[Senate Report 107-13]
[From the U.S. Government Publishing Office]



                                                        Calendar No. 35
107th Congress                                                   Report
                                 SENATE
 1st Session                                                     107-13

======================================================================


                        AIRLINE CUSTOMER SERVICE
                            IMPROVEMENT ACT

                               __________

                              R E P O R T

                                 of the

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                 S. 319

 


                 April 26, 2001.--Ordered to be printed

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
89-010                     WASHINGTON : 2001



       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                      one hundred seventh congress
                             first session

                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA SNOWE, Maine                 JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas                JOHN B. BREAUX, Louisiana
GORDON SMITH, Oregon                 BYRON L. DORGAN, North Dakota
PETER G. FITZGERALD, Illinois        RON WYDEN, Oregon
JOHN ENSIGN, Nevada                  MAX CLELAND, Georgia
GEORGE ALLEN, Virginia               BARBARA BOXER, California
                                     JOHN EDWARDS, North Carolina
                                     JEAN CARNAHAN, Missouri
                       Mark Buse, Staff Director
                   Ann H. Choiniere, General Counsel
               Kevin D. Kayes, Democratic Staff Director
                  Moses Boyd, Democratic Chief Counsel
                Gregg Elias, Democratic General Counsel
                                                        Calendar No. 35
107th Congress                                                   Report
                                 SENATE
 1st Session                                                     107-13

======================================================================



 
                      AIRLINE CUSTOMER SERVICE ACT

                                _______
                                

                 April 26, 2001.--Ordered to be printed

                                _______
                                

       Mr. McCain, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                              R E P O R T

                         [To accompany S. 319]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 319) ``A bill to amend title 
49, United States Code, to ensure that air carriers meet their 
obligations under the Airline Customer Service Agreement, and 
provide improved passenger service in order to meet public 
convenience and necessity'', having considered the same, 
reports favorably thereon with an amendment (in the nature of a 
substitute) and recommends that the bill (as amended) do pass.

                          Purpose of the Bill

  The purpose of the Airline Customer Service Improvement Act, 
S. 319, is to ensure that air carriers provide improved 
passenger service to meet public convenience and necessity and 
fulfill their obligations under the voluntary Airline Customer 
Service Agreement, which was agreed upon on June 17, 1999. The 
bill would implement recommendations made by the Department of 
Transportation's (DOT) Inspector General's (IG) office in its 
Final Report on the Airline Customer Service Agreement as well 
as additional customer service protections.

                          Background and Needs

  Statistics kept by DOT show that complaints about commercial 
air travel have risen dramatically in the past few years. While 
some of the increase can be attributed to the ease of making 
such complaints through the Internet, it is not in dispute that 
air traveler discontent and frustration are at high levels. 
Many factors contribute to increased consumer dissatisfaction 
with the airlines. For example, steps that the airlines have 
taken to control costs and maintain their profitability have a 
direct impact on travelers' experiences. In addition, demand 
for air travel has increased tremendously over the last several 
years, causing planes to be more crowded and placing strains on 
carriers' ability to provide adequate services. Inadequacies in 
airport and air traffic control infrastructure have contributed 
to air travel delays and ground holds.
  In many other industries, a company risks losing customers 
due to its poor service. However, this principle does not 
always apply in the airline industry. For instance, travelers 
who are dependent on a hub airport that is dominated by one 
carrier do not necessarily have the option of flying on another 
carrier that offers better service. In addition, freedom of 
entry is usually a disciplining factor when it comes to poor 
service, but the barriers to entry in the airline industry are 
relatively high. The overall state of air travel and service 
has led to calls from the public for governmental intervention.
  In response to this public outcry, the Air Transport 
Association (ATA), which represents the major domestic 
airlines, in June 1999, voluntarily agreed to a Customer 
Service Commitment that required each of its members to develop 
a Customer Service Plan with the following features: offer the 
lowest fare available; notify customers of known delays, 
cancellations and diversions; deliver baggage expeditiously; 
support an increase in the baggage liability limit; allow 
reservations to be held or canceled; provide prompt ticket 
refunds; properly accommodate disabled and special needs 
passengers; meet customers' essential needs during long on-
aircraft delays; handle ``bumped'' passengers with fairness and 
consistency; disclose travel itineraries, cancellation 
policies, frequent flyer rules, and aircraft configurations; 
ensure good customer service from code-share partners; and be 
more responsive to customer complaints. As part of the 
voluntary agreement, the air carriers agreed to support an 
increase in the baggage liability limit, as well as legislation 
that increased possible fines for violations of DOT customer 
service regulations. The Wendell H. Ford Aviation Investment 
and Reform Act for the 21st Century (P.L. 106-181, known as 
AIR-21) required the DOT Inspector General's (IG) Office to 
review the airlines' progress and prepare Interim and Final 
Reports.
  The IG's Interim Report was intended as a mid-term review to 
determine if the carriers had made sufficient progress in 
implementing their voluntary commitments. The IG found the 
airlines were making a clear and genuine effort to strengthen 
the attention paid to customer service, but bottom-line results 
were mixed, and the airlines needed to do more to restore 
customer confidence. The preliminary results included areas 
where the airlines could improve, such as disclosures to 
passengers relating to fare and refund availability and what to 
expect in the case of an extended onboard delay. The IG's 
Interim Report also noted that the airlines' Plans were not 
legally enforceable by consumers, unless their provisions were 
also incorporated into the airlines' contracts of carriage. The 
IG recommended that the airlines ensure that their contracts of 
carriage fully reflected the benefits afforded by their Plans 
and the airlines' Customer Service Commitment. The Committee 
held a hearing on the Interim Report on June 28, 2000.
  In the Final Report, issued on February 12, 2001, the IG 
indicated that the Commitment had resulted in positive benefits 
for air travelers on a number of important fronts. 
Notwithstanding progress made by the airlines, the IG continued 
to find significant shortfalls in reliable and timely 
communication with passengers by the airlines about flight 
delays and cancellations, the major causes of customer 
dissatisfaction. The IG believes that actions by the airlines 
to reduce flight delays and cancellations are critical because 
major improvements in providing capacity to meet demand, such 
as new runways and new air traffic control capacity enhancing 
technology, will take at least several years.
  The IG found the customer service areas most in need of 
improvement are the provisions that are triggered when there 
are delays and cancellations, namely, keeping customers 
informed of delays and cancellations, meeting customers' 
``essential'' needs during ``extended'' on-aircraft delays, and 
making reasonable efforts to return delayed or mishandled 
checked baggage within 24 hours. According to the IG, although 
the airlines have made significant investment and progress 
toward meeting these commitments, problems persist, including 
untimely, incomplete, or unreliable reports to passengers about 
flight status, delays, and cancellations.
  According to the IG, although airline mitigation measures 
alone will not solve the complex delay and cancellation 
problem, the airlines should be doing their part. The FAA's 
efforts to modernize air traffic control through new 
technology, satellite navigation at airports, airspace 
redesign, and, importantly, new runways will be central 
elements in any successful effort to add capacity and avoid 
gridlock.
  The Final Report was the subject of a Committee hearing on 
February 13, 2001. The Committee was told that the airlines had 
invested billions of dollars in technology and training to 
improve customer service as a result of their voluntary 
commitments. At the hearing, the IG noted that, while the 
airlines' voluntary efforts had produced benefits faster than a 
legislative or regulatory mandate, additional steps were needed 
to improve customer service that would require implementation 
by legislation and regulations.
  As directed by law, the IG made numerous, specific 
recommendations for improving accountability, enforcement, and 
the consumer protections afforded commercial air passengers. S. 
383 was introduced to implement these recommendations and 
additional customer protections.

