Aviation Data Modernization

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Parts 241 and 249

[Dockets No. OST-1998-4043]

RIN 2105-AC71

Aviation Data Modernization

AGENCY:

Office of the Secretary, Department of Transportation.

ACTION:

Notice of proposed rulemaking (NPRM).

SUMMARY:

The Department of Transportation (the Department) is proposing to revise the rules governing the nature, scope, source, and means for collecting and processing aviation traffic data. Those reporting requirements are known as the: Origin—Destination Survey of Airline Passenger Traffic (O&D Survey); and Form 41, Schedule T-100—U.S. Air Carrier Traffic and Capacity Data by Nonstop Segment and On-flight Market and Form 41, Schedule T-100(f)—Foreign Air Carrier Traffic Data by Nonstop Segment and On-flight Market (collectively, the T-100/T-100(f)). Current traffic statistics no longer adequately measure the size, scope and strength of the air travel industry. This NPRM proposes to simplify the requirements placed upon Carriers reporting the O&D Survey. The proposed O&D Survey will eliminate the ambiguity in the identification of the Participating Carrier and eliminate the need for manual data collection by designating the Issuing Carrier as the Participating Carrier. It will also increase accuracy by expanding the volume of data to 100 percent of Ticketed Itineraries, and make the data more useful to Department, airport, and industry planners by collecting broader information about the Ticketed Itinerary sale and the scheduled itinerary details. The proposed T-100/T-100(f) will improve the quality of the data by maximizing the congruence of the O&D Survey and the T-100/T-100(f).

DATES:

Comments must be submitted by April 18, 2005.

FOR FURTHER INFORMATION CONTACT:

Richard Pittaway, Office of Aviation Analysis, 400 Seventh St. SW., Room 6401, Washington, DC 20590, (202) 366-8856.

SUPPLEMENTARY INFORMATION:

Electronic Access

You can view and download this document by going to the Web site of the Department's Docket Management System (

http://dms.dot.gov/

). On that page, click on “simple search.” On the next page, type in the last four digits of the docket number shown on the first page of this document, 4043. Then click on “search.” An electronic copy of this document also may be downloaded from

http://regulations.gov

and from the Government Printing Office's Electronic Bulletin Board Service at (202) 512-1661. Internet users may reach the Office of the Federal Register's home page at:

http://www.archives.gov/federal_register/index.html

and the Government Printing Office's database at:

http://www.gpoaccess.gov/fr/index.html.

Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review the Department's complete Privacy Act Statement in the

Federal Register

published on April 11, 2000 (65 FR 19477-78) or you may visit

http://dms.dot.gov.

Public Meeting

Based on the significant proposed changes to the O&D reporting system, the Department is considering holding a public meeting. If necessary, the public meeting would allow the Department to gather additional input from the Air Carriers and other stakeholders. Any meeting would be open to the public and a record of the meeting would be placed in the rulemaking docket. If the Department decides a public meeting is necessary, the Department will publish a notice announcing the meeting in the

Federal Register.

Table of Contents

A. Authority

B. Background

1. Current Method of Collecting O&D Survey Data

2. Current Method of Collecting T-100/T-100(f)

3. Office of Inspector General's Report

4. Advanced Notice of Proposed Rulemaking

C. Need for Data Modernization

1. Background

2. Review of Deficiencies in the Current O&D Survey

D. O&D Survey Data Usage

1. The Department

2. Other Government Agencies

3. Other Stakeholders

E. Limitations of O&D Survey and T-100/T-100(f)

F. Need for Regulatory Action

G. Development of the Record in this Rulemaking

H. Scope of this Rulemaking

I. O&D Survey Redesign

1. Summary of the Proposed O&D Survey

2. Discussion of the Proposed O&D Survey

3. Reporting Requirements

4. Significant Issues Related to the Data to Be Collected

5. Transition Period

J. T-100/T-100(f) Considerations

1. Background

2. T-100/T-100(f) Changes to be Considered

K. Data Dissemination

1. Dissemination of Data by Month

2. Proposed Construction of One-way Trips

3. Proposed Proration Method

4. Proposed Changes to Confidentiality

L. Rulemaking Analyses and Notices

M. Glossary

N. Proposed Rule

A. Authority

The Civil Aeronautics Board Sunset Act of 1984 (Pub. L. 98-443) requires the Department of Transportation (the Department), under the authority of the Secretary for Transportation (49 U.S.C. 329(b)(1)), to collect and disseminate information on civil aeronautics and aviation transportation in the U.S., other than that collected and disseminated by the National Transportation Safety Board. The Department must, at minimum, collect information on the origin and destination of passengers and information on the number of passengers traveling by air between any two points in air transportation. Additionally, the Department must be responsive to the needs of the public and disseminate information to make it easier to adapt the air transportation system to the present and future needs of the commerce of the U.S. (49 U.S.C. 40101(a)(7)). In meeting this responsibility, the Department collects data submitted under 14 CFR Part 217 (Reporting Traffic Statistics by Foreign Air Carriers in Civilian Scheduled, Charter, and Nonscheduled Services), 14 CFR Part 241 (Uniform System of Accounts and Reports for Large Certificated Air Carriers) and 14 CFR Part 298 (Exemptions for Air Taxi and Commuter Air Carriers).

Under 14 CFR Part 217, Foreign Air Carriers that are authorized by the Department to provide scheduled passenger services to or from the U.S. must file Form 41 Schedule T-100(f) “Foreign Air Carrier Traffic Data by Nonstop Segment and On-flight Market,” accumulated in accordance with the data elements prescribed in Section 217.5 (14 CFR Part 217 section 217.3). These requirements reflect changes made to international data submissions by large Air Carriers (Docket No. OST-1996-1049, RIN 2105-AC34, 62 FR 6715; Docket No. OST-1998-4043, RIN 2139-AA08, 67 FR 49217).

Under 14 CFR Part 241, all U.S. certificated and commuter U.S. Air Carriers must report their traffic

movements in the T-100. Under 14 CFR Part 217, all Foreign Air Carriers that operate to the U.S. must report their traffic movements involving a U.S. point in the T-100(f). Participation in the O&D Survey is required by 14 CFR Part 241 Section19-7. The source documents are airline tickets ending in double-zero (major domestic markets) or zero (all other markets), reported only by the first honoring and Operating Air Carrier, which shall report the required data for the entire Ticketed Itinerary.

B. Background

This NPRM is part of an effort by the Department to conduct a broad-based review of the requirements for aviation data and to modernize the way the Department collects, processes and disseminates aviation data. Specifically, it addresses the collection and processing of traffic reporting requirements described in the O&D Survey and T-100/T-100(f). It reflects prior analyses of the aviation data collected and processed by the Department and the effective use of that data by the government, the airline industry, consumers, and other stakeholders, which indicate a need to revise and update the O&D Survey and T-100/T-100(f).

1. Current Method of Collecting O&D Survey Data

The O&D Survey collects a sample of itineraries quarterly from large certificated U.S. Air Carriers. Foreign Air Carriers granted antitrust immunity as part of code-share agreements with U.S. Air Carriers contribute O&D Survey data under a similar but separate program. The current method of gathering data for the O&D Survey requires large certificated Air Carriers that transport passengers (i.e. “Participating Carriers”) to examine each flight coupon to determine whether the ticket, or Ticketed Itinerary, is reportable. Reportable tickets are those with a ticket number ending in a double-zero (major domestic markets) or zero (all other markets). In practice, tickets ending in zero are reported, presumably representing ten percent of all Ticketed Itineraries. The ticket must be reported unless it is apparent that another Participating Carrier has already reported it. If it is not apparent, then the Participating Carrier must report the ticket. Data are reported quarterly.

If the Participating Carrier issued the ticket, it will likely have saved the itinerary data for use in reporting the ticket to the Department's O&D Survey. If the Participating Carrier did not issue the ticket, the Carrier must either receive the necessary data from the Carrier that issued the ticket or employ staff to examine the physical passenger document and transcribe as much of the Ticketed Itinerary as possible from a used flight coupon.

2. Current Method of Collecting T-100/T-100(f)

The current method of gathering data for the T-100/T-100(f) requires Reporting Carriers (e.g. all Carriers required by 14 CFR Part 217, 14 CFR Part 241, and 14 CFR Part 298 to report operating statistics) to report the movement of traffic in accordance with the uniform classifications prescribed. They are compiled by Flight-Stage as actually performed and represent 100 percent of operations. The requirements reflect revisions made to T-100/T-100(f) reporting requirements for both Foreign and Domestic Air Carriers (Docket No. OST-1996-1049, RIN 2105-AC34, 62 FR 6715; Docket No. OST-1998-4043, RIN 2139-AA08, 67 FR 49217). Data are submitted monthly.

3. Office of Inspector General's Report

At the request of The Bureau of Transportation Statistics (BTS), the Office of the Inspector General (OIG) audited the Passenger Origin-Destination Survey (O&D Survey) data submitted by the Air Carriers to the Department. The OIG report, released in February 1998, acknowledged that passenger data was critical for basic departmental responsibilities and for making sound policy decisions. It declared the O&D Survey to be insufficiently reliable for use in supporting these decisions. Specifically, the OIG report concluded that “[a]lthough O&D data are used by Department analysts to provide quantitative support for key policy and funding decisions, we found that O&D data are unreliable for use in making these important decisions.'' (Office of Inspector General Audit Report Number AV-1998-086 Feb. 24, 1998 p.iii).

4. Advanced Notice of Proposed Rulemaking

In July 1998, the Office of the Assistant Secretary for Aviation and International Affairs and BTS jointly issued an advance notice of proposed rulemaking (ANPRM) (July 15, 1998, 63 FR 28128) as a first step in reviewing aviation data collected by the Department (Docket OST-1998-4043-1). The Department solicited comments about (1) whether the existing airline traffic and financial data should be amended, supplemented or replaced; (2) whether selected forms and reports should be retained, modified, or eliminated; (3) whether aviation data should be filed electronically; and (4) how the aviation data system should be reengineered to enhance efficiency and reduce costs for both the Department and the airline industry. The ANPRM explored not only the scope of traffic and financial information, but also the sources of data, the timing of the reporting of data, the methods of processing data, and the release of data to the public. The Department subsequently conducted additional outreach and research activities to further assess data requirements and potential improvements to the reporting and processing systems. In the ANPRM, the Department stated its goal that the aviation data systems should be reviewed and modernized to adapt to the present and future needs of commerce.

As a result of the ANPRM, the Department issued an NPRM on August 28, 2001, to assessment changes to the T-100/T-100(f) Traffic Reporting System (Docket No. OST-1998-4043, RIN 2139-AA08, 66 FR 45201). On July 30, 2002, the Department issued a final rule modifying the T-100/T-100(f) Traffic Reporting System (Docket No. OST-1998-4043, RIN 2139-AA08, 67 FR 49217). This NPRM proposes additional data modernization changes that were not previously addressed in prior rulemakings.

C. Need for Data Modernization

In 1947, the U.S. Government under the Civil Aeronautics Board (CAB) began keeping information about the origin and destination of passenger air travel based on passenger reservations. In 1968, the O&D Survey was overhauled and the basis of counting passengers was changed to the present system of counting sold tickets reported after first use. With the exception of a few added data elements to record code-share ticketing, the O&D Survey collected today has changed little since 1968, although some changes were made to the T-100/T-100(f) (Docket OST-1996-1049, RIN 2105-AC34, 62 FR 6715; Docket OST-1998-4043, RIN 2139-AA08, 67 FR 49217). The industry, however, has changed a great deal since then.

1. Background

Worldwide, the scheduled air transportation industry is divided into those Carriers that share passengers with one another on the same Air Travel Ticket, a practice called interlining, and those Carriers that operate independently without interline agreements. For both types of Carriers, only one Carrier serves as the Issuing Carrier, but for interlining Carriers, the

Issuing Carrier plays a coordinating role for all other Carriers included in the Ticketed Itinerary. The Issuing Carrier is responsible for holding the ticket purchaser's funds until they are earned, paying taxes due to government agencies, and paying the travel agent commission, if any. The Issuing Carrier is also known as the plating Carrier because, in the age when flight coupons had red carbon paper backing, the Issuing Carrier's three-digit identifier was stamped on a metal plate that travel agents and airline ticket agents used to imprint the first three positions of a 13-digit ticket number of an Air Travel Ticket.

The Issuing Carrier holds the ticket purchaser's funds until they have been earned by providing transportation to the passenger. When the passenger's travel plans include travel on multiple Carriers on the same Ticketed Itinerary, the Carrier that transports the passenger provides evidence to the Issuing Carrier that the passenger has been transported in order to receive its share of the funds. This process is called “interline settlement” or “interline billing.” When presented with evidence that the passenger has been transported, the Issuing Carrier credits the billing Carrier with its prorated share of the passenger's fare. Since sharing passengers internationally is common, the interline billing process is standardized worldwide across all Carriers that choose to interline passengers. Because travel agencies all over the world sell tickets on Carriers located in many countries, and because passenger travel plans often involved multiple Carriers, interlining Carriers and travel agents worldwide created the standard agent ticket, which is used universally by interlining Carriers. These Carriers use identical, or near identical, billing processes to facilitate the handling of shared tickets. Even when travel is scheduled on a single Carrier, extenuating circumstances due to weather, mechanical, or other operational difficulties can result in passengers being transported on multiple Carriers. After accommodating a displaced passenger, the Carriers use standard interline billing processes to transfer funds from the Issuing Carrier to the Carrier that transported the passenger. Carriers that do not choose to interline passengers and that do not rely on travel agents to distribute their travel products are not bound by these standard procedures and agreements, but most Carriers choose to use industry standard procedures nonetheless.

Tax authorities generally require the Issuing Carrier to remit all taxes and fees associated with the Air Travel Ticket on behalf of all Carriers that appear on the Ticketed Itinerary. The Issuing Carrier, regardless of the identity of the Carrier that will operate each Flight Coupon Stage, will remit the tax tied to each Flight Coupon Stage. A case in point is the Aviation and Transportation Security Act (ATSA), Public law 107-71. Under the ATSA, the Issuing Carrier remits the September 11th Security fee. Even though the fee is calculated based upon the number of Flight Coupon Stages in the Air Travel Ticket, carriers that transport the passengers have no responsibility for collecting and remitting this fee.

For example, a passenger purchasing non-stop service transportation from Washington to St. Louis and back will be assessed the September 11th Security Fee one time for each One-way Trip. The Issuing Carrier will remit the September 11th Security Fee within 60 days of the purchase of the ticket, regardless of the scheduled travel date. Here, if U.S. Airways, Inc. (US Airways) issues a Ticketed Itinerary with outbound travel on US Airways and return travel scheduled several months later on United Air Lines (United), it is the responsibility of US Airways, as the Issuing Carrier, to remit the September 11th Security fees for travel on both outbound and return travel. Passengers pay the September 11th Security fee based on the number of enplanements described in the Ticketed Itinerary, not on the number of actual enplanements that the exigencies of travel actually require the passenger to make. If, on the day the passenger leaves Washington, a problem arises that results in the passenger traveling to another city (and, perhaps, on another Carrier) to change planes before continuing on to St. Louis, the passenger is not assessed a second September 11th Security Fee because the assessment of the September 11th Security Fee was made by the Issuing Carrier when the itinerary was issued.

