[Federal Register Volume 61, Number 13 (Friday, January 19, 1996)]
[Proposed Rules]
[Pages 1309-1312]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-546]



-----------------------------------------------------------------------


DEPARTMENT OF TRANSPORTATION
14 CFR Chapter II

[Docket No. OST-96-993; Notice 96-1]
RIN 2105-AC36


Ticketless Travel: Passenger Notices

AGENCY: Office of the Secretary, DOT.

ACTION: Request for Comments.

-----------------------------------------------------------------------

SUMMARY: The Department is seeking comment on passenger notice 
requirements as applied to ticketless air travel. This action is taken 
on the Department's initiative.

DATES: Comments on the issues discussed in this document should be 
received by March 19, 1996. Late-filed comments will be considered to 
the extent practicable.

ADDRESSES: Comments should be sent to Docket Clerk, Docket No. OST-96-
993, Room PL-401, Department of Transportation, 400 Seventh Street SW, 
Washington, DC 20590. For the convenience of persons who will be 
reviewing the docket, it is requested that commenters provide an 
original and three copies of their comments. Comments can be inspected 
from 9:00 a.m. to 5:00 p.m. Commenters who wish the receipt of their 
comments to be acknowledged should include a stamped, self-addressed 
postcard with their comments. The docket clerk will date-stamp the 
postcard and mail it to the commenter. Comments should be on 8\1/2\ by 
11 inch white paper using dark ink and should be without tabs and 
unbound.

FOR FURTHER INFORMATION CONTACT: Tim Kelly, Aviation Consumer 
Protection Division, Office of Aviation Enforcement and Proceedings, 
Office of the General Counsel, Department of Transportation, 400 
Seventh Street SW, Room 10405, Washington, DC 20590, telephone (202) 
366-5952.

SUPPLEMENTARY INFORMATION:

Background

    Various DOT regulations require U.S. and foreign air carriers to 
provide consumer notices on or with passenger tickets. These notices 
provide information about protections afforded by federal regulations, 
limitations on carrier liability, and contract terms that passengers 
may not otherwise be aware of. These ticket notice requirements are 
listed below.

Subject/Source (14 CFR)

Oversales--Sec. 250.11
Domestic baggage liability--Sec. 254.5
International baggage liability--Sec. 221.176
Domestic contract of carriage terms--Sec. 253.5
Terms of electronic tariff (international)--Sec. 221.177(b)
Refund penalties (domestic)--Sec. 253.7
Fare increases (international)--Sec. 221.174
Death/injury liability limits (international)--Sec. 221.175
    Over the past few years, a number of airlines have begun selling 
air service with ``ticketless travel,'' also known as ``electronic 
ticketing.'' Under this concept a passenger or travel agent calls the 
airline, makes a reservation and purchases the transportation during 
the call, typically by credit card. No ``ticket,'' as that document has 
traditionally been configured, is issued. Instead, the passenger is 
orally given a confirmation number and/or is sent a written itinerary. 
Upon checking in at the airport the passenger simply provides his or 
her name, furnishes identification, and is given a boarding pass or 
other document that is used to gain access to the aircraft.
    The Department of Transportation supports the development of 
ticketless travel. The process has the potential to reduce carrier and 
agent costs, and thereby costs to consumers, and to make air 
transportation easier to purchase. At the same time, the Department has 
been concerned that necessary information in the passenger notices 
described above be provided to all passengers in a ticketless 
environment at a time and in a manner that makes the information 
useful. A number of carriers that offer ticketless travel have 
approached the Department and asked what procedures we would find to be 
acceptable in this area. In response, we have pointed out the 
importance of providing the same general level and timeliness of notice 
that is presently required for traditionally-ticketed passengers, as 
indicated in the discussion that follows. As far as we are aware, 
virtually all carriers that offer ticketless travel are providing those 
notices in the manner and at the time that we have recommended.
    We realize that this is a dynamic area of air transportation. We 
are publishing this Federal Register notice in order to seek comment on 
all aspects of the issue of consumer notices in a ticketless air travel 
environment so that unnecessary documentation burdens can be 
eliminated, consistent with providing needed information to consumers 
in a timely fashion.

