g., first class, economy),
ticketed fare (e.g., full fare ticket--Y class), and, in the case of
advance seat assignment, the particular seat on the aircraft if
different seats on that flight entail different charges. In other
words, the response to a specific flight itinerary search request by a
consumer on a carrier's Web site would need to display next to the fare
the actual fee to that consumer for his or her carry-on bag, first and
second checked bags, and advance seat assignment. Nothing in this
proposal would require carriers to compel consumers to provide the
passenger-specific details before searching for airfare. Providing such
details before conducting a search should be an option and not a
requirement for consumers. We note that many carriers already offer
seat maps during the online booking process on their Web site that
permit consumers to obtain a seat assignment at that time and that
disclose the charge for each seat. This process would comply with the
proposed rule as long as there is a statement adjacent to the fare on
the first screen where an itinerary-specific fare is displayed that
informs the consumer that there are fees for advance seat assignments
and direct links to the seat map.
    The fee information that ticket agents would be required to display
to consumers differs from what would be required of airlines in that
ticket agents would not be required to include variations in fees that
depend on the attributes of the passengers such as the passenger type
(e.g., military), frequent flyer status, or method of payment. Ticket
agents would be required to take into account variations in fees that
are related to the itinerary such as travel dates, geography, ticketed
fare and cabin. In addition to providing itinerary-specific fees for a
first checked bag, a second checked bag, a carry-on bag and an advance
seat assignment, ticket agents would also be required to clearly and
prominently disclose that these fees may be reduced or waived based on
the passenger's frequent flyer status, method of payment or other
characteristic. Ticket agents who have not negotiated an agreement with
the airlines to sell advance seat assignments would also be required to
disclose that seat availability and fees may change at any time until
purchase of the seat assignment. In addition, it is worth noting that
carriers and agents would be permitted to offer an ``opt out'' option
for consumers who prefer to search for fare information only, without
any ancillary fee information, and when this option is selected
carriers and agents would not be required to present the fee
information.
    We ask for comment on whether the Department should only require
carriers and agents to provide information on standard baggage fees
without taking into account variations based on frequent flyer
discounts, loyalty card discounts, geography, ticketed fare, etc. If
all of the varieties of baggage fees are displayed, how should the
varying fees be arranged? Regarding advance seat assignments, the
charges for which also may vary considerably based on, among other
things, the location of the seat and how far in advance the seat
assignment is purchased, should carriers and agents be required to
display all possible advance seat assignment fees, or a range, or the
fee for each seat assignment available at the time of the search for a
particular city-pair? What is the technological feasibility and cost of
providing this information to consumers in a usable fashion,
particularly for ticket agents?
    As discussed earlier, neither of the Department's two alternative
proposals would require that carriers enable agents to sell the
carrier's ancillary services; in industry idiom, we are not proposing
to require that the fees be ``transactable.'' The Department is
addressing the harm caused to consumers of not knowing the true cost of
travel before purchasing air transportation. Under the proposed
disclosure regime, every point of sale for a particular carrier's fares
would also provide access to the carrier's fee information for first
and second checked bag, one carry-on bag, and an advance seat
assignment. This requirement would place a legal obligation on carriers
to disseminate this information to all of their agents; however, the
Department is not stating the method the carriers must use to
distribute the information, as long as it is in a form that would allow
the fee information to be displayed on the first itinerary-specific
results page in a schedule/fare database. Carriers would be free to
develop cost-effective methods for distributing this information to
their agents. Carriers could use existing channels, such as filing the
fee information through the ATPCO, or they could develop their own
systems to disseminate the information, in conjunction with the agents
who would receive the information.
    Although neither of the Department's alternative proposals dictate
the method that carriers must use to distribute the information,
carriers should be mindful that whatever distribution method they might
choose must be usable, accurate, and current so the information is
accessible in real-time. Similarly, ticket agents must work in good
faith with

