[Federal Register Volume 62, Number 175 (Wednesday, September 10, 1997)]
[Proposed Rules]
[Pages 47606-47611]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23944]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 255

[Docket No. OST-97-2881; Notice No. 97-9]
RIN 2105-AC65


Computer Reservations System (CRS) Regulations

AGENCY: Office of the Secretary, Transportation

ACTION: Advance notice of proposed rulemaking

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SUMMARY: The Department is initiating this rulemaking to determine 
whether it should continue or modify its existing rules governing 
airline computer reservations systems (CRSs). Unless extended by the 
Department, the existing rules (14 CFR part 255) will expire on 
December 31, 1997. It is the Department's preliminary position that the 
rules should be continued, probably with revisions.

DATES: Comments must be submitted on or before November 10, 1997. Reply 
comments must be submitted on or before December 9, 1997.

ADDRESSES: Comments must be filed in Room PL-401, Docket 49812, U.S. 
Department of Transportation, 400 7th St. S.W., Washington , D.C. 
20590. Late filed comments will be considered to the extent possible. 
To facilitate consideration of comments, each commenter should file six 
copies of its comments.

FOR FURTHER INFORMATION CONTACT: Thomas Ray, Office of the General 
Counsel, 400 Seventh St. SW., Washington, DC 20590, (202) 366-4731.

SUPPLEMENTARY INFORMATION: The Department adopted its rules governing 
CRS operations--14 C.F.R. part 255--because CRSs had become essential 
for

[[Page 47607]]

the marketing of airline services for almost all airlines operating in 
this country. We found that the rules were necessary to ensure that the 
owners of the systems--all of which were airlines or airline 
affiliates--did not use them to unreasonably prejudice the competitive 
position of other airlines or to provide misleading or inaccurate 
information to travel agents and their customers. Our rules include a 
sunset date, December 31, 1997, so they will expire unless we readopt 
them after examining whether they are still necessary. We are beginning 
this proceeding to determine whether we should readopt the rules and, 
if so, with what modifications.

