[Federal Register Volume 67, Number 157 (Wednesday, August 14, 2002)]
[Notices]
[Pages 53035-53036]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-20627]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary


Notice on Honoring Tickets of Insolvent Airlines Pursuant to 
Section 145 of the Aviation and Transportation Security Act

August 8, 2002.
AGENCY: Office of the Secretary, DOT.
SUMMARY: The Department is publishing the following notice regarding 
the obligation of carriers to honor the tickets of insolvent airlines 
pursuant to the requirements of section 145 of the Aviation and 
Transportation Security Act.

FOR FURTHER INFORMATION CONTACT: Dayton Lehman, Jr., Deputy Assistant 
General Counsel, Office of Aviation Enforcement and Proceedings (C-70), 
400 7th Street, SW.,Washington, DC 20590, (202) 366-9349.
    The purpose of this notice is to clarify the obligation of airlines 
under section 145 of the Aviation and Transportation Security Act 
(``Act'') to provide transportation to passengers of airlines that have 
ceased operations due to insolvency or bankruptcy. (Pub. L. 107-71, 115 
Stat. 645 (November 19, 2001).) This notice is needed because of 
numerous consumer complaints received by the Department regarding the 
treatment of passengers holding Vanguard Airline tickets by other 
airlines in the wake of Vanguard's July 30, 2002, cessation of 
operations.
    In the wake of the September 11, 2001, terrorist attacks on the 
United States, Congress passed the Aviation and Transportation Security 
Act, which was signed into law on November 19, 2001. At least in part 
due to concerns that airlines might become insolvent, with resulting 
harm to consumers holding tickets on such airlines, Congress included 
in the law a provision to protect such consumers. The provision, 
section 145, requires airlines that operate on the same route as an 
insolvent carrier that has ceased operations to transport, ``to the 
extent practicable,'' the ticketed passengers of the insolvent carrier. 
Specifically, section 145, which applies to interruptions in air 
service that occur within 18 months of the enactment of the Act, states 
in pertinent part:


[[Page 53036]]


    (a) * * * Each air carrier that provides scheduled air 
transportation on a route shall provide, to the extent practicable, 
air transportation to passengers ticketed for air transportation on 
that route by any other air carrier that suspends, interrupts, or 
discontinues air passenger service on the route by reason of 
insolvency or bankruptcy of the other air carrier.
    (b) * * * An air carrier is not required to provide air 
transportation under subsection (a) to a passenger unless that 
passenger makes alternative arrangements with the air carrier for 
such transportation within 60 days after the date on which that 
passenger's air transportation was suspended, interrupted, or 
discontinued (without regard to the originally scheduled travel date 
on the ticket).

    After the recent cessation of operations of Vanguard Airlines, 
there has been considerable confusion, on the part of airlines and the 
traveling public, over airlines' responsibilities under section 145, 
particularly with regard to the meaning of the phrase ``to the extent 
practicable'' as it relates to the carriers'' duties to transport 
persons holding Vanguard tickets. Carriers have implemented varying 
policies regarding the treatment afforded to persons holding Vanguard 
tickets. Some carriers are providing those passengers transportation at 
no additional cost, either on a confirmed or stand-by basis. Others 
permit passengers to fly stand-by but assess up to a $100 
``administrative fee'' each way, along with offering to drop advance 
purchase requirements for restricted positive-space fares, and still 
others offer restricted positive-space fares and do not permit stand-by 
travel at all. In some of the instances, carriers have announced that 
their accommodations for Vanguard passengers will be available for only 
a short period of time.
    It is the Department's position that section 145 requires, at a 
minimum, that passengers holding valid confirmed tickets, whether paper 
or electronic, of the insolvent or bankrupt carrier must be transported 
by other carriers who operate on the route for which the passenger is 
ticketed on a space-available basis on the date of travel shown on the 
ticket or other documentation demonstrating e-ticketing, without 
significant additional charges. We recognize that there is a cost to 
airlines of transporting such passengers and we do not believe that in 
enacting section 145 Congress intended to prohibit carriers from 
recovering from accommodated passengers minimal amounts associated with 
the actual cost of providing such transportation, such as direct cost 
of rewriting a passenger's ticket, onboard meal costs, and additional 
fuel costs for transporting an additional passenger. However, in no 
case do we foresee those costs exceeding $25 each way.
    We also believe that the 60-day provision in the statute is clear. 
Consumers holding Vanguard tickets have until 60 days after the carrier 
suspended operations, or until September 28, 2002, to attempt to make 
alternative arrangements with another carrier.
    It should be noted that passengers who purchased their Vanguard 
tickets using a credit card are entitled under the Fair Credit Billing 
Act to a credit refund from their credit card issuer, under specific 
circumstances, to the extent they do not receive the services for which 
they paid. If a passenger elects to accept alternate transportation 
under section 145, this choice is likely to affect his or her right to 
a refund under the Fair Credit Billing Act. The public may obtain 
information on obtaining refunds for Vanguard tickets on the 
Department's website at http://www.dot.gov/airconsumer/vanguard.htm.
    Questions regarding this notice may be addressed to the Office of 
Aviation Enforcement and Proceedings (C-70), 400 7th St., SW., 
Washington, DC 20590.

    Note: An electronic version of this document is available on the 
World Wide Web at http://dms.dot.gov/reports.


    Dated: August 8, 2002.
Read C. Van de Water,
Assistant Secretary for Aviation and International Affairs.
[FR Doc. 02-20627 Filed 8-13-02; 8:45 am]
BILLING CODE 4910-62-P