                      Summary of Major Provisions

  As reported, S. 319 would:
          1. Direct the DOT to increase resources allocated to 
        providing the following:
                   Airline passenger consumer 
                protection and related services.
                   Oversight and enforcement of laws 
                and regulations that provide protection for air 
                travelers.
          2. Require each large air carrier to incorporate its 
        individualized Airline Customer Service Plan into its 
        contract of carriage.
          3. Require each large air carrier to take numerous, 
        concrete actions to improve customer service, such as 
        giving air travelers at airports and on aircraft the 
        best available information regarding delays and 
        cancellations. Many of the requirements would be 
        civilly enforceable by DOT.
          4. Provide for improved DOT statistics with respect 
        to missing passenger baggage and chronically-delayed or 
        -canceled flights.
          5. Require the DOT to initiate a rulemaking to 
        accomplish the following:
                   To consider establishing a uniform 
                check-in deadline and to require air carriers 
                to disclose their policies on how such 
                deadlines apply to passengers making 
                connections.
                   Increase the maximum amount of 
                denied boarding compensation for passengers 
                denied boarding involuntarily (bumped).
          6. Require the DOT to perform the following 
        functions:
                   Review all regulations relating to 
                air carriers' treatment of customers and to 
                make modifications as needed.
                   Prescribe regulations to establish 
                minimum standards for emergency medical and 
                first-aid equipment carried aboard aircraft 
                with 30 or more seats.
                   Study incidents of damage to 
                equipment of passengers with disabilities.

                          Legislative History

  On February 12, 2001, the IG issued its Final Report on 
Airline Customer Service Commitment, and, on February 13, the 
Committee held a hearing on the findings and recommendations of 
the IG. After the hearing on the 13th, Senators McCain, 
Hollings, and Hutchison introduced S. 319, the Airline Customer 
Service Improvement Act, to implement the recommendations of 
the IG. Senators Feingold, Kerry, and Snowe subsequently 
cosponsored this bill. On March 15, 2001, the Committee ordered 
S. 319 reported with an amendment in the nature of a substitute 
offered by Senators McCain, Hollings, Hutchison, Wyden, and 
Kerry.

                            Estimated Costs

  In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 20, 2001.
Hon. John McCain,
Chairman, Committee on Commerce, Science, and Transportation, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 319, the Airline 
Customer Service Improvement Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark Hadley.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               Congressional budget office cost estimate

S. 319--Airline Customer Service Improvement Act

    Summary: S. 319 would require air carriers to provide 
certain services to customers, including:
           providing timely information about delays;
           offering the lowest fare for which a 
        customer is eligible; and
           disclosing to customers the performance of 
        flights that are chronically canceled or delayed.
    In addition, the bill would require air carriers to 
incorporate within their standard contract of carriage the 
provisions of the Airline Customer Service Commitment as agreed 
to by the members of the Air Transport Association on June 17, 
1999. Finally, under the bill, each large air carrier would be 
required to establish a quality assurance system for measuring 
customer service.
    Based on information from the Department of Transportation 
(DOT), CBO estimates that implementing the oversight, 
compliance, and enforcement efforts required by the bill would 
cost the department $20 million over the 2001-2006 period. In 
addition, CBO estimates that air carriers would pay on average 
about $1 million a year in additional civil fines under this 
bill. Such fines are recorded in the budget as receipts; 
therefore, pay-as-you-go procedures would apply.
    S. 319 contains no intergovernmental mandates as defined in 
the Unfunded Mandates Reform Act (UMRA). S. 319 would impose 
private-sector mandates on certain air carriers. CBO will 
provide an estimate of the impact of this legislation on the 
private sector in a separate statement.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 319 is shown in the following table. The 
costs of this legislation fall within budget function 400 
(transportation).

----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                              2001     2002     2003     2004     2005     2006
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level.............................    (\1\)        4        4        4        4        4
Estimated Outlays.........................................    (\1\)        4        4        4        4        4

                                               CHANGES IN REVENUES

Estimated Revenues........................................        0        1        1        1        1        1
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.

