Display of Joint Operations in Carrier-Owned Computer Reservations Systems Regulations, 16990-16995 [05-6650]
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Federal Register / Vol. 70, No. 63 / Monday, April 4, 2005 / Proposed Rules
TABLE 1.—APPLICABILITY OF CERTAIN
AIRPLANES—Continued
Model
747–100, 747–100B, 747–100B SUD, 747–
200B, 747–200C, 747–200F, 747–300,
747SR, and 747SP series airplanes.
757–200 and 757–200PF series airplanes.
767–200 and 767–300 series airplanes.
(2) Boeing Model 747–400 series airplanes,
serial numbers 23719, 23720, 23814, 23816,
23817, 23818, 23819, 23820, 23999, 24061,
and 24062.
Unsafe Condition
(d) This AD was prompted by reports of inflight and ground fires on certain airplanes
manufactured with insulation blankets
covered with a specific
polyethyleneteraphthalate (PET), ORCON
Orcofilm AN–26 (all variants, including
AN–26, AN–26A, and AN–26B), hereafter
referred to as ‘‘AN–26’’, which may
contribute to the spread of a fire when
ignition occurs from sources such as
electrical arcing or sparking. We are issuing
this AD to ensure that insulation blankets
constructed of AN–26 are removed from the
fuselage. Such insulation blankets could
propagate a fire that is the result of electrical
arcing or sparking.
Compliance
(e) You are responsible for having the
actions required by this AD performed within
the compliance times specified, unless the
actions have already been done.
Replacement
(f) Except as provided in paragraph (g) of
this AD, within 72 months after the effective
date of this AD, remove all insulation
blankets from the pressurized areas of the
fuselage and install a new insulation blanket
using applicable maintenance manual
procedures. The new insulation blankets
must comply with 14 Code of Federal
Regulations (CFR) 25.856(a). The areas where
the affected insulation blankets are installed
include, but are not limited to, the following
areas:
(1) Crown area of the airplane;
(2) Areas behind flight deck panels and
circuit breaker panels;
(3) Areas behind sidewalls, lavatories,
closets, and galleys;
(4) Cargo compartment areas;
(5) Air ducting;
(6) Waste and water tubing; and
(7) Areas attached to the underside of floor
panels.
Exception
(g) The actions described in paragraph (f)
are not required for any insulation blanket
that is determined not to be constructed of
AN–26, using a method approved by the
Manager, Seattle Aircraft Certification Office
(ACO).
Note 1: Insulation material that is partmarked with a date of manufacture indicating
that it was manufactured before July 1981 or
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after December 1988 is not constructed of
AN–26.
Parts Installation
(h)(1) As of the effective date of this AD,
no person may install any insulation blanket
constructed of AN–26 on any airplane unless
it has been modified to comply with 14 CFR
25.856(a), in accordance with a method
approved by the Manager, Seattle ACO.
(2) As of six months after the effective date
of this AD, if any insulation blanket is
removed for any reason, it may not be reinstalled unless:
(i) It has been determined not to be
constructed of AN–26 using a method
approved by the Manager, Seattle ACO; or
(ii) It has been modified to comply with 14
CFR 25.856(a), in accordance with a method
approved by the Manager, Seattle ACO.
Alternative Methods of Compliance
(AMOCs)
(i) The Manager, Seattle ACO, has the
authority to approve AMOCs for this AD, if
requested in accordance with the procedures
found in 14 CFR 39.19.
Issued in Renton, Washington, on March
29, 2005.
Kalene C. Yanamura,
Acting Manager, Transport Airplane
Directorate, Aircraft Certification Service.
[FR Doc. 05–6674 Filed 4–1–05; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Part 256
[Docket No. OST–2005–20826]
RIN 2105–AD44
Display of Joint Operations in CarrierOwned Computer Reservations
Systems Regulations
Office of the Secretary,
Department of Transportation.
ACTION: Notice of proposed rulemaking.
AGENCY:
SUMMARY: The Department’s rules
currently prohibit each airline that
owns, controls, or operates a computer
reservations system (‘‘CRS’’ or
‘‘system’’) from denying system access
to two or more carriers whose flights
share a single designator code and
discriminating against any carrier
because the carrier uses the same
designator code as another carrier. The
Department recently determined that its
comprehensive rules governing CRS
operations should be terminated
because they are no longer necessary.
The Department is initiating this
proceeding to consider whether it
should also terminate the rules
governing the treatment of code-sharing
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airlines by airlines that own, control, or
operate a system.
DATES: Comments must be submitted on
or before May 4, 2005. Reply comments
must be submitted on or before May 19,
2005.
ADDRESSES: You may submit comments
identified by DOT DMS Docket Number
OST–2005–20826 by any of the
following methods:
• Web Site: https://dms.dot.gov.
Follow the instructions for submitting
comments on the DOT electronic docket
site.
• Fax: 1–202–493–2251.
• Mail: Docket Management Facility;
U.S. Department of Transportation, 400
Seventh Street, SW., Nassif Building,
Room PL–401, Washington, DC 20590–
001.
• Hand Delivery: Room PL–401 on
the plaza level of the Nassif Building,
400 Seventh Street, SW., Washington,
DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal
Holidays.
• Federal eRulemaking Portal: Go to
https://www.regulations.gov. Follow the
online instructions for submitting
comments.
Instructions: All submissions must
include the agency name and docket
number or Regulatory Identification
Number (RIN) for this rulemaking. For
detailed instructions on submitting
comments and additional information
on the rulemaking process, see the
Public Participation heading of the
Supplementary Information section of
this document. Note that all comments
received will be posted without change
to https://dms.dot.gov. including any
personal information provided. Please
see the Privacy Act heading under
Regulatory Notices.
Docket: For access to the docket to
read background documents or
comments received, go to https://
dms.dot.gov at any time or to Room PL–
401 on the plaza level of the Nassif
Building, 400 Seventh Street, SW.,
Washington, DC, between 9 a.m. and 5
p.m., Monday through Friday, except
Federal Holidays.
Due to security procedures in effect
since October 2001 on mail deliveries,
mail received through the Postal Service
may be subject to delays. Commenters
should consider using an express mail
firm to ensure the timely filing of any
comments not submitted electronically
or by hand. Late filed comments will be
considered to the extent possible.
FOR FURTHER INFORMATION CONTACT:
Thomas Ray, Office of the General
Counsel, 400 Seventh St. SW.,
Washington, DC 20590, (202) 366–4731.
Electronic Access: You can view and
download this document by going to the
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website of the Department’s Docket
Management System (https://
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. 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: https://www.nara.gov/fedreg and
the Government Printing Office’s
database at: https://www.access.gpo.gov/
nara/.
SUPPLEMENTARY INFORMATION:
A. Introduction
We have had two sets of rules
governing airline computer reservations
systems (‘‘CRSs’’ or ‘‘systems’’)
(although the systems now are also
commonly called global distribution
systems, or GDSs, we will refer to them
as CRSs for purposes of this
rulemaking). One set of rules, 14 CFR
Part 255, established comprehensive
requirements governing the systems’
relationships with airlines and the
systems’ travel agency customers. These
rules covered any system that was
owned or marketed by an airline or
airline affiliate. 14 CFR 255.2. The other
set, 14 CFR Part 256, concerned the
systems’ treatment of airlines that share
the same two-symbol designator code,
the code used by the systems and other
sources of airline information to identify
the airline offering the seats being sold
(the codes for America West and U.S.
Airways, for example, are HP and US).
This set of rules prohibits the airlines
that own, control, or operate each
system from denying access to the
system to two or more airlines whose
flights share a single designator code
and from discriminating against any
airline because that airline uses the
same designator code as another airline.