The CRS Business

    A CRS consists of a periodically-updated central database that 
contains information on the travel services sold through the system. 
Subscribers (mainly travel agents) access the CRS through computer 
terminals, which are usually leased from the system. Consumers may also 
access a CRS through an on-line computer service or the Internet.
    The most important service sold through a system is airline 
transportation, but a system user can also obtain information and 
conduct transactions for rental cars, hotels, and other travel 
services.
    A CRS enables users to find out what airline seats and fares are 
available, to book a seat, and to issue a ticket on each airline that 
``participates'' in the system, that is, that makes its services 
saleable through the CRS. Airlines participating in a system pay a fee 
whenever someone uses the system to make a booking on that airline 
(most of the systems also charge fees for related transactions, such as 
booking changes and cancellations). Other travel suppliers pay similar 
types of fees. The systems also charge many travel agency subscribers 
for using a CRS, although subscriber fees, unlike airline fees, are 
disciplined by competition and typically have been relatively small 
(and even offset by large bonuses for using a system). In the past each 
airline owning a system also benefited when travel agencies used its 
system, because those agencies made more bookings on that airline than 
they would have made if they had used a system that was not affiliated 
with that airline (this is the ``halo effect''). The size of the halo 
effect has apparently shrunk in recent years, in large part because the 
functionality offered by the systems for the owner airlines and other 
participating airlines has become more equal.
    Four CRSs--each affiliated with one or more U.S. airlines--operate 
in the United States. The largest system, Sabre, is primarily owned by 
the parent corporation of American Airlines. Apollo, the second largest 
system, is operated by Galileo International, whose airline owners are 
United Air Lines, US Airways, Air Canada, and several European 
airlines. Both Sabre and Galileo International have public 
shareholders. Worldspan is owned by Delta Air Lines, Northwest 
Airlines, Trans World Airlines, and Abacus, a group of Asian airlines. 
The fourth system is Amadeus, a major European system primarily owned 
by Lufthansa, Air France, Iberia, and Continental Air Lines; Amadeus 
acquired System One, a system formerly controlled by an affiliate of 
Continental.
    We found in our last major CRS rulemaking, completed in 1992, that 
CRSs had become essential for the marketing of the services of 
virtually all airlines. With the exception of Southwest Airlines and a 
few other low-fare carriers, all U.S. airlines had found it essential 
to distribute their services through each of the four CRSs operating in 
the United States because of the importance of travel agencies in the 
distribution of airline services and each travel agency's predominant 
use of a single system. 57 FR 43780, 43783-43784 (September 22, 1992).
    In recent years seventy percent of all airline bookings in the 
United States have been made by travel agencies, and travel agencies 
rely almost entirely on CRSs to determine what airline services are 
available and to make reservations for their customers. Travel agencies 
rely so much on CRSs because of their efficiency. 57 FR at 43782. If 
travel agency offices commonly used several CRSs, travel agents would 
be able to obtain information and make bookings on a carrier even if 
the carrier participated in only some of the four systems. Each travel 
agency office, however, generally uses only one system for the great 
majority of its bookings. 57 FR at 43783.
    An airline's ability to sell its services will be significantly 
impaired if its services are not displayed and offered for sale in each 
CRS used by a significant number of travel agents. If the airline does 
not participate in one system, the travel agents using that system must 
call the airline to obtain information and make bookings, which is 
substantially less efficient than using a CRS. Travel agents are less 
likely to book an airline when doing so is significantly more difficult 
than booking another airline that does participate in the agents' CRS. 
As a result, the non-participating airline will receive fewer bookings 
than it would have obtained if it participated in the agents' system. 
Because of the importance of marginal revenues in the airline industry, 
a loss of a few bookings on each flight is likely to substantially 
reduce the airline's profitability. 57 FR at 43783-43784.
    An airline can try to mitigate the loss of bookings caused by non-
participation in a system by establishing a direct electronic link 
between the travel agencies using that system and its own internal 
reservations system, but doing so is expensive and potentially less 
convenient for travel agents. An airline cannot create its own CRS, for 
entry into the CRS business would be extremely costly and the airline 
would have difficulty obtaining a significant market share. 57 FR at 
43782-43784.
    Airlines could exert some competitive pressure on the systems if 
they could encourage travel agencies to use one system instead of 
another, but that has appeared to be impracticable.
    More recently, as explained below, airlines, travel agencies, and 
some systems have created new booking services that are accessible 
directly by consumers through the Internet. While the use of these 
services is growing rapidly, consumers make relatively few bookings 
through these services. Moreover, these services, except for the 
websites offered by individual airlines, use a CRS as their booking 
engine, so the growth in Internet bookings may not necessarily reduce 
airline dependence on CRSs.

History of the Department's Regulation of CRSs

    CRSs became essential for airline distribution in the early 1980s. 
Each system's owner airline used its system to prejudice airline 
competition and give consumers misleading or incomplete information in 
order to obtain more bookings. These factors caused the agency formerly 
responsible for the economic regulation of airlines, the Civil 
Aeronautics Board (``the Board''), to adopt rules governing the 
operations of airline-affiliated CRSs. 49 FR 32540 (August 15, 1984). 
The Board based its CRS regulations primarily on its authority under 
section 411 of the Federal Aviation Act, later recodified as 49 U.S.C. 
41712, to prevent unfair methods of competition and unfair and 
deceptive practices in air transportation and the marketing of airline 
transportation. On review the Seventh Circuit upheld the Board's rules. 
United Air Lines v. CAB, 766 F.2d 1107 (7th Cir. 1985).
    The Board's major rules required each system to make participation 
available to all airlines on non-discriminatory terms, to offer at 
least one unbiased display, and to make available to each

