[Federal Register Volume 64, Number 49 (Monday, March 15, 1999)]
[Rules and Regulations]
[Pages 12854-12860]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6137]



[[Page 12853]]

_______________________________________________________________________

Part III





Department of Transportation





_______________________________________________________________________



Office of the Secretary



14 CFR Part 258



Disclosure of Change-of-Gauge Services; Final Rule

  Federal Register / Vol. 64, No. 49 / Monday, March 15, 1999 / Rules 
and Regulations  

[[Page 12854]]



DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 258

[Docket Nos. OST-1995-177, 47546, 45911, 45912, and 45913]
RIN 2105-AC17


Disclosure of Change-of-Gauge Services

AGENCY: Office of the Secretary (OST), DOT.

ACTION: Final rule.

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

SUMMARY: This rule codifies and augments the Department of 
Transportation's disclosure rules and policies concerning change-of-
gauge services--i.e., services with one flight number that require a 
change of aircraft--in order to ensure that prospective airline 
consumers are given pertinent information on the nature of these 
services. The rule applies to U.S. air carriers, foreign air carriers, 
and, where appropriate, ticket agents (including travel agents) doing 
business in the United States. It includes the following requirements: 
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 (OAG) and comparable 
publications, and to computer reservations systems, that consumers be 
given reasonable and timely oral notice that a service with a single 
flight number that they are considering booking entails a change of 
aircraft en route, and that written notice of the aircraft change be 
provided along with any ticket.

DATES: This regulation is effective July 13, 1999. Comments on the 
information collection requirements must be received on or before May 
14, 1999.

ADDRESSES: Comments should be sent to Jack Schmidt, Office of Aviation 
and International Economics (X-10), Office of the Assistant Secretary 
for Aviation and International Affairs, Office of the Secretary, U.S. 
Department of Transportation, 400 Seventh St., SW., Washington, DC 
20590, (202) 366-5420 or (202) 366-7638 (FAX).

FOR FURTHER INFORMATION CONTACT: Betsy L. Wolf, Senior Trial Attorney, 
Office of Aviation Enforcement and Proceedings (202-366-9349), Office 
of the General Counsel, U.S. Department of Transportation, 400 7th St. 
SW., Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

Background

    The Department issued a Notice of Proposed Rulemaking (NPRM), 60 FR 
3778 (January 19, 1995), in which it requested comments and reply 
comments on a proposed rule requiring various forms of disclosure of 
change-of-gauge services. Change-of-gauge service is 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. Operationally, in addition to one-flight-to-one-
flight change-of-gauge services, airlines also schedule change-of-gauge 
services that involve aircraft changes between multiple flights 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.'' As with one-for-one change-of-gauge services, the carrier 
assigns a single flight number for the passenger's entire itinerary 
even though the passenger changes planes, but in addition, the single 
flight to or from the change point itself has multiple numbers: one for 
each segment with which it connects and one for the local market in 
which it operates.
    49 U.S.C. 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 section 41712, the 
Department has adopted various regulations and policies to prevent 
unfair or deceptive practices or unfair methods of competition. The 
Department's current rules governing computer reservations systems 
(CRSs), adopted in September of 1992, require that CRS displays give 
notice of any flight that involves a change of aircraft en route. 
Computer Reservations System (CRS) Regulations, Final Rule, 57 FR 
43780, 43835 (September 22, 1992); 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.
    In the NPRM, our response to American Airlines, Inc.'s petition in 
Docket 47546 to ban ``funnel flights,'' we concluded that no type of 
change-of-gauge service should be banned per se. Nevertheless, we 
tentatively found that even with our current policy requiring 
disclosure of aircraft changes, effective disclosure is not always 
made, resulting not only in bookings that otherwise might not be made 
but also in confusion and hardship during travel. We tentatively found 
that the failure to disclose required aircraft changes in scheduled 
passenger air transportation in a timely manner is an unfair or 
deceptive practice or an unfair method of competition within the 
meaning of 49 U.S.C. 41712, and we proposed 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:

    (1) Notice by carriers of required aircraft changes in written 
and electronic 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) A prescribed written notice at the time of sale of such 
service.

    We received comments on the NPRM from four air carriers (American 
Airlines, Inc., Delta Air Lines, Inc., United Air Lines, Inc., 
USAirways, Inc.), the Port Authority of New York and New Jersey (Port 
Authority), the American Society of Travel Agents, Inc. (ASTA), 
Americans for Sound Aviation Policy (ASAP), two travel agencies (Red 
Carpet Travel and Fran's Travel), and two individuals (Donald L. 
Pevsner and E. Sakaria). We received reply comments from two air 
carriers (American and Continental Airlines, Inc.). Having reviewed all 
of these documents, we have decided to adopt the proposed rule with 
some modification and clarification.