carriers to come to agreement on the method used to transmit the
ancillary service fee information. For example, ticket agents should
not use contractual restrictions to prohibit travel agents, carriers,
or applications software providers from integrating the ancillary fee
information with information obtained from the GDSs. Since the
Department's proposal would require ticket agents to provide the
ancillary fee information to consumers, in cases where carriers and
ticket agents are able to agree on a transmission mode for ancillary
fee information other than through a GDS, we would expect GDSs to work
in good faith with carriers and other ticket agents to permit the
integration of information obtained from other sources with information
obtained through the GDS and allow the distribution of fee information
directly to the agents. Additionally, under the proposed disclosure
requirement, to the extent that carriers have existing contractual
relationships with ticket agents acting as intermediaries, such as
GDSs, to distribute fare information, those ticket agents would be
prohibited from imposing charges for the distribution of ancillary
service fee information that are separate from or in addition to the
existing charges for the distribution of fare information as it would
be unlawful to provide fare information that does not include the fees
for the basic ancillary services. The Department invites comments
regarding the two proposals: (1) Requiring a carrier to disseminate
certain ancillary service fee information to the agents that distribute
the carrier's fare, schedule, and availability information and
requiring both carriers and agents to disclose accurate and up-to-date
fee information to consumers, or (2) requiring a carrier to disseminate
certain ancillary service fee information to the agents that distribute
the carrier's fare, schedule, and availability information and are a
point of sale for the carrier's tickets to consumers, and requiring
both carriers and agents to disclose accurate and up-to-date fee
information to consumers. What are the costs and benefits of requiring
carriers to provide ancillary fee information to all ticket agents,
including entities that have not previously considered themselves to be
regulated but would fall under the proposed definition of ``ticket
agent,'' described above, and what are the costs and benefits of
requiring carriers to provide ancillary fee information only to ticket
agents that act as sales outlets? If DOT requires disclosure of certain
ancillary service fees, but does not require the ability to purchase
these services at the time of booking, what would be the preferred way
for carriers to collect payment for such services? On the Internet
through the airline Web sites prior to check-in, at the airport at the
time of check-in, etc.?
    Proponents of the first alternative have argued that, because most
carriers already rely on GDSs to transmit information to ticket agents
that act as a point of sale, the Department could ensure that the
information was disseminated in a quick and efficient manner by
requiring carriers to provide the information to GDSs. They also assert
that such a proposal would resolve the ``market failure'' that has
prevented carriers and ticket agents from coming to agreements that
would allow the information to be provided to consumers. Advocates of
the second alternative state that permitting carriers to decide which
intermediaries, if any, to use to provide ancillary fee information to
ticket agents acting as sales outlets still provides for consumer
disclosure but minimizes government interference with business
arrangements. Additionally, they contend that the second proposal
provides opportunities for the development of new and innovative
technologies and methods of distribution of air transportation while
allowing carriers the freedom to use traditional methods if it makes
commercial sense for them to do so.
    In addition to the two alternative proposals under consideration,
we also solicit comment on whether any of the alternatives rejected
earlier in the rulemaking process better address the problem of lack of
transparency of fees associated with ancillary services. For example,
should the Department set design standards (e.g., filing of fees for
ancillary services through ATPCO, EDIFACT, XML or some other
technology) rather than using performance standards for transmission of
ancillary fee data from airlines to ticket agents or from airlines and
ticket agents to consumers? Under both alternative proposals, the
Department does not prescribe particular standards in order to avoid
stifling innovation and imposing more of a burden on industry
participants than is necessary to solve the transparency problem.
However, we are interested in comments on whether setting a specific
technological/information standard could potentially enhance innovation
and improve transparency, and if so, how. Would selecting a specific
standard allow for new market entrants in the transmission or display
of air travel information, by making fare and fee information more open
and accessible?
    The Department also solicits comment on the issue of whether the
basic ancillary services that are disclosed to consumers should also be
transactable. Although the Department has tentatively determined that
it would be sufficient to require carriers and agents to disclose
certain basic ancillary fee information to consumers, it has not closed
the door on the possibility of also requiring that those ancillary
services be available for purchase through all channels that carriers
decide should sell their fares. In other words, should we require these
ancillary services to also be ``transactable''?
    Representatives of certain consumer advocacy groups and trade
associations have argued to the Department that if consumers are not
entitled to purchase the ancillary services at the time of booking air
transportation, the carrier may increase the price of those ancillary
services before the consumer has a chance to purchase the ancillary
service on the carrier's Web site or through its reservation center. In
the case of advance seat assignments, the problem is particularly acute
because in addition to price increases, the consumer risks the
possibility that the advance seat assignment that he or she wished to
purchase will no longer be available.
    Carriers are prohibited from increasing the price of baggage fees
after a consumer purchases air transportation under the current 14 CFR
399.88, but under the Guidance on Price Increases of Ancillary Services
and Products not Purchased with the Ticket issued by the Enforcement
Office on December 28, 2011, and under the proposed change to section
399.88 discussed below, carriers would not be prohibited from
increasing the price of an advance seat assignment until the seat
assignment itself is purchased. Prices for advance seat assignment are
often dynamic and change based on route, aircraft size, availability,
and time of purchase. Proponents of transactability argue that without
the ability to purchase the seats at the time of ticket purchase,
consumers will be further harmed because desired seats may not be
available when the passenger decides to purchase them or is allowed by
the carrier to purchase them or they may cost more. The Department
seeks comment on requiring disclosure plus transactability of advance
seat assignment fees at all points of sale. We also seek information on
the costs and benefits of requiring transactability and how requiring
transactability would affect existing contracts between the GDSs and
the airlines. We also invite interested persons to provide their views
on whether disclosure plus

transactability should be required not only for advance seat
assignments but also for fees associated with first and second checked
bags and carry-on bags. As noted above, of the ancillary services
traditionally included in the price of a ticket, the Department views
the first and second checked bag, one carry-on bag, and an advance seat
assignment as the services that are intrinsic to air transportation and
of primary importance to many consumers when making air transportation
purchasing decisions. The Department invites comments on whether the
list should be expanded to include services such as in-flight wireless
Internet access, seating section upgrades, food and beverages, or
priority boarding. If the list should be expanded, how should carriers
and agents display the information related to these additional
services?
    The Department also solicits comment on leaving the disclosure
requirements established in 14 CFR 399.85 unchanged instead of adopting
new proposed requirements for customer-specific information about one
carry-on bag, the first and second checked bag, and an advance seat
assignment. Under the existing regulation, consumers may visit
individual carrier Web sites to ascertain all of the fees associated
with ancillary services. This information is in a centralized location
accessible from a link on each carrier's homepage. Leaving the existing
requirements in place would not require carriers to enable agents to
provide up-to-date and real-time pricing for ancillary services, but it
would still require that passengers be made aware that ``baggage fees
may apply'' on the first page on which a fare quote is given for a
flight search. The Department asks consumers to comment on the existing
requirements, particularly whether the disclosure requirements under
section 399.85 have aided in their ability to price shop and their
ability to understand the true cost of travel before purchasing. The
Department also asks carriers and ticket agents to comment regarding
whether they believe the current disclosure requirements are sufficient
and effective and why or why not. The Department also asks agents to
comment on how the current disclosure requirements are affecting their
businesses and whether consumers are aided under the disclosure
requirements. If the Department decides to maintain the current
disclosure requirements, should the Department require carriers to list
the fees for advance seat assignments in a more specific manner, rather
than a range, on the page listing ancillary fees and on e-ticket
confirmations? Comments on the cost and benefits of the proposal and
all of the alternatives are invited. Further, we encourage interested
parties to provide comment regarding any innovative alternatives/
solutions that Department may not have considered but that would
address the lack of disclosure of ancillary service fees in all sales
channels.