Discussion

    At the time that the various passenger notice requirements 
described above were issued, all passengers received tickets. It 
appears that the ticket was chosen as the means for conveying required 
consumer information simply because tickets were a universally-
available medium for documenting the carrier/passenger contract of 
carriage and providing notice in writing to individual passengers. We 
have found no evidence that the use of the word ``ticket'' in these 
notice rules contemplated that only airline passengers who receive 
traditional tickets are able and entitled to benefit from the 
information in these notices.
    Indeed, there is ample evidence that these notice requirements were 
enacted in order to provide important information to all airline 
passengers. In issuing a rule requiring a ticket notice disclosing 
baggage liability limits, the Civil Aeronautics Board noted:

    As we stated in EDR-182, inadequate knowledge by the traveling 
public of the limits on liability for loss of or damage to baggage 
has been a recurring source of consumer complaints and this 
continues to be the case. [T]he Board has determined that the 
traveling public is entitled to effective notice of both Warsaw 
Convention and other baggage liability limitations. [ER-691 issued 
August 24, 1971; 36 FR 17034.]

    In 1977 the Board issued a rule requiring a ticket notice 
disclosing overbooking practices. The agency stated:

    * * * while we find nothing unlawful in a carrier's attempt to 
insulate itself against a common law action of fraudulent 
misrepresentation by filing a tariff rule, such carrier and its 
agents should be required to provide the passenger with actual 
notice of its overbooking practices. Although, as the carriers point 
out, a passenger may be legally presumed to have knowledge of a 
carrier's tariffs, it is clearly unrealistic to expect passengers to 
have actual knowledge of the contents of tariffs. [ER-987 issued 
February 28, 1977; 42 FR 12420.]

    In 1982, as domestic tariffs were being phased out, the Board 
issued a rule permitting carriers to continue to incorporate terms by 
reference into contracts with passengers, as they had with tariffs, but 
requiring a ticket notice disclosing the existence of the incorporated 
terms. The rule also required specific notice of certain terms 
affecting the refundability of the fare. The Board stated that it 
wanted to:


[[Page 1310]]

    * * * make sure that the traveling public are able to find out 
the terms they are ``buying into'' whenever they purchase an airline 
ticket, so that they can make an informed choice of carrier, class 
and flight, and protect themselves (for example, by buying extra 
insurance) against undesired risks * * * This rule is intended to 
alert passengers, and prospective passengers, that important terms 
are incorporated in ticket contracts * * * [ER-1302 issued September 
27, 1982; 47 FR 52134; 14 CFR Part 253.]

    One of the primary concerns of airlines at the time that the rule 
permitting continued incorporation of contract terms (14 CFR Part 253) 
was adopted was the possibility of being subjected to widely divergent 
standards involving notice of contract terms by the courts of many 
different states which might have jurisdiction over their contracts. 
Part 253 preempts state courts from involvement in the issue of notice 
of contract terms, so long as carriers comply with its provisions. 
Presumably, carriers that offer ticketless travel want to incorporate 
contract terms by reference and take advantage of liability limitations 
to the same extent as carriers that issue tickets. However, it is open 
to question whether courts will view a carrier's contract of carriage 
to be enforceable by a carrier if a consumer does not receive timely 
written notice of its applicability to the air transportation being 
purchased. At this point, we continue to believe that Part 253 strikes 
a balance between the Department's responsibility to protect consumers 
and its desire to allow airlines the maximum flexibility possible for 
their business decisions. Accordingly, for the same reasons that were 
cited when the part 253 disclosure rules were enacted, both carriers 
and passengers could face increased risks if notice of the incorporated 
contract of carriage terms were not to be provided to ticketless 
passengers in a timely fashion. We seek comment on whether carriers 
selling ticketless travel expect that their respective contracts of 
carriage will apply to the purchased transportation. We also seek 
comment on the costs and the benefits of providing notice of any 
incorporated contract of carriage terms to ticketless passengers within 
a few days after the purchase transaction, and the methods by which 
this could be accomplished. In addition to comments on all of the above 
issues, we specifically ask for comment on the issue of preemption if 
carriers do not provide written notice to ticketless passengers similar 
to that required under part 253.
    In addition to conveying consumer notices, an airline ticket serves 
as a record of the passenger's reservation. The definition of 
``confirmed reserved space'' in the Department's denied boarding rule 
(14 CFR Sec. 250.1) is:

    * * * space on a specific date and on a specific flight and 
class of service of a carrier which has been requested by a 
passenger and which the carrier or its agent has verified, by 
appropriate notation on the ticket or in any other manner provided 
therefor by the carrier, as being reserved for the accommodation of 
the passenger.


