UNITED STATES OF AMERICA

**DEPARTMENT OF TRANSPORTATION**

**OFFICE OF THE SECRETARY**

**WASHINGTON, DC**

Section 145, referrred to below, expired in 2006. Since that time there
has been no requirement for airlines to honor the tickets of another
airline that ceases operations(although some air carriers do so
voluntarily, usually with restrictions and/or a small fee).

#  

**HONORING TICKETS OF INSOLVENT AIRLINES PURSUANT TO THE REQUIREMENTS OF
SECTION 145 OF THE AVIATION AND TRANSPORTATION SECURITY ACT**

# 

# NOTICE

This Notice provides further guidance for airlines and the traveling
public regarding the obligation of airlines under section 145 of the
Aviation and Transportation Security Act, P.L. 107-71, 115 Stat. 645
(November 19, 2001) ("Act"), to transport passengers of airlines that
have ceased operations due to insolvency or bankruptcy. In section 8404
of the Intelligence Reform and Terrorism Prevention Act of 2004 (P.L.
108-458 (Dec. 17, 2004)), Congress recently renewed the obligation of
air carriers under section 145 to provide transportation to passengers
of airlines that have ceased operations due to insolvency or bankruptcy.
Prior to Congress's most recent action, the Department had issued three
notices providing guidance to carriers and the public regarding section
145.[^1] The purpose of this notice is to respond to the many inquiries
from airlines and the public regarding section 145 received since
issuance of those notices, and to provide notice that we have
reconsidered our earlier estimates of the direct costs to carriers of
providing alternate transportation required by section 145 and have
accordingly decided that the maximum amount that a carrier may charge a
passenger accommodated under the law should be greater than originally
believed.

Section 145 requires, in essence, that airlines operating on the same
route as an insolvent carrier that has ceased operations transport the
ticketed passengers of the insolvent carrier "to the extent
practicable." Our earlier notices set forth, among other things, our
view that, at a minimum, section 145 requires that passengers who hold
valid confirmed tickets, whether paper or electronic, on an insolvent or
bankrupt carrier that has ceased operations on a route be transported on
a space-available basis by other carriers that operate on the route for
which the passenger is ticketed. We also stated our belief that Congress
did not intend to prohibit carriers from recovering from accommodated
passengers the amounts associated with the actual cost of providing such
transportation. We indicated at that time that we did not foresee those
costs exceeding \$25.00 each way, or \$50.00 on a roundtrip basis.
However, we also made clear that we recognized that such charges might
be determined to be higher, since the cost to a carrier of complying
with section 145 could be affected by a variety of factors, including
the number of affected passengers, the fuel costs to carriers in effect
at the time of a cessation, and the markets and itineraries involved.

Since the renewal of section 145 in December 2004, we have received many
inquiries from the airline and travel agent industries, the media, and
the public about various aspects of the law. These questions involve,
among other issues, the amount carriers may charge displaced passengers
seeking to be accommodated, as well as questions regarding section 145's
applicability to international flights, code shared flights, passengers
holding frequent flier tickets, and passengers whose transportation
involves charter flights. As a result of these and other questions,
including those raised on our own initiative, we have reviewed section
145 and are issuing this further notice, which updates and expands upon
advice previously provided airlines and the public about the provision.
This guidance is being provided in an attached question-and-answer
format, which should assist readers in understanding the many issues
involved.

Questions regarding this notice may be addressed in writing to Dayton
Lehman, Deputy Assistant General Counsel, or Jonathan Dols, Supervisory
Trial Attorney, Office of Aviation Enforcement and Proceedings, 400
7^th^ St., S.W., Washington, D.C. 20590, or they may be contacted by
telephone at (202) 366-9342 or by email at
[dayton.lehman@dot.gov](mailto:Dayton.lehman@dot.gov) or
<jonathan.dols@dot.gov>, respectively.