The federal agency formerly
responsible for the economic regulation
of the airline industry, the Civil
Aeronautics Board (‘‘the Board’’),
adopted both the comprehensive rules
(Part 255) and the rules governing the
treatment of airlines that code-share
(Part 256) in the same year, 1984, on the
basis of a common economic and
competitive analysis. 49 FR 12675
(March 30, 1984) (Part 256); 49 FR
32540 (August 15, 1984) (Part 255). The
Board adopted the rules barring systems
from discriminating against codesharing airlines in an expedited
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proceeding to keep Apollo, the system
then controlled by United, from carrying
out its plan to deny access to any airline
that used another airline’s code.
Our comprehensive CRS rules
included a sunset date to ensure that we
would reexamine whether the rules
remained necessary and were effective.
57 FR 43780, 43829–43830 (September
22, 1992). As a result of our most recent
reexamination of those rules, completed
in 2003, we determined that the CRS
rules had become unnecessary. We
allowed most of the rules to expire on
January 31, 2004, their sunset date, and
terminated the remaining rules on July
31, 2004. 69 FR 976, 977 (January 7,
2004).
The rules governing the systems’
treatment of code-sharing airlines, Part
256, have not had a sunset date.
However, because the Board adopted
those rules and the comprehensive rules
governing CRS operations, Part 255, on
the basis of the same factual analysis
and competitive rationale, our findings
that industry changes have made the
comprehensive rules unnecessary
requires us to reexamine whether the
rules on the treatment of code-sharing
airlines are still necessary. After
considering that question, we are
proposing to terminate these rules as
well.
We ask the parties to submit
comments that thoroughly discuss the
factual and policy issues raised by our
proposal to eliminate the rules and to
provide detailed information on the
proposal and on the amount of its likely
benefits and costs.
Comments will be due thirty days
after publication of this notice, and
reply comments will be due fifteen days
thereafter. After considering the
comments, we will issue a final rule.
B. Background
As we have explained in our other
CRS rulemakings, the systems
efficiently provide travel agents with
comprehensive information and booking
capabilities on airlines and other travel
suppliers, such as hotel and rental car
companies. See, e.g., 67 FR 69366,
69370 (November 15, 2002). Each
system provides information and
booking capabilities on the airlines that
‘‘participate’’ in the system, that is,
agree to make their services saleable
through the system and to pay the fees
required for participation. A CRS
presents displays that integrate the
services of all participating airlines. The
displays show schedules and fares and
whether specific flights and fares are
available. A travel agent can compare
the services offered by different airlines
and determine which would best meet
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a customer’s needs. The agent can
reserve seats and issue tickets through
the system. 67 FR 69370.
The basis for our past adoption of CRS
regulations was the systems’ important
role in the distribution of airline tickets
(and their ownership by airlines).
Airlines obtained a large majority of
their bookings from travel agents, and
travel agents relied on a system to
determine what services and fares were
available for their customers and to
make bookings. Each travel agency
office typically relied entirely or almost
entirely on one system to carry out these
functions. If an airline did not
participate in one of the systems, the
travel agents using that system could
not readily obtain information and make
bookings on that airline, which would
therefore lose a significant amount of
business. As a result, almost every
airline had to participate in each of the
systems, so airlines had no bargaining
leverage with the systems. 67 FR 69375–
69382; 69 FR 980.
With one small exception, each of the
systems operating in the United States
was developed and owned by one
airline, which had the ability and
incentive to operate its system in ways
that would prejudice airline
competition. 67 FR 69367, 69375–
69376.
Soon after the systems were first
offered to travel agencies, the systems’
impact on airline competition became a
matter of concern. For example, an
airline owning a system would bias the
system’s display of airline services so
that flights operated by rival airlines
were difficult to find, even when a
competitor’s flights met the travel
agency customer’s needs better than did
the owner airline’s flights. The Board
therefore began a rulemaking to
determine whether it should adopt
regulations governing the systems’ role
in airline distribution. The Board first
issued an advance notice of proposed
rulemaking. 48 FR 41171 (September 14,
1983). After considering the comments
responding to that notice, the Board
decided that it should propose
comprehensive rules governing CRS
operations, and submitted a draft notice
of proposed rulemaking to the Office of
Management and Budget for review.
While the Board’s proposal was under
review at OMB, several smaller airlines
complained to the Board that Apollo,
the system controlled by United, had
announced that it would no longer
display services operated by one airline
under another airline’s code. They
alleged that Apollo’s change in policy
would substantially injure their
marketing efforts. 49 FR 9430–9431.
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As a result of the competitive harm
that could result from Apollo’s
proposed policy change, the Board
proposed and, after reviewing the
comments, adopted as Part 256 the rules
that prohibit airlines that own, control,
or operate a system from discriminating
against an airline because the airline
offered its services under another
airline’s code. As noted, the Board
relied on the industry and competitive
analysis developed in its rulemaking on
the comprehensive CRS regulations. 49
FR 9430; 49 FR 12675.
Soon after the Board proposed the
rules governing the treatment of codesharing airlines, the Board issued its
notice of proposed rulemaking on the
adoption of comprehensive CRS rules.
49 FR 11644 (March 27, 1984). The
Board later adopted those proposed
rules, with some revisions, as Part 255.
Among other things, those rules barred
systems from biasing their primary
displays and from charging
discriminatory booking fees. 49 FR
32540 (August 15, 1984).
The Board adopted both the
comprehensive rules and the rules
governing the treatment of code-sharing
airlines under its authority under
section 411 of the Federal Aviation Act,
then 49 U.S.C. 1381, later recodified as
49 U.S.C. 41712, to prohibit unfair and
deceptive practices and unfair methods
of competition (we will refer to the
section under its traditional name,
section 411).
The Court of Appeals affirmed the
Board’s adoption of Parts 255 and 256.
United Air Lines v. CAB, 766 F.2d 1107
(7th Cir. 1985).
C. Basis for Proposed Termination of
Rules
The factual basis for our recent
decision to terminate all of the
comprehensive CRS rules suggests that
we should also terminate the rule
governing the treatment of code-sharing
airlines. As noted above, we concluded
that the on-going developments in
airline distribution and the CRS
business in recent years had
substantially eroded the basis for CRS
regulations and made the rules
unnecessary. The two major
developments were the increasing
importance of the Internet in airline
distribution and the divestiture by U.S.
airlines of all CRS ownership interests.
The Internet’s growing use by
consumers and travel agents has created
alternative channels for airline bookings
and the dissemination of information on
schedules and fares. Airlines have been
encouraging many consumers to book
their travel directly through an airline
website rather than through a travel
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agent. 67 FR 69373–69374. Travel
agents are increasingly checking
Internet sites to see whether better fares
and flights are available than those
displayed in the system they use. 69 FR
980. Airlines also began offering special
discounts, commonly known as
webfares, to consumers who booked
tickets through the airline’s own
website, and they have used their
control over access to their webfares to
obtain better terms for CRS
participation. 67 FR 69373; 69 FR 979–
980. Because these developments are
establishing market discipline for the
terms and quality of the systems’
services offered airlines, we concluded
that the comprehensive rules had
become unnecessary. 69 FR 984.