Allowing Change-of-Gauge Services

    In the NPRM, we declined to ban either single or multiple change-
of-gauge services outright. We noted that in general, we have declined 
to foreclose carriers' marketing and service innovations unless these 
violate 49 U.S.C. 41712 or otherwise contravene the public interest, 
and we tentatively found that problems of passenger deception or 
confusion or distortion of competition arising from ineffective 
disclosure could and should be addressed by our proposed rule. We noted 
various public benefits that can flow from change-of-gauge services: a 
lower likelihood of missed connections, lower fares, increased scope 
and

[[Page 12855]]

frequency of service, increased competition, our ability to review 
regulated international air fares, and maximum utilization of U.S. 
carriers' rights under international bilateral agreements.
    Several commenters would have us reconsider our decision not to ban 
any change-of-gauge services. Some would settle for a ban on multiple 
change-of-gauge services, while others continue to press for a ban on 
one-for-one changes of gauge as well.
    American supports the proposed rule for one-for-one changes of 
gauge but calls for a ban on multiple changes of gauge except for those 
specifically approved by the Department on a case-by-case basis. 
American doubts that connections are any more likely to be held for 
late-arriving flights in the case of multiple changes of gauge than 
they are in the case of ordinary online connecting services. In 
American's view, the Department should limit the use of single flight 
numbers to connections whose flights are routinely held in cases of 
delay. The carrier argues that even with effective disclosure of 
aircraft changes, travelers will still be misled into thinking that 
their connecting flights will not leave without them. It cites the 
support of fifteen parties for its original petition to ban multiple 
change-of-gauge flights in support of its position here.
    American contends that the Department's leverage over fares under 
the Standard Foreign Fare Level (SFFL) is not a substantive reason to 
allow all multiple change-of-gauge services. It states that the rules 
allowing us to stop fare increases based on SFFL do not bear as a 
practical matter on transportation to and from countries with liberal 
pricing regimes, and it states that in any event, the Department has 
other means of protecting the public against unreasonable fares. 
American also believes that our concern that banning multiple change-
of-gauge services would sacrifice valuable route rights is largely 
unfounded, because many bilateral agreements do not grant such rights. 
As for our concern that banning multiple change-of-gauge services by 
foreign carriers would breach some of our agreements, American states 
that foreign carriers dislike these services and that therefore, the 
United States could readily renegotiate those agreements that allow 
carriers of both parties to operate them. American does not oppose 
Departmental approval of change-of-gauge services to satisfy bilateral 
obligations.
    Joining American in supporting a ban on multiple change-of-gauge 
services are the Port Authority and ASAP. The Port Authority maintains 
that these services are inherently unfair and deceptive, that they 
engender panic and helplessness at airports, and that even with the 
proposed disclosure requirements, consumers will not grasp the nature 
of their travel. For essentially the same reasons, Red Carpet Travel, 
Fran's Travel, Mr. Pevsner, and E. Sakaria favor a ban on all change-
of-gauge services, not just those involving multiple flights on one 
side of the change point. On the other side of this issue, Delta, 
USAirways, and Continental take the position that no change-of-gauge 
services should be banned.
    We affirm our earlier conclusion that change-of-gauge services are 
not unfair or deceptive practices or unfair methods of competition 
within the meaning of 49 U.S.C. 41712, provided that the en route 
change of aircraft is disclosed to consumers clearly and effectively 
before they book transportation. American provides no evidence to 
support its hypothesis that in the case of multiple change-of-gauge 
services, connections are not likely to be held. While American 
correctly observes that we do not exercise our leverage over fares 
under SFFL in the case of bilateral agreements with countries that have 
liberal pricing regimes, it would be contrary to the public interest 
for us to sacrifice this leverage for all bilateral relationships, 
including those with countries that do not have liberal pricing 
regimes. Banning change-of-gauge flights would do just that, because 
our SFFL reviews do not extend to fares for connecting flights with 
separate flight numbers.
    Similarly, the proportion of our bilateral agreements that 
specifically provide for change-of-gauge services is irrelevant. What 
matters is that a significant and growing number of these agreements 
do. Among these are the 32 open-skies agreements we have concluded with 
aviation partners on four continents, our landmark agreement with 
Canada that governs our largest foreign aviation market, and many 
agreements with other significant aviation partners, such as France and 
Japan. The United States negotiated for the change-of-gauge provisions 
in these agreements in consultation with U.S. air carriers for the 
purpose of enabling them to exploit the agreements' new route 
opportunities as fully as possible. We would be acting contrary to the 
public interest if we were to sacrifice these negotiated rights 
unilaterally. American suggests that we could renegotiate those 
agreements that allow our partners to provide change-of-gauge services, 
but this would require making further trades to the foreign governments 
involved. Such retrenchment would again be contrary to the public 
interest.
    E. Sakaria questions the legality of change-of-gauge service in 
light of a provision in the Warsaw Convention that tickets must show 
each point of transfer and a provision in carriers' certificates 
requiring all operations to be conducted in accordance with all 
applicable treaties. We do not interpret the certificate condition in 
question as requiring carriers to issue tickets indicating changes of 
gauge.
    The arguments in the comments fail to persuade us that change-of-
gauge services should be banned outright. Moreover, the record lacks 
evidence that this position has broad support in the industry. We do 
not agree that the disclosures required by our rule will fail to give 
consumers effective notice of the change of aircraft en route. We do 
share the concerns of the Port Authority and other commenters that 
airports may not be posting notices of change-of-gauge services that 
clearly and effectively direct passengers to their ongoing aircraft. We 
do urge the carriers offering these services to work with airports 
where the aircraft changes are made to remedy this problem. In our 
view, however, this concern does not warrant sacrificing all of the 
benefits that change-of-gauge service can offer to the traveling 
public. For these reasons, and owing to the long history and acceptance 
of the practice (see NPRM, supra, 60 FR at 3778-3779), we will not ban 
change-of-gauge service.

