Disclosure of Change-of-Gauge Services

Federal RegisterMar 15, 1999

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SUMMARY: This rule codifies and augments the Department of

Transportation's disclosure rules and policies concerning change-of-

gauge services--i.e., services with one flight number that require a

change of aircraft--in order to ensure that prospective airline

consumers are given pertinent information on the nature of these

services. The rule applies to U.S. air carriers, foreign air carriers,

and, where appropriate, ticket agents (including travel agents) doing

business in the United States. It includes the following requirements:

That transporting carriers include notice of required aircraft changes

in their written and electronic schedule information provided to the

public, to the Official Airline Guide (OAG) and comparable

publications, and to computer reservations systems, that consumers be

given reasonable and timely oral notice that a service with a single

flight number that they are considering booking entails a change of

aircraft en route, and that written notice of the aircraft change be

provided along with any ticket.

DATES: This regulation is effective July 13, 1999. Comments on the

information collection requirements must be received on or before May

14, 1999.

ADDRESSES: Comments should be sent to Jack Schmidt, Office of Aviation

and International Economics (X-10), Office of the Assistant Secretary

for Aviation and International Affairs, Office of the Secretary, U.S.

Department of Transportation, 400 Seventh St., SW., Washington, DC

20590, (202) 366-5420 or (202) 366-7638 (FAX).

FOR FURTHER INFORMATION CONTACT: Betsy L. Wolf, Senior Trial Attorney,

Office of Aviation Enforcement and Proceedings (202-366-9349), Office

of the General Counsel, U.S. Department of Transportation, 400 7th St.

SW., Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

Background

The Department issued a Notice of Proposed Rulemaking (NPRM), 60 FR

3778 (January 19, 1995), in which it requested comments and reply

comments on a proposed rule requiring various forms of disclosure of

change-of-gauge services. Change-of-gauge service is scheduled

passenger air transportation for which the operating carrier uses one

single flight number even though passengers do not travel in the same

aircraft from origin to destination but must change planes at an

intermediate stop. Operationally, in addition to one-flight-to-one-

flight change-of-gauge services, airlines also schedule change-of-gauge

services that involve aircraft changes between multiple flights on one

side of the change point and one single flight on the other side.

Change-of-gauge services with multiple origins or destinations are

called ``Y'' (i.e., two-for-one), ``W'' (i.e., three-for-one), or

``starburst'' (i.e., unrestricted) changes of gauge, depending on the

shape of the route patterns. Popularly, they are also called ``funnel

flights.'' As with one-for-one change-of-gauge services, the carrier

assigns a single flight number for the passenger's entire itinerary

even though the passenger changes planes, but in addition, the single

flight to or from the change point itself has multiple numbers: one for

each segment with which it connects and one for the local market in

which it operates.

49 U.S.C. 41712, formerly section 411 of the Federal Aviation Act,

authorizes the Department to identify and ban unfair or deceptive

practices or unfair methods of competition on the part of air carriers,

foreign air carriers, and ticket agents. Under section 41712, the

Department has adopted various regulations and policies to prevent

unfair or deceptive practices or unfair methods of competition. The

Department's current rules governing computer reservations systems

(CRSs), adopted in September of 1992, require that CRS displays give

notice of any flight that involves a change of aircraft en route.

Computer Reservations System (CRS) Regulations, Final Rule, 57 FR

43780, 43835 (September 22, 1992); 14 CFR 255.4(b)(2). In addition, the

Department requires as a matter of policy that consumers be given

notice of aircraft changes for change-of-gauge flights. See Order 89-1-

31 at 5.

In the NPRM, our response to American Airlines, Inc.'s petition in

Docket 47546 to ban ``funnel flights,'' we concluded that no type of

change-of-gauge service should be banned per se. Nevertheless, we

tentatively found that even with our current policy requiring

disclosure of aircraft changes, effective disclosure is not always

made, resulting not only in bookings that otherwise might not be made

but also in confusion and hardship during travel. We tentatively found

that the failure to disclose required aircraft changes in scheduled

passenger air transportation in a timely manner is an unfair or

deceptive practice or an unfair method of competition within the

meaning of 49 U.S.C. 41712, and we proposed to require U.S. air

carriers, foreign air carriers, and, where applicable, ticket agents

(including travel agents) doing business in the United States to make

the following disclosures of all change-of-gauge services:

(1) Notice by carriers of required aircraft changes in written

and electronic schedule information provided to the public, to the

Official Airline Guide and comparable publications, and to computer

reservations systems,

(2) In any direct oral communication with a consumer concerning

a change-of-gauge service, notice before booking transportation that

the service requires a change of aircraft en route, and

(3) A prescribed written notice at the time of sale of such

service.

We received comments on the NPRM from four air carriers (American

Airlines, Inc., Delta Air Lines, Inc., United Air Lines, Inc.,

USAirways, Inc.), the Port Authority of New York and New Jersey (Port

Authority), the American Society of Travel Agents, Inc. (ASTA),

Americans for Sound Aviation Policy (ASAP), two travel agencies (Red

Carpet Travel and Fran's Travel), and two individuals (Donald L.