[[Page 47608]]

airline participant any marketing and booking data from bookings for 
domestic travel that it chose to generate from its system. The Board's 
rules also prohibited certain contract terms that restricted the travel 
agencies' ability to choose between systems. For example, the Board 
fixed the maximum term for travel agency contracts at five years.
    After the Board's sunset on December 31, 1984, we assumed the 
Board's responsibilities for airline regulation, including its 
regulation of CRSs.
    The Board included a sunset date of December 31, 1990, in its rules 
to ensure that we would reexamine the need for the rules and the rules' 
effects. We initially conducted a study of the rules and the CRS 
business as part of the Secretary's study of domestic airline 
competition. Secretary's Task Force on Competition in the U.S. Domestic 
Airline Industry, Airline Marketing Practices: Travel Agencies, 
Frequent-Flyer Programs, and Computer Reservation Systems (February 
1990).
    We then conducted a rulemaking proceeding to reexamine the rules. 
54 FR 38870 (September 21, 1989) (advance notice of proposed 
rulemaking); 56 FR 12586 (March 26, 1991) (notice of proposed 
rulemaking); and 57 FR 43780 (September 22, 1992) (the final rule). 
While we were completing our rulemaking, we extended the expiration 
date of the Board's rules so that they remained in effect until we 
adopted revised rules. 55 FR 53149 (December 27, 1990); 56 FR 60915 
(November 29, 1991); 57 FR 22643 (May 29, 1992).
    In finding that CRS rules remained necessary to promote airline 
competition, we determined that market forces still did not discipline 
the price or level of service offered participating airlines by the 
systems, that CRS owners would still use their control of the systems 
to prejudice airline competition if there were no rules, and that 
systems could still bias their displays of airline services if there 
were no rules requiring unbiased displays. 57 FR at 43783-43787.
    We therefore maintained the Board's rules, which we strengthened in 
some respects. In determining which rules to adopt, we attempted to 
adopt rules that would promote competition in the CRS business and 
thereby make detailed regulation less necessary. In particular, we 
adopted rules (i) giving travel agencies the right to use third-party 
equipment and software in conjunction with a CRS (each vendor generally 
had required its subscribers to lease equipment from itself and limited 
their ability to use programs produced by independent firms), and (ii) 
giving agencies the right to use their CRS terminals (unless owned by 
the vendor) to access other CRSs and sources of airline information. 
Sections 255.9. We adopted these rules because vendors had barred 
travel agencies from using their terminals to access any other system 
or database, a restriction which discouraged agencies from using 
multiple systems. We hoped that the rules would make it likely that 
travel agencies would begin using multiple systems and databases, which 
would give airlines alternate electronic methods for providing travel 
agencies with information and booking capabilities and thereby create 
some competition for the systems. 57 FR at 43797. We similarly 
prohibited certain types of travel agency contracts that unreasonably 
limited an agency's ability to use more than one system. Section 255.8.
    We also adopted rules (i) requiring each airline with a significant 
CRS ownership interest to participate in each other system at a level 
equal to its level of participation in its own system, if the other 
system's participation terms were commercially reasonable, (ii) 
requiring systems to offer participating airlines functionality that 
was more comparable to that offered owner airlines, and (iii) requiring 
systems to make marketing and booking data derived from bookings for 
international travel available to participating airlines. Sections 
255.5, 255.7, and 255.10.
    However, our rules did not address all of the complaints made by 
non-vendor carriers, the smaller CRSs, and the travel agencies. Some of 
the complaints were not valid. Others were valid, but neither we nor 
the commenters could devise workable and cost-effective rules that 
would solve the problems. For example, we adopted no rule limiting the 
level of booking fees, even though we found that they were not 
disciplined by competition, because each of the parties' suggested 
rules on limiting booking fee levels had serious flaws. 57 FR at 43816-
43817.
    To ensure that we would reexamine the need for our rules and their 
effectiveness, we included a sunset date, December 31, 1997, in our 
rules. 14 C.F.R. 255.12; 57 FR at 43829-43830 (September 22, 1992). If 
we do not readopt the rules or extend their expiration date, the rules 
will end on that date.
    Our staff has begun a study of the CRS business and airline 
marketing practices. See Order 94-9-35 (September 26, 1994).