It is a misnomer to say that travel agents issue tickets. Travel agents distribute (sell or issue for free) Ticketed Itineraries on behalf of an Issuing Carrier, and send the pertinent information about the sale, and the proceeds of the sale, to the Issuing Carrier. Originally, travel agents remitted funds directly to Issuing Carriers. With growing numbers of airlines, the international nature of air travel, and growing numbers of travel agencies, Carriers and travel agencies throughout the world formed clearing houses, which came to be known as Bank Settlement Plans (BSPs), to provide a central location for handling Air Travel Tickets distributed (sold) by travel agents. There is a BSP for each country or, sometimes, clusters of countries. Travel agencies in North America remit sales to the Airlines Reporting Corporation (ARC), organized in the early 1980s, which operates in much the same way that BSPs operate in other parts of the world.

When the current O&D Survey was established in the 1960s, the most common accounting system was a lift-based system. The airline industry used flown flight coupons, also known as lifts, as the primary source of accounting and marketing data. It was customary to make a reservation, and then ticket the reservation at a later time. The ticket consisted of one flight coupon for each enplanement and a summary or auditor's coupon. Every flight coupon contained all the information about the itinerary.

Moving all evidence of the ticket sale to each airline's accounting center was time-consuming and laborious. In the years prior to the widespread use of computers, tickets sold in the U.S. took weeks to reach the Carrier; tickets sold in foreign countries would typically take months. Some ticket sales were processed within a week or two, but very often sales took so long that the passenger had completed the journey before the Issuing Carrier processed the sale of the Air Travel Ticket. In contrast, after each flight departure, the airport personnel sent a flight envelope containing all the flight coupons to the Operating Air Carrier's accounting offices for processing. The flown flight coupons came to the accounting center organized in flight envelopes for flights departed mostly in the prior week. By virtue of the ubiquitous red carbon paper, every flight coupon included a copy of the entire itinerary. Therefore, in a pre-computer environment, a lift-based accounting system organized around the lifted flight coupons made sense. Taxes and commissions had to wait until the sale records reached the Issuing Carrier, but in a lift-based accounting system, a Carrier's accounting and market data needs were met with the information on the lifted flight coupon.

In 1968, the CAB designed the O&D Survey around the lifted flight coupon to reflect the standard procedures that were in use in the airline industry. Collecting the ticket sale data after one coupon had been used was not only in line with Carrier accounting practices of the time but also had two other advantages. First, this collection method grouped the reported tickets together in a date close to the passenger's use of a flight coupon rather than the ticket issue date. Second, it kept fully refunded and

fully exchanged tickets from being included in the O&D Survey.

The CAB also recognized that manual procedures are labor intensive and expensive. In keeping with the desire to minimize the burden of collection, the CAB specified very few elements from the ticket for collection, required only 10 percent of the tickets to be examined, and limited the number of surveys to four a year.

The Carriers were early adopters of computer systems. The first of the customer interactions to be automated was the reservation process. The major Carriers built large reservation systems to match passengers to departing aircraft. The reservations system computers had an operating system that was designed specifically for the requirements of Carrier reservation systems. Passengers and travel agents worldwide called Carriers to make a reservation and the airline employees entered the passenger information. Several of the Carriers eventually packaged their systems as a product, called a Computer Reservation System (CRS). They sold the ability to access the reservations system to the travel agents. Marketed as Sabre, PARS, Apollo, and System One, the CRS owners gained revenue from others' access to the system, and Carriers lowered their costs because travel agents, rather than airline employees, were now entering the passenger information into the reservations system.

When the reservations systems began to issue automated tickets, the travel agent and the airline ticket counters achieved higher efficiency and productivity. Automated ticketing lowered costs by copying data already in the reservations system onto a paper ticket. However, since the reservations computer operating system was incompatible with the Carrier accounting computers, the information from the ticketing record had to be copied again onto an electronic record that was transmitted to the Carrier's accounting computer systems. Since the accounting system received a copy of the ticket data but not a direct link to the reservations system, the accounting system had no direct way of recording changes made in the reservation system.

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Changes to the passenger's reservation that were important enough to cause an agent to re-issue the ticket would, in turn, generate a new ticket record that would be forwarded to the accounting system. Changes to the passenger's reservation that did not cause an agent to re-issue the ticket would not be communicated to the accounting system. Nevertheless, whereas moving manual ticket data from the ticket sellers to the Carriers had been laborious, slow, and costly, the automated computerized ticketing process opened up new possibilities to move ticket information quickly, efficiently, and at low cost to Carriers.

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This was true at some carriers until the advent of electronic ticketing in the mid-1990s.

Automated ticket processing opened up cost saving opportunities in passenger revenue accounting. The huge cost of rewriting an accounting system from lift-based to sales-based was justified, in part, because the lift-based accounting system required hundreds of employees trained to process the lifted flight coupons. Because a sales-based accounting system makes use of information already stored in the computer, Carriers gradually shifted away from reliance on information from lifted flight coupons and toward reliance on information stored from the ticket sale. By 2004, Carriers use sales-based accounting systems almost exclusively.

Regardless of the accounting system, there remained a gap in data when the itinerary included multiple Carriers. Only the Carrier that issued the ticket had a complete computer record of it. A Carrier that transported a passenger on a ticket that it did not issue had to employ staff to enter the itinerary into its computer system. In the 1980s, American Airlines initiated agreements to share ticket information about shared passengers with Trans World Airlines, United Air Lines and Eastern Airlines to avoid the cost of manually re-typing each other's tickets. In 1990, the system of sharing ticket information was formalized with an industry standard record structure for all Carriers called Transmission Control Number (TCN) record. Whenever a Carrier needed to share information about a ticket with the other Carriers in the itinerary, a TCN record could be sent between Carriers. Responsibility to oversee the data sharing was given to the Airline Tariff Publishing Company (ATPCO). ATPCO would forward TCN records to the operating Carriers in the itinerary on behalf of the Issuing Carrier. The ATPCO TCN exchange service was offered to all Carriers, although not all Carriers decided to participate.

The TCN data sharing was created as an optional service to facilitate more efficient information exchange among interlining Carriers electing to use the service, not as a compulsory system. Tickets continued to be created without a corresponding TCN record. Conversely, multiple TCNs were sometimes created to describe a single sale. Sometimes this happened because TCN records were generated for tickets for customers who failed to complete the purchase. Other times, customers demanded a change that resulted in a second TCN being created while the first could not reliably be nullified. Testing can generate a TCN or, sometimes, TCNs by the thousands, for which there was no ticket sale. Carriers' passenger revenue accounting systems were designed to find the TCNs they needed for accounting purposes, ignore the extraneous TCNs, and still be able to accept manual data on tickets for which no TCN exists. Not all Carriers used TCN records in the course of business. Of those that did, some created TCNs for their own internally-issued tickets, while other Carriers did not.

After the CRSs became known as Global Distribution Systems (GDSs) in the 1990s, they inherited the responsibility to create the TCN records for travel agency tickets. With this development, TCNs became the vehicle to send information about the ticket from the travel agencies to the Issuing Carrier as well as to any other Carrier that participated in the itinerary. The GDSs sell the TCN information to the Carriers for a small fee. The GDSs also sell the travel agent's reservation information. The product, called marketing information data tapes (MIDT), contains no information about the price of the travel except the selling class codes and is limited to segments booked through travel agencies. The MIDT data are marketed to Carriers for use in business planning activities.

While increasing computerization simplified many of the carriers' data collection, processing, and exchange activities, manual collection of the O&D Survey information became more difficult for the Participating Carriers. With reliance on computerized ticketing and the shift to sales-based accounting systems, there was little interest or need to continue the practice of using carbon paper to print the whole itinerary on all of the ticket's flight coupons. Examination of coupons, standard procedure in the old lift-based system, is not necessary in the normal course of business when using a sales-based accounting system. Since the Department's O&D Survey continued to require the Operating Air Carrier to provide information from the lifted flight coupons, it became increasingly vital for the Operating Air Carrier to receive information about the issuance of the ticket from the Issuing Carrier. If the first Participating Carrier is not the Issuing Carrier or did not receive that sale information from the Issuing

Carrier, then the Participating Carrier is required to employ staff to locate that lifted flight coupon. This is an intensely manual process, and it is a significant burden on limited human and financial resources of the Operating Air Carrier. In the pre-computer era, Carriers could draw on accounting department employees trained in obtaining information from lifted flight coupons, but increasing reliance on computer records and sales-based accounting systems left Carriers with only a small number of employees with sufficient training to glean the O&D Survey information from a lifted flight coupon. Sales processing by computer has become so reliable that as of May 2004, the GDSs no longer print a paper version of the auditor's coupon. Employees with the skills needed to extract the necessary information from visual examination of a lifted flight coupon have become increasingly scarce.

The level of effort that the current O&D Survey imposes on an Operating Air Carrier to identify whether it is the first Participating Carrier in the itinerary is compounded by the number of Carriers the Department exempts from reporting to the O&D Survey. Tens of thousands of passengers fly each day on commuter Carriers and Foreign Air Carriers operating under code-share agreements. As a result of code-share ticketing procedures, the identity of the Operating Air Carrier is often hidden from an outside observer. When the Issuing Carrier does not provide the itinerary details to the Operating Air Carrier, via a TCN record or other means, then it is difficult for the Operating Air Carrier to determine whether any of the other Carriers whose Airline Designator appears on the ticket as the Marketing Carrier is scheduled to operate the flight. A Participating Carrier may not be aware that a Code-Share partner is scheduled to operate a flight. The CFR specifically absolves the Participating Carrier from the burden of determining the scheduled Operating Air Carrier if the Issuing Carrier did not notify it and it is not a Carrier involved in the code-share agreement.

If the reporting carrier does not know the operating carrier on a downline code-share segment, it would use the ticketed carrier's code for both the operating and the ticketed carriers. The reporting carrier is not responsible for knowing the operating carrier of a downline code-share where it is not a party to the code-share segment.

—14 CFR Sec 19-7 V. Selection of Sample and Recording of Data (D)(2)(b)

In addition to the higher cost, examination of a printed paper coupon to obtain information that is usually transferred by computer yields less information than it did in the 1960s, when manual processing was the norm. Electronic ticketing has become the standard practice for most U.S. Air Carriers. However, when authorization to board a plane must be communicated between Carriers, and electronic means are for any number of reasons unavailable, issuing a paper flight coupon remains the standard practice of the industry.

The O&D Survey requires Participating Carriers to report information about an entire ticket based on the knowledge of the flight coupon they have in hand. Paper coupons today generally only contain the information for a single flight segment. The itinerary must be deciphered by examining the pricing area of the ticket. Unfortunately, the pricing area lists city codes instead of airport codes. For cities with only one airport, the limitation poses no problem, but for cities such as New York, the pricing area will list the price to NYC. The use of NYC obscures whether the passenger is scheduled to arrive at LaGuardia (LGA) or Kennedy (JFK) or, for that matter, at Newark (EWR) or Newburgh (SWF) airports.

The passengers' purchased itinerary has always been limited to four segments per ticket because only four could be printed plainly on carbon paper copies. If a passenger's itinerary required more than four flight coupons, the Carriers used two or more tickets in conjunction with each other. When the itinerary was long enough to require spanning two tickets, the information from the second ticket was never available to the Participating Carrier. Recognizing this, the Department exempted the Participating Carrier from reporting the second and subsequent conjuncted tickets from the O&D Survey. However, even when some portions of the Ticketed Itinerary go unreported, the total amount collected for the ticket is still reported in full. Reported flight coupons are artificially over-valued when the full ticket value, but only the partial itinerary, is reported. The number of partially reported itineraries currently being reported in the O&D Survey is assumed to be low, but since they are not detectable, there is no ability to quantify them, and, therefore, the impact of exempting long itineraries on the current O&D Survey is unknown.

Reliance on the ability of the Operating Air Carrier to examine the lifted flight coupons no longer provides the best reasonably obtainable economic information about the purchase of air travel on scheduled Carriers. The Department acknowledges that the current O&D Survey burdens Participating Carriers with obligations to examine the details of lifted flight coupons that they would not ordinarily do in the course of their business.

Significant among these burdens is the obligation to determine first Participating Carrier. Under the requirements of the current O&D Survey, the only way to meet the obligation of determining whether an Operating Air Carrier is the first Participating Carrier is for each Operating Air Carrier to examine the complete routing of every Ticketed Itinerary that was used to transport passengers in the quarter. There is no other way for Operating Air Carriers to determine whether or not it is apparent that another Participating Carrier has already reported the ticket.

The Survey data are taken from the coupon that is lifted by a participating carrier, unless it is apparent from the lifted coupon that another participating carrier has already recorded and reported the data, in which instance the ticket coupon is non-reportable for the second honoring/participating carrier.

—14 CFR Sec 19-7 Appendix A (I.) General Description of O&D Survey (B) Narrative Description

The “unless it is apparent” standard for determining whether an Operating Air Carrier is responsible for reporting a Ticketed Itinerary is a difficult standard to meet. Every Operating Air Carrier must diligently examine every Ticketed Itinerary to find out whether it has a ticket number ending in zero. For ticket numbers ending in zero, when the Operating Air Carrier is the initial Carrier in the routing, then clearly it should report the Ticketed Itinerary. When the Operating Air Carrier is the second or third Carrier in the routing, it must compare the identifiers of the previous Carriers in the routing to the list of Participating Carriers provided by the Department's Office of Airline Information (OAI). Under the current regulation, even the most diligent Participating Carrier will not report all O&D Survey tickets correctly if there is an unrecognized code-share flight present in the itinerary, the itinerary spans multiple physical tickets (known as conjuncted tickets), or the itinerary includes cities with multiple airports.

2. Review of Deficiencies in the Current O&D Survey

Respondents to Docket OST-1998-4043-1 (ANPRM, July 15, 1998; 63 FR 28128) agreed that the O&D Survey, as it exists, exempts too many passengers from the report, is cumbersome and expensive to compile, and fails to collect key elements of information. In addition, the results of the O&D Survey

published by the Department are unwieldy to use. The Department wishes to address problems such as those identified in the 1998 OIG report, which concluded that O&D data were unreliable for use in key policy and funding decisions.

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For example, the Inspector General determined that of 8,894 city pairs, the O&D Survey report on 6,661 city pairs (69 percent) did not meet the Department's accuracy criteria when using enplanement statistics as a benchmark. The Inspector General (IG) used the enplanement statistics as a reliable comparison because they are also used by the Carriers for aircraft operational purposes. The IG cited several reasons for the inaccuracies, most of which were attributed to the fact that the basic reporting requirements of the O&D Survey have not been aligned with current industry practices.

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Office of Inspector General Audit Report Number AV-1998-086 Feb. 24, 1998 p. iii.

a. Reporting Exemptions

Exemptions from reporting, granted in the 1960s, have become a major problem in today's O&D Survey. For example, Carriers flying planes with 60 or fewer seats are exempt from reporting. As such, passengers whose entire itineraries are flown on smaller Carriers will not be reported, yet their participation in the air transportation system is critical. Similarly, code-share agreements between large and small Carriers were non-existent when the current O&D Survey was designed. Today, Carriers of all sizes are connected to a global air transportation system through global alliances and international ticket agreements. This intertwining of service adds complexity and increases the potential for error when reporting Ticketed Itineraries.