Pevsner and E. Sakaria). We received reply comments from two air

carriers (American and Continental Airlines, Inc.). Having reviewed all

of these documents, we have decided to adopt the proposed rule with

some modification and clarification.

Allowing Change-of-Gauge Services

In the NPRM, we declined to ban either single or multiple change-

of-gauge services outright. We noted that in general, we have declined

to foreclose carriers' marketing and service innovations unless these

violate 49 U.S.C. 41712 or otherwise contravene the public interest,

and we tentatively found that problems of passenger deception or

confusion or distortion of competition arising from ineffective

disclosure could and should be addressed by our proposed rule. We noted

various public benefits that can flow from change-of-gauge services: a

lower likelihood of missed connections, lower fares, increased scope

and

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frequency of service, increased competition, our ability to review

regulated international air fares, and maximum utilization of U.S.

carriers' rights under international bilateral agreements.

Several commenters would have us reconsider our decision not to ban

any change-of-gauge services. Some would settle for a ban on multiple

change-of-gauge services, while others continue to press for a ban on

one-for-one changes of gauge as well.

American supports the proposed rule for one-for-one changes of

gauge but calls for a ban on multiple changes of gauge except for those

specifically approved by the Department on a case-by-case basis.

American doubts that connections are any more likely to be held for

late-arriving flights in the case of multiple changes of gauge than

they are in the case of ordinary online connecting services. In

American's view, the Department should limit the use of single flight

numbers to connections whose flights are routinely held in cases of

delay. The carrier argues that even with effective disclosure of

aircraft changes, travelers will still be misled into thinking that

their connecting flights will not leave without them. It cites the

support of fifteen parties for its original petition to ban multiple

change-of-gauge flights in support of its position here.

American contends that the Department's leverage over fares under

the Standard Foreign Fare Level (SFFL) is not a substantive reason to

allow all multiple change-of-gauge services. It states that the rules

allowing us to stop fare increases based on SFFL do not bear as a

practical matter on transportation to and from countries with liberal

pricing regimes, and it states that in any event, the Department has

other means of protecting the public against unreasonable fares.

American also believes that our concern that banning multiple change-

of-gauge services would sacrifice valuable route rights is largely

unfounded, because many bilateral agreements do not grant such rights.

As for our concern that banning multiple change-of-gauge services by

foreign carriers would breach some of our agreements, American states

that foreign carriers dislike these services and that therefore, the

United States could readily renegotiate those agreements that allow

carriers of both parties to operate them. American does not oppose

Departmental approval of change-of-gauge services to satisfy bilateral

obligations.

Joining American in supporting a ban on multiple change-of-gauge

services are the Port Authority and ASAP. The Port Authority maintains

that these services are inherently unfair and deceptive, that they

engender panic and helplessness at airports, and that even with the

proposed disclosure requirements, consumers will not grasp the nature

of their travel. For essentially the same reasons, Red Carpet Travel,

Fran's Travel, Mr. Pevsner, and E. Sakaria favor a ban on all change-

of-gauge services, not just those involving multiple flights on one

side of the change point. On the other side of this issue, Delta,

USAirways, and Continental take the position that no change-of-gauge

services should be banned.

We affirm our earlier conclusion that change-of-gauge services are

not unfair or deceptive practices or unfair methods of competition

within the meaning of 49 U.S.C. 41712, provided that the en route

change of aircraft is disclosed to consumers clearly and effectively

before they book transportation. American provides no evidence to

support its hypothesis that in the case of multiple change-of-gauge

services, connections are not likely to be held. While American

correctly observes that we do not exercise our leverage over fares

under SFFL in the case of bilateral agreements with countries that have

liberal pricing regimes, it would be contrary to the public interest

for us to sacrifice this leverage for all bilateral relationships,

including those with countries that do not have liberal pricing

regimes. Banning change-of-gauge flights would do just that, because

our SFFL reviews do not extend to fares for connecting flights with

separate flight numbers.

Similarly, the proportion of our bilateral agreements that

specifically provide for change-of-gauge services is irrelevant. What

matters is that a significant and growing number of these agreements

do. Among these are the 32 open-skies agreements we have concluded with

aviation partners on four continents, our landmark agreement with

Canada that governs our largest foreign aviation market, and many

agreements with other significant aviation partners, such as France and

Japan. The United States negotiated for the change-of-gauge provisions

in these agreements in consultation with U.S. air carriers for the

purpose of enabling them to exploit the agreements' new route

opportunities as fully as possible. We would be acting contrary to the

public interest if we were to sacrifice these negotiated rights

unilaterally. American suggests that we could renegotiate those

agreements that allow our partners to provide change-of-gauge services,

but this would require making further trades to the foreign governments

involved. Such retrenchment would again be contrary to the public

interest.

