[Federal Register Volume 60, Number 12 (Thursday, January 19, 1995)]
[Proposed Rules]
[Pages 3778-3783]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1331]



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DEPARTMENT OF TRANSPORTATION
Office of the Secretary

14 CFR Part 258

[Dockets No. 47546, 49511, 49512, and 49513; Notice 95-3]
RIN 2105-AC17


Disclosure of Change-of-Gauge Services

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

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: In order to ensure that prospective airline consumers are 
given pertinent information on the nature of change-of-gauge services, 
i.e., services with one flight number that require a change of 
aircraft, the Department of Transportation is proposing to codify and 
augment its current disclosure requirements. The Department is 
requesting comments on the following three proposed requirements, which 
would apply to U.S. air carriers, foreign air carriers, and where 
appropriate, ticket agents (including travel agents) doing business in 
the United States: (1) that transporting carriers include notice of 
required aircraft changes in their written and electronic schedule 
information provided to the public, to the Official Airline Guide and 
comparable publications, and to computer reservations systems, (2) that 
consumers be given reasonable and timely notice before they book 
transportation that a particular service with a single slight number 
entails a change of aircraft en route, and (3) that written notice of 
the aircraft change be provided at the time of sale. This proposal 
constitutes the department's response to the petition of American 
Airlines in Docket 47546 to ban the practice of ``funnel flights,'' a 
type of change-of gauge service. The Department is also dismissing the 
complaints of TACA International Airlines, Aviateca, and Nicaraguense 
de Aviacion (``NICA'') in Dockets 49511, 49512, and 49513, 
respectively, against Continental Airlines for operating funnel 
flights.

DATES: The Department requests comments by March 20, 1995 and reply 
comments by April 19, 1995. The Department will consider late-filed 
comments only to the extent practicable.

ADDRESSES: Comments should be filed with the Docket Clerk, U.S. 
Department of Transportation, Room 4107, Docket No. 47546, 400 Seventh 
Street SW, Washington, DC 20590. To facilitate consideration of the 
comments, we ask commenters to file twelve copies of each submission. 
We also encourage commenters to submit electronic versions of their 
comments to the Department through the Internet; our e-mail address is 
[email protected].\1\ Please note, however, that at this 
time the Department considers only the paper copies filed with the 
Docket Clerk to be official comments. Comments will be available for 
inspection at the above address from 9:00 a.m. to 5:00 p.m., Monday 
through Friday. For acknowledgment of receipt of comments, include a 
stamped, self-addressed postcard, which the Docket Clerk will date-
stamp and mail.

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

FOR FURTHER INFORMATION CONTACT: Betsy L. Wolf, Senior Trial Attorney, 
Office of Aviation Enforcement and Proceedings (202-366-9356), Office 
of the General Counsel, U.S. Department of Transportation, 400 7th St. 
SW., Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

Introduction

    A change-of-gauge service is a type of scheduled passenger air 
transportation for which the operating carrier uses one single flight 
number even though passengers do not travel in the same aircraft from 
origin to destination but must change planes at an intermediate stop. 
One-flight-to-one flight change-of-gauge service differs from ordinary 
connecting service in that the carrier will usually hold the second 
aircraft for the arrival of the first one. Computer Reservations System 
(CRS) Regulations, Final Rule, 57 FR 43780, 43804 (September 22, 1992).
    ``Change-of-gauge service is a long-established practice in 
transportation. The term itself originate with the railroads when 
passengers had to change trains due to differences in the size of 
tracks. Change-of-gauge services have been used in aviation for 
decades. In 1972, the Civil Aeronautics Board rejected the contention 
that change-of-gauge services were an unfair or deceptive practice or 
an unfair method of competition, as long as notice was given, and it 
changed its rules to accommodate them. Internationally, in 1978, the 
United States won an international arbitration brought when France 
attempted to limit the right of a U.S. carrier to operate change-of-
gauge service. The tribunal found that the agreement between the United 
States and France permitted change-of-gauge service by giving each 
country wide discretion over operational aspects of flight. Change-of-
gauge services are constantly used in cargo transportation, where they 
sometimes entail changes from one mode of transportation to another. 
The policy of the United States has been to permit intermodal changes 
of gauge as long as shippers are not mislead as to actual service.
    In addition to one-flight-to-one flight change-of-gauge services, 
change-of-gauge services can also involve aircraft changes between 
multiple flight on one side of the change point and one single flight 
on the other side. Change-of-gauge services with multiple origins or 
destinations are called ``Y'' (i.e., two-for-one), ``W'' (i.e., three-
for-one), or ``starburst'' (i.e., unrestricted) changes of gauge, 
depending on the shape of the route patterns. Popularly, they are also 
called ``funnel flights.'' The United States has taken the lead in 
persuading our bilateral aviation partners to move beyond one-for-one 
change-of-gauge services to allow carriers the flexibility to operate 
multiple changes of gauge. As with one-for-one change-of-gauge 
services, the carrier assigns a single 

