[Federal Register Volume 67, Number 223 (Tuesday, November 19, 2002)]
[Notices]
[Pages 69805-69806]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29442]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary


Honoring Tickets of National Airlines Pursuant to the 
Requirements of Section 145 of the Aviation and Transportation Security 
Act

    The Department issued a notice on August 8, 2002, providing 
guidance for airlines and the traveling public regarding the obligation 
of airlines under section 145 of the Aviation and Transportation 
Security Act (``Act'') to transport passengers of airlines that have 
ceased operations due to insolvency or bankruptcy. (Pub. L. 107-71, 115 
Stat. 645 (November 19, 2001)) That notice, which was issued after 
Vanguard Airlines' July 2002 cessation of service, was intended to 
provide immediate guidance in response to numerous complaints from 
ticketed passengers and inquiries from airlines. On November 6, 2002, 
National Airlines ceased operations. The purpose of this notice is to 
remind carriers that the provisions of section 145 also apply to 
National Airlines' cessation of service.
    As guidance to the industry, the Department's August 8 notice 
mentioned several factors that we would look to in determining whether 
airlines were complying with section 145.\1\ Section 145 requires, in 
essence, that airlines operating on the same route as an insolvent 
carrier that has ceased operations shall transport the ticketed 
passengers of the insolvent carrier ``to the extent practicable.'' The 
Department stated, among other things, our preliminary view that, at a 
minimum, section 145 requires that passengers holding valid confirmed 
tickets, whether paper or electronic, on an insolvent or bankrupt 
carrier be transported by other carriers who operate on the route for 
which the passenger is ticketed on a space-available basis, without 
significant additional charges. We further pointed out that, under 
section 145, passengers whose transportation has been interrupted have 
60 days after the date of the service interruption to make alternative 
arrangements with an airline for that transportation. We made clear in 
our guidance, however, that we did not believe that, in enacting 
section 145, Congress intended to prohibit carriers from recovering 
from accommodated passengers the amounts associated with the actual 
cost of providing such transportation. We wish to reiterate that advice 
with respect to the current situation involving National Airlines' 
cessation of service.
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    \1\ Failure by an airline to comply with section 145 may 
constitute an unfair and deceptive practice in violation of 49 
U.S.C. 41712.
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    After the issuance of our August 8 notice, several carriers 
informally sought additional clarification, specifically regarding 
recovery of the costs of accommodating passengers under section 145. In 
our August 8 notice, we stated that we did not foresee that such costs 
would exceed $25.00.\2\ We wish to make clear that the $25.00 amount 
stated above was simply an estimate of the magnitude of the additional 
direct costs carriers might incur in transporting affected passengers 
on a standby basis.
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    \2\ We pointed out that examples of such costs include the cost 
of rewriting tickets, providing additional onboard meals, and the 
incremental fuel cost attributable to transporting an additional 
passenger.
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    Several carriers have informally raised concerns that the $25.00 
cost estimate was too low. In each such instance, Department staff has 
advised those carriers that, to the extent they experienced and could 
document reasonable direct costs in excess of the $25.00 estimated 
amount, they should be entitled to recover such costs under the 
statute. Department staff has specifically requested each airline that 
had expressed concern to provide evidence demonstrating that its 
reasonable direct costs exceeded the estimated $25.00 amount. No 
airline has provided any documentation in

[[Page 69806]]

response to that request.\3\ We thus have no information demonstrating 
that the estimated amount of $25.00 would be inadequate to cover 
additional direct costs to transport persons holding Vanguard Airline 
tickets on a space available basis.
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    \3\ A few airlines also expressed separate concerns about 
difficulties in verifying confirmed reservations of passengers 
holding electronic tickets, in which case a hard-copy ticket would 
not be available. Department staff suggested it would be appropriate 
to require such passengers to provide proof of payment and 
confirmation, such as receipts and printed itineraries.
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    With respect to National Airlines, the Department has not received 
any written comments or other evidence from any airline demonstrating 
that $25.00 would be insufficient to cover additional direct costs to 
transport persons holding tickets on a space-available basis. However, 
we have received reports that in some instances airlines have charged 
far in excess of $25.00 for transportation. Because we wish to ensure 
that airlines have had the opportunity to demonstrate that costs in 
excess of $25.00 each way are reasonable, the Department has not yet 
taken any action with respect to any airline in connection with section 
145 involving either Vanguard Airlines' or National Airlines' 
cessations of operations. To obtain further information on this issue 
from the traveling public and the airlines, we request that any airline 
or person who believes that the Department's estimate of $25.00 is 
either insufficient, or is more than necessary to cover the direct 
costs of accommodating ticketed passengers on a space available basis, 
contact the Department's Office of Aviation Enforcement and 
Proceedings, at the address below, within seven days of the date of 
this notice and provide written comments and evidence of costs in 
support of their position.
    Questions regarding this notice may be addressed in writing to 
Dayton Lehman, Deputy Assistant General Counsel, Office of Aviation 
Enforcement and Proceedings, 400 7th St., SW., Washington, DC 20590, or 
he may be contacted by telephone at (202) 366-9342.
    An electronic version of this document is available on the World 
Wide Web at http://dms.dot.gov/reports.

    Dated: November 14, 2002.
Read C. Van de Water,
Assistant Secretary for Aviation and International Affairs.
[FR Doc. 02-29442 Filed 11-15-02; 11:31 am]
BILLING CODE 4910-62-P