    Basis of estimate: For this estimate, we assume S. 319 
would be enacted within the next few months. On that basis, CBO 
estimates that implementing the bill would cost $20 million 
over the 2001-2006 period, assuming appropriation of the 
necessary amounts. CBO estimates that air carriers would pay 
civil fines totaling about $5 million over the 2001-2006 period 
for violations of the bill's provisions.

Spending subject to appropriation

    S. 319 would require DOT to monitor air carriers and 
enforce the customer service provisions of this bill. In 
addition, under the bill, DOT would issue new regulations 
concerning emergency medical assistance and deadlines for 
passenger check-in. It would also have to prepare reports on 
damage caused by air carriers to equipment owned by passengers 
with disabilities, and on service provided to passengers with 
disabilities. Based on information from DOT, CBO estimates that 
implementing S. 319 would cost approximately $4 million a year 
for between 30 to 50 new employees to work primarily on 
monitoring and enforcement activities.

Revenues

    S. 319 would impose civil fines on air carriers for 
violating the customer service requirements of the bill. 
Collections of civil penalties are recorded in the budget as 
governmental receipts (revenues). Under current law, air 
carriers pay between $350,000 and $1.5 million a year in civil 
fines for violating consumer protection requirements. Because 
S. 319 would significantly expand consumer protection efforts, 
CBO estimates, based on information from DOT, that air carriers 
would on average pay an additional $1 million annually in fines 
under the bill.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. CBO's 
estimate of the net change in governmental receipts is shown in 
the following table. For the purposes of enforcing pay-as-you-
go procedures, only the effects in the current year, the budget 
year, and the succeeding four years are counted.

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                      2001   2002   2003   2004   2005   2006   2007   2008   2009   2010   2011
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................                                 Not applicable
Changes in receipts................      0      1      1      1      1      1      1      1      1      1      1
----------------------------------------------------------------------------------------------------------------

    Estimated impact on state, local, and tribal governments: 
S. 319 contains no intergovernmental mandates as defined in the 
Unfunded Mandates Reform Act. The bill would require air 
carriers to coordinate with local airport authorities and 
airport operators regarding certain customer service procedures 
in terminal areas, but the cost to local airport authorities 
and airport operators to participate in this coordination with 
air carriers would not be significant.
    Estimated impact on the private sector: S. 319 would impose 
private-sector mandates, as defined by UMRA, on certain air 
carriers. CBO will provide an estimate of the impact of this 
legislation on the private sector in a separate statement.
    Estimate prepared by: Federal Costs: Mark Hadley, Impact on 
State, Local, and Tribal Governments: Victoria Heid Hall.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis. G. Thomas Woodward, Assistant 
Director for Tax Analysis.

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 25, 2001.
Hon. John McCain,
Chairman, Committee on Commerce, Science, and Transportation, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed statement on private-sector mandates for 
S. 319, the Airline Customer Service Improvement Act. CBO 
completed a federal cost estimate and an assessment of the 
bill's effects on state, local, and tribal governments on April 
20, 2001.
    If you wish further details on this statement, we will be 
pleased to provide them. The CBO staff contacts are Jean 
Talarico and Paige Piper/Bach.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

    congressional budget office estimate of costs of private-sector 
                                mandates

S. 319--Airline Customer Service Improvement Act

    Summary: S. 319 would impose several private-sector 
mandates as defined by the Unfunded Mandates Reform Act (UMRA) 
on large air carriers. CBO cannot determine whether the direct 
cost to the private sector would exceed the annual threshold 
defined by UMRA ($113 million in 2001, adjusted annually for 
inflation).
    Private-sector mandates contained in bill: S. 319 would 
require large air carriers, as defined in the bill, to provide 
certain services to customers, including:
           Incorporating within its contract of 
        carriage the provisions of the Airline Customer Service 
        Commitment as agreed to by the members of the Air 
        Transportation Association;
           Disclosing on-time performance and 
        cancellation rates whenever a customer makes a 
        reservation or purchases a ticket on a chronically 
        delayed or cancelled flight;
           Establishing a quality assurance and 
        performance measurement system;
           Establishing an internal audit process to 
        measure compliance with their customer service 
        commitments and obligations;
           Developing and implementing a system to 
        track and document the time between receipt of a claim 
        for missing baggage and its delivery;
           Monitoring and reporting its efforts to 
        improve services to passengers with disabilities and 
        special needs;
           Providing timely information about flight 
        delays; and
           Offering the lowest fare for which a 
        customer is eligible.
    In addition, the bill would require large air carriers to 
provide other service-enhancing improvements.
    According to government and industry sources, business 
practices related to customer services vary widely in the 
airline industry. As a result, the cost of complying with 
mandates in the bill would differ greatly among affected air 
carriers. CBO cannot determine whether the aggregate direct 
cost would exceed the annual threshold defined by UMRA because 
we do not have sufficient information about existing practices 
and industry costs.
    Estimate prepared by: Paige Piper/Bach and Jean Talarico.
    Estimate approved by: Roger Hitchner, Assistant Director 
for Microeconomics and Financial Studies Division.

                      Regulatory Impact Statement

  In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       number of persons covered

  All large U.S. airlines, as defined in the bill, would be 
subject to the new statutory requirements regarding customer 
service under sections 4, 5, and 7.
  Section 10 would lead to new regulations regarding standards 
for onboard medical equipment for all passenger airlines that 
operate aircraft with 30 or more seats. New standards and 
regulations would also affect flight attendants who would be 
primarily responsible for using such equipment. Such airlines 
and their employees are, however, already subject to 
significant levels of regulation.