The Need for a Rule

    At the other end of the scale, Delta, USAirways, and Continental 
take the position that the Department should not adopt any disclosure 
rule, arguing that they already make effective disclosure of change-of-
gauge services, that the disclosure required by the rule would come at 
a high cost, and that there is not enough evidence that consumers are 
being deceived, confused, or otherwise harmed to justify this burden on 
sellers of air transportation. ASTA, too, argues against the rule. Some 
commenters also oppose individual components of the rule; we address 
these contentions below.
    Delta argues that existing rules and policies requiring notice of 
aircraft changes in CRSs and disclosure of change-of-gauge services to 
consumers give the latter adequate protection. Delta states that it 
fully discloses its change-of-gauge services in CRSs, the OAG, the ABC 
World Airways Guide, other similar publications, and its own

[[Page 12856]]

timetables. An owner of Worldspan, Delta states that this CRS directs 
travel agents to tell passengers of the aircraft change and where it 
will occur. Delta also states that passengers on its change-of-gauge 
services receive a separate boarding pass for each flight segment that 
involves a different aircraft and contends that these constitute 
effective written notice of the aircraft change. Delta also argues that 
apart from existing regulatory requirements, carriers have commercial 
and competitive incentives to inform consumers fully about the services 
that they provide. The carrier thus concludes that the rule is 
unnecessary.
    Delta also contends that the Department has not justified the rule 
with empirical evidence that consumers are being confused or deceived 
or that they are not being informed of change-of-gauge services in a 
timely fashion. If anything, Delta argues, the evidence suggests the 
contrary. The carrier states that of the almost 7,000 consumer 
complaints that the Department received in 1994, only 30 involved 
``direct flight-undisclosed connection'' (a category that Delta 
believes encompasses other services in addition to changes of gauge), 
and only 3 of these involved ``unsatisfactory information.'' Delta 
states that its own records indicate few if any complaints about 
change-of-gauge services in recent years. Absent evidence, Delta 
claims, the Department has relied on generalized and unsubstantiated 
conclusions, which are not valid grounds for imposing a redundant, 
unnecessary, intrusive, and very costly regulation on the industry, 
especially in view of carriers' recent record losses.
    USAirways, like Delta, contends that the Department has not shown a 
need for the rule and notes that change-of-gauge service was not 
identified as a ``Significant Consumer Issue'' in Secretary Pena's 
letter to carriers of December 20, 1994. Also like Delta, USAirways 
maintains that consumers already get all of the information they need 
to make informed decisions about change-of-gauge services. The carrier 
states that it complies with existing rules and policies by making full 
disclosure of change-of-gauge services in CRSs, the OAG, and its 
timetables and by having its agents tell passengers of required 
aircraft changes before booking change-of-gauge flights. Like Delta, 
USAirways contends that all carriers have a strong incentive to inform 
passengers effectively.
    Continental states that it already provides adequate notice of its 
change-of-gauge services. Continental also agrees with Delta and 
USAirways that other carriers have the incentive to do so as well, that 
the additional costs of the rule would be a substantial burden for both 
carriers and travel agents, and that the Department has not justified 
the rule.
    ASTA argues that the rule is not necessary to meet consumers' needs 
for information and that it will make normal communication with travel 
agents ``a negative and distasteful experience for the consumer, rife 
with warnings of disruptions and other difficulties.'' Rather than 
adopt the entire rule, in ASTA's view, the Department should just 
require CRS vendors to enhance the systems' disclosure of change-of-
gauge services to travel agents and then see if market-based incentives 
solve the deception problem inherent in these services.
    American takes issue in its reply comments with those who oppose 
the rule. American maintains that the Department is justified in 
deciding as a matter of policy that sellers of air transportation must 
expressly inform consumers, before they commit themselves to buying 
seats on change-of-gauge flights, that they will be changing planes en 
route. Otherwise, American claims, with a single flight number and 
single boarding pass, passengers will often make the mistaken 
assumption that they will not be making a connection. United, for its 
part, endorses the Department's objectives and agrees with the 
Department that without effective disclosure, change-of-gauge services 
can mislead consumers.
    We remain of the view that the rule is a necessary complement to 
change-of-gauge services to assure compliance with 49 U.S.C. 41712. We 
are not persuaded that our existing policies and regulation result in 
effective disclosure all of the time, commercial incentives 
notwithstanding, nor are we persuaded that the costs of compliance with 
the rule will outweigh the benefits it will bring. As we noted in the 
NPRM, we currently have a rule that requires notice of en route 
aircraft changes in CRS displays (14 CFR 255.4(b)(2)) and a requirement 
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).
    The rule, however, does not expressly require travel agents, the 
sellers of most air transportation, to disclose the aircraft change to 
consumers. Neither does our policy, as articulated in our orders, 
expressly apply to travel agents:

    As a preliminary matter, we affirm the legitimacy of holding out 
change-of-gauge services under single flight numbers, provided that 
notice is given of the change of aircraft en route * * * (footnote 
omitted).

Id. While our Enforcement Office could bring an action under 49 U.S.C. 
41712 against any seller of air transportation with a pattern of 
failing to disclose change-of-gauge services effectively, we believe 
that our adopting a rule with affirmative disclosure requirements will 
result in broader, more immediate, and more reliable protection both to 
the traveling public and to airline competition. As American 
recognizes, the failure to inform consumers of aircraft changes en 
route is inherently deceptive and should be prohibited whether or not 
it has precipitated a high volume of complaints.
    The most recent evidence available to us indicates, moreover, that 
change-of-gauge service is not always effectively disclosed. In 1995, 
the Department's Aviation Consumer Protection Division received 42 
complaints about changes of gauge, more than 5 times as many complaints 
as the 8 we received about code sharing, or the sharing of airline 
designator codes. In 1996, we received 16 complaints about code sharing 
and 47 complaints about change-of-gauge services; in 1997, we received 
8 complaints about code sharing and 55 complaints about change-of-gauge 
services; in 1998, we received 7 complaints about code sharing and 47 
complaints about change-of-gauge services. When one considers that the 
relevant set of passengers is not all passengers (several hundred 
million) but only those on change-of-gauge flights, the 191 complaints 
that we have received in four years indicate that all is not well. 
Furthermore, we do not know how many complaints the carriers may have 
received about change-of-gauge services since the issuance of the NPRM.
    For all of these reasons, and because no party submitted any 
evidence in support of its claim of undue costs, we will adopt the rule 
with the modifications and clarifications discussed below.

Notice in Schedules

    In the NPRM, we proposed to adopt the following requirement for 
carriers' schedules:

    Sec. 255.5(a) Notice in Schedules. Carriers operating change-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.

    Delta, USAirways, and Continental object to this requirement. Delta 
and USAirways state that they already meet

[[Page 12857]]