E. Sakaria questions the legality of change-of-gauge service in

light of a provision in the Warsaw Convention that tickets must show

each point of transfer and a provision in carriers' certificates

requiring all operations to be conducted in accordance with all

applicable treaties. We do not interpret the certificate condition in

question as requiring carriers to issue tickets indicating changes of

gauge.

The arguments in the comments fail to persuade us that change-of-

gauge services should be banned outright. Moreover, the record lacks

evidence that this position has broad support in the industry. We do

not agree that the disclosures required by our rule will fail to give

consumers effective notice of the change of aircraft en route. We do

share the concerns of the Port Authority and other commenters that

airports may not be posting notices of change-of-gauge services that

clearly and effectively direct passengers to their ongoing aircraft. We

do urge the carriers offering these services to work with airports

where the aircraft changes are made to remedy this problem. In our

view, however, this concern does not warrant sacrificing all of the

benefits that change-of-gauge service can offer to the traveling

public. For these reasons, and owing to the long history and acceptance

of the practice (see NPRM, supra, 60 FR at 3778-3779), we will not ban

change-of-gauge service.

The Need for a Rule

At the other end of the scale, Delta, USAirways, and Continental

take the position that the Department should not adopt any disclosure

rule, arguing that they already make effective disclosure of change-of-

gauge services, that the disclosure required by the rule would come at

a high cost, and that there is not enough evidence that consumers are

being deceived, confused, or otherwise harmed to justify this burden on

sellers of air transportation. ASTA, too, argues against the rule. Some

commenters also oppose individual components of the rule; we address

these contentions below.

Delta argues that existing rules and policies requiring notice of

aircraft changes in CRSs and disclosure of change-of-gauge services to

consumers give the latter adequate protection. Delta states that it

fully discloses its change-of-gauge services in CRSs, the OAG, the ABC

World Airways Guide, other similar publications, and its own

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timetables. An owner of Worldspan, Delta states that this CRS directs

travel agents to tell passengers of the aircraft change and where it

will occur. Delta also states that passengers on its change-of-gauge

services receive a separate boarding pass for each flight segment that

involves a different aircraft and contends that these constitute

effective written notice of the aircraft change. Delta also argues that

apart from existing regulatory requirements, carriers have commercial

and competitive incentives to inform consumers fully about the services

that they provide. The carrier thus concludes that the rule is

unnecessary.

Delta also contends that the Department has not justified the rule

with empirical evidence that consumers are being confused or deceived

or that they are not being informed of change-of-gauge services in a

timely fashion. If anything, Delta argues, the evidence suggests the

contrary. The carrier states that of the almost 7,000 consumer

complaints that the Department received in 1994, only 30 involved

``direct flight-undisclosed connection'' (a category that Delta

believes encompasses other services in addition to changes of gauge),

and only 3 of these involved ``unsatisfactory information.'' Delta

states that its own records indicate few if any complaints about

change-of-gauge services in recent years. Absent evidence, Delta

claims, the Department has relied on generalized and unsubstantiated

conclusions, which are not valid grounds for imposing a redundant,

unnecessary, intrusive, and very costly regulation on the industry,

especially in view of carriers' recent record losses.

USAirways, like Delta, contends that the Department has not shown a

need for the rule and notes that change-of-gauge service was not

identified as a ``Significant Consumer Issue'' in Secretary Pena's

letter to carriers of December 20, 1994. Also like Delta, USAirways

maintains that consumers already get all of the information they need

to make informed decisions about change-of-gauge services. The carrier

states that it complies with existing rules and policies by making full

disclosure of change-of-gauge services in CRSs, the OAG, and its

timetables and by having its agents tell passengers of required

aircraft changes before booking change-of-gauge flights. Like Delta,

USAirways contends that all carriers have a strong incentive to inform

passengers effectively.

Continental states that it already provides adequate notice of its

change-of-gauge services. Continental also agrees with Delta and

USAirways that other carriers have the incentive to do so as well, that

the additional costs of the rule would be a substantial burden for both

carriers and travel agents, and that the Department has not justified

the rule.

ASTA argues that the rule is not necessary to meet consumers' needs

for information and that it will make normal communication with travel

agents ``a negative and distasteful experience for the consumer, rife

with warnings of disruptions and other difficulties.'' Rather than

adopt the entire rule, in ASTA's view, the Department should just

require CRS vendors to enhance the systems' disclosure of change-of-

gauge services to travel agents and then see if market-based incentives

solve the deception problem inherent in these services.

American takes issue in its reply comments with those who oppose

the rule. American maintains that the Department is justified in

deciding as a matter of policy that sellers of air transportation must

expressly inform consumers, before they commit themselves to buying

seats on change-of-gauge flights, that they will be changing planes en

route. Otherwise, American claims, with a single flight number and

single boarding pass, passengers will often make the mistaken

assumption that they will not be making a connection. United, for its

part, endorses the Department's objectives and agrees with the

Department that without effective disclosure, change-of-gauge services

can mislead consumers.

