[Federal Register Volume 64, Number 166 (Friday, August 27, 1999)]
[Rules and Regulations]
[Pages 46818-46821]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21998]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Parts 257, 258 and 399

[Docket Nos. OST-95-179, OST-95-623, and OST-95-177]
RIN 2105-AC10, 2105-AC17


Petitions Involving the Effective Dates of the Disclosure of 
Code-Sharing Arrangements and Long-Term Wet Leases Final Rule, and the 
Disclosure of Change-of-Gauge Services Final Rule.

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

ACTION: Final rule and notice of effective and compliance dates.

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SUMMARY: On March 15, 1999, we issued two new rules, the Disclosure of 
Code-Sharing Arrangements and Long-Term Wet Leases Rule, 14 CFR part 
257 (``Code-Share Rule''), and the Disclosure of Change-of-Gauge 
Services Rule, 14 CFR part 258 (``Change-of-Gauge Rule''), to enable 
consumers to make informed choices about their air transportation and 
to travel without undue confusion. Both rules were to take effect on 
July 13. On July 9, in response to petitions to delay the rules' 
effective date, we issued a Final Rule and Notice of Proposed 
Disposition (see 64 FR 38111, July 15, 1999), delaying the effective 
date for both rules until August 25, 1999, and giving interested 
parties until July 30 to comment on our proposal to delay the 
compliance date of portions of both rules further, until March 15, 
2000. We are adopting our proposal as a final rule, as clarified below, 
and amending both disclosure rules to reflect the new compliance dates.

DATES: The effective date of 14 CFR part 257, published at 64 FR 12851-
12852 (March 15, 1999), and new Sec. 257.6, published herein, is August 
25, 1999. The date on which compliance with Sec. 257.5(a), 
Sec. 257.5(b) (insofar as compliance requires reprogramming by Computer 
Reservations Systems), and Sec. 257.5(c) is mandatory is March 15, 
2000; compliance with all other sections is mandatory as of August 25, 
1999.
    The effective date of 14 CFR part 258, published at 64 FR 12860 
(March 15, 1999), and new Sec. 258.6, published herein, is August 25, 
1999. The date on which compliance with Sec. 258.5(c) is mandatory is 
March 15, 2000; compliance with all other sections is mandatory as of 
August 25, 1999.
    The removal of 14 CFR 399.88, published at 64 FR 12852 (March 15, 
1999), is effective August 25, 1999.

FOR FURTHER INFORMATION CONTACT: Betsy L. Wolf, Senior Trial Attorney, 
Office of Aviation Enforcement and Proceedings (202-366-9359), Office 
of the General Counsel, U.S. Department of Transportation, 400 Seventh 
Street, S.W., Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

Background

    On March 15, 1999, we adopted two new disclosure rules, the Code-
Share Rule and the Change-of-Gauge Rule, under 49 U.S.C. Sec. 41712, 
our authority to prohibit unfair and deceptive practices and unfair 
methods of competition. The rules will protect consumers of air 
transportation by ensuring that they are told the nature of service 
they are considering before they decide to buy it and then by giving 
them written information to help them avoid confusion and mishaps, such 
as missed flights or connections, during their transportation. Each 
rule codifies and augments existing disclosure requirements for air 
carriers 1 and also sets new disclosure requirements for 
ticket agents. Among other things, the Code-Share Rule (14 CFR Part 
257) requires air carriers involved in code-sharing arrangements or 
long-term wet leases to identify those arrangements in the written or 
electronic schedule information they provide to the public, in the 
Official Airline Guide and comparable publications, and in Computer 
Reservations Systems (``CRSs'') with an asterisk or comparable mark and 
to disclose the transporting carrier's corporate name and any other 
name under which the service is held out to the public (Sec. 257.5(a)). 
The rule also requires air carriers and ticket agents to disclose this 
information orally to prospective passengers before booking 
transportation (Sec. 257.5(b)) and then to provide this information in 
a written notice once a consumer has booked a flight involving a code-
share arrangement or a long-term wet lease (Sec. 257.5(c)). The Change-
of-Gauge rule (14 CFR part 258) has comparable requirements for service 
with one flight number that requires a change of aircraft en route 
(Sec. 258.5). For many if not most air carriers and for all ticket 
agents, the ability to comply fully with the above requirements hinges 
on the CRSs' capability both to display all of the relevant information 
and to print it as the required written notice.
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    \1\ As used in this discussion, the term ``air carriers'' means 
both U.S. carriers and foreign carriers.
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    The rules were scheduled to take effect on July 13. Beginning in 
late April, we received several petitions