By:

**Karan Bhatia**

***Assistant Secretary for***

##  Aviation and International Affairs

Dated: June 1, 2005

(SEAL)

*An electronic version of this document is available on the World Wide
Web at* http://airconsumer.ost.dot.gov

Attachment to June 1, 2005, Section 145 Notice

**Department of Transportation Guidance Regarding**

**Section 145 of the Aviation and Transportation Security Act**

In section 8404 of the Intelligence Reform and Terrorism Prevention Act
of 2004 (P.L. 108-458 (Dec. 17, 2004)), Congress renewed the obligation
of air carriers under section 145 of the Aviation and Transportation
Security Act (P.L. 107-71, 115 Stat.645 (Nov. 19, 2001) ("Act")) to
provide transportation to passengers of airlines that have ceased
operations due to insolvency or bankruptcy. As amended, section 145
states in pertinent part:

> \(a\) ... Each air carrier that provides scheduled air transportation
> on a route shall provide, to the extent practicable, air
> transportation to passengers ticketed for air transportation on that
> route by any other air carrier that suspends, interrupts, or
> discontinues air passenger service on the route by reason of
> insolvency or bankruptcy of the other air carrier.
>
> \(b\) ... An air carrier is not required to provide air transportation
> under subsection (a) to a passenger unless that passenger makes
> alternative arrangements with the air carrier for such transportation
> within 60 days after the date on which that passenger's air
> transportation was suspended, interrupted, or discontinued (without
> regard to the originally scheduled travel date on the ticket).
>
> \(c\) ... This section does not apply to air transportation the
> suspension, interruption, or discontinuance of which occurs after
> November 19, 2005.[^2]

**[Questions and Answers]{.underline}**

**Question 1:** What is the basic requirement of section 145?

**Answer 1:** At a minimum, section 145 requires that passengers holding
valid confirmed tickets, whether paper or electronic, on an insolvent or
bankrupt carrier that has ceased operations on a route by reason of that
insolvency or bankruptcy be transported on a space-available basis by
other carriers who operate on the route for which the passenger is
ticketed.

**Question 2:** If a U.S. air carrier that has not yet filed for
bankruptcy discontinues operating on a route for reasons of
"insolvency," must other air carriers operating on that route provide
transportation to passengers ticketed by the insolvent air carrier?

**Answer 2:** Yes.

**Question 3:** What constitutes "insolvency" for purposes of section
145?

**Answer 3:** Insolvency is generally the inability to pay one's debts
as they become due. This would probably occur with or after a bankruptcy
filing, but such a filing need not necessarily occur to trigger section
145 obligations.

**Question 4:** Does the law apply to passengers of foreign air carriers
that cease operations on international routes to or from the United
States due to bankruptcy or insolvency?

**Answer 4:** No. The law only applies to passengers ticketed on U.S.
air carriers that cease operations.

**Question 5:** Do foreign air carriers have any obligation under the
law to accommodate passengers ticketed by U.S. carriers that have ceased
operations on an international route due to bankruptcy or insolvency?

**Answer 5:** No. The obligation applies only to U.S. air carriers.

**Question 6:** Does the law provide relief for passengers who have
purchased transportation on a charter flight?

**Answer 6:** No. We do not believe it was the intent of Congress to
include charter transportation within the coverage of section 145.
Although the language of section 145 does not, on its face, exclude
charter passengers from its protections, the obligation to transport
passengers extends only to scheduled carriers, not charter carriers,
either direct or indirect. We do not believe Congress would have
intended to provide protection for charter passengers without also
providing a commensurate obligation on charter carriers, both direct and
indirect, to accommodate the passengers of other carriers that might
cease operations on a route.

In addition, there are many different types of charters that do not
readily lend themselves to the type of protection we believe Congress
intended under section 145, including single entity charters that might
involve a company transporting its employees or a sports team, as well
as on-demand air taxi charters. Moreover, some charters, such as public
charters, which may be sold by charter operators that do not operate
their own aircraft, and single entity charters are already subject to
required financial protections in the form of surety bonds or letters of
credit and/or escrow accounts for passenger funds.

We note that our Aviation Enforcement Office has in one instance advised
carriers and the public of its opinion that section 145 applied to the
cessation of service of a charter airline that sold transportation
directly to the public. That situation involved Southeast Airlines,
which ceased service on November 30, 2004. We do not expect our decision
here to affect any of Southeast's passengers, whose transportation was
interrupted more than 60 days ago, a period of time beyond section 145's
coverage. (See section 145(b).)