                            economic impact

  Section 3 would cause increases in DOT resources for airline 
passenger consumer protection and related services and for 
oversight and enforcement of laws and regulations protecting 
air travelers. These increases were authorized by provisions of 
AIR-21. With respect to sections 3 through 9, improvements in 
airline customer service brought about by these requirements 
and mandates could save consumers significant amounts of money 
in the aggregate, particularly if they are given more and 
better information when making air travel decisions.
  Section 4 may lead to modest economic costs, mostly 
administrative in nature, for air carriers to alter their 
contracts of carriage. For airlines not currently performing 
the mandated practices, this section would lead to additional 
costs. This section would also cause carriers to incur the 
costs of customer service quality assurance and performance 
measurement systems and internal audits of their customer 
service plans. Carriers could also incur fines if they commit 
violations enforced by DOT, but some could be avoided if the 
airlines invest in systems to improve the quality and flow of 
information provided to consumers.
  Section 5 may lead to modest economic costs for airlines to 
implement the obligations imposed by this section, such as the 
establishment of toll-free numbers for baggage status 
monitoring of code shares, the development of systems for 
tracking mishandled bags, and the monitoring of customer 
service performance by code-share partners.
  Section 6 may cause the DOT to incur incidental costs to 
develop and post a monthly table showing flight data for the 
prior three months. Because the other portion of this section 
merely requires the DOT to change an existing calculation 
technique, no additional impact should result from this 
provision.
  Section 7 may cause air carriers to incur additional costs 
due to an increase in the maximum amount of denied boarding 
compensation for bumped passengers.
  Section 10 may lead to additional costs for air carriers for 
emergency medical and first-aid equipment and training 
prescribed by DOT. The saving of lives and mitigation of 
serious medical problems that may result from this section 
could result in substantial economic benefits to individuals 
and society at large.

                                privacy

  This legislation would not have any adverse impact on the 
personal privacy of the individuals affected.

                               paperwork

  Section 3 would increase paperwork for DOT, which must 
prepare reports for congressional authorizing committees. 
However, expansion of DOT resources regarding airline passenger 
consumer protection will undoubtedly enhance DOT's oversight in 
this area.
  Section 4 would moderately increase the paperwork burden of 
large air carriers that still need to incorporate their 
customer service plans into their contracts of carriage. The 
quality assurance and performance measurement systems and 
internal audits mandated under this section will also create 
paperwork for these carriers. DOT will also incur additional 
paperwork to monitor airline performance.
  For any large air carrier not currently doing so, section 5 
would impose an additional paperwork burden associated with the 
publication of comprehensive reports of frequent flyer 
redemption information. There would also be additional 
paperwork for airlines associated with their 90-day 
implementation reports to DOT and for DOT associated with its 
preparation of a report to Congress on the airlines progress on 
implementing requirements under the bill. This section may 
impose additional paperwork on these carriers to improve and 
monitor practices related to delayed and canceled flights, 
baggage delivery, services for special-needs passengers, and 
code-share agreements.
  Section 6 may require a minimal amount of additional 
paperwork by DOT associated with adding chronically-delayed and 
chronically-canceled flight statistics to existing monthly 
tables.
  Section 7 would require additional paperwork from the DOT to 
conduct rulemakings related to bumping of airline passengers.
  Section 8 would impose additional paperwork on the DOT to 
study damage to equipment used by disabled passengers.
  Section 9 may require additional paperwork if DOT determines 
that modifications to regulations are needed to promote the 
purposes of this bill or improve treatment of passengers.
  Section 10 imposes additional paperwork on the DOT to 
prescribe regulations regarding medical and first-aid 
equipment.

                      Section-by-Section Analysis


Section 1. Short Title

  This section establishes the title of the bill as the 
``Airline Customer Service Improvement Act''.

Section 2. Findings

  This section sets forth five congressional findings 
establishing the general basis for enactment of the bill. The 
amendment includes additional findings to establish the basis 
for the bill.

Section 3. Department of Transportation to Devote Greater Resources to 
        Airline Passenger Consumer Protection

  This section directs the Secretary of Transportation to 
increase DOT resources allocated to providing: (1) airline 
passenger consumer protection and related services; and (2) 
oversight and enforcement of laws and regulations that provide 
protection for air travelers. Within 60 days after enactment of 
the bill, DOT would be required to report to congressional 
authorizing committees on steps taken to increase such 
resources.
  The IG found the resources available to the DOT to carry out 
oversight and enforcement of consumer protection and unfair 
competition laws and regulations are seriously inadequate. 
Until this situation is changed, the IG believes DOT will not 
be able to satisfactorily discharge its consumer protection 
responsibilities, including the duties assigned to it for 
investigating complaints involving disabled airline passengers.

Section 4. Airline Customer Service Commitment

  This section requires each large air carrier to incorporate 
the provisions of the Airline Customer Service Commitment 
(Commitment), as executed by the members of Air Transport 
Association on June 17, 1999, in its contract of carriage. 
These carriers are also required to incorporate their 
individual customer service plans, which were developed in 
accordance with the Commitment, into their contracts of 
carriage to the extent such plans are broader or more specific 
than the underlying Commitment.
  This section requires each large air carrier to institute the 
following, specified practices: (1) provide passengers with 
timely and accurate information regarding delays and 
cancellations (as promised in the original Commitment); (2) 
offer the lowest fares available to customers making inquiries 
at the air carrier's ticket offices and airport ticket service 
counters; (3) notify customers that lower fares may be 
available on the Internet (as promised in the original 
Commitment); (4) provide the on-time performance rate for each 
flight (based on the most recently available data) on its 
Internet website; (5) disclose, without being requested, the 
on-time performance and cancellation rate for chronically 
delayed or canceled flights whenever a customer makes a 
reservation or purchases a ticket; (6) establish a plan with 
respect to passengers who must unexpectedly remain overnight 
during a trip due to flight delays, cancellations, or 
diversions; and (7) tell all passengers on a flight what the 
airline is required to pay bumped passengers before the airline 
makes offers to passengers to induce them to relinquish their 
seats voluntarily.
  Each large air carrier is also required to establish a 
customer service quality assurance and performance measurement 
system, to establish an internal audit process to measure 
compliance with the Commitment and its customer service plan, 
and to cooperate fully with DOT in any external audits of those 
systems and processes.
  Because the foregoing obligations are set forth in the U.S. 
Code, DOT would be able to enforce violations through civil 
administrative proceedings, which could lead to fines. In 
enforcing the new statutory obligations, DOT is required to 
focus on practices and patterns of conduct, where appropriate, 
rather than individual failures or violations.
  This section requires DOT to do the following: monitor 
airline compliance with this section and take such actions as 
may be necessary to enforce compliance; monitor airline quality 
assurance and performance measurement systems to ensure they 
are meetingtheir commitments; and review the airline internal 
audits of their quality assurance and performance measurement systems.
  In this section, a ``large air carrier'' is defined as a U.S. 
airline that (1) operates aircraft designed to have a maximum 
passenger capacity of more than 60 seats or a maximum payload 
capacity of more than 18,000 pounds or (2) conducts operations 
where one or both terminals of a flight stage are outside the 
U.S. The definition excludes charter operators.
  This section defines a chronically-delayed flight as one with 
at least 40 percent of its arrivals delayed for at least 15 
minute during the most recent three-month period for which data 
are available. Chronically-canceled flights are those canceled 
at least 30 percent of the time during the same period of time.