3. Expanding the Definition of ``Reporting Carrier'' Under 14 CFR Part
234

    In 14 CFR Part 234, the Department sets forth requirements for
``reporting carriers'' to file certain performance data with the
Department and provide flight on-time performance information to the
public. ``Reporting carrier'' is defined in 14 CFR 234.2 as an air
carrier certificated under 49 U.S.C. 41102 that accounts for at least
one percent of domestic scheduled-passenger revenues. In addition to
reporting carriers, any carrier that does not reach the reporting
carrier threshold may voluntarily file Part 234 reports, provided that
the Department's Bureau of Transportation Statistics (BTS) is advised
beforehand and such data will be submitted voluntarily for 12
consecutive months.
    Pursuant to Part 234, reporting carriers are required to submit to
BTS' Office of Airline Information their domestic scheduled passenger
on-time performance data and mishandled baggage information, and
provide on-time performance codes to computer reservation systems
(CRS). These carriers also must disclose to consumers the on-time
performance code, on a flight-by-flight basis, for all domestic
scheduled flights that they market to the public, including the flights
operated by code-share partners. The on-time performance codes must be
disclosed to consumers during in-person or telephone communication
(including but not limited to reservations or ticketing transactions)
upon reasonable inquiry. For flight schedule Web site displays, the on-
time performance information must be provided either on the initial
listing of the flights or via a prominent hyperlink. Furthermore, to
implement a statutory requirement of the Wendell H. Ford Aviation
Investment and Reform Act for the 21st Century (Pub. L. 106-81), the
Department amended Part 234 in 2005 to require all U.S. air carriers
(not only ``reporting carriers'') to file a report with the
Department's Aviation Consumer Protection Division on any incident
involving the loss, injury, or death of an animal during air
transportation.\4\ Additionally, under 14 CFR Part 250, reporting
carriers are also required to submit to the Department information on
passengers denied boarding on their domestic and outbound international
scheduled flights.
---------------------------------------------------------------------------

    \4\ On June 29, 2012, the Department issued a Notice of Proposed
Rulemaking (RIN 2105-AE07, Docket No. DOT-OST-2010-0211), seeking
comments on whether the Department should expand the reporting
carrier pool for reporting animal death, loss and injury incidents
to cover all U.S. carriers operating domestic and international
scheduled passenger air transportation using at least one aircraft
with a design capacity of more than 60 seats. See 77 FR 38747 (June
29, 2012). Because our determination on the scope of reporting
carrier with respect to animal death, loss or injury incidents will
be addressed separately in the final rule of that rulemaking,
interested parties should provide comments regarding animal
reporting to the Department through the docket designated for RIN
2105-AE07.
---------------------------------------------------------------------------

    Since their implementation, Parts 234 and 250 have been effective
tools for the Department to collect on-time performance, mishandled
baggage, and oversales data and use these data to monitor the quality
of service provided by each reporting carrier to the flying public and
to provide such information to consumers. On October 22, 2013, BTS
issued a Technical Reporting Directive (Technical Directive
23) to update the list of reporting air carriers that are
required to file ``Airline Service Quality Performance Reports'' under
14 CFR Part 234 for calendar year 2014. Technical Directive 23
identified the following 14 air carriers that reached the reporting
threshold of one percent of domestic scheduled-passenger revenue in the
12-month period ending June 30, 2013: AirTran Airways, Alaska Airlines,
American Airlines, American Eagle Airlines, Delta Air Lines, ExpressJet
Airlines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways,
SkyWest Airlines, Southwest Airlines, United Airlines, US Airways, and
Virgin America.
    The one percent domestic scheduled-passenger revenue threshold for
reporting carriers was set in a final rule that initiated the reporting
requirements contained in Part 234. 52 FR 34056 (September 9, 1987). In
that final rule, the Department considered some comments asserting that
flight delays affect passengers without regard to the size of the
carrier or the length of the flight. The Department concluded, however,
that compliance with the rule was likely to be much more costly for
small carriers than for large carriers, particularly due to the fact
that, at the time when the rule was finalized, large carriers were more
likely than small carriers to maintain their flight performance data in
a computerized form. Therefore, the Department made the determination
that as an initial matter, it would limit the application of

this rule to large air carriers. Nonetheless, the Department noted that
it would continue to review the carriers covered and would extend the
reporting requirements to smaller carriers if it became necessary.
    Twenty-five years have passed since the issuance of that final
rule. Technology innovations that have fundamentally reshaped our world
in many ways have also profoundly changed almost every aspect of the
commercial aviation industry's operations. In 1987, for a small carrier
to file data with the Department, it had to commit to either a
significant capital investment in a comprehensive computer data
tracking system or to a significant human resource investment so it
could compile and file reports manually. Conversely, in this day and
age, virtually all air carriers are using computerized recordkeeping
methods to store and distribute data to file reports with the
Department or are conducting internal performance evaluations, or both,
which makes reporting data a much easier and less costly task.
    Moreover, we believe that requiring smaller carriers to report
service quality data to the Department will greatly benefit the public
in several ways. First, adding these smaller carriers' performance data
to the data currently collected by BTS will enable the Department to
obtain and provide to the flying public a more complete picture of the
performance of scheduled passenger service in general. These data will,
in turn, provide consumers with more meaningful information on which to
base their purchasing decisions. For example, based on BTS-provided
domestic scheduled passenger revenue and enplanement data for 2010, the
carriers that reach the one percent threshold represent approximately
90 percent of total domestic scheduled passenger revenue, and 80
percent of total domestic scheduled passenger enplanements. If we were
to lower the threshold to 0.5 percent of domestic scheduled passenger
revenue, the reporting carrier pool would capture approximately 98
percent of domestic scheduled passenger revenue and 94 percent of the
domestic scheduled passenger enplanements.
    Further, the public benefits of including smaller carriers in the
reporting pool were also recognized and supported by a September 2011
Report to Congressional Requesters prepared by the Government
Accountability Office (GAO). In the report titled Airline Passenger
Protections, More Data and Analysis Needed to Understand Effects of
Flight Delays, GAO recommended that in order to enhance aviation
consumers' decision-making, the Department should collect and publicize
more comprehensive on-time performance data to include information on
most flights, to airports of all sizes. GAO specifically recommended
that one way this goal could be accomplished was by requiring airlines
with a smaller percentage of total domestic scheduled passenger service
revenue, such as airlines that operate flights for other airlines, to
report flight performance information. Furthermore, expanding the
reporting carrier pool would enhance the Department's ability to
analyze the cause of flight disruptions such as delays and
cancellations, particularly with respect to airports in smaller
communities and smaller airlines. For example, according to GAO's
analysis of the performance record of two legacy airlines \5\ and their
regional partners, the regional partners generally have worse on-time
performance records. GAO further notes that while flight cancellations
to smaller communities may inconvenience a relatively small number of
passengers, they may result in long trip delays if those smaller
communities have infrequent service. What's more, requiring smaller
carriers to file on-time performance, mishandled baggage, and oversales
data with the Department will increase the level of public scrutiny of
these carriers' performance, which in turn will function as an
incentive for these carriers to continuously improve the quality of
their service. The enhanced service quality will increase these
carriers' competitiveness and benefit the regional markets that they
primarily serve.
---------------------------------------------------------------------------