[[Page 3779]]
flight number for the passenger's entire itinerary even though the 
passenger changes planes, but in addition, the single flight to or from 
the exchange point itself has multiple numbers: one for each segment 
with which it connects and one for the local market in which it 
operates. That flight is thus listed in CRSs under different numbers in 
different city-pair markets. As an example, an airline might operate 
three flights to London from three European cities: Flight 100 from 
Frankfurt, Flight 200 from Paris, and Flight 300 from Rome. In London, 
passengers from all three flights board a single aircraft bound for New 
York. The London-New York flight would carry all three flight numbers 
plus its own number. Schedules would show direct or through flights to 
New York from Frankfurt, Paris, and Rome as well as the nonstop flight 
from London.
    49 U.S.C. Sec. 41712, formerly section 411 of the Federal Aviation 
Act, authorizes the Department to identify and ban unfair or deceptive 
practices or unfair methods of competition on the part of air carriers, 
foreign air carriers, and ticket agents. Under Sec. 41712, the 
Department has adopted various regulations and policies to prevent 
unfair or deceptive practices or unfair methods of competition, such as 
the CRS rules (14 CFR Part 255) and our policy on fare advertising (14 
CFR Sec. 399.84), for example., The Department's current CRS rules, 
adopted in September of 1992, require that CRS displays give notice of 
any flight that involves a change of aircraft en route Id at 43835; 14 
CFR 255.4(b)(2). In addition the Department requires as a matter of 
policy that consumers be given notice of aircraft changes for change-
of-gauge flights. See Order 89-1-31 at 5.

Petition for Rulemaking

    On May 16, 1991, American Airlines, Inc., filed a petition for 
rulemaking to prohibit funnel flights, claiming that they deceive 
consumers and prejudice airline competition. American maintains that 
uninformed consumers are harmed when they decide to buy transportation 
on funnel flights, because they mistakenly believe that they will be 
traveling from origin to destination on one plane, thus avoiding the 
risk that they or their baggage will miss connections. American 
maintains that competing carriers suffer harm in two ways. First, they 
fail to sell their own connecting services of equivalent quality to the 
misinformed passengers. Second, in CRS displays for any city-pair, they 
have only one listing for their connecting services, whereas a funnel 
flight is listed twice, both as a direct flight with a single flight 
number and as a connecting service. According to American, this double 
listing not only gives undue exposure to the funnel flights but also 
pushes competitive connecting services to later CRS screens where they 
are less likely to be sold.
    American acknowledges that CRSs in the United States attempt to 
call funnel flights to the attention of their travel agent subscribers 
by including the notation ``CHG'' with these flights' CRS listings. 
(The adoption of 14 CFR 255.4(b)(2) supra, occurred after American 
filed its petition.) Despite this precaution, however, American claims 
that many consumers still buy tickets on funnel flights without 
understanding that they will be making a connection and not remaining 
on one plane throughout their journey. American states that confusion 
may result for a number of reasons: the travel agent may fail to 
explain matters adequately to the traveler; the person making the 
reservation may not be the person taking the trip, and even if the 
former understands the situation, he or she may fail to explain matters 
adequately to the latter; or the traveler may become confused upon 
receiving just one flight coupon instead of the two that one would 
normally expect for a connection.
    American contends that funnel flights offer no offsetting benefit 
to the traveling public to justify their existence. American also 
contends that no carrier will forgo the practice as long as any of its 
competitors maintains it. Therefore, except in the case of ``true'' 
change-of-gauge flights that are specifically authorized or required by 
bilateral agreements to have a single flight number, American urges 
that funnel flights be prohibited. It proposes that the Department 
adopt the following language as a new paragraph (c) to Sec. 399.81 of 
our regulations, ``Unrealistic or deceptive scheduling'' (14 CFR 
399.81):

    (c) Except as otherwise expressly approved by the Department, it 
is the policy of the Department to regard as an unfair or deceptive 
practice, and an unfair method of competition, the use by an air 
carrier, commuter air carrier, or foreign air carrier of multiple 
flight numbers for a single aircraft operating on any given day in a 
single city-pair for interstate, overseas, or foreign air 
transportation.