For example, the IG pointed out that a Participating Carrier is exempt from proper reporting of the code-share relationship if it has no knowledge of that relationship. In a code-share situation, the Carrier that transports the passenger (Operating Air Carrier) is not the Carrier printed on the itinerary (Marketing Carrier). The Carrier that issues the ticket is responsible for knowing when this is occurring and notifying the passenger of the code-share situation. However, when the Participating Carrier is not the Issuing Carrier, the Participating Carrier cannot always report the code-share portions of the Ticketed Itinerary properly.

Code-sharing with regional Carrier partners has created a situation wherein customers can begin travel on a regional Carrier that does not report the O&D Survey because of size exemptions. In that case, the second Carrier in an itinerary should report the ticket. However, the second Carrier may not be a code-share partner with the regional Carrier that first transported the passenger. The second Carrier will believe the ticket to have been reported by the first Carrier when, in fact, it has not been reported. This causes the entire itinerary to go unreported.

Exceptions for Foreign Air Carriers also impact the accuracy of the O&D Survey, and the IG cited this exception as a prominent problem. Excluding those Foreign Air Carriers granted antitrust immunity for alliances with U.S. carriers, Foreign Air Carriers may transport passengers without reporting their Origin and Destination traffic to the Department. In consequence, some travelers bound for foreign countries are counted in the Department's statistics, and some are not. Excluding these passengers introduces a bias into the statistics that is difficult to evaluate. As the code-share and marketing alliances between U.S. and Foreign Air Carriers developed throughout the 1990s, this reporting gap became even more significant.

b. Sample Size

The IG pointed out that having Participating Carriers report only those tickets ending in zero or double-zero is not an appropriate sample design. It is not certain that those tickets will be randomly distributed across all Ticketed Itineraries. A survey must be based on a random sample of the population if the results of the survey are to be generalized to the entire population. Unfortunately, there are indications that the sample used in the existing O&D Survey is not entirely random, although it is not always clear how this non-randomness occurs.

When the O&D Survey was established, ticket numbers were preprinted sequentially on paper ticket stock. As each customer appeared, each had an equal chance of receiving a ticket number ending in zero. Since ticket numbers are now assigned by a computer program, the possibility that ticket numbers are assigned for reasons other than randomness arises. For example, a tour operator might use its block of ticket numbers to issue all the ticket numbers that end in the same digit to members of a particular tour, resulting in all those tickets being selected for the sample or excluded from the sample depending on which tour was assigned ticket numbers ending in zero. One Carrier has analyzed its ticket numbers and found that 11 percent end in zero, which would not occur if the numbers were entirely random. While the sample is intended to be 10 percent of all tickets, analysis by BTS' Office of Statistical Quality in 2001 concluded that the actual sample size ranged from 10.1 percent in 1999 to 9.6 percent in 2000. This is a larger variation than one would expect purely from normal sampling error, suggesting some non-randomness in the creation or selection of ticket numbers.

c. Definition of Origin and Destination

The common understanding of a True O&D is a passenger who is traveling from the origin of the trip to arrive at the destination of the trip where the individual intends to conduct business or engage in leisure activity. Passengers generally prefer to arrive at the True O&D destination in the fewest possible Flight-Stages, but often a passenger travels over many Flight-Stages, many Flight Coupon Stages, and, sometimes, many modes of transportation to reach the True O&D destination, and in the case of a very remote destination, the journey might take several days. The Department's intent has always been to track, to the greatest extent possible, the passenger's intended True O&D.

Carriers, airports, the Department, and other stakeholders use various methodologies to approximate the passenger's True O&D. The standard approximation is known as a One-way Trip. The principal determination of One-way Trip is based on the time spent on the ground between sequential Flight-Coupon Stages. A short time between sequential Flight-Coupon Stages implies a connection in a continuing One-way Trip. A long time on the ground between sequential Flight-Coupon Stages implies an end of the prior One-way Trip and a beginning of the next One-way Trip. Flight Number and Fare Basis Code are sometimes used, in addition to time on the ground, to calculate a One-way Trip. The One-way Trip is usually completed in a single day, although the definition of One-way Trip encompasses the possibility that travel continues overnight and into the following day(s).

However, the information Carriers currently supply in the Department's O&D Survey is devoid of flight number, travel date, departure time and arrival time, so the data collected by the Department has left it without the ability to use time spent on the ground to establish a One-way Trip. As a result, since the beginning of the O&D Survey, the Department has used continuous direction of travel as its approximation of True O&D. This methodology is known as Directional Passenger construction. In a regulated airline

environment, determining passenger trips by measure of least circuity was an adequate measure of passenger travel. In that environment, passengers had no incentive to travel in any direction other than toward their destination as efficiently as possible. However, following the extensive development of hub-and-spoke systems following deregulation, passengers are often motivated by price or incentivized by Carrier loyalty programs that reward taking circuitous connecting flights even when a non-stop flight is offered.

The Department's Directional Passenger concept considers a passenger to be on a continuous trip so long as the passenger continues in the same direction regardless of the number of days the journey takes, subject to certain circuity rules that allow some backtracking. For example, the Department's circuity based rules consider an itinerary of Albuquerque to Denver to Reno to be a single Directional Passenger trip. However, an itinerary of Albuquerque to Denver to Las Vegas will never be considered as a single directional trip because the location of Las Vegas airport in relation to Albuquerque causes the circuity check to break the trip into two directional passenger trips. Because the Department does not collect flight date or flight time, the O&D Survey always identifies Albuquerque to Denver to Reno as a single Directional Passenger trip, regardless of the number of days the passenger stays in Denver. On the other hand, regardless of the short number of hours spent in Denver, the O&D Survey always identifies Albuquerque to Denver to Las Vegas as one Albuquerque to Denver Directional Passenger trip and counts the Denver to Las Vegas stage as a separate Directional Passenger trip.

Itinerary construction and circuity rules together determine Directional Passengers. When an Albuquerque-Las Vegas passenger purchases a round trip ticket traveling through Denver on both the outbound and the return trip, then the directional passenger rules will recognize the pattern, and determine that the outbound journey should be considered a single Albuquerque-Las Vegas trip and the return trip to be a single Las Vegas-Albuquerque trip. However, when an Albuquerque-Las Vegas passenger purchases a round trip ticket with the outbound journey changing planes in Denver and a return trip changing planes in San Francisco, then the directional passenger rules will interpret the outbound journey to be an Albuquerque-Denver trip, the return trip will be a San Francisco-Albuquerque trip with a separate Denver-San Francisco trip sandwiched between them. In this situation, the Directional Passenger construction views Las Vegas as a connecting city and does not recognize the passenger's true intention to visit Las Vegas. Itineraries like Albuquerque to Denver to Las Vegas have increased as a result of the development of extensive hub-and-spoke operations by incumbent carriers. Clearly, approximating True O&D using the Directional Passenger method is less accurate in the current environment than it was when it was instituted.

The Department cannot approximate True O&D consistently across all itineraries using the O&D Survey as it is currently collected. Furthermore, the Department cannot determine Directional Passengers on a consistent basis because travel that is part of a stand alone Directional Passenger trip is treated differently than if that travel is part of a round trip, and round trips are treated differently depending on the airport in which a passenger might choose to change planes.

In authorizing Passenger Facility Charges (PFCs), the Congress recognized the concept of One-way Trip in civil aviation law. No PFC on any passenger may be imposed for more than two boardings on a One-way Trip (14 CFR 158.9(a)(1)). The concept of One-way Trip was further ensconced in Federal law on November 19, 2001, when Congress established the September 11th Security Fee. Section 44940(b) and (c) of ATSA provides that the fee may not exceed $2.50 per enplanement or $5.00 per One-way Trip. Congress did not specify the definition of One-way Trip, but it is commonly understood that it was to be a journey from the passenger's point of view, concomitant with common practice.

The Carriers assess PFCs and September 11th Security Fees using time in hub as the principal determinant of a One-way Trip. The Department believes that the Carrier's method of determination for the One-way Trips is an acceptable methodology. However, because the Department uses directional travel as the determinant of its passenger counts, it cannot effectively monitor the enforcement of these Federal laws. Since the Department's Directional Passenger methodology for determining passenger counts does not match the One-way Trip methodology for determining passenger counts being used by the Air Carriers to assess the fees, the Department's counts can, at best, predict only the approximate value of the fees due to government agencies.

The Department's inability to measure One-way Trips consistent with industry standards leaves it without an adequate measure of passenger demand for air travel in the U.S. The OIG issues reports on airline metrics

3

that use the number of air travelers enplaned as the measure of air traffic demand. While the number of enplanements can be an accurate measure of passenger demand at individual airports, it has unfortunate implications when used as a measure of nationwide air traffic demand. When Carriers discontinue non-stop service between two airports, leaving connecting service as the sole option of passengers traveling between these airports, the number of enplanements doubles since passengers must now enplane a second aircraft. When enplanements are used as the sole measure of nationwide air travel demand, discontinuing direct service has the perverse effect of making it appear as if air travel demand is increasing. Thus the reduction in the true number of persons traveling after September 11, 2001 likely would be underestimated when using enplanements as a measure of demand, because the airlines' reduction in the number of non-stop flights caused the travelers to enplane more times to reach their destination. The Department believes that some of the perceived lack of accuracy in the O&D Survey is a result of measuring passenger traffic in terms of the Directional Passenger in an era when airlines are providing incentives for passengers to use circuitous connecting services.

3

For example, Airline Industry Metrics, Trends on Demand and Capacity, Aviation System Performance, Airline Finances, and Service to Small Airports Number: CC-2004-006 (

http://www.oig.dot.gov/show_pdf.php?id=1237

).

d. Fares, Taxes, and Fees

Taxation of scheduled passenger aviation today is a combination of percentage of fare, ticket tax, itinerary-specific taxes such as international departure tax, and enplanement fees such as September 11th Security Fees, subject to limitations on the number of charges and fees that can be assessed on a One-way Trip. Because the O&D Survey commingles taxes and fees with the fare amount, exact measurement of the portion of the ticket price that represents tax has been an educated guess even when taxes were based on a percentage of the fare.

e. Passengers Versus Passenger Trips

It is generally believed that all the passenger counts reported in a quarter represent passengers scheduled to fly in that quarter. Rather, the current O&D Survey bundles all the travel on a Ticketed Itinerary in a single quarter. The complete itinerary is reported as if

it took place entirely within the quarter in which travel commences. Therefore, a misunderstanding often exists between passengers reported and passenger trips. For example, all passengers who travel to a destination in December and return in January have all their travel reported in the December quarter; none of the passengers' journeys are reported in the first quarter of the next year.

f. Reporting Consistency

Different Carriers report data elements in different ways. For example, some Carriers with single-service cabins report all service as first-class, while others with single service cabins report all service as coach. Additional reliability problems occur because the Issuing Carrier sometimes provides the Participating Carrier with the information saved when the Ticketed Itinerary was issued, and sometimes it does not. When the Issuing Carrier does not provide information to the Participating Carrier, the Participating Carrier can only know what is printed on the lifted flight coupon and may find it difficult to report an itinerary correctly. Lack of correct knowledge is explicitly excused in the CFR.

When the Participating Carrier attempts to decipher the city codes for the complete itinerary using the pricing area of the ticket, inaccuracies can result. The designated city codes—not the airport codes—are present in the pricing section of the ticket. When the Carrier serves multiple airports in a metropolitan area, such as Dulles and Reagan National Airports in Washington, the pricing area displays WAS instead of the airport code. The segment's actual airport in that circumstance is unknown to the Participating Carrier. This is also the case with bulk tickets. Participating Carriers that are also Issuing Carriers can report the ticket price accurately, while Participating Carriers that did not issue the ticket, and did not receive a TCN, cannot report the actual amount paid. If the ticket value is not printed on the paper document, the Participating Carrier cannot know how to report it correctly.

The majority of users of the government's O&D Survey data purchase the data from third-party providers, which use internal decision rules to interpret the data. These independent companies obtain the data from the Department and reprocess it for sale. These companies make assumptions about the distortions that are inherent therein. For example, the third party providers perform extensive analysis on the data to separate the amount that was likely paid as fare from the amount that was likely paid as tax. Because the decision rules are specific to third-party providers, different interpretations of the same original data exist.

D. O&D Survey Data Usage

A diverse group of stakeholders including the Executive Branch and Congress use traffic data to help them in making decisions that affect the national air transportation system and the U.S. economy. Most responses to the ANPRM, including airports, labor unions, equipment manufacturers and industry consultants, identified the Department's aviation data as their most important source of data. These stakeholders depend upon the Department to provide accurate, timely, and comprehensive aviation data.

1. The Department

Air transportation is a significant sector of the nation's economy. Despite wars and economic downturns, the nation continues to experience long-term increases in demand for air travel. Through its efforts to measure economic activity, the Department affirms its role in fostering opportunities for transportation providers to create and maintain the best transportation system in the world and to enhance the quality of life of the American people, today and into the future. The Department uses aviation data to carry out its mandates, among them (1) improving international air services by seeking market liberalization, (2) ensuring the benefits of a deregulated, competitive domestic airline industry, and (3) developing policies to improve air service and/or access to the commercial aviation system for small and rural communities.

In particular, the Department uses O&D Survey information and the T-100/T-100(f):

• To exercise the Department's responsibilities for economic oversight of the airline industry as mandated under 49 U.S.C. 40101, including, but not limited to:

• (7A) “Developing and maintaining a sound regulatory system that is responsive to the needs of the public and in which decisions are reached promptly to make it easier to adapt the air transportation system to the present and future needs of the commerce of the United States”;

• (9) “Preventing unfair, deceptive, predatory, or anticompetitive practices in air transportation”;

• (10) “Avoiding unreasonable industry concentration, excessive market domination, monopoly powers, and other conditions that would tend to allow at least one air carrier * * * unreasonably to increase prices, reduce services, or exclude competition in air transportation”;

• (12A) “Encouraging, developing, and maintaining an air transportation system relying on actual and potential competition to provide efficiency, innovation, and low prices”;

• (13) “Encouraging entry into air transportation markets by new and existing air carriers and the continued strengthening of small air carriers to ensure a more effective and competitive airline industry”; and

• (16) “Ensuring that consumers in all regions of the United States, including those in small communities and rural and remote areas, have access to affordable, regularly scheduled air service”;

• As a base of information to assess, maintain, and preserve competition in the airline industry and in specific aviation markets, under various federal laws and programs, such as:

• To investigate allegations of unfair and deceptive practices and unfair methods of competition, under 49 U.S.C. 41712;

• To review proposed mergers and acquisitions to assess their competitive effect;

• To review code-share and marketing agreements between domestic major Air Carriers, under 49 U.S.C. 41720; and

• To review applications for antitrust immunity between U.S. and Foreign Air Carriers, under 49 U.S.C. 41308;

• To administer the Essential Air Services program assessing the air service needs of small communities (49 U.S.C. 41743);

• To administer the Small Community Air Service Development Program;

• To administer funds under the Aviation Investment and Reform Act for the 21st Century;

• To administer the Air Transportation Safety and System Stabilization Act;

• To monitor the trends and developments in the operating and competitive structures to ensure that Department policies remain consistent with commercial developments;

• To determine an Air Carrier's initial fitness to provide air transportation and review an Air Carrier's continuing fitness to provide air transportation (49 U.S.C. 41102);

• To evaluate certificate transfer applications (49 U.S.C. 41105);

• To grant or deny permits for Foreign Air Carriers to provide transportation as a Foreign Air Carrier to

the U.S. by determining whether the public interest is being served in granting the permit (49 U.S.C. 41302) and to approve the transfer of such permit to another Foreign Air Carrier by determining whether the public interest is served (49 U.S.C. 41303); and

• To assemble information and prepare reports required and requested by the President and the Congress.

