[Federal Register Volume 60, Number 45 (Wednesday, March 8, 1995)]
[Notices]
[Pages 12813-12814]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5588]



=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Office of the Secretary
[Docket 49152 and Order 95-2-44]


Order on Discussion Authority Regarding Limits and Conditions of 
Passenger Liability Established by the Warsaw Convention

SUMMARY: We are publishing the entire order as an appendix to this 
document.

DATES: Issued in Washington, D.C., February 22, 1995.

EFFECTIVE DATE: February 28, 1995.

FOR FURTHER INFORMATION CONTACT: Peter Bloch, U.S. Department of 
Transportation, Office of the Assistant General Counsel for 
International Law, Room 10105, 400 Seventh Street, S.W., Washington, 
D.C. 20590. (202) 366-9183.
Patrick V. Murphy,
Acting Assistant Secretary for Aviation and International Affairs.

Order

    On September 24, 1993, the International Air Transport 
Association (IATA) filed an application requesting approval of, and 
antitrust immunity for, intercarrier discussions concerning the 
limits and conditions of passenger liability established by the 
Warsaw Convention (Convention).
    IATA states that pending ratification and entry into force of 
Montreal Protocols Numbers 3 and 4 to the Convention, there is a 
need for interim passenger liability rules that are adequate to 
current day standards of compensation. The current regime, as 
embodied in the Montreal intercarrier agreement of 1966 (Agreement) 
and which covers all carriers serving the United States, establishes 
a liability limit of $75,000 for personal injury and death.1 
Adjusted for inflation, IATA notes that this amount would be over 
$300,000 in today's dollars. Despite this, adherence to the 
Agreement's $75,000 limit continues to be a condition for all 
carriers to operate to the Untied States. Against this background, 
IATA states that air carrier parties to the Agreement need the 
authority to discuss bringing the Agreement up to date. It states 
that such discussions may include possible amendments to, or 
replacements for, this Agreement. IATA states that its request for 
discussion authority and antitrust immunity is consistent with 
Department precedent.

    \1\ The Warsaw Convention, to which the United States became a 
party in 1934, established a number of uniform rules regarding 
international air transportation, including in Article 22 an air 
carrier liability limit of approximately $10,000 for each passenger 
injury or death, absent a finding of willful misconduct. The Hague 
Protocol of 1955, which doubled the liability limit, was not 
ratified by the United States. Rather, in 1966, the carriers serving 
the United States agreed to adopt a special contract under Article 
22, establishing what remains the current regime (Agreement CAB 
18900, approved by Order E-23680, May 13, 1966) (Docket 17325). 
Under the Agreement's terms, these carriers also agreed not to avail 
themselves of the defense of non-negligence under Article 20(1) of 
the Convention for claims under that amount.
---------------------------------------------------------------------------

    No answers were filed in response to the IATA application.

Decision

    The Department has decided to grant the requested discussion 
immunity subject to the conditions described below. The United 
States has a firmly-established policy that liability limits should 
be adequate to contemporary standards of compensation and that the 
current regime needs to be updated to provide sufficient protection 
to the traveling public. We are granting the application because the 
discussions proposed by IATA may bring about an interim solution 
that will serve either until Montreal Protocols 3 and 4 are ratified 
and enter into force, or until negotiation and entry into force of a 
new Convention meeting all U.S. requirements.
    We may authorize intercarrier discussions and grant them 
antitrust immunity where we find that the discussions are necessary 
to meet a serious transportation need or to achieve important public 
benefits and that such benefits or need cannot be secured by 
reasonably available alternatives that are materially less 
anticompetitive.2 49 U.S.C. 41308, 41309.

    \2\ We assume for the purposes of our decision here that the 
proposed discussions could reduce competition among carriers.
---------------------------------------------------------------------------

