Public Charter Prospectuses, 5239-5242 [2013-01395]
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Public Comment
Requirements for Submissions
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2013, in Rooms 1 and 2, 1724 F Street
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Douglas Bell,
Chair, Trade Policy Staff Committee.
[FR Doc. 2013–01497 Filed 1–23–13; 8:45 am]
BILLING CODE 3290–F3–P
DEPARTMENT OF TRANSPORTATION
Office of the Secretary
Public Charter Prospectuses
Office of the Secretary,
Department of Transportation.
ACTION: Guidance on review and
approval of public charter prospectuses.
5239
policies affecting the review and
approval of public charter filings under
14 CFR part 380 and related changes in
the Department’s enforcement policies.
These revisions refer to a notice dated
November 13, 2012, appearing at 77 FR
69692 (Nov. 20, 2012).
FOR FURTHER INFORMATION CONTACT:
Nicholas Lowry, Attorney, Office of
Aviation Enforcement and Proceedings
(C–70), 1200 New Jersey Ave. SE.,
Washington, DC 20590, (202) 366–9349.
Clarification of November 2012
Guidance on Review and Approval of
Public Charter Operations and
Prospectuses
On November 13, 2012, the
Department’s Office of International
Aviation and Office of Aviation
Enforcement and Proceedings issued a
joint notice regarding future filings
under 14 CFR part 380, the
Department’s rule on public charters
and enforcement policy under those
rules.1 That notice, which was an effort
to prevent the kind of harm to
consumers that took place when the
charter operator Southern Sky Air &
Tours, LLC d/b/a Direct Air ceased
service, explained that the Department
would in the future not approve
prospectuses under part 380 absent
certain supplemental assurances
designed to avoid practices evident in
the Direct Air case that were in violation
of the public charter rules.
Specifically, the notice described the
Department’s plan to reject public
charter prospectus filings that do not
affirmatively state that: (1) The contract
between the charter operator and the
direct air carrier is for the full price of
the air transportation; and (2) the
charter operator will retain control and
access to its reservations records, and
share those records with the direct air
carriers. Furthermore, we stated that we
would not permit the charter operator to
accept payment by debit card (although
we did state our willingness to consider
waivers from this prohibition on
demonstration that consumers would
receive the protections of the Fair Credit
Billing Act). The notice also stated that
voucher programs, such as that offered
by Direct Air, are not acceptable and
will be considered to be per se
violations of 14 CFR part 380.
Shortly after issuance of this notice,
the Department received a number of
comments from the public charter
AGENCY:
The Department is publishing
the following notice on clarifying new
SUMMARY:
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1 In addition to being published in the Federal
Register (77 FR 69692 (Nov. 20, 2012)), the notice
was also posted at www.regulations.gov and on the
Enforcement Office Web site https://www.dot.gov/
airconsumer/guidance-aviation-rules-and-statutes
and was widely distributed by email to persons
who regularly communicate with the office.
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community. Some comments
questioned the legality of the notice.
Other comments sought clarification or
revision of aspects of the guidance
addressed in the notice. In order to have
sufficient time to review and consider
these comments, we extended the
effective date of the guidance to January
14, 2013.2 Then, on January 4, 2013,
after considering the comments received
on our November 13 guidance, we
issued a draft clarification and invited
additional public comments by January
8, 2013. We received six comments from
four attorneys who represent public
charter industry participants, one
charter company and a prospective
charter operator.3
We have now fully considered the
comments previously received and
additional comments we solicited on
the draft clarification, and we are
convinced that requiring supplemental
assurances to prospectus filings is
within our authority and is needed to
prevent consumer harm. However, we
agree with the public charter
community that further clarification and
revision of the guidance is needed to
make certain that the assurances to be
filed as part of the prospectus filings
address the practical business problems
raised in the comments we received but
still prevent the problematic situation
that took place when Direct Air ceased
service. As such, this notice modifies
the prior guidance by providing
citations to the existing laws that are the
basis for the guidance, further clarifying
the supplemental information/
assurances that should be included in
public charter prospectus filings and
further clarifying our enforcement
policy with respect to certain matters
discussed in the guidance. In response
to comments that the charter operator,
the bank, and the direct air carrier
should not be asked to make assurances
in areas where they have no
responsibility, the required assurances
will only be expected with respect to
the portions of the charter operations in
which the entity making the assurance
is directly involved.
