Computer Reservations System Regulations

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 255

[Docket No. OST-97-3057]

RIN 2105-AC67

Computer Reservations System Regulations

AGENCY: Office of the Secretary, DOT.

ACTION: Final rule.

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SUMMARY: The Department is adopting a rule which amends its rules

governing airline computer reservations systems (CRSs) (14 CFR part

255) by changing their expiration date from December 31, 1997, to March

31, 1999. This amendment will keep the rules from terminating on

December 31, 1997, and will thereby cause those rules to remain in

effect while the Department carries out its reexamination of the need

for CRS regulations. The Department believes that the current rules

should be maintained during that reexamination because they appear to

be necessary for promoting airline competition and helping to ensure

that consumers and travel agents can obtain complete and accurate

information on airline services.

DATES: This rule is effective on December 31, 1997.

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

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

SUPPLEMENTARY INFORMATION: When the Department adopted its rules

governing CRS operations, 14 CFR part 255, in 1992, it included a

sunset date for the rules to ensure that the need for the rules and

their effectiveness would be reexamined within several years. The

sunset date is December 31, 1997. 14 CFR 255.12. We have begun the

process of reexamining the rules but cannot complete that task by the

rules' current

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sunset date. We therefore proposed to change the sunset date to March

31, 1999. 62 FR 59313, November 3, 1997. We gave interested persons an

opportunity to comment on our proposal, but no one except America West

Airlines submitted comments. America West supports the proposal. We

have determined to adopt our proposed rule.

Background

As we explained in the notice of proposed rulemaking, in our last

major CRS rulemaking, and in recent CRS proceedings, CRS regulations

are necessary to protect airline competition and ensure that consumers

can obtain accurate and complete information on airline services. See,

e.g., 57 FR 43780, 43783-43787, September 22, 1992. CRSs have become

essential for the marketing of airline services, and market forces do

not discipline the price and quality of service offered airlines by the

systems. Furthermore, the systems operating in the United States are

each entirely or predominantly owned by one or more airlines or airline

affiliates. Without regulations, a system's owners could use it to

unreasonably prejudice the competitive position of other airlines or to

provide misleading or inaccurate information to travel agents and their

customers. 62 FR 59315, November 3, 1997.

When we last reexamined the CRS rules, we readopted them with

changes designed to promote airline and CRS competition. 57 FR 43780,

September 22, 1992. Our rules included a sunset date, December 31,

1997, to ensure that we would reexamine them after several years. 14

CFR 255.12; 57 FR at 43829-43830, September 22, 1992.

We have begun the process of reexamining our rules by publishing an

advance notice of proposed rulemaking asking interested persons to

comment on whether we should readopt the rules and, if so, whether

changes are needed. 62 FR 47606, September 10, 1997. At the request of

some parties, we gave the parties more time for submitting their

comments and reply comments on the advance notice. 62 FR at 58700,

October 30, 1997. We later invited interested persons to comment on a

rulemaking petition filed by America West Airlines in their comments on

our advance notice. 62 FR 60195, November 7, 1997.

Our Proposed Extension of the Current Rules

We obviously cannot complete the rulemaking proceeding for the

reexamination of our rules by December 31, 1997, the current sunset

date set forth in our rules. We therefore proposed to change the rules'

sunset date to March 31, 1999. The proposed amendment would keep the

current rules in force while we conducted our overall reexamination of

the rules.

We reasoned that a temporary extension of the current rules would

preserve the status quo while we determine whether our existing rules

should be readopted. As we noted, the systems, airlines, and travel

agencies have been operating with the expectation that each system will

comply with the rules. They would be unduly burdened if the rules

expired and were later reinstated by us, since they could have changed

their method of operations in the meantime. 62 FR at 59315, November 3,

1997.

We also tentatively determined that a short-term continuation of

the current rules was necessary to protect airline competition and

consumers against unreasonable practices. The findings made in our last

major CRS rulemaking on the need for CRS rules still appeared to be

valid. Those findings indicated that the rules should be maintained to

protect airline competition and consumers against the injuries that

could otherwise occur.

