Page 1 of 7

Before the

DEPARTMENT OF TRANSPORTATION 

Washington, DC 20590

APPLICATION OF THE 

INTERNATIONAL AIR 

TRANSPORT ASSOCIATION

FOR APPROVAL OF AN 

AGREEMENT 

(RESOLUTION 787) OF THE 

PASSENGER SERVICES 

CONFERENCE 

(Docket No. OST-2013-0048)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

OBJECTIONS TO 

TENTATIVE DECISION AND 

ORDER TO SHOW CAUSE

Edward Hasbrouck

1130 Treat Ave.

San Francisco, CA 94110

telephone 415-824-0214

edward@hasbrouck.org

http://www.hasbrouck.org

30 May 2014

Edward Hasbrouck

<http://www.hasbrouck.org>

Objections to Tentative Decision,

Docket No. OST-2013-0048

30 May 2014
Page 2 of 7

On May 21, 2014, the Department of Transportation ("DOT") issued Order 2014-5-7 

(Docket No. DOT-OST-2013-0048-0415):

By this order, we tentatively find that, subject to certain conditions enumerated 

herein (and set forth in the attached Appendix), approval of IATA Resolution 787 

would be in the public interest, and direct interested parties to show cause why the 

Department should not approve the resolution.

DOT should not approve IATA Resolution 787 because the sale of tickets at personalized

prices, as contemplated by the resolution, rather than in accordance with published tariffs, is 

contrary to the explicit and unambiguous provisions of 49 U.S. Code § 41510; because DOT's 

tentative findings are based on an unsupported misreading of that statute, which would render it 

meaningless; because approval of the resolution would not be in the public interest for the same 

public policy reasons that motivated Congress to enact 49 U.S.C. § 41510, 49 U.S.C. § 40101(c)

(2), and § 40103(a)(2); because DOT has failed to consider whether the resolution is compatible 

with 49 U.S.C. § 40101(c)(2) and § 40103(a)(2); and because DOT has failed to consider 

whether approval of the resolution is consistent with U.S. international obligations.

1. Pricing in accordance with published tariffs is required by statute.

Requirements for airlines, like other common carriers, to publish and adhere to tariffs are 

independent of, and serve public policy goals distinct from, requirements for filing of tariffs 

with, or approval of tariffs by, any government agency. They have been explicitly retained by 

Congress for airlines, as for other types of common carriers, when Congress has repealed 

requirements for those tariffs to be filed with or approved by DOT components.

 49 U.S.C. § 41510 explicitly, unambiguously, and without exception prohibits the sale of

international air transportation at any price not "specified in the tariff of the carrier that is in 

effect for that transportation". If no tariff is in effect, no transportation may lawfully be sold.

§ 41510 gives the Secretary of Transportation authority to specify "privilege[s] or 

facilit[ies]" in addition to prices for air transportation which must be included in tariffs. But the 

statute grants DOT regulatory discretion only with respect to additional matters required to be 

specified in the tariff. The statute grants DOT no discretion to waive the minimum statutory 

requirement for the prices of international air transportation to be specified in the tariff.

The grant of regulatory authority to DOT to extend the tariff requirement beyond prices 

to other privileges or facilities underscores the importance placed by Congress on full 

compliance with, and enforcement of, the tariff requirement for air transportation prices. DOT 

was given authority to require inclusion of other privileges or facilities in the tariff in order to 

preclude efforts by airlines to evade the tariff requirement by moving essential matters out of the 

tariff and into less readily accessible or entirely non-public general rules, conditions, etc.

Edward Hasbrouck

<http://www.hasbrouck.org>

Objections to Tentative Decision,

Docket No. OST-2013-0048

30 May 2014
Page 3 of 7

(This concern was well-founded. Tariffs of IATA's member airlines are interpreted in 

accordance with IATA's general rules of fare construction, for example. But those general rules 

are not freely available. IATA's Web site at <http://www.iata.org/publications/Pages/pat.aspx> 

gives no price for the General Rules, stating only that the price is "Available upon request" from 

<customerservice.indp@iata.org>. In response to e-mail messages to that address, I received a 

reply stating that the price of a single printed copy of the most recent "General Rules" volume of 

the IATA/SITA Passenger Air Tariff (PAT) is EUR185 plus EUR25 for shipping to the USA 

from IATA's office in Geneva, Switzerland, for a total of EUR210 or approximately USD 290.1)