Our prior notice stated that charter
operators could not have contracts with
direct air carriers that are limited to
providing aircraft, crew, maintenance
and insurance (ACMI). We stated that
the contract between the charter
operator and the direct air carrier must
be for the full price of the air
2 77
FR 74729 (Dec. 17, 2012).
is a discussion of the comments
received on the draft clarification we posted on our
Web site (https://www.dot.gov/airconsumer/latestnews) and placed in DOT–OST–2013–0002 at
https://regulations.gov on January 4, 2013.
3 Attached
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transportation.4 This guidance is based
on section 380.11 which provides that a
direct air carrier shall be paid in full for
the cost of the charter transportation
prior to the scheduled date of flight
departure. However, as a matter of
enforcement policy, we have decided
not to take action against public charter
operators that have ACMI contracts
provided that the charter operators and
their escrow banks offer assurances that
all passenger funds in charter programs
are deposited in the relevant escrow and
that the escrow banks involved maintain
accounts and full and accurate
accounting of disbursements to vendors
such as fuel or ground handling
providers in accordance with 14 CFR
380.34(b). For charter operators using a
security instrument under section
380.34(a), ACMI contracts may also be
utilized provided that the amount of the
security instrument is unlimited or for
the full cost of the air transportation.
(See footnote 4). Further, in the limited
circumstances where a government
requires payment directly from a public
charter operator rather than the escrow
bank as required by section
380.34(b)(2)(v), as a matter of
enforcement policy, we will not pursue
enforcement action against the public
charter operator for doing so.5 In
addition, in situations where a public
charter operator is required to pay
government taxes and fees in advance of
the passenger date of travel, we will not
take action against these entities for
paying the fees out of the escrow
account prior to payment to the direct
air carrier irrespective of the
requirement in section 380.34(b)(2)(ii)
for the direct air carrier to be paid in full
prior to other payments being made, so
long as the bank and public charter
operator maintain a full accounting of
records of such disbursements.6 Our
rules require that disbursements be
identified on an individual flight by
flight basis. Our primary intent is to
reaffirm that all passenger funds must
be deposited initially in the escrow
accounts, apart from certain deductions
allowed in travel agent sales.
Another area of clarification concerns
control by public charter operators of
passenger reservation records and the
4 The full cost of the direct air transportation
includes the cost of aircraft, crew, maintenance,
insurance, fuel, ground handling, landing fees,
reservations costs, passenger facility fees and taxes,
and all other costs associated with the direct air
transportation.
5 We are aware of markets, for example Cuba, in
which payments for ground services may only be
made by the charter operator.
6 In case the charter is cancelled, the charter
operator must also be prepared to make full refunds
to consumers, including amounts disbursed as prepaid taxes (14 CFR 380.32(k)).
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sharing of these records with direct air
carriers. Our prior notice indicated that
we would not approve public charter
prospectus filings that do not include an
assurance that the public charter
operator will retain direct control of all
passenger reservation records and will
share those records with the direct air
carrier to ensure that, in the event of a
major disruption in the program, the
direct air carrier would be able to
identify and contact tour participants
regarding returning flights.
Representatives of charter operators
contended that the Department was
creating new requirements through
guidance. However, a number of
sections in part 380 require public
charter operators to provide
notifications to passengers under certain
specific circumstances. See, e.g.,
sections 380.12 and 380.33. In addition,
sections 249.21 and 380.36 require
public charter operators to maintain
passenger records for six months after
the completion or cancellation of the
flight or series of flights. To comply
with these obligations, public charter
operators must have access to passenger
reservation records. In addition, section
14 CFR 212.3(f) requires direct air
carriers conducting public charter
operations to return passengers who
purchased round trip transportation on
the charter and who were transported by
that carrier on their outbound flights to
their point of origin. Without passenger
reservation records, direct air carriers
would be unable to comply with this
existing requirement. Therefore, we
view the existing requirements as
mandating that public charter operators
share these records with direct air
carriers when needed to return
passengers to their points of origin.
Representatives of charter operators
also appeared to believe that the
guidance would not allow charter
operators to rely on reservations systems
provided by third-parties. This is not
correct. Direct air carriers and charter
operators can rely on such outside
vendors for these services but must
ensure that they still have access to the
records. Our intent was and remains to
emphasize, to both the charter operator
and the direct carrier, the importance of
the obligation to return passengers
under section 212.3, and not to preclude
the use of third-party vendors. Both the
public charter operator and the direct
air carrier have discretion in how to
meet this obligation, but the Department
needs assurances in the prospectus
filings that the public charter operator
will maintain access to the reservation
records as required by existing rules and
share this information with the direct
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air carrier in case of a disruption in a
charter program to comply with the
requirement to return passengers under
section 212.3.
