Oversales and Denied Boarding Compensation, 37491-37496 [E7-13365]

Agencies

• Office of the Secretary
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 72, Number 131 (Tuesday, July 10, 2007)]
[Proposed Rules]
[Pages 37491-37496]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-13365]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 250

[OST Docket No. OST-01-9325]
RIN 2105-AD63


Oversales and Denied Boarding Compensation

AGENCY: Office of the Secretary (OST), Department of Transportation 
(DOT).

ACTION: Advance notice of proposed rulemaking (ANPRM).

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SUMMARY: The Department of Transportation (DOT or Department) is 
seeking comment on whether it should amend its rules relating to 
oversales and denied boarding compensation to cover flights operated 
with aircraft seating 30 through 60 passengers, which are currently 
exempt from the rule, to increase the maximum required compensation, 
and to make other changes. Such changes in the rule, if undertaken, 
would be intended to maintain consumer protection commensurate with 
developments in the aviation industry.

DATES: Comments are requested by September 10, 2007. Late-filed 
comments will be considered to the extent practicable.

ADDRESSES: You may submit comments identified by the docket number OST-
01-9325 by any of the following methods:
     Web Site: https://dms.dot.gov. Follow the instructions for 
submitting comments on the DOT electronic docket site.
     Federal e-Rulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.

[[Page 37492]]

     Fax: (202) 493-2251.
     Mail: Docket Management System; U.S. Department of 
Transportation, 1200 New Jersey Ave. SE., Room W12-140, Washington, DC 
20590.
     Hand Delivery: To the Docket Management System; Room W12-
140 (ground level), 1200 New Jersey Ave. SE., Washington, DC, between 9 
a.m. and 5 p.m., Monday through Friday, except Federal Holidays.
    Instructions: You must include the agency name and docket number 
OST-01-9325 or the Regulatory Identification Number (RIN) for this 
rulemaking at the beginning of your comment. Note that all comments 
received will be posted without change to https://dms.dot.gov, including 
any personal information provided.
    Docket: You may view the public docket through the Internet at 
https://dms.dot.gov or in person at the Docket Management System office 
at the above address.
    The Department of Transportation is in the process of moving to a 
new building. It is anticipated that the Docket Office will move to its 
new location before the end of the comment period. We do not yet have 
the complete address for the Docket Office in the Department's new 
building. The Department will publish a Federal Register notice when 
this information becomes available. The address change will not affect 
electronic submissions, and mail submissions will be forwarded to the 
new address.

FOR FURTHER INFORMATION CONTACT: Tim Kelly, Aviation Consumer 
Protection Division, Office of the General Counsel, Department of 
Transportation, 1200 New Jersey Ave. SE., Washington, DC 20590, 202-
366-5952 (voice), 202-366-5944 (fax), tim.kelly@dot.gov (e-mail).

SUPPLEMENTARY INFORMATION:

Background

    Part 250 establishes minimum standards for the treatment of airline 
passengers holding confirmed reservations who are involuntarily denied 
boarding (``bumped'') from their flight because it has been oversold. 
In most cases, bumped passengers are entitled to compensation. Part 250 
contains limits on the amount of compensation that is required to be 
provided to passengers who are bumped involuntarily. The rule does not 
apply to flights operated with aircraft with a design capacity of 60 or 
fewer passenger seats.
    In adopting the current rules, the Civil Aeronautics Board (the 
Department's predecessor in aviation economic regulation) recognized 
the inherent unfairness in carriers selling ``confirmed'' ticketed 
reservations for a flight yet selling more of those reservations for 
the flight than they have seats. Therefore, the CAB sought to reduce 
the number of passengers involuntarily denied boarding to the smallest 
practicable number without prohibiting deliberate overbooking or 
interfering unnecessarily with the carriers' reservations practices. 
Air travelers receive some benefit from controlled overbooking because 
it allows flexibility in making and canceling reservations as well as 
buying and refunding tickets. Overbooking makes possible a system of 
confirmed reservations that can almost always be honored. It allows 
airlines to fill more seats, reducing the pressure for higher fares, 
and makes it easier for people to obtain reservations on the flights of 
their choice. On the other hand, overbooking is the major cause of 
oversales, and the people who are inconvenienced are not those who do 
not show up for their flights, but passengers who have conformed to all 
carrier rules. The current rule allocates the risk of being denied 
boarding among travelers by requiring airlines to solicit volunteers 
and use a boarding priority procedure that is not unjustly 
discriminatory.
    In 1981, the CAB amended the oversales rule to exclude from the 
rule all operations using aircraft with 60 or fewer passenger seats. 
(ER-1237, 46 FR 42442, August 21, 1981.) At the time of that 
proceeding, the impact of the rule on carriers operating small aircraft 
was found to be significant. If a passenger was denied boarding on a 
typical small aircraft short-haul flight and subsequently missed a 
connection to a long-haul flight, the short-haul carrier usually had to 
compensate the passenger in an amount equal to twice the value of the 
passenger's remaining ticket coupons to his or her destination, subject 
to a maximum limitation. For example, if the short-haul fare was $50 
and the connecting long-haul fare was $500, the first carrier often had 
to pay the passenger denied boarding compensation in an amount far 
greater than $50, depending on whether alternate transportation could 
be arranged to arrive within a short time, despite the minimal fare 
that the first carrier received for its flight. The problem was 
exacerbated by the fact that most commuter airline flights at the time 
were on small turboprop and piston engine aircraft which were affected 
by weight limitations in high temperature/humidity conditions to a 
greater extent than jets and, therefore, might require bumping even 
when the carrier did not book beyond the seating capacity of the 
aircraft.
    Part 250 has tended to reduce passenger inconvenience and financial 
loss occasioned by overbooking without imposing heavy burdens on the 
airlines or significant costs on the traveling public. In focusing only 
on the treatment of passengers whose boarding is involuntarily denied, 
we have avoided regulating carriers' reservations practices. Overall, 
it appears that the rule has served a useful purpose; however, in light 
of recommendations from various sources, including Congress and major 
airlines themselves, we are seeking comment on whether certain aspects 
of the rule may be outdated and should be revised. In view of the 
passage of time since the rule was last revised and changes in 
commercial air travel over that time, we are in this advanced notice of 
proposed rulemaking seeking comment on whether we should increase the 
compensation maximums and extend the rule to cover a larger range of 
aircraft. The Department is also seeking comment on certain other 
changes of lesser impact that are under consideration.

The Current Denied Boarding Compensation Rule

    The purpose of the Department's denied boarding compensation rule 
is to balance the rights of passengers holding reservations with the 
desirability of allowing air carriers to minimize the adverse economic 
effects of ``no-shows'' (passengers with reservations who cancel or 
change their flights at the last minute). The rule sets up a two-part 
system. The first encourages passengers to voluntarily relinquish their 
confirmed reservations in exchange for compensation agreed to between 
the passenger and the airline. The second requires that, where there is 
an insufficient number of volunteers, passengers who are bumped 
involuntarily be given compensation in an amount specified in the rule. 
In addition, the Department requires carriers to give passengers notice 
of those procedures through signs, and written notices provided with 
tickets and at airports, and to report the number of passengers denied 
boarding to the Department on a quarterly basis.
    The Civil Aeronautics Board (CAB) first required payments to bumped 
passengers 45 years ago. In Order No. E-17914, dated January 8, 1962, 
the CAB conditioned its approval of ``no-show penalties'' for confirmed 
passengers on a requirement that bumped passengers be compensated. An 
oversales rule was adopted in 1967 as 14 CFR Part 250

[[Page 37493]]