    American proposes that this rule take effect 90 days after its 
adoption in order to allow for an orderly transition.

Comments and Reply Comments

    Seven air carriers (Lufthansa German Airlines, British Airways PLC, 
Delta Air Line, Inc., Swissair [Swiss Air Transport Company, Ltd.], Air 
France, Virgin Atlantic Airways, Ltd., and Sabena Belgian World 
Airlines), one group of fourteen airlines (the Orient Airlines 
Association), two other groups (the American Society of Travel Agents, 
Inc. [ASTA] and the Dallas/Fort Worth Parties), one individual (Donald 
L. Pevsner, Esq.), and one travel agency (Magic Carpet Travel Agency) 
filed comments in response to American's petition. Three carriers 
(American Trans Air, Inc., Air Canada, and American) filed reply 
comments. All of these pleadings may be reviewed in the docket. In 
reaching our decision to propose the rule discussed below, the 
Department has considered the information provided and arguments 
advanced by the commenters.
    To summarize the pleadings, all commenters except Air Canada 
support a prohibition of funnel flights, although some suggest 
variations on American's proposed language that would more clearly 
permit code-sharing and blocked space arrangements or that would ban 
all change-of-gauge flights that are not required by bilateral 
agreements. Some suggest addressing funnel flights through the CRS 
rules rather than by amending our policy statement on unrealistic or 
deceptive scheduling. Several foreign carriers take the position that 
foreign carriers are particularly harmed by funnel flights and that 
this practice violates the spirit if not the letter of certain 
bilateral agreements. Mr. Pevsner also asks the Department to go so far 
as to ban all ticketing of two or more flight segments on a single-
coupon, whether in interstate or foreign air transportation.

Funnel Flight Complaints Against Continental

    On April 18, 1994, three foreign air carriers filed nearly 
identical complaints in which they ask the Department to order 
Continental Airlines, Inc. to cease and desist from operating funnel 
flights between the United States and Latin America. TACA International 
Airlines, S.A., Aviateca, S.A., and Nicaraguense de Aviacion, S.A. 
(``NICA'') filed their complaints in Dockets 49511, 49512, and 49513, 
respectively. The three complainants argue that Continental's funnel 
flights deceive and confuse consumers and harm competition. 
Specifically, they maintain that the funnel flights keep consumers from 
buying the most convenient transportation and give them the mistaken 
impression that Continental offers far more flights to Latin America 
than it actually does. They also maintain that Continental's funnel 
flights harm competition not 

[[Page 3780]]
only by misleading consumers but by unfairly outranking other 
equivalent services in CRS displays and displacing such services to 
later CRS screens where they are less likely to be sold. The 
complainants also maintain that Continental's funnel flights deprive 
them of a fair and equal opportunity to compete.
    Apart from the issue of funnel flights, TACA charges Continental 
with attempting to dominate the Texas-Latin America market by 
unilaterally terminating a prorate agreement between the two carriers 
in the El Salvador-Houston market, by engaging in predatory pricing, by 
opposing TACA's expansion of service through Honduran flights, and by 
opposing TACA's expansion of service at Dallas/Fort Worth.
    United and American both filed consolidated answers supporting the 
complaints but urging the Department to ban funnel flights as a 
practice industrywide rather than merely acting on individual 
complaints.
    Continental filed individual answers opposing the complaints. 
Continental maintains that its funnel flights are entirely legal, as 
are the other activities of which TACA complains. The carrier also 
denies that its funnel flight service receives preference over other 
on-line connecting services in CRSs other than SystemOne. As an 
affirmative defense, Continental notes that the Department has not 
acted on American's petition for rulemaking to ban funnel flights. In 
addition, Continental asserts that TACA owns a 30 percent share of 
Aviateca and a 49 percent share of NICA, and it maintains that the 
complaints represent a concerted response to its own opposition to 
TACA's requests for extra-bilateral authority to serve Dallas/Fort 
Worth and all points in Honduras and to its own complaint about lack of 
access to jetways at San Salvador as well. Continental also 
characterizes the complaints as a concerted effort to limit 
Continental's ability to compete in the U.S.-Central America market.