According to DOT's "Order to Show Cause":

We are tentatively not convinced by Mr. Hasbrouck’s allegations that customized 

pricing offers would be illegal because statutory and regulatory provisions still 

prohibit carriers from charging any price not contained in publicly disclosed, 

published tariffs, notwithstanding the fact that the Department has exempted carriers 

from officially filing such tariffs with the Department. The clause in 49 U.S.C. § 

41510 under which carriers are to charge only prices identical to those in the tariff 

“in effect for such transportation” presumed filing of those tariffs with the 

Department under § 41504 as part of a comprehensive economic regulatory regime. 

Domestic tariff filing was terminated by the Deregulation Act of 1978. With 

progressive liberalization of international air services, including implementation of 

over 100 open skies agreements, the Department has, under § 40109(c) and 14 CFR 

Part 293, progressively exempted carriers from filing tariffs in liberalized 

international markets.

The "Order to Show Cause" provides no support for the claim that 49 U.S.C. § 41510 

"presumed" filing of tariffs with the government, or that even if it did, this would permit DOT to 

read the requirements of § 41510 out of existence. 49 U.S.C. § 41510 is concerned with 

adherence to a tariff. The statute does not mention tariff filing with, or approval by, DOT any 

other U.S. or foreign government agency. Congress retained § 41510, with its requirement for 

adherence to a tariff, when it enacted the Airline Deregulation Act of 1978, and when it granted 

DOT authority to define the scope of tariff filing requirements in § 41504. Standard principles 

of statutory construction require DOT to recognize that Congress did so for a reason.

§ 41504 requires filing of tariffs only "to the extent the Secretary requires by regulation". 

In the absence of any such regulations, the default would be that there would be no filing 

requirement. § 41510 is different: it does not depend on promulgation of regulations for its 

effect, and grants no discretion for waivers by DOT of its requirements. § 41510 is binding on 

DOT and airlines. Again, this reflects a deliberate judgment of Congress binding on DOT.

DOT's tentative decision would nullify what Congress required and treat § 41510 as 

meaningless, contrary to the basic rule that each provision of a statute be given meaning.

1 E-mail message to Edward Hasbrouck from Lauriane Mercier, Team Leader, Customer Service INDP, 

<customerservice.indp@iata.org>, 26 May 2014.

Edward Hasbrouck

<http://www.hasbrouck.org>

Objections to Tentative Decision,

Docket No. OST-2013-0048

30 May 2014
Page 4 of 7

Industry norms reflected in IATA's own "General Rules" confirm that publication is an 

essential element of the definition of both "fare" and "tariff". In contrast, filing with or approval

by any government agency is not mentioned in, or "presumed" by, those definitions:

Fare – The amount charged by the carrier for the carriage of a passenger and his 

allowable free baggage and is the current fare which a carrier in the publication it 

normally uses to publish fares, holds out to the public, or the appropriate segment of 

the public, as being applicable to the class of service to be furnished....

Tariffs – The published fares, rates, charges and/or related conditions of the carrier.2

By IATA's own definitions, which accurately reflect the commonly-understood 

meanings of these terms, an unpublished price list or unpublished algorithm for generating 

prices or "offers" is not a "fare" or a "tariff", and does not satisfy 49 U.S.C. § 41510.

The distinction between requirements for publication of and adherence to tariffs, and for 

filing of tariffs with, and approval of tariffs by, DOT or other government agencies, is made 

clear by the precedent set by Congress and DOT in their treatment of common carriers in other 

modes of transportation. Statutes enacted by Congress and implemented by DOT regulations 

require tariffs for common carriers in other modes of transportation to be made available to the 

public, even when tariff filing and approval requirements have been repealed. For example, 

requirements for public availability of tariffs for rail transportation were retained by Congress in 

49 U.S.C. § 11101 and implementing regulations promulgated by DOT's Surface Transportation 

Board at 49 CFR § 1300, even after requirements for filing and approval of those tariffs were 

repealed by the Interstate Commerce Commission Termination Act of 1995.