Secondly, all of the U.S. airlines that
held an ownership interest in a system
have divested those interests. The Board
had adopted the original rules because
each significant system was then
controlled by an airline, and the airline
owner had the incentive and the ability
to use its system to distort airline
competition. 67 FR 69373. Now, in
contrast, none of the systems is owned
or controlled by any U.S. airline or
airline affiliate, and only Amadeus has
any airline owners. 69 FR 979. In our
final decision in our reexamination of
the comprehensive rules, we found that
the systems should have no incentive to
operate in ways designed to distort
airline competition, because none of
them are owned or controlled by U.S.
airlines or airline affiliates. 69 FR 990–
991. While Amadeus is owned in part
by three European airlines, it also has
substantial public ownership, its airline
owners should have no motive to
undermine airline competition within
the United States, and its U.S. market
share is less than ten percent. 69 FR
986. We recognized that a system might
be willing to take steps to prejudice
airline competition if compensated for
doing so by an airline, for example, by
selling display bias, but there is no
certainty that such conduct will occur
or, if it did, that it would substantially
harm consumers. We accordingly
concluded that the possibility of display
bias did not warrant the continuation of
industry-wide rules, especially in light
of the systems’ declining market power.
69 FR 994. While we could not predict
precisely how systems will respond to
the industry’s deregulation, we expected
that consumers and participants in the
airline distribution business will benefit
from the rules’ termination. 69 FR 978.
We stated, moreover, that we intend to
monitor the effects of the CRS industry’s
deregulation and that we will take
appropriate action if a system engages in
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conduct that would violate section 411.
69 FR 978, 986.
The rules on the treatment of codesharing airlines, unlike the
comprehensive rules, have never
contained a sunset date that would
cause us to reconsider whether the rules
remained necessary. However, the
findings on which we based our
decision to terminate the
comprehensive rules suggest that we
should also terminate the Part 256 rules
governing the systems’ treatment of
airlines that share codes. The Board
adopted those rules largely to protect
airline competition from potential
efforts by the airlines that controlled the
systems to create displays that
discriminated against competing
airlines that shared codes. As noted, the
Board began the rulemaking due to
United’s plan to eliminate code-sharing
airlines from Apollo’s displays. The
complete divestiture of their CRS
ownership interests by the U.S. airlines
that had controlled the systems has
eliminated the primary basis for the
Board’s original adoption of these rules.
Furthermore, as we found in our
reexamination of the comprehensive
rules, because the Internet has created
alternative sources of information and
booking capabilities for airlines and
travel agents, market forces are
beginning to discipline the systems’
prices and terms for airline
participation. If an airline believes that
a system’s display of its services is
unreasonable or unfair, the airline
should have some ability at least to
lower its level of participation. The
airlines’ ability to reject unacceptable
terms for CRS participation should
continue to grow. Furthermore, travel
agencies have an interest in obtaining
full, accurate, and useful information on
airline services, and they have the
ability to choose between systems. 69
FR 1005. These factors should
encourage the systems to display
information on airline services in a
manner that will meet the needs of
travel agents. Eliminating the rules may
give a system additional flexibility to
tailor its displays to meet travel agent
and consumer demands and may result
in more useful displays. We therefore
have tentatively determined that the
rules governing the systems’ treatment
of code-sharing airlines are no longer
necessary and should be ended.
In addition, as noted above, these
rules cover only airlines that own,
control, or operate a system, not the
systems themselves, and Amadeus’
airline owners are therefore the only
firms required to comply with the rules.
Applying the rules only to Amadeus’
owner airlines appears illogical and
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potentially inequitable, when Amadeus
has the smallest market share in the
United States and has airline owners
that should have little interest in
distorting competition within this
country.
We do not expect systems to adopt the
practices now barred by Part 256,
denials of system access to airlines that
code-share and discrimination against
such airlines. Code-sharing has become
a widespread practice and, among other
things, has formed the basis for the
development of international alliances
between U.S. and foreign airlines, such
as the Star Alliance, oneworld, and
SkyTeam. We have found that codesharing can provide significant
consumer benefits. 67 FR 69396–69397.
As a result, we assume that travel agents
will demand that systems provide
displays that show airline services
marketed under code-share
arrangements. Systems may also choose
to offer displays that limit the display of
code-share services, as some have being
doing. 69 FR 1005. Any decision by a
system to change or limit the display of
code-sharing services, however, should
reflect the system’s response to market
demands, not a decision to distort
airline competition by creating displays
that discriminate against all code-share
services. The systems’ vigorous
competition for travel agency customers
should cause them to provide displays
that satisfy travel agent preferences.
Regulatory Process Matters
Regulatory Assessment and Unfunded
Mandates Reform Act Assessment
1. Unfunded Mandates Reform Act
Assessment
The Unfunded Mandates Reform Act
of 1995, 2 U.S.C. 1531–1538, requires
Federal agencies to prepare a written
assessment of the costs, benefits, and
other effects of proposed or final rules
that include a Federal or private
mandate likely to result in the
expenditures by State, local, or tribal
governments, in the aggregate, or by the
private sector, of more than $100
million annually.
The proposed rule would not result in
expenditures by the private sector or by
State, local, or tribal governments
because we propose to eliminate the
rules. In addition, no such government
operates a system or airline that is or
has been subject to our regulations.
2. Regulatory Assessment
Executive Order 12866, Regulatory
Planning and Review (58 FR 51735,
October 4, 1993), defines a significant
regulatory action as one that is likely to
result in a rule that may have an annual
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effect on the economy of $100 million
or more, or that may adversely affect, in
a material way, the economy, a sector of
the economy, productivity, competition,
jobs, the environment, public health or
safety, or State, local, or tribal
governments or communities.
Regulatory actions are also considered
significant if they are likely to create a
serious inconsistency or interfere with
the actions taken or planned by another
agency, if they establish novel policy
issues, or if they materially alter the
budgetary impact of entitlements,
grants, user fees, or loan programs or the
rights and obligations of the recipients
of such programs.
The Department’s Regulatory Policies
and Procedures (44 FR 11034, February
26, 1979) outline similar definitions and
requirements with the goal of
simplifying and improving the quality
of the Department’s regulatory process.
They state that a rule will be significant
if it is likely to generate much public
interest.
This proposed regulation would be a
significant regulatory action under the
Executive Order, since CRS rules have
long been a subject of public
controversy. The Department’s tentative
assessment of the likely costs and
benefits for this proposal is set forth
below. This proposal has been reviewed
by the Office of Management and
Budget under the Executive Order.
This preliminary economic analysis
seeks to assess the potential economic
and competitive consequences of our
proposed rules on computer
reservations systems, airlines, and travel
agencies and to evaluate the benefits to
the industry and the traveling public.
We tentatively find, as discussed below,
that the elimination of the rules barring
airline-owned systems from
discriminating against airlines that
code-share should not harm airlines,
travel agencies, or consumers, or have a
material effect on firms in the airline or
airline distribution businesses or on
consumers.
The Civil Aeronautics Board
originally adopted the rules barring
discrimination against airlines that
shared the same code when each of the
systems was owned by an airline and
when each airline owner had the ability
and the incentive to use its system to
prejudice the competitive position of
rival airlines. The systems’ conduct at
that time justified the Board’s action.
The Board proposed these rules as a
result of United’s plan to eliminate
code-share services from the displays
offered by Apollo, the system then
owned by United, a plan that would
harm several of United’s competitors.
Airlines then relied on travel agents for
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16993
the large majority of their revenues, and
travel agents relied on the systems to
determine what airline services were
available, to make bookings, and to
issue tickets.
The industry conditions that caused
the Board to adopt the rules barring
discrimination against code-sharing
airlines no longer exist. No system is
currently owned by a U.S. airline or
airline affiliate. No system should have
an incentive to discriminate against
code-share services in order to distort
airline competition. The share of airline
revenues produced by travel agents has
been falling. Many travel agents now
use multiple sources of information to
investigate options for their customers
and no longer rely almost entirely on
one of the systems to determine what
airline flights and fares are available. As
a result, airlines have been obtaining
some bargaining leverage against the
systems, and a system’s failure to
display airline services in an unbiased
manner will no longer deny travel
agents the ability to electronically
obtain complete information on airline
service options. The systems’
competition for travel agency customers
will give the systems an incentive to
provide displays that meet the travel
agents’ needs for more accurate,
complete, and useful information. The
airlines’ growing bargaining leverage
with the systems should encourage
systems to provide access to their
services on terms which are consistent
with airline marketing strategies.