(ER-503, 32 FR 11939, August 18, 1967) and revised substantially in 
1978 and 1982 after comprehensive rulemaking proceedings (ER-1050, 43 
FR 24277, June 5, 1978 and ER-1306, 47 FR 52980, November 24, 1982, 
respectively). The key features of the current requirements are as 
follows:
    (1) In the event of an oversold flight, the airline must first seek 
volunteers who are willing to relinquish their seats in return for 
compensation offered by the airline.
    (2) If there are not enough volunteers, the airline must use non-
discriminatory procedures (`boarding priorities') in deciding who is to 
be bumped involuntarily.
    (3) Most passengers who are involuntarily bumped are eligible for 
denied boarding compensation, with the amount depending on the price of 
each passenger's ticket and the length of his or her delay. If the 
airline can arrange alternate transportation that is scheduled to 
arrive at the passenger's destination within 2 hours of the planned 
arrival time of the oversold flight (4 hours on international flights), 
the compensation equals 100% of the passenger's one-way fare to his or 
her next stopover or final destination, with a $200 maximum. If the 
airline cannot meet the 2 (or 4) hour deadline, the compensation rate 
doubles to 200% of the passenger's one-way fare, with a $400 maximum. 
This compensation is in addition to the value of the passenger's 
ticket, which the passenger can use for alternate transportation or 
have refunded if not used.
    (4) There are several exceptions to the compensation requirement. 
Compensation is not required if the passenger does not comply fully 
with the carrier's contract of carriage or tariff provisions regarding 
ticketing, reconfirmation, check-in, and acceptability for 
transportation; if an aircraft of lesser capacity has been substituted 
for operational or safety reasons; if the passenger is offered 
accommodations in a section of the aircraft other than that specified 
on the ticket, at no extra charge (a passenger seated in a section for 
which a lower fare is charged is entitled to an appropriate refund); or 
if the carrier arranges comparable transportation, at no extra cost to 
the passenger, that is planned to arrive at the passenger's next 
stopover or final destination not later than 1 hour after the planned 
arrival time of the passenger's original flight.
    (5) A passenger who is denied boarding involuntarily may refuse to 
accept the denied boarding compensation specified in the rule and seek 
monetary or other compensation through negotiations with the carrier or 
by private legal action.
    (6) Carriers must post counter signs and include notices with 
tickets to alert travelers of their overbooking practices and the 
consumer protections of the rule. In addition, they must provide a 
detailed written notice explaining their oversales practices and 
boarding priority rules to each passenger involuntarily denied 
boarding, and to any other person requesting a copy.
    (7) Every carrier must report, on a quarterly basis, data on the 
number of denied boardings on flights that are subject to Part 250.