Section 5. Other Service-Enhancing Improvements

  This section requires each large carrier, within 90 days of 
enactment of the bill, to do the following: (1) establish 
realistic targets for reducing chronically-delayed and -
canceled flights; (2) establish a system passengers may use 
before departing for the airport to determine whether there is 
a lengthy flight delay or whether a flight has been canceled; 
(3) establish realistic performance goals for reducing the 
number of mishandled bags; (4) develop and implement a system 
for tracking and documenting the amount of time between the 
receipt of a passenger's claim for missing baggage and the 
delivery of the baggage to the passenger; (5) monitor and 
report its efforts to improve services provided to passengers 
with disabilities and special needs; (6) clarify terminology 
used to advise passengers of unscheduled delays or 
interruptions in service, such as ``extended period of time'' 
and ``emergency,'' to better inform passengers about what they 
can expect during onboard delays; (7) ensure that comprehensive 
passenger service contingency plans are properly maintained and 
that the plans, and any changes to those plans, are coordinated 
with local airport authorities and the FAA; (8) ensure that 
master airport flight information display monitors contain 
accurate, up-to-date flight information and that the 
information is consistent with that shown on the carrier's 
flight information display monitors; (9) establish a toll-free 
telephone number that passengers may use to check on the status 
of checked baggage that was not delivered on arrival at the 
passenger's destination; (10) if it maintains a domestic code-
share arrangement with another air carrier, conclude an 
agreement under which it will conduct an annual audit of that 
air carrier's compliance with the Airline Customer Service 
Commitment; and (11) if it has a frequent flyer program, make 
available to the public a comprehensive report of frequent 
flyer redemption information in its customer literature and 
annual reports. These requirements are not subject to 
enforcement by DOT.
  This section requires each airline, within 90 days after 
enactment of the bill, to report to DOT on its implementation 
of the obligations imposed by this bill. Within 270 days after 
enactment of the bill, DOT is required to report to Congress on 
the implementation by the airlines of the obligations imposed 
on them by this bill, together with such additional findings 
and recommendations for additional legislative or regulatory 
action as deemed appropriate by the Secretary.

Section 6. Improved DOT Statistics

  This section requires DOT to change how it calculates 
mishandled baggage statistics so that passengers who do not 
check bags are not factored into the calculations. It also 
requires DOT to include a table in its monthly Air Travel 
Consumer Report that shows the number of chronically-delayed or 
-canceled flights (as defined by the bill).

Section 7. DOT Regulations on Bumping

  This section requires DOT to initiate a rulemaking to amend 
regulations to: (1) consider establishing a uniform check-in 
deadline and to require air carriers to disclose their policies 
on how such deadlines apply to passengers making connections; 
and (2) increase the maximum amount of denied boarding 
compensation for passengers denied boarding involuntarily 
(bumped). DOT is also required to define ``any undue or 
unreasonable preference or advantage'' and ``unjust or 
unreasonable prejudice or disadvantage'' as those terms are 
used in DOT regulations related to air carrier priority rules 
or criteria for passengers denied boarding involuntarily.

Section 8. Study of Damage to Passengers with Disabilities Equipment

  This section requires DOT to study incidents involving damage 
to equipment used by disabled passengers.

Section 9. Review of Regulations

  This section requires DOT to review all regulations that 
relate to air carriers' treatment of customers and to make such 
modifications as may be appropriate to promote the purposes of 
the bill and protect consumers.

Section 10. Emergency Medical Assistance

  This section requires DOT to prescribe regulations, after 
consulting with the U.S. Surgeon General, to establish minimum 
standards for emergency medical and first-aid equipment carried 
aboard aircraft with 30 or more seats. Factors that DOT would 
have to consider in developing the regulations include the 
following: weight and size of equipment, special training that 
may be needed for airline employees, space limitations of 
affected aircraft, the effect of the regulations on aircraft 
operations, the practical experience of airlines in carrying 
and operating similar equipment, whether any carriers are 
already training their employees in this area, and other 
relevant factors.