    \5\ A ``legacy'' airline is a carrier that was operating when
the industry was deregulated. They are typically large airlines with
a hub-and-spoke route system.
---------------------------------------------------------------------------

    For these reasons, we are proposing in this NPRM to amend the
definition of ``reporting carrier'' under Part 234 to include carriers
that account for at least 0.5 percent of annual domestic scheduled-
passenger revenue. Additionally, since for years BTS has been using
June 30, instead of March 31, as the cutoff date to compile a carrier's
annual domestic scheduled-passenger revenue percentage, we propose to
codify this change in the definition of ``reporting carrier.'' We seek
public comments on whether 0.5 percent is a reasonable threshold to
achieve our goal of maximizing the scope of data collection from the
industry while balancing that benefit against the burden of increasing
reporting requirements on carriers, particularly small businesses. If
0.5 is not the most reasonable threshold, we seek comment on an even
larger expansion, e.g., to 0.25 percent of domestic scheduled passenger
revenue, or a smaller expansion to 0.75 percent of domestic scheduled
passenger revenue. Additionally, we seek comment on whether we should
require that all carriers that provide domestic scheduled passenger
service report to the Department. We especially welcome comments that
provide specific cost estimates or analysis by small carriers that
would potentially be impacted by this proposal. We also request
comments regarding whether a carrier's share of domestic scheduled
passenger revenue remains an appropriate benchmark. Should we use a
carrier's share of domestic scheduled passenger enplanements instead?
If so, what percentage is a reasonable threshold for triggering the
reporting obligation?
    Finally, in relation to the burden associated with implementing a
reporting mechanism within a carrier's operation system, what is the
approximate time period that a newly reporting carrier will likely need
to prepare for the new reporting duties? Although not proposed in the
rule text, we are contemplating that should this proposal be finalized,
we would permit carriers that otherwise would not have been reporting
carriers but become a reporting carrier under a new threshold to file
their first Part 234 report by February 15 for the first January that
is at least six months after the effective date of this rule. We
believe this would provide carriers adequate time to implement
necessary procedures for filing the reports and amending their Web
sites to comply with the flight on-time performance disclosure
requirements contained in section 234.11, to the extent that the Web
sites directly market flights to consumers. Having the initial reports
start in January would provide the added benefit of preserving the
consistency of the Department's data for a full calendar year during
the transition. We seek comments on whether this rationale for
determining the compliance date for the reporting requirement would be
helpful to newly reporting carriers.
    In addition to expanding the pool of reporting carriers, we are
also contemplating expanding the scope of ``reportable flights'' in
relation to airports. The current rule only requires reports for
flights operated to and from U.S. airports that count for at least 1%
of domestic enplanements (large hub airports). However, since the
inception of the rule, the reporting carriers have chosen to file
reports for scheduled passenger flights to all U.S. airports

where they operate. In this NPRM, we seek comments on whether we should
eliminate the concept of reportable flights and simply mandate reports
for all scheduled flights operated by reporting carriers to and from
all U.S. airports. Without this amendment, the expansion of ``reporting
carrier'' to include smaller carriers could be rendered less meaningful
because a large percentage of flights operated by these smaller
carriers are not to or from large hub airports. In addition to comments
on whether and how such expansion of scope of reportable flights may
benefit different stakeholders, we also welcome information on cost
comparisons for carriers to report only flights to and from (1) large
hub airports, (2) large, medium, small, and non-hub U.S. airports, and
(3) all airports.