The O&D Survey and T-100/T-100(f), as currently collected, particularly impact the Department's evaluation of Air Carrier service to smaller communities. The Essential Air Services program (EAS) and the Small Community Air Service Development Program are directed towards smaller markets and require evaluation of service and fares. For example, under EAS, the Department determines the minimum level of service required at each eligible community by specifying a hub through which the community is linked to the national network, and specifying a minimum service level in terms of flights and available seats. Where necessary, the Department pays a subsidy to an Air Carrier to ensure that the specified level of service is provided. Similarly, research activities such as The Rural Air Fare Study,

4

which was conducted pursuant to Section 1213 of the Federal Aviation Administration Reauthorization Act of 1996, require data on all passenger air travel, including many smaller markets served exclusively by airlines operating only aircraft having fewer than 60 seats.

4

Summary may be found at

http://ostpxweb.dot.gov/aviation/rural/scexec.pdf

).

The Federal Aviation Administration's (FAA) mandates include (1) regulating civil aviation to promote safety, (2) encouraging and developing civil aeronautics, including new aviation technology, (3) developing and operating a system of air traffic control and navigation for both civil and military aircraft, (4) researching and developing the National Airspace System and civil aeronautics, (5) developing and carrying out programs to control aircraft noise and other environmental effects of civil aviation, and (6) regulating U.S. commercial space transportation.

The FAA also administers the Airport Improvement Program (AIP) (authorized by 49 U.S.C. Chapter 471), which has the broad objective of assisting in the development of a nationwide system of public-use airports adequate to meet the currently projected growth of civil aviation. It also provides funding for airport planning and development projects. In addition, medium and large airports where one or two Carriers control more than 50 percent of passenger boardings must submit a written competition plan to receive approval to impose a Passenger Facility Charge (PFC) or to receive a grant under the AIP. All aspects of qualifying, planning, allocating, and monitoring of AIP funds rely on the integrity of the data that the Department collects.

The FAA uses O&D data for forecasting long-term growth in air travel demand and for determining corresponding needs for airport development and airspace system improvements. FAA also uses O&D data for conducting cost-benefit analyses of proposed safety rulemakings, infrastructure investments, and air traffic control improvements.

Within the Department, BTS has specific statutory responsibilities (49 U.S.C. 111(c)) to measure traffic flows, travel times, travel costs, and variables influencing traveling behavior and to collect data relating to the performance of transportation systems. BTS is specifically required to collect data that are suitable for conducting cost-benefit analyses.

BTS uses O&D data, together with other sources of passenger travel data (such as its National Household Travel Survey), to analyze passenger travel by all modes of transportation. Since passengers periodically shift the modes of transportation that they use (as they did after the terrorist attacks of September 11, 2001), passenger travel patterns by air are of great importance not only to airlines and airports, but also to transportation planners in other modes as well, such as highways and rail. BTS uses the O&D data to better understand what factors influence passengers' choices about which mode of transportation to use, so that transportation planners can plan appropriately.

The O&D data are used to measure the prices that passengers pay for air travel. These travel cost data are the basis of the Air Travel Price Index (ATPI), the price index developed for measuring airline prices.

Finally, the Department's Research and Special Programs Administration (RSPA) administers the Civil Reserve Air Fleet (CRAF) program, which provides civilian aircraft to the Federal government for use in war or other emergency situations. RSPA uses the T-100 to determine which Carriers can make what aircraft available, while minimizing the adverse effect that these commitments make to the airlines' normal civilian operations. Estimating these adverse effects requires data on the revenue that would be affected by the cancellation of any particular flight.

2. Other Government Agencies

a. The Department of Justice

The Department of Justice (DOJ) uses aviation statistics to assist in the prevention of anti-competitive conduct that is subject to criminal and civil action under the Sherman and Clayton Acts. The Department's aviation statistics have been one of the Justice Department's most important tools used to enforce various criminal statutes related to Sherman Act violations. DOJ also uses them to review mergers and acquisitions.

b. The Department of Homeland Security

The Department of Homeland Security (DHS) uses the Department's aviation data to help predict revenues from the collection of September 11th Security Fees. Because the Department's system bases its determination of passenger trips on least circuity, and the passengers are paying these fees on the basis of the industry standard One-way Trip, the Department's data provide poor predictions of these revenues. The current O&D Survey concept of Directional Passenger, which does not consistently predict the number of passengers arriving at the airport to change planes, which hampers DHS’ airport security manpower forecast. The ability to discern the difference between connecting passengers at a given airport versus passengers beginning their journey at that airport is critical to effectively managing security staffing and other resources at the airport. In addition, the O&D Survey cannot currently provide the critical time-of-day and day-of-week passenger volume data required by DHS to plan and forecast the manpower requirements of airport screeners.

Furthermore, the Air Transportation Safety and System Stabilization Act (Pub. L. 107-42) assigns the responsibility to remit the September 11th Security Fees for all travel described on the Air Travel Ticket to the Carrier that issues the ticket. Since the Department's O&D Survey information does not identify the Carrier that issued the ticket, the Department's data provide insufficient information for DHS to monitor the Carriers responsible for remitting the fees. Since the Federal government does not collect statistics about Carriers issuing tickets, the DHS uses the tickets reported in the O&D Survey as the best available substitute.

c. The Department of Commerce

The Department of Commerce's (DOC) ability to carry out its mandate to promote tourism is hindered by the

Department's inability to know with certainty the beginning and ending of One-way Trips. Significant numbers of tourists travel by scheduled air transportation, and the Department's data collection policies leave DOC using only guesses about origins and destinations based on the Department's directional passenger counts.

The DOC's Bureau of Economic Analysis is also responsible for producing the official U.S. Government estimate of the Gross Domestic Product (GDP), and to adjust these estimates for inflation using the GDP Deflator. The GDP Deflator is a price index, similar to the Bureau of Labor Statistics' Consumer Price Index (CPI) that covers a broad range of prices, including prices not paid directly by consumers. The accuracy of the GDP Deflator would benefit from more accurate price data and more timely data. The reporting process proposed in this rulemaking would allow DOT to provide data that are more accurate to DOC. By the time the current quarterly O&D Survey data become available, it is no longer current, and, therefore, cannot be used in the GDP Deflator.

d. The Bureau of Labor Statistics

The Bureau of Labor Statistics (BLS) has a critical need for passenger O&D pricing information on a monthly basis, available promptly, so that it can achieve a more accurate index of air travel prices for incorporation into the monthly CPI. The proposed rule would provide these more accurate price data on a timely monthly basis. BLS’ ability to evaluate the cost of air travel and incorporate those evaluations into the consumer price index and the producer price index is compromised by the Department's current statistical techniques. Furthermore, the policy of reporting all travel in the quarter when travel commences compromises the attempt to allocate the cost of air travel to the proper travel month. The Producer Price Index (PPI) is supposed to be calculated net of taxes, but the Department's statistical data does not collect information to enable BLS to separate fares and taxes. Because BLS computes separate price indexes for purchases by consumers (the CPI) and purchases by producers (the PPI), it is important for BLS to be able to separate the purpose for which an airline trip is taken—whether business or leisure. The existing O&D data do not provide such information. The proposed rule would collect information that would enable better analysis of the purpose of travel.

BLS would like to adjust its monthly international price program for Exports by the amount paid by U.S. resident travelers to the Foreign Air Carriers on all routes. Because of the reporting exemptions granted to Foreign Air Carriers flying to the U.S., some U.S. citizens traveling to foreign destinations on Foreign Air Carriers are counted in the O&D Survey and some U.S. citizens are not. Lack of consistent Foreign Air Carrier statistics hinders BLS’ ability to keep its published statistics accurate and effective.

e. The Department of State

The Department of State (DOS) uses the Department's aviation data to provide the information base for policy decisions in international aviation negotiations.

f. The Government Accountability Office

The U.S. Government Accountability Office (GAO) uses O&D data to conduct special studies of the airline industry at the request of Congress. The quality of the analysis that GAO provides to Congress would be substantially improved by the additional and higher quality data collected under the proposed rule.

3. Other Stakeholders

Other stakeholders, such as public and private sector individuals, organizations, and agencies, rely on aviation data.

a. Existing and Potential Carriers

Carriers use the Department's data for traffic forecasting and evaluation of new routes. Evaluation of new market opportunities by Carriers is dependent on the O&D Survey. Even with their access to many internal sources of data, Air Carriers still report that they depend on the O&D Survey data. Almost all Carriers rely on the Department's data as the fundamental, and least expensive, source of industry demand data. For new Carriers, as well as smaller and low cost Air Carriers for which MIDT data is prohibitively expensive, the O&D Survey is the only viable source of traffic data. Third-party providers have developed new tools that enable smaller Carriers to participate in sophisticated route and strategic planning at a much lower cost. The success of such planning exercises is dependent, in part, upon the quantity and quality of data available to the Carriers. In addition, evaluation of traffic and routes is an essential component of aircraft acquisition planning.

b. Airports

Department traffic data provide the basis for analysis by the nation's airports. The O&D Survey, with its fare information, is the only source of information for airports to study price elasticity. In addition, the O&D Survey is the airports' primary source of data for evaluating new routes. The proposed O&D Survey would provide information about passengers originating at an airport and passengers transiting through an airport, an important distinction when planning for services that the passengers demand. Route evaluations are used to encourage new service from Carriers, and thereby improve their service to the consumer.

Smaller airports have a particular need for information about the destinations of passengers. Airports that do not have passenger volumes high enough to substantiate service to multiple cities need to establish service to cities in the region where the passengers using that airport want to go. When the airport can establish service only to a large city in one direction and most of the potential travelers in the area tend to travel in another direction, then the small airport that might have been viable on its own merits if it had service to the city in the appropriate direction may find that it must rely on the Federal government's small airport subsidy to remain viable. The O&D Survey is the primary source of destination information available to small airports.

Airports and state aeronautical agencies use the data to understand their customers and the airport's role in its regional transportation market. Airports must ensure that Air Carriers have reasonable access to essential airport facilities, so statistical forecasting of passengers is essential. Airport local and regional planning functions use, in part, Department O&D Survey and T-100/T-100(f) data to plan buildings and runways that are vital to expanding the nation's air transportation system into the future. Smaller airports, served primarily by Carriers that are exempt from current O&D Survey reporting requirements, are particularly hampered by the lack of relevant aviation data.

c. Consumers and the General Public

Consumers benefit from the availability and analyses of accurate and complete aviation data. In the past, the Department received numerous inquiries from the public regarding domestic airline fares. In response, the Department began issuing a quarterly report called The Domestic Airline Fares Consumer Report based on the Department's traffic data. It provides information about average prices being paid by consumers in the top 1,000 domestic city pair markets in the

continental U.S. Similarly, Carriers have a vested interest in True O&D to effectively conduct route and other strategic planning. If Carriers are better able to accurately plan their services, consumers will be better served.

In addition, manufacturers, industry associations, consultants, academics, researchers, financial analysts, investors, and the general public use the Department's aviation data as the statistical base for a variety of studies on topics related to aviation.

d. Labor Unions

Labor unions consider the Department's data as a vital component of their negotiation strategies. Accurate and timely data are also crucial during times of economic downturn, particularly when Air Carriers request concessions from their unions.

e. Equipment Manufacturers

Because demand and traffic patterns reflect utilization of aircraft, demand and traffic data in the O&D Survey provide fundamental information on air transport markets that are vital in planning future products. Consequently, aircraft manufacturers are a prime user of the Department's traffic statistics.

E. Limitations of the O&D Survey and T-100/T-100(f)

The deficiencies of the O&D Survey and the T-100/T-100(f) have been known for some time. While changes were made to the T-100 and T-100(f) on July 30, 2002, the O&D Survey has not been substantially updated to reflect changes in the industry. It has become apparent that the cost of inadequate passenger and traffic information is significant for both the government and private sector aviation communities who rely on this data to fulfill their responsibilities and grow their businesses. Furthermore, recent changes in information technology and Carrier reservation and accounting systems have significantly reduced the cost of revising the Department's data collection requirements such that the benefits to all stakeholders of updating the system to provide more timely, accurate, and useful data far exceed the costs.

The current aviation era is characterized by rapid change. Carrier pricing can change multiple times a day. Carrier strategies sometimes change from month to month and require increasingly sophisticated analysis to support and evaluate business decisions and cases. The growth in the number of third-party providers of airline analytical software to evaluate the viability of new routes and other strategic decisions has made sophisticated Carrier analysis commonplace at even the smallest of Carriers. These software models, used by Carriers, consulting firms, and government agencies, require more detailed, timely, and comprehensive passenger demand data to optimize analyses of a dynamic industry and plan for its future. The Department's responsibility to identify and evaluate emerging trends in commercial aviation is constrained by traffic statistics that are only collected by month and by quarter and that are insufficiently comprehensive and detailed. The continuation of collecting insufficient, quarterly data to measure the transportation industry will severely hamper the ability of Federal, state, and local governments to provide the infrastructure to allow the airline industry to contribute to economic growth. Decisions on aviation infrastructure worth billions of dollars increasingly require more sophisticated analysis for which more accurate, timely, and comprehensive data are critical.

The nation is becoming more dependent on fast, efficient air travel. The nation's economy functions with the understanding that any person or any shipment of goods can be delivered across the nation within hours. Adequate quantitative data about the movement of passengers will help the Department prepare for the future needs of the transportation system.

Prior to September 11, 2001, delays associated with the capacity constraints of the air transportation system were undermining the efficiency of the system. These capacity constraints are now beginning to reemerge as demand recovers. Furthermore, the events of September 11, 2001, and the subsequent effects of those events on the aviation industry, further support the need for additional data modernization. Not only was the collection of data elements inadequate to measure important aspects of the aviation industry, vital information was not available in a timely fashion to interpret the short and medium term impacts of these events. It was also impossible to observe the recovery of the air transportation system in those crucial days after the system was restored.

More specifically, the data was inadequate for the following reasons: first, neither T-100/T-100(f) data (reported monthly) nor O&D Survey data (reported quarterly for ten percent, or less, of completed tickets) revealed daily changes in traffic and fares following 9/11. Without the ability to assess daily traffic levels, the Department could not fully assess the return of passengers to the nation's air transportation system and the extent to which the recovery was progressing differently in various regions of the country. Second, without any information about the sale of the Ticketed Itineraries, it was impossible to differentiate between the post September 11th passengers who purchased non-refundable tickets prior to September 11th and those travelers that purchased their Ticketed Itineraries after September 11th and thereby gauge the level of passenger confidence. Third, quarterly data submissions resulted in a significant delay in the Department's analysis of the impact of September 11th. The third quarter of 2001 O&D Survey data showed the 20 days most directly impacted by the events of September 11th mixed with the 71 days prior. The next data available in the O&D Survey could not be released until the end of the following quarter. Fourth, in implementing the provisions of the Air Transportation Safety and System Stabilization Act (Public Law 107-42), Congress and the Department exclusively relied on T-100 in providing assistance to Air Carriers and other industry participants. Even though the O&D Survey information is more useful in measuring some aspects of the nation's aviation economy, data collected only quarterly made it unusable for purposes of fulfilling the Air Transportation Safety and System Stabilization Act or for adequately monitoring the recovery of the industry following the terrorist attacks.