Industry Developments

    There have been changes in the CRS business and airline marketing 
practices since our last major CRS rulemaking. We are examining those 
developments in our study, and we will take our study's findings into 
consideration in this rulemaking.
    One important development is the creation of booking sites on the 
Internet for use by consumers. A number of airlines have created 
websites, as have many travel agencies and some CRSs. Although several 
on-line computer services have been offering electronic booking 
capabilities to consumers for some time, the Internet sites have 
created new avenues for direct bookings by consumers. Moreover, several 
of the airline websites offer consumers discount fares that are not 
available through other distribution channels. Some industry experts 
believe that the Internet will in time significantly reduce the 
importance of CRSs.
    Another development--electronic ticketing--has made direct bookings 
by consumers more attractive and economical for both travellers and 
airlines. Travellers using electronic tickets no longer need paper 
tickets. Before the development of electronic ticketing, travellers 
making bookings electronically still needed to obtain a ticket either 
by mail or in person from a travel agent, an airline sales office, or 
the check-in counter at the airport. The need to obtain a paper ticket 
limited the efficiency advantages for consumers--and airlines--of 
making bookings electronically.
    In addition, several new low-cost airlines began operations without 
participating in any CRS. Those airlines believed that avoiding CRS 
participation--and the payment of booking fees--would help lower their 
distribution costs and thereby improve their ability to offer fares 
lower than those offered by the more established airlines, which relied 
on travel agencies and CRSs for distributing their services. The low-
cost airlines' strategy of avoiding CRS participation initially 
suggested that airlines might be able to develop alternative 
distribution methods that might discipline the prices and quality of 
service offered by the systems. However, this may not occur. Some of 
these low-cost airlines--Western Pacific and ValuJet, for example--have 
announced plans to make their services available through CRSs, and 
other low-cost airlines--Reno and Frontier, for example--have always 
relied on CRS participation in their marketing.

[[Page 47609]]

Regulatory Developments Since Our Adoption of Revised Rules

    In view of the continuing changes in the CRS business and airline 
marketing practices and of requests by some airline and travel agency 
firms for further revisions in our rules, we began a study of CRSs and 
airline marketing. Order 94-9-35 (September 26, 1994). We intend to 
complete the study later this year and to use it as a basis for our 
analysis of the issues in this proceeding. We will place a copy of the 
study in the docket for this rulemaking when we publish it.
    We have begun two rulemakings on specific CRS issues. We have 
proposed a rule prohibiting each system from imposing contract terms on 
participating airlines that require an airline to participate in a 
system at at least as high a level as the airline participates in any 
other system. We tentatively concluded that such ``parity'' clauses 
unreasonably reduce competition in the CRS and airline industries. We 
asked, however, whether we should allow a system to enforce such a 
clause against an airline that owns or markets a competing system. 61 
FR 42197 (August 14, 1996).
    We also proposed revisions to our rules on CRS displays to promote 
airline competition and ensure that travel agents and their customers 
can obtain a reasonable display of airline services. Our proposals 
would require each system to offer at least one display without an on-
line preference, require every display to be based on criteria 
rationally related to consumer preferences, and bar systems from 
creating displays that neither use elapsed time as a significant factor 
in selecting flights from the database nor give single-plane flights a 
preference over connecting flights in ranking flights. 61 FR 42208 
(August 14, 1996).
    We have been analyzing the comments filed in response to these two 
notices of proposed rulemaking and intend to issue a final decision 
soon in those two rulemakings.
    In addition, pending before us is an enforcement proceeding 
resulting from a third-party complaint filed by Northwest against 
American and Sabre Travel Information Network. Docket OST-95-430. The 
case involves American's distribution to Sabre travel agencies of a 
program developed by Sabre that causes American flights to be given a 
preferential display position. Northwest and our enforcement office 
argue that American's distribution of this program violates our CRS 
rules and 49 U.S.C. 41712 and have asked us to reverse an 
administrative law judge's decision that held that American's conduct 
was lawful.
    We are aware that other CRS practices trouble many airlines and 
travel agencies and some CRS firms. For example, a number of airlines 
object to the continuing increases in booking fees and the airlines' 
inability to exert any check on those increases. A related matter 
concerns the dispute between some participating airlines and one or 
more systems over the systems' imposition of booking fees on 
transactions that participating airlines believe are of no benefit to 
them. See, e.g., Travel Distribution Report (April 24, 1997), at 1. 
Many travel agencies and some systems believe that the airline owners 
of some systems unfairly tie an agency's access to attractive discount 
fares offered by the airline to the agency's subscription to the 
airline's CRS. The growth of Internet booking sites has led to requests 
that we extend the coverage of at least some of our rules to such 
booking sites. See, e.g., the comments filed by Amadeus in the parity 
clause rulemaking docket, Docket OST-96-1145. In addition, American and 
TWA have filed petitions for a rule prohibiting the multiple listing of 
a single flight under different airline codes as a result of code-
sharing agreements. Dockets 49620 and 49622.