4. Carriers To Report Data for Certain Flights Operated by Their Code-
Share Partners

    The Department of Transportation provides information each month on
the quality of services provided by the airlines through its Air Travel
Consumer Report (ATCR). This Report is divided into six sections:
Flight delays, mishandled baggage, oversales, consumer complaints,
customer service reports to the Transportation Security Administration,
and airline reports of the loss, injury, or death of animals during air
transportation. The sections that deal with flight delays, mishandled
baggage, and oversales are based on data collected by BTS pursuant to
14 CFR Part 234 and Part 250. The section that deals with animal
incidents during air transport is based on reports required by section
234.13 and collected by the Aviation Consumer Protection Division.
    With respect to flight delay information, in addition to the
monthly overview of each reporting carrier, the ATCR also ranks each
reporting carrier's performance at all large hub U.S. airports from
which it operates. These performance tables, particularly the rankings,
are widely accepted as important indicators of the carriers' quality of
service, and are frequently referred to in news reports, industry
analyses, and consumer commentaries and forums. Moreover, it is not
uncommon that these rankings are used as the key references in
institutional studies, the results of which are often cited in news
reports with attention-grabbing headlines such as ``The Best and Worst
Airlines of the U.S.'' Although headlines like this tend to over-
simplify the complexity of airline operations, being named as one of
``the best'' or ``the worst'' airlines in the country in a national
news outlet does have a significant impact on a carrier's image and
brand identity and either affords the carrier a great marketing tool or
causes some consumers to avoid selecting that carrier's flights when
making purchase decisions which acts as an incentive for the carrier to
improve its performance.
    Because of the influence of the ATCR on consumer perception of
carriers as well as its effect on the perception of carriers within the
industry, it is vitally important that the information provided by
these reports remains accurate. Since the Department began to issue the
ATCR, the Aviation Consumer Protection Division and BTS have been
working closely to ensure that the published reports accurately reflect
the data received by the Department. However, this continuing effort
does not address the growing problem of an inadequate scope of data
collection, the most significant area being that a marketing carrier's
data do not include its flights operated by code-share partners.
    The data that carriers file under Part 234 and Part 250 are the
primary source from which each monthly ATCR is developed. A
``reportable flight'' under Part 234 refers to any domestic scheduled
nonstop flight reported to the Department by a reporting carrier
pursuant to 14 CFR Part 241, Uniform System of Accounts and Reports for
Large Certificated Air Carriers. Part 241 in turn defines a ``reporting
carrier'' for the purpose of Form T-100 (U.S. air carrier traffic and
capacity data by nonstop segment and on-flight market) as ``the carrier
in operational control of the flight, i.e., the carrier that uses its
flight crew under its own FAA operating authority.'' Therefore, the on-
time performance and mishandled baggage data collected under Part 234
from each reporting carrier are limited to the data for a reporting
carrier's domestic scheduled passenger nonstop flight segments operated
by that reporting carrier. Part 250 also limits the oversales reporting
requirement to reporting carriers, although it is not limited to
domestic flights (see 14 CFR 250.10).
    If the reporting carrier engages in code-sharing arrangements in
which the reporting carrier is the marketing carrier but not the
operating carrier, the performance data for those flights are not
included in the reporting carrier's Part 234 and Part 250 reports. If
the operating carrier of a code-share flight is a reporting carrier
itself, the performance data for its code-share flights that are also
marketed by another carrier will be reported to the Department, but
data for those flights will not be attributed to the marketing carrier.
What's more, some operating carriers of code-share flights marketed by
larger carriers do not meet the current reporting threshold of Part
234, and a certain number of operating carriers of code-share flights
marketed by larger carriers would not meet the proposed lower reporting
threshold of 0.5 percent of annual domestic scheduled passenger
revenue. Therefore, the on-time performance, mishandled baggage, and
oversales data for those flights are not currently reported to the
Department at all and, even under a revised reporting threshold, not
all of those operating carriers of code-share flights marketed by
larger carriers would necessarily be required to report performance
data.
    The Department considers the current scope of reportable flights
under Part 234 inadequate to truly capture many carriers' quality of
service, so as to be accurately reflected in the ATCR. The limited
scope of the current reporting requirements may result in consumer
confusion or misperception. We note that the majority of legacy/
mainline U.S. carriers continue to seek brand consolidation, while
still maintaining the ``hub and spoke'' operation structure. For
economic reasons, those legacy carriers' regional short-haul flights
are operated, in many markets, by code-share partners on a fee-for-
flight basis and these operating carriers do not engage in the sale of
tickets at all. According to the data contained in the FAA's Aerospace
Forecast for fiscal years 2012-2032, mainline carriers provided 16
percent less domestic passenger capacity in 2011 than they did in 2001.
Over the same ten-year period, however, regional carriers' capacity
overall has increased to 153 percent of the 2001 level. Further, a
recent Official Airline Guide (OAG) survey provides a snapshot of the
current operations of mainline carriers and their regional partners and
indicates the comparative scope of code-share operations. It shows that
in 2011, each of the top five legacy carriers had more than 45% of its
domestic scheduled flights operated by code-share regional partners,
with the carrier on the top of the survey list having almost 70% of its
domestic scheduled flights operated by code-share regional partners.
The service quality data for these code-shared flights are not reported
by the legacy carriers and are not attributed to these carriers'
records and rankings in the ATCR. However, those flights are marketed
by the legacy carriers with their own airline designator codes and
usually their own brands, sometimes bearing trademarks such as