Neither the legislative history, the statutory language, industry norms and 

conventions, IATA's own standard definitions, nor the precedents set by Congress and 

DOT in relation to other modes of transportation, supports DOT's tentative decision, which

wrongly presumes that 49 U.S.C. § 41510 can be read out of existence or ignored.

Providers of air transportation are not required to operate as common carriers 

subject to the requirements of 49 U.S.C. § 41510. If they prefer, they can choose to 

operate as air taxi services, charter operators, or private carriers. But if they want the 

benefits of common carrier status, airlines must comply with the applicable laws and 

treaties, unless and until Congress and national governments choose to repeal them.

If IATA or DOT believes that 49 U.S.C. § 41510 should be repealed, that is a 

matter for Congress – which would have to consider, inter alia, not only the public policy 

reasons § 41510 was enacted and has been retained, but whether § 41510 can be repealed 

without violating U.S. obligations pursuant to international aviation agreements.

2 IATA/SITA Passenger Air Tariff, General Rules, § 1.2.1 (emphasis added).

Edward Hasbrouck

<http://www.hasbrouck.org>

Objections to Tentative Decision,

Docket No. OST-2013-0048

30 May 2014
Page 5 of 7

2. Requiring adherence to published tariffs is in the public interest.

Historically, the requirement for pricing in accordance with a published tariff, as the 

essential element of the definition of a "common carrier", long predates, and serves public policy

purposes independent of, any requirement for filing with or approval of tariffs by governments.

Common carrier laws were among the first consumer protection laws. They were based 

on legislative recognition of the inherently unequal bargaining position of an individual customer

with respect to a transportation company, and the vulnerability to exploitation or extortion of a

farmer whose produce will spoil if not promptly transported to market, a passenger in midjourney or desperate to see a sick friend or family member before they die, and the like. They 

were intended to ensure access to transportation services by all customers at reasonable rates.

The types of "price discrimination" which tariff requirements were intended to prevent 

was not primarily, and certainly was not solely, limited to discrimination on the basis of race, 

national origin, or the like. Rather, tariff requirements for common carriers were intended to 

ensure meaningful access to transportation services for all members of the public at reasonable 

prices, and to prevent discrimination on the basis of personal animus or other personal factors.

Tariff adherence and publication requirements serve purposes of equity, transparency, 

and access to transportation, independent of the oversight purposes of tariff filing and approval.

In international markets in which international agreements required approval of fares by 

both governments, DOT justified a de facto policy of nonenforcement of the tariff adherence 

requirement of 49 U.S.C. § 41510 as benefiting the public by allowing airlines to sell tickets at 

off-tariff prices lower than those fares which some foreign government were willing to approve.3

That rationale no longer applies in deregulated markets in which fares are no longer 

subject to government approval. In such a market, an airline that wishes to offer a lower price 

can simply publish a lower fare. Price opacity, which serves no public benefit, is the only reason

for the persistence of off-tariff airline ticket pricing in deregulated markets. Off-tariff pricing 

serves to hide real prices from both competitors and consumers, frustrating both competition and 

comparison shopping. Off-tariff pricing is especially damaging to the ability of third parties to 

provide comprehensive aggregated or comparative price information or shopping tools. 

Moreover, the price transparency which is obtained through required adherence to 

published tariffs is more important, not less, when tariffs aren't required to be filed with or 

approved by DOT or any other government agency. Without the ability to verify whether the 

price demanded by the airline is in accord with the tariff, it's impossible for any individual to tell 

whether the "offer" has been determined, in whole or in part, on the basis of invidious factors.

3 See Notice of Proposed Rulemaking, "Statement of Enforcement Policy on Rebating", Office of the Secretary of 

Transportation (OST) Docket No. 45884, 53 Federal Register 41353, 21 October 1988.

Edward Hasbrouck

<http://www.hasbrouck.org>

Objections to Tentative Decision,

Docket No. OST-2013-0048

30 May 2014
Page 6 of 7

3. Requiring adherence to published tariffs is necessary to assure the statutory 

"public right of freedom of transit by air" by common carrier.

DOT has failed to consider whether the resolution is compatible with 49 U.S.C. § 

40101(c)(2) and § 40103(a)(2), which guarantee and require DOT to consider, in the exercise of 

its regulatory authority, the "public right of freedom of transit by air".