Request for Comments

    We are issuing this advance notice of proposed rulemaking to invite 
comments on whether we should readopt the rules and, if so, with which 
changes. Despite the developments in airline distribution and the CRS 
business, we tentatively believe that each of the systems continues to 
have market power over airline participants and that the terms of 
airline participation are not affected by market forces. See, e.g., 61 
FR at 42198. As in our last major CRS rulemaking, the principal 
statutory authority for this rulemaking is 49 U.S.C. 41712, which 
authorizes us to define and prohibit unfair methods of competition and 
unfair and deceptive practices in air transportation and the marketing 
of air transportation.
    We will examine whether the regulation of CRS operations remains 
necessary. We also intend to review whether our rules have been 
effective in promoting competition in the airline and CRS businesses 
and in enabling consumers and their travel agents to obtain accurate 
and complete information and, if not, why not and whether they can be 
revised to make them effective.
    In determining which, if any, CRS rules should be adopted, we 
intend to focus as much as possible on rule proposals that will 
increase competitive market forces in the CRS industry rather than on 
proposals for detailed regulation of CRS practices. We took this 
approach in our last major CRS rulemaking. See, e.g., 57 FR at 43781.
    We ask the commenters to address the following issues:
    1. Should the rules be continued? If so, for how long? Should 
another review be required and, if so, when? Commenters who recommend 
that the rules should not be continued should address the consequences 
of that recommendation on airlines, competition among the systems, 
travel agencies, and the public.
    2. Have the rules been effective? Are the rules adequate and 
appropriate in light of technological changes, changes in business 
conditions in the airline and travel industries, and the rise of 
Internet and on-line computer services that enable consumers to make 
bookings?
    3. In those areas where commenters believe that the rules have not 
been effective, should provisions be deleted or modified and, if 
modified, how? Commenters should address how the rules have been 
effective or ineffective in detail.
    4. Do the changes in ownership of the systems (all now have 
multiple owners and at least one is owned in part by the public) 
require changes in our approach to regulation or in individual rules? 
Should we reexamine our jurisdictional and analytical bases for 
regulating CRSs, which rely on the ownership of each system by one or 
more airlines and airline affiliates? Do the decisions by some airline 
owners to reduce their CRS ownership interests indicate that there is 
less need for CRS regulation?
    5. Have the rules allowing travel agencies to use third-party 
hardware and software and to use terminals not owned by a system to 
access other travel databases had any impact? Should the rules be 
changed to make it easier for travel agencies to use third-party 
hardware and software and to access other databases? For example, 
should the exception allowing vendors to restrict the use of vendor-
owned equipment be eliminated? Do one or more dominant airlines 
affiliated with a CRS use their market power in any regional airline 
market to deter or block agencies from exercising their rights under 
these rules? Do systems otherwise impose contract terms that 
unreasonably deter agencies from acquiring their own equipment or 
otherwise using multiple databases or systems?
    6. Does the mandatory participation rule (section 255.7) strengthen 
or weaken competition in the airline and

[[Page 47610]]

