[Federal Register Volume 68, Number 61 (Monday, March 31, 2003)]
[Rules and Regulations]
[Pages 15350-15353]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-7636]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 255

[Docket No. OST-2003-14484]
RIN 2105-AD24


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 amending its rules governing airline 
computer reservations systems (CRSs), by changing the rules' expiration 
date from March 31, 2003, to January 31, 2004. If the expiration date 
were not changed, the rules would terminate on March 31, 2003. This 
extension of the current rules will keep them in effect while we 
complete our reexamination of the need for CRS regulations. Some or all 
of the rules may no longer be necessary, but the Department will 
maintain the current rules until January because they may be 
beneficial. The Department may determine in its reexamination that the 
need for most or all of the rules has ended. The Department has 
previously extended the rules from their original December 31, 1997, 
expiration date, most recently to March 31, 2003.

DATES: This rule is effective on March 31, 2003.

FOR FURTHER INFORMATION CONTACT: Thomas Ray, Office of the General

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Counsel, 400 Seventh St. SW., Washington, DC 20590, (202) 366-4731.

SUPPLEMENTARY INFORMATION:

Electronic Access

    You can view and download this document by going to the webpage of 
the Department's Docket Management System (http://dms.dot.gov/). On 
that page, click on ``search.'' On the next page, type in the last five 
digits of the docket number shown on the first page of this document, 
14484. Then click on ``search.'' An electronic copy of this document 
also may be downloaded by using a computer, modem, and suitable 
communications software from the Government Printing Office's 
Electronic Bulletin Board Service at (202) 512-1661. Internet users may 
reach the Office of the Federal Register's home page at: http://www.nara.gov/fedreg and the Government Printing Office's database at: 
http://www.access.gpo.gov/nara/index.html.

Discussion

    We adopted rules governing CRS operations, 14 CFR part 255, because 
almost all airlines operating in the United States relied on the CRSs 
in marketing their airline services and each system was then controlled 
by one or more airlines or airline affiliates. 57 FR 43780, September 
22, 1992. We found that rules were necessary to ensure that each of the 
airlines and airline affiliates that controlled a system did not use 
the system to unfairly prejudice the competitive position of other 
airlines and to ensure that travel agents and their customers could 
obtain accurate and unbiased information from the systems. Our rules 
contained a sunset date to ensure that we would reexamine whether the 
rules remained necessary and, if so, whether they were effective.
    As a result of the sunset date provision, we began a proceeding to 
reexamine whether the rules were necessary and effective by issuing an 
advance notice of proposed rulemaking, 62 FR 47606, September 10, 1997, 
followed later by a supplemental advance notice of proposed rulemaking 
that asked the parties to update their comments. 65 FR 45551, July 24, 
2000.
    We recently issued a notice of proposed rulemaking in which we 
tentatively found that elements of the rules may remain necessary, at 
least in the short term, and that some changes to the rules may be 
justified. 67 FR 69366, November 15, 2002. We also proposed to 
eliminate some rules, primarily the rules barring systems from charging 
airlines discriminatory booking fees and requiring airlines with a 
significant ownership in one system to participate in other systems at 
the same level if the terms for doing so are commercially reasonable. 
We invited comment on whether the public interest would be served by 
full and immediate sunset of the rules. Our notice includes a detailed 
discussion of the rulemaking issues and our tentative findings on the 
relevant features of the airline distribution and CRS businesses. 
Comments and reply comments on our tentative findings on the need for 
CRS regulation and our proposals are due March 16 and May 15, 2003, 
respectively. 67 FR 72869, December 9, 2002.
    To maintain the existing rules in effect while we complete our 
reexamination of those rules, we proposed to extend the sunset date to 
January 31, 2004. 68 FR 7325, February 13, 2003. We noted that the 
March 31, 2003, sunset date will come only two weeks after the close of 
the comment period on the notice of proposed rulemaking for our overall 
reexamination of the rules and that the reply comment period will close 
seven weeks later. We clearly cannot complete our rulemaking by the 
March 31 sunset date. We tentatively found that allowing the rules to 
sunset during our reexamination of them could be contrary to the public 
interest. We are aware that our final decision in our overall 
reexamination of the rules may be that the rules do not actually serve 
the public interest in the short term or in the long term.
    Eleven persons commented on the proposal. U.S. Airways, Sabre, 
Galileo International, Amadeus Global Travel Distribution, and the 
American Society of Travel Agents (``ASTA'') supported the proposal, 
Worldspan, Northwest, United, and LanChile opposed any extension, and 
American and Orbitz stated their willingness to accept only a shorter 
extension.
    We have determined to change the rules' expiration date to January 
31, 2004, as we proposed. This will allow the rules to remain in effect 
while we complete our overall reexamination of the existing CRS rules. 
We recognize the need to complete the major rulemaking as soon as 
possible so that the rules reflect current industry conditions and 
economic realities. We intend to make a final decision promptly in that 
proceeding.