it in its entirety; Continental's reply comments indicate that the 
carrier meets this requirement for everything except its own printed 
schedules. In addition to agreeing with Delta and USAirways that the 
requirement is redundant and unnecessary, Continental claims that it is 
costly in terms of customer service and administrative expenses.
    United does not object to this requirement even though it will have 
to change its city timetables by adding an annotation to indicate 
change-of-gauge flights. The carrier states that it is already meeting 
the requirement's other components. Not only does United endorse this 
requirement, but it would have the Department go further and require an 
additional notice of aircraft changes for multiple change-of-gauge 
services. United reasons that without such a notice, at the airport 
where they change planes, passengers might not know to look for a 
flight with several different numbers. United contends that additional 
notice of multiple change-of-gauge services in written and electronic 
schedules will help sellers of air transportation provide both written 
and oral notice that is more responsive to consumers' needs than the 
notice required by the rule. (We address United's views on these 
requirements below.) United also claims that carriers do not always 
have control over the displays of flight information at airports and 
asks that we make clear in our final rule that this requirement does 
not apply to airport displays.
    ASTA asks us to require CRS vendors to enhance their disclosure of 
change-of-gauge services to travel agents. American endorses the 
requirement and observes that none of the carriers that filed comments 
is claiming that disclosure of aircraft changes in schedules is 
unnecessary, burdensome, or unduly expensive.
    We will adopt the requirement. We will modify the proposed language 
to make clear that the rule applies to carriers that hold out change-
of-gauge service even if they do not actually operate it themselves, 
such as in the case of code-sharing. No commenter questions the benefit 
of disclosing aircraft changes in written and electronic schedules. The 
carriers who filed comments all comply with at least most of the 
requirement's components already, so their unsubstantiated claims of 
undue cost fail to persuade us. Continental provides no estimate or 
other support for its assertion that including notice of aircraft 
changes in its printed schedule will mean great expense in the areas of 
customer service and administration. United is correct in assuming that 
this requirement does not apply to those airport displays over which 
carriers do not have control.
    We will not adopt the additional requirement suggested by United. 
From the consumer's perspective, there is no real functional difference 
between one-for-one and multiple changes of gauge. We have no evidence 
that flight listings at airports are more likely to be accurate and 
complete in the case of one-for-one changes of gauge than in the case 
of multiple changes of gauge, especially now that code-sharing has 
become so common in international travel. Contrary to United's 
assumption, we think that having different indicators for one-for-one 
and multiple change-of-gauge services is more likely to confuse 
passengers than having one universal indicator to alert them to the 
need to change aircraft en route. If, after the rule's implementation, 
experience indicates otherwise, we can always revisit this issue in a 
later rulemaking. In the meantime, we encourage carriers to take 
whatever additional steps they can to make sure that travel agents as 
well as consumers understand the nature of their services.

Oral Notice

    In the NPRM, we proposed to adopt the following oral notice 
requirement for change-of-gauge services:

    Sec. 258.5(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.

    This requirement drew opposition from Delta, United, USAirways, 
ASTA, and Continental and support from American. Delta argues that 
since air carriers are already required to inform consumers of aircraft 
changes en route, this requirement constitutes a redundant, 
unnecessary, overbroad, and highly intrusive regulatory action that 
will impose significant costs and burdens on the industry. Delta 
contends that this notice certainly is not necessary for every oral 
communication between consumer and airline and concludes that if the 
requirement is adopted, it should be limited to communications taking 
place before transportation is purchased.
    United believes that the Department has significantly understated 
the added cost to the industry of the oral notice requirement, 
especially when coupled with the oral notice requirements proposed for 
code-share flights and insecticide spraying. The carrier estimates that 
it carries over 500,000 passengers on change-of-gauge services each 
year and believes that other carriers carry even more, and it suggests 
that the notice requirement will likely affect some tens of millions of 
reservations transactions. With the Department's estimate of one to two 
extra minutes per transaction, the costs to the industry of compliance 
with this requirement will be high. United anticipates that much of the 
burden will fall on travel agents, as in the case of the code-share and 
insecticide-spraying disclosure requirements, and it suggests that this 
burden may well outweigh the value of the notice to consumers. United 
also believes that with improved notice of changes of gauge in CRSs and 
schedules, travel agents will be better equipped to inform consumers 
about aircraft changes, which will reduce the need for any oral notice 
requirement.
    USAirways states that it already has its sales agents tell 
consumers of aircraft changes en route before the latter book 
transportation and argues that all carriers have an incentive to do 
likewise. It therefore objects to this requirement. ASTA argues that 
the requirement is unnecessary and that travel agents have an incentive 
to disclose aircraft changes to consumers provided that the carriers 
make this information readily available to the agents. Continental, 
too, opposes this requirement and agrees with the reasoning of Delta, 
United, and USAirways. In addition, Continental notes that in the NPRM 
(60 FR, supra, at 3781), the Department found that it was complying 
with existing disclosure requirements.
    American supports the oral notice requirement. The carrier finds 
inconsistency in the commenters' arguments (1) that the requirement is 
unnecessary because they already provide oral notice and (2) that the 
requirement is unduly burdensome and costly. American does suggest that 
we clarify our intention regarding when the requirement applies; it 
assumes that we mean for disclosure to be made not during every oral 
communication but only at some point before the consumer decides to 
book a change-of-gauge flight.
    We will adopt the requirement as proposed and clarify that we do 
intend for the notice to be given when the seller is giving the 
consumer schedule information--i.e., before the consumer makes a 
decision to book a particular flight. No commenter argues that 
consumers should not be told about any change of aircraft en route 
before they decide which flight to book, and we believe the public 
benefit of this

[[Page 12858]]

requirement to be axiomatic. The carriers' assertions that compliance 
will be unduly costly lack evidentiary support. Moreover, these 
assertions are substantially undercut, if not altogether belied, by 
several factors. One, the carriers themselves say that they are already 
making the required disclosure voluntarily. Two, ASTA and the other 
travel agent commenters do not claim that compliance with this 
requirement will be unduly costly for travel agents. Three, in our 
parallel rulemaking on code-sharing (Docket 49702, Disclosure of Code-
Sharing Arrangements and Long-Term Wet Leases, Notice of Proposed 
Rulemaking, 59 FR 40836 [August 10, 1994]), with the exception of 
Qantas Airways Limited, no commenter--air carrier or travel agent--has 
claimed that a similar oral notice requirement for code-share services 
will impose an undue financial or administrative burden.