The rules barring discrimination
against code-sharing airlines may limit
the ability of Amadeus, the only system
now subject to the rules, to respond to
travel agency preferences to create
displays less cluttered with code-shares,
and may keep travel agents from
obtaining displays that meet their needs.
Even if the rules impose no burden on
Amadeus, however, there is no apparent
justification for maintaining them.
For the same reasons on which we
based our decision to terminate the
comprehensive rules, our elimination of
the rules barring discrimination against
airlines that share codes should have no
significant economic impact on airlines,
travel agencies, or consumers. First,
because the existing rule covers only
airlines that own, operate, or control a
system, only the smallest of the four
systems operating in the United States—
Amadeus—is subject to the rule.
Secondly, no system should have an
incentive to distort competition in the
U.S. airline industry, because no system
is owned or controlled by a U.S. airline
or airline affiliate. Amadeus’ principal
owners are three European airlines. In
addition, public shareholders own a
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substantial amount of Amadeus’ stock,
and Amadeus’ management must
operate the business for the benefit of all
of its shareholders, not just its airline
shareholders. Code-sharing is a much
more widespread practice now than it
was when the Board adopted these
rules, and no system is likely to block
the display of services operated under
code-share arrangements. For these
reasons, we do not expect Amadeus or
any other system to begin
discriminating against airlines that
share codes.
We request interested persons to
provide us with detailed information
about the possible consequences of this
proposal, including its benefits, costs,
and economic and competitive impacts.
Initial Regulatory Flexibility Statement
The Regulatory Flexibility Act of
1980, 5 U.S.C. 601 et seq., was enacted
by Congress 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. This notice of
proposed rulemaking sets forth the
reasons for our rule proposal and its
objectives and legal basis.
Our proposed termination of the
existing rules would not have a
significant economic impact on a
substantial number of small business
entities. The rules impose obligations
only on airlines that own, control, or
operate a system, and none of the
airlines that now own, or have owned,
a system has been a small entity. The
rules may indirectly affect smaller
airlines and travel agencies, which are
small entities, because they may affect
how code-share services are displayed
in the systems used by travel agents.
Eliminating the rules should have no
significant impact on smaller airlines or
travel agencies.
First, the rules currently govern only
Amadeus, the system with the smallest
market share in the United States,
because the other three systems have no
airline owners. Secondly, the rules
prohibit a system from discriminating
against code-share services offered by
airlines. The Board adopted the rules
because one of the airline-owned
systems was then planning to stop
displaying flights operated by any
airline if they were sold under another
airline’s code, a change that would
undermine the marketing efforts of a
major competitor of the system’s airline
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owner. 49 FR 9435. It seems unlikely
that any system would adopt a similar
policy on the display of code-share
services, because all major U.S. and
European airlines have code-share
operations. Furthermore, travel agencies
have a substantial degree of bargaining
leverage with the systems, as shown by
the record in our last reexamination of
the comprehensive rules, 69 FR 981–
983, which should cause the systems to
offer displays that meet the needs of
travel agents. Airlines are obtaining
more bargaining power with the
systems, which should also keep
systems from offering displays that
would significantly interfere with
airline marketing programs. Because
code-sharing is now a widespread
practice, a system’s refusal to display
services operated under code-share
arrangements would probably
undermine that system’s ability to
obtain travel agency customers, and it
would displease its major airline
customers. Finally, the Internet has
provided new sources of airline
information for travel agents to use, so
travel agents no longer rely so greatly on
the systems for airline information.
Furthermore, as discussed, there no
longer appears to be any rationale for
maintaining these rules.
The Regulatory Flexibility Act
requires us to publish an initial
regulatory flexibility analysis that
considers such matters as the impact of
a proposed rule on small entities if the
rule would have ‘‘a significant economic
impact on a substantial number of small
entities.’’ 5 U.S.C. 605(b). For the
reasons stated above, I certify that the
elimination of our rule on the treatment
of code-share operations which is
proposed by this notice would not have
a significant economic impact on a
substantial number of small entities. No
initial regulatory flexibility analysis is
therefore required for this action.
Our proposed 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.
Interested persons may address our
tentative conclusions under the
Regulatory Flexibility Act in their
comments submitted in response to this
notice of proposed rulemaking.
Assistance for Small Entities
Under section 213(a) of the Small
Business Regulatory Enforcement
Fairness Act of 1996, Public Law 104–
121, we want to assist small entities in
understanding the proposed rule so that
they can better evaluate its effects on
them and participate in the rulemaking.
PO 00000
Frm 00028
Fmt 4702
Sfmt 4702
If the proposed rule would affect your
small business, organization, or
governmental jurisdiction and you have
questions concerning its provisions or
options for compliance, please consult
Thomas Ray at (202) 366–4731.
Paperwork Reduction Act
The proposed rule contains no
collection-of-information requirements
subject to the Paperwork Reduction Act,
Pub. L. 96–511, 44 U.S.C. Chapter 35.
See 57 FR at 43834.
Federalism Implications
Our proposal would have no
substantial direct effects 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. Therefore, in
accordance with Executive Order 13132,
dated August 4, 1999, we have
determined that it does not present
sufficient federalism implications to
warrant consultations with State and
local governments.
Taking of Private Property
This proposed rule would not effect a
taking of private property or otherwise
have taking implications under
Executive Order 12630, Government
Actions and Interference with
Constitutionally Protected Property
Rights.
Civil Justice Reform
This proposed rule meets applicable
standards in sections 3(a) and 3(b)(2) of
Executive Order 12988, Civil Justice
Reform, to minimize litigation,
eliminate ambiguity, and reduce
burden.
Protection of Children
We have analyzed this proposed rule
under Executive Order 13045,
Protection of Children from
Environmental Heath Risks and Safety
Risks. This rule does not concern an
environmental risk to health or risk to
safety that may disproportionately affect
children.
Consultation and Coordination With
Tribal Governments.
This proposed rule will not have
tribal implications, will not impose
substantial direct compliance costs on
Indian tribal governments, and will not
preempt tribal law. Therefore, it is
exempt from the consultation
requirements of Executive Order 13175.
If tribal implications are identified
during the comment period, we will
undertake appropriate consultations
with the affected Indian tribal officials.
E:\FR\FM\04APP1.SGM
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Federal Register / Vol. 70, No. 63 / Monday, April 4, 2005 / Proposed Rules
Energy Effects
We have analyzed this proposed rule
under Executive Order 13211, Actions
Concerning Regulations That
Significantly Affect Energy Supply,
Distribution, or Use. We have
determined that this is not classified as
a ‘‘significant energy action’’ under that
order because it is a ‘‘significant
regulatory action’’ under Executive
Order 12866 and it would not have a
significant adverse effect on the supply,
distribution, or use of energy.
Environment
The proposed rule would have no
significant impact on the environment.
PART 256—[REMOVED AND
RESERVED]
1. Accordingly the Department
proposes to remove 14 CFR art 256 and
reserve art 256.
Issued in Washington, DC, on March 27,
2005.
Norman Y. Mineta,
Secretary of Transportation.
[FR Doc. 05–6650 Filed 4–1–05; 8:45 am]
BILLING CODE 4910–62–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Food and Drug Administration
21 CFR Part 101
[Docket No. 2001N–0548] (formerly Docket
No. 01N–0548)
Food Labeling; Guidelines for
Voluntary Nutrition Labeling of Raw
Fruits, Vegetables, and Fish;
Identification of the 20 Most Frequently
Consumed Raw Fruits, Vegetables,
and Fish; Reopening of the Comment
Period
AGENCY:
Food and Drug Administration,
HHS.