    The purpose of the discussions in this case is to secure the 
important public benefit of a liability regime that reflects 
contemporary standards of compensation. The discussions are 
consistent with a strong and long-standing Department policy of 
seeking a uniform set of passenger liability rules that meet today's 
needs.
    We find that there are no reasonably available alternatives to 
the requested discussions having a materially less anticompetitive 
effect. The best alternative, of course, is an international 
agreement such as the Montreal Protocols and Supplemental 
Compensation Plan, but it is because that approach has proven to be 
such a complex and lengthy one, and given the pressing need to have 
an updated liability regime, that we are entertaining this 
discussion authority request. Another alternative would be to allow 
individual carriers to apply to the Department for modifications to 
their tariffs and conditions of carriage to implement individual new 
special contracts under Article 22 of the Convention. We do not 
believe that approach is workable. Some carriers would probably 
attempt this, while others would not. Those that did would likely 
offer contracts with different terms from one another. One clear and 
unacceptable result of such an approach would be that portions of 
the traveling public would not be adequately protected. A final 
alternative would be for the United States to unilaterally establish 
a regime that all carriers operating to the United States would have 
to abide by. This approach, however, could engender such significant 
opposition from our trading partners that our ability to implement 
the plan unilaterally could very well be jeopardized.
    We also find that the requested approval and grant of antitrust 
immunity to discuss an interim liability regime is appropriately 
limited in nature and well-calculated to achieve a result consistent 
with our objective of having in place a liability regime that 
reflects contemporary standards of compensation. IATA seeks 
discussions geared toward producing a temporary arrangement, 
recognizing the immediate need to increase the liability limits 
through a uniform system of rules. This is fully consistent with our 
objectives. IATA would announce a place and date for such 
discussions and has said that it would invite all its member 
carriers.
    IATA requests that we not impose conditions on such discussions 
that would restrict the ability of the participant carriers to 
consider all options in structuring a liability regime. We will not 
impose conditions other than those that we consider standard and 
which we have set out below. However, we believe that in 
constructing any intercarrier agreement, the participants should 
seek to reflect the basic objectives which we have pursued in our 
efforts to secure ratification of the Montreal Protocols and 
creation of a supplemental compensation [[Page 12814]] plan. We have 
strived for a uniform international system that allows U.S. victims 
to receive fair recoveries within a reasonable period of time. 
Specifically, we would expect that any agreement reached by the 
carriers would be consistent with the following guidelines: first, 
with regard to passenger claims arising from international journeys 
ticketed in the United States, passengers would be entitled to 
prompt and complete compensation on a strict liability basis with no 
per passenger limits and with measures of damages consistent with 
those available in cases arising in U.S. domestic air 
transportation; second, this coverage should be extended to U.S. 
citizens and permanent residents traveling internationally on 
tickets not issued in the United States.
    We have decided to grant the request for discussion authority 
and antitrust immunity in this order, rather than through a show-
cause proceeding. The discussions sought by the applicants seek to 
carry out our established public policy goal, the modernization of 
passenger liability limits. Implementing that goal as soon as 
possible will redound to the immediate benefit of the traveling 
public and therefore provide important public benefits. We are 
willing to grant antitrust immunity in this instance because, unlike 
most situations where it has been sought, the purpose of the 
discussions at issue here is fully consistent with the public 
interest. Furthermore, any agreement reached by the carriers may not 
be implemented without our approval, and interested persons will 
have an opportunity to comment on any application for such approval.
    In addition, to minimize any adverse impact on the public 
interest, we will condition our approval and grant of antitrust 
immunity upon the following express conditions: (1) The discussion 
authority is limited to 120 days from the date of publication of 
this order; (2) advance notice of any meeting shall be given to all 
U.S. and foreign air carriers as well as to the Department of 
Transportation and the Department of Justice; (3) representatives of 
the Department of Transportation and the Department of Justice shall 
be permitted to attend the meetings authorized by this order; (4) 
IATA shall file within 14 days with the Department a report of each 
meeting held including inter alia the date, place, attendance, a 
copy of any information submitted to the meeting by any participant, 
and a summary of the discussions and any proposed agreements; (5) 
any agreement reached must be submitted to the Department for 
approval and must be approved before its implementation; (6) the 
attendees at such meetings must not discuss rates, fares or 
capacity, except to the extent necessary to discuss ticket price 
additions reflecting the cost of any passenger compensation plan; 
and (7) the discussions will be held in the metropolitan Washington, 
D.C. area.

Accordingly

    1. The Department approves the request for discussion authority 
filed by IATA in this docket, subject to the restrictions listed 
below, under section 41308 of title 49 of the United States Code, 
for 120 days from the date of publication of this order, for 
discussions directed toward producing a uniform set of passenger 
liability limits;
    2. The Department exempts persons participating in the 
discussions approved by this order from the operation of the 
antitrust laws under section 41309 of Title 49 of the United States 
Code;
    3. The Department's approval is subject to the following 
conditions:
    (a) Advance notice of any meeting shall be given to all 
identifiably interested U.S. air carriers and foreign air carriers, 
as well as to the Department of Transportation and the Department of 
Justice;
    (b) Representatives of the entities listed in subparagraph (a) 
above shall be permitted to attend all meetings authorized by this 
order;
    (c) IATA shall file within 14 days with the Department a report 
of each meeting held including inter alia the date, place, 
attendance, a copy of any information submitted to the meeting by 
any participant, and a summary of the discussions and any proposed 
agreements;
    (d) Any agreement reached must be submitted to the Department 
for approval and must be approved before its implementation;
    (e) Attendees at such meetings must not discuss rates, fares or 
capacity, except to the extent necessary to discuss ticket price 
additions reflecting the cost of any passenger compensation plan;
    (f) The Department shall retain jurisdiction over the 
discussions to take such further action at any time, without a 
hearing, as it may deem appropriate; and
    (g) Any meetings authorized by this order shall be held in the 
metropolitan Washington, D.C. area.
    4. Petitions for reconsideration may be filed pursuant to our 
rules in response to this order;
    5. We will serve a copy of this order on all parties served by 
IATA in this docket, as indicated by the service list attached to 
its application; and
    6. We will publish a copy of this order in the Federal Register.
Patrick V. Murphy,
Acting Assistant Secretary for Aviation and International Affairs.
[FR Doc. 95-5588 Filed 3-7-95; 8:45 am]
BILLING CODE 4910-62-P