[Federal Register Volume 65, Number 62 (Thursday, March 30, 2000)]
[Rules and Regulations]
[Pages 16808-16811]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-7861]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 255

[Docket No. OST-2000-6984]
RIN 2105-AC75


Third Extension of Computer Reservations Systems (CRS) 
Regulations

AGENCY: Office of the Secretary, Department of Transportation.

ACTION: Final rule.

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SUMMARY: The Department is revising its rules governing airline 
computer reservations systems (CRSs), 14 CFR part 255, to change the 
rules' expiration date for a third time. This revision changes the date 
from March 31, 2000, to March 31, 2001, to keep the rules from 
terminating on March 31, 2000. The rules will thus remain in effect 
while the Department continues its reexamination of the need for CRS 
regulations. The Department finds that the current rules should be 
maintained because they are necessary for promoting airline competition 
and helping to ensure that consumers and their travel agents can obtain 
complete and accurate information on airline services. The Department 
previously extended the rules from December 31, 1997, to March 31, 
1999, and from March 31, 1999, to March 31, 2000.

DATES: This rule is effective on March 31, 2000.

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

SUPPLEMENTARY INFORMATION: To ensure that we periodically review the 
need for our CRS rules and their effectiveness, section 255.12 of the 
rules establishes a sunset date. The original sunset date was December 
31, 1997. We have changed the rules' expiration date twice before, once 
to March 31, 1999, 62 FR 66272 (December 18, 1997), and then to March 
31, 2000, 64 FR 15127 (March 30, 1999).
    We are now changing the sunset date to March 31, 2001, because we 
have been unable to complete our reexamination of the current rules by 
March 31, 2000. Given our view that the current rules should be 
maintained pending our reexamination of the need for rules, we proposed 
to change the rules' expiration date to March 31, 2001, and gave 
interested persons an opportunity to comment on that proposal. 65 FR 
11009 (March 1, 2000).

[[Page 16809]]

We received comments from Delta Air Lines, Amadeus Global Travel 
Distribution, Worldspan, and the American Society of Travel Agents, all 
of which supported the proposal.

Background

    We adopted our CRS rules because they are necessary to protect 
airline competition and to ensure that consumers can obtain accurate 
and complete information on airline services. 65 FR at 11010-11011. 
Because almost all airlines found it essential to participate in each 
CRS, market forces did not discipline the price and quality of service 
offered airlines by the CRSs. Travel agents relied on CRSs to provide 
airline information and bookings for their customers, and almost all 
airlines received a large majority of their bookings from travel 
agencies. Travel agencies typically used only one system (or 
predominantly used one system even if they had access to two or more 
systems). Each airline therefore had to participate in an agency's 
system if it wished to have its services readily saleable by that 
agency. Each system, moreover, was controlled by airlines or airline 
affiliates, who could use them to unreasonably prejudice the 
competitive position of other airlines or to provide misleading or 
inaccurate information to travel agents and their customers. For these 
reasons, we adopted rules regulating CRS operations in the United 
States, 57 FR 43780 (September 22, 1992). 65 FR at 11009-11010.
    Our rules included a sunset date, December 31, 1997, to ensure that 
we would reexamine whether the rules remained necessary and whether 
they were effective. 57 FR at 43829-43830 (September 22, 1992). We have 
begun a reexamination of our current rules by publishing an advance 
notice of proposed rulemaking that invited interested persons to 
comment on whether we should readopt the rules and, if so, with what 
changes. 62 FR 47606 (September 10, 1997). Almost all of the parties 
responding to our advance notice of proposed rulemaking have urged us 
to maintain CRS rules, and many of them argued that various changes 
should be made to the rules to strengthen them. 65 FR at 11010.

Our Proposed Extension of the CRS Rules

    Because we have been unable to complete our reexamination of the 
rules, we have twice changed the sunset date, most recently to March 
31, 2000. 64 FR 15127 (March 30, 1999). We proposed again to change the 
expiration date for the rules to March 31, 2001, so that they would 
remain in effect pending our reexamination of our rules, since we could 
not complete that reexamination by March 31, 2000. 65 FR 11009 (March 
1, 2000). The proposed temporary extension of the current rules would 
maintain the status quo until we determine which rules, if any, should 
be adopted. As we explained, maintaining the rules in effect appeared 
to be necessary to protect airline competition and consumers against 
unreasonable practices in view of our earlier findings on the market 
power of the systems and each airline owner's potential interest in 
using its affiliated CRS to prejudice the competitive position of other 
airlines. Furthermore, allowing the current rules to expire could be 
disruptive, since the systems, airlines, and travel agencies have been 
conducting their operations in the expectation that each system will 
comply with the rules. 65 FR at 11010-11011.
    Finally, maintaining the rules in effect appeared necessary to 
comply with the United States' obligations under various treaties and 
bilateral air services agreements to assure foreign airlines a fair and 
equal opportunity to compete. 65 FR at 11011.
    As we stated, our inability to complete the rules' reexamination is 
unfortunate due to the importance of adapting our rules to current 
industry conditions. This inability has stemmed from the need to 
address other airline competition issues that appeared to be more 
urgent. In addition, recent developments in airline distribution 
practices, most notably the growing importance of the Internet, are 
requiring additional study by the staff. As we noted, moreover, our 
existing rules appear to prevent the practices that present serious 
threats to airline competition and to the ability of consumers to 
obtain unbiased and accurate information through the systems. We have 
been aware, however, that several parties are alleging that the 
compelling need for certain additional CRS regulations requires us to 
act promptly on those issues without waiting for the completion of the 
overall reexamination of the rules. 65 FR 11010.
    Because we needed to make the proposed amendment effective by March 
31, 2000, we shortened the comment period to ten days. 65 FR at 11009.