    Thus, if a passenger has a ticket reflecting confirmed reserved 
space (generally indicated by the notation ``OK'' in the Status field), 
that passenger has a reservation for purposes of our denied boarding 
rule even if the carrier cannot locate the reservation in the computer. 
Under that rule, that passenger is entitled to compensation if not 
boarded. Ticketless passengers could be at a disadvantage in this 
regard if there is no evidence in their possession of having a 
reservation on a particular flight. The confirmation number provided at 
the time of the purchase may help the carrier locate the reservation, 
but if the computer record cannot be found, the confirmation numbers 
now being used may not establish that the passenger has a reservation 
on the specific flight for which he or she is checking in. Therefore, 
failure to provide confirmed passengers with an adequate written record 
of the confirmation could lead to numerous disputes between airlines 
and passengers regarding entitlement to denied boarding compensation as 
required by part 250. Such a written record could be the confirmation 
number alone, if the carrier has a system that allows airport agents to 
use a confirmation number to determine the status of the reservation 
associated with that number without resort to its computer reservation 
system (e.g., by using a coded confirmation number). However, if a 
carrier does not have a procedure free of reliance on a single computer 
reservation system, in order to achieve the same end it may be 
advisable for a written record of the reservation to be sent to the 
passenger at the time of the purchase to identify the specific flights, 
dates and classes of service purchased by the passenger, consistent 
with section 250.1. We ask for comments on whether passengers in a 
ticketless environment should receive evidence of their confirmed 
reservation independent of a carrier's computer reservation system and, 
if so, by what means.
    Another issue raised by ticketless travel is that the passenger may 
have no record issued by the carrier or its agent of the fare that was 
quoted to and accepted by the passenger during the telephone call or 
other transaction when the transportation was purchased. The charge 
record from the passenger's credit card company may not arrive in the 
mail until after the flight, and should there be a disagreement at 
check-in over the correct fare, the passenger would have no evidence of 
the amount that he or she had agreed to pay. Although airline tickets 
contain fare information, no existing rule requires such a written 
record of the fare, and thus some carriers may not wish to create one 
for ticketless passengers. However, to the extent that written material 
is given to ticketless passengers in order to address other issues 
discussed here, providing a written record of the fare (perhaps 
generated from the record of the purchase transaction) would obviate 
many potential disputes over the amount of the fare. Comments are 
invited on how carriers deal with fare disputes with all passengers, 
but particularly with passengers who purchase tickets by phone, and on 
how often such disputes occur.
    To the extent that carriers revise their systems as a result of any 
of the issues discussed in this Notice, it may be easier to incorporate 
fare information now than to have to add it later. It is likely that 
many business travelers will need a written statement of the fare for 
expense reports in any event. Providing fare documentation on a 
ticketless transaction may encourage more business travelers to use the 
system, which may in turn reduce carrier costs. We seek comment on the 
desirability and practicality of providing fare information in writing 
to ticketless passengers.
    Article 3, section 2 of the Warsaw Convention (49 Stat. 3000, 49 
U.S.C.A. 1502) requires that before a carrier can assert Warsaw 
liability limits for personal injury or death or for lost or damaged 
baggage with respect to a particular international passenger, the 
carrier must provide that passenger a ticket which states, inter alia, 
that the transportation is subject to the Convention's rules. This 
issue will need to be addressed.
    Ticketless carriers that are providing consumer notices as we have 
recommended have been furnishing those notices in writing. We have 
advised those carriers that written notice could be provided through 
electronic text media such as ``e-mail'' and faxes. Oral notice during 
a telephone transaction alone would not meet the requirements of the 
current regulations that apply to ticket notices. The consumer notices 
that currently 