The third issue that we addressed in
our guidance concerned the use of debit
cards in the purchase of charter
transportation. Our November 13 notice
prohibited the use of debit cards in the
purchase of charter transportation,
citing the explicit language of section
380.31 7, which only provides for
payment by check, money order or
credit card, but not by debit card. We
were particularly concerned that debit
cards lack the chargeback protections
afforded credit card users under the Fair
Credit Billing Act (15 U.S.C. 1601 et
seq.). As a matter of enforcement policy,
we have now determined not to pursue
action against charter operators that
accept payment by debit card if they can
provide assurances to the Department
that their merchant banks and credit
card/debit card processors will provide
the same chargeback protections to
those using debit cards as credit card
users receive. If a charter operator
cannot obtain such assurances then it
may not accept debit card payments for
transportation.8
Finally, we wish to clarify our
position regarding vouchers. We stated
in our November 13 notice that the
Enforcement Office would consider any
voucher program similar to that offered
by Direct Air to be a per se violation of
14 CFR part 380. In the case of Direct
Air, the charter operator sold vouchers
for travel at unspecified dates in the
future. Consumer funds did not, as a
result, receive the escrow protection
required under Part 380. However, the
proscription on the use of vouchers
applies only to voucher programs for
which the charter operator receives
money.
Purely gratuitous or complimentary
vouchers distributed for passenger
goodwill are not affected by this policy
and they will not be considered to be
per se violations.9
This revised policy regarding
approval of charter prospectuses
clarifies the notice of November 13,
7 The provision cited should have been 14 CFR
380.34(b)(2)(i).
8 With respect to charters protected by a security
agreement covering the full cost of the air
transportation (14 CFR 380.34(a)), our rules allow
charter operators to accept payment in any form.
(See, 63 FR 28225, 28232, May 22, 1998; fn. 10).
9 Complimentary vouchers will, however,
continue to be subject to statutory provisions on
unfair and deceptive trade practices (49 U.S.C.
41712) and unauthorized holding out of air
transportation (49 U.S.C. 41101) wherever
applicable. For example, distributing vouchers in
excess of the capacity of aircraft contracted for in
a specific program would constitute such a
violation.
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2012, and will take effect 60 days from
the date of this notice. Prospectuses
filed after that date will not be approved
without the supplemental assurances,
outlined above. The Enforcement Office
intends to undertake enforcement
action, where appropriate, if it obtains
evidence of violations of commitments
made in those statements, or of the
acceptance of debit purchases without
the appropriate assurances as discussed
above, or of sales initiatives such as the
voucher program described above.
Moreover, 14 CFR 380.24 continues to
require the Department ‘‘to deny the
exemption authority of any charter
operator, without hearing, if [the
Department] finds that such action is
necessary in the public interest or is
otherwise necessary in order to protect
the rights of the travelling public’’ and
it will do so. Questions regarding this
notice may be addressed to the Office of
Aviation Enforcement and Proceedings
(C–70), 1200 New Jersey Avenue SE.,
Washington, DC 20590 or you may
contact Lisa Swafford-Brooks, Chief,
Aviation Licensing Compliance Branch
(lisa.swafford-brooks@dot.gov), or
Nicholas Lowry, Senior Attorney
(nick.lowry@dot.gov) in that office, at
(202) 366–9342.
Dated: January 14, 2013.
Paul L. Gretch,
Director, Office of International Aviation.
Samuel Podberesky,
Assistant General Counsel for Aviation
Enforcement and Proceedings.
An electronic version of this
document is available at https://
www.regulations.gov.
Discussion of Comments on Draft
Clarification of November 2012
Guidance on Review and Approval of
Public Charter Operations and
Prospectuses
In our draft notice placed in DOT–
OST–2013–0002 on the clarification of
our November 13 guidance, we invited
public comments by January 8, 2013 on
our revised guidance on the review and
approval of public charter prospectuses
under 14 CFR part 380. We received six
comments from four attorneys who
represent public charter industry
participants, one charter company and a
prospective charter operator. The notice,
as revised, is included above this
summary of comments.
With respect to AMCI contracts, one
commenter states that assurances
regarding depositing all funds in escrow
accounts, as the notice suggests, is
redundant, as it is already part of the
rule but did not offer any further
objection. A second comment queried
whether payments to vendors and tax
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5241
payments would be paid by the escrow
bank or the charter operator and
whether payments could be made prior
to the flight completion date. The notice
explains that payment may be made by
the charter operator in limited
circumstance subject to certain
conditions. We also clarify that we will
allow prepayment of fees out of escrow
if required by a government entity.