[[Page 46819]]

from air carriers and trade associations asking that we delay the 
rules' effective date. Most petitioners based their requests on the 
CRSs' inability to accomplish all necessary reprogramming by July 13 
due to two factors: one, their having initially underestimated the 
magnitude of this task, and two, their needing now to devote the bulk 
of their information systems resources to anticipating and avoiding 
problems during the transition to the year 2000 (``Y2K''). Most 
petitioners asked that both rules be made effective March 15, 2000. The 
United States Tour Operators Association, Inc. (``USTOA''), which said 
that its members cannot begin to reprogram their own ``front-end 
information systems'' until after the CRSs are reprogrammed, requested 
an additional grace period for its members of six months.
    While recognizing that the information systems used by the air 
transportation industry must be prepared to continue functioning 
normally through the turn of the year, we also recognized that the need 
for effective disclosure of code-share service, long-term wet-lease 
service, and change-of-gauge service has been pressing and is likely to 
increase as air carriers' relationships and operations grow ever more 
complex. Balancing these two concerns, in a Final Rule and Notice 
issued July 9, 1999 (see 64 FR 38111 (July 15, 1999), we delayed the 
effective date of both rules until August 25; we proposed that 
compliance with those portions of the new rules that codify existing 
requirements and those portions with which air carriers and ticket 
agents can comply without awaiting CRS reprogramming be mandatory as of 
August 25, and we proposed that compliance with those portions of the 
new rules with which air carriers and ticket agents cannot comply until 
CRS reprogramming is completed be mandatory as of March 15, 2000, as 
requested. We also proposed to refrain as a matter of discretion from 
enforcing both rules in their entirety against USTOA's members until 
September 15, 2000. We gave interested parties until July 30 to comment 
on our proposed disposition.
    The sections of Part 257 for which we proposed to make compliance 
mandatory as of August 25 because carriers and ticket agents can comply 
with them without further CRS reprogramming are the following:

Sec.
257.1  Purpose.
257.2  Applicability.
257.3  Definitions.
257.4  Unfair and Deceptive Practice.
257.5  Notice requirement.

    (b) Oral notice to prospective consumers (in part): oral notice 
before booking transportation involving a code-share arrangement (1) 
of the fact that the selling carrier is not the transporting carrier 
and (2) of the transporting carrier's identity (as shown by its two-
letter designator code in CRS displays).

(d) Advertising.

    We proposed that compliance with the following sections of Part 258 
be mandatory as of August 25:

Sec.
258.1  Purpose.
258.2  Applicability.
258.3  Definitions.
258.4  Unfair and Deceptive Practice.
258.5  Notice requirement.
    (a) Notice in schedules.

    (b) Oral notice to prospective consumers.

    The sections of Part 257 for which we proposed to make compliance 
mandatory as of March 15, 2000, because carriers and ticket agents 
cannot comply with them without further CRS reprogramming are the 
following:

Section 257.5  Notice requirement.

    (a) Notice in schedules.
    (b) Oral notice to prospective consumers (in part): the 
remaining elements of this section--i.e. (1) identification of the 
transporting carrier in code-share arrangements by its corporate 
name and any other name under which the service is held out to the 
public and (2) all required disclosures for long-term wet leases.
    (c) Written notice.

    We proposed that compliance with the following section of Part 258 
be mandatory as of March 15, 2000:

Section 258.5  Notice requirement.

    (c) Written notice.