Comments

    We received comments from four parties: Delta Air Lines, Worldspan, 
Amadeus Global Distribution System (``Amadeus''), and the American 
Society of Travel Agents (``ASTA''). The commenters agree that the 
rules should be extended as we proposed. Amadeus, however, urges us to 
act on its request that we prohibit the tying of a travel agency's 
access to an airline's corporate discount fares with the agency's use 
of the system affiliated with that airline (Docket OST-99-5888). ASTA 
contends that we should act quickly on its proposal that systems be 
prohibited from selling marketing data derived from travel agent 
bookings to airlines, which would require the amendment of section 
255.10. Worldspan, on the other hand, asserts that we should reexamine 
the rules in one comprehensive proceeding rather than address selected 
issues in separate proceedings.

Final Rule

    We are changing the rules' sunset date to March 31, 2001, as we 
proposed. Delta, Amadeus, Worldspan, and ASTA support our proposal, and 
no one has objected to it. We based our proposal on the findings made 
by us in earlier CRS rulemakings and the position of almost all parties 
in the underlying rulemaking Docket OST-97-2881 that CRS rules are 
still necessary. 65 FR at 11011. In our overall reexamination of the 
rules we will, of course, consider whether recent developments, such as 
the divestiture by several airlines of their CRS ownership interests, 
indicate that there may be little need for some or all of the CRS 
rules.
    ASTA and Amadeus each urge us to act quickly on the specific rule 
proposals of interest to it. We will consider their requests as part of 
our consideration of procedures for completing the reexamination of the 
rules and for updating the rules to reflect current industry 
conditions. We also plan to announce soon procedures for moving forward 
with the overall reexamination of the rules.

Effective Date

    We have determined for good cause to make this amendment effective 
on March 31, 2000, rather than thirty days after publication as 
required by the Administrative Procedure Act, 5 U.S.C. 553(d), except 
for good cause shown. To maintain the current rules in force, we must 
make this amendment effective by March 31, 2000. Since the amendment 
preserves the status quo, it will not require the systems, airlines, 
and travel agencies to change their operating methods. As a result, 
making the amendment effective less than thirty days after publication 
will not burden anyone.

[[Page 16810]]

Regulatory Process Matters

Regulatory Assessment

    This rule is a nonsignificant regulatory action under section 3(f) 
of Executive Order 12866 and has not been reviewed by the Office of 
Management and Budget under that order. The proposal is also not 
significant under the regulatory policies and procedures of the 
Department of Transportation, 44 FR 11034 (February 26, 1979).
    In our notice of proposed rulemaking, we tentatively determined 
that maintaining the current rules should impose no significant costs 
on the CRSs. The systems' continuing compliance with the rules on 
displays and functionality should not impose a substantial burden, 
since they have already taken the steps necessary to comply with those 
requirements. Keeping the rules in effect would benefit participating 
airlines, since they would otherwise be subjected to unreasonable terms 
for participation, and benefit consumers, who might otherwise be given 
incomplete or inaccurate information on airline services. The rules 
also contain provisions that are designed to prevent abuses in the 
systems' competition with each other for travel agency subscribers. 65 
FR at 11011.
    Our last comprehensive CRS rulemaking included an economic 
analysis, and we stated our belief that that analysis remains 
applicable to our extension of the rules' expiration date. We concluded 
that no new economic analysis appeared to be necessary, but we stated 
that we would consider comments from any party on that analysis before 
we again revised the rules' sunset date. 65 FR at 11011.
    No one filed comments on the economic analysis, so we are basing 
this rule on the analysis used in our last comprehensive CRS 
rulemaking. We will prepare a new economic analysis as part of our 
review of the existing rules, if we determine that rules remain 
necessary.
    This rule does not impose unfunded mandates or requirements that 
will have any impact on the quality of the human environment.