**Question 7:** Once in bankruptcy, must an air carrier cease all
operations before section 145 obligations are triggered or are section
145 obligations triggered by the cessation of operations only on a
particular route or certain routes by an insolvent or bankrupt air
carrier?

**Answer 7:** The plain language of the statute covers cessation on a
route-by-route basis. However, we would expect that a carrier that
ceases operations on only one or several routes would itself take steps
to ensure that its ticketed passengers are transported over other
routings or receive a full refund, at the passenger's choice. Moreover,
if the carrier continues to hold out for sale service between the points
involved, i.e., in the market, the carrier would not be deemed to have
ceased operations on "that route." See Answer to Question 10 below.

**Question 8:** Because section 145 obligations are triggered by the
cessation of service on one or more routes, rather than requiring a
system-wide cessation of operations, are section 145 obligations
triggered when a bankrupt air carrier simply reduces the number of
flights it offers on a given route but does not cease *all* service on
that route?

**Answer 8:** No.

**Question 9:** How does one determine whether a suspension,
interruption, or discontinuation of service on a route is the result of
bankruptcy or insolvency or of some other event not triggering section
145 obligations, such as a seasonal suspension of service or a contract
dispute?

**Answer 9:** This will depend on the facts of each case.

**Question 10:** Section 145 refers to carriers that provide scheduled
air transportation on the "route" for which a passenger is ticketed.
What constitutes a "route"?

**Answer 10:** Section 145 states simply that an air carrier that
provides transportation on "a route" where service is discontinued by
another air carrier due to bankruptcy or insolvency shall provide
transportation on "that route" to passengers ticketed by the bankrupt
air carrier. Since section 145 clearly is intended to help ensure that
consumers' expectations are preserved and that they reach their
destinations if reasonably practicable, the Department believes that
Congress did not intend to limit the section 145 obligations to those
carriers operating between the two points on a non-stop basis. Indeed,
the service for which the passenger seeks alternate transportation may
itself not have been non-stop service. On the other hand, travel on
nearly every major carrier can be constructed between most pairs of
points, provided one were willing to take a circuitous routing
potentially involving numerous connections. We think this kind of
substitute service was not what Congress intended. A carrier will be
deemed to be providing transportation on "that route" if it holds out
service between the two points to the public through its website or GDS
services, regardless of the circuity involved.

For example, Carrier A discontinues service between Chicago's O'Hare
Airport (ORD) and Philadelphia (PHL) due to bankruptcy. Carrier B does
not offer non-stop service ORD-PHL, but does offer for sale service from
ORD to PHL via Pittsburgh (PIT). Under section 145, Carrier B must
provide "to the extent practicable" transportation ORD-PIT-PHL to
passengers ticketed by Carrier A between ORD and PHL. As a counter
example, Carrier A discontinues service between San Diego (SAN) and
Baltimore-Washington International Airport (BWI) due to bankruptcy.
Carrier B does not offer for sale any service between SAN and BWI, but a
person could travel on Carrier B between SAN and BWI if he or she were
willing to combine flights that operated SAN-Albuquerque (ABQ)-Houston
(HOU)-Birmingham (BHM)-BWI. Under section 145, Carrier B does not have
to provide transportation to passengers ticketed by Carrier A between
SAN and BWI, since it does not hold out service in the SAN-BWI market.

**Question 11:** Under section 145, must an air carrier that offers only
connecting or "backhaul" service on a route, transport passengers
ticketed by a bankrupt air carrier on that route?

**Answer 11:** Yes, under section 145, if an air carrier does not hold
out or operate direct service between two cities, but holds out for sale
connecting service between them, it must provide alternate
transportation under section 145 to passengers ticketed by another air
carrier that has discontinued its service on that route, regardless of
whether the alternate transportation involves a backhaul. (See Question
and Answer 10 above.)