Written Notice

    In the NPRM, we proposed to adopt the following written notice 
requirement:

    Sec. 258.5(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 where it will occur and what aircraft 
types are involved.

    Delta, USAirways, and Continental object to any written notice 
requirement. United does not object in principle, and American supports 
a written notice requirement. All maintain that if such a requirement 
is adopted, the language should be left to each carrier rather than 
dictated by the Department. Delta, United, and Continental also 
question the wisdom of a written notice requirement given the trend 
toward ticketless travel.
    Delta claims that a written notice requirement is redundant in view 
of the disclosures that carriers already make, and especially in its 
own case, since it issues passengers a separate boarding pass for each 
segment that involves a different aircraft. It claims that written 
disclosure is also unduly burdensome in terms of cost. In addition, 
Delta contends that the written notice requirement goes contrary to 
current trends towards reducing paperwork, especially ticketless 
travel, and that if carriers are required to issue a separate written 
notice at the airport, ticketing and check-in could be delayed. If we 
do adopt written notice requirements over its objections, Delta takes 
the position that we should not specify the language: in Delta's view, 
the above language is too long and potentially confusing to consumers.
    United agrees in principle with a requirement that written notice 
of aircraft changes en route be provided along with the ticket, but it 
objects to being required to use the language set forth above. That 
language refers generically to change-of-gauge flights that could 
involve either one-for-one or multiple changes of gauge. United does 
not operate multiple change-of-gauge service, and it strongly objects 
to being required to use language that suggests otherwise. United also 
characterizes the language as too long and too complicated to be 
effective. It proposes that each carrier be permitted to create its own 
written notice to reflect its own operations and procedures, subject to 
review by our Enforcement Office, possible enforcement action, and, 
should it prove necessary, another rulemaking at some later date. 
United also believes that a standard notice is more likely to be 
ignored than read.
    As for ticketless travel, United questions the need for and utility 
of any written notice to passengers who do not receive tickets. The 
carrier states that its ticketless passengers still receive written 
confirmation of their reservations but that its marketing research has 
determined that many passengers do not want this. In United's view, the 
Department should not require a written notice in the case of 
ticketless travel unless the passenger is receiving written 
confirmation of his or her reservation.
    USAirways strongly objects to the written notice requirement as 
ineffective, redundant, and costly and to the Department's language as 
wordy and confusing. USAirways states that many travel agents already 
give passengers written itineraries and that it does so on request. The 
carrier recognizes that itineraries, if given, would be more complete 
if they reminded passengers of aircraft changes en route. It argues, 
however, that where no itinerary is issued, carriers and agents should 
not be required to provide a separate written notice simply to remind 
passengers of changes of gauge after transportation has been purchased, 
because such a requirement is burdensome and costly. USAirways states 
that it would have to modify its computer system and add a prompt to 
have its sales agents get passengers' addresses. This in turn would 
increase the length of each call. Additional costs would be incurred 
for printing the notice and mailing it, and changes in travel 
arrangements would require additional written notice. For last minute 
travel arrangements, the cost of sending written notice by express 
service would be even higher. Continental agrees with USAirways' 
arguments.
    American supports a written notice requirement. American disagrees 
with Delta and USAirways that notice in schedules coupled with oral 
notice should suffice to inform passengers of aircraft changes en 
route, contending that few consumers actually look at carriers' 
schedules when booking transportation and also that the person making a 
reservation is often not the person traveling. In American's view, the 
cost of written notice is justified, at least when passengers receive 
tickets, to ensure that they understand the nature of their flights and 
can navigate their way through their connections at the intermediate 
airports. For the many consumers who already get written itineraries 
from carriers and travel agents, American reasons that the burden of 
providing written notice is minimal.
    American believes that carriers should have the choice of using the 
Department's language or writing their own notice, subject to the 
Department's review. The carrier addresses USAirways' concern about the 
expense of processing itineraries and mailing them to passengers who 
ordinarily would not get them by suggesting that we amend the beginning 
of the first sentence of Sec. 258.5(c) to read as follows:

    At the time of delivery in the United States of a ticket 
covering a change-of-gauge service, * * *.