On reservations records, again we
received a comment stating that
assurances regarding access to passenger
records are redundant since they are
already implicitly required by the rule.
Another comment pointed out that
charter carriers and operators are not
able to maintain independent
reservations systems. Our notice
recognizes this and states that the
carriers and charter operators have
discretion in how they maintain records
and can use third party vendors, so long
as they are in a position to make
reasonable efforts to contact passengers
in case of a stranding.
With respect to the use of debit cards,
two commenters point out that bondonly programs should be free to accept
debit cards without the assurances
described in the order because the
bonds cover the full amount of the air
transportation. We agree and have
modified the notice to reflect that
qualification.
In addition, the comments of a
prospective charter operator generally
denied that the Department had
authority to prohibit the use of debit
cards or voucher programs or to seek
assurances regarding AMCI contracts.
We believe he is wrong on these points.
He also asserts that the Department
should provide free bonding protection
for all public charter programs. These
comments are outside the scope of our
notice and beyond our authority.
Another charter operator suggested,
with respect to voucher programs, that
pre-paid voucher programs should be in
compliance with part 380, provided all
consumer funds remained in a general
escrow account until the consumer
selected a date and then could be
allocated to a specific flight date. In
addition, the commenter suggests that
carriers should be free to enter into
AMCI contracts with charter operators if
special security accounts were
established to cover flight expenses,
such as fuel, not covered in the AMCI
contract. We remain open to consider
such proposals in the context of waiver
or exemption requests so long as we are
convinced that consumer funds receive
adequate protection.
Several of the commenters expressed
interest in the exact form the assurances
discussed in the notice should take. We
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plan to place sample assurances in the
docket for public review and comment
shortly (DOT–OST–2013–0002; at
https://regulations.gov).
Tuesday, February 12
8:30 a.m.–3:00 p.m.
meetings
Sub-groups
[FR Doc. 2013–01395 Filed 1–23–13; 8:45 am]
Wednesday, February 13
BILLING CODE 4910–9X–P
8:30 a.m. Sub-groups meetings
3:00 p.m. Tour of Delta’s OCC
DEPARTMENT OF TRANSPORTATION
Thursday, February 14
Federal Aviation Administration
8:30 a.m.–3:00 p.m.
meetings
Friday, February 15
32nd Meeting: RTCA Special
Committee 206, Aeronautical
Information and Meteorological Data
Link Services
Federal Aviation
Administration (FAA), U.S. Department
of Transportation (DOT).
ACTION: Meeting Notice of RTCA Special
Committee 206, Aeronautical
Information and Meteorological Data
Link Services.
AGENCY:
The FAA is issuing this notice
to advise the public of the thirty-second
meeting of the RTCA Special Committee
206, Aeronautical Information and
Meteorological Data Link Services.
DATES: The meeting will be held
February 11–15, 2013 from 8:30 a.m.–
5:00 p.m. (except Monday).
ADDRESSES: The meeting will be held at
Delta Airlines Headquarters, 1030 Delta
Boulevard, Atlanta, GA 30354.
FOR FURTHER INFORMATION CONTACT: The
RTCA Secretariat, 1150 18th Street NW.,
Suite 910, Washington, DC 20036, or by
telephone at (202) 330–0652/(202) 833–
9339, fax at (202) 833–9434, or Web site
at https://www.rtca.org. In addition,
Sophie Bousquet may be contacted
directly at email sbouquet@rtca.org or
(202) 330–0663.
SUPPLEMENTARY INFORMATION: Pursuant
to section 10(a) (2) of the Federal
Advisory Committee Act (Pub. L. 92–
463, 5 U.S.C., App.), notice is hereby
given for a meeting of Special
Committee 206. The agenda will include
the following:
SUMMARY:
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Monday, February 11, 2013
9:00 a.m. Opening Plenary
• Chairmen’s remarks and host’s
comments
• Attendee Introductions
• Approval of previous meeting
minutes
• Review and approve meeting
agenda
• Action item review
• TOR change
• Sub-Group status and week’s plan
10:30 a.m. Break
10:45 a.m. Sub-groups meetings
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Sub-groups
8:30 a.m. Closing Plenary
• Sub-groups reports
• Industry Coordination
• Tables in Appendix C of DO–340
• Result of SC 217 ISRA
• Action Item Review
• Future meeting plans and dates
• Other business
12:30 p.m. Adjourn (no lunch break)
Attendance is open to the interested
public but limited to space availability.