Proposed rule; reopening of the
comment period.
ACTION:
SUMMARY: The Food and Drug
Administration (FDA) is reopening until
June 3, 2005, the comment period for a
proposed rule published in the Federal
Register of March 20, 2002. In that
document, FDA proposed to amend its
voluntary nutrition labeling regulations
by updating the names and nutrition
labeling values for the 20 most
frequently consumed raw fruits,
vegetables, and fish in the United States.
Since publication of the proposed rule,
the agency has received new data in
comments that it intends to use to
further update the nutrition labeling
VerDate jul<14>2003
15:01 Apr 01, 2005
Jkt 205001
values. The agency also intends to use
additional data from the U.S.
Department of Agriculture (USDA) for
certain nutrients in raw produce. Those
data became available after the close of
the comment period. FDA is reopening
the comment period to allow all
interested parties the opportunity to
review its tentative nutrition labeling
values based upon data FDA received
within and after the comment period,
and to comment on the additional
nutrient data for some of the 20 most
frequently consumed raw fruits,
vegetables, and fish. FDA will evaluate
any new data submissions during this
reopened comment period and will
consider use of those data in a final rule.
DATES: Submit written or electronic
comments by June 3, 2005.
ADDRESSES: You may submit comments,
identified by Docket No. 2001N–0548,
by any of the following methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Agency Web site: https://
www.fda.gov/dockets/ecomments.
Follow the instructions for submitting
comments on the agency Web site.
• E-mail: fdadockets@oc.fda.gov.
Include Docket No. 2001N–0548 in the
subject line of your e-mail message.
• FAX: 301–827–6870.
• Mail/hand delivery/courier [for
paper, disk, or CD–ROM submissions]:
Division of Dockets Management (HFA–
305), 5630 Fishers Lane, rm. 1061,
Rockville, MD 20852.
Instructions: All submissions received
must include the agency name and
docket number or regulatory
information number for this rulemaking.
All comments received will be posted
without change to https://www.fda.gov/
ohrms/dockets/default.htm, including
any personal information provided. For
detailed instructions on submitting
comments and additional information
on the rulemaking process, see the
‘‘Comments’’ heading of the
SUPPLEMENTARY INFORMATION section of
this document.
Docket: For access to the docket to
read background documents or
comments received, go to https://
www.fda.gov/ohrms/dockets/
default.htm and insert the relevant
docket number, 01N–0548, into the
‘‘Search’’ box and follow the prompts
and/or go to the Division of Dockets
Management, 5630 Fishers Lane, rm.
1061, Rockville, MD 20852.
FOR FURTHER INFORMATION CONTACT:
Mary Brandt, Center for Food Safety and
Applied Nutrition (HFS–840), Food and
Drug Administration, 5100 Paint Branch
PO 00000
Frm 00029
Fmt 4702
Sfmt 4702
16995
Pkwy., College Park, MD 20740, 301–
436–1788.
SUPPLEMENTARY INFORMATION:
I. Background
In the Federal Register of March 20,
2002 (67 FR 12918) (the proposed rule),
FDA proposed to amend its voluntary
nutrition labeling regulations by
updating the names and nutrition
labeling values for the 20 most
frequently consumed raw fruits,
vegetables, and fish in the United States
based upon new data submitted or made
available to the agency. In that
document, we requested comments on
the proposal by June 3, 2002. In the
Federal Register of June 6, 2002 (67 FR
38913), we corrected the proposed rule
that published with an incorrect docket
number (i.e., Docket No. 01N–0458) and
provided additional time to submit
comments, until August 20, 2002.
In a comment to the proposed rule,
USDA submitted nutrient data from its
2001–2002 nationwide sampling of
fruits and vegetables (see https://
www.fda.gov/ohrms/dockets/dailys/02/
Aug02/080602/01n-0548-c000006vol1.pdf). USDA provided data for 16 of
the 20 most frequently consumed fruits:
Apple, avocado (California), banana,
cantaloupe, grapefruit, honeydew
melon, kiwifruit, nectarine, orange,
peach, pear, pineapple, plums,
strawberries, sweet cherries, and
watermelon; and 12 of the top 20
vegetables: Bell pepper, broccoli, carrot,
celery, cucumber, iceberg lettuce, leaf
lettuce, onion, potato, radish, sweet
potato, and tomato. At the time USDA
submitted the comment, the data results
for vitamin C, sodium, and potassium
were not yet available, and the analysis
of carotenoids for carrots, sweet
potatoes, cucumbers, onions, and sweet
peppers had not been completed. In
June and July of 2003, after the close of
the comment period, USDA provided
sodium, potassium, and some
carotenoid values that it did not submit
earlier (Ref. 1). It also submitted vitamin
C values for pineapple.
In other comments to the proposed
rule, the Citrus Research Board and
Food Research, Inc., provided nutrient
data from 1998 for oranges, grapefruit,
tangerines (Mandarin oranges), and
lemons (see https://www.fda.gov/ohrms/
dockets/dailys/02/Aug02/081602/
8001f4e1.pdf, https://www.fda.gov/
ohrms/dockets/dailys/02/Aug02/
082902/01N-0548-cr00001-01-vol1.htm,
and https://www.fda.gov/ohrms/dockets/
dailys/02/Aug02/082902/
8002574a.doc).
Two comments recommended that
Chinook salmon be included with the
revised species of fish (see https://
E:\FR\FM\04APP1.SGM
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Agencies
[Federal Register Volume 70, Number 63 (Monday, April 4, 2005)]
[Proposed Rules]
[Pages 16990-16995]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-6650]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Part 256
[Docket No. OST-2005-20826]
RIN 2105-AD44
Display of Joint Operations in Carrier-Owned Computer
Reservations Systems Regulations
AGENCY: Office of the Secretary, Department of Transportation.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Department's rules currently prohibit each airline that
owns, controls, or operates a computer reservations system (``CRS'' or
``system'') from denying system access to two or more carriers whose
flights share a single designator code and discriminating against any
carrier because the carrier uses the same designator code as another
carrier. The Department recently determined that its comprehensive
rules governing CRS operations should be terminated because they are no
longer necessary. The Department is initiating this proceeding to
consider whether it should also terminate the rules governing the
treatment of code-sharing airlines by airlines that own, control, or
operate a system.
DATES: Comments must be submitted on or before May 4, 2005. Reply
comments must be submitted on or before May 19, 2005.
ADDRESSES: You may submit comments identified by DOT DMS Docket Number
OST-2005-20826 by any of the following methods:
Web Site: https://dms.dot.gov. Follow the instructions for
submitting comments on the DOT electronic docket site.
Fax: 1-202-493-2251.
Mail: Docket Management Facility; U.S. Department of
Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401,
Washington, DC 20590-001.
Hand Delivery: Room PL-401 on the plaza level of the
Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9
a.m. and 5 p.m., Monday through Friday, except Federal Holidays.
Federal eRulemaking Portal: Go to https://
www.regulations.gov. Follow the online instructions for submitting
comments.
Instructions: All submissions must include the agency name and
docket number or Regulatory Identification Number (RIN) for this
rulemaking. For detailed instructions on submitting comments and
additional information on the rulemaking process, see the Public
Participation heading of the Supplementary Information section of this
document. Note that all comments received will be posted without change
to https://dms.dot.gov. including any personal information provided.
Please see the Privacy Act heading under Regulatory Notices.