    American does acknowledge that this approach would increase the 
risk of a traveler's not learning of the aircraft change until arriving 
at the airport and thus having to use a service he or she might not 
otherwise have chosen. The carrier also sees merit in United's argument 
that written notice should not be required for passengers who do not 
receive written confirmation of their reservations. It suggests that 
perhaps we should require in such cases that sellers document that they 
have given oral notice.
    We will adopt the written notice requirement with minor 
modifications to correct an inadvertent omission and to account for 
ticketless travel. We are

[[Page 12859]]

not persuaded by any of the unsubstantiated claims of undue burden and 
cost. In the many cases where consumers already receive itineraries 
along with their tickets, any increase in sellers' costs should be 
minimal, as American correctly notes. American is also correct in 
reasoning that any burden associated with written notice is outweighed 
by the benefit of the increased likelihood that consumers will 
understand the nature of their transportation and be able to change 
from one plane to another without confusion or mishap. Written notice 
should prove especially beneficial in the many cases where the person 
booking the transportation is someone other than the traveler.
    We will require all sellers of air transportation to use the 
written disclosure as proposed rather than allow carriers (or other 
sellers) to substitute their own language. This generic language has 
three elements: it discloses an aircraft change, it alerts the consumer 
to the possibility that the number of the ongoing flight might not be 
listed clearly--or at all--at the intermediate airport, and it directs 
the consumer to the seller for more information. Because we have no 
evidence that airport problems are more likely to occur with multiple 
changes of gauge than one-for-one changes of gauge, we deem it 
necessary that all three elements appear in all written notices, 
United's position to the contrary notwithstanding. This being the case, 
we cannot agree that the language is either too long or too 
complicated.
    If we were to allow sellers of air transportation to use their own 
language subject to our review, not only would the sellers availing 
themselves of this option incur the expense of drafting alternate 
language to express the same three elements, but reviewing and 
processing individual applications from the potential legions of air 
carriers, foreign air carriers, and travel agents would strain the 
Department's resources. Furthermore, allowing the disclosure to exist 
in many variations would more likely confuse consumers than enlighten 
them. Requiring all sellers to use the Department's language is thus 
the most cost-effective and straightforward means of ensuring that 
consumers receive effective written disclosure.
    We will modify this provision in two respects. First, we will 
rectify an inadvertent omission in the proposed rule by adding language 
to make clear that the written notice requirement, like the other two, 
applies to those change-of-gauge services that are to, from, or within 
the United States. Second, to account for ticketless travel, we will 
change the proposed rule to require that the written notice be provided 
(1) to ``ticketed'' passengers, at the time of sale of any ticket that 
includes a covered change-of-gauge service and (2) to ``ticketless'' 
passengers, no later than the time when they check in at the airport 
for the first flight of an itinerary that includes a covered change-of-
gauge service. This change reflects our policy on other passenger 
notices in the case of ticketless travel, which we adopted after 
issuing this NPRM. See Ticketless Travel: Passenger Notices, 62 FR 
19473 (April 22, 1997). Of course, nothing prohibits sellers of air 
transportation from providing this written notice to ``ticketless'' 
passengers at an earlier juncture, such as along with any itinerary 
they send the passenger at the time of sale. We encourage sellers to do 
whatever they can to give passengers the best possible notice as early 
as possible.

Year 2000 Problem

    In an effort to ensure that our regulations do not interfere or 
delay solutions for the Year 2000 Problem (Y2K), the Department has 
decided that, in preparing proposed and final rules that mandate 
business process changes and require modifications to computer systems 
between now and July 1, 2000, the Department will discuss those rules 
specifically with reference to Y2K requirements and determine whether 
the implementation of those rules should be delayed to a time after 
July 1, 2000.
    Since the Department does not have detailed knowledge about the Y2K 
status of the systems that will need to be changed as a result of this 
rule, we attempted to gauge the effect based on a review of statements 
from Annual Reports, 10-K and 10-Q Statements filed with the Securities 
and Exchange Commission, news reports, press releases, and other 
documents. We researched this issue with regard to four computer 
reservations systems, the nine largest airlines, one smaller airline, 
and five organizations closely associated with airline computerized 
systems and databases. While this information did not reflect detailed 
technical assessments, it allowed us to establish a broad baseline 
against which to judge the issuance of our rule.
    Our analysis has shown a widespread effort involved in the Y2K 
program for air transportation. In general, most of the companies we 
examined have stated that they expect to be Y2K-compliant in a timely 
manner. However, most also reflect caution by noting that there are no 
guarantees or assurances that all systems will be ready and that their 
operations could be adversely affected. In response to this 
possibility, many have established contingency plans that will allow 
continued operations.
    Because of the amount of progress these companies have already 
made, the Department has determined that it is in the public interest 
to issue this rule now and not delay its implementation to a time after 
July 1, 2000. The number and type of marketing practices that include 
change-of-gauge services, code-sharing arrangements, marketing 
alliances and other marketing agreements, especially among multiple 
carriers and involving international operations have grown 
substantially. These agreements are likewise expected to continue to 
grow in the future. At the same time, they have increased in complexity 
as well. For these reasons, the Department has determined that it is 
now essential to issue this disclosure rule so that prospective 
travelers have as clear and complete information as possible prior to 
buying air transportation as well as during the journey.

