[Federal Register Volume 60, Number 10 (Tuesday, January 17, 1995)]
[Proposed Rules]
[Pages 3359-3361]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1014]



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DEPARTMENT OF TRANSPORTATION
Office of the Secretary

14 CFR Part 257

[Docket Nos. 49702 and 48710; Notice 95-1]
RIN 2105-AC10


Disclosure of Code-Sharing Arrangements and Long-Term Wet Leases

AGENCY: Department of Transportation; Office of the Secretary.

ACTION: Supplementary Notice of Proposed Rulemaking (SNPRM).

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SUMMARY: This document proposes modifications to a recent notice of 
proposed rulemaking (``NPRM''). The NPRM proposed to strengthen the 
Department's current rules requiring that consumers be notified of the 
existence of a code-sharing arrangement or long-term wet lease. In 
these operations, the operator of the aircraft differs from the airline 
in whose name the transportation was sold. The modification proposed 
here would require that the corporate name of the transporting carrier 
be disclosed. This action is being taken in response to comments filed 
to the NPRM.

DATES: The Department requests comments by February 16, 1995. The 
Department will consider late-filed comments only to the extent 
practicable.

[[Page 3360]] ADDRESSES: Comments should be sent to the Docket Section, 
Docket No. 49702, Department of Transportation, 400 7th Street SW., 
Room 4107, Washington, DC 20590. To facilitate consideration of the 
comments, we ask commenters to file twelve copies of each comment. We 
encourage commenters who wish to do so also to submit comments to the 
Department through the Internet; our Internet address is 
[email protected].1 Note, however, that at this time 
the Department considers only the paper copies filed with the Docket 
Section to be the official comments. Comments will be available for 
inspection at this address from 9:00 a.m. to 5:00 p.m., Monday through 
Friday. Commenters who wish the Department to acknowledge the receipt 
of their comments should include a stamped, self-addressed postcard 
with their comments. The Docket Section will date-stamp the postcard 
and mail it back to the commenter.

    \1\Our X.400 e-mail address is G=DOT/S=dockets/OU1=qmail/O=hq/
p=gov+dot/a=attmail/c=us.

FOR FURTHER INFORMATION CONTACT: Patricia N. Snyder or Laura Trejo, 
Office of International Law, Office of the General Counsel, U.S. 
Department of Transportation, 400 7th Street SW., Room 10105, 
Washington, DC 20590. (202) 366-9183.

SUPPLEMENTARY INFORMATION:

Background

    The Department issued a Notice of Proposed Rulemaking (NPRM), 59 FR 
40836 (August 10, 1994), seeking comments on a proposed rule to 
strengthen the disclosure of code-sharing arrangements and long-term 
wet leases. In code-sharing arrangements and long-term wet leases, the 
operator of a flight, or ``transporting carrier,'' differs from the 
airline in whose name the transportation is sold. The NPRM proposed, 
inter alia: (1) to require ticket agents (including travel agents) 
doing business in the United States and foreign air carriers, as well 
as U.S. air carriers, to provide notice in schedules and in any direct 
oral communication with consumers that the transportation they are 
considering purchasing will be provided by an airline different from 
the airline holding out the transportation, and to disclose the 
identity of the airline that will actually operate the aircraft; and 
(2) for tickets issued in the United States, to require U.S. and 
foreign air carriers and ticket agents (including travel agents) to 
provide written notice of the transporting carrier's identity at the 
time of sale of transportation involving a code-sharing or long-term 
wet-lease arrangement.
    The NPRM stated that identifying a transporting carrier by a 
network name, such as ``The Delta Connection,'' would be acceptable if 
that is the name in which the service is generally held out to the 
public. It did not require the notice to include the operator's 
corporate name. However, the NPRM reminded airlines and ticket agents 
that the proposed rule would require disclosure not only of the name of 
the transporting carrier or network, but also of the fact that the 
transporting entity is not the one shown on the ticket. Since many 
network names may connote a special type of service rather than a 
different carrier, the NPRM stated that the transporting carrier should 
be identified, for example, as ``our affiliate, Northwest Airlink.'' In 
addition, since the purpose of this rule is to prevent deception and to 
avoid consumer confusion, the NPRM did not require disclosure of a 
corporate name that is not the name used by the carrier to identify 
itself in airports or in advertisements and that would thus mean 
nothing to consumers.
    We received comments and reply comments to the NPRM from ten U.S. 
airlines (Alaska Airlines, Inc., American Airlines, Inc., Continental 
Airlines, Inc., Delta Air Lines, Inc., Frontier Airlines, Inc., 
Northwest Airlines, Inc., Southwest Airlines, Co., Trans World 
Airlines, United Air Lines, Inc., and USAir, Inc.), eight foreign 
airlines (Aerovias de Mexico, S.A. de C.V., British Airways, Qantas 
Airways Limited, SwissAir, LTU Lufttransport-Unternehmen GmbH. & Co. 
KG, British Midland Airways, Ansett Australia Holdings, and LanChile), 
four associations (International Association of Machinists, Regional 
Airline Association, International Airline Passengers Association, and 
National Air Carrier Association), three CRS vendors (Galileo 
International Partnership, Worldspan, and System One Information 
Management, Inc.), nine travel agent/industry groups (Action 6, Admiral 
Travel Bureau, American Automobile Association, American Society of 
Travel Agents, Mercury Travel, OmegaWorld Travel, Rogal Associates, 
Township Travel, and USTravel), and five other groups or individuals 
(Americans for Sound Aviation Policy, the City of Philadelphia, Donald 
Pevsner, the British Embassy, and Congresswoman Rosa De Lauro).
    The International Airline Passenger Association, Americans for 
Sound Aviation Policy (ASAP), and Frontier argued that the rule should 
require disclosure of the name of the actual, transporting carrier to 
avoid confusion between the network name and the name of the major 
code-sharing partner. ASAP claimed that the commuter airlines' 
aircraft, seat pitch, comfort, in-flight amenities, and cockpit crews 
age and experience are inferior to those of the major airlines with 
which they connect. To ensure that passengers are fully informed in 
making purchase decisions, they argue that the corporate name must be 
disclosed. Frontier also stated that major carriers typically code-
share with a number of otherwise independent commuter carriers, all of 
which operate under a general network name such as United Express. 
Masking the true corporate identities, according to Frontier, in 
accurately suggests that the major carrier is the operator of the 
commuter service. Moreover, Frontier noted that the aircraft operated 
by the commuter carriers vary among the commuters themselves.
    The Regional Airline Association and United agreed with the NPRM 
that, in disclosing the transporting carrier for purposes of this rule, 
it should be permissible to use a network name if that is the name in 
which the service is generally held out to the public. United argued 
that reprogramming CRSs to include the corporate name on the primary 
flight display screen would require considerable effort and cost. In 
addition, United argued that the commuter's corporate name is readily 
available to interested passengers in existing schedules and CRS 
displays. According to United, comments seeking revisions on the 
network-names-disclosure policy are beyond the scope of this 
rulemaking, because the NPRM did not propose to require the use of 
corporate names.

Supplemental Proposal

    Having reviewed these comments, the Department has reconsidered its 
earlier view and now proposes a requirement that the corporate name 
itself be disclosed to consumers in code-share and long-term wet lease 
operations. By ``corporate name,'' we mean the carrier's own name, 
rather than its network name. Thus, for example, under our new 
proposal, it would not be acceptable for a travel agent or carrier to 
identify a transporting carrier simply as ``United Express.'' The 
purpose of the proposal is to prevent any misunderstanding regarding 
the separate identity of the transporting carrier. Our proposal should 
help to ensure that consumers will not assume that a major airline is 
the transporting carrier when purchasing transportation 
[[Page 3361]] operated by one of its regional airline partners.
    The Department recognizes that affiliated carriers operating under 
a network name sometimes use the airport facilities of their major 
airline partner, and airport signs frequently identify the facilities 
of these affiliated carriers only by their network name. Thus, to avoid 
confusion among passengers arriving at the airport, the Department 
expects airlines and ticket agents also to disclose the network name, 
if that is the name in which service is generally held out to the 
public. We are not now proposing to require disclosure of the network 
name, however, because we tentatively believe that the competitive 
benefits of promoting the network name are adequate to ensure that 
airlines and travel agents will, in fact, tell passengers the network 
name. We solicit comment on whether we should make this an explicit 
requirement in the final rule.
    The Department invites specific comments on the feasibility and 
costs of implementation of this proposal, if any. Comments discussing 
the implementation cost must be supported by data and economic 
analyses.
    The usual 60-day comment period has been reduced to 30 days because 
the proposed change is minor and because commenters have already had an 
opportunity to address the issue in the original NPRM.
    Proposed section 257.5, in revised form, appears immediately below. 
For convenience, we have put additions in quotes and show the deletion 
as two asterisks [**]:

Section 257.5  Notice Requirement

    (a) Notice in schedules. In written or electronic schedule 
information provided by carriers to the public, the Official Airline 
Guides and comparable publications, and, where applicable, computer 
reservations systems, carriers involved in code-sharing arrangements 
or long-term wet leases shall ensure that [**] each flight in 
scheduled passenger air transportation on which the designator code 
is not that of the transporting carrier ``is identified by an 
asterisk or other easily identifiable mark and that information 
disclosing the corporate name of the transporting carrier is also 
provided.''
    (b) Oral notice to prospective consumers. In any directoral 
communication with a prospective consumer concerning a flight that 
is part of a code-sharing arrangement or long-term wet lease, a 
ticket agent doing business in the United States or a carrier shall 
tell the consumer, before booking transportation, that the 
transporting carrier is not the carrier whose designator code will 
appear on the ticket and shall identify the transporting carrier 
``by its corporate name.''
    (c) Written notice. At the time of sale, each selling carrier or 
ticket agent shall provide each consumer of scheduled passenger air 
transportation sold in the United States that involves a code-
sharing arrangement or long-term wet lease with the following 
notice:
    (1) If an itinerary is issued, there shall appear in conjunction 
with the listing of any flight segment on which the designator code 
is not that of the transporting carrier a legend that states 
`Operated by' followed by the ``corporate'' name of the transporting 
carrier. In the case of single-flight number service involving a 
segment or segments on which the designator code is not that of the 
transporting carrier, the notice shall clearly identify the segment 
or segments and the transporting carrier ``by its corporate name.'' 
The following form of statement will satisfy the requirement of the 
preceding sentence: IMPORTANT NOTICE: Service between XYZ City and 
ABC City will be operated by Jane Doe Airlines;' or
    (2) If no itinerary is issued, the selling carrier or ticket 
agent shall provide a separate written notice that clearly 
identifies the transporting carrier ``by its corporate name'' for 
any flight segment on which the designator code is not that of the 
transporting carrier. The following form of notice will satisfy the 
requirement of this subparagraph: IMPORTANT NOTICE: Service between 
XYZ City and ABC City will be operated by Jane Doe Airlines.'
    (d) Advertising In any advertisement for service in a city-pair 
market that is provided under a code-sharing arrangement or by long-
term wet lease, the advertising carrier or ticket agent shall 
clearly indicate the nature of the service and shall identify the 
transporting carrier[s] ``by corporate name.''

Regulatory Analyses and Notices

    The Department has determined that this action is not a significant 
regulatory action under Executive Order 12866 or under the Department's 
Regulatory Policies and Procedures. The Department placed a draft 
regulatory evaluation that examines the estimated costs and impacts of 
the proposed rule in the docket in connection with the NPRM. It does 
not expect the proposal made in this supplemental notice to increase 
those costs or impacts.
    The Department certifies that this rule, if adopted, would not have 
a significant economic impact on a substantial number of small 
entities. Although many ticket agents and some air carriers are small 
entities, the Department believes that the costs of notification will 
be minimal. The Department seeks comment on whether there are small 
entity impacts that should be considered. If comments provide 
information that there are significant small entity impacts, the 
Department will prepare a regulatory flexibility analysis at the final 
rule stage.
    The Department does not believe that there would be sufficient 
federalism implications to warrant the preparation of a federalism 
assessment.

Paperwork Reduction Act

    The proposed rule does not contain information collection 
requirements that require approval by the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. 2507 et seq.).

List of Subjects in 14 CFR Part 257

    Air carriers, Foreign air carriers, and Consumer protection.

    For the reasons set forth in the preamble, the Department of 
Transportation proposes to amend the part 257 proposed in Notice 94-11, 
59 FR 40836, published on August 10, 1994, as follows:

PART 257--[AMENDED]


Sec. 257.5  [Amended]

    1. By deleting from the proposed Sec. 257.5(a) the words ``an 
asterisk or other easily recognizable mark identifies'' and adding to 
the end of paragraph (a) the following: ``is identified by an asterisk 
or other easily identifiable mark and that information disclosing the 
corporate name of the transporting carrier is also provided'';
    2. By inserting the words ``by its corporate name'' at the end of 
proposed Sec. 257.5(b);
    3. By inserting the word ``corporate'' between ``the'' and ``name'' 
in the first sentence, and by inserting the words ``by its corporate 
name'' at the end of the second sentence after ``transporting 
carrier,'' of proposed Sec. 257.5(c)(1);
    4. By inserting the words ``by its corporate name'' between the 
first ``transporting carrier'' and ``for any flight segment'' in 
proposed Sec. 257.5(c)(2); and
    5. By inserting the words ``by corporate name'' at the end of 
proposed Sec. 257.5(d).

    Issued under authority delegated in 49 CFR 1.56a(h)(2) in 
Washington, D.C. on January 10, 1995.
Patrick V. Murphy,
Acting Assistant Secretary for Aviation and International Affairs.
[FR Doc. 95-1014 Filed 1-13-95; 8:45 am]
BILLING CODE 4910-62-P