Docket: For access to the docket to read background documents or
comments received, go to https://dms.dot.gov at any time or to Room PL-
401 on the plaza level of the Nassif Building, 400 Seventh Street, SW.,
Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal Holidays.
Due to security procedures in effect since October 2001 on mail
deliveries, mail received through the Postal Service may be subject to
delays. Commenters should consider using an express mail firm to ensure
the timely filing of any comments not submitted electronically or by
hand. Late filed comments will be considered to the extent possible.
FOR FURTHER INFORMATION CONTACT: Thomas Ray, Office of the General
Counsel, 400 Seventh St. SW., Washington, DC 20590, (202) 366-4731.
Electronic Access: You can view and download this document by going
to the
[[Page 16991]]
website of the Department's Docket Management System (https://
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. 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: https://
www.nara.gov/fedreg and the Government Printing Office's database at:
https://www.access.gpo.gov/nara/.
SUPPLEMENTARY INFORMATION:
A. Introduction
We have had two sets of rules governing airline computer
reservations systems (``CRSs'' or ``systems'') (although the systems
now are also commonly called global distribution systems, or GDSs, we
will refer to them as CRSs for purposes of this rulemaking). One set of
rules, 14 CFR Part 255, established comprehensive requirements
governing the systems' relationships with airlines and the systems'
travel agency customers. These rules covered any system that was owned
or marketed by an airline or airline affiliate. 14 CFR 255.2. The other
set, 14 CFR Part 256, concerned the systems' treatment of airlines that
share the same two-symbol designator code, the code used by the systems
and other sources of airline information to identify the airline
offering the seats being sold (the codes for America West and U.S.
Airways, for example, are HP and US). This set of rules prohibits the
airlines that own, control, or operate each system from denying access
to the system to two or more airlines whose flights share a single
designator code and from discriminating against any airline because
that airline uses the same designator code as another airline.
The federal agency formerly responsible for the economic regulation
of the airline industry, the Civil Aeronautics Board (``the Board''),
adopted both the comprehensive rules (Part 255) and the rules governing
the treatment of airlines that code-share (Part 256) in the same year,
1984, on the basis of a common economic and competitive analysis. 49 FR
12675 (March 30, 1984) (Part 256); 49 FR 32540 (August 15, 1984) (Part
255). The Board adopted the rules barring systems from discriminating
against code-sharing airlines in an expedited proceeding to keep
Apollo, the system then controlled by United, from carrying out its
plan to deny access to any airline that used another airline's code.
Our comprehensive CRS rules included a sunset date to ensure that
we would reexamine whether the rules remained necessary and were
effective. 57 FR 43780, 43829-43830 (September 22, 1992). As a result
of our most recent reexamination of those rules, completed in 2003, we
determined that the CRS rules had become unnecessary. We allowed most
of the rules to expire on January 31, 2004, their sunset date, and
terminated the remaining rules on July 31, 2004. 69 FR 976, 977
(January 7, 2004).
The rules governing the systems' treatment of code-sharing
airlines, Part 256, have not had a sunset date. However, because the
Board adopted those rules and the comprehensive rules governing CRS
operations, Part 255, on the basis of the same factual analysis and
competitive rationale, our findings that industry changes have made the
comprehensive rules unnecessary requires us to reexamine whether the
rules on the treatment of code-sharing airlines are still necessary.
After considering that question, we are proposing to terminate these
rules as well.
We ask the parties to submit comments that thoroughly discuss the
factual and policy issues raised by our proposal to eliminate the rules
and to provide detailed information on the proposal and on the amount
of its likely benefits and costs.
Comments will be due thirty days after publication of this notice,
and reply comments will be due fifteen days thereafter. After
considering the comments, we will issue a final rule.
B. Background
As we have explained in our other CRS rulemakings, the systems
efficiently provide travel agents with comprehensive information and
booking capabilities on airlines and other travel suppliers, such as
hotel and rental car companies. See, e.g., 67 FR 69366, 69370 (November
15, 2002). Each system provides information and booking capabilities on
the airlines that ``participate'' in the system, that is, agree to make
their services saleable through the system and to pay the fees required
for participation. A CRS presents displays that integrate the services
of all participating airlines. The displays show schedules and fares
and whether specific flights and fares are available. A travel agent
can compare the services offered by different airlines and determine
which would best meet a customer's needs. The agent can reserve seats
and issue tickets through the system. 67 FR 69370.
The basis for our past adoption of CRS regulations was the systems'
important role in the distribution of airline tickets (and their
ownership by airlines). Airlines obtained a large majority of their
bookings from travel agents, and travel agents relied on a system to
determine what services and fares were available for their customers
and to make bookings. Each travel agency office typically relied
entirely or almost entirely on one system to carry out these functions.
If an airline did not participate in one of the systems, the travel
agents using that system could not readily obtain information and make
bookings on that airline, which would therefore lose a significant
amount of business. As a result, almost every airline had to
participate in each of the systems, so airlines had no bargaining
leverage with the systems. 67 FR 69375-69382; 69 FR 980.
With one small exception, each of the systems operating in the
United States was developed and owned by one airline, which had the
ability and incentive to operate its system in ways that would
prejudice airline competition. 67 FR 69367, 69375-69376.
Soon after the systems were first offered to travel agencies, the
systems' impact on airline competition became a matter of concern. For
example, an airline owning a system would bias the system's display of
airline services so that flights operated by rival airlines were
difficult to find, even when a competitor's flights met the travel
agency customer's needs better than did the owner airline's flights.
The Board therefore began a rulemaking to determine whether it should
adopt regulations governing the systems' role in airline distribution.
The Board first issued an advance notice of proposed rulemaking. 48 FR
41171 (September 14, 1983). After considering the comments responding
to that notice, the Board decided that it should propose comprehensive
rules governing CRS operations, and submitted a draft notice of
proposed rulemaking to the Office of Management and Budget for review.
While the Board's proposal was under review at OMB, several smaller
airlines complained to the Board that Apollo, the system controlled by
United, had announced that it would no longer display services operated
by one airline under another airline's code. They alleged that Apollo's
change in policy would substantially injure their marketing efforts. 49
FR 9430-9431.
[[Page 16992]]
As a result of the competitive harm that could result from Apollo's
proposed policy change, the Board proposed and, after reviewing the
comments, adopted as Part 256 the rules that prohibit airlines that
own, control, or operate a system from discriminating against an
airline because the airline offered its services under another
airline's code. As noted, the Board relied on the industry and
competitive analysis developed in its rulemaking on the comprehensive
CRS regulations. 49 FR 9430; 49 FR 12675.
Soon after the Board proposed the rules governing the treatment of
code-sharing airlines, the Board issued its notice of proposed
rulemaking on the adoption of comprehensive CRS rules. 49 FR 11644
(March 27, 1984). The Board later adopted those proposed rules, with
some revisions, as Part 255. Among other things, those rules barred
systems from biasing their primary displays and from charging
discriminatory booking fees. 49 FR 32540 (August 15, 1984).
The Board adopted both the comprehensive rules and the rules
governing the treatment of code-sharing airlines under its authority
under section 411 of the Federal Aviation Act, then 49 U.S.C. 1381,
later recodified as 49 U.S.C. 41712, to prohibit unfair and deceptive
practices and unfair methods of competition (we will refer to the
section under its traditional name, section 411).
The Court of Appeals affirmed the Board's adoption of Parts 255 and
256. United Air Lines v. CAB, 766 F.2d 1107 (7th Cir. 1985).
C. Basis for Proposed Termination of Rules
The factual basis for our recent decision to terminate all of the
comprehensive CRS rules suggests that we should also terminate the rule
governing the treatment of code-sharing airlines. As noted above, we
concluded that the on-going developments in airline distribution and
the CRS business in recent years had substantially eroded the basis for
CRS regulations and made the rules unnecessary. The two major
developments were the increasing importance of the Internet in airline
distribution and the divestiture by U.S. airlines of all CRS ownership
interests.