With the approval of the chairman,
members of the public may present oral
statements at the meeting. Persons
wishing to present statements or obtain
information should contact the person
listed in the FOR FURTHER INFORMATION
CONTACT section. Members of the public
may present a written statement to the
committee at any time.
Issued in Washington, DC, on December
19, 2012.
Richard F. Gonzalez,
Management Analyst, Business Operations
Group, ANG–A12, Federal Aviation
Administration.
[FR Doc. 2013–01378 Filed 1–23–13; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
Membership in the National Parks
Overflights Advisory Group Aviation
Rulemaking Committee
Federal Aviation
Administration, Department of
Transportation.
ACTION: Notice.
AGENCY:
By Federal Register notice
(See 77 FR 27835–27836, May 11, 2012
and 77 FR 48201, August 13, 2012) the
National Park Service (NPS) and the
Federal Aviation Administration (FAA)
invited interested persons to apply to
fill one upcoming opening on the
National Parks Overflights Advisory
Group (NPOAG) Aviation Rulemaking
Committee (ARC). The notice invited
interested persons to apply to fill a
vacancy representing environmental
concerns due to the incumbent
SUMMARY:
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member’s completion of a three-year
term appointment on October 9, 2012.
Since the previous notices did not draw
enough responses from individuals for
the open environmental vacancy, NPS
and FAA are using this notice to invite
other interested individuals to apply for
the environmental opening. If you
responded to either of the initial notices
for the environmental opening, you will
still be under consideration and need
not re-apply. This notice also informs
the public of another upcoming opening
to represent commercial air tour
operator interests due to an incumbent
member’s completion of a three-year
term appointment on May 19, 2013.
DATES: Persons interested in applying
for the NPOAG openings representing
environmental concerns and
commercial air tour operator interests
need to apply by February 22, 2013.
FOR FURTHER INFORMATION CONTACT:
Keith Lusk, Special Programs Staff,
Federal Aviation Administration,
Western-Pacific Region Headquarters,
P.O. Box 92007, Los Angeles, CA
90009–2007, telephone: (310) 725–3808,
email: Keith.Lusk@faa.gov.
SUPPLEMENTARY INFORMATION:
Background
The National Parks Air Tour
Management Act of 2000 (the Act) was
enacted on April 5, 2000, as Public Law
106–181. The Act required the
establishment of the advisory group
within 1 year after its enactment. The
NPOAG was established in March 2001.
The advisory group is comprised of a
balanced group of representatives of
general aviation, commercial air tour
operations, environmental concerns,
and Native American tribes. The
Administrator of the FAA and the
Director of NPS (or their designees)
serve as ex officio members of the
group. Representatives of the
Administrator and Director serve
alternating 1-year terms as chairman of
the advisory group.
In accordance with the Act, the
advisory group provides ‘‘advice,
information, and recommendations to
the Administrator and the Director—
(1) On the implementation of this title
[the Act] and the amendments made by
this title;
(2) On commonly accepted quiet
aircraft technology for use in
commercial air tour operations over a
national park or tribal lands, which will
receive preferential treatment in a given
air tour management plan;
(3) On other measures that might be
taken to accommodate the interests of
visitors to national parks; and
(4) At the request of the Administrator
and the Director, safety, environmental,
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Agencies
[Federal Register Volume 78, Number 16 (Thursday, January 24, 2013)]
[Notices]
[Pages 5239-5242]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-01395]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
Public Charter Prospectuses
AGENCY: Office of the Secretary, Department of Transportation.
ACTION: Guidance on review and approval of public charter prospectuses.
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SUMMARY: The Department is publishing the following notice on
clarifying new policies affecting the review and approval of public
charter filings under 14 CFR part 380 and related changes in the
Department's enforcement policies. These revisions refer to a notice
dated November 13, 2012, appearing at 77 FR 69692 (Nov. 20, 2012).
FOR FURTHER INFORMATION CONTACT: Nicholas Lowry, Attorney, Office of
Aviation Enforcement and Proceedings (C-70), 1200 New Jersey Ave. SE.,
Washington, DC 20590, (202) 366-9349.
Clarification of November 2012 Guidance on Review and Approval of
Public Charter Operations and Prospectuses
On November 13, 2012, the Department's Office of International
Aviation and Office of Aviation Enforcement and Proceedings issued a
joint notice regarding future filings under 14 CFR part 380, the
Department's rule on public charters and enforcement policy under those
rules.\1\ That notice, which was an effort to prevent the kind of harm
to consumers that took place when the charter operator Southern Sky Air
& Tours, LLC d/b/a Direct Air ceased service, explained that the
Department would in the future not approve prospectuses under part 380
absent certain supplemental assurances designed to avoid practices
evident in the Direct Air case that were in violation of the public
charter rules.