Issues

The Maximum Amount of Denied Boarding Compensation

    It has been over 20 years since the rule was last revised, and the 
existing $200 and $400 limits on the amount of required denied boarding 
compensation for passengers involuntarily denied boarding have not been 
raised since 1978. The Department has received recommendations from 
various sources that it reexamine its oversales rule and, in 
particular, the maximum amounts of compensation set forth in the rule. 
In this regard, in a sense-of-the-Senate amendment to the Department of 
Transportation and Related Agencies Appropriations Act of 2000, Public 
Law 106-69, the Senate noted its sense that the Department should amend 
its denied boarding rule to double the applicable compensation amounts. 
Congress has also proposed legislation to require the Department to 
review the rule's maximum amounts of compensation. (See S.319, reported 
in the Senate April 26, 2001.) In addition, in his February 12, 2000, 
Final Report on Airline Customer Service Commitments, the Department's 
Inspector General (IG) recommended, among other things, that the 
airlines petition the Department to increase the amount of denied 
boarding compensation payable to involuntarily bumped passengers. In 
response thereto, and citing the length of time since the maximum 
amounts of denied boarding compensation were last revised, the Air 
Transport Association (the trade association of the larger U.S. 
airlines) filed a petition with the Department on April 3, 2001, 
requesting that a rulemaking be instituted to examine those amounts.\1\ 
(Docket OST-01-9325). Most recently, the IG on November 20, 2006, 
issued his ``Report on the Follow-up Review Performed of U.S. Airlines 
in Implementing Selected Provisions of the Airline Customer Service 
Commitment'' in which the IG recommended that we determine whether the 
maximum DBC amount needs to be increased and whether the oversale rule 
needs to be extended to cover aircraft with 31 through 60 seats.
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    \1\ It is important to note that the maximum involuntary denied 
boarding amounts set forth in Part 250 are amounts below which 
carriers cannot set their maximum compensation. Airlines have been 
and continue to be free, as a competitive tool, to set their maximum 
compensation levels at amounts greater than that provided in the 
Department's rule. We are not aware of any carrier that has elected 
to do so.
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    The CAB's decision in 1978 to double the maximum amount of denied 
boarding compensation to $400 was based on its determination that the 
previous maximum was inadequate to redress the inconvenience to bumped 
passengers and that the increase would provide a greater incentive to 
carriers to reduce the number of persons involuntarily bumped from 
their flights. Following promulgation of the rule in 1978 requiring the 
solicitation of volunteers and doubling the compensation maximum, the 
overall industry rate of involuntary denied boardings per 10,000 
enplanements in fact declined for many years. Until the most recently 
published report, the rate was slightly below the level of involuntary 
bumping reported 10 years ago. In this regard, 55,828 passengers were 
involuntarily bumped from their flights in 2006 on the 18 largest U.S. 
airlines (carriers whose denied boarding rate is tracked in the 
Department's monthly Air Travel Consumer Report \2\). Additional 
passengers were bumped by other airlines, whose denied boarding rate is 
not tracked in this report but whose bumped passengers are subject to 
the maximum compensation rates in the DOT rule. The annual rate of 
involuntary denied boardings per 10,000 enplanements in 2006 for the 
carriers tracked in the report is the highest since 2000, and that 
trend continues in the rate for the first quarter of 2007. Involuntary 
denied boarding rates from the Air Travel Consumer Report for the past 
ten years appear below:
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    \2\ This report tracks the denied boarding rate of air carriers 
that each account for at least 1% of domestic scheduled-service 
passenger revenues for the previous year. Consequently, the list of 
carriers whose performance is tracked in this report can change from 
year to year.

------------------------------------------------------------------------
                                                             Invol. DB's
                            Year                              per 10,000
                                                              passengers
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1997.......................................................         1.06
1998.......................................................         0.87
1999.......................................................         0.88
2000.......................................................         1.04

[[Page 37494]]

 
2001.......................................................         0.82
2002.......................................................         0.72
2003.......................................................         0.86
2004.......................................................         0.86
2005.......................................................         0.89
2006.......................................................         1.01
1st qtr. 2007..............................................         1.45
------------------------------------------------------------------------