CRS businesses? Should the rule be modified to create areas where 
airlines with CRS ownership interests would have some ability to choose 
which services to buy from other systems? Should the rule instead be 
extended to cover airlines that market a system? Should the rule be 
extended to include matters like access to corporate discount fares?
    7. In the parity clause rulemaking, Delta Air Lines has contended 
that we should bar systems from requiring participation in the booking 
services offered through Internet sites as a condition to participation 
in the services offered travel agency subscribers. What impact would 
Delta's proposal have on airline and CRS competition? Does the use of 
CRSs as booking engines by many Internet websites raise other issues 
that should be addressed in the rules?
    8. Do the systems' display algorithms injure airline competition 
and, if so, how? If so, how could we prevent those injuries without 
engaging in a detailed regulation of the systems' criteria for editing 
and ranking their displays?
    9. Does our rule requiring each system to make available to 
participating airlines all of the marketing and booking data generated 
by the system from bookings (section 255.10) benefit airline 
competition? Are system owners or other airlines using the data in ways 
that may prejudice airline competition? If so, how should the rule be 
changed?
    10. We adopted a rule that generally requires each system to make 
available to participating airlines the same functionality used by its 
owner airlines (section 255.5). Has this rule been effective? Are there 
any remaining significant differences in functionality that affect 
airline competition?
    11. Should we address the issues of booking fee levels and the 
structure of booking fees? If so, is there a practicable method for 
regulating the level of booking fees? Is there a way to bring market 
forces to bear on the terms on which airlines participate in CRSs?
    12. Do the systems inappropriately charge airlines for agency 
transactions that are unnecessary or valueless for airline 
participants? Do the systems use subscriber contract terms, such as 
productivity pricing, that may encourage unnecessary transactions by 
some agencies and lead to increased booking fee costs for airline 
participants? If such problems exist, should we adopt rules in this 
area? Parties commenting on this issue should explain why airlines can 
or cannot stop illegitimate or unnecessary travel agency transactions 
by taking action against travel agencies that choose to conduct such 
transactions.
    13. In the past we have reasoned that promoting the systems' 
competition for subscribers should usually promote airline competition, 
although increased competition for subscribers may lead to increased 
CRS costs for participating airlines. Does such competition among the 
systems benefit airline participants? Do systems use subscriber 
contract terms that adversely affect competition in the CRS or airline 
industries? If so, how could the rules be changed to eliminate such 
adverse effects?
    14. Some industry participants have asserted that some of the major 
airlines with CRS ownership interests coerce travel agencies at their 
hubs into using their systems and thereby unreasonably limit 
competition in both the CRS and airline industries. Are these 
assertions true? If they are, are there any practicable rules that 
could be adopted that would limit or eliminate such practices?
    15. The overseas marketing efforts of some CRSs have been 
frustrated by discriminatory conduct by foreign airlines and other 
travel suppliers that own or market a competing CRS in their home 
countries. Section 255.11(b) of our rules already exempts a CRS from 
complying with certain rule requirements in response to some types of 
discriminatory conduct by a foreign CRS. Should our rules be revised to 
strengthen a U.S. system's ability to take countermeasures against such 
discrimination?
    We will, of course, consider all of the factual and legal issues 
presented by the commenters that relate to our decision on whether to 
readopt or revise the rules. We do not intend our list of questions to 
foreclose commenters from raising other issues, and we will consider 
all proposals suggested by the parties in this proceeding.
    We anticipate that some parties will urge us to extend the coverage 
of at least some of our CRS rules to airline information and booking 
services available to consumers through the Internet. If such requests 
are made, the parties should discuss them in light of the differences 
between the way CRSs and Internet services are typically used by 
consumers. While consumers can directly use Internet sites, consumers 
relying on travel agencies for information and advice do not see the 
CRS displays used by the travel agent. Travel agencies hold themselves 
out as unbiased sources of information, while many websites do not. In 
finding a need for CRS regulation we have cited such factors as the 
usual practice of travel agencies of using only one system, the 
difficulties for travel agencies of switching systems or using more 
than one system, and the time pressures on travel agents that tend to 
cause them to book one of the first flights shown on a display, even if 
flights displayed later may better suit the traveller's needs. 57 Fed. 
Reg. at 43783, 43785-43786. These factors seem unlikely to be true for 
consumer use of Internet booking sites. Parties who want us to regulate 
Internet services, whether or not they exclude sites created by a 
single airline, should explain why we should take such action, given 
these differences. Parties who object to such proposals should also 
address these differences and any other relevant differences between 
CRSs and Internet booking sites.
    Similarly, parties arguing that our rules should either be cut back 
or extended to Internet sites in order to equalize the competitive 
burden should explain why the regulations governing CRSs used by travel 
agencies place the systems at a competitive disadvantage compared to 
booking services offered through the Internet.
    We plan to resolve the issues presented by our notices of proposed 
rulemaking on parity clauses, Docket OST-96-1145, and on CRS displays, 
Docket OST-96-1639, in those proceedings. We are aware, of course, that 
the commenters on those proposals have asserted that we should adopt 
additional rules that were not proposed in our notices of proposed 
rulemaking, such as, for example, possible changes to the mandatory 
participation rule. Those rule proposals should be raised in this 
proceeding.
    In addition, any party that wishes to propose rules affecting the 
display of code-sharing services is free to do so in this docket.
    Finally, we do not intend to consider in this proceeding air 
transportation issues that are not closely related to CRS practices. 
While our major goal in regulating CRS practices has been the promotion 
of airline competition, we will not consider all airline competition 
issues in this docket. As a result, we do not plan to focus in this 
proceeding on such issues as the competitive effects of override 
commissions or code-sharing, notwithstanding the potential importance 
of those issues.