Notice of Proposed Rulemaking

    Proposed Rule: By this notice, we propose to require U.S. air 
carriers, foreign air carriers, and, where applicable, ticket agents 
(including travel agents) doing business in the United States to make 
the following disclosures of all change-of-gauge services, or services 
with a single flight number that require changes of aircraft en route 
(including funnel flights):
    (1) notice by carriers of required aircraft changes in written and 
electric schedule information provided to the public, to the Official 
Airline Guide and comparable publications, and to computer reservations 
systems,
    (2) in any direct oral communication with a consumer concerning a 
change-of-gauge service, notice before booking transportation that the 
service requires a change of aircraft en route, and
    (3) written notice at the time of sale of such service stating the 
following:

Notice: Change of Aircraft Required

    For at least one of your flights, you must change aircraft en 
route even though your ticket may show only one flight number and 
have only one flight coupon for that flight. Further, in the case of 
some travel, one of your flights may not be identified at the 
airport by the number on your ticket, or it may be identified by 
other flight numbers in addition to the one on your ticket. At your 
request, the seller of this ticket will give you details of your 
change of aircraft, such as where it will occur and what aircraft 
types are involved.

    We are thus proposing to codify explicit requirements that all 
sellers of air transportation make effective disclosure to consumers 
that change-of-gauge itineraries, including funnel flights, require a 
change of aircraft. The contentions of American and the various 
commenters, as confirmed by our Consumer Affairs office, tentatively 
persuades us that even with our current policy requiring disclosure of 
aircraft changes, too many consumers may be buying transportation on 
these services without realizing that they will be changing planes. 
Also, despite our adoption in 1992 of a rule requiring that CRS 
displays must identify single-number flights requiring a change of 
aircraft, it appears that travelers are still not always informed of en 
route aircraft changes, resulting in confusion and hardship.
    We tentatively find that the failure to disclose required aircraft 
changes in scheduled passenger air transportation constitutes an unfair 
or deceptive practice or an unfair method of competition within the 
meaning of 49 U.S.C. 41712 (formerly section 411 of the Federal 
Aviation Act). We intend for the disclosure requirements proposed here 
to complement our CRS rule. The proposed rule should alleviate problems 
of passenger deception or confusion and any resultant harm to 
competition, and it should enable all consumers to make well-informed 
decisions when purchasing travel.
    We are not persuaded that we should ban either single or multiple 
change-of-gauge services. The Department has generally declined to 
foreclose carriers' marketing and service innovations unless these 
violate 49 U.S.C. 41712 or otherwise contravene the public interest. We 
do not agree with American and the commenters that funnel flights or 
other change-of-gauge services violate 49 U.S.C. 41712 or contravene 
the public interest in and of themselves. We tentatively find that any 
problems of passenger deception or confusion that can be attributed to 
the absence of effective disclosure to prospective passengers can and 
should be solved by our proposed rule.
    In calling for a ban on funnel flights and other change-of-gauge 
services, American and the commenters ignore the public benefits that 
these services provide. One-for-one change-of-gauge services are 
superior to ordinary online connections, because with the former, the 
carrier will usually hold the second aircraft for the arrival of the 
first one. Both American Trans Air, which argues that change-of-gauge 
services can promote economic efficiency, and Delta oppose banning 
these services. Multiple change-of-gauge services can promote economic 
efficiency by raising load factors on the funnel segments. Higher load 
factors in turn can enable carriers to charge lower fares, serve more 
markets, and increase frequency. A higher level and scope of service 
translate into increased competition, which also benefits consumers. 
If, as American argues, multiple change-of-gauge services really 
provide no benefits for consumers, then with effective disclosure, 
consumers will stop using them, so carriers will stop offering them.
    The carriers who favor a ban on single and multiple change-of-gauge 
services also ignore the costs of banning these services. First, a ban 
on multiple change-of-gauge services could lead to higher fares in a 
significant number of international city-pairs. The Department 
exercises some control over the upward movement of fares in 
international air transportation on single-flight-number services, 
since it can block--and has blocked--fare increases that exceed the 
levels allowable under the Standard Foreign Fare Level for itineraries 
with one flight number. Such regulatory control does not extend to 
fares for itineraries held out under two or more flight numbers.
    Second, a ban on multiple change-of-gauge services would sacrifice 
valuable international route rights, to the detriment of both the 
carriers and the traveling public. The United States has negotiated 
with our bilateral trading partners--and paid by making various 
concessions--for the rights to have its carriers conduct change-of-
gauge services in foreign air transportation. Many bilateral agreements 
not only allow U.S. carriers to operate change-of-gauge services to and 
from points beyond foreign gateways but actually 