We remain of the view that the rule is a necessary complement to

change-of-gauge services to assure compliance with 49 U.S.C. 41712. We

are not persuaded that our existing policies and regulation result in

effective disclosure all of the time, commercial incentives

notwithstanding, nor are we persuaded that the costs of compliance with

the rule will outweigh the benefits it will bring. As we noted in the

NPRM, we currently have a rule that requires notice of en route

aircraft changes in CRS displays (14 CFR 255.4(b)(2)) and a requirement

as a matter of policy that consumers be given notice of aircraft

changes for change-of-gauge flights (see Order 89-1-31 at 5).

The rule, however, does not expressly require travel agents, the

sellers of most air transportation, to disclose the aircraft change to

consumers. Neither does our policy, as articulated in our orders,

expressly apply to travel agents:

As a preliminary matter, we affirm the legitimacy of holding out

change-of-gauge services under single flight numbers, provided that

notice is given of the change of aircraft en route * * * (footnote

omitted).

Id. While our Enforcement Office could bring an action under 49 U.S.C.

41712 against any seller of air transportation with a pattern of

failing to disclose change-of-gauge services effectively, we believe

that our adopting a rule with affirmative disclosure requirements will

result in broader, more immediate, and more reliable protection both to

the traveling public and to airline competition. As American

recognizes, the failure to inform consumers of aircraft changes en

route is inherently deceptive and should be prohibited whether or not

it has precipitated a high volume of complaints.

The most recent evidence available to us indicates, moreover, that

change-of-gauge service is not always effectively disclosed. In 1995,

the Department's Aviation Consumer Protection Division received 42

complaints about changes of gauge, more than 5 times as many complaints

as the 8 we received about code sharing, or the sharing of airline

designator codes. In 1996, we received 16 complaints about code sharing

and 47 complaints about change-of-gauge services; in 1997, we received

8 complaints about code sharing and 55 complaints about change-of-gauge

services; in 1998, we received 7 complaints about code sharing and 47

complaints about change-of-gauge services. When one considers that the

relevant set of passengers is not all passengers (several hundred

million) but only those on change-of-gauge flights, the 191 complaints

that we have received in four years indicate that all is not well.

Furthermore, we do not know how many complaints the carriers may have

received about change-of-gauge services since the issuance of the NPRM.

For all of these reasons, and because no party submitted any

evidence in support of its claim of undue costs, we will adopt the rule

with the modifications and clarifications discussed below.

Notice in Schedules

In the NPRM, we proposed to adopt the following requirement for

carriers' schedules:

Sec. 255.5(a) Notice in Schedules. Carriers operating change-of-

gauge services to, from, or within the United States shall ensure

that in the written and electronic schedule information they provide

to the public, to the Official Airline Guide and comparable

publications, and to computer reservations systems, these services

are shown as requiring a change of aircraft.

Delta, USAirways, and Continental object to this requirement. Delta

and USAirways state that they already meet

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it in its entirety; Continental's reply comments indicate that the

carrier meets this requirement for everything except its own printed

schedules. In addition to agreeing with Delta and USAirways that the

requirement is redundant and unnecessary, Continental claims that it is

costly in terms of customer service and administrative expenses.

United does not object to this requirement even though it will have

to change its city timetables by adding an annotation to indicate

change-of-gauge flights. The carrier states that it is already meeting

the requirement's other components. Not only does United endorse this

requirement, but it would have the Department go further and require an

additional notice of aircraft changes for multiple change-of-gauge

services. United reasons that without such a notice, at the airport

where they change planes, passengers might not know to look for a

flight with several different numbers. United contends that additional

notice of multiple change-of-gauge services in written and electronic

schedules will help sellers of air transportation provide both written

and oral notice that is more responsive to consumers' needs than the

notice required by the rule. (We address United's views on these

requirements below.) United also claims that carriers do not always

have control over the displays of flight information at airports and

asks that we make clear in our final rule that this requirement does

not apply to airport displays.

ASTA asks us to require CRS vendors to enhance their disclosure of

change-of-gauge services to travel agents. American endorses the

requirement and observes that none of the carriers that filed comments

is claiming that disclosure of aircraft changes in schedules is

unnecessary, burdensome, or unduly expensive.

We will adopt the requirement. We will modify the proposed language

to make clear that the rule applies to carriers that hold out change-

of-gauge service even if they do not actually operate it themselves,

such as in the case of code-sharing. No commenter questions the benefit

of disclosing aircraft changes in written and electronic schedules. The

carriers who filed comments all comply with at least most of the

requirement's components already, so their unsubstantiated claims of

undue cost fail to persuade us. Continental provides no estimate or

other support for its assertion that including notice of aircraft

changes in its printed schedule will mean great expense in the areas of

customer service and administration. United is correct in assuming that

this requirement does not apply to those airport displays over which

carriers do not have control.

We will not adopt the additional requirement suggested by United.