Background: Rulemaking History

    Our notice of proposed rulemaking set forth our tentative findings 
and analysis on the nature of the airline distribution and CRS 
businesses and on whether the CRS rules should be kept or changed. We 
recognized the changes occurring in the airline distribution system, 
especially the Internet's erosion of the airlines' dependence on the 
systems, and the potential that these changes may eliminate the need 
for many or all of our rules. 67 FR 69376, 63977. Nonetheless, we 
tentatively concluded that at present some rules should be maintained 
to protect airline competition and consumers. We have requested comment 
on whether the non-discriminatory booking fee and mandatory 
participation rules noted above could be eliminated, since airlines may 
have more bargaining leverage against the systems than we have found in 
past rulemakings. 67 FR 69368. We will also consider comments 
contending that additional rules are unnecessary or counterproductive. 
We will take these comments into account in considering whether to 
retain some or any of the rules, or whether full and complete sunset 
may be in the public interest.
    We initially established a sixty-day comment period and a thirty-
day reply comment period. As a result of a petition submitted by 
nineteen commenters, we extended the comment period by sixty days and 
the reply comment period by thirty days. 67 FR 72869, December 9, 2002.
    While we have been conducting our reexamination of the rules, we 
have changed the sunset date five times to maintain the rules pending 
our completion of that reexamination. Our most recent extension was to 
March 31, 2003. 62 FR 66272, December 18, 1997; 64 FR 15127, March 30, 
1999; 65 FR 16808 March 30, 2000; 66 FR 17352, March 30, 2001; and 67 
FR 14846, March 28, 2002.

Our Proposed Sunset Date Extension

    We again proposed to extend the expiration date for our CRS rules, 
to January 31, 2004, in order to maintain the rules while we complete 
our reexamination of the need for the rules and their effectiveness. 68 
FR 7325, February 13, 2003. We explained that we could not issue final 
rules by the current sunset date, March 31, 2003. Changing the sunset 
date would enable us to preserve the status quo until we determine 
which rules, if any, should be retained. We tentatively determined that 
doing so would be in the public interest. In that regard we referenced 
our notice of proposed rulemaking for the overall reexamination of the 
rules, where we tentatively concluded that elements of the rules may be 
necessary, at least in the near term, to protect airline competition 
and consumers against potentially unreasonable and unfair CRS 
practices. We further cited our

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obligation under 49 U.S.C. 40105(b), formerly section 1102(a) of the 
Federal Aviation Act, then codified as 49 U.S.C. 1502(a), to act 
consistently with the United States' obligations under bilateral air 
services agreements, and concluded that that obligation might justify a 
short-term continuation of the rules. 67 FR 69384. We stated our 
awareness of the importance of adopting final rules that reflect 
current conditions in the CRS and airline distribution businesses.

Comments

    Three of the systems--Amadeus, Galileo, and Sabre--supported our 
proposal to change the sunset date to January 31, 2004, as did ASTA, 
the largest travel agency trade association, and U.S. Airways. American 
and Orbitz, the on-line travel agency owned by American, Continental, 
Delta, Northwest, and United, supported a shorter extension of the 
rules. American proposed August 31 as the new sunset date, while Orbitz 
proposed September 30. The other commenters--Delta, Northwest, United, 
and LanChile--opposed any extension of the rules. United particularly 
opposed any continuation of the non-discriminatory booking fee and 
mandatory participation rules.
    Sabre filed a reply challenging several of the factual assertions 
made by several airline commenters concerning the systems' alleged 
market power and unreasonable practices.