Regulatory Analyses and Notices

    The Department has determined that this action is not a significant 
regulatory action under Executive Order 12866 or the Department's 
Regulatory Policies and Procedures. It has not been reviewed by the 
Office of Management and Budget. This rule does not impose unfunded 
mandates or requirements that will have any effect on the quality of 
the human environment. The Department has placed a regulatory 
evaluation that examines the estimated costs and effects of the rule in 
the docket.
    The Department has evaluated the effect of this rule on small 
entities. I certify that this rule will 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. We believe 
that air carriers and travel agents already have some incentive to 
provide this information to their customers and that many have found 
low-cost means of doing so.
    The Department has analyzed this rule under the principles and 
criteria contained in Executive Order 12512 (``Federalism'') and has 
determined that the rule does not have sufficient federalism 
implications to warrant the preparation of a federalism assessment.

Paperwork Reduction Act

    This rule contains information collection requirements that are 
being submitted to OMB for approval under

[[Page 12860]]

the Paperwork Reduction Act of 1995. The Department has determined an 
estimate of the burden hours associated with this rule and is hereby 
requesting comments on its estimate.
    This rule contains information collection requirements that are 
being submitted to the Office of Management and Budget (OMB) for 
approval under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et 
seq.). Collection-of-information requirements include reporting, 
recordkeeping, notification, and other similar requirements. In the 
Notice of Proposed Rulemaking (NPRM) that preceded this rule, the 
Department stated that the proposed rule did not contain information 
collection requirements that required approval by OMB under the then-
current Paperwork Reduction Act. However, the requirements under the 
Paperwork Reduction Act of 1995 consider third party notifications as 
data collections and thus subject to the regulations. This final rule 
is therefore being submitted to the Office of Management and Budget for 
review. At the same time, the Department is hereby inviting public 
comment upon its estimate of the annual burden hours associated with 
this rule. Persons are not required to respond to a collection of 
information unless it displays a currently valid OMB control number.
    Those potentially affected by this rule include 192 U.S. air 
carriers, 205 foreign air carriers, and approximately 33,500 travel 
agents doing business in the United States, as well as the traveling 
public. The Department has estimated that 24.7 million to 74.1 million 
phone calls would be affected by this rule. The annual reporting burden 
hours for this data collection are estimated to range from 102,954 
hours to 308,861 hours for all travel agents and airline ticket agents 
and from 102,954 hours to 308,861 hours for air travelers based on 15 
seconds per phone call and an average of 2.1 phone calls per trip.
    Comments are invited on: (a) Whether this collection of information 
(third party notification) is necessary for the proper performance of 
the functions of the agency, including whether the information will 
have practical utility; (b) the accuracy of the agency's estimate of 
burden of the proposed collection of information; (c) ways to enhance 
the quality, utility, and clarity of the information to be collected; 
and (d) ways to minimize the burden of the collection of information on 
the respondents, including through the use of automated techniques or 
other forms of information technology.

List of Subjects in 14 CFR Part 258

    Air carriers, Consumer protection, Foreign air carriers, Reporting 
and recordkeeping requirements, Ticket agents.

    For the reasons set forth in the preamble, the Department amends 
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.
258.3  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 part 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.

    As used in this part:
    (a) Air transportation has the meaning ascribed to it in 49 U.S.C. 
40102(5).
    (b) Carrier means any air carrier or foreign air carrier as defined 
in 49 U.S.C. 40102(2) or 49 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. 41712 unless, in conjunction with such holding out 
or sale, carriers and ticket agents follow the requirements of this 
part.


258.5  Notice requirement.

    (a) Notice in schedules. Carriers holding out or operating change-
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 
transportation that includes a change-of-gauge service to, from, or 
within the United States, or, if no ticket is issued, no later than the 
time when the passenger checks in at the airport for the first flight 
in an itinerary that includes such a service, the selling carrier or 
ticket agent shall provide the following written notice:

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.

    Issued under authority delegated in 49 CFR 1.56a(h)(2) in 
Washington, DC on March 5, 1999.
Charles A. Hunnicutt,
Assistant Secretary for Aviation and International Affairs.
[FR Doc. 99-6137 Filed 3-10-99; 1:23 pm]
BILLING CODE 4910-62-P