We further found that an extension of the rules was unlikely to

impose significant costs on the systems and their owners, since they

had already adjusted their operations to comply with the rules and

since the rules did not impose costly burdens of a continuing nature on

the systems. 62 FR 59316, November 3, 1997.

Finally, we suggested that our obligation under section 1102(b) of

the Federal Aviation Act, recodified as 49 U.S.C. 40105(b), to act

consistently with the United States' obligations under treaties and

bilateral air services agreements provided an additional ground for

maintaining our current rules during our reexamination of their need

and effectiveness. 62 FR 59316, November 3, 1997.

Due to the need to make the proposed amendment effective by the end

of 1997, we shortened the comment period to fifteen days. As we noted,

however, the advance notice of proposed rulemaking for the

reexamination of the CRS rules had stated that we intended to propose

an extension of the current rules. 62 FR at 59314, November 3, 1997.

Comments

America West was the only party that filed comments on our proposal

to change the rules' sunset date. America West agrees with our

tentative findings in the notice of proposed rulemaking that the

systems have market power that requires continuing regulation and the

findings made in our parity clause rulemaking and in our last major CRS

rulemaking. America West further cites the complaints made by it in its

recent petition for a rulemaking on CRS booking fee practices and

travel agency transactions, Docket OST-97-3014, and asks that we act

promptly on that petition.

Decision

We will amend the rules' sunset date as proposed by our notice of

proposed rulemaking. America West supports our proposal, and no one

objected to it. The analysis underlying that proposal is consistent

with the findings made by us in other recent rulemakings on CRS issues,

as stated in our notice and America West's comments. We will, of

course, review our past findings on the need for continued CRS

regulation as part of our overall reexamination of the CRS rules.

We recognize America West's interest in prompt action on its

rulemaking petition, but we plan to address its petition when we review

the comments and reply comments being filed in the proceeding for

reexamining all of the CRS rules. We have already asked parties to

include their responses to America West's petition in their comments on

our advance notice of proposed rulemaking. 62 FR 60195, November 7,

1997.

Effective Date

We have determined for good cause to make this amendment effective

on December 31, 1997, rather than thirty days after publication as

required by the Administrative Procedure Act, 5 U.S.C. 553(d), except

for good cause shown. In order to maintain the current rules in effect

on a continuing basis, we must make this amendment effective by

December 31, 1997. Since the amendment preserves the status quo, it

will not require the systems, airlines, and travel agencies to change

their operating methods. As a result, making the amendment effective

less than thirty days after publication will not burden anyone.

Regulatory Process Matters

Regulatory Assessment

This rule is a nonsignificant regulatory action under section 3(f)

of Executive Order 12866 and has not been reviewed by the Office of

Management and Budget under that order. Executive Order 12866 requires

each executive agency to prepare an assessment of costs and benefits

for each significant rule under section 6(a)(3) of that order. The rule

is also not significant under the

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regulatory policies and procedures of the Department of Transportation,

44 FR 11034, February 26, 1979.

In our notice of proposed rulemaking we tentatively determined that

maintaining the current rules should impose no significant costs on the

CRSs. The systems have done the work necessary to comply with the

rules' requirements on displays and functionality. Continuing to

operate in compliance with the rules would not impose a substantial

burden on the systems. Maintaining the rules would benefit airlines

using CRSs, since otherwise they could be subjected to unreasonable

terms for participation, and would benefit consumers, who otherwise

might obtain incomplete or inaccurate information on airline services.

We also noted that our notice of proposed rulemaking in our last

major rulemaking included a tentative regulatory impact statement whose

analysis we made final in adopting the rules. In proposing to change

the rules' sunset date, we stated our belief that the analysis remained

applicable to that proposal and that no new regulatory impact statement

therefore seemed necessary. We further stated our willingness to

consider any comments on that analysis before making our proposal

final.

As indicated, no one filed any comments. We will therefore base

this rule on the analysis used in our last major CRS rulemaking, as

discussed in our notice of proposed rulemaking. We will, of course,

undertake a new regulatory assessment as part of our review of the

existing rules, if we determine that rules remain necessary.

This rule does not impose unfunded mandates or requirements that

will have any impact on the quality of the human environment.