                        Changes in Existing Law

  In compliance with paragraph 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill, 
as reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new material is printed 
in italic, existing law in which no change is proposed is shown 
in roman):

                        TITLE 49. TRANSPORTATION


                    SUBTITLE VII. AVIATION PROGRAMS


                    PART A. AIR COMMERCE AND SAFETY


                 SUBPART IV. ENFORCEMENT AND PENALTIES


                  CHAPTER 417. OPERATIONS OF CARRIERS


                       SUBCHAPTER I. REQUIREMENTS


Sec.  41722. Airline passenger emergency in-flight medical care

  (a) In General.--The Secretary of Transportation shall 
prescribe regulations to establish minimum standards for 
resuscitation, emergency medical, and first-aid equipment and 
supplies to be carried on board an aircraft operated by an air 
carrier in air transportation that is capable of carrying at 
least 30 passengers.
  (b) Factors Considered.--In prescribing regulations under 
subsection (a), the Secretary shall consider--
          (1) the weight and size of the equipment described in 
        subsection (a);
          (2) the need for special training of air carrier 
        personnel to operate the equipment safely and 
        effectively;
          (3) the space limitations of each type of aircraft to 
        which the standards apply;
          (4) the effect of the regulations on aircraft 
        operations;
          (5) the practical experience of airlines in carrying 
        and operating similar equipment, and whether any air 
        carriers are already training appropriate personnel to 
        an acceptable level of proficiency in the operation of 
        such equipment and the provision of first-aid; and
          (6) such other factors as the Secretary finds 
        relevant.
  (c) Consultation With Surgeon General.--Before prescribing 
regulations under subsection (a), the Secretary shall consult 
with the Surgeon General of the United States.

           *       *       *       *       *       *       *


                SUBCHAPTER IV. AIRLINE CUSTOMER SERVICE

Sec.  41781. Airline customer service requirements

  (a) In General.--Within 60 days after the date of enactment 
of the Airline Customer Service Improvement Act, each large air 
carrier shall incorporate in its contract of carriage--
          (1) the provisions of the Airline Customer Service 
        Commitment executed by the Air Transport Association 
        and 14 of its member airlines on June 17, 1999; and
          (2) its customer service plan developed in accordance 
        with that Commitment to the extent that the plan is 
        more specific or broader than the Commitment.
  (b) Additional Obligations.--Within 60 days after the date of 
enactment of the Airline Customer Service Improvement Act, each 
large air carrier shall institute the following practices:
          (1) Provide to customers at an airport and on board 
        an aircraft, in a timely, reasonable, and truthful 
        manner, the best information available to the air 
        carrier regarding a delay, cancellation, or diversion 
        affecting the customers' flight, including--
                  (A) the cause of any such delay, 
                cancellation, or diversion; and
                  (B) for a delayed flight, the air carrier's 
                best estimate of the departure time.
          (2) Offer the lowest fare available for which a 
        customer is eligible at the air carrier's ticket 
        offices and airport ticket service counters for the 
        date, flight, and class of service requested.
          (3) Notify customers that lower fares may be 
        available through other distribution systems, including 
        Internet websites.
          (4) Provide, no later than the 5th day of each month, 
        the air carrier's on-time performance rate for each 
        scheduled flight for the most recently ended month for 
        which data is available through its Internet website.
          (5) Disclose, without being requested, the on-time 
        performance and cancellation rate for a chronically 
        delayed or chronically canceled flight whenever a 
        customer makes a reservation or purchases a ticket on 
        such a flight.
          (6) Establish a plan with respect to passengers who 
        must unexpectedly remain overnight during a trip due to 
        flight delays, cancellations, or diversions.
          (7) Tell all passengers on a flight what the air 
        carrier is required to pay passengers involuntarily 
        denied boarding before making offers to passengers to 
        induce them to relinquish seats voluntarily.
  (c) Compliance Assurance.--
          (1) Air carrier functions.--Each large air carrier 
        also shall--
                  (A) establish a customer service quality 
                assurance and performance measurement system 
                within 90 days after the date of enactment of 
                the Airline Customer Service Improvement Act;
                  (B) establish an internal audit process to 
                measure compliance with the commitments and 
                obligations under subsections (a) and (b) 
                within 90 days after the date of enactment of 
                the Airline Customer Service Improvement Act; 
                and
                  (C) cooperate fully with any Department of 
                Transportation audit of its customer service 
                quality assurance system or review of its 
                internal audit.
          (2) DOT functions.--The Secretary of Transportation 
        shall--
                  (A) monitor compliance by large air carriers 
                with the requirements of this section and take 
                such action under subpart IV of this title as 
                may be necessary to enforce compliance with 
                this section under subpart IV of this title;
                  (B) monitor, in particular, and enforce air 
                carrier performance under paragraphs (1), (2), 
                (3), (5), and (7) of subsection (b), focusing 
                on practices and patterns of conduct rather 
                than specific incidents of failure to follow 
                the air carrier's established practices;
                  (C) monitor air carrier customer service 
                quality assurance and performance measurement 
                systems to ensure that air carriers are meeting 
                fully their airline passenger service 
                commitments; and
                  (D) review the internal audits conducted by 
                air carriers of their air carrier customer 
                service quality assurance and performance 
                measurement systems.
  (d) Definitions.--In this section:
          (1) Large air carrier.--The term ``large air 
        carrier'' means an air carrier holding a certificate 
        issued under section 41102 that conducts scheduled 
        passenger air transportation and--
                  (A) operates aircraft designed to have a 
                maximum passenger capacity of more than 60 
                seats or a maximum payload capacity of more 
                than 18,000 pounds; or
                  (B) conducts operations where one or both 
                terminals of a flight stage are outside the 50 
                states of the United States, the District of 
                Columbia, the Commonwealth of Puerto Rico and 
                the U.S. Virgin Islands.
          (2) Chronically delayed flight.--The term 
        ``chronically delayed flight'' means a regularly 
        scheduled flight that has failed to arrive on time (as 
        defined in section 234.2 of title 14, Code of Federal 
        Regulations) at least 40 percent of the time during the 
        most recent 3-month period for which data are 
        available.
          (3) Chronically canceled flight.--The term 
        ``chronically canceled flight'' means a regularly 
        scheduled flight at least 30 percent of the departures 
        of which have been canceled during the most recent 3-
        month period for which data are available.

