Senate Report 107-13 - AIRLINE CUSTOMER SERVICE IMPROVEMENT ACT

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

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

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AIRLINE CUSTOMER SERVICE
IMPROVEMENT ACT

__________

R E P O R T

of the

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

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

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AIRLINE CUSTOMER SERVICE ACT

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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).

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.