    Likely contributing to this upward trend is the fact that flights 
are fuller: from 1978 to 2006 the system-wide load factor (percentage 
of seats filled) for U.S. airlines increased from 61.5% to 79.2%, with 
most of this increase taking place since 1994.
    With respect to the denied boarding compensation limits, inflation 
has eroded the $200 and $400 limits that were established in 1978. 
Using the Consumer Price Index for All Urban Consumers (CPI-U, the 
basis for the inflation adjustor in the Department's domestic baggage 
liability rule, 14 CFR 254.6), $400 in 1978 is worth $128 as of 
February 2007. (See the Bureau of Labor Statistics Inflation Calculator 
at https://www.bls.gov/cpi/home.htm.) Stated another way, in order to 
have the same purchasing power today as in 1978, the $400 limit would 
need to be $1,248 in February 2007.
    At the same time, however, air fares have not risen to the same 
extent as the CPI-U. While historical comparisons of air fares are 
problematic, one frequently-used index for changes in air fares is 
passenger yield. Yield is passenger revenue divided by revenue 
passenger miles--the revenue collected by airlines for carrying one 
passenger for one mile. According to the Air Transport Association, 
system-wide nominal yield (i.e., not adjusted for inflation) for all 
reporting U.S. air carriers was 8.29 cents per revenue passenger mile 
in 1978 and 12.00 cents per revenue passenger mile in 2005 (latest 
available data at this writing)--an increase of 44.8%.
    Applying the CPI-U calculation to the current $200 and $400 DBC 
limits that were established in 1978 would produce updated limits of 
$624 and $1,248 respectively. However, applying the 44.8% increase in 
passenger yield to the current $200 and $400 limits would produce 
updated limits of $290 and $580 respectively. The $200 and $400 figures 
in Part 250 are merely limits on the amount of denied boarding 
compensation; the actual compensation rate is 100% or 200% of the 
passenger's fare (depending on how long he or she was delayed by the 
bumping). The Department requests comment on whether the maximums in 
the rule should be increased so that that a higher percentage of denied 
boarding compensation payments are not affected.
    Consequently, we are seeking comment on five options with respect 
to the limits on the amount of denied boarding compensation, as well as 
any other suggested changes:
    (1) Increase the $200/$400 limits to approximately $624 and $1,248 
respectively, based on the increase in the CPI as described above;
    (2) Increase the $200/$400 limits to approximately $290 and $580 
respectively, based on the increase in passenger yield as described 
above;
    (3) Double the maximum amounts of denied boarding compensation from 
$200 to $400 and from $400 to $800;
    (4) Eliminate the limits on compensation altogether, while 
retaining the 100% and 200% calculations;
    (5) Take no action, i.e. leave the current $200/$400 limits in 
place.
    We also seek comment on whether we should amend the rule to include 
a provision for periodic adjustments to the denied boarding 
compensation maximums, as is required by our baggage liability rule (14 
CFR Part 254). As in the case of the baggage rule, the Department could 
review the CPI-U every two years, and adjust the maximum amounts 
accordingly. The new maximum DBC amounts could be rounded to the 
nearest $50, for simplicity. Any increase would be announced by 
publishing a notice in the Federal Register. (Since this would be 
merely a mathematical computation, the Department would not need to 
first publish a proposed rule to effectuate an increase.) The new 
maximum compensation amounts and revised notice requirements under the 
rule would be effective a specified amount of time after publication in 
the Federal Register (e.g., perhaps 90 days). We request comment on 
this approach.
    It is important to note that none of these proposals would 
necessarily require carriers to offer more compensation to the great 
majority of passengers affected by overbooking because most such 
situations are handled through voluntary compensation, typically at the 
departure gate. Nor would they affect the significant proportion of 
involuntarily bumped passengers--possibly the majority--with fares low 
enough that the formula for involuntary denied boarding compensation 
would not reach the proposed new limits. Finally, even with respect to 
involuntarily bumped passengers whose denied boarding compensation 
might increase with higher maximums, many such passengers accept a 
voucher for future travel on that airline (usually in a face amount 
greater than the legally required denied boarding compensation) in lieu 
of a check. Carriers make such offers because vouchers do not have the 
same value as cash compensation given high rates of non-use and 
inventory-management restrictions.
    As indicated earlier, in 2006 over 55,000 passengers were denied 
boarding involuntarily by the 18 carriers that are tracked in the 
Department's Air Travel Consumer Report (i.e., the 18 largest U.S. air 
carriers). We assume that an increase in the regulatory maximums would 
result in an increase in amounts paid to such passengers but request 
comment on the likely financial impact, including both the direct 
impact (increased cash compensation), and the indirect impact resulting 
from either lower overbooking rates or higher voluntary compensation 
levels.