           *       *       *       *       *       *       *


                         CHAPTER 463. PENALTIES

Sec.  46301. Civil penalties

  (a) General Penalty.--
          (1) A person is liable to the United States 
        Government for a civil penalty of not more than $1,000 
        for violating--
                  (A) chapter 401 (except sections 40103(a) and 
                (d), 40105, 40116, and 40117), chapter 411, 
                chapter 413 (except sections 41307 and 
                41310(b)-(f)), chapter 415 (except sections 
                41502, 41505, and 41507-41509), chapter 417 
                (except sections 41703, 41704, 41710, 41713, 
                and 41714), chapter 419, subchapter II or III 
                of chapter 421, chapter 441 (except section 
                44109), 44502(b) or (c), chapter 447 (except 
                sections 44717 and 44719-44723), chapter 449 
                (except sections 44902, 44903(d), 44904, 
                44907(a)-(d)(1)(A) and (d)(1)(C)-(f), and 
                44908), or section 47107(b) (including any 
                assurance made under such section) of this 
                title;
                  (B) a regulation prescribed or order issued 
                under any provision to which clause (A) of this 
                paragraph applies;
                  (C) any term of a certificate or permit 
                issued under section 41102, 41103, or 41302 of 
                this title; or
                  (D) a regulation of the United States Postal 
                Service under this part.
          (2) A person operating an aircraft for the 
        transportation of passengers or property for 
        compensation (except an airman serving as an airman) is 
        liable to the Government for a civil penalty of not 
        more than $10,000 for violating--
                  (A) chapter 401 (except sections 40103(a) and 
                (d), 40105, 40106(b), 40116, and 40117), 
                section 44502(b) or (c), chapter 447 (except 
                sections 44717-44723), or chapter 449 (except 
                sections 44902, 44903(d), 44904, and 44907-
                44909) of this title; or
                  (B) a regulation prescribed or order issued 
                under any provision to which clause (A) of this 
                paragraph applies.
          (3) A civil penalty of not more than $10,000 may be 
        imposed for each violation under paragraph (1) of this 
        subsection related to--
                  (A) the transportation of hazardous material;
                  (B) the registration or recordation under 
                chapter 441 of this title of an aircraft not 
                used to provide air transportation;
                  (C) a violation of section 44718(d), relating 
                to the limitation on construction or 
                establishment of landfills;
                  (D) a violation of section 44725, relating to 
                the safe disposal of life-limited aircraft 
                parts; or
                  (E) a violation of section 41705, relating to 
                discrimination against handicapped individuals.
          (4) A separate violation occurs under this subsection 
        for each day the violation (other than a violation of 
        section 41715) continues or, if applicable, for each 
        flight involving the violation (other than a violation 
        of section 41715).
          (5) Penalty for diversion of aviation revenues. The 
        amount of a civil penalty assessed under this section 
        for a violation of section 47107(b) of this title (or 
        any assurance made under such section) or section 47133 
        of this title may be increased above the otherwise 
        applicable maximum amount under this section to an 
        amount not to exceed 3 times the amount of revenues 
        that are used in violation of such section.
          (6) Air service termination notice. Notwithstanding 
        paragraph (1), the maximum civil penalty for violating 
        section 41715 shall be $5,000 instead of $1,000.
          (7) Consumer protection. Notwithstanding paragraphs 
        (1) and (4), the maximum civil penalty for violating 
        section [40127 or 41712] 40127, 41712, or 41781 
        (including a regulation prescribed or order issued 
        under such section) or any other regulation prescribed 
        by the Secretary that is intended to afford consumer 
        protection to commercial air transportation passengers, 
        shall be $2,500 for each violation.
  (b) Smoke Alarm Device Penalty.--
          (1) A passenger may not tamper with, disable, or 
        destroy a smoke alarm device located in a lavatory on 
        an aircraft providing air transportation or intrastate 
        air transportation.
          (2) An individual violating this subsection is liable 
        to the Government for a civil penalty of not more than 
        $2,000.
  (c) Procedural Requirements.--
          (1) The Secretary of Transportation may impose a 
        civil penalty for the following violations only after 
        notice and an opportunity for a hearing:
                  (A) a violation of subsection (b) of this 
                section or chapter 411, chapter 413 (except 
                sections 41307 and 41310(b)-(f)), chapter 415 
                (except sections 41502, 41505, and 41507-
                41509), chapter 417 (except sections 41703, 
                41704, 41710, 41713, and 41714), chapter 419, 
                subchapter II of chapter 421, or section 44909 
                of this title.
                  (B) a violation of a regulation prescribed or 
                order issued under any provision to which 
                clause (A) of this paragraph applies.
                  (C) a violation of any term of a certificate 
                or permit issued under section 41102, 41103, or 
                41302 of this title.
                  (D) a violation under subsection (a)(1) of 
                this section related to the transportation of 
                hazardous material.
          (2) The Secretary shall give written notice of the 
        finding of a violation and the civil penalty under 
        paragraph (1) of this subsection.
  (d) Administrative Imposition of Penalties.--
          (1) In this subsection--
                  (A) ``flight engineer'' means an individual 
                who holds a flight engineer certificate issued 
                under part 63 of title 14, Code of Federal 
                Regulations.
                  (B) ``mechanic'' means an individual who 
                holds a mechanic certificate issued under part 
                65 of title 14, Code of Federal Regulations.
                  (C) ``pilot'' means an individual who holds a 
                pilot certificate issued under part 61 of title 
                14, Code of Federal Regulations.
                  (D) ``repairman'' means an individual who 
                holds a repairman certificate issued under part 
                65 of title 14, Code of Federal Regulations.
          (2) The Administrator of the Federal Aviation 
        Administration may impose a civil penalty for a 
        violation of chapter 401 (except sections 40103(a) and 
        (d), 40105, 40106(b), 40116, and 40117), chapter 441 
        (except section 44109), section 44502(b) or (c), 
        chapter 447 (except sections 44717 and 44719-44723), 
        chapter 449 (except sections 44902, 44903(d), 44904, 
        44907(a)-(d)(1)(A) and (d)(1)(C)-(f), 44908, and 
        44909), or section 46301(b), 46302, 46303, 46318, or 
        47107(b) (as further defined by the Secretary under 