Final Rule

    We have determined to adopt our proposal to change the sunset date 
to January 31, 2004. We obviously cannot complete our overall 
reexamination of the rules by March 31, and we continue to believe that 
we may well need an additional ten months to complete that proceeding. 
The comment period for reply comments will end on May 15, and we must 
then analyze the comments, decide what final rules should be adopted, 
and draft a final rule. The final rule must be reviewed by the Office 
of Management and Budget (``OMB''). This entire process may require ten 
months for completion, especially given the complex and controversial 
issues presented in that rulemaking.
    We will, of course, try to issue a final rule as soon as possible 
rather than wait until the new January 31 sunset date. Adopting a 
shorter extension at this time might well require us to conduct an 
additional rulemaking to change the date again, which would be an 
inefficient use of Government resources and interfere with our intent 
to focus on completing the overall reexamination of the rules as 
promptly as possible. A shorter extension might also keep us from 
thoroughly and carefully examining the issues before making our final 
decision on whether CRS rules remain necessary and, if so, how they 
should be changed.
    We recognize that the rules may have become unnecessary. As we 
continue our reexamination, we will maintain the rules based on a 
tentative finding that some of the rules may serve the public interest. 
It may remain true, for example, that the systems have market power 
that could be used to prejudice airline competition. American thus 
states, ``CRS market and pricing power remain intact * * *.'' American 
Comments at 1. If so, ending the rules would not necessarily enable 
airlines to obtain better terms for participation. United, however, has 
pointed out that we proposed to eliminate the non-discriminatory 
booking fee and mandatory participation rules because we tentatively 
found that they may prevent airlines from obtaining lower prices. We 
cannot adopt United's suggestion that any extension of the sunset date 
exclude those two rules, since that would amount to a change in the 
existing rules that we do not wish to adopt until we have had the 
opportunity to consider the comments on the issue. Nor can we agree 
now, before the end of the comment period for our proposals on changing 
the rules, with the assertions by several other commenters that the 
rules preserve and enhance the systems' market power. See, e.g., Orbitz 
Comments. We have found in past rulemakings that rules were needed to 
curb the systems' market power, most recently in the parity clause 
rulemaking completed five years ago. 62 FR 59784, November 5, 1997. We 
tentatively concluded in our recent notice of proposed rulemaking that 
we see some evidence that the systems may still have market power. At 
issue is whether some or all of the rules affect the exercise of such 
market power, to the extent it exists, and whether they do so in a 
manner that serves the public interest.

Effective Date

    We have determined for good cause to make this amendment effective 
on March 31, 2003, rather than thirty days after publication as 
required by the Administrative Procedure Act except for good cause 
shown. 5 U.S.C. 553(d). To keep the current rules in force, we must 
make this amendment effective by March 31, 2003. Since the amendment 
preserves the status quo, it will not require the systems, airlines, or 
travel agencies to change their operating methods. Making this 
amendment effective on less than thirty days notice accordingly will 
not impose an undue burden on anyone.

Regulatory Process Matters

Regulatory Assessment

    This rulemaking is a significant regulatory action under section 
3(f) of Executive Order 12866 and has been reviewed by the Office of 
Management and Budget under that order. The proposal is also 
significant under the regulatory policies and procedures of the 
Department of Transportation, 44 FR 11034.
    Our notice of proposed rulemaking in this proceeding cited the 
tentative findings of the preliminary regulatory assessment in our 
notice of proposed rulemaking for the overall reexamination of the 
rules that the existing rules do not appear to impose a significant 
burden on the systems or their users. 68 FR 7326, citing 67 FR 69418-
69423. We stated our belief that that regulatory assessment should be 
applicable to our proposal to extend the rules' sunset date and that no 
new regulatory impact statement appears to be necessary. We invited 
interested persons to comment on those findings. No commenter 
specifically commented on our regulatory assessment, which we will make 
final.
    This rule will not impose unfunded mandates or requirements that 
would 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. airlines and smaller 
travel agencies.
    This rule sets forth the reasons for our extension of the rules' 
expiration date and the objectives and legal basis for that rule.
    Our notice of proposed rulemaking on this extension proposal cited 
the tentative regulatory flexibility analysis on the rules' impact that 
was included in our notice of proposed rulemaking for the reexamination 
of the rules. We stated that that analysis appeared to be valid for our 
proposed extension of the rules' termination date. 68 FR 7326-7327. We 
stated that we would consider

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comments on that analysis. No one filed such comments, and we will 
adopt that analysis as our final regulatory flexibility statement for 
this proceeding.
    Our rule contains 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. et seq.) that this regulation will not have a significant 
economic impact on a substantial number of small entities.

Paperwork Reduction Act

    This rule contains no collection-of-information requirements 
subject to the Paperwork Reduction Act, Public Law. 96-511, 44 U.S.C. 
chapter 35.

Federalism Assessment

    We stated that we had reviewed our proposed rule in accordance with 
the principles and criteria contained in Executive Order 13132, dated 
August 4, 1999, and determined that it would 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. This rule will 
not limit the policymaking discretion of the States. Nothing in this 
rule will 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. Our notice of proposed 
rulemaking stated our belief that the policy set forth in this rule is 
consistent with the principles, criteria, and requirements of the 
Federalism Executive Order and the Department's governing statute.
    We invited comments on these conclusions. 68 FR 7327. No one 
commented on our federalism assessment. We will therefore make it 
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.

List of Subjects in 14 CFR Part 255

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

0
Accordingly, the Department of Transportation amends 14 CFR part 255 as 
follows:

PART 255--(AMENDED)

0
1. The authority citation for part 255 continues to read as follows:

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


0
2. Section 255.12 is revised to read as follows:


Sec.  255.12.  Termination.

    The rules in this part terminate on January 31, 2004.

    Issued in Washington, DC, on March 25, 2003.
Norman Y. Mineta,
Secretary of Transportation.
[FR Doc. 03-7636 Filed 3-28-03; 8:45 am]
BILLING CODE 4910-62-P