Regulatory Flexibility Analysis

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601 et seq., was

enacted by Congress to ensure that small entities are not unnecessarily

and disproportionately burdened by government regulations. The act

requires agencies to review proposed regulations that may have a

significant economic impact on a substantial number of small entities.

For purposes of this rule, small entities include smaller U.S. and

foreign airlines and smaller travel agencies.

Our notice of proposed rulemaking set forth the reasons for our

proposed extension of the rules' expiration date and the objectives and

legal basis for that proposed rule. We also pointed out that keeping

the current rules in force would not change the existing regulation of

small businesses. In addition, we presented a regulatory flexibility

analysis on the impact of the rules in our last major CRS rulemaking.

That analysis appeared to be valid for our proposed amendment of the

rules' sunset date. We therefore adopted that analysis as our tentative

regulatory flexibility statement and stated that we would consider any

comments submitted on that analysis in this proceeding.

We noted that the continuation of our existing CRS rules will

primarily affect two types of small entities, smaller airlines and

travel agencies. To the extent that the rules enable airlines to

operate more efficiently and reduce their costs, changing the sunset

date of the CRS rules would also affect all small entities that

purchase airline tickets, since airline fares may be somewhat lower

than they would otherwise be.

We reasoned that the rules would benefit smaller airlines without a

CRS ownership affiliation, by protecting them from certain potential

system practices that could injure their ability to operate profitably

and compete successfully. If there were no rules, the systems' airline

owners could use them to prejudice the competitive position of smaller

airlines. The rules protect smaller airlines, for example, by

prohibiting display bias and discriminatory fees for services provided

airlines. The rules also impose no significant costs on smaller

airlines.

The CRS rules affect the operations of smaller travel agencies,

primarily by prohibiting certain CRS practices that could unreasonably

restrict the travel agencies' ability to use more than one system or to

switch systems. Among other things, the rules give travel agencies the

right to use third-party hardware and software and prohibit display

bias.

No one filed comments on our Regulatory Flexibility Act analysis.

We will adopt the analysis set forth in the notice of proposed

rulemaking.

The Regulatory Flexibility Act also requires each agency to

periodically review rules which have a significant economic impact upon

a substantial number of small entities. 5 U.S.C. 610. Our rulemaking

reexamining the need for the CRS rules and their effectiveness will

constitute the required review of those rules. Our reexamination of the

rules will include a Regulatory Flexibility Act analysis if we propose

new CRS rules.

Our rule contains no direct reporting, record-keeping, or other

compliance requirements that would affect small entities. There are no

other federal rules that duplicate, overlap, or conflict with our

proposed rules.

The Department certifies under section 605(b) of the Regulatory

Flexibility Act (5 U.S.C. et seq.) that this regulation will not have a

significant economic impact on a substantial number of small entities.

Paperwork Reduction Act

This proposal contains no collection-of-information requirements

subject to the Paperwork Reduction Act, Pub. L. 96-511, 44 U.S.C.

Chapter 35.

Federalism Implications

This rule will have no substantial direct effects on the States, on

the relationship between the national government and the States, or on

the distribution of power and responsibilities among the various levels

of government. Therefore, in accordance with Executive Order 12812, we

have determined that the rule does not have sufficient federalism

implications to warrant preparation of a Federalism Assessment.

List of Subjects in 14 CFR Part 255

Air carriers, Antitrust, Consumer protection, Reporting and

recordkeeping requirements, Travel agents.

Accordingly, the Department of Transportation proposes to amend 14

CFR part 255, Carrier-owned Computer Reservations Systems, as follows:

PART 255--[AMENDED]

1. The authority citation for part 255 is revised to read as

follows:

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

2. Section 255.12 is revised to read as follows:

Sec. 255.12 Termination.

Unless extended, these rules on carrier-owned computer reservation

systems shall terminate on March 31, 1999.

Issued in Washington, D.C. on December 11, 1997.

Charles A. Hunnicutt,

Assistant Secretary for Aviation and International Affairs.

[FR Doc. 97-32897 Filed 12-17-97; 8:45 am]

BILLING CODE 4910-62-P