The Internet's growing use by consumers and travel agents has
created alternative channels for airline bookings and the dissemination
of information on schedules and fares. Airlines have been encouraging
many consumers to book their travel directly through an airline website
rather than through a travel agent. 67 FR 69373-69374. Travel agents
are increasingly checking Internet sites to see whether better fares
and flights are available than those displayed in the system they use.
69 FR 980. Airlines also began offering special discounts, commonly
known as webfares, to consumers who booked tickets through the
airline's own website, and they have used their control over access to
their webfares to obtain better terms for CRS participation. 67 FR
69373; 69 FR 979-980. Because these developments are establishing
market discipline for the terms and quality of the systems' services
offered airlines, we concluded that the comprehensive rules had become
unnecessary. 69 FR 984.
Secondly, all of the U.S. airlines that held an ownership interest
in a system have divested those interests. The Board had adopted the
original rules because each significant system was then controlled by
an airline, and the airline owner had the incentive and the ability to
use its system to distort airline competition. 67 FR 69373. Now, in
contrast, none of the systems is owned or controlled by any U.S.
airline or airline affiliate, and only Amadeus has any airline owners.
69 FR 979. In our final decision in our reexamination of the
comprehensive rules, we found that the systems should have no incentive
to operate in ways designed to distort airline competition, because
none of them are owned or controlled by U.S. airlines or airline
affiliates. 69 FR 990-991. While Amadeus is owned in part by three
European airlines, it also has substantial public ownership, its
airline owners should have no motive to undermine airline competition
within the United States, and its U.S. market share is less than ten
percent. 69 FR 986. We recognized that a system might be willing to
take steps to prejudice airline competition if compensated for doing so
by an airline, for example, by selling display bias, but there is no
certainty that such conduct will occur or, if it did, that it would
substantially harm consumers. We accordingly concluded that the
possibility of display bias did not warrant the continuation of
industry-wide rules, especially in light of the systems' declining
market power. 69 FR 994. While we could not predict precisely how
systems will respond to the industry's deregulation, we expected that
consumers and participants in the airline distribution business will
benefit from the rules' termination. 69 FR 978. We stated, moreover,
that we intend to monitor the effects of the CRS industry's
deregulation and that we will take appropriate action if a system
engages in conduct that would violate section 411. 69 FR 978, 986.
The rules on the treatment of code-sharing airlines, unlike the
comprehensive rules, have never contained a sunset date that would
cause us to reconsider whether the rules remained necessary. However,
the findings on which we based our decision to terminate the
comprehensive rules suggest that we should also terminate the Part 256
rules governing the systems' treatment of airlines that share codes.
The Board adopted those rules largely to protect airline competition
from potential efforts by the airlines that controlled the systems to
create displays that discriminated against competing airlines that
shared codes. As noted, the Board began the rulemaking due to United's
plan to eliminate code-sharing airlines from Apollo's displays. The
complete divestiture of their CRS ownership interests by the U.S.
airlines that had controlled the systems has eliminated the primary
basis for the Board's original adoption of these rules.
Furthermore, as we found in our reexamination of the comprehensive
rules, because the Internet has created alternative sources of
information and booking capabilities for airlines and travel agents,
market forces are beginning to discipline the systems' prices and terms
for airline participation. If an airline believes that a system's
display of its services is unreasonable or unfair, the airline should
have some ability at least to lower its level of participation. The
airlines' ability to reject unacceptable terms for CRS participation
should continue to grow. Furthermore, travel agencies have an interest
in obtaining full, accurate, and useful information on airline
services, and they have the ability to choose between systems. 69 FR
1005. These factors should encourage the systems to display information
on airline services in a manner that will meet the needs of travel
agents. Eliminating the rules may give a system additional flexibility
to tailor its displays to meet travel agent and consumer demands and
may result in more useful displays. We therefore have tentatively
determined that the rules governing the systems' treatment of code-
sharing airlines are no longer necessary and should be ended.
In addition, as noted above, these rules cover only airlines that
own, control, or operate a system, not the systems themselves, and
Amadeus' airline owners are therefore the only firms required to comply
with the rules. Applying the rules only to Amadeus' owner airlines
appears illogical and
[[Page 16993]]
potentially inequitable, when Amadeus has the smallest market share in
the United States and has airline owners that should have little
interest in distorting competition within this country.
We do not expect systems to adopt the practices now barred by Part
256, denials of system access to airlines that code-share and
discrimination against such airlines. Code-sharing has become a
widespread practice and, among other things, has formed the basis for
the development of international alliances between U.S. and foreign
airlines, such as the Star Alliance, oneworld, and SkyTeam. We have
found that code-sharing can provide significant consumer benefits. 67
FR 69396-69397. As a result, we assume that travel agents will demand
that systems provide displays that show airline services marketed under
code-share arrangements. Systems may also choose to offer displays that
limit the display of code-share services, as some have being doing. 69
FR 1005. Any decision by a system to change or limit the display of
code-sharing services, however, should reflect the system's response to
market demands, not a decision to distort airline competition by
creating displays that discriminate against all code-share services.
The systems' vigorous competition for travel agency customers should
cause them to provide displays that satisfy travel agent preferences.
Regulatory Process Matters
Regulatory Assessment and Unfunded Mandates Reform Act Assessment
1. Unfunded Mandates Reform Act Assessment
The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538,
requires Federal agencies to prepare a written assessment of the costs,
benefits, and other effects of proposed or final rules that include a
Federal or private mandate likely to result in the expenditures by
State, local, or tribal governments, in the aggregate, or by the
private sector, of more than $100 million annually.
The proposed rule would not result in expenditures by the private
sector or by State, local, or tribal governments because we propose to
eliminate the rules. In addition, no such government operates a system
or airline that is or has been subject to our regulations.
2. Regulatory Assessment
Executive Order 12866, Regulatory Planning and Review (58 FR 51735,
October 4, 1993), defines a significant regulatory action as one that
is likely to result in a rule that may have an annual effect on the
economy of $100 million or more, or that may adversely affect, in a
material way, the economy, a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or State,
local, or tribal governments or communities. Regulatory actions are
also considered significant if they are likely to create a serious
inconsistency or interfere with the actions taken or planned by another
agency, if they establish novel policy issues, or if they materially
alter the budgetary impact of entitlements, grants, user fees, or loan
programs or the rights and obligations of the recipients of such
programs.
The Department's Regulatory Policies and Procedures (44 FR 11034,
February 26, 1979) outline similar definitions and requirements with
the goal of simplifying and improving the quality of the Department's
regulatory process. They state that a rule will be significant if it is
likely to generate much public interest.
This proposed regulation would be a significant regulatory action
under the Executive Order, since CRS rules have long been a subject of
public controversy. The Department's tentative assessment of the likely
costs and benefits for this proposal is set forth below. This proposal
has been reviewed by the Office of Management and Budget under the
Executive Order.
This preliminary economic analysis seeks to assess the potential
economic and competitive consequences of our proposed rules on computer
reservations systems, airlines, and travel agencies and to evaluate the
benefits to the industry and the traveling public. We tentatively find,
as discussed below, that the elimination of the rules barring airline-
owned systems from discriminating against airlines that code-share
should not harm airlines, travel agencies, or consumers, or have a
material effect on firms in the airline or airline distribution
businesses or on consumers.