From the consumer's perspective, there is no real functional difference

between one-for-one and multiple changes of gauge. We have no evidence

that flight listings at airports are more likely to be accurate and

complete in the case of one-for-one changes of gauge than in the case

of multiple changes of gauge, especially now that code-sharing has

become so common in international travel. Contrary to United's

assumption, we think that having different indicators for one-for-one

and multiple change-of-gauge services is more likely to confuse

passengers than having one universal indicator to alert them to the

need to change aircraft en route. If, after the rule's implementation,

experience indicates otherwise, we can always revisit this issue in a

later rulemaking. In the meantime, we encourage carriers to take

whatever additional steps they can to make sure that travel agents as

well as consumers understand the nature of their services.

Oral Notice

In the NPRM, we proposed to adopt the following oral notice

requirement for change-of-gauge services:

Sec. 258.5(b) Oral Notice to Prospective Consumers. In any

direct oral communication with a consumer in the United States

concerning a change-of-gauge service, any carrier or ticket agent

doing business in the United States shall tell the consumer before

booking scheduled passenger air transportation to, from, or within

the United States that the service requires a change of aircraft en

route.

This requirement drew opposition from Delta, United, USAirways,

ASTA, and Continental and support from American. Delta argues that

since air carriers are already required to inform consumers of aircraft

changes en route, this requirement constitutes a redundant,

unnecessary, overbroad, and highly intrusive regulatory action that

will impose significant costs and burdens on the industry. Delta

contends that this notice certainly is not necessary for every oral

communication between consumer and airline and concludes that if the

requirement is adopted, it should be limited to communications taking

place before transportation is purchased.

United believes that the Department has significantly understated

the added cost to the industry of the oral notice requirement,

especially when coupled with the oral notice requirements proposed for

code-share flights and insecticide spraying. The carrier estimates that

it carries over 500,000 passengers on change-of-gauge services each

year and believes that other carriers carry even more, and it suggests

that the notice requirement will likely affect some tens of millions of

reservations transactions. With the Department's estimate of one to two

extra minutes per transaction, the costs to the industry of compliance

with this requirement will be high. United anticipates that much of the

burden will fall on travel agents, as in the case of the code-share and

insecticide-spraying disclosure requirements, and it suggests that this

burden may well outweigh the value of the notice to consumers. United

also believes that with improved notice of changes of gauge in CRSs and

schedules, travel agents will be better equipped to inform consumers

about aircraft changes, which will reduce the need for any oral notice

requirement.

USAirways states that it already has its sales agents tell

consumers of aircraft changes en route before the latter book

transportation and argues that all carriers have an incentive to do

likewise. It therefore objects to this requirement. ASTA argues that

the requirement is unnecessary and that travel agents have an incentive

to disclose aircraft changes to consumers provided that the carriers

make this information readily available to the agents. Continental,

too, opposes this requirement and agrees with the reasoning of Delta,

United, and USAirways. In addition, Continental notes that in the NPRM

(60 FR, supra, at 3781), the Department found that it was complying

with existing disclosure requirements.

American supports the oral notice requirement. The carrier finds

inconsistency in the commenters' arguments (1) that the requirement is

unnecessary because they already provide oral notice and (2) that the

requirement is unduly burdensome and costly. American does suggest that

we clarify our intention regarding when the requirement applies; it

assumes that we mean for disclosure to be made not during every oral

communication but only at some point before the consumer decides to

book a change-of-gauge flight.

We will adopt the requirement as proposed and clarify that we do

intend for the notice to be given when the seller is giving the

consumer schedule information--i.e., before the consumer makes a

decision to book a particular flight. No commenter argues that

consumers should not be told about any change of aircraft en route

before they decide which flight to book, and we believe the public

benefit of this

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requirement to be axiomatic. The carriers' assertions that compliance

will be unduly costly lack evidentiary support. Moreover, these

assertions are substantially undercut, if not altogether belied, by

several factors. One, the carriers themselves say that they are already

making the required disclosure voluntarily. Two, ASTA and the other

travel agent commenters do not claim that compliance with this

requirement will be unduly costly for travel agents. Three, in our

parallel rulemaking on code-sharing (Docket 49702, Disclosure of Code-

Sharing Arrangements and Long-Term Wet Leases, Notice of Proposed

Rulemaking, 59 FR 40836 [August 10, 1994]), with the exception of

Qantas Airways Limited, no commenter--air carrier or travel agent--has

claimed that a similar oral notice requirement for code-share services

will impose an undue financial or administrative burden.

Written Notice

In the NPRM, we proposed to adopt the following written notice

requirement:

Sec. 258.5(c) Written notice. At the time of sale in the United

States of a change-of-gauge service, the selling carrier or ticket

agent shall provide written notice stating the following:

Notice: Change of Aircraft Required

For at least one of your flights, you must change aircraft en

route even though your ticket may show only one flight number and

have only one flight coupon for that flight. Further, in the case of

some travel, one of your flights may not be identified at the

airport by the number on your ticket, or it may be identified by

other flight numbers in addition to the one on your ticket. At your

request, the seller of this ticket will give you details of your

change of aircraft, such as where it will occur and what aircraft

types are involved.