[[Page 3781]]
require the beyond flights to be continuations of flights that 
originate in the United States or earlier legs of flights that are 
destined for the United States. Our bilateral agreement with Great 
Britain expressly requires that U.S. carriers use the same flight 
numbers for all change-of-gauge sectors, for example. This and similar 
restrictions make through flight numbers a necessity if U.S. carriers 
are to redeem international route rights to many points beyond foreign 
gateways. Banning multiple change-of-gauge services would sacrifice 
these rights and deprive the traveling public of U.S. carrier service. 
Moreover, most of the bilateral agreements that allow multiple change-
of-gauge services do so for both parties and specifically authorize 
multiple flight numbers for a single operation. To prohibit foreign 
flag carriers from operating multiple change-of-gauge services in the 
United States would breach these agreements. To sacrifice U.S. 
carriers' rights unilaterally would contravene the public interest as a 
matter of principle and in practice could put U.S. carriers at a 
competitive disadvantage.
    The pleadings indicate that the problems associated with change-of-
gauge services lie not with the services in and of themselves but with 
the failure to inform passengers effectively that these services entail 
a change of aircraft en route. This failure, as stated above, we 
tentatively find to be an unfair or deceptive practice or an unfair 
method of competition. The disclosure rules that we are proposing 
should alleviate not only most of the consumer problems detailed by the 
commenters but also whatever competitive problems may now result from 
consumers' mistaken belief that they are purchasing single-plane 
transportation. For the reasons discussed below, the other concerns 
voiced by the commenters--i.e., CRS display issues, the single-coupon 
ticketing, the effects on foreign air carriers, and the incomplete 
flight displays at airports associated with funnel flights and change-
of-gauge services--do not, in our view, warrant a ban on these 
practices.
    Those who comment on this notice should be aware that the tentative 
conclusions and analysis set forth here do not reflect any of the 
comments filed in Docket 49702, Disclosure of Code-Sharing Arrangements 
and Long-Term Wet Leases, Notice of Proposed Rulemaking, 59 FR 40836 et 
seq. (August 10, 1994). Rather, to the extent that they may bear on 
this rulemaking, we will consider these comments, as well as our 
disposition of them in our final action in the code-sharing rulemaking, 
before we adopt any final rule on disclosure of change-of-gauge 
services.
    In light of our tentative conclusion that funnel flights do not 
violate 49 U.S.C. 41712 in and of themselves and should not be banned, 
we dismiss the complaints of TACA, Aviateca, and NICA against 
Continental in Dockets 49511, 49512, and 49513, respectively. 
Continental appears, moreover, to be complying with our policy 
requiring that passengers be informed of aircraft changes. After 
reviewing the complaints, we asked our Officer of Consumer Affairs to 
investigate Continental's compliance by making anonymous test calls, 
and that office informs us that in all of its calls, the aircraft 
change was disclosed. We also dismiss TACA's complaint because the 
carrier has provided no evidence in support of its charge of predatory 
pricing and because the other acts with which its charges Continental 
do not violate 49 U.S.C. 41712, any other provision of title 49 of the 
U.S. Code, or the bilateral agreement between the United States and El 
Salvador.
    Passenger Confusion and Deception: In requiring operators of 
change-of-gauge services to disclose aircraft changes in their 
schedules and in requiring all sellers of scheduled passenger air 
transportation to make oral disclosure of aircraft changes to 
prospective passengers before booking travel and to provide written 
notice at the time of sale, we mean to eliminate instances in which 
passengers choose these types of transportation under a mistaken 
impression that they will remain on the same plane throughout their 
journeys. We understand that in some cases, passengers have only 
learned that they must change aircraft after they have begun their 
travel. The written notice should also eliminate any misunderstanding 
as to the nature of the transportation that might otherwise result from 
the receipt of only one flight coupon for an itinerary that entails a 
change of planes. It should eliminate or reduce as well any confusion 
that passengers might otherwise experience if they see multiple flight 
numbers listed at the airport for the same flight, with or without 
their own flight number. We have recently addressed analogous concerns 
regarding the sharing of airline designator codes by proposing to 
require sellers of air transportation to give passengers oral and 
written notice of such arrangements. See Disclosure of Code-Sharing 
Arrangements and Long-Term Wet Leases, Notice of Proposed Rulemaking, 
supra.
    The disclosure requirements proposed here should thus address the 
problems associated with passengers' misunderstanding of the nature of 
their transportation. Two other consumer-related concerns cited by some 
commenters do not, in our view, justify a ban on one-for-one or 
multiple change-of-gauge services. First, that passengers are issued 
just one flight coupon and therefore cannot switch automatically to 
another carrier in the event that the ongoing segment of their 
transportation is cancelled or seriously delayed does not justify 
banning one-for-one or multiple change-of-gauge services. This 
restriction is not unique to those services. Many widely-used discount 
fares are not automatically transferrable from one carrier to another, 
either, but instead must be specially endorsed by the issuing carrier 
in order to be accepted by another carrier. Second, we do not agree 
that we must sacrifice the public benefits of multiple change-of-gauge 
flights in order to eliminate whatever confusion may result from their 
incomplete listing in some airports' displays. This is an issue that 
affected airports should address. In any event, the written notice that 
our proposed rule would require would alert passengers to the 
possibility of incomplete airport displays.
    Competition: To the extent that competition among airlines may be 
affected when passengers reject other connecting services in favor of 
one-for-one or multiple change-of-gauge services under the mistaken 
belief that they will thereby avoid changing planes, our proposed 
disclosure requirements should correct this distortion.
    American and the commenters also cite padded displays in CRSs as a 
competitive concern that warrants banning these practices outright. We 
do not agree, because the legitimacy of change-of-gauge services in and 
of themselves is a separate issue from the way that such services are 
displayed in CRSs. In fact, the issue of multiple CRS listings has been 
raised in two recent petitions for rulemaking: American and Trans World 
Airlines have filed petitions in Dockets 49620 and 49622, respectively, 
for a CRS rule prohibiting multiple listing of code-sharing services. 
In that context, the Department will consider the issue of display 
practices as it involves both code-sharing services and change-of-gauge 
services.
    American and the commenters also complain that funnel flights are 
improperly given preference in CRSs over on-line connecting services. 
As noted above, though, Continental claims that even though its funnel 
flights to Latin America are displayed in CRSs as 