Although the events of September 11, 2001 were unprecedented, the need for more detailed, and more time-specific traffic data to monitor the impact of significant events on the industry and its recovery from them is not unique to that situation. Since the terrorist attacks, the industry has experienced the SARS outbreak, the Iraq war, and various elevated code orange alerts. In order to monitor the impact of these extraordinary events on the industry, the Department had to issue requests for supplemental data from the Carriers. Not only do these supplemental requests burden the industry with additional reporting requirements, they also highlight the fundamental need for the Department to routinely collect more detailed, time-specific data to fulfill its statutory obligations to monitor the health of the airline industry and respond to requests from Congress and other government agencies about the impact of such events on an industry that is vital to the U.S. economy. The current data collection

systems are inadequate for providing timely answers to any question with more precision than a month for the T-100/T-100(f) and more precision than a quarter for the O&D Survey. Reliance on data that is only available quarterly for purposes of measuring the dynamics of airline prices is a critical shortcoming of the O&D Survey. The ATPI, for example, is severely handicapped by the limits of quarterly data. Flight date is an important element of the value of a flight and therefore an important factor in the computation of the ATPI.

The Transportation Security Administration (TSA) requires information about passenger travel by time-of-day and by day-of-week to plan airport security screener staffing requirements. The current T-100/T-100(f) averages data across a month and the O&D Survey averages data across an entire calendar quarter, so that variability over time within the calendar quarter cannot be measured. Variability over time and dates can only be measured if the Department begins collecting data about time and date of travel. The volume of passenger traffic varies by time-of-day and day-of-week and lack of information about passenger volumes can result in passenger delays due to too few screeners or in a useless expenditure of Federal dollars due to overstaffing at certain times.

TSA requires some method of forecasting the collection of revenue from the Air Carriers. The September 11th Security fee is remitted by the ticket's Issuing Carrier, but Issuing Carrier is not one of the data elements collected in either the O&D Survey or the T-100/T-100(f), making it difficult for TSA to forecast or monitor the proper remittance of tax dollars.

Neither the O&D Survey nor the T-100/T-100(f) provide any information about the sale of new tickets (

e.g.

, changes in passenger booking windows), a key measure of traveler confidence in the air transportation system. Such information is critical to evaluating the likely financial impact of exogenous events, such as September 11th or SARS, on Carriers. In addition, these data limitations preclude the Department from precisely evaluating the impacts of even endogenous industry events such as potential strikes or Carrier shutdowns.

The problem resulting from the reporting exemption given to Air Carriers so long as they do not operate aircraft with more than 59 seats is illustrated by the emergence of Air Carriers flying substantial fleets of regional jets. For example, the commencement of operations by Independence Air in June of 2004 caused a profound adjustment of fares in small, medium and large markets in the Eastern half of the U.S. However, because Independence Air did not operate aircraft with more than 59 seats, it did not have to report O&D Survey data, thereby resulting in an incomplete picture of the effects of this Air Carrier's start of operations. When a major realignment of fares can result from the actions of an Air Carrier that qualifies for the small aircraft size exemption, then the small aircraft size exemption must be reevaluated.

The FAA acknowledged these and other issues at its 2001 Commercial Aviation Forecast Conference.

5

Accurate and detailed data on the flow of passengers through the air transportation system is critical to addressing congestion and developing ways to make the system more efficient. The FAA requires data on the number of passengers flying at specific times of day and specific days of the week, allowing it to calculate more accurately the costs and benefits of safety regulations, infrastructure investments, operational changes, and other FAA actions.

5

Information may be obtained from

http://apo.faa.gov/2001ConferenceProc/proc2001/procdoc.htm

.

Lack of information about catchment areas impacts the Department's ability to assess the effects of competitive services and alternative airports. A number of government agencies are charged with monitoring the airline industry and providing sufficient infrastructure to accommodate its growth. The use of secondary airports increasingly shapes the operating and competitive structures of the airline industry. These agencies increasingly require information that allows them to identify and analyze changes in the catchment areas of various airports, thereby understanding how such changes impact industry structure and airport and airway infrastructure planning and development. For the same reasons, such information would also be enormously useful to other users of the data, including airports, airlines, and aviation consulting firms.

BTS is specifically directed to gather data that are relevant to cost-benefit analysis. One requirement of cost-benefit analysis is estimating the number of people that are affected by a particular proposed regulation or infrastructure improvement or technology investment. A major weakness of the existing O&D Survey is that it does not provide flight-specific data, so it is not possible to estimate how many people are flying on any particular day of the week or at any particular time. Since infrastructure and air traffic control investments are most likely to produce benefits at times when the airspace system is congested, it is important to be able to measure how many people are flying at these times to measure of the number of people affected by proposed infrastructure and air traffic control improvements.

BTS’ current On-Time Data Base allows analysis of the particular flights that are affected by delays, but does not have the ability to know the number of passengers affected by delays. Since the number of passengers affected is likely to be greatest when congestion and delays are highest, current data are likely to understate the impact of delays on the traveling public. Information about the number of people traveling by time-of-day is vital to understanding the dynamics of the air transportation system.

The 10 percent sample is inadequate for fulfilling the Department's mandates and hampers the data quality of the O&D Survey. These data quality issues have a strong effect on programs that include measurements of air service to small communities. The EAS program is particularly impacted. Other programs affected include BTS' quarterly research series (ATPI), an experimental measure currently under development. The ATPI uses O&D Survey data and is dependent upon accurate data for all markets.

The Department's inability to measure True O&D according to the industry standards using One-way Trips hinders its ability to accurately measure nationwide air travel demand. Nationwide measures of air travel demand, airport improvements financed by PFC revenue, and improved airport security financed by the September 11th Security fees all depend on the Department's ability to identify One-way Trips. However, the Department's T-100/T-100(f) statistics count enplanements, while the O&D Survey statistics count Directional Passengers. Consequently, the government is without any method of properly forecasting tax revenue and without means to monitor the effects of tax policy.

F. Need for Regulatory Action

The Department is obligated to collect and disseminate information about civil aeronautics including, at a minimum, information on (1) the origin and destination of passengers in interstate air transportation, and (2) the number of passengers traveling by air between any two points in interstate air transportation (49 U.S.C. 329 (b)). In addition, the Department allocates

airport improvement funds, provides essential air service subsidies and allocates funds to the air traffic control system. The requirement that the Department judge the need for, and consequences of, a regulation based on accurate statistical information presupposes that sound economic information exists.

The Department has a unique role in collecting transportation industry information. The need for a statutory mandate to collect traffic statistics is underscored by the extensive differences between the various airline business models and the level of technical sophistication that make the task of gathering comprehensive industry-wide data on air transportation a very formidable task for private industry or an industry trade group to undertake. The only other government entities in a position to gather traffic statistics are the nation's airports. Airports are operated by a variety of State, Municipal, County and Regional authorities. Collectively, they do not have the resources to process statistics on all of the passengers flowing through them on a daily basis, and it would be cost prohibitive for each of the major airports to develop parallel statistical systems. It would be a burden on the Air Carriers to require reporting to more than four hundred airports, and a burden on the airports to reassemble the data into a nationwide view of passenger air travel. Although third-party providers offer “enhanced” aviation data, the original sources of third-party provider data remain the T-100/T-100(f) and O&D Survey. The underlying need for traffic information cannot be satisfied anywhere else because there are no other sources of comprehensive traffic data available in the aviation industry. We therefore conclude that the changes proposed in this NPRM are required to provide accurate statistical information.

Respondents to the Department's ANPRM overwhelmingly agreed that the O&D Survey and T-100/T-100(f) segment data are essential. Most named the T-100/T-100(f) and the O&D Survey as the basis for all analytical work done in their organizations. Those that have access to other sources of data reported that they generally crosschecked those sources with information from either the T-100/T-100(f) or the O&D Survey. The Department's traffic data provides the press and consumer groups with the ability to monitor prices and advise the public about low price alternatives to high fares, which fosters a more competitive industry that benefits all consumers. The traffic data and the press and consumer group analysis of the data strengthen American companies by allowing companies to negotiate with airlines on fares. The traffic data benefits consumers by providing new entrant Air Carriers with the ability to demonstrate the strength of their business plan to investors.

The O&D Survey, however, was singled out most often in responses to the ANPRM as the data source most in need of improvement. The abundance of complaints about the deficiencies that exist in the O&D Survey has caused the public and the aviation industry to be cautious about any conclusions that can be drawn from this data, yet a wide range of stakeholders use it because it is the only available source of economic information that describes key aspects of scheduled air passenger transportation. Data inaccuracies have doubtlessly led to sub-optimal decisions by stakeholders that are as impossible to quantify as they are essential to correct. We therefore conclude that the changes proposed in this NPRM are made necessary by compelling need to improve the safety and economic well being of the American people.

Furthermore, OMB has published guidelines for ensuring that Federal agencies establish practices for ensuring and maximizing the quality, objectivity, utility and integrity of information disseminated by Federal agencies. Disseminated information must be accurate, clear, complete, and presented in an unbiased manner. Where appropriate, data should have full, accurate, transparent documentation and error sources affecting data quality should be identified and disclosed to users. The IG has declared that the Department's O&D Survey does not meet the Department's standard of acceptability of 95 percent accuracy. Since the O&D Survey and T-100/T-100(f) remain the key measure of the economics of the passenger air travel industry, the Department is under obligation to provide the most accurate statistical information that it can reasonably provide. The 1998 OIG report, the 1998 ANPRM, and subsequent outreach activities support the necessity of aviation data modernization. The IG found that to compensate for the unreliable O&D data, Department aviation analysts often requested Air Carriers to provide supplemental data, but they sometimes simply used their experience to apply adjustment factors to the unreliable data. Lack of consistent data collection over time decreases the utility of that data, while every request for supplemental information increases the Air Carriers' and the Department's costs. We therefore conclude that the changes proposed in this NPRM are necessary to implement Congress' intent for the law.

Because the Executive Branch and Congress utilize this data to form and implement public policies to foster a safe, healthy, efficient, and competitive air transportation system that contributes to aviation safety, national security, and the U.S. economy, agency investment in aviation information is critical. The private markets and other government and quasi-governmental agencies agree that this information is also critical for their needs, but private markets are unable to provide adequate statistical information to address this need. The unreliability of the data undermines the Department's ability to perform its statutory mandate to disseminate information that enables the transportation system to adapt to the present and future needs of commerce and to ensure that public policy remains consistent with changing commercial reality.

G. Development of the Record in This Rulemaking

The Department received 48 comments in Docket OST-1998-4043 in response to its ANPRM (July 15, 1998, 63 FR 28128) from Air Carriers, Foreign Air Carriers, airports, industry consultants, trade associations, and unions. Typical of the responses was that of American Airlines, which, as both a supplier and a user of data, expressed full support of the Department's effort to simplify the data submissions and ensure the accuracy and integrity of the data disseminated to the public. The Regional Airline Association pointed out that it had long advocated modernizing the data. Delta Air Lines supported the initiative so long as it did not require the incursion of unreasonable computer programming costs. The Air Line Pilots Association and the Association of Flight Attendants favored any change that would improve data quality and integrity over the current data.

Comments received about the O&D Survey under the ANPRM indicate that there is significant concern about the data. Even while emphasizing the importance of having access to the Department's traffic data statistics, the respondents stressed that the O&D Survey has serious weaknesses. Respondents repeatedly mentioned that the data elements collected were insufficient to meet the data needs of the public and the aviation industry. There was consensus that the reporting exemptions granted to some Carriers significantly affected the reliability and completeness of the data. There was near universal agreement that the data

collected by the Department suffer from a lack of both quality and consistency. Specific comments point to the O&D Survey's outdated design, which affects the quality and accuracy of data gathered. This is amply demonstrated by the list of improvements that were put forth in the ANPRM. The suggested modifications to make the O&D Survey more reliable include:

• Change the source of data;

• Decrease the data reporting exemptions;

• Improve data validation;

• Improve definitions of data elements to enhance uniformity;

• Improve enforcement of timely receipt of data to guarantee timely release of data;

• Expand the number of elements collected to increase the usefulness in measuring the industry;

• Increase the accuracy of the data to make it more reliable; and

• Decrease the complexity of the form of the published data to make it more useful for decision making.

Stakeholders agree that the collection, processing, and dissemination of aviation data, particularly through the O&D Survey and T-100/T-100(f), are critical to the continued function and well being of the U.S. airline industry. There was general affirmation that the suggestions the Department proposed in the ANPRM were acceptable. Furthermore, Executive Order 12866 obligates the Department to collect, process, and disseminate accurate, timely, and relevant aviation data. The Department's data is insufficient to accurately determine a consistent measure of passenger travel using its same general direction of travel passenger counting methodology. Therefore, it is unable to fulfill its mandate to provide the most relevant aviation data within the current reporting requirements.

The air travel industry has grown rapidly since deregulation. Deregulated markets, code-share and other cooperative marketing agreements, new airline business models, and the adoption of the hub-and-spoke model and the rolling hub variation of that model have changed the fundamental economics of the airline industry. These changes have left the Department attempting to measure an aviation economy that is not the economy that the existing data were designed to measure. As such, 14 CFR Part 241, Section 19-7 (“Passenger origin-destination survey”) has outlived the economic model for which it was designed. Despite some adjustments (specifically, Docket No. OST-1996-1049, RIN 2105-AC34, 62 FR 6715; Docket No. OST-1998-4043, RIN 2139-AA08, 67 FR 49217), these metrics have not kept pace with changes in the industry, nor do they measure essential features of aviation economics as we know them today. Therefore, the Department is issuing this NPRM.

H. Scope of This Rulemaking

The purpose of this rulemaking is to (1) reduce the reporting burden on the Participating Carriers, (2) make the O&D Survey more relevant and useful, (3) reduce the time it takes to disseminate the information and (4) achieve maximum congruence between the O&D Survey and the T-100/T-100(f). In so doing, the rulemaking will aid industry and government users by collecting the most accurate and consistently obtainable economic information about the purchase of air travel on scheduled Carriers to or from, or within, the U.S. This rulemaking will address the identification of the responsible reporting entity, the identification of the data elements required to measure economic activity in the scheduled passenger air transportation industry, and the identification of exemptions that shall be allowed in the reporting process.

The Department seeks to achieve these goals by making the O&D Survey more relevant and useful to all stakeholders. Specific concerns associated with the current O&D Survey reporting requirements include (1) minimizing the number of reporting exemptions, (2) increasing the level of detail, (3) increasing the quantity and quality of information collected, (4) eliminating the need for data providers to resort to manual data collection, thereby reducing reporting costs, (5) establishing more uniform reporting by updating guidelines and instructions to the Carriers, (6) achieving maximum congruence between the O&D Survey and the T-100/T-100(f), and (7) updating the means of submission to enhance the timeliness of data release.

I. O&D Survey Redesign

The Department believes that an accurate O&D Survey based on Revenue Passenger tickets is now both desirable and possible in light of recent changes in airline information technology.