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\1\ In addition to being published in the Federal Register (77
FR 69692 (Nov. 20, 2012)), the notice was also posted at
www.regulations.gov and on the Enforcement Office Web site https://www.dot.gov/airconsumer/guidance-aviation-rules-and-statutes and was
widely distributed by email to persons who regularly communicate
with the office.
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Specifically, the notice described the Department's plan to reject
public charter prospectus filings that do not affirmatively state that:
(1) The contract between the charter operator and the direct air
carrier is for the full price of the air transportation; and (2) the
charter operator will retain control and access to its reservations
records, and share those records with the direct air carriers.
Furthermore, we stated that we would not permit the charter operator to
accept payment by debit card (although we did state our willingness to
consider waivers from this prohibition on demonstration that consumers
would receive the protections of the Fair Credit Billing Act). The
notice also stated that voucher programs, such as that offered by
Direct Air, are not acceptable and will be considered to be per se
violations of 14 CFR part 380.
Shortly after issuance of this notice, the Department received a
number of comments from the public charter
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community. Some comments questioned the legality of the notice. Other
comments sought clarification or revision of aspects of the guidance
addressed in the notice. In order to have sufficient time to review and
consider these comments, we extended the effective date of the guidance
to January 14, 2013.\2\ Then, on January 4, 2013, after considering the
comments received on our November 13 guidance, we issued a draft
clarification and invited additional public comments by January 8,
2013. We received six comments from four attorneys who represent public
charter industry participants, one charter company and a prospective
charter operator.\3\
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\2\ 77 FR 74729 (Dec. 17, 2012).
\3\ Attached is a discussion of the comments received on the
draft clarification we posted on our Web site (https://www.dot.gov/airconsumer/latest-news) and placed in DOT-OST-2013-0002 at https://regulations.gov on January 4, 2013.
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We have now fully considered the comments previously received and
additional comments we solicited on the draft clarification, and we are
convinced that requiring supplemental assurances to prospectus filings
is within our authority and is needed to prevent consumer harm.
However, we agree with the public charter community that further
clarification and revision of the guidance is needed to make certain
that the assurances to be filed as part of the prospectus filings
address the practical business problems raised in the comments we
received but still prevent the problematic situation that took place
when Direct Air ceased service. As such, this notice modifies the prior
guidance by providing citations to the existing laws that are the basis
for the guidance, further clarifying the supplemental information/
assurances that should be included in public charter prospectus filings
and further clarifying our enforcement policy with respect to certain
matters discussed in the guidance. In response to comments that the
charter operator, the bank, and the direct air carrier should not be
asked to make assurances in areas where they have no responsibility,
the required assurances will only be expected with respect to the
portions of the charter operations in which the entity making the
assurance is directly involved.
Our prior notice stated that charter operators could not have
contracts with direct air carriers that are limited to providing
aircraft, crew, maintenance and insurance (ACMI). We stated that the
contract between the charter operator and the direct air carrier must
be for the full price of the air transportation.\4\ This guidance is
based on section 380.11 which provides that a direct air carrier shall
be paid in full for the cost of the charter transportation prior to the
scheduled date of flight departure. However, as a matter of enforcement
policy, we have decided not to take action against public charter
operators that have ACMI contracts provided that the charter operators
and their escrow banks offer assurances that all passenger funds in
charter programs are deposited in the relevant escrow and that the
escrow banks involved maintain accounts and full and accurate
accounting of disbursements to vendors such as fuel or ground handling
providers in accordance with 14 CFR 380.34(b). For charter operators
using a security instrument under section 380.34(a), ACMI contracts may
also be utilized provided that the amount of the security instrument is
unlimited or for the full cost of the air transportation. (See footnote
4). Further, in the limited circumstances where a government requires
payment directly from a public charter operator rather than the escrow
bank as required by section 380.34(b)(2)(v), as a matter of enforcement
policy, we will not pursue enforcement action against the public
charter operator for doing so.\5\ In addition, in situations where a
public charter operator is required to pay government taxes and fees in
advance of the passenger date of travel, we will not take action
against these entities for paying the fees out of the escrow account
prior to payment to the direct air carrier irrespective of the
requirement in section 380.34(b)(2)(ii) for the direct air carrier to
be paid in full prior to other payments being made, so long as the bank
and public charter operator maintain a full accounting of records of
such disbursements.\6\ Our rules require that disbursements be
identified on an individual flight by flight basis. Our primary intent
is to reaffirm that all passenger funds must be deposited initially in
the escrow accounts, apart from certain deductions allowed in travel
agent sales.