**Question 12:** Under section 145, must an air carrier operating
scheduled service on a route to one airport serving a city provide
transportation to passengers ticketed by a bankrupt air carrier on a
route to a different airport serving the same city?

**Answer 12:** Yes, provided that the airports are considered alternate
airports for the city and the carrier from which the passenger is
seeking accommodation holds out for sale service to the alternate
airport. For example, Carrier A discontinues service between Los Angeles
International Airport (LAX) and JFK International Airport (JFK) due to
bankruptcy. Carrier B, which offers service only between (LAX) and
Newark International Airport (EWR), must provide transportation from LAX
to EWR to a passenger ticketed by Carrier A between LAX and JFK, since
JFK and EWR are considered alternate airports serving New York City and
Carrier B holds out for sale service between LAX and EWR, one of the
alternate airports. We recognize that the question of whether a
particular airport is considered an "alternate airport" may need to be
determined on a case-by-case basis. Carriers should note, however, that
since a primary purpose of section 145 is to assist consumers in
obtaining acceptable alternate transportation and our interpretation of
that provision requires transportation only on a stand-by,
space-available basis, we expect carriers to take a liberal approach if
this issue arises.

A carrier that serves only a portion of a passenger's itinerary and does
not operate to the destination city for which the passenger is ticketed
would not be obligated under section 145 to transport the passenger to
another point from which the passenger might hope to obtain
accommodations to his or her ultimate destination. For example, if the
passenger of an insolvent or bankrupt carrier holds a ticket from
Chicago to Phoenix, a carrier that does not offer service to Phoenix but
does offer service to Denver is not obligated under section 145 to
provide the passenger transportation to Denver in hopes that he or she
can then find further transportation to Phoenix. This same result would
hold if the passenger was originally ticketed from Chicago to Phoenix
through Denver.

**Question 13:** What charge can a carrier assess for accommodating a
passenger holding a ticket on a carrier that has ceased operations?

**Answer 13:** In our first three guidance documents, we stated that we
did not believe that Congress intended to prohibit carriers from
recovering from accommodated passengers the amounts associated with the
actual cost of providing such transportation. We pointed out that
examples of such costs include the cost of rewriting tickets, providing
additional onboard meals, and the incremental fuel cost attributable to
transporting an additional passenger. Based on that methodology, we
found that a reasonable estimate of such costs at that time would not
exceed \$25 each way, regardless of the number of segments involved.
Significantly, we noted that the costs of complying with section 145 may
be affected by a variety of factors, including the number of passengers,
the current fuel costs to carriers, and the markets and itineraries
involved. We made no attempt at that time specifically to consider such
factors, but indicated our willingness to do so in the future. It has
been more than two years since our last notice was issued. Several
carriers have requested that we reexamine this cost issue, asserting
that increased costs, including that of fuel, the proven need to
increase staffing to handle last-minute influxes of stand-by passengers
after another carrier ceases operations, and the need to cover certain
air transportation taxes, justify the Department permitting an increase
in the maximum amount a carrier can charge to recover its additional
expenses for providing alternate transportation under section 145. They
have asked that we increase the maximum permissible amounts to \$50 each
way for domestic travel and travel to or from foreign points in North
and Central America and the Caribbean and \$125 each way for other
international travel.

We have reexamined this cost issue and conclude that an increase in
permissible maximum rebooking charges, including any necessary taxes and
fees, to an amount of \$50 each way is reasonable. Although we invite
carriers to provide further comments, we do not at this time have
sufficient information to justify increasing the maximum permissible
amount for long-haul international travel to the maximum of \$125 as
requested by certain carriers. However, as described below, some
governments may impose substantial taxes and fees on passengers that are
collected by carriers in the price of a ticket and turned over to the
government only upon travel by the passenger. Where a carrier ceases
operations without having paid such amounts on behalf of the passenger,
the carrier providing alternate transportation may be required to pay
the tax. Under such circumstances, the \$50 maximum stated above may be
increased by the amount a foreign government directly assesses a carrier
providing alternate transportation under section 145.