``Connection'' or ``Express'' in addition to the mainline carriers'
trade names. In many instances, the mainline carriers also handle
virtually all aspects of ground operations including scheduling and
customer service related issues, such as dealing with oversales
situations, providing denied boarding compensation, and resolving
baggage claims. Consumers may consider these code-share flights
operated by code-share regional partners to be air transportation
service provided by the mainline carrier just as much as the flights
actually operated by the mainline carriers.
    The Department is also concerned that the inadequacy of the scope
of service quality reports may hinder competition. The Department is
mindful that on-time performance data in the ATCR may have a limited
influence on a consumer's purchase decision regarding a particular
flight, because the consumer is more likely to refer to that specific
flight's on-time performance record, which under 14 CFR 234.11 must be
provided on a marketing carrier's Web site, regardless of whether it is
operated by a code-share partner. Nonetheless, a carrier's ATCR ranking
speaks of the carrier's performance quality from a macro perspective,
and is often used by carriers as a powerful marketing tool in
developing brand loyalty, recruiting talented employees, and
negotiating with suppliers and airports, as well as promoting its
service in a newly developed or targeted geographic market. Most
importantly, the ATCR numbers and rankings are benchmarks carriers use
to assess their performance among competitors and to seek effective
ways to improve. As stated above, recent numbers show that virtually
all legacy carriers have at least 45% of their domestic scheduled
passenger flight segments operated by code-share partners, which means
data for those flights are not reported by the marketing carriers under
Part 234 and Part 250 or attributed to the carrier in the ATCR. By
contrast, most relatively new carriers that are ranked in the ATCR
operate a ``point-to-point'' network and follow a different business
model, the so-called ``low cost'' model. Under this business model,
carriers engage in very few, if any, code-share arrangements. As a
result, the ATCR is comparing the service quality of all flights
marketed by a low-cost carrier with the service quality of 55% or less
of the flights marketed under legacy carriers' brands and codes. We
will not seek to determine how including code-share flight records in
the ATCR would affect legacy carriers' rankings, but we are of the
tentative opinion that requiring all reporting carriers to report data
for all flights marketed under that carrier's name and code would put
carriers on an equal footing in this important competitive arena.
    Additional support for our proposal comes from the aforementioned
final report by FAAC, which noted that the Competitiveness and
Viability Subcommittee recommended that the Department should continue
to require marketing carriers to provide clear and transparent
notification of operations conducted by an air carrier other than the
marketing carrier. Further, some subcommittee members also believed
that more detailed disclosure regarding regional carriers' operations
should be included in the ATCR, and that the report should include
metrics organized not only by operating air carrier, but by the
marketing air carrier.
    For the reasons stated above, we are proposing to expand the scope
of ``reportable flight'' under Part 234, and consequently under Part
250. Pursuant to this proposal, a reporting carrier would continue to
file Form 234 and Form 251 (the oversales report required by Part 250)
with respect to nonstop scheduled flights operated by the reporting
carrier. In addition, each reporting carrier would file a separate Form
234 and a separate Form 251 to include both flights that are operated
by the reporting carrier itself and all nonstop scheduled flights that
are operated by a code-share partner and sold under the reporting
carrier's code. Reportable flights under Part 234 (on-time performance
and baggage data) are limited to domestic nonstop flight segments. The
Form 251 oversales report has always included data for outbound
international flights from the United States, and that will continue to
be the case for the proposed new report that would include service
operated by code-share partners. However, this new report, like the
original report, would be limited to service operated by ``a
certificated carrier or commuter air carrier''--both of which are U.S.
air carriers--and consequently the new report would not collect data on
code-share flights operated for a reporting carrier by a foreign-
carrier code-share partner. Our primary regulatory interest at this
time is collecting and publishing data on code-share service operated
by the regional-carrier partners of the larger U.S. airlines. We are
not proposing at this time to collect oversales data for flights from
the United States (the oversales rule doesn't apply to inbound
international flights to the United States) that are operated by large
foreign carriers that do not already report these data.
    For this purpose it is irrelevant whether the actual operating
carrier in the code-share arrangement is a reporting carrier itself and
is required to file data for that flight under the reporting
requirements applicable to the operating carrier. Under our proposed
rule, the marketing carrier reporting data on flights operated by
another carrier would not need to distinguish flights operated by
different code-share partners. We are proposing to require the
marketing carrier to provide aggregated consumer statistics for all
flights operated under its code (i.e., flights it operates and flights
operated by its code-share partners). This would be an additional
reporting requirement (second set of reports) and is not intended to
replace the existing requirement for a reporting carrier to provide
separate data for flights it operates. We seek comment on whether the
second sets of reports should only contain the performance records of
all flights operated for the reporting carrier by its code-share
partners but not the flights operated by the reporting carrier.
Alternatively, rather than having all code-share partners' records in
aggregation, we ask if we should require the marketing carrier to
provide separate data on flights operated by each of its code-share
partner's operations. What are the benefits of separating each code-
share partner's records and what are the costs, if any, added to the
reporting carriers? Finally, since many regional carriers operate
flights under the code of more than one large carrier, we seek comment
on whether ``double-counting,'' i.e., situations where a given flight
carries the code of more than one large carrier, is an issue and if so,
how to avoid it. Do regional carriers that have code-share agreements
with more than one large carrier ever operate a given flight for more
than one marketing carrier, or on the other hand, do these flights
always operate in discrete city-pair markets? How should we deal with
the situation of large U.S. carriers that code-share with each other?
    Our proposal to expand the scope of reportable flights will
necessitate amendments to the rule text of 14 CFR 234.6, Baggage
Handling Statistics. On July 15, 2011, the Department issued an NPRM,
Reporting Ancillary Airline Passenger Revenues (RIN 2105-AE31, Docket
No. DOT-RITA-2011-0001) that proposes, among other things, to amend
section 234.6 by changing the way it computes mishandled baggage rates,
from mishandled baggage reports per unit of domestic enplanements to
mishandled baggage per unit of checked