Small Business Impact

    Congress enacted the Regulatory Flexibility Act of 1980, 5 U.S.C. 
601 et seq., 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. Our notice of proposed rulemaking set 
forth the reasons for our proposed extension of the rules' expiration 
date and the objectives and legal basis for that proposed rule. 65 FR 
at 11011.
    We also noted that keeping the current rules in force would not 
change the existing regulation of small businesses. We referred to the 
final rule in our last comprehensive CRS rulemaking, which contained an 
analysis underlying our determination that the rules would not have a 
significant economic impact on a substantial number of small entities. 
In proposing to revise the sunset date to March 31, 2001, we reasoned 
that that analysis appeared to remain valid for that proposed 
extension. We therefore adopted that analysis as our tentative 
regulatory flexibility statement but stated that we would consider any 
comments filed on that analysis in connection with the proposal. 65 FR 
at 11011.
    We tentatively concluded that maintaining our existing CRS rules 
would primarily affect two types of small entities, smaller airlines 
and travel agencies. The rules would also affect all small entities 
that purchase airline tickets, since airline fares may be somewhat 
lower than they would otherwise be, although the amount may not be 
large, if our CRS rules allow airlines to operate more efficiently than 
they otherwise would. 65 FR at 11011.
    Keeping the rules in effect would benefit smaller airlines that 
have no ownership interest in a CRS, since the rules prohibit certain 
potential system practices that could injure the smaller airlines' 
ability to operate profitably and compete successfully. The rules, for 
example, bar display bias and discriminatory booking fees. Without the 
rules, the systems' airline affiliates could use them to prejudice the 
competitive position of other airlines. 65 FR at 11011-11012.
    The rules additionally affect the operations of smaller travel 
agencies, primarily by prohibiting certain CRS practices that could 
unreasonably restrict the travel agencies' ability to use more than one 
system or to switch systems. The rules prohibit CRS contracts that have 
a term longer than five years, give travel agencies the right to use 
third-party hardware and software, and prohibit certain types of 
contract clauses, such as minimum use and parity clauses, that restrict 
an agency's ability to use multiple systems. By prohibiting display 
bias based on carrier identity, the rules also enable travel agencies 
to obtain more useful displays of airline services. 65 FR at 11012.
    We invited interested persons to address our tentative conclusions 
under the Regulatory Flexibility Act in their comments submitted in 
response to this notice of proposed rulemaking. 65 FR at 11012.
    No one filed comments on our Regulatory Flexibility Act analysis. 
We will adopt the analysis set forth in the notice of proposed 
rulemaking.
    Our proposed rule contained no direct reporting, record-keeping, or 
other compliance requirements that would affect small entities. There 
are no other federal rules that duplicate, overlap, or conflict with 
our proposed rules.
    I certify under section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.) that this regulation will not have a significant 
economic impact on a substantial number of small entities.

Paperwork Reduction Act

    This proposal contains no collection-of-information requirements 
subject to the Paperwork Reduction Act, Pub.L. No. 96-511, 44 U.S.C. 
Chapter 35.

Federalism Implications

    We stated that we had reviewed this rule in accordance with the 
principles and criteria contained in Executive Order 13132, dated 
August 4, 1999, and determined that it will not have a substantial 
direct effect 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. The rule will 
not limit the policymaking discretion of the States. Nothing in it 
would directly preempt any State law or regulation. We are adopting 
this amendment primarily under the authority granted us by 49 U.S.C. 
41712 to prevent unfair methods of competition and unfair and deceptive 
practices in the sale of air transportation. In our notice of proposed 
rulemaking, we stated our belief that the policy set forth in the 
proposed rule is consistent with the principles, criteria, and 
requirements of the Federalism Executive Order and the Department's 
governing statute. We welcomed comments on our conclusions.
    No one submitted comments on our federalism assessment. Therefore, 
we will make that assessment final. Because the rule will have no 
significant effect on State or local governments, as discussed above, 
no consultations with State and local governments on this rule were 
necessary.

[[Page 16811]]

List of Subjects in 14 CFR Part 255

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

    Accordingly, the Department of Transportation amends 14 CFR part 
255, Carrier-owned Computer Reservations Systems, as follows:

PART 255--[AMENDED]

    1. The authority citation for Part 255 continues to read as 
follows:

    Authority: 49 U.S.C. 40101, 40102, 40105, 40113, 41712.

    2. Section 255.12 is revised to read as follows:


Sec. 255.12.  Termination.

    The rules in this part terminate on March 31, 2001.

    Issued in Washington, DC on March 27, 2000, under authority 
delegated by 49 CFR 1.56a (h) 2.
A. Bradley Mims,
Deputy Assistant Secretary for Aviation and International Affairs.
[FR Doc. 00-7861 Filed 3-29-00; 8:45 am]
BILLING CODE 4910-64-P