The cost of rebooking a particular passenger can vary substantially
depending upon the particular circumstances involved. For example, at
airports with relatively low traffic volumes, where existing
alternatives can readily accommodate a small number of new passengers,
the cost of doing so would be modest. On the other hand, at high traffic
volume airports, particularly during the first few days following
cessation of service by a major service provider at that airport, other
carriers would likely have to significantly and quickly increase
personnel resources in order to efficiently accommodate a surge of new
passengers, resulting in considerable additional costs. These costs may
be due to the need to set up new systems to verify such customers'
existing ticket information and handle their stand-by status, which may
require the issuance of paper tickets, a privilege for which many
carriers today charge their own passengers \$20 or perhaps more. These
increased costs may affect carriers regardless of their size and can be
even more pronounced where the carrier obligated to provide alternate
transportation does not itself have a large presence at an airport
involved. Such a situation will require extraordinary steps by a carrier
to meet its section 145 obligation in handling the influx of passengers
seeking to travel on a stand-by basis, particularly since such
passengers require personal attention and handling, unlike a carrier's
regular customers, who are likely to be traveling on an e-ticket and
checking in over the Internet or at an unstaffed kiosk. For example,
Delta Airlines was required to temporarily reassign ticket agents to its
Las Vegas station from other stations after Vanguard, a much smaller
carrier but one that had a relatively large presence at Las Vegas,
ceased operations. Vanguard's passengers swamped the counters of Delta
and other carriers seeking assistance pursuant to the requirements of
section 145. Since the vast majority of passengers' itineraries will
involve one or more high traffic volume airports and in light of the
substantial expenses that may occur, we conclude that the increased
maximum rebooking fees of \$50 discussed above are reasonable.

With regard to long-haul international routes, in their request for an
increase in the maximum charge that may be assessed for accommodating a
passenger under section 145, several carriers pointed to the higher
costs associated with such routes due to increased expenses for fuel,
meals, security, and ground handling. While this may be the case, we do
not at this time have sufficient information to believe that an increase
in the maximum charge to \$125 is justified. However, we understand
that, in certain markets, carriers may collect as part of their ticket
prices departure fees that must be paid to the foreign government upon
departure of the passenger. Those fees may become the responsibility of
the carrier providing alternate transportation under section 145 and in
such cases it is reasonable for that fee to be charged the accommodated
passenger in addition to the \$50 charge. As we have in the past, we
invite any airline or person who believes that our estimates of the
amount necessary to cover the direct costs of accommodating ticketed
passengers on a space available basis are inaccurate to provide written
comments and evidence of costs in support of their position.

Finally, while we are permitting the higher ceiling on fees that have
been proposed, we are not mandating that any fee be charged and
certainly not mandating that the ceiling fee be charged.

**Question 14:** If a carrier declares bankruptcy and then, after
section 145 expires under its sunset clause, suspends service on a
particular route, does the law apply?

**Answer 14:** Not if the law remains sunsetted. If, however, the law
was not in effect at the time of the cessation but is later renewed, one
must look to the language renewing the provision to determine if
Congress intended that it not apply to cessations that have already
occurred. In the absence of language to the contrary in the renewal
provision, the obligation to transport qualifying passengers resumes at
the time that the law goes back into effect, subject to the 60-day
provision in section 145(b), without regard to when the insolvent or
bankrupt carrier ceased operations.

**Question 15:** Does the 60-day period in which a passenger must make
alternative arrangements start on the date of the bankruptcy filing or
does it run from the date of the "suspension, interruption, or
discontinuance" of service on a particular route?

**Answer 15:** The 60-day period runs from the date of the "suspension,
interruption, or discontinuance" of service on a particular route. For
example, if Carrier A declares bankruptcy on August 1, but continues
operating its SFO-LAX service until September 1, at which time it
suspends its service due to the bankruptcy, passengers ticketed by
Carrier A on this route would have until October 30 to make alternative
arrangements.

**Question 16:** Since section 145 provides a passenger 60 days in which
to make alternate arrangements, does this mean that a carrier is
obligated to offer standby transportation (1) on any date on which space
may be available and on which the passenger desires to travel, so long
as the passenger seeks such arrangements within the 60 day period, or
(2) on the first date, including the passenger's original date of
travel, on which space is available, or (3) only on the date the
passenger was originally ticketed?