The Small-Aircraft Exclusion

    The Oversales rule originally issued by the CAB did not contain an 
exclusion for small aircraft. In 1981 that agency amended Part 250 to 
exclude operations with aircraft seating 60 or fewer passengers The CAB 
determined that without this exclusion the denied boarding rule imposed 
a proportionately greater financial and operational burden on these 
small-aircraft operators than on carriers operating larger aircraft. In 
addition, because of the lower revenues generated by these small 
aircraft, the financial burden of denied boarding compensation placed 
certificated carriers operating aircraft with 60 or fewer seats at a 
competitive disadvantage relative to commuter carriers (non-
certificated) operating similar equipment and on similar routes which 
were not subject to Part 250. The number of flights that was excluded 
by the amendment was small and most such flights were operated by small 
carriers that operated small aircraft exclusively. Part 250 currently 
applies to certificated U.S. carriers and foreign carriers holding a 
permit, or exemption authority, issued by the Department, only with 
respect to operations performed with aircraft seating more than 60 
passengers.
    While largely exempt from the denied boarding rule, the regional 
airline industry has experienced tremendous growth. According to the 
Regional Airline Association,\3\ passenger enplanements on regional 
carriers have increased more than 100% since 1995, and regional 
airlines now carry one out of every five domestic air travelers in

[[Page 37495]]

the United States. RAA states that Revenue Passenger Miles on regional 
carriers have increased forty fold since 1978 and increased 17 percent 
from 2004 to 2005 alone. Regional jets have fueled much of the recent 
growth. According to RAA, from 1989 to 2004 the number of turbofan 
aircraft (regional jets) in the regional-airline fleet increased from 
54 to 1,628 and regional jets now make up 59% of the regional-carrier 
fleet. Although many regional jets have more than 60 passenger seats 
and thus are subject to Part 250, the ubiquitous 50-seat regional jet 
models have driven much of the growth of the regional-carrier sector. 
Moreover, most regional jets are operated by regional carriers 
affiliated with a major carrier via a code-share agreement and/or an 
equity stake in the regional carrier. RAA asserts that 99% of regional 
airline passengers traveled on code-sharing regional airlines in 2005.
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    \3\ See https://www.raa.org.
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    DOT statistics demonstrate the growth in traffic on flights 
operated by aircraft with 31 through 60 seats. From the 4th quarter of 
2002 (earliest available consistent data) to the 4th quarter of 2005, 
the number of U.S.-carrier flights using such aircraft increased by 22% 
while the number of flights using aircraft seating more than 60 
passengers declined by 0.8%. During the same period, the number of 
passengers carried on flights using aircraft with 31 through 60 seats 
increased by 40.8% while the number of passengers carried on flights 
using aircraft seating more than 60 passengers increased by only 
8.3%.\4\
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    \4\ DOT Form 41, schedule T-100.
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    The increased use of jet aircraft in the 30-to-60 seat sector 
accompanied by the increase in the ``branding'' of those operations 
with the codes and livery of major carriers has blurred the distinction 
between small-aircraft and large-aircraft service in the minds of many 
passengers. There would seem to be little, if any, difference to a 
consumer bumped from a small aircraft or a large aircraft--the effect 
is the same. The Department therefore is seeking comment on whether we 
should extend the consumer protections of Part 250 to these flights 
(including flights of non-certificated commuter air carriers) and thus 
scale back the small-aircraft exception that was added to the rule in 
1981. Specifically, the Department seeks comment on whether it should 
reduce the seating-capacity exception for small aircraft from ``60 
seats or less'' to ``less than 30 seats'' and add commuter carriers to 
the list of carriers to which Part 250 applies. Since the Department is 
aware that many regional carriers already voluntarily provide DBC to 
passengers bumped from their 30-to-60-seat aircraft, commenters are 
specifically asked to include in their presentations data regarding 
oversales and denied boarding compensation in operations with aircraft 
having 30 through 60 seats by both certificated and non-certificated 
carriers, to the extent it is available.