Timetable for Proceeding

    As noted above, our current rules will expire on December 31, 1997, 
if we do not extend them before that expiration date. Given the time 
required for completing this rulemaking, including the need to give 
parties an adequate opportunity to file comments and reply comments in 
response to this notice and

[[Page 47611]]

to our future notice of proposed rulemaking, we will not be able to 
complete this rulemaking by the current expiration date of our rules. 
We therefore intend to issue a notice of proposed rulemaking to extend 
the existing rules while we complete this rulemaking.
    We currently intend to complete our pending study of the CRS 
business and airline marketing practices before we issue a notice of 
proposed rulemaking in this proceeding. We note that we followed a 
similar procedure in our last major CRS rulemaking.

Regulatory Process Matters

Regulatory Assessment

    Our CRS rules were a significant regulatory action under section 
3(f) of Executive Order 12866 and were reviewed by the Office of 
Management and Budget under that order. As required by section 6(a)(3) 
of that Executive Order, we prepared an assessment of the rules' costs 
and benefits. The rules were also significant under the regulatory 
policies and procedures of the Department of Transportation, 44 FR 
11034.
    At this point, we do not know whether we will propose new rules 
that would have a substantial impact and would thus be considered 
significant under the Executive Order.
    The comments submitted in response to this notice should address 
the potential effects any changes would have on the economy, costs or 
prices for consumers and the government, and adverse effects on 
competition.
    We do not expect that this rulemaking will impose unfunded mandates 
or requirements that will have any impact on the quality of the human 
environment.

Regulatory Flexibility Analysis

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601 et seq., was 
enacted by Congress to ensure that small entities are not unnecessarily 
and disproportionately burdened by government regulations. The act 
requires agencies to review proposed regulations that may have a 
significant economic impact on a substantial number of small entities. 
For purposes of this rule, small entities include smaller U.S. and 
foreign airlines and smaller travel agencies.
    Any rules adopted by us regulating CRS operations are likely to 
affect the operations of many small entities, primarily travel 
agencies, even though they would not be regulated directly if we 
readopted the existing rules. When we publish a notice of proposed 
rulemaking in this proceeding, we will include an initial regulatory 
flexibility analysis as required by the Regulatory Flexibility Act.
    That act also requires each agency to periodically review rules 
which have a significant economic impact upon a substantial number of 
small entities. 5 U.S.C. 610. This rulemaking will constitute the 
required review of our CRS rules.

Paperwork Reduction Act

    The current rules contain no collection-of-information requirements 
subject to the Paperwork Reduction Act, Public Law No. 96-511, 44 
U.S.C. Chapter 35. See 57 F.R. at 43834.

Federalism Implications

    This request for comments will have no substantial direct effects 
on the States, on the relationship between the national government and 
the States, or on the distribution of power and responsibilities among 
the various levels of government. Therefore, in accordance with 
Executive Order 12812, we have determined that it does not present 
sufficient federalism implications to warrant preparation of a 
Federalism Assessment.

List of Subjects in 14 CFR Part 255

    Air carriers, Antitrust, Consumer protection, Reporting and 
recordkeeping requirements, Travel agents.

    Issued in Washington, DC on August 28, 1997.
Rodney E. Slater,
Secretary of Transportation.
[FR Doc. 97-23944 Filed 9-9-97; 8:45 am]
BILLING CODE 4910-62-P