**Answer 16:** Although Congress was not clear on this issue, in our
initial notice dated August 2, 2002, we stated that section 145 required
at a minimum that a carrier is required to transport a passenger on a
space-available basis on the date of travel shown on the ticket. There
is some support for this interpretation, since section 145(a) applies
the law's protections to "ticketed" passengers (on a specified route)
and the 60-day provision in section 145(b) states that a passenger must
make alternate arrangements "for such transportation" within that time
frame. A strict view of the alternate transportation required to be
provided as a passenger is "ticketed" would limit the alternate
transportation to the precise date for which the passenger was
originally ticketed. This could, however, produce a harsh result not
intended by Congress given the consumer-oriented nature of the
provision, such as could occur when a passenger is scheduled to travel
on the day a carrier ceases operations and would therefore have no time
to make alternate arrangement for travel that day with another carrier,
or when flights of the carrier that is required to provide alternate
transportation are totally booked on a particular day. On the other
hand, we do not believe the provision should be read so broadly as to
permit the passenger to select any travel date in the future, regardless
of his or her original ticketed travel date.

We believe, therefore, that Congressional intent to assist consumers to
the extent practicable is satisfied where consumers are permitted to
travel on the date ticketed, or as soon thereafter as space is
available, and that consumers whose ticketed date of travel is within 72
hours of the date of a cessation of operations of the carrier on which
they are ticketed should be given a reasonable period of time after the
cessation, not to exceed one week, in which to make such alternate
arrangements.

**Question 17:** Must the carrier subject to a section 145 obligation
provide a passenger seeking accommodation under section 145 a confirmed
reservation on a flight, or can the carrier place the passenger on a
"standby" list?

**Answer 17:** The carrier may place the passenger on a standby list.

**Question 18:** Assuming that the transportation provided under section
145 is on a standby basis and that a carrier does not normally create
reservation records for standby passengers, how can an air carrier
determine if a passenger had in fact made alternative arrangements with
it within the 60-day window? If an air carrier cannot make such a
determination, can it refuse to transport such a passenger? For example,
Carrier A goes bankrupt and ceases all service on July 1. Jane Doe, who
was ticketed by Carrier A on a flight scheduled for November 1, makes
alternative arrangements with Carrier B on July 2 for a flight on
Carrier B scheduled for November 1. Jane Doe subsequently presents
herself as a standby passenger to Carrier B on November 1, but Carrier B
has no record that Doe made the requisite alternative arrangements
within the 60-day window since it did not create a reservation record
when Jane Doe contacted it on July 2.

**Answer 18:** While the burden is in the first instance on a passenger
to prove that he or she was ticketed for travel on the carrier that has
ceased operations and has complied with the 60-day provision, after the
passenger has done so, the burden of proof shifts to the carrier that is
requested to provide alternate transportation if the carrier asserts
that it has no obligation to transport the passenger on a
space-available basis. Thus, while we do not proposed to prescribe how
carriers are to meet that burden of proof, a carrier may not refuse
transportation under the 60-day provision if a properly ticketed
passenger asserts that he or she complied with that requirement and was
promised alternate transportation on a particular day, and the carrier
has no evidence to the contrary merely because the carrier elected not
to institute some method of monitoring requests for alternate
transportation required under section 145.

**Question 19:** Under section 145, can an air carrier refuse to
transport an otherwise qualified passenger ticketed by a bankrupt air
carrier on the basis that the passenger was issued an "e-ticket" for the
bankrupt carrier's flight?

**Answer 19:** No. However, the carrier can request reasonable proof
that the passenger purchased a ticket. As stated in our prior notices,
reasonable proof of purchase could be receipts and printed itineraries.