Disposition of Comments

    We received comments from the Air Transport Association of America, 
Inc. (``ATA''), Amadeus Global Travel Distribution, S.A., the Regional 
Airline Association (``RAA''), and the following air carriers: 
Aeropostal Alas de Venezuela, C. por A., Air New Zealand Limited, 
American Eagle Airlines, Inc. and Executive Airlines, Inc. d/b/a 
American Eagle, Continental Airlines, Delta Air Lines, Qantas Airways 
Limited, and US Airways, Inc. ATA, Amadeus, RAA, Continental, Delta, 
and US Airways support the Department's approach. Aeropostal asks that 
we delay the compliance date of the requirement that print 
advertisements disclose long-term wet leases (Sec. 257.5(d)) until 
March 15, 2000. Air New Zealand and Qantas ask that we similarly delay 
the compliance date of any requirement that cannot be met until 
carriers reprogram their own internal reservations systems. American 
Eagle and Executive state that they will not need the waiver they 
requested earlier and were granted in the notice (see 64 FR 38111 at 
38112 (July 15, 1999)) if the March 15, 2000, compliance date is 
adopted as proposed. Finally, US Airways requests clarification of the 
disclosure requirement for print advertisements (Sec. 257.5(d)).
    Aeropostal, the flag carrier of Venezuela, states that it is only 
permitted to provide transportation between Venezuela and the United 
States by means of a wet lease arrangement or a code-sharing 
arrangement with an authorized carrier from another country. All of its 
U.S.-Venezuela service is therefore subject to the Code-Share Rule. If 
the rule's advertising requirement takes effect before March 15, 2000, 
Aeropostal maintains, the discrepancy between the detailed disclosure 
in its print advertisements and the more limited information available 
to travel agents through their CRSs will cause confusion for consumers 
who call travel agents and will result in lost business. Aeropostal 
seeks a delay in the advertising requirement's compliance date in order 
that consumers and travel agents will be working with the same 
information.
    We will deny Aeropostal's request. The information its 
advertisements will provide on the nature of its services and the 
identity of the transporting carrier is critical to consumers' ability 
both to choose intelligently among transportation options and to avoid 
confusion during their journeys. As Sec. 257.4 of the Code-Share rule 
states, holding out or selling code-share or long-term wet-lease 
services without making the required disclosures is an unfair or 
deceptive practice or an unfair method of competition in violation of 
49 U.S.C. 41712. The public interest thus requires that we not delay 
the effective date of any provision that does not entail CRS 
reprogramming. Furthermore, we do not share Aeropostal's concern that 
travel agents will not be able to field consumers' questions about 
Aeropostal's services. As experienced professionals, travel agents are 
familiar with industry practices and can be expected to know enough 
about wet leases and how to find details on particular wet-lease 
services to explain them to consumers without having the information on 
their CRS screens. Code-share services are already listed in CRSs with 
the transporting carrier identified by its designator code: all that 
the Code-Share Rule adds to existing requirements is to specify that 
carriers must disclose both the transporting carrier's corporate

[[Page 46820]]