[[Page 3782]]
direct services with a change of equipment no CRS except System One 
gives them a preference over other international on-line connecting 
services. Moreover, out CRS rules allow vendors to include change-of-
gauge services with connecting services on a nondiscriminatory basis.
    Effects on Foreign Air Carriers: Several commenters argue that we 
should ban multiple change-of-gauge services because they 
disproportionately harm foreign air carriers and because, in violation 
of various bilateral agreements, they deprive foreign air carriers of a 
fair and equal opportunity to compete. As we found in the CRS 
rulemaking, however, ``the right to a fair and equal opportunity to 
compete does not guarantee foreign air carriers the exact same 
opportunities that U.S. carriers have. [citations omitted]. . . U.S. 
and foreign carriers must each contend with the practical advantages of 
route structure and market identity that competing carriers have within 
their own countries.'' Computer Reservations System (CRS) Regulations, 
Final Rule, supra, at 43892-43893 (``Prescribed Algorithm''). For 
example, any one foreign carrier can generally offer change-of-gauge 
and on-line connecting service to the United States from far more 
points behind its homeland gateways than any U.S. carrier can serve. 
Cf. id. at 43803 (``On-Line Preference''). Furthermore, in an era of 
increasing code-sharing arrangements between U.S. and foreign air 
carriers--arrangements which enable the participants to offer the 
equivalent of change-of-gauge and on-line service between U.S. and 
foreign points behind and beyond the participants' gateways--foreign 
carriers now have additional opportunities to compete at interior-U.S. 
points. See Disclosure of Code-Sharing Arrangements and Long-term Wet 
Leases, Notice of Proposed Rulemaking, supra, 59 FR at 40837.