bags. The proposed amendments to section 234.6 also include a new and
separate requirement for collecting statistics for mishandled
wheelchairs and scooters used by passengers with disabilities. In this
NPRM, our proposed amendments to section 234.6 are tentatively based on
the proposed rule text in the ancillary revenues reporting NPRM. Our
adoption of the rule text as proposed in RIN 2105-AE31 in this
rulemaking is not indicative of whether we are going to adopt the text
as proposed in the final rule for the ancillary revenue reporting
proposal. Further, although that NPRM's comment period has ended, any
comments regarding the proposed computation method for mishandled
baggage and the proposed inclusion of mishandled wheelchairs and
scooters in the reporting should be submitted to the ancillary revenue
reporting rulemaking docket and will be considered to the extent
practicable.
    We note that if the operating carrier is already a reporting
carrier, the data for the code-share flights that will be added to the
marketing carrier's report will have to be prepared and submitted to
the Department by the operating carrier to meet the existing reporting
requirement. In these instances, we expect that the cost to the
marketing carrier to obtain this data would be negligible. With respect
to flights operated by a code-share partner that is not a reporting
carrier, we believe the cost of obtaining data would be higher but not
significant, as most carriers, large or small, already have internal
systems in place that track the major elements of flight performance
quality. There are also costs related to compiling data for the code-
share flights and setting up the reporting infrastructure to file the
compiled report with the Department. We seek comments from carriers and
the public regarding the costs associated with adding data on flights
operated by code-share partners to reports filed with the Department.
We further note that 14 CFR 234.8 requires reporting carriers to
calculate and assign an on-time performance code for each ``reportable
flight.'' Currently section 234.8 only covers domestic scheduled
flights operated by a reporting carrier, so our proposal to expand the
scope of ``reportable flight'' under Part 234 will require that
reporting carriers also calculate and assign an on-time performance
code for each domestic scheduled flight operated by a code-share
partner. However, since April 29, 2010, all current reporting carriers
have been required by section 234.11 to disclose on their Web sites
that provide schedule information detailed on-time performance records,
on a monthly basis, for each domestic scheduled flight, including each
domestic code-share flight. In this regard, we expect that these
current reporting carriers are already adequately prepared to comply
with requirement of section 234.8 with respect to code-share flights.
Finally, we ask what the reasonable implementation period should be if
this proposal becomes a final rule.

5. Minimum Customer Service Standards for Ticket Agents

    In the Department's first Enhancing Airline Passenger Protections
final rule, 74 FR 68983, the Department required U.S. carriers in 14
CFR 259.5 to adopt a customer service plan. In the second Enhancing
Airline Passenger Protections final rule, 76 FR 23110, the Department
extended this requirement to foreign carriers and required both U.S.
and foreign carriers to adopt minimum standards for their customer
service plans. Among other standards, the Department requires carriers
to provide prompt ticket refunds where ticket refunds are due, in
accordance with existing Department rules; hold a reservation at the
quoted fare or permit the reservation to be cancelled without penalty
for at least 24 hours after a customer books the ticket; disclose
cancellation policies, seating configuration, and lavatory availability
to consumers; notify travelers of changes in travel itineraries; and
respond to consumer-related complaints in a timely manner. Section
259.5 only applies to U.S. and foreign carriers that provide scheduled
passenger service using at least one aircraft with an original designed
passenger capacity of 30 or more seats. In a Frequently Asked Questions
guidance document issued by the Department's Enforcement Office, in
response to questions regarding whether section 259.5 applies to ticket
agents, the Enforcement Office clarified that these customer service
provisions are not applicable to agents. Therefore, agents are not
currently required to hold a reservation for 24 hours or respond to
consumer complaints or notify passengers of changes to travel
itineraries.
    The Department is proposing to amend 14 CFR 399.80, which addresses
unfair and deceptive practices by ticket agents, because the Department
believes that all airline passengers should benefit from certain
customer service plan protections. Not all of the customer service
standards set forth in 14 CFR 259.5 should apply to agents, but the
Department sees no reason not to extend the standards related to ticket
purchases and information dissemination to ticket agents that sell air
transportation. As such, the Department is proposing to require these
ticket agents to adopt minimum customer service standards in select
areas. The customer service standards would not apply to ticket agents
that don't sell air transportation but rather arrange for air
transportation and receive compensation in connection with air
transportation sold by others. Additionally, as proposed, the standards
would only apply to those ticket agents with annual revenue of $100
million or more that market to the general public in the United States.
A majority of U.S. travelers who bought their airline tickets through
an avenue other than a carrier used large ticket agents.
    As carriers are already required to allow reservations to be held
at the quoted fare without payment or cancelled without penalty for at
least 24 hours after a reservation is made if the reservation is made
one week or more prior to a flight's departure, the Department is
proposing to extend this requirement to ticket agents that sell air
transportation. The Department feels that such agents should be able to
allow reservations to be held at the quoted fare, as carriers are
already required to provide this option. Moreover, through this
proposal, the benefits of reserving without payment or canceling
without penalty will reach consumers who use an agent to book air
transportation. Similar to carriers, this proposal would only require
ticket agents that sell air transportation to hold the fare at the
quoted price. The proposal would not require agents to hold for 24
hours the price for other related items such as fees associated with
ancillary services or tour components (e.g., hotel stay) although
agents are, of course, free to do so if they wish. We solicit comment
on whether the Department should require specific disclosure by agents
and airlines about what is and is not being held for 24 hours.
    The Department also seeks comments on requiring both agents and
carriers to inform consumers, when engaging in oral communications with
them about changes to a reservation, of the consumer's right to cancel
without penalty if applicable. The Department has received complaints
alleging that airlines are not disclosing to consumers when they are
eligible to change their reservation without penalty and charging
consumers change fees when consumers are unaware that they can cancel
without penalty and rebook. Should carriers and agents be required to
disclose the 24-hold policy to a consumer who is making a change within
24 hours of booking? Should the