1. Summary of the Proposed O&D Survey

a. Who Shall Report

The Department proposes that all U.S. Air Carriers, and Foreign Air Carriers reporting data under antitrust immunity granted under 49 U.S.C. 41308, that are operating at least one aircraft with 15 or more seats and issuing tickets for travel on scheduled interstate passenger services to or from, or within, the U.S. participate in the O&D Survey. By this change, the Department proposes to abandon the concept of first Participating Carrier reporting a portion of Ticketed Itineraries in favor of the Issuing Carrier reporting all eligible Ticketed Itineraries. In light of substantial changes in airline ticketing and revenue accounting practices, this alternative is the most efficient and cost effective, allowing for the broadest possible data availability with a minimum of ongoing reporting effort.

b. Data To Be Collected

The Department believes that a fundamental restructuring of the data collected under the O&D Survey is necessary for the Department to fulfill its Congressional mandate to ensure a healthy, safe, efficient, accessible, and competitive transportation system that meets our vital national interests and enhances the quality of life of the American people. The Department acknowledges that this mandate includes meeting the needs of the aviation community that relies on this data, and we have endeavored to incorporate as many of its suggestions as possible in this proposal. The Department recognizes its obligation to measure passenger travel utilizing techniques that Congress, the industry, and the public recognize as valid, current, and reasonable industry measurements. In order to do this, the Department proposes to collect information about the issuance of the Ticketed Itinerary and to collect additional information about the travel described in the itinerary. With these changes, the Department proposes to abandon the concept of Directional Passenger in favor of One-way Trips to define True O&D.

The Department proposes to expand the scope of data that, currently, results in an insufficient volume of data to meet basic tests of validity and reliability. Therefore, the Department is abandoning the reliance on a 10 percent sample and is proposing 100 percent reporting of eligible Ticketed Itineraries. The Department intends to eliminate the limitations imposed on the scope of data that resulted in an overabundance of exceptions that compromised data quality. Therefore, the Department is removing the various exceptions for reporting long itineraries and non-standard itineraries and eliminating alternative data sample collection techniques for travel in major markets.

The Department proposes to expand the scope of data in order to gather data

elements required to understand and disseminate useful information about passenger travel and thereby proposes to eliminate the bundling of ticket taxes and fees with the ticketed fare.

The current O&D Survey includes the following data elements: (1) Point of origin, (2) Carrier on each flight-coupon stage, (3) fare-basis code for each flight-coupon stage, (4) points of stopover or connection (interline and intraline), (5) point of destination, (6) number of passengers, and (7) total dollar value of ticket. The proposed revision of the O&D Survey includes additional traffic elements that occur for each Flight-Stage and sale elements that occur only once for an individual itinerary.

c. Proposed Traffic Elements

1.

Flight-Stage Sequence Number.

A two-character ordinal sequence number beginning with 01 that the Participating Carriers will assign to each Flight-Stage of a Ticketed Itinerary.

2.

Airport Codes.

a.

Flight-Stage Origin Airport.

The airport's IATA location identifier from which a Flight-Stage departs. The Department proposes to accept a city code in lieu of airport code only when the Flight-Stage flight number is OPEN, the itinerary uses a City Code instead of an airport code, and the scheduled Carrier serves multiple airports within the city making the origin airport unknowable.

b.

Flight-Stage Destination Airport.

The airport's IATA location identifier at which a Flight-Stage arrives. The Department proposes to accept a city code in lieu of airport code only when the Flight-Stage flight number is OPEN, the itinerary uses a City Code instead of an airport code, and the scheduled Carrier serves multiple airports within the city making the destination airport unknowable.

3.

Carrier Codes.

a.

Operating Carrier.

The IATA issued Airline Designator code of the U.S. Air Carrier or Foreign Air Carrier operating the equipment used on the Flight-Stage.

b.

Marketing Carrier.

The IATA issued Airline Designator code of the U.S. Air Carrier or Foreign Air Carrier marketing the Flight-Stage.

4.

Scheduled Flight Date.

The date on which the Flight-Stage is scheduled to depart.

5.

Scheduled Departure Time.

The scheduled local flight departure time of the Flight-Stage.

6.

Master Flight Number.

The Airline Designator code and flight number under which the flight inventory is managed.

7.

Scheduled Arrival Date.

The date on which the Flight-Stage is scheduled to arrive.

8.

Scheduled Arrival Time.

The scheduled local arrival time of the Flight-Stage.

9.

Fare Basis Code/Ticket Designator.

The alphanumeric code identifying the fare by class, qualification, and restriction associated with the Flight-Stage.

10.

Ticketing Class of Service.

A one-character code indicating the service cabin within the aircraft in which the passenger is scheduled to be seated under the fare rules stated for each Flight-Stage of the Ticketed Itinerary.

d. Proposed Sale Elements

1.

Issuing Carrier Identifier.

The Issuing Carrier's assigned IATA recognized airline numeric code.

2.

Ticketed Itinerary Identifier.

The alphanumeric identifier for the Ticketed Itinerary. This identifier identifies a unique itinerary for each Issuing Carrier Identifier and Date of Issue.

3.

Date of Issue.

The local date on which the Ticketed Itinerary was issued.

4.

Fare Amount.

The Fare Amount is the monetary amount the Issuing Carrier receives from the ticket purchaser on behalf of all the U.S. Air Carriers or Foreign Air Carriers included in the itinerary. The Fare Amount includes the Carrier-imposed fees and surcharges, such as fuel surcharges, for the carriage of a passenger and allowable free baggage on the passenger's complete itinerary, denominated in U.S. dollars, and accurate to two decimal places, rounded. The Fare Amount excludes taxes and fees imposed by Federal, state, local and foreign governments and excess baggage fees.

5.

Government Taxes and Fees.

a.

Government Imposed Tax/Fee Identifier.

The government tax or fee identifier. The Department's codes will be listed in the Passenger Origin-Destination Survey Directives issued by the Department.

b.

Government Imposed Taxes/Fee Amount.

This field will contain the value of the tax or fee specified by the identifier that precedes it, denominated in U.S. dollars and accurate to two decimal places, rounded.

6.

Ticketing Entity Outlet Type.

The identifying code of the distribution channel through which the Ticketed Itinerary was issued. The Department's codes will be listed in the Passenger Origin-Destination Survey Directives issued by the Department.

7.

Customer Loyalty Program Identifier.

The program identification code assigned to the airline customer loyalty program or alliance customer loyalty program under which the passenger accrues benefits.

8.

Customer Loyalty Program Award Ticket Indicator.

The one-character identifying code to indicate that customer loyalty program credits were expended in obtaining the Ticketed Itinerary.

9.

Number of Passengers.

The numeric value representing the number of passengers traveling on the Ticketed Itinerary. If multiple passengers have flown on a ticketed itinerary, we are considering requiring carriers to report separate records, with separate fares, for any groups of passengers on the itinerary that have flown under differing fare basis codes or under special discount fares. For example, if lower fares are paid for children within a tour group, the children's fares should be reported in a separate data record with a separate fare. When the projected number of passengers on a group ticket differs from the actual number, we are considering requiring carriers to report the actual number of passengers who flew on the group ticket as of the reporting event. BTS believes that these disaggregations are necessary to calculate its air travel price index. We seek comment on carrier practices and handling of group tickets and on the feasibility of the methodology we are considering.

10.

Itinerary Copy Date.

The date that the Participating Carrier copied the Ticketed Itinerary data for submission to the Department.

2. Discussion of the Proposed O&D Survey

a. Traffic Elements

In its comments to the Department's ANPRM, the Regional Airline Association (Docket OST-1998-4043-11) stated that the measure of passenger traffic used in the O&D Survey fails to satisfy the industry's need for timely and relevant information. Unisys Corporation (Docket OST-1998-4043-22) and Delta Air Lines (Docket OST-1998-4043-21) stated that the O&D Survey should adopt the True O&D concept. The Port of Portland (Docket OST-1998-4043-19) urged the recognition of multi-carrier O&Ds. In requesting that the Department begin using “relevant information,” “True O&D,” and “multi-carrier O&D” to measure passenger traffic, these respondents made clear that, for the aviation industry, the Directional Passenger is no longer an acceptable measure of True O&D. The Department agrees with the Regional Airline Association that, if we are to provide relevant information about the scheduled air transportation industry, we must change the basic calculation of the True O&D used in the O&D Survey to the calculation of One-way Trip

commonly used in the air travel industry.

Scheduled Air Carriers in the U.S. use a variety of methodologies to construct One-way Trips in order to comply with the provisions of collecting September 11th Security Fees. The most widely accepted is a methodology based on “time in hub.” Here, the number of hours spent in an airport is the gauge by which it is determined whether the passenger (1) intended to continue the trip by changing planes, or (2) intended to remain in that city for other purposes. It is sometimes known as “the four hour rule” methodology because four hours is the most common maximum domestic connection time allowed with this method. In this methodology, certain other decision criteria are applied to supplement the time in hub determination, such as special rules for itineraries in which there are no stops that exceed the time allowance, itineraries with “void” and “OPEN” coupons, and itineraries that backtrack over the same set of airports.

The Department proposes to define a One-way Trip in terms of time spent in transit, subject to certain other rules. All other methodologies that are in use at Carriers require proprietary knowledge or were uniquely adapted to the needs of a particular Carrier, and would not apply industry-wide to all Carriers. These characteristics make the other methodologies unsuitable for use by the Department on a universal basis. The Department seeks comments from the industry and the public regarding the optimal method for constructing a One-way Trip. We will consider all the suggestions for appropriate determination of a One-way Trip, and establish a consensus of the guidelines provided by the industry to use in processing data in the O&D Survey for dissemination. We propose to require the following data elements for each segment of the Ticketed Itinerary as input for the One-way Trip determination: (1) Flight-Stage Sequence Number, (2) Airport Codes, (3) Carrier Codes, (4) Scheduled Flight Date, (5) Master Flight Number, (6) Scheduled Departure Time, (7) Scheduled Arrival Date, (8) Scheduled Arrival Time, (9) Fare Basis Code/Ticket Designator, and (10) Ticketing Class of Service.

1.

Flight-Stage Sequence Number.

Every Flight-Stage of an itinerary must have a sequence number assigned to it by the Issuing Carrier. Should problems arise, a positive identifier, assigned by the provider of the data, will help facilitate communication and resolution. Flight-Stage Sequence Number will begin each itinerary with Flight-Stage 01 and continue with sequential Flight-Stages. Surface Flight Coupon Stages (known within the industry as surface segments, including those provided by designated surface carriers such as railroads) that are included in the itinerary will be included in the numbering sequence. Voids (also known as arrival unknown segments, or ARNK segments) and OPEN segments are to be included in the numbering sequence.

2.

Airport Code.

Airport code for both Flight-Stage Origin Airport and Flight-Stage Destination Airport will be identified by the IATA location identifier that uniquely identifies that airport. American Airlines (Docket OST-1998-4043-5) and others commented that the presence of City Codes in the itinerary in lieu of airport codes resulted in data inconsistency. In the current O&D Survey, Participating Carriers from time to time had to attempt to decipher the itinerary using the pricing area of the ticket. The Department believes that our proposed change, which designates the Issuing Carrier as the Participating Carrier, will eliminate the problem caused by manual examination of the pricing area. However, the Department recognizes that when a Carrier sells an itinerary known as an “OPEN” itinerary, where (1) the itinerary is purchased but not booked, (2) the purchased itinerary includes a City Code instead of an airport code, and (3) the scheduled Carrier provides service to multiple airports at that city, then the airport code is unknowable. In this case, the Air Carrier must issue a ticket where the appropriate value is a City Code and the Department proposes to accept in the O&D Survey the reporting of City Codes in the itinerary only under this circumstance.

3.

Carrier Code.

Where once Carrier Code would have been described simply as the Airline Designator of the U.S. Air Carrier or Foreign Air Carrier that transported the passenger, the onset of code-sharing has introduced multiple Carriers into the ticketing process. The Marketing Carrier Code is the Carrier identifier that the passenger sees when examining the Ticketed Itinerary. The Operating Carrier is the Carrier that operates the aircraft that transports the passenger. Marketing Carrier and Operating Carrier will be identified by the IATA Airline Designator assigned to them. If the Carrier has no IATA Airline Designator code, then the Department will assign a reporting code. When a Carrier markets surface transportation as an extension of its air transportation service, and the transportation is (1) provided by a common carrier that is not an Air Carrier or Foreign Air Carrier, and (2) described on the Ticketed Itinerary and included in the total fare, then the surface carrier's IATA Airline Designator will serve as the Operating Carrier and the Carrier's IATA Airline Designator will serve as the Marketing Carrier.

4.

Scheduled Flight Date.

The Department's ability to determine One-way Trips from the O&D Survey information is crippled by a lack of information about Scheduled Flight Date. The lack of information about Scheduled Flight Date makes it impossible to know which passengers pass through a location on their itinerary to stay only long enough to change planes, and which passengers remain multiple days at a location.

In its comments, Data Base Products, Inc. (Docket OST-1998-4043-36) cited another inaccuracy, mentioning that the O&D Survey passengers are counted in the quarter in which the first departure took place regardless of the flight date scheduled in the itinerary. It pointed out that this inaccuracy is most noticeable in the transition from fourth quarter to first quarter where all trips are reported in the fourth quarter despite a large number of people departing in December who are ticketed to return in January. The scheduled air transportation industry does not always fluctuate in orderly monthly cyclic patterns. Holidays such as Thanksgiving and Easter have a great effect on air travel patterns and thereby require daily data.

Monthly data are problematic in other ways. From time to time, including times of emergency such as September 11th, the Department has found it necessary to request flight data at the weekly or daily level. Complying with these ad hoc data requests imposes a burden on Air Carriers. By routinely collecting data by flight date instead of by flight month, the Department will be able to avoid the need for special reporting requests by flight date. The ability to analyze air travel by day-of-week and in seven day moving averages will enable the Department to facilitate more robust economic measurement and analysis and be prepared to analyze the effects on air transportation when significant economic, weather and security related shocks to the nation occur. Because the determination of One-way Trips is critical to the Department's assessment of the air transportation industry, the Department proposes to collect information by Scheduled Flight Date.

5.

Scheduled Departure Time.

The Department's ability to determine One-way Trips from the O&D Survey

information is also crippled by a lack of information about Scheduled Departure Time. The lack of information about Scheduled Departure Time makes it impossible to know which passengers pass through a location on their itinerary to stay only long enough to change planes, and which passengers remain for an extended period at a location.

Knowledge of the scheduled time of departure helps the Department understand the economics of the air travel industry. The FAA oversees the development of the nation's air travel infrastructure, and knowledge of Scheduled Departure Time allows it to calculate the costs and benefits of safety regulations and infrastructure improvements. Similarly, departure time will assist the TSA in meeting the needs of airports and Air Carriers with the appropriate staff levels for airport security. Flight-Coupon Stages where the travel plans are OPEN will be assigned an early morning departure time to be determined later, and the results of that determination will be published in the Passenger Origin-Destination Survey Directives issued by the Department.

6.

Master Flight Number.