name and any other name under which the service is held out to the 
public.
    Air New Zealand and Qantas raise an issue that we did not consider 
when we issued our July 9 proposal. The Code-Share and Change-of-Gauge 
Rules apply to air carriers not only in their capacity as providers of 
air transportation and sellers of their own services but also in their 
capacity as sellers of the services of other air carriers. In the 
latter capacity, they are serving the function of a ticket agent. Any 
carrier that uses a CRS governed by 14 CFR part 255 as its internal CRS 
has the same information available to it as CRSs' travel agent 
subscribers have and is thus in a position to comply now with those 
parts of the new rules' oral disclosure requirements that do not 
require CRS reprogramming. In particular, such a carrier has the 
capability of informing a passenger before booking transportation that 
another carrier's service is a code-share service and naming the 
transporting carrier. It likewise has the capability of informing a 
passenger before booking transportation that another carrier's service 
entails a change of aircraft en route. Air New Zealand and Qantas, 
however, are not such carriers. Each of them has an internal 
reservations system that is not a CRS governed by 14 CFR part 255, and 
the only code-share or change-of-gauge services that these systems 
currently display as such are those of Air New Zealand and Qantas 
themselves, respectively. In order to comply with the new rules' oral 
and written notice requirements, both carriers will need to reprogram 
their internal reservations systems, which they will not be able to do 
by August 25. They therefore request that the compliance date of 
Sec. 257.5(b) and Sec. 258.5(b) be delayed for carriers situated as 
they are until March 15, 2000.
    We will accommodate Air New Zealand, Qantas, and any similarly 
situated carrier in the same way that we are accommodating USTOA: 
rather than complicate matters by codifying different compliance dates 
for different classes of sellers of air transportation, we will simply 
refrain as a matter of discretion from enforcing Sec. 257.5(b) and 
Sec. 258.5(b) against carriers whose internal reservations systems do 
not display the code-share and change-of-gauge services of other 
carriers for their sales of such services prior to March 15, 2000. This 
approach is fair to the carriers and should not affect consumers to any 
significant degree. Air New Zealand estimates that only approximately 
0.0135 percent of the bookings on its internal reservations system are 
made in the U.S. for code-share flights between third-party carriers. 
The carrier estimates that the level of its third-party carrier change-
of-gauge bookings, more difficult to quantify, is even lower.
    Qantas raises another issue: it seeks assurance that our decision 
to delay the compliance date of Sec. 257.5(a), the requirement 
concerning notice in schedules of code-share and long-term wet-lease 
arrangements, to March 15, 2000, applies to all information whose 
inclusion depends on reprogramming carriers' internal reservations 
systems. The carrier also asks us to delay until March the compliance 
date of Sec. 258.5(a), the parallel requirement for change-of-gauge 
service, which we tentatively decided should be August 25. Qantas's 
request reflects a misunderstanding of the rules. As used in 
Sec. 257.5(a) and Sec. 258.5(a), the term ``computer reservations 
system'' means a CRS governed by 14 CFR part 255; it does not mean 
carriers' internal reservations systems. Carriers offering change-of-
gauge service are already required to indicate the change of aircraft 
in their CRS listings, so no delay in the compliance date of 
Sec. 258.5(a) is warranted. We are delaying the compliance date of 
Sec. 257.5(a)--in its entirety--because it requires carriers to list 
new information in CRSs and because the CRSs cannot display this 
information until they are reprogrammed.
    US Airways requests clarification of the Code-Share Rule's 
advertising requirement (Sec. 257.5(d)). With code-sharing 
relationships that involve 9 ``US Airways Express'' carriers, some 
2,500 daily US Airways Express departures, and 170 airports, US Airways 
seeks a means of implementing this requirement that presents the 
relevant information without confusing its customers. The carrier 
states that it frequently lists services for multiple city-pairs in one 
advertisement as a cost-effective, competitive means of informing the 
public of low fares. While such an advertisement serves primarily to 
promote US Airways' own jet service, in some cases, the advertised fare 
in a city-pair may be available in addition on another routing operated 
partly or entirely by a US Airways Express carrier, and some travelers 
may prefer this latter service. Under these circumstances, US Airways 
plans to use the following language in its advertisements in 
reasonably-sized print (i.e., not in fine-print fare conditions):

    These fares are available on US Airways. Depending upon your 
travel needs, alternative routings may be available at the same 
fares, with all or part of the service on regional aircraft operated 
by US Airways Express Carriers Allegheny, Air Midwest, CCAIR, 
Chautauqua, CommutAir, Mesa, Piedmont, PSA or Trans States Airlines. 
Call your travel consultant for details.

    US Airways maintains that in the context of the new rules' other 
requirements, the above language will give consumers ``complete, 
concise, readable, and accurate information about their air 
transportation options.''
    In the circumstances outlined by US Airways, the language it 
proposes will satisfy the Code-Share Rule's requirements for print 
advertisements. The treatment of Sec. 257.5(d) in the rule's preamble 
(see 64 FR 12838 at 12848 (March 15, 1999)) might literally be 
interpreted as precluding US Airways' approach and requiring instead 
that the carrier at least use symbols for each individual city-pair to 
identify all possible transporting carriers and combinations of 
carriers. We believe, however, that in these particular circumstances, 
such an advertisement would be needlessly complex and would cause 
consumers undue confusion. Therefore, for an advertisement in which the 
advertising carrier offers service in its own right in every city-pair 
listed as well as code-share service in one or more of these city-
pairs, the carrier may comply with Sec. 257.5(d) by including the 
language proposed by US Airways (with the appropriate carriers' names, 
of course), or equivalent language,2 in reasonably-sized 
print. For an advertisement in which the advertising carrier does not 
offer service in its own right in every city-pair listed, however, the 
rule requires that the transporting carrier(s) be specified for each 
city-pair.
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    \2\ Carriers may ask our Office of Aviation Enforcement and 
Proceedings to review proposed advertisements in order to make 
certain that any equivalent language complies with the advertising 
requirement in both letter and spirit.
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    In closing, we once again encourage the CRSs and the carriers to 
complete their reprogramming as quickly as possible, and we encourage 
any affected parties that can comply with the Code-Share Rule and the 
Change-of-Gauge Rule in their entirety before they become effective in 
their entirety to do so.