Department require that the policy be prominently disclosed during the
booking process? Currently, many carriers only disclose the policy in
their ``Customer Service Commitment'' but not during the booking
process. Would it be beneficial for consumers to have this information
during booking?
    Additionally the Department is proposing to require agents to
provide prompt refunds where ticket refunds are due. This requirement
would mirror 14 CFR 259.5(b)(5), which requires carriers to submit a
refund for a credit card purchase within 7 days of the complete refund
request, and in the case of cash or check purchases, within 20 days of
receiving a complete refund request. Oftentimes, if a consumer has to
cancel a trip, and a refund is due, they find themselves going between
the airline and the agent for the refund in cases where the passenger
purchased the airline ticket through an agent. This requirement would
prevent this type of hassle and back-and-forth for consumers and
clarify the agent's responsibility in assisting consumers when ticket
refunds are due.
    The Department is also proposing that agents disclose cancellation
policies, seating configuration, and lavatory availability upon request
to a passenger before a consumer books a selected flight. Many
consumers who choose to book through a ticket agent are unaware of
restrictions or fees associated with canceling the ticket.
Additionally, consumers are not always aware that they are booking a
flight on a smaller aircraft or an aircraft that may not have a
bulkhead seat or lavatory available. As carriers are required to
provide this information to consumers on their Web sites and upon
request from their telephone reservation staff, the Department feels
agents should also provide the information. Under this proposal, agents
would have to make this information available on their Web sites that
are marketed to U.S. consumers, and upon request for reservations made
over the telephone. The Department invites interested parties to
comment on this proposal, specifically whether agents already have this
information to share with consumers. If agents do not have information
about carriers' cancellation policies, aircraft seating configurations
and lavatory availability, should the Department impose a requirement
for carriers to provide their agents this information or should agents
be required to provide links so that consumers can obtain that
information? The Department also invites comments regarding the methods
for disclosing cancellation policies, seating configurations, and
lavatory availability information to consumers. Should the Department
require that this information be placed at a particular location on a
carrier's Web site, e.g., next to every flight in a search-result list
for a particular itinerary?
    The Department is also proposing that agents adopt a customer
service standard to notify consumers of changes in travel itineraries
in a timely manner. A carrier is not required to notify a consumer
about a change in his or her travel itinerary if the carrier does not
have contact information for that individual, and an agent is not
required to provide a client's contact information to an airline.
Therefore, consumers who use agents that do not provide contact
information to carriers may not receive direct or timely notice of
changes to their itinerary. This requirement is intended to ensure that
consumers are timely notified of such changes.
    Finally, the Department is proposing that agents be required to
substantively respond to consumer complaints. Agents would be required
to acknowledge receipt of a consumer-related complaint within 30 days
of receipt of the complaint. Where the complaint (in whole or in part)
is about the agent's service, the agent must substantively respond to
the complaint within 60 days. If all or part of the complaint is about
services furnished (or to be furnished) by an airline or other travel
supplier, the agent must forward the complaint to that supplier for
response. If no part of the complaint is about the agent's service and
the agent sends the complaint to the appropriate supplier(s), the
agent's substantive reply can consist of the agent informing the
passenger that his or her complaint has been forwarded to the
appropriate party and providing contact information to the passenger
for that entity. This proposal closes the gap that exists in 14 CFR
259.5(b)(11) and 259.7, which require carriers to respond to consumer
complaints but do not provide for complaints related to a ticket
agent's services.
    Although the subjects that we are proposing that ticket agents that
sell air transportation address in their customer service plans are
identical to those that carriers are already required to include in
their customer service plans with respect to ticket purchases and
information dissemination, we request comment on whether any of these
subjects would be inappropriate if applied to ticket agents. Why or why
not? Some of these items may be under direct control of the air
carrier, and not the ticket agent. In commenting on these customer
service commitments, large ticket agents should address the extent to
which they are responsible for each of these items. Moreover, we seek
comment on whether the Department should require that ticket agents
address any other subjects in their customer service plans. For
example, should ticket agents be required to prominently disclose to
individuals who will be issued more than one ticket for their trip that
their bags may not be checked through, as airlines typically check a
passenger's baggage between the origin and destination points that are
issued on a single ticket? Should ticket agents also be required to
disclose to such individuals that they may have to pay multiple and
different bag fees if ticketed separately as the Department's
requirement for one set of baggage allowances and fees throughout a
passenger's itinerary only applies when there is a single ticket? If
so, when should this disclosure occur--before or after a ticket is
purchased? We also seek comment on the appropriate form for such a
disclosure (e.g., orally, on the ticket agent's Web site, on e-ticket
confirmation). The Department is proposing to apply these customer
service standards only to large ticket agents (those with annual
revenue of $100 million or more) that market to the general public in
the United States. The Department invites comment on whether the
applicability should be expanded to cover other ticket agents, e.g.,
smaller ticket agents, or ticket agents who do not sell to members of
the general public.
    The Department recognizes that requiring these minimum customer
service standards for agents would place a cost burden on these
agencies. However, the Department believes that the benefits to
consumers of receiving timely information, permitting reservations to
be held for 24 hours without risk, and having their complaints
addressed outweigh the costs. These proposals put all airline
passengers on an equal footing when it comes to customer service
standards, regardless of how they purchased their tickets.
    The Department invites comments on the costs and benefits of these
proposed customer service standards. For consumers who use agents, have
you had problems in the past determining the cancellation policies
associated with your ticket or being informed of changes in travel
itineraries? For carriers, do you see any cost in sharing the
information with the agents that the agents would be required to
provide to consumers? For agents, what are the costs and benefits that
you see in the proposal? Are you already receiving the information that

you would have to disclose to consumers from carriers? Should agents
also be required to review their adherence to the customer service
plans each year and retain the records of the audits for two years
following the date of any audit, just as carriers are required to do
today? Should agents be required to post their customer service plans
on their Web sites if the Web sites are marketed towards U.S.
consumers? Are there unforeseen consequences of the proposal, and, if
so, what are they?

6. Codifying 49 U.S.C. 41712(c) Regarding Web site Disclosure of Code-
Share Service and Other Amendments to 14 CFR Part 257

    Code-sharing is an arrangement whereby a flight is operated by a
carrier other than the airline whose designator code is used in
schedules and on tickets. The Department's current regulation on the
disclosure of code-sharing and long term wet lease arrangements, 14 CFR
257.5, was initially issued in 1999. Based on the statutory prohibition
against unfair and deceptive practices in the sale of air
transportation, 49 U.S.C. 41712, the purpose of Sec.  257.5 is to
ensure that consumers are aware of the identity of the airline actually
operating their flight in code-sharing and long-term wet lease
arrangements in domestic and international air transportation. See 64
FR 12838 (March 15, 1999). The Department has long recognized the
economic benefits of airline code-sharing and long term wet lease
arrangements but has been aware that such arrangements may cause