Master Flight Number shall consist of the two-character Airline Designator of the Carrier that manages the inventory and the flight number under which that Carrier manages the flight. In flights that are not involved in a code-share and not involved in starburst or funnel flight operations, the Master Flight Number will be the same as the Marketing Flight Number. When code-shares, funnel flights and starburst flights are involved, this data element will be used to identify the Airline Designator and true flight number under which the flight inventory is controlled. The Department proposes to collect this data element to fill in the gap between the data the industry uses to track flights and the data the Department collects.

The term “code-share” is not sufficiently precise to describe what has become two distinct concepts. For purposes of this rulemaking, the term Alliance Code-Share will be used to describe the code-share relationship wherein each Carrier keeps its identity and livery distinct from one another and wherein each Carrier has the opportunity to market the other's flights. The term Franchise Code-Share will be used to describe the code-share relationship wherein the Franchise Code-Share Partner never appears as the Marketing Carrier and generally, although not necessarily, paints its aircraft in the livery of the Mainline Partner.

At the inception of code-sharing, the scheduled air passenger industry coined the term Marketing Carrier to distinguish it from the Operating Air Carrier that transported the passenger. According to the ATPCO TCN Ticket Exchange Service Specifications Guide instructions for populating the data element “Coupon/Segment Marketing Carrier” (glossary reference MCAR), the Marketing Carrier is:

The carrier that appears as the Carrier for a segment on the ticket. In a code-sharing arrangement, if a CRS knows the Servicing Carrier (CARR) and the Marketing Carrier (MCAR) both elements CARR and MCAR should be populated. If the CRS only knows the Marketing Carrier (MCAR), Marketing Carrier should be populated and Servicing Carrier should be blank.

According to the ATPCO TCN Ticket Exchange Service Specifications Guide instructions for populating data element “Coupon/Segment Carrier Code” (glossary reference CARR), the Carrier is:

The Carrier that carried the passenger. A CRS will populate this element with the same code as the Marketing Carrier (MCAR) unless the CRS knows of a code-sharing arrangement. If the CRS knows of a code-sharing arrangement, the CRS will code the Carrier that appears on the ticket as the Marketing Carrier (MCAR) and the Carrier that carries the passenger as the Carrier Code (CARR).

The Department, recognizing the importance of keeping track of code-share relationships on Ticketed Itineraries, amended the O&D Survey to provide for code-share ticketing practices. The Department defined the term “Ticketed air carrier”, which functions as the equivalent of the industry term Marketing Carrier. The definition of Ticketed Air Carrier in 14 CFR Part 241 Section 19-7 Appendix A, X. Glossary of Terms is:

Under a code-share arrangement, the air carrier whose two-character air carrier code is used for a flight segment, whether or not it actually operates the flight segment.

However, the Department diverged from standard industry practice when we defined Operating Air Carrier in a way that is slightly different than the industry term Coupon/Segment Carrier Code. Operating Air Carrier 14 CFR Part 241 Section 19-7 Appendix A, X. Glossary of Terms is:

Under a code-share arrangement, the air carrier whose aircraft and flight crew are used to perform a flight segment.

In an Alliance Code-Share, the industry's definition of Marketing Carrier is the equivalent of the Department's Ticketed Air Carrier, and the industry's definition of Coupon/Segment Carrier is the equivalent of the Department's Operating Air Carrier. However, in a Franchise Code-Share, the industry data is populated as if the relationship is a wet-lease and, therefore, the Airline Designator of the Mainline Partner serves as both the Marketing Carrier and the Coupon/Segment Carrier. Although the Department rules require the Issuing Carrier (or Issuing Carrier's agent) to notify the passenger of the identity of each Operating Air Carrier in the routing, standard industry practice does not list the Franchise Code-Share Partner's Airline Designator on the Ticketed Itinerary. Nevertheless, the O&D Survey rules require the Participating Carrier to report the Airline Designator of the Franchise Code-Share Partner Carrier as the Operating Air Carrier, and report the Airline Designator of the Mainline Partner as the Marketing Carrier.

The difference in the treatment of data between the industry and the Department's O&D Survey is most clear when examining an itinerary that includes both an Alliance Code Share and a Franchise Code-Share. For example, if Lufthansa German Airlines (Lufthansa) had authority to sell a code-share itinerary from Frankfurt (FRA) to Dulles (IAD) to Norfolk (ORF), and the IAD to ORF portion is on an aircraft operated by Mesa Airlines (Mesa), then the O&D Survey submission would show two flights. The FRA to IAD portion would be reported as Ticketing Air Carrier of Lufthansa and Operating Air Carrier of Lufthansa. The IAD to ORF portion of the travel would be reported as Ticketing Air Carrier of Lufthansa and the Operating Air Carrier of Mesa. The Department does not know the identity of the Mainline Partner Air Carrier. Logically, in this case, a user would assume Mesa is operating as United Express but there is nothing to preclude Mesa from flying IAD to ORF as US Airways Express, so such assumptions are not to be relied on. The Department's data is used for time series analysis over many years and no user of the data can logically deduce an Air Carrier's livery and operations over many years of service.

The Department has a statutory responsibility to monitor airline code-share relationships. As regional Carriers have increasingly taken multiple Mainline Partner Carriers into code-share arrangements, Franchise Code-Shares have become increasingly difficult for the Department to monitor. When an Air Carrier takes on a Franchise Code-Share relationship with two Mainline Partners that, in turn, have Alliance code-share relationships

with each other, the need for a new data element in the O&D Survey is clear. When a Carrier operates as a Franchise Code-Share Partner for both US Airways and United Air Lines (United), the O&D Survey data records cannot distinguish between (1) flying in the livery of United, ticketed as a US Airways flight and (2) flying in the livery of US Airways, ticketed as a US Airways flight. In situation (1), the identity of the Mainline Partner (United, in this case) is lost. In situation (2), the identity of the Mainline Partner (US Airways, in this case) is not lost, but there is no way for the user of the data to know that. Since the user is provided no ability to distinguish between a record reported in situation (1) and a record reported in situation (2), the value of the data in assessing code-share travel partnerships is greatly diminished.

To further illustrate how Carriers would report the Marketing Carrier, Operating Carrier, and Master Flight Number data elements under this proposed system, consider the following hypothetical examples of itineraries involving a single US Airways Express flight operated by Mesa. Under this scenario, US Airways contracts with Mesa (IATA Airline Designator YV) to operate regional jet service between Charlotte (CLT) and Charleston, SC (CHS) on a fee per departure basis. Mesa operates the aircraft but the aircraft is painted in US Airways' livery. US Airways is wholly responsible for managing the inventory on the flight and bears all of the revenue risk associated with the flight. US Airways markets this flight to its customers as US Airways Express flight 2808. Mesa does not market this flight to the public under its own designator code and has no responsibility for managing the inventory. US Airways' alliance partners United and Lufthansa market US Airways Express flight 2808 as United 7808 and Lufthansa 8808, respectively. Although United and Lufthansa sell seats on US Airways flight 2808 under their respective designators, neither Carrier has any responsibility for managing the inventory on this flight. The following itinerary examples illustrate how the proposed system would work in practice.

Itinerary 1:

Lufthansa marketed Munich-Charleston One-way Trip with connection over Charlotte to US Airways Express flight 2808. Under this scenario, the passenger buys a ticket from Munich to Charlotte on LH100, a Lufthansa operated flight. In Charlotte, the passenger will connect to Charleston on LH8808, which is the Lufthansa marketing flight number for US Airways Express flight US2808 operated by Mesa. For the LH8808 Flight-Stage, the Participating Carrier would populate the Marketing Carrier, Operating Carrier, and Master Flight Number data elements as follows:

Marketing Carrier:

LH.

Operating Carrier:

YV.

Master Flight Number:

US2808.

Itinerary 2:

United marketed Chicago-Charleston One-way Trip with connection over Charlotte to US Airways Express flight 2808. Under this scenario, the passenger buys a ticket from Chicago to Charlotte on UA200, a United operated flight. In Charlotte, the passenger will connect to Charleston on UA7808, which is the United marketing flight number for US Airways Express flight US2808 operated by Mesa. For the UA7808 Flight-Stage, the Participating Carrier would populate the Marketing Carrier, Operating Carrier, and Master Flight Number data elements as follows:

Marketing Carrier:

UA.

Operating Carrier:

YV.

Master Flight Number:

US2808.

Itinerary 3:

US Airways marketed Charlotte-Charleston One-way Trip, Non-stop on US Airways Express flight 2808. Under this scenario, the passenger buys a ticket from Charlotte to Charleston on US2808. For the US2808 Flight-Stage, the Participating Carrier would populate the Marketing Carrier, Operating Carrier, and Master Flight Number data elements as follows:

Marketing Carrier:

US.

Operating Carrier:

YV.

Master Flight Number:

US2808.

In all three of the situations described above, if the US Airways flight from Charlotte to Charleston were to be operated by US Airways itself (i.e. with mainline equipment rather than by one of its regional affiliates) as hypothetical flight US Airways 518, the Operating Carrier field in all of the above examples would instead reflect “US.” The Master Flight Number field would reflect “US518.”

It is also important to know the Master Flight Number when Carriers use funnel flights and starburst flights to market their product to consumers. Correlations between the T-100/T-100(f) would be very difficult if the O&D Survey is only reported under the various flight numbers that are assigned in funnel flights and starburst flights. Knowing the Master Flight Number will provide the common element needed for accurate correlation.

The Department must require this data element to fulfill its mandate to protect consumers by monitoring code-share ticketing and other marketing practices. Therefore, the Department proposes to collect the Master Flight Number, which will consist of the Airline Designator and true flight number of the Mainline Partner that manages the inventory of the flight. The Department invites comment on this topic and on the efficacy and difficulty of populating this data element.

7.

Scheduled Arrival Date.

The Department's ability to determine One-way Trips is dependent on knowing when a scheduled flight arrives in an airport. Scheduled Arrival Time is meaningless without Scheduled Arrival Date.

8.

Scheduled Arrival Time.

The Department's ability to determine One-way Trips from the O&D Survey information is further crippled by a lack of information about Scheduled Arrival Time. The lack of information about Scheduled Arrival Time makes it impossible to know which passengers pass through a location on their itinerary to stay only long enough to change planes, and which passengers remain for an extended period at a location.

Flight-Coupon Stages where the travel plans are OPEN will be assigned an arrival time to be determined later and the results of that determination will be published in the Passenger Origin-Destination Survey Directives issued by the Department.

9.

Fare Basis Code/Ticket Designator.

The Department requires fare basis code and ticket designator to understand the restrictions placed on the purchase of travel and the economics of the air travel industry. Several respondents to the ANPRM requested that the Department collect information that will enable it to provide a classification of fares. The Fare Basis Code is the alphanumeric code identifying the fare by class, qualification, and restrictions associated with the travel segment. The Ticket Designator is the code indicating that the fare basis code is modified by rules associated with the ticket designator code. Ticket Designator is specified in the ATPCO TCN Ticket Exchange Service Specifications Guide instructions for populating data element “Coupon/Segment Fare Basis/Tkt Designator” (glossary reference FBTD) as the code that appears in the same field as the Fare Basis Code separated by an oblique “/”.

10.

Ticketing Class of Service.

In order to understand service demand and to understand the quality of services to communities, the Department proposes to continue the practice of collecting information about class of service, also known as cabin class. In response to the ANPRM, American Airlines (Docket

OST-1998-4043-5) and others noted that non-standard reporting of class of service degrades the usefulness of the published data. The most expensive class of service, generally provided in the cabin located nearest the nose of the plane, is typically referred to as the first class cabin. The least expensive class of service (coach/economy/main) cabin is typically located in the aft-most section of the aircraft. Sometimes a Carrier will avoid offering a class of service marketed as first class, and choose to market the front cabin as business class instead. To further complicate matters, more than one Carrier markets the front cabin of its narrowbody aircraft flying on a domestic route and the front cabin of its widebody aircraft flying on an international route with the same “first class” designation. Today, certain Carriers offer “premium coach” seating and in the future, Carriers may offer an “ultra-premium” (

i.e.

more expensive than first class) cabin. We are unaware of an objective class of service definition maintained anywhere in the industry that distinguishes between these classes of service. Indeed, currently there is no objective class of service definition that would prohibit a Carrier providing only a single class of service from calling it first class, even if that single class of service was comparable to coach class at a Carrier that offers multiple classes of service.

The Department desires to change the class of service designations to make them as objective and as meaningful as possible. However, we believe the marketplace is the best arbiter of a Carrier's claim to offer first class service. We do not wish to codify a particular standard of service or seat pitch as the point that differentiates a first class accommodation from a business class accommodation. The Department seeks consistent class of service designations but there are no objectively defined designations in the industry. Therefore, the Department proposes to provide a framework in which each airline will assign a number to the service cabins in its fleet from the least expensive to the most expensive, such that the least expensive cabin (usually the aft-most cabin) is designated as “1” and each defined cabin class above cabin 1 (

i.e.

those that the Carrier markets at higher price points and that are generally physically located toward the front of the aircraft) will be designated with the next highest ordinal number. The number “2” will generally designate what has heretofore been described as premium coach. The number “3” will generally designate what has heretofore been described as business class or first class of a two cabin aircraft. The number “4” will generally designate what has been described as first class of a three cabin aircraft. The number “5” will designate ultra-premium first class. The Carriers would provide the Department with up to date definitions of its 5 class of service designations and would use their own internal class of service codes to classify their passengers. When a Carrier operates a fleet of aircraft with a class of service that is arguably similar to the class of service offered by competing Carriers, and if the Department believes a compelling public interest is served by re-designating the passengers as having been transported in a different class of service, the Department reserves the right to re-designate passengers on such an airline into a different class of service. The Department seeks comment from Carriers and the public on the efficacy of this proposal.

b. Sale Elements

1.

Issuing Carrier Identifier.

Every Carrier that issues Ticketed Itineraries must have a unique three-digit numeric identifier. The Issuing Carrier is responsible for the ticket stock on which the itinerary is issued. The Department proposes to identify the Issuing Carrier with the Carrier's assigned IATA three-digit code. This code also serves as the first three digits of the 13-digit ticket number on a standard agent ticket.

2.

Ticketed Itinerary Identifier.

Carriers assign a ticket number or Passenger Name Record (PNR) identifier to every Ticketed Itinerary that is unique when used in conjunction with an Issuing Carrier Identifier and the Date of Issue. This data element will contain the value of that identifier. The Department requires a unique identifier to facilitate communication with the Participating Carriers in the Department's effort to monitor the data and the Participating Carrier requires a unique identifier to facilitate communication with the Department when data must be corrected and resubmitted. The Ticketed Itinerary Identifier is necessary for effective resolution of problems.

3.

Date of Issue.

The Department proposes to require Date of Issue because it is part of the unique identifier of the Ticketed Itinerary. In the past, the Department has often had to require Air Carriers to provide supplemental information about travel because it lacked information about ticket sales dates. DOJ and DOC both require knowledge of the date of sale in the course of carrying out their mandates. The date the Ticketed Itinerary is issued is an important component of understanding the economics of the airline industry. Falling passenger counts or rising passenger counts have traditionally been the measure of the economic engine that travel provides to the economy. However, for some purposes, the rising and falling volume of daily ticket sales over time is a better measure of industry economics. Another key element of air transportation economics is the measurement of the number of days between ticket sale and first use of the Ticketed Itinerary. Known as the booking window, or advance purchase window, the increase or decrease of the booking window year over year is an important measure of consumer confidence. To understand the dynamics of rising and falling volume of itineraries sold and the size of the booking window, the Department must collect the Date of Issue.