**Question 20:** Generally, an airline's contract of carriage states
that, in the event of a change of schedule (such as a cessation of
service in a market), the carrier's obligation is to reroute the
passenger at no additional cost (it could be on its own service or that
of another carrier) or, if the rerouting is unacceptable to the
passenger, provide a full refund. Many bankruptcies involve carriers
that continue to operate under Chapter 11 of the Bankruptcy Code and are
authorized by the bankruptcy court to continue to operate their systems
on a "business-as-usual" basis. In many or all such Chapter 11 cases,
the bankrupt carrier petitions the court to permit refunds to
pre-petition passengers to cover situations where, absent the
bankruptcy, a refund would have been due. Do other air carriers have a
section 145 obligation if:

> • (a) a bankruptcy court permits the carrier to provide a refund but
> the consumer does not want the refund and also does not want to accept
> being rerouted on the bankrupt carrier?
>
> • (b) whether or not the bankruptcy court permits a refund, the
> bankrupt carrier is able to reroute passengers affected by a cessation
> of service on certain other carriers at no additional charge to the
> passenger in the way that the airline likely would have done through
> its interline agreements in the absence of the bankruptcy?

**Answer 20:** Under either circumstance, if the bankrupt airline can
reroute the passenger to his or her destination on another of its own
flights or pursuant to an agreement with another carrier, the passenger
must accept this alternate arrangement, or a full refund, if applicable.
(See Question and Answer numbers 7 and 10 above.)

**Question 21:** Can a carrier that is obligated to provide alternate
transportation on a space-available basis under section 145 to
passengers of a carrier that has ceased operations offer those
passengers confirmed space at any price in lieu of the space-available
option? What if the passenger accepts the offer and learns while
checking in for the flight that standby seats are available?

**Answer 21:** A carrier may seek to accommodate passengers in such a
manner, provided it makes clear to the passenger that the offer of a
confirmed seat for the price set by the carrier is an alternative to
being provided a space-available seat under section 145 and acceptance
is the passenger's option. Where such an election is made by a passenger
after full and accurate disclosure of his or her options under section
145, including (if known) the availability of stand-by seats, the
passenger cannot later demand a refund (under terms not otherwise
applicable to his or her ticket) and seek to travel under section 145
if, for example, the passenger shows up for the reserved flight and
discovers stand-by seats will be available.

**[Questions 22 through 28 Refer to Code Share Issues]{.underline}**

**Question 22:** When considering the definition of a "route," does a
carrier's obligation under section 145 to provide alternate
transportation apply only to routes on which it operates its own
aircraft or does it also apply to code share operations where another
carrier operates the aircraft?

**Answer 22:** The legislation does not address this issue and
accordingly we believe that the answer depends on whether it is
"practicable" for the carrier to provide alternate transportation under
the code share arrangement. As stated in section 145, Congress only
required alternate transportation "to the extent practicable." There are
several circumstances that might make it impractical for a carrier to
provide transportation under section 145 on routes on which it offers
only code share service. For example, a carrier's code share agreement
may not give it access to the inventory of the carrier operating the
aircraft nor the authority to provide stand-by service. By contrast,
where the code share carrier does have access to the inventory of the
operating carrier and the ability to put passengers on a standby list,
it likely would be "practicable" to provide alternate transportation.
(It appears to the Department that this would be the case in most, if
not all, code share relationships between domestic regional affiliates
and major carriers.)

There may be circumstances specific to code share arrangements,
particularly in foreign markets, where an accommodating carrier's cost
for providing transportation on its code share partner's aircraft may
bear no relationship to the maximum direct costs specifically allocated
to providing the transportation to that passenger. In such
circumstances, the accommodating code sharing carrier may charge, in
addition to the \$50.00 fee, whatever additional amount is necessary to
cover that specific direct transportation cost to the carrier to
transport that passenger. Should the passenger dispute the charge, the
carrier will have the burden of demonstrating that the additional amount
charged is justified.

**Question 23 (Both U.S. air carriers):** Carrier A and Carrier B, both
U.S. air carriers, have a code share agreement in which Carrier A
operates the flight. Carrier A ceases operations by reason of bankruptcy
or insolvency. What requirements exist, pursuant to section 145, with
regard to passengers of Carrier A and Carrier B?