[[Page 1311]]
appear on tickets are lengthier than the brief oral notice now required 
for code-sharing (14 CFR Sec. 399.88) and the more detailed notices 
proposed for code-sharing and change-of-gauge service (59 FR 40836 and 
60 FR 3778). In addition, the code-sharing and change-of-gauge 
disclosures are alerts about a single fact, while the ticket notices 
contain more-detailed information that passengers may want to refer to 
during check-in or even after the flight (e.g., in the event of a 
problem). Finally, a written notice avoids disputes over what was said. 
To the extent that information in the notices currently required on 
tickets is provided to ticketless passengers, we seek comment on 
whether we should specify the methods by which this information should 
be transmitted and the timing of such notice.
    We have stated to carriers that have contacted us about ticketless 
travel that the intent of the current regulations for notices on 
tickets is to ensure that the notices to passengers are provided in 
conjunction with the purchase transaction. Consistent with this 
concept, we have advised these carriers that we believe that on a 
ticketless sale the notices should be sent to the purchaser (via mail, 
fax, ``e-mail,'' personal delivery, or other timely means) within a few 
days after the purchase transaction. The purposes of the consumer 
notices may not be served if they are handed to passengers as they 
check in at the airport, or put in a queue to be mailed just before 
each passenger's flight. It is at the time of the purchase transaction 
that a passenger puts his or her money at risk on a restricted fare, 
and also enters into a contract. Passengers may wish to take certain 
actions before the flight as a result of reading the consumer notices, 
such as purchasing additional insurance or packing differently (e.g., 
putting expensive items in a carry-on bag). At the same time, we have 
also advised carriers that we recognize that if a passenger makes a 
ticketless purchase only a few days before departure and it would be 
impossible or unreasonably costly to get the required written material 
to him or her before the day of the flight, it may be necessary to 
provide this written material upon check-in at the airport. Such a 
procedure is similar to that now followed when tickets purchased by 
telephone within a few days of departure cannot be mailed due to the 
lack of time. We seek comment on the question of when any notices, if 
required, should be provided.
    Some carriers have introduced machines that accept a credit card or 
``smart card.'' If the machine delivers a standard ticket, the required 
information must be on the ticket, pursuant to the Department's current 
regulations on ticket notices. If the machine processes a ticketless 
sale, a page containing the required information could be printed out 
with each transaction, or the machine could print the passenger-
specific data (i.e., confirmation information and fare) on a receipt 
and a supply of the consumer notices could be kept in a container 
attached to the machine with a sign asking customers to take one. We 
seek comment on whether written notices, if required, should be 
provided during such transactions, and how they should be furnished. 
Should passengers who read and sign special ``disclosure forms,'' which 
provide all currently required notices, in order to obtain a ``smart 
card'' also receive notices with each air transportation purchase?
    Several airlines and Computer Reservations System vendors allow 
subscribers of commercial online services to make reservations and 
purchase air transportation (both ticketed and ticketless) online. A 
number of airlines have established home pages on the World Wide Web, 
raising the prospect of electronic sales of air transportation via that 
medium. To the best of our knowledge, most current online sales of air 
transportation result in the mailing of a ticket, which should normally 
include the required notices. However, in the case of an online 
ticketless purchase (as opposed to simply a reservation), the question 
arises whether the consumer information that currently appears on or 
with tickets should be provided, and if so, how. One way to do this 
would be to offer a prominent, convenient and inexpensive (in terms of 
connect-time charges) option for the passenger to download or print the 
notices during the purchase transaction. Another would be to ``e-mail'' 
the notices to the passenger's ``e-mail'' address. Simply advising the 
customer that the consumer information is available to be read 
elsewhere online may not be adequate, just as it would not be 
satisfactory in a conventional ticketing transaction for the seller to 
tell the passenger where he or she could locate the required notices. 
Comments on these issues are invited.
    The current regulations concerning ticket notices state that the 
notices must appear on tickets issued by travel agents. In two recent 
rulemakings the Department has proposed new written notices to be given 
to passengers who book code-sharing flights or change-of-gauge flights. 
Those proposed rules specifically take ticketless travel into account, 
and they would, if adopted, require that the written disclosure 
proposed in those rules be given to persons who book through travel 
agents. See 59 FR 40836, August 10, 1994, ``Disclosure of Code-Sharing 
Arrangements and Long-Term Wet Leases,'' and 60 FR 3778, January 19, 
1995, ``Disclosure of Change-of-Gauge Services.'' Those who comment on 
this notice on ticketless travel should be aware that the conclusions 
and analysis set forth here do not reflect any of the comments filed in 
the two dockets cited above. Any party that filed comments in those 
dockets on the issue of disclosure by travel agents is invited to file 
similar comments here.
    We are currently of the view that providing timely written notice 
to ticketless passengers should not be unduly burdensome to carriers. 
The various procedures discussed in this Notice would represent no 
increase in required passenger notices; implementing the procedures 
(which we have previously recommended to carriers) would simply mean 
that the written information that has in the past been required to be 
provided to all passengers should continue to be provided to all 
passengers. We believe that virtually all carriers that offer 
ticketless travel have been following all of the procedures described 
in this Notice since last year, and doing so does not appear to have 
inhibited their ticketless programs. The high level of adherence to the 
ticketless travel notice procedures recommended by us and described in 
this Notice is, in part, attributable to the fact that it is in the 
best interests of the carriers and their customers to adopt such a 
system, as well as the apparent ease of following those procedures.
    The notices in question would easily fit on the front and back of a 
single 8\1/2\ by 11 inch sheet of paper. If formatted differently or if 
the international notices are not provided to domestic passengers, the 
notices fit on the front of a single sheet. (The Department's Aviation 
Consumer Protection Division has created a sample sheet which is 
available by contacting the individual listed at the beginning of this 
notice under ``For Further Information.'' It is also available 
electronically through the World Wide Web at http://www.dot.gov/
dotinfo/general/rules/aviation.html)
    Some airlines that have implemented or studied ticketless travel 
have stated that most of the cost savings result from the elimination 
of ``back office'' processing of ticket coupons, physical security for 
ticket stock, and cumbersome procedures for refunding lost tickets, 
rather than from simply eliminating the printing of tickets 