Delta, USAirways, and Continental object to any written notice

requirement. United does not object in principle, and American supports

a written notice requirement. All maintain that if such a requirement

is adopted, the language should be left to each carrier rather than

dictated by the Department. Delta, United, and Continental also

question the wisdom of a written notice requirement given the trend

toward ticketless travel.

Delta claims that a written notice requirement is redundant in view

of the disclosures that carriers already make, and especially in its

own case, since it issues passengers a separate boarding pass for each

segment that involves a different aircraft. It claims that written

disclosure is also unduly burdensome in terms of cost. In addition,

Delta contends that the written notice requirement goes contrary to

current trends towards reducing paperwork, especially ticketless

travel, and that if carriers are required to issue a separate written

notice at the airport, ticketing and check-in could be delayed. If we

do adopt written notice requirements over its objections, Delta takes

the position that we should not specify the language: in Delta's view,

the above language is too long and potentially confusing to consumers.

United agrees in principle with a requirement that written notice

of aircraft changes en route be provided along with the ticket, but it

objects to being required to use the language set forth above. That

language refers generically to change-of-gauge flights that could

involve either one-for-one or multiple changes of gauge. United does

not operate multiple change-of-gauge service, and it strongly objects

to being required to use language that suggests otherwise. United also

characterizes the language as too long and too complicated to be

effective. It proposes that each carrier be permitted to create its own

written notice to reflect its own operations and procedures, subject to

review by our Enforcement Office, possible enforcement action, and,

should it prove necessary, another rulemaking at some later date.

United also believes that a standard notice is more likely to be

ignored than read.

As for ticketless travel, United questions the need for and utility

of any written notice to passengers who do not receive tickets. The

carrier states that its ticketless passengers still receive written

confirmation of their reservations but that its marketing research has

determined that many passengers do not want this. In United's view, the

Department should not require a written notice in the case of

ticketless travel unless the passenger is receiving written

confirmation of his or her reservation.

USAirways strongly objects to the written notice requirement as

ineffective, redundant, and costly and to the Department's language as

wordy and confusing. USAirways states that many travel agents already

give passengers written itineraries and that it does so on request. The

carrier recognizes that itineraries, if given, would be more complete

if they reminded passengers of aircraft changes en route. It argues,

however, that where no itinerary is issued, carriers and agents should

not be required to provide a separate written notice simply to remind

passengers of changes of gauge after transportation has been purchased,

because such a requirement is burdensome and costly. USAirways states

that it would have to modify its computer system and add a prompt to

have its sales agents get passengers' addresses. This in turn would

increase the length of each call. Additional costs would be incurred

for printing the notice and mailing it, and changes in travel

arrangements would require additional written notice. For last minute

travel arrangements, the cost of sending written notice by express

service would be even higher. Continental agrees with USAirways'

arguments.

American supports a written notice requirement. American disagrees

with Delta and USAirways that notice in schedules coupled with oral

notice should suffice to inform passengers of aircraft changes en

route, contending that few consumers actually look at carriers'

schedules when booking transportation and also that the person making a

reservation is often not the person traveling. In American's view, the

cost of written notice is justified, at least when passengers receive

tickets, to ensure that they understand the nature of their flights and

can navigate their way through their connections at the intermediate

airports. For the many consumers who already get written itineraries

from carriers and travel agents, American reasons that the burden of

providing written notice is minimal.

American believes that carriers should have the choice of using the

Department's language or writing their own notice, subject to the

Department's review. The carrier addresses USAirways' concern about the

expense of processing itineraries and mailing them to passengers who

ordinarily would not get them by suggesting that we amend the beginning

of the first sentence of Sec. 258.5(c) to read as follows:

At the time of delivery in the United States of a ticket

covering a change-of-gauge service, * * *.

American does acknowledge that this approach would increase the

risk of a traveler's not learning of the aircraft change until arriving

at the airport and thus having to use a service he or she might not

otherwise have chosen. The carrier also sees merit in United's argument

that written notice should not be required for passengers who do not

receive written confirmation of their reservations. It suggests that

perhaps we should require in such cases that sellers document that they

have given oral notice.

We will adopt the written notice requirement with minor

modifications to correct an inadvertent omission and to account for

ticketless travel. We are

[[Page 12859]]

not persuaded by any of the unsubstantiated claims of undue burden and

cost. In the many cases where consumers already receive itineraries

along with their tickets, any increase in sellers' costs should be

minimal, as American correctly notes. American is also correct in

reasoning that any burden associated with written notice is outweighed

by the benefit of the increased likelihood that consumers will

understand the nature of their transportation and be able to change

from one plane to another without confusion or mishap. Written notice

should prove especially beneficial in the many cases where the person

booking the transportation is someone other than the traveler.