Request for Comments

    We invite comments not only on the merits of our proposed 
disclosure requirements but also on the feasibility and costs of 
implementing them. Comments should be supported by concrete data. Any 
economic analysis should contain enough detail to allow the Department 
to make an independent evaluation of the position advocated.

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 has placed a 
regulatory evaluation that examines the estimated costs and effects of 
the proposal in the docket.
    The Department certifies that this rule, if adopted, would not have 
a significant economic effect 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 effects 
on small entities that should be considered. If comments provide 
information that there are significant effects on small entities, the 
Department will prepare a regulatory flexibility analysis at the final 
rule stage.
    The Department does not believe that the proposed rule has 
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 258

    Air carriers, Foreign air carriers, Ticket agents, and Consumer 
protection.

    For the reasons set forth in the preamble, the Department proposes 
to amend Title 14, Chapter II, Subchapter A by adding a new Part 258, 
to read as follows:

PART 258--DISCLOSURE OF CHANGE-OF-GAUGE SERVICES

Sec.
258.1  Purpose.
258.2  Applicability.
257.3  Definitions.
258.4  Unfair and Deceptive Practice.
258.5  Notice Requirement.

    Authority: 49 U.S.C. 40113(a) and 41712.


Sec. 258.1  Purpose.

    The purpose of this part is to ensure that consumers are adequately 
informed before they book air transportation or embark on travel 
involving change-of-gauge services that these services require a change 
of aircraft en route.


Sec. 258.2  Applicability.

    This rule applies to the following:
    (a) direct air carriers and foreign air carriers that sell or issue 
tickets in the United States for scheduled passenger air transportation 
on change-of-gauge services or that operate such transportation; and
    (b) ticket agents doing business in the United States that sell or 
issue tickets for scheduled passenger air transportation on change-of-
gauge services.


Sec. 258.3  Definitions.

    (a) Air transportation has the meaning ascribed to it in 49 U.S.C. 
Sec. 40102(5).
    (b) Carrier means any air carrier or foreign air carrier as defined 
in 49 U.S.C. 40102(2) or U.S.C. 40102(21), respectively, that engages 
directly in scheduled passenger air transportation.
    (c) Change-of-gauge service means a service that requires a change 
of aircraft en route but has only a single flight number.
    (d) Ticket agent has the meaning ascribed to it in 49 U.S.C. 
40102(40).


Sec. 258.4  Unfair and deceptive practice.

    The holding out or sale of scheduled passenger air transportation 
that involves change-of-gauge service is prohibited as an unfair or 
deceptive practice or an unfair method of competition within the 
meaning of 49 U.S.C. Sec. 41712 unless, in conjunction with such 
holding out or sale, carriers and ticket agents follow the requirements 
of this part.


Sec. 258.5  Notice requirement.

    (a) Notice in Schedules. Carriers operating-of-gauge services to, 
from, or within the United States shall ensure that in the written and 
electronic schedule information they provide to the public, to the 
Official Airline Guide and comparable publications, and to computer 
reservations systems, these services are shown as requiring a change of 
aircraft.
    (b) Oral Notice to Prospective Consumers. In any direct oral 
communication with a consumer in the United States concerning a change-
of-gauge service, any carrier or ticket agent doing business in the 
United States shall tell the consumer before booking scheduled 
passenger air transportation to, from, or within the United States that 
the service requires a change of aircraft en route.
    (c) Written Notice. At the time of sale in the United States of a 
change-of-gauge service, the selling carrier or ticket agent shall 
provide written notice stating the following:

Notice: Change of Aircraft Required

    For at least one of your flights, you must change aircraft en 
route even though your ticket may show only one flight number and 
have only one flight coupon for that flight. Further, in the case of 
some travel, one of your flights may not be identified at the 
airport by the number on your ticket, or it may be identified by 
other flight numbers in addition to the one on your ticket. At your 
request, the seller of this ticket will give you details of your 
change of aircraft, such as 

[[Page 3783]]
where it will occur and what aircraft types are involved.

    Issued under authority delegated in 49 CFR 1.56a(h)(2) in 
Washington, D.C. on January 12, 1995.
Patrick V. Murphy,
Acting Assistant Secretary for Aviation and International Affairs.
[FR Doc. 95-1331 Filed 1-18-95; 8:45 am]
BILLING CODE 4910-62-M