4.

Fare Amount.

The Department's ability to measure fare information independent of taxes collected is vital to the understanding of aviation commerce. Carriers shall convert fares paid in currencies other than U.S. Dollars into U.S. Dollars using whatever currency conversion methods the Carrier customarily uses in its normal course of business. The current O&D Survey requires Participating Carriers to truncate the cents from the reported total amount. This practice artificially lowers the Department's estimate of total amount collected because an unknown number of cents have been dropped from millions of tickets. Rounding to the nearest cent will allow some imprecision to remain, but the Department believes that losing fractions of one half cent is an acceptable degree of imprecision. Fare amounts have customarily not been whole dollar amounts even when they do not require currency conversion to U.S. dollars. Therefore, the Department proposes to collect fare information independent of tax information, and further proposes to collect fare information accurate to two decimal places rounded.

5.

Government Imposed Taxes/Fees.

The ability to identify each and every tax, passenger facility charge, and fee that the consumer must pay is central to the Department's understanding of the economics of travel. Disaggregating taxes and government-imposed fees from the fare will enable the Department to more accurately monitor changes in airfares and separately monitor the changes in taxes and fees paid, both of which have substantial policy considerations.

On January 9, 2003, Captain Duane Woerth, President of the Air Line Pilots Association International, testified

before the Senate Committee on Commerce, Science, and Transportation that airline taxes were choking the industry.

6

He testified that, according to the Air Transport Association (ATA), taxes on a $100 domestic ticket could be as high as 44 percent of the amount collected. Without improvements to the O&D Survey, it is impossible to use Department data to precisely determine whether the testimony was based on an example of a typical ticket or an extreme case, and whether it is indicative of an industry-wide trend affecting a substantial number of passengers.

6

Source:

http://commerce.senate.gov/pdf/woerth010903.pdf

.

The Department proposes to adopt the industry's standard Government imposed tax/fee identifiers as documented in the ATPCO TCN Ticket Exchange Service Specifications Guide instructions for populating data element “Tax/Miscellaneous Fee Type” (glossary reference TMFT). Carriers shall convert amounts paid in currencies other than U.S. Dollars into U.S. Dollars using whatever currency conversion methods the Carrier customarily uses in its normal course of business. The Department proposes to require the reporting of taxes and fees collected by the Carriers on behalf of government entities and further proposes to collect tax and fee information accurate to two decimal places rounded.

6.

Ticketing Entity Outlet Type.

BLS (Docket OST-1998-4043-54), American Airlines (Docket OST-1998-4043-5), and Northwest Airlines (Docket OST-1998-4043-49), among others, specifically requested that the O&D Survey include a distribution channel component. The Department has conducted studies of airline marketing and distribution practices and how they affect the cost structure of Carriers as well as the associated impact on consumers. Knowledge of the distribution channel used to deliver the ticket to the passenger has become an important part of aviation analysis.

The Department has lacked the data to sufficiently examine such changes precisely at a time when they have become an important part of the Carrier's efforts to reduce costs. The Department proposes to collect an indicator that identifies the type of location responsible for issuing the Ticketed Itinerary. The Department seeks comment regarding the efficacy of using codes based on those already in use in the industry as listed in ATPCO's TCN Ticket Exchange Service Specifications Guide instructions for populating data element “Ticketing Entity Outlet Type” (glossary reference TIOT).

• A = Airline office

• B = Business corporate account

• C = Consolidator

• D = Direct dial in locations (Consumers, PC Users)

• E = End user access via third party (Internet, Minitel, etc)

• G = General sales office

• I = Internal CRS locations

• M = Multi-access

• N = Non-IATA agents

• P = Pending agents

• S = Self service machine

• T = IATA travel agent

• U = Unknown

• V = Vendor (car, hotel)

• W = Wholesaler or tour operator

The codes will be listed in the Passenger Origin-Destination Survey Directives issued by the Department.

7.

Customer Loyalty Program Identifier.

Some users of the O&D Survey data have requested a data element to record the program name when a passenger has declared a membership in a loyalty program. The need to monitor domestic and international alliances and the causes and consequences of share shift associated with the alliance have become critical in understanding industry trends and discerning their competitive impact. The Department proposes to collect the name of the program in which the passenger is earning credit. We are unaware of any industry standard loyalty program identifiers. The ATPCO TCN Ticket Exchange Service Specifications Guide instructions for populating data element “Coupon/Segment Frequent Flyer Reference” (glossary reference FFRF) indicate that the reference include the “Airline Designator of the airline that assigned the Frequent Flyer Number” which presupposes that loyalty programs belong to an airline rather than an alliance of airlines.

We propose to use the industry standard loyalty program identifiers if a consensus exists, otherwise, the Department will maintain and publish a list of loyalty programs and appropriate identifying codes for those programs. We are aware that not all ticket purchasers declare their membership in a loyalty program at the time the itinerary is ticketed. Passengers that identify themselves as members of a program after the Ticketed Itinerary has been submitted to the O&D Survey will remain unrecognized in the Department's statistics. The Department seeks comment from the industry and the public regarding the ability of the Carriers to reliably populate this element.

8.

Customer Loyalty Program Award Ticket Indicator.

The Department believes that, to carry out its mandate, it must know when a passenger has expended mileage points or award credits to obtain a Ticketed Itinerary. The Department proposes the values of “A” when the customer paid no fare at all, “P” when the customer pays partially with award credits, and “U” when the passenger paid the appropriate fare for passage, but used award credit to upgrade to a more exclusive class of service. The Department seeks comment from the industry and the public regarding the ability of the Carriers to reliably populate this element.

9.

Number of Passengers.

The majority of Ticketed Itineraries are issued to one passenger, but some Ticketed Itineraries describe the travel of multiple passengers traveling together on the same itinerary. The Department must collect the count of passengers included in the Ticketed Itinerary. Without knowledge of this value, the data from several of the other elements, particularly the Fare Amount, become invalid.

10.

Itinerary Copy Date.

Since Ticketed Itinerary databases are operational databases for the Carriers, and since operational systems are by their nature constantly updating data, and since the Department is requiring a copy of the Participating Carrier's Ticketed Itinerary data to be taken at a given point in time, it is important to have that point in time recorded. The copy date will also facilitate the correction of data. Participating Carriers wishing to replace previously submitted data can do so more easily if the Department can identify old and new copies of records using the copy date.

We explored the possibility of omitting this data element on the assumption that the Department could record the date that the data was received. However, this option would record the date of successful data transmission rather than record the date the Participating Carrier's operational data was copied. To best facilitate communication, the Date of Submission must be set by the Participating Carrier at the date the data is copied, not by the Department at the date the data is received. Knowledge of the Itinerary Copy Date will help alleviate questions and concerns about data quality.

c. Other Suggested Elements

Various members of the air transportation community have suggested the following as elements the Department should collect. The Department does not propose to collect

these data elements, but we seek further comment advocating the inclusion of these suggested elements, and we will consider including any one or all of these elements in the list of mandatory elements collected under this rule.

1.

Passenger Type.

The airline industry has an established passenger type code that is used as an indicator of the characteristics of the passenger based on a pricing decision. ATPCO's TCN Ticket Exchange Service Specifications Guide instructions for populating data element “Passenger Type” (glossary reference PAST) describes this as a three-digit code indicating the type of passenger (

e.g.

, ADT for adult fares, CHD for child fares, MIL for military fares and GOV for government fares.) Several Carriers and airports that responded to the ANPRM requested some kind of information about the type of passenger traveling on the Ticketed Itinerary. The Department would also benefit from having passenger data type in planning for air transportation needs of the future. From time to time, the Department is required to conduct reviews of government fares. For example, on at least one occasion, the Department has been asked to supply information on the number of children that fly on commercial Carriers.

The National Transportation Safety Board has recommended that BTS improve the quality of exposure data available for safety analysis (See National Transportation Safety Board, Transportation Safety Databases, Report No. SR-02-02, September 11, 2002, p. 38). Exposure data (

i.e.

, the number of passengers exposed to the risk of an accident in any particular type of transportation) are essential for measuring the accident rate for different types of transportation and measuring the benefits of safety improvements. Aviation safety analysts are particularly interested in certain data that would be collected under the proposed rule on characteristics of airline passengers (

e.g.

, whether the passengers are adults, children, or infants), so that they can estimate the likelihood that passengers would take an alternative mode of transportation if safety regulations increased the cost of flying. BTS believes that information about passenger type will help it calculate a more meaningful ATPI. The Department is considering collecting passenger type as a data element and, therefore, we seek comment on the availability of passenger information, the consistency with which it is populated in airline systems proposed as the source for O&D Survey data in this rulemaking, and the reliability of the Carriers maintaining a uniform understanding about what each value signifies.

2.

Fare Basis Category.

The Department currently collects class of service information and rudimentary fare classification information in a dual-use field called fare basis code. The current classification has seven possible values: C (Unrestricted Business Class), D (Restricted Business Class), F (Unrestricted First Class), G (Restricted First Class), X (Restricted Coach/Economy Class), and Y (Unrestricted Coach/Economy Class), plus U (Unknown). The dual-use codes indicate (1) the class of service (also known as cabin class) appropriate to the fare basis the passenger purchased and (2) whether or not the passenger's fare basis was issued under one or more restrictions, such as the fare's minimum advance purchase requirement or the fare's eligibility to be refunded. We continue to believe that Ticketing Class of Service is an important element to collect, and we have proposed collecting it as explained under section I.(2)(a)(10) of this document. In addition, we are considering collecting information about fare basis restrictions. We believe that policy makers and the aviation industry as a whole would benefit from information about the purpose for which the passenger is traveling.

Several Air Carriers requested fare categorization in their ANPRM comments. The most often mentioned classification was a business or leisure dichotomy classification. The Department believes that the business—leisure dichotomy is a useful but very subjective evaluation, which is very difficult to categorize in a standardized manner industry-wide, given the data currently available. Our understanding of the difficulties faced by the Air Transport Association in its attempt to build criteria for categorizing business and leisure fares based on existing data elements in Carrier reservations and accounting systems tends to verify that belief.

We believe that classification based on objective and verifiable criteria would provide a more useful classification methodology. The current classification has only a single aspect, “restricted” or “unrestricted.” This, though verifiable, is so broad that it provides very little understanding of passenger fares in the current aviation environment. We are, therefore, considering and requesting comment on, classifications based on a combination of three criteria (1) travel eligibility date, (2) purchase eligibility restrictions, and (3) refundability/exchangeability. We believe that knowledge of these three aspects of a fare would enable a comparison of fares across Carriers and provide useful “passenger type” data while relying on common information stored in carrier accounting and reservations systems.

The Department believes that categorization of fares would be extremely useful to the government and industry users alike, but we recognize that there are substantial difficulties in collecting, categorizing, and validating the data given current data in Carrier reservation and accounting systems. First, the Department would necessarily rely on Carriers' classification designations. The Department cannot independently edit or validate the Carriers' classifications beyond issuing guidelines, which would be as specific as possible, but would necessarily be fairly general in nature. Second, the complexity and diversity of fare basis codes is enormous. Some fare basis codes are designated for single markets. Some are designated for a group of markets. Some are designated for all markets, but carry restrictions that apply only in some markets. Third, the volume of fare basis codes on file for many Carriers is huge. It is not uncommon for an individual carrier to have thousands of fare basis codes and combinations of codes. The volume of fare basis codes in combination with their complexity and diversity make classification of fares a very challenging task. Fourth, fare basis codes do not have a universal meaning across all Carriers in the industry. Pricing structures are unique within each Carrier. A given set of fare basis codes reflects the pricing structure only within the context of the given Carrier.

One approach to a classification plan would be for each carrier to submit its list of fare hierarchies to the Department. The list or lists would include the fare basis codes and the attendant rules for these fare basis codes as expressed in terms of the Department's three classification criteria or some other set of classification criteria suggested by members of the industry. With an understanding of the fares included in each category across multiple Carriers, the Department could publish a map of fares that would serve as the industry fare basis category for purposes of classifying the value of fares across all carriers.

There appear to be two options for collecting this type of data, (1) retain the existing system of classification of “restricted” or “unrestricted”, or (2) use the fare basis codes as a means for establishing more accurate comparisons across carriers. Given the inconsistency of fare basis code application from

Carrier to Carrier, some method of mapping by the Department would be required. Whenever possible, the Department prefers data elements that can be objectively collected and consistently validated industry-wide.

The Department seeks further comment on the utility and efficacy of collecting Fare Basis Category based on an aggregated fare basis classifications as well as any other data element that could prove useful to users of the O&D Survey in understanding the nature and purpose of passenger air travel in the U.S. Comments should address (1) the usefulness and efficacy of the continuation of collecting the current “restricted” or “unrestricted” fare designation only, and (2) the usefulness and efficacy of establishing a new system based on some form of mapping fare basis codes according to similar values assigned to different codes by various Carriers by periodically collecting and publishing comprehensive fare hierarchies from each Participating Carrier. We request that comments be as specific as possible in outlining any proposed methodologies and that they address issues involved in making industry-wide comparisons accurate and meaningful.

3.

Commission Amount.

This data element represents the amount paid by the Issuing Carrier to the travel agent for selling a Ticketed Itinerary on its behalf. The Department recognizes that, in general, the role of sales commissions paid to the travel agents on the issuance of a Ticketed Itinerary have diminished in the U.S. However, commission payments have not disappeared from the air travel industry. In light of this, the Department seeks comment regarding the efficacy of collecting this information.

4.

Form of Payment Type.

As shifts occur between payment by cash, credit card, or one of the new forms of Internet payment, collection of this data may provide insight into ticket purchasing behavior. The Department seeks comment on the efficacy of collecting this information.

5.

Electronic Ticket Indicator.

This element, used in conjunction with ticketing entity outlet type, could help isolate information about selling and distribution channels. The Department seeks comment on the collection of an indicator to determine information about electronic ticketing. The proposed values would be the ones used in ATPCO's TCN Ticket Exchange Service Specifications Guide instructions for populating data element “Electronic Ticket Indicator” (glossary reference ETKI).

6.

Passenger Citizenship Nation.

BLS requested citizenship information to determine whether a trip constitutes an export transaction or an import transaction. DOC's International Trade Administration (ITA) requested citizenship information to help in its mandate to facilitate trade and tourism. DOS, which negotiates air treaties with foreign governments, would benefit from citizenship data. The Department seeks comment regarding the efficacy of collecting statistical information about passenger citizenship.

7.

Country Code and Area Code of the Passenger's Phone Number.

US Airways, United Air Lines, Southwest Airlines, the Sabre Group, Northwest Airlines, Continental Airlines, and American Airlines all included in their ANPRM comments their desire that the Department obtain information about the passenger's point of origin. BLS needs citizenship information to determine whether a trip constitutes an export transaction or an import transaction. The passenger's phone number area code, in conjunction with passenger's phone number country code, is one indication of passenger point of origin. In light of the increasing use of cell phones and the increasing disassociation between the area in which a passenger resides and the geographical area of the cell phone's area code, the Department seeks comment regarding the efficacy and the cost/benefit proposition of collecting this information as an indication of passenger residence in general, and in light of announced DHS requirements.

8.

Passenger Zip Code/Postal Code.

Sabre, US Airways, American, Continen

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