**Answer 23:** Other U.S. air carriers have an obligation under section
145 to provide transportation to passengers ticketed for transportation
on Carrier A on its flight. Under section 145, no such obligation exists
for passengers ticketed for transportation on Carrier B, because Carrier
B was not the entity that ceased operations. Carrier B would, however,
have obligations to the passengers holding tickets for transportation on
it as set forth in its contract of carriage.

**Question 24 (Both U.S. air carriers):** Same as question 23, with
Carrier A operating the flight, but Carrier B ceases operations due to
bankruptcy.

**Answer 24:** Other U.S. air carriers, including Carrier A, have an
obligation under section 145 to provide transportation to passengers
ticketed for transportation on Carrier B. No such obligation attaches to
passengers ticketed for transportation on Carrier A, because it has not
ceased operations.

**Question 25 (U.S. and Foreign air carriers):** Carrier A, a U.S. air
carrier, and Carrier B, a foreign air carrier, have a code share
agreement in which U.S. Carrier A operates the flight. U.S. Carrier A
ceases operations by reason of bankruptcy or insolvency. What
requirements exist, pursuant to section 145, with regard to passengers
of U.S. Carrier A and Foreign Carrier B?

**Answer 25:** Other U.S. air carriers have an obligation under section
145 to provide transportation to a passenger ticketed for transportation
on a flight of U.S. Carrier A. No such obligation exists with respect to
passengers ticketed for transportation on Foreign Carrier B, because
section 145 applies only to passengers of a U.S. air carrier that
actually ceases operations due to bankruptcy or insolvency and Carrier B
is a foreign air carrier. Foreign carrier B has no obligation under
section 145 to passengers ticketed for transportation on U.S. Carrier A.

**Question 26** **(U.S. and Foreign air carriers):** Same as Question 25
except that Carrier B, the foreign air carrier, ceases operations due to
bankruptcy on a codeshare route on which U.S. Carrier A operates the
flight.

**Answer 26:** Other U.S. air carriers, including U.S. Carrier A, have
no obligation under section 145 to provide alternate transportation to
passengers ticketed by Carrier B, because it is a foreign carrier. Our
interpretation here with respect to U.S. Carrier A is limited to its
obligation pursuant to section 145, however, and does not consider any
other obligation that it may have to carry the passengers of its code
share partner, Foreign Carrier B.

**Question 27** **(U.S. and Foreign air carriers):** Carrier A, a U.S.
air carrier, and Carrier B, a foreign air carrier, have a code share
agreement in which Foreign Carrier B operates the flight. U.S. Carrier A
ceases operations by reason of bankruptcy or insolvency. What
requirements exist, pursuant to section 145, with regard to passengers
of U.S. Carrier A and Foreign Carrier B?

**Answer 27:** Other U.S. air carriers have an obligation under section
145 to provide transportation to passengers ticketed by U.S. Carrier A,
because it ceased operations on a route due to bankruptcy. Foreign
Carrier B has no obligation under section 145 to transport the
passengers of U.S. Carrier A, because section 145 applies only to U.S.
carriers. Our interpretation here is limited to Foreign Carrier B's
obligation pursuant to section 145, however, and does not consider any
other obligation that it may have to carry the passengers of its code
share partner, U.S. Carrier A.

**Question 28** **(U.S. and Foreign air carriers):** Same as Question
27, except that Foreign Carrier B ceases operations due to bankruptcy on
a code share route on which it operates the flight, leaving passengers
ticketed by U.S. Carrier A without lift.

**Answer 28:** Other U.S. air carriers have no obligation under section
145 to provide transportation to passengers ticketed by U.S. Carrier A,
because it has not ceased operations on a route due to insolvency or
bankruptcy and no obligation to transport passengers ticketed by Foreign
Carrier B, since it is a foreign carrier. Carrier A would, however, have
obligations to the passengers holding tickets for transportation on it
as set forth in its contract of carriage.

[^1]: Those notices were issued on August 8, 2002, (67 FR 53035, Aug.
    14, 2002) November 14, 2002, (67 FR 69805, Nov. 19, 2002) and
    January 23, 2003 (68 FR 4266, Jan. 28, 2003).

[^2]: In the fall of 2005 this date was extended to November 30, 2006.