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\4\ The full cost of the direct air transportation includes the
cost of aircraft, crew, maintenance, insurance, fuel, ground
handling, landing fees, reservations costs, passenger facility fees
and taxes, and all other costs associated with the direct air
transportation.
\5\ We are aware of markets, for example Cuba, in which payments
for ground services may only be made by the charter operator.
\6\ In case the charter is cancelled, the charter operator must
also be prepared to make full refunds to consumers, including
amounts disbursed as pre-paid taxes (14 CFR 380.32(k)).
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Another area of clarification concerns control by public charter
operators of passenger reservation records and the sharing of these
records with direct air carriers. Our prior notice indicated that we
would not approve public charter prospectus filings that do not include
an assurance that the public charter operator will retain direct
control of all passenger reservation records and will share those
records with the direct air carrier to ensure that, in the event of a
major disruption in the program, the direct air carrier would be able
to identify and contact tour participants regarding returning flights.
Representatives of charter operators contended that the Department was
creating new requirements through guidance. However, a number of
sections in part 380 require public charter operators to provide
notifications to passengers under certain specific circumstances. See,
e.g., sections 380.12 and 380.33. In addition, sections 249.21 and
380.36 require public charter operators to maintain passenger records
for six months after the completion or cancellation of the flight or
series of flights. To comply with these obligations, public charter
operators must have access to passenger reservation records. In
addition, section 14 CFR 212.3(f) requires direct air carriers
conducting public charter operations to return passengers who purchased
round trip transportation on the charter and who were transported by
that carrier on their outbound flights to their point of origin.
Without passenger reservation records, direct air carriers would be
unable to comply with this existing requirement. Therefore, we view the
existing requirements as mandating that public charter operators share
these records with direct air carriers when needed to return passengers
to their points of origin.
Representatives of charter operators also appeared to believe that
the guidance would not allow charter operators to rely on reservations
systems provided by third-parties. This is not correct. Direct air
carriers and charter operators can rely on such outside vendors for
these services but must ensure that they still have access to the
records. Our intent was and remains to emphasize, to both the charter
operator and the direct carrier, the importance of the obligation to
return passengers under section 212.3, and not to preclude the use of
third-party vendors. Both the public charter operator and the direct
air carrier have discretion in how to meet this obligation, but the
Department needs assurances in the prospectus filings that the public
charter operator will maintain access to the reservation records as
required by existing rules and share this information with the direct
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air carrier in case of a disruption in a charter program to comply with
the requirement to return passengers under section 212.3.
The third issue that we addressed in our guidance concerned the use
of debit cards in the purchase of charter transportation. Our November
13 notice prohibited the use of debit cards in the purchase of charter
transportation, citing the explicit language of section 380.31 \7\,
which only provides for payment by check, money order or credit card,
but not by debit card. We were particularly concerned that debit cards
lack the chargeback protections afforded credit card users under the
Fair Credit Billing Act (15 U.S.C. 1601 et seq.). As a matter of
enforcement policy, we have now determined not to pursue action against
charter operators that accept payment by debit card if they can provide
assurances to the Department that their merchant banks and credit card/
debit card processors will provide the same chargeback protections to
those using debit cards as credit card users receive. If a charter
operator cannot obtain such assurances then it may not accept debit
card payments for transportation.\8\
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\7\ The provision cited should have been 14 CFR 380.34(b)(2)(i).
\8\ With respect to charters protected by a security agreement
covering the full cost of the air transportation (14 CFR 380.34(a)),
our rules allow charter operators to accept payment in any form.
(See, 63 FR 28225, 28232, May 22, 1998; fn. 10).
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Finally, we wish to clarify our position regarding vouchers. We
stated in our November 13 notice that the Enforcement Office would
consider any voucher program similar to that offered by Direct Air to
be a per se violation of 14 CFR part 380. In the case of Direct Air,
the charter operator sold vouchers for travel at unspecified dates in
the future. Consumer funds did not, as a result, receive the escrow
protection required under Part 380. However, the proscription on the
use of vouchers applies only to voucher programs for which the charter
operator receives money.