Application of the Denied Boarding Compensation Rule

    Boarding priority rules determine the order in which various 
categories of passengers will be involuntarily bumped when a flight is 
oversold. Part 250 states that boarding priority rules must not provide 
any undue or unreasonable preference. The IG in his 2000 report 
identified possible ambiguities in the Department's requirements 
regarding boarding priority rules, and he recommended that we provide 
examples of what we consider to be an undue or unreasonable preference. 
The IG was also concerned that the amounts of compensation provided 
passengers who are involuntarily bumped was in some cases less than the 
face value of vouchers given to passengers who volunteer to give up 
their seats. He therefore recommended, in addition to raising the 
maximum compensation amounts for involuntarily bumped passengers, as 
discussed above, that we require carriers to disclose orally to 
passengers, at the time the airline makes an offer to volunteers, what 
the airline is obligated to pay passengers who are involuntarily 
bumped.
Boarding Priorities
    Our boarding priority requirement was designed to give carriers the 
maximum flexibility to set their own procedures at the gate, while 
affording consumers protection against unfair and unreasonable 
practices. Thus, the rule (1) Requires that airlines establish their 
own boarding priority rules and criteria for oversale situations 
consistent with Part 250's requirement to minimize involuntary bumpings 
and (2) states that those boarding priority rules and criteria ``shall 
not make, give, or cause any undue or unreasonable preference or 
advantage to any particular person or subject any particular person to 
any unjust or unreasonable prejudice or disadvantage in any respect 
whatsoever.'' (14 CFR 250.3(a)).
    Although we are not aware of any problems resulting from this rule 
as written, we agree that guidance regarding this provision would be 
useful to the industry and public alike. Accordingly we seek comment on 
whether the Department should list in the rule, as examples of 
permissible boarding priority criteria, the following:
     A passenger's time of check in (first-come, first-served);
     Whether a passenger has a seat assignment before reaching 
the departure gate for carriers that assign seats;
     A passenger's fare;
     A passenger's frequent flyer status; and
     Special priorities for passengers with disabilities, 
within the meaning of 14 CFR Part 382, or for unaccompanied minors.

We wish to make clear that the five examples proposed here are 
illustrative only, and not exclusive. We do not intend by these 
examples, if incorporated into Part 250, to foreclose the use by 
carriers of other boarding priorities that do not give a passenger 
undue preference or unjustly prejudice any passenger.
Notice to Volunteers
    Accurately notifying passengers of their rights in an oversale 
situation is important, so that they can make an informed decision. 
Part 250 already contains requirements designed to accomplish that 
objective and to protect passengers from being involuntarily bumped if 
they have not been accorded adequate notice. Section 250.2b(b) 
prohibits a carrier from denying boarding involuntarily to any 
passenger who was earlier asked to volunteer without having been 
informed about the danger of being denied boarding involuntarily and 
the amount of compensation that would apply if that occurred. While 
this provision would appear to provide adequate incentive for airlines 
to provide complete notice to passengers who are asked to volunteer, 
and to protect those passengers not provided such notice, we see some 
merit in making this notice requirement more direct. Accordingly, we 
seek comment on whether we should amend section 250.2b to affirmatively 
require that, no later than the time a carrier asks a passenger to 
volunteer, it inform that person whether he or she is in danger of 
being involuntarily bumped and, if so, the compensation the carrier is 
obligated to pay.

Reporting

    Section 250.10 of the current rule requires all carriers that are 
subject to Part 250 to file a quarterly report (Form 251) on oversale 
activity. Due to staffing limitations, for many years the only carriers 
whose oversale data have been routinely reviewed, entered into an 
automated system, or published by the

[[Page 37496]]

Department are the airlines that are subject to the on-time performance 
reporting requirement. Those are the U.S. carriers that each account 
for at least 1 percent of total domestic scheduled-service passenger 
revenues--currently 18 airlines (see 14 CFR 234). The Department's 
monthly Air Travel Consumer Report provides data for these airlines in 
four areas: on-time performance, baggage mishandling, oversales, and 
consumer complaints. The oversale data for that report are derived from 
the Form 251 reports mandated by Part 250. The data in the Form 251 
reports filed by the other carriers is not keypunched, summarized, 
published, or routinely reviewed.
    The Department seeks comment on whether it should revise section 
250.10 to relieve all carriers of this reporting requirement except for 
the airlines whose data is being used, i.e., U.S. carriers that are 
required to report on-time performance under Part 234. Those airlines 
account for the vast majority of domestic traffic and bumpings, so the 
Department will still receive adequate information and the public will 
continue to have access to published data for the same category of 
carriers as before. Such action would be consistent with the Paperwork 
Reduction Act and the Regulatory Flexibility Act. It would also result 
in consistent carrier reporting requirements for all four sections of 
the Air Travel Consumer Report.