[[Page 1312]]
themselves. Those advantages would be unaffected by notice procedures 
such as those described in this document. We request specific comments 
on the monetary costs and the benefits of implementing the notice 
procedures discussed above.
    The procedures discussed in this Notice are not new ones. As 
indicated above, over the past year we have communicated our views on 
this issue to several carriers that offer ticketless travel, and we 
have shared them with the Air Transport Association of America. In the 
two recent rulemakings mentioned above in which the Department has 
proposed new written notices to be given to passengers on code-sharing 
flights or change-of-gauge flights, the proposed provisions have been 
phrased to require the notices ``at the time of sale'' rather than on 
or with a ``ticket.'' The code-sharing proposal states in the 
Supplementary Information section that ``[T]he separate written notice 
requirement would apply whether or not the consumer is given an actual 
ticket to evidence the transportation * * * ''
    It has been suggested that requiring ticketless passengers to be 
given written information is inconsistent with the fact that many 
airline passengers make reservations in advance but pick up their 
tickets at the airport. We seek comment on this point, because we see 
no direct inconsistency. The existing rules on ticket notices state 
that the notices are to be provided on or with the ticket. If the 
ticket is not furnished until the passenger arrives at the airport, 
that is when the passenger completes the contract with the carrier and 
should receive the notices, even if he or she had made a telephone 
reservation two weeks earlier. A passenger who makes a reservation by 
phone but purchases the ticket at the airport is not putting his or her 
money at risk at the time of the telephone reservation, nor is he or 
she entering into a contract at that point.
    On the other hand, we recognize that it may not be uncommon for a 
passenger to purchase a ticket by credit card over the telephone a few 
days before departure, leaving insufficient time for the ticket to be 
mailed and requiring that it be picked up at the airport, at which time 
the required notices would first be provided. We ask for comments on 
the number of travelers who may purchase air travel in this manner and 
whether there have been any specific problems associated with such 
travelers not receiving required notices until they receive their 
ticket upon arrival at the airport. We ask that commenters address 
specific reasons for any problems or lack of problems experienced by 
travelers in this area (e.g., Are short-notice purchases likely to be 
most common among business persons or other frequent travelers who may 
already be familiar with contract terms provided in required notices?).
    It has also been suggested that there is no justification for 
requiring such written notices on ticketless transactions in the 
airline industry when reservations for hotel rooms and rental cars are 
routinely made by telephone, with merely a confirmation number being 
given to the customer. However, these services are seldom paid for in 
full at the time of the reservation, and there is generally more 
flexibility to change reservations than is the case on a discount 
airline ticket. Also, few hotel or car rental transactions are subject 
to the terms of a 50-page contract of carriage as is common in air 
travel. Finally, state and local governments are not preempted from 
regulating hotel stays and car rentals, but those levels of government 
are preempted by federal law from regulating air carrier rates, routes 
or services. Nonetheless, comments on this issue are welcome.
    The Department wishes to arrive at the most efficient and flexible 
means of delivering necessary consumer information without hindering 
the development of ticketless travel. To that end, we seek comment on 
all aspects of the agency views expressed in this Notice, especially 
with respect to any increased costs that may be imposed by adherence to 
the notice procedures which we have recommended and which are discussed 
above.
    An electronic version of this document is available at http://
www.dot.gov/dotinfo/general/rules/aviation.html

    Issued this 5th day of January, 1996 at Washington, DC.
Mark L. Gerchick,
Acting Assistant Secretary for Aviation and International Affairs.
[FR Doc. 96-546 Filed 1-18-96; 8:45 am]
BILLING CODE 4910-62-P