Allowing a so-called "common carrier" to "offer" its services to disfavored customers, or 

to anonymous customers, only at prohibitive prices would defeat the fundamental goals of 

common carrier law and contravene the statutory "public right of freedom of transit by air". 

There is no meaningful distinction between a private carrier that claims "the right to refuse 

service to anyone" and a so-called "common carrier" that claims the right to "offer" anyone, for 

any reason or no reason, an arbitrarily high price for its services.

Approval by DOT of IATA Resolution 787 would effectively eliminate the "public right 

of freedom of transit by air" and violate 49 U.S.C. § 40101(c)(2) and § 40103(a)(2).

4. Approval of IATA Resolution 787 would contravene U.S. international 

obligations.

DOT has failed to consider whether the resolution is consistent with U.S. international 

obligations. Numerous multilateral and bilateral international aviation agreements commit the 

U.S. to ensure that airlines operate as "common carriers" and/or that airlines sell tickets only at 

prices determined from published tariffs in accordance with published fare construction rules.

A transportation provider that makes personalized ticket price "offers" not determined by 

a publicly-available tariff, as contemplated by IATA Resolution 787, would not meet the 

definition of a "common carrier" as that term is used in used in international agreements.

Indeed, one of the major reasons why Congress chose to retain the requirement for 

pricing only in accordance with a tariff in 49 U.S.C. § 41510 when it enacted the Airline 

Deregulation Act of 1978, and subsequently, was and has continued to be that enforcement of its 

requirements is necessary to fulfill U.S. obligations pursuant to those international agreements.

In 1988, DOT proposed to formalize its then-existing de facto policy of nonenforcement 

of the tariff adherence requirement of 49 U.S.C. § 41510.4 That proposed rule was never 

finalized, possibly because DOT realized that it was not within DOT's regulatory authority to 

nullify, refuse to enforce, or grant general impunity for violations of a valid statute. When DOT 

finally official withdrew this proposed rulemaking in 2002, it noted that, "Other nations said that 

the Department should enforce the prohibition ... more rigorously."5 More precisely, other 

4 Note 3, supra.

5 "Withdrawal of Proposed Rulemaking Action; Statement of Enforcement Policy on Rebating", Docket No. OST96-1505, 67 Federal Register 234, 5 December 2002.

Edward Hasbrouck

<http://www.hasbrouck.org>

Objections to Tentative Decision,

Docket No. OST-2013-0048

30 May 2014
Page 7 of 7

nations argued that enforcement of the tariff adherence requirement of 49 U.S.C. § 41510 was 

mandated by international aviation agreements to which the U.S. was, as it still is, a party.

Those objections remain equally valid today. DOT is barred by international agreements 

from approving IATA Resolution 787, which envisions and is intended to authorize a "New 

Distribution Capability" based on non-tariff pricing, for the same reasons that DOT was and is 

barred by those international agreements from approving any other off-tariff pricing. Congress 

could repeal 49 U.S.C. § 41510 only if the U.S. first withdrew from or negotiated and obtained 

approval by each other party for amendments of each such provision in each of these agreements.

DOT's tentative decision is based on an unsupported and erroneous conflation of tariff 

filing and approval requirements with tariff publication and adherence requirements. Requiring 

common carriers to adhere to published tariffs as the sole basis for determining ticket prices 

benefits the travelling public and is explicitly and unambiguously required by multiple Federal 

statutes and international agreements from which DOT has no authority to derogate. 

For the reasons given above and in my previous submissions in this docket, DOT should 

disapprove IATA Resolution 787 and commit itself to full enforcement of 49 U.S.C. § 41510, in 

accordance with 49 U.S.C. § 41510, § 40101(c)(2), § 40103(a)(2), and U.S. obligations pursuant 

to applicable international aviation agreements regarding common carriers, fares, and tariffs.

Respectfully submitted,

 /s/ 

Edward Hasbrouck

1130 Treat Ave.

San Francisco, CA 94110

telephone 415-824-0214

edward@hasbrouck.org

http://www.hasbrouck.org

Edward Hasbrouck

<http://www.hasbrouck.org>

Objections to Tentative Decision,

Docket No. OST-2013-0048

30 May 2014