        section 47107(l) and including any assurance made under 
        section 47107(b)) of this title or a regulation 
        prescribed or order issued under any of those 
        provisions. The Administrator shall give written notice 
        of the finding of a violation and the penalty.
          (3) In a civil action to collect a civil penalty 
        imposed by the Administrator under this subsection, the 
        issues of liability and the amount of the penalty may 
        not be reexamined.
          (4) Notwithstanding paragraph (2) of this subsection, 
        the district courts of the United States have exclusive 
        jurisdiction ofa civil action involving a penalty the 
Administrator initiates if--
                  (A) the amount in controversy is more than 
                $50,000;
                  (B) the action is in rem or another action in 
                rem based on the same violation has been 
                brought;
                  (C) the action involves an aircraft subject 
                to a lien that has been seized by the 
                Government; or
                  (D) another action has been brought for an 
                injunction based on the same violation.
          (5)(A) The Administrator may issue an order imposing 
        a penalty under this subsection against an individual 
        acting as a pilot, flight engineer, mechanic, or 
        repairman only after advising the individual of the 
        charges or any reason the Administrator relied on for 
        the proposed penalty and providing the individual an 
        opportunity to answer the charges and be heard about 
        why the order shall not be issued.
          (B) An individual acting as a pilot, flight engineer, 
        mechanic, or repairman may appeal an order imposing a 
        penalty under this subsection to the National 
        Transportation Safety Board. After notice and an 
        opportunity for a hearing on the record, the Board 
        shall affirm, modify, or reverse the order. The Board 
        may modify a civil penalty imposed to a suspension or 
        revocation of a certificate.
          (C) When conducting a hearing under this paragraph, 
        the Board is not bound by findings of fact of the 
        Administrator but is bound by all validly adopted 
        interpretations of laws and regulations the 
        Administrator carries out and of written agency policy 
        guidance available to the public related to sanctions 
        to be imposed under this section unless the Board finds 
        an interpretation is arbitrary, capricious, or 
        otherwise not according to law.
          (D) When an individual files an appeal with the Board 
        under this paragraph, the order of the Administrator is 
        stayed.
          (6) An individual substantially affected by an order 
        of the Board under paragraph (5) of this subsection, or 
        the Administrator when the Administrator decides that 
        an order of the Board under paragraph (5) will have a 
        significant adverse impact on carrying out this part, 
        may obtain judicial review of the order under section 
        46110 of this title. The Administrator shall be made a 
        party to the judicial review proceedings. Findings of 
        fact of the Board are conclusive if supported by 
        substantial evidence.
          (7)(A) The Administrator may impose a penalty on a 
        person (except an individual acting as a pilot, flight 
        engineer, mechanic, or repairman) only after notice and 
        an opportunity for a hearing on the record.
          (B) In an appeal from a decision of an administrative 
        law judge as the result of a hearing under subparagraph 
        (A) of this paragraph, the Administrator shall consider 
        only whether--
                  (i) each finding of fact is supported by a 
                preponderance of reliable, probative, and 
                substantial evidence;
                  (ii) each conclusion of law is made according 
                to applicable law, precedent, and public 
                policy; and
                  (iii) the judge committed a prejudicial error 
                that supports the appeal.
          (C) Except for good cause, a civil action involving a 
        penalty under this paragraph may not be initiated later 
        than 2 years after the violation occurs.
          (D) In the case of a violation of section 47107(b) of 
        this title or any assurance made under such section--
                  (i) a civil penalty shall not be assessed 
                against an individual;
                  (ii) a civil penalty may be compromised as 
                provided under subsection (f); and
                  (iii) judicial review of any order assessing 
                a civil penalty may be obtained only pursuant 
                to section 46110 of this title.
          (8) The maximum civil penalty the Administrator or 
        Board may impose under this subsection is $50,000.
          (9) This subsection applies only to a violation 
        occurring after August 25, 1992.
  (e) Penalty Considerations.--In determining the amount of a 
civil penalty under subsection (a)(3) of this section related 
to transportation of hazardous material, the Secretary shall 
consider--
          (1) the nature, circumstances, extent, and gravity of 
        the violation;
          (2) with respect to the violator, the degree of 
        culpability, any history of prior violations, the 
        ability to pay, and any effect on the ability to 
        continue doing business; and
          (3) other matters that justice requires.
  (f) Compromise and Setoff.--
          (1)(A) The Secretary may compromise the amount of a 
        civil penalty imposed for violating--
                  (i) chapter 401 (except sections 40103(a) and 
                (d), 40105, 40116, and 40117), chapter 441 
                (except section 44109), section 44502(b) or 
                (c), chapter 447 (except 44717 and 44719-
                44723), or chapter 449 (except sections 44902, 
                44903(d), 44904, 44907(a)-(d)(1)(A) and 
                (d)(1)(C)-(f), 44908, and 44909) of this title; 
                or
                  (ii) a regulation prescribed or order issued 
                under any provision to which clause (i) of this 
                subparagraph applies.
          (B) The Postal Service may compromise the amount of a 
        civil penalty imposed under subsection (a)(1)(D) of 
        this section.
          (2) The Government may deduct the amount of a civil 
        penalty imposed or compromised under this subsection 
        from amounts it owes the person liable for the penalty.
  (g) Judicial Review.--An order of the Secretary or the 
Administrator imposing a civil penalty may be reviewed 
judicially only under section 46110 of this title.
  (h) Nonapplication.--
          (1) This section does not apply to the following when 
        performing official duties:
                  (A) a member of the armed forces of the 
                United States.
                  (B) a civilian employee of the Department of 
                Defense subject to the Uniform Code of Military 
                Justice.
          (2) The appropriate military authority is responsible 
        for taking necessary disciplinary action and submitting 
        to the Secretary (or the Administrator with respect to 
        aviation safety duties and powers designated to be 
        carried out by the Administrator) a timely report on 
        action taken.

                                 
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