Regulatory Notices

A. Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures

    This action has been determined to be significant under Executive 
Order 12866 and the Department of Transportation Regulatory Policies 
and Procedures. It has been reviewed by the Office of Management and 
Budget under that Order. A preliminary discussion of possible costs and 
benefits of the proposed rule is presented above.

B. Executive Order 13132 (Federalism)

    This Advance Notice of Proposed Rulemaking has been analyzed in 
accordance with the principles and criteria contained in Executive 
Order 13132 (``Federalism''). This notice does not propose any 
regulation that: (1) Has substantial direct effects on the States, the 
relationship between the national government and the States, or the 
distribution of power and responsibilities among the various levels of 
government; (2) imposes substantial direct compliance costs on State 
and local governments; or (3) preempts state law. Therefore, the 
consultation and funding requirements of Executive Order 13132 do not 
apply.

C. Executive Order 13084

    This notice has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13084 (``Consultation and 
Coordination with Indian Tribal Governments''). Because none of the 
options on which we are seeking comment would significantly or uniquely 
affect the communities of the Indian tribal governments and would not 
impose substantial direct compliance costs, the funding and 
consultation requirements of Executive Order 13084 do not apply.

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an 
agency to review regulations to assess their impact on small entities 
unless the agency determines that a rule is not expected to have a 
significant economic impact on a substantial number of small entities. 
Certain options on which we are seeking comment may impose new 
requirements on certain small air carriers, but few of them are small 
businesses as defined by the Small Business Administration and the 
Department believes that the economic impact would not be significant. 
All air carriers have control over the extent to which the rule impacts 
them since they control their own overbooking rates. Carriers can 
mitigate the cost of denied boarding compensation by obtaining 
volunteers who are willing to give up their seat for less compensation 
than what the rule mandates for passengers who are bumped 
involuntarily, and by offering travel vouchers in lieu of cash 
compensation. The vast majority of the traffic that would be covered by 
the oversales rule for the first time as a result of the options on 
which we seek comment is carried by airlines that are owned by or 
affiliated with a major carrier or its parent company. As noted below, 
one of the options on which we are seeking comment relieves an existing 
reporting requirement for all but the largest carriers. The monetary 
costs of most of these options result in a corresponding dollar-for-
dollar monetary benefit for members of the public who are bumped from 
their confirmed flights and for small businesses that employ some of 
them. The options provide an economic incentive for carriers to use 
more efficient overbooking rates that result in fewer bumpings while 
still allowing the carriers to fill seats that would go unsold as the 
result of ``no-show'' passengers. Therefore, the options on which we 
are seeking comment are not expected to have a significant economic 
impact on a substantial number of small entities.

E. Paperwork Reduction Act

    The options on which we are seeking comment impose no new 
information reporting or record keeping necessitating clearance by the 
Office of Management and Budget. They relieve a reporting requirement 
for many carriers that are currently subject to that requirement. One 
required handout that airlines distribute to bumped passengers would 
require minor revisions.

F. Unfunded Mandates Reform Act

    The Department has determined that the requirements of Title II of 
the Unfunded Mandates Reform Act of 1995 do not apply to this notice.

    Issued this 3rd day of July, 2007, at Washington, DC.
Andrew B. Steinberg,
Assistant Secretary for Aviation and International Affairs.
[FR Doc. E7-13365 Filed 7-9-07; 8:45 am]
BILLING CODE 4910-9X-P