The Civil Aeronautics Board originally adopted the rules barring
discrimination against airlines that shared the same code when each of
the systems was owned by an airline and when each airline owner had the
ability and the incentive to use its system to prejudice the
competitive position of rival airlines. The systems' conduct at that
time justified the Board's action. The Board proposed these rules as a
result of United's plan to eliminate code-share services from the
displays offered by Apollo, the system then owned by United, a plan
that would harm several of United's competitors. Airlines then relied
on travel agents for the large majority of their revenues, and travel
agents relied on the systems to determine what airline services were
available, to make bookings, and to issue tickets.
The industry conditions that caused the Board to adopt the rules
barring discrimination against code-sharing airlines no longer exist.
No system is currently owned by a U.S. airline or airline affiliate. No
system should have an incentive to discriminate against code-share
services in order to distort airline competition. The share of airline
revenues produced by travel agents has been falling. Many travel agents
now use multiple sources of information to investigate options for
their customers and no longer rely almost entirely on one of the
systems to determine what airline flights and fares are available. As a
result, airlines have been obtaining some bargaining leverage against
the systems, and a system's failure to display airline services in an
unbiased manner will no longer deny travel agents the ability to
electronically obtain complete information on airline service options.
The systems' competition for travel agency customers will give the
systems an incentive to provide displays that meet the travel agents'
needs for more accurate, complete, and useful information. The
airlines' growing bargaining leverage with the systems should encourage
systems to provide access to their services on terms which are
consistent with airline marketing strategies.
The rules barring discrimination against code-sharing airlines may
limit the ability of Amadeus, the only system now subject to the rules,
to respond to travel agency preferences to create displays less
cluttered with code-shares, and may keep travel agents from obtaining
displays that meet their needs. Even if the rules impose no burden on
Amadeus, however, there is no apparent justification for maintaining
them.
For the same reasons on which we based our decision to terminate
the comprehensive rules, our elimination of the rules barring
discrimination against airlines that share codes should have no
significant economic impact on airlines, travel agencies, or consumers.
First, because the existing rule covers only airlines that own,
operate, or control a system, only the smallest of the four systems
operating in the United States--Amadeus--is subject to the rule.
Secondly, no system should have an incentive to distort competition in
the U.S. airline industry, because no system is owned or controlled by
a U.S. airline or airline affiliate. Amadeus' principal owners are
three European airlines. In addition, public shareholders own a
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substantial amount of Amadeus' stock, and Amadeus' management must
operate the business for the benefit of all of its shareholders, not
just its airline shareholders. Code-sharing is a much more widespread
practice now than it was when the Board adopted these rules, and no
system is likely to block the display of services operated under code-
share arrangements. For these reasons, we do not expect Amadeus or any
other system to begin discriminating against airlines that share codes.
We request interested persons to provide us with detailed
information about the possible consequences of this proposal, including
its benefits, costs, and economic and competitive impacts.
Initial Regulatory Flexibility Statement
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601 et seq., was
enacted by Congress 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. This notice of proposed
rulemaking sets forth the reasons for our rule proposal and its
objectives and legal basis.
Our proposed termination of the existing rules would not have a
significant economic impact on a substantial number of small business
entities. The rules impose obligations only on airlines that own,
control, or operate a system, and none of the airlines that now own, or
have owned, a system has been a small entity. The rules may indirectly
affect smaller airlines and travel agencies, which are small entities,
because they may affect how code-share services are displayed in the
systems used by travel agents. Eliminating the rules should have no
significant impact on smaller airlines or travel agencies.
First, the rules currently govern only Amadeus, the system with the
smallest market share in the United States, because the other three
systems have no airline owners. Secondly, the rules prohibit a system
from discriminating against code-share services offered by airlines.
The Board adopted the rules because one of the airline-owned systems
was then planning to stop displaying flights operated by any airline if
they were sold under another airline's code, a change that would
undermine the marketing efforts of a major competitor of the system's
airline owner. 49 FR 9435. It seems unlikely that any system would
adopt a similar policy on the display of code-share services, because
all major U.S. and European airlines have code-share operations.
Furthermore, travel agencies have a substantial degree of bargaining
leverage with the systems, as shown by the record in our last
reexamination of the comprehensive rules, 69 FR 981-983, which should
cause the systems to offer displays that meet the needs of travel
agents. Airlines are obtaining more bargaining power with the systems,
which should also keep systems from offering displays that would
significantly interfere with airline marketing programs. Because code-
sharing is now a widespread practice, a system's refusal to display
services operated under code-share arrangements would probably
undermine that system's ability to obtain travel agency customers, and
it would displease its major airline customers. Finally, the Internet
has provided new sources of airline information for travel agents to
use, so travel agents no longer rely so greatly on the systems for
airline information. Furthermore, as discussed, there no longer appears
to be any rationale for maintaining these rules.
The Regulatory Flexibility Act requires us to publish an initial
regulatory flexibility analysis that considers such matters as the
impact of a proposed rule on small entities if the rule would have ``a
significant economic impact on a substantial number of small
entities.'' 5 U.S.C. 605(b). For the reasons stated above, I certify
that the elimination of our rule on the treatment of code-share
operations which is proposed by this notice would not have a
significant economic impact on a substantial number of small entities.
No initial regulatory flexibility analysis is therefore required for
this action.
Our proposed 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.
Interested persons may address our tentative conclusions under the
Regulatory Flexibility Act in their comments submitted in response to
this notice of proposed rulemaking.
Assistance for Small Entities
Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996, Public Law 104-121, we want to assist small
entities in understanding the proposed rule so that they can better
evaluate its effects on them and participate in the rulemaking. If the
proposed rule would affect your small business, organization, or
governmental jurisdiction and you have questions concerning its
provisions or options for compliance, please consult Thomas Ray at
(202) 366-4731.
Paperwork Reduction Act
The proposed rule contains no collection-of-information
requirements subject to the Paperwork Reduction Act, Pub. L. 96-511, 44
U.S.C. Chapter 35. See 57 FR at 43834.
Federalism Implications
Our proposal would have no substantial direct effects 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. Therefore, in accordance with Executive
Order 13132, dated August 4, 1999, we have determined that it does not
present sufficient federalism implications to warrant consultations
with State and local governments.
Taking of Private Property
This proposed rule would not effect a taking of private property or
otherwise have taking implications under Executive Order 12630,
Government Actions and Interference with Constitutionally Protected
Property Rights.
Civil Justice Reform
This proposed rule meets applicable standards in sections 3(a) and
3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden.
Protection of Children
We have analyzed this proposed rule under Executive Order 13045,
Protection of Children from Environmental Heath Risks and Safety Risks.
This rule does not concern an environmental risk to health or risk to
safety that may disproportionately affect children.
Consultation and Coordination With Tribal Governments.
This proposed rule will not have tribal implications, will not
impose substantial direct compliance costs on Indian tribal
governments, and will not preempt tribal law. Therefore, it is exempt
from the consultation requirements of Executive Order 13175. If tribal
implications are identified during the comment period, we will
undertake appropriate consultations with the affected Indian tribal
officials.
[[Page 16995]]
Energy Effects
We have analyzed this proposed rule under Executive Order 13211,
Actions Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use. We have determined that this is not classified as
a ``significant energy action'' under that order because it is a
``significant regulatory action'' under Executive Order 12866 and it
would not have a significant adverse effect on the supply,
distribution, or use of energy.
Environment
The proposed rule would have no significant impact on the
environment.
PART 256--[REMOVED AND RESERVED]
1. Accordingly the Department proposes to remove 14 CFR art 256 and
reserve art 256.
Issued in Washington, DC, on March 27, 2005.
Norman Y. Mineta,
Secretary of Transportation.
[FR Doc. 05-6650 Filed 4-1-05; 8:45 am]
BILLING CODE 4910-62-P