Purely gratuitous or complimentary vouchers distributed for
passenger goodwill are not affected by this policy and they will not be
considered to be per se violations.\9\
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\9\ Complimentary vouchers will, however, continue to be subject
to statutory provisions on unfair and deceptive trade practices (49
U.S.C. 41712) and unauthorized holding out of air transportation (49
U.S.C. 41101) wherever applicable. For example, distributing
vouchers in excess of the capacity of aircraft contracted for in a
specific program would constitute such a violation.
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This revised policy regarding approval of charter prospectuses
clarifies the notice of November 13, 2012, and will take effect 60 days
from the date of this notice. Prospectuses filed after that date will
not be approved without the supplemental assurances, outlined above.
The Enforcement Office intends to undertake enforcement action, where
appropriate, if it obtains evidence of violations of commitments made
in those statements, or of the acceptance of debit purchases without
the appropriate assurances as discussed above, or of sales initiatives
such as the voucher program described above. Moreover, 14 CFR 380.24
continues to require the Department ``to deny the exemption authority
of any charter operator, without hearing, if [the Department] finds
that such action is necessary in the public interest or is otherwise
necessary in order to protect the rights of the travelling public'' and
it will do so. Questions regarding this notice may be addressed to the
Office of Aviation Enforcement and Proceedings (C-70), 1200 New Jersey
Avenue SE., Washington, DC 20590 or you may contact Lisa Swafford-
Brooks, Chief, Aviation Licensing Compliance Branch (lisa.swafford-brooks@dot.gov), or Nicholas Lowry, Senior Attorney
(nick.lowry@dot.gov) in that office, at (202) 366-9342.
Dated: January 14, 2013.
Paul L. Gretch,
Director, Office of International Aviation.
Samuel Podberesky,
Assistant General Counsel for Aviation Enforcement and Proceedings.
An electronic version of this document is available at https://www.regulations.gov.
Discussion of Comments on Draft Clarification of November 2012 Guidance
on Review and Approval of Public Charter Operations and Prospectuses
In our draft notice placed in DOT-OST-2013-0002 on the
clarification of our November 13 guidance, we invited public comments
by January 8, 2013 on our revised guidance on the review and approval
of public charter prospectuses under 14 CFR part 380. We received six
comments from four attorneys who represent public charter industry
participants, one charter company and a prospective charter operator.
The notice, as revised, is included above this summary of comments.
With respect to AMCI contracts, one commenter states that
assurances regarding depositing all funds in escrow accounts, as the
notice suggests, is redundant, as it is already part of the rule but
did not offer any further objection. A second comment queried whether
payments to vendors and tax payments would be paid by the escrow bank
or the charter operator and whether payments could be made prior to the
flight completion date. The notice explains that payment may be made by
the charter operator in limited circumstance subject to certain
conditions. We also clarify that we will allow prepayment of fees out
of escrow if required by a government entity.
On reservations records, again we received a comment stating that
assurances regarding access to passenger records are redundant since
they are already implicitly required by the rule. Another comment
pointed out that charter carriers and operators are not able to
maintain independent reservations systems. Our notice recognizes this
and states that the carriers and charter operators have discretion in
how they maintain records and can use third party vendors, so long as
they are in a position to make reasonable efforts to contact passengers
in case of a stranding.
With respect to the use of debit cards, two commenters point out
that bond-only programs should be free to accept debit cards without
the assurances described in the order because the bonds cover the full
amount of the air transportation. We agree and have modified the notice
to reflect that qualification.
In addition, the comments of a prospective charter operator
generally denied that the Department had authority to prohibit the use
of debit cards or voucher programs or to seek assurances regarding AMCI
contracts. We believe he is wrong on these points. He also asserts that
the Department should provide free bonding protection for all public
charter programs. These comments are outside the scope of our notice
and beyond our authority. Another charter operator suggested, with
respect to voucher programs, that pre-paid voucher programs should be
in compliance with part 380, provided all consumer funds remained in a
general escrow account until the consumer selected a date and then
could be allocated to a specific flight date. In addition, the
commenter suggests that carriers should be free to enter into AMCI
contracts with charter operators if special security accounts were
established to cover flight expenses, such as fuel, not covered in the
AMCI contract. We remain open to consider such proposals in the context
of waiver or exemption requests so long as we are convinced that
consumer funds receive adequate protection.
Several of the commenters expressed interest in the exact form the
assurances discussed in the notice should take. We
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plan to place sample assurances in the docket for public review and
comment shortly (DOT-OST-2013-0002; at https://regulations.gov).
[FR Doc. 2013-01395 Filed 1-23-13; 8:45 am]
BILLING CODE 4910-9X-P