Regulatory Analyses and Notices

    The Department has determined that this action is not an 
economically significant regulatory action under Executive Order 12866 
or the Department's Regulatory Policies and Procedures, and it has not 
been reviewed by the Office of Management and Budget. This rule is 
significant under the Department's Regulatory Policies and Procedures 
because of congressional and public interest. The

[[Page 46821]]

rule does not impose unfunded mandates or requirements that will have 
any effect on the quality of the human environment. A summary of the 
regulatory analyses of the rules whose effective date is being extended 
here was published at 64 FR 12850-12851 and 12859, March 15, 1999. Also 
published there were discussions of the rules' effects on small 
businesses and their Federalism and Paperwork Reduction Act 
implications. Apart from the Y2K implications recently brought to light 
and addressed above and in the July 9 proposal, the determinations made 
previously are not significantly affected by the limited extensions of 
the effective date made here.

List of Subjects in 14 CFR Parts 257 and 258

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

    For the reasons set forth in the preamble, the Department amends 
Title 14, Chapter II, Subchapter A, Parts 257 and 258 as follows:

PART 257--DISCLOSURE OF CODE-SHARING ARRANGEMENTS AND LONG-TERM WET 
LEASES

    1. The authority citation for Part 257 continues to read as 
follows:

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

    2. Section 257.6 is added to read as follows:


Sec. 257.6  Effective and compliance dates.

    (a) This Part is effective as of August 25, 1999.
    (b) Compliance with the following sections is mandatory as of 
August 25, 1999:
    (1) Sec. 257.1, Sec. 257.2, Sec. 257.3, Sec. 257.4, Sec. 257.5(d), 
and Sec. 257.6.
    (2) Sec. 257.5(b) to the extent that it requires sellers of air 
transportation to give consumers oral notice before booking 
transportation involving a code-share arrangement
    (i) Of the fact that the selling carrier is not the transporting 
carrier and
    (ii) Of the transporting carrier's identity (as shown by its two-
letter designator code in CRS displays).
    (c) Compliance with the following sections is mandatory as of March 
15, 2000:
    (1) Sec. 257.5(a) and Sec. 257.5(c) in their entirety.
    (2) Sec. 257.5(b) insofar as it requires sellers of air 
transportation to give consumers
    (i) Oral notice before booking transportation involving a code-
share arrangement of the transporting carrier's corporate name and any 
other name under which the service is held out to the public and
    (ii) The same disclosures for long-term wet leases as for code-
sharing arrangements.

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

    3. The authority citation for Part 258 continues to read:

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

    4. Section 258.6 is added to read as follows:


Sec. 258.6  Effective and compliance dates.

    (a) This Part is effective as of August 25, 1999.
    (b) Compliance with the following sections is mandatory as of 
August 25, 1999: Sec. 258.1, Sec. 258.2, Sec. 258.3, Sec. 258.4, 
Sec. 258.5(a), Sec. 258.5(b), and Sec. 258.6.
    (c) Compliance with Sec. 258.5(c) is mandatory as of March 15, 
2000.

    Issued in Washington, DC on August 18, 1999, under authority 
delegated by 49 CFR 1.56a(h)2.
A. Bradley Mims,
Acting Assistant Secretary for Aviation and International Affairs.
[FR Doc. 99-21998 Filed 8-25-99; 8:45 am]
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