We will require all sellers of air transportation to use the

written disclosure as proposed rather than allow carriers (or other

sellers) to substitute their own language. This generic language has

three elements: it discloses an aircraft change, it alerts the consumer

to the possibility that the number of the ongoing flight might not be

listed clearly--or at all--at the intermediate airport, and it directs

the consumer to the seller for more information. Because we have no

evidence that airport problems are more likely to occur with multiple

changes of gauge than one-for-one changes of gauge, we deem it

necessary that all three elements appear in all written notices,

United's position to the contrary notwithstanding. This being the case,

we cannot agree that the language is either too long or too

complicated.

If we were to allow sellers of air transportation to use their own

language subject to our review, not only would the sellers availing

themselves of this option incur the expense of drafting alternate

language to express the same three elements, but reviewing and

processing individual applications from the potential legions of air

carriers, foreign air carriers, and travel agents would strain the

Department's resources. Furthermore, allowing the disclosure to exist

in many variations would more likely confuse consumers than enlighten

them. Requiring all sellers to use the Department's language is thus

the most cost-effective and straightforward means of ensuring that

consumers receive effective written disclosure.

We will modify this provision in two respects. First, we will

rectify an inadvertent omission in the proposed rule by adding language

to make clear that the written notice requirement, like the other two,

applies to those change-of-gauge services that are to, from, or within

the United States. Second, to account for ticketless travel, we will

change the proposed rule to require that the written notice be provided

(1) to ``ticketed'' passengers, at the time of sale of any ticket that

includes a covered change-of-gauge service and (2) to ``ticketless''

passengers, no later than the time when they check in at the airport

for the first flight of an itinerary that includes a covered change-of-

gauge service. This change reflects our policy on other passenger

notices in the case of ticketless travel, which we adopted after

issuing this NPRM. See Ticketless Travel: Passenger Notices, 62 FR

19473 (April 22, 1997). Of course, nothing prohibits sellers of air

transportation from providing this written notice to ``ticketless''

passengers at an earlier juncture, such as along with any itinerary

they send the passenger at the time of sale. We encourage sellers to do

whatever they can to give passengers the best possible notice as early

as possible.

Year 2000 Problem

In an effort to ensure that our regulations do not interfere or

delay solutions for the Year 2000 Problem (Y2K), the Department has

decided that, in preparing proposed and final rules that mandate

business process changes and require modifications to computer systems

between now and July 1, 2000, the Department will discuss those rules

specifically with reference to Y2K requirements and determine whether

the implementation of those rules should be delayed to a time after

July 1, 2000.

Since the Department does not have detailed knowledge about the Y2K

status of the systems that will need to be changed as a result of this

rule, we attempted to gauge the effect based on a review of statements

from Annual Reports, 10-K and 10-Q Statements filed with the Securities

and Exchange Commission, news reports, press releases, and other

documents. We researched this issue with regard to four computer

reservations systems, the nine largest airlines, one smaller airline,

and five organizations closely associated with airline computerized

systems and databases. While this information did not reflect detailed

technical assessments, it allowed us to establish a broad baseline

against which to judge the issuance of our rule.

Our analysis has shown a widespread effort involved in the Y2K

program for air transportation. In general, most of the companies we

examined have stated that they expect to be Y2K-compliant in a timely

manner. However, most also reflect caution by noting that there are no

guarantees or assurances that all systems will be ready and that their

operations could be adversely affected. In response to this

possibility, many have established contingency plans that will allow

continued operations.

Because of the amount of progress these companies have already

made, the Department has determined that it is in the public interest

to issue this rule now and not delay its implementation to a time after

July 1, 2000. The number and type of marketing practices that include

change-of-gauge services, code-sharing arrangements, marketing

alliances and other marketing agreements, especially among multiple

carriers and involving international operations have grown

substantially. These agreements are likewise expected to continue to

grow in the future. At the same time, they have increased in complexity

as well. For these reasons, the Department has determined that it is

now essential to issue this disclosure rule so that prospective

travelers have as clear and complete information as possible prior to

buying air transportation as well as during the journey.

Regulatory Analyses and Notices

The Department has determined that this action is not a significant

regulatory action under Executive Order 12866 or the Department's

Regulatory Policies and Procedures. It has not been reviewed by the

Office of Management and Budget. This rule does not impose unfunded

mandates or requirements that will have any effect on the quality of

the human environment. The Department has placed a regulatory

evaluation that examines the estimated costs and effects of the rule in

the docket.

The Department has evaluated the effect of this rule on small

entities. I certify that this rule will not have a significant economic

effect on a substantial number of small entities. Although many ticket

agents and some air carriers are small entities, the Department

believes that the costs of notification will be minimal. We believe

that air carriers and travel agents already have some incentive to

provide this information to their customers and that many have found

low-cost means of doing so.

The Department has analyzed this rule under the principles and

criteria contained in Executive Order 12512 (``Federalism'') and has

determined that the rule does not have sufficient federalism

implications to warrant the preparation of a federalism assessment.

Paperwork Reduction Act

This rule contains information collection requirements that are

being submitted to OMB for approval under

[[Page 12860]]

the Paperwork Reduction Act of 1995. The Department has determined an

estimate of the burden hours associated with this rule and is hereby

requesting comments on its estimate.

This rule contains information collection requirements that are

being submitted to the Office of Management and Budget (OMB) for

approval under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et

seq.). Collection-of-information requirements include reporting,

recordkeeping, notification, and other similar requirements. In the

Notice of Proposed Rulemaking (NPRM) that preceded this rule, the

Department stated that the proposed rule did not contain information

collection requirements that required approval by OMB under the then-

current Paperwork Reduction Act. However, the requirements under the

Paperwork Reduction Act of 1995 consider third party notifications as

data collections and thus subject to the regulations. This final rule

is therefore being submitted to the Office of Management and Budget for

review. At the same time, the Department is hereby inviting public

comment upon its estimate of the annual burden hours associated with

this rule. Persons are not required to respond to a collection of

information unless it displays a currently valid OMB control number.

Those potentially affected by this rule include 192 U.S. air

carriers, 205 foreign air carriers, and approximately 33,500 travel

agents doing business in the United States, as well as the traveling

public. The Department has estimated that 24.7 million to 74.1 million

phone calls would be affected by this rule. The annual reporting burden

hours for this data collection are estimated to range from 102,954

hours to 308,861 hours for all travel agents and airline ticket agents

and from 102,954 hours to 308,861 hours for air travelers based on 15

seconds per phone call and an average of 2.1 phone calls per trip.

Comments are invited on: (a) Whether this collection of information

(third party notification) is necessary for the proper performance of

the functions of the agency, including whether the information will

have practical utility; (b) the accuracy of the agency's estimate of

burden of the proposed collection of information; (c) ways to enhance

the quality, utility, and clarity of the information to be collected;

and (d) ways to minimize the burden of the collection of information on

the respondents, including through the use of automated techniques or

other forms of information technology.

List of Subjects in 14 CFR Part 258

Air carriers, Consumer protection, Foreign air carriers, Reporting

and recordkeeping requirements, Ticket agents.

For the reasons set forth in the preamble, the Department amends

Title 14, Chapter II, Subchapter A by adding a new Part 258, to read as

follows:

PART 258--DISCLOSURE OF CHANGE-OF-GAUGE SERVICES

Sec.

258.1 Purpose.

258.2 Applicability.

258.3 Definitions.

258.4 Unfair and deceptive practice.

258.5 Notice requirement.

Authority: 49 U.S.C. 40113(a) and 41712.

Sec. 258.1 Purpose.

The purpose of this part is to ensure that consumers are adequately

informed before they book air transportation or embark on travel

involving change-of-gauge services that these services require a change

of aircraft en route.

Sec. 258.2 Applicability.

This part applies to the following:

(a) Direct air carriers and foreign air carriers that sell or issue

tickets in the United States for scheduled passenger air transportation

on change-of-gauge services or that operate such transportation; and

(b) Ticket agents doing business in the United States that sell or

issue tickets for scheduled passenger air transportation on change-of-

gauge services.

Sec. 258.3 Definitions.

As used in this part:

(a) Air transportation has the meaning ascribed to it in 49 U.S.C.

40102(5).

(b) Carrier means any air carrier or foreign air carrier as defined

in 49 U.S.C. 40102(2) or 49 U.S.C. 40102(21), respectively, that

engages directly in scheduled passenger air transportation.

of aircraft en route but has only a single flight number.

(d) Ticket agent has the meaning ascribed to it in 49 U.S.C.

40102(40).

Sec. 258.4 Unfair and deceptive practice.

The holding out or sale of scheduled passenger air transportation

that involves change-of-gauge service is prohibited as an unfair or

deceptive practice or an unfair method of competition within the

meaning of 49 U.S.C. 41712 unless, in conjunction with such holding out

or sale, carriers and ticket agents follow the requirements of this

part.

258.5 Notice requirement.

(a) Notice in schedules. Carriers holding out or operating change-

of-gauge services to, from, or within the United States shall ensure

that in the written and electronic schedule information they provide to

the public, to the Official Airline Guide and comparable publications,

and to computer reservations systems, these services are shown as

requiring a change of aircraft.

(b) Oral notice to prospective consumers. In any direct oral

communication with a consumer in the United States concerning a change-

of-gauge service, any carrier or ticket agent doing business in the

United States shall tell the consumer before booking scheduled

passenger air transportation to, from, or within the United States that

the service requires a change of aircraft en route.

transportation that includes a change-of-gauge service to, from, or

within the United States, or, if no ticket is issued, no later than the

time when the passenger checks in at the airport for the first flight

in an itinerary that includes such a service, the selling carrier or

ticket agent shall provide the following written notice: