Federal Register / Vol. 69, No. 200 / Monday, October 18, 2004 / Notices 61429

1This notice does not apply to activities that are 

permitted under 14 CFR parts 296, 297, or 380.

As implemented in SBA’s regulations 

at 13 CFR 121.1204, in order to be 

considered available to participate in 

the Federal market for a class of 

products, a small business manufacturer 

must have submitted a proposal for a 

contract solicitation or received a 

contract from the Federal government 

within the last 24 months. The SBA 

defines ‘‘class of products’’ based on six 

digit coding systems. The first coding 

system is the Office of Management and 

Budget North American Industry 

Classification System (NAICS). The 

second is the Product and Service Code 

established by the Federal Procurement 

Data System. 

The SBA received a request on 

September 7, 2004 to waive the 

Nonmanufacturer Rule for General 

Aviation Turboprop Aircraft With Six 

Or More Passenger Seats. In response, 

SBA is currently processing a request to 

waive the Nonmanufacturer Rule for 

General Aviation Turboprop Aircraft 

With Six Or More Passenger Seats, 

North American Industry Classification 

System (NAICS) 336411. The public is 

invited to comment or provide source 

information to SBA on the proposed 

waiver of the nonmanufacturer rule for 

this NAICS code.

Authority: 15 U.S.C. 637(a)(17).

Emily Murphy, 

Acting Associate Administrator for 

Government Contracting.

[FR Doc. 04–23271 Filed 10–15–04; 8:45 am] 

BILLING CODE 8025–01–P

SMALL BUSINESS ADMINISTRATION

Small Business Size Standards: 

Waiver of the Nonmanufacturer Rule

AGENCY: U.S. Small Business 

Administration.

ACTION: Notice of Waiver of the 

Nonmanufacturer Rule for 

Miscellaneous Electrical Equipment and 

Components Manufacturing. 

SUMMARY: The U.S. Small Business 

Administration (SBA) is granting a 

waiver of the Nonmanufacturer Rule for 

Miscellaneous Electrical Equipment and 

Components Manufacturing. The basis 

for waivers is that no small business 

manufacturers are supplying these 

classes of products to the Federal 

government. The effect of a waiver 

would be to allow otherwise qualified 

regular dealers to supply the products of 

any domestic manufacturer on a Federal 

contract set aside for small businesses or 

awarded through the SBA’s 8(a) 

Business Development Program.

DATES: This waiver is effective 

November 2, 2004.

FOR FURTHER INFORMATI0N CONTACT:

Edith Butler, Program Analyst, by 

telephone at (202) 619–0422; by FAX at 

(202) 481–1788; or by email at 

edith.butler@sba.gov.

SUPPLEMENTARY INFORMATION: Section 

8(a)(17) of the Small Business Act, (Act) 

15 U.S.C. 637(a)(17), requires that 

recipients of Federal contracts set aside 

for small businesses or SBA’s 8(a) 

Business Development Program provide 

the product of a small business 

manufacturer or processor, if the 

recipient is other than the actual 

manufacturer or processor of the 

product. This requirement is commonly 

referred to as the Nonmanufacturer 

Rule. The SBA regulations imposing 

this requirement are found at 13 CFR 

121.406(b). Section 8(a)(17)(b)(iv) of the 

Act authorizes SBA to waive the 

Nonmanufacturer Rule for any ‘‘class of 

products’’ for which there are no small 

business manufacturers or processors 

available to participate in the Federal 

market. 

As implemented in SBA’s regulations 

at 13 CFR 121.1204, in order to be 

considered available to participate in 

the Federal market for a class of 

products, a small business manufacturer 

must have submitted a proposal for a 

contract solicitation or received a 

contract from the Federal government 

within the last 24 months. The SBA 

defines ‘‘class of products’’ based on six 

digit coding systems. The first coding 

system is the Office of Management and 

Budget North American Industry 

Classification System (NAICS). The 

second is the Product and Service Code 

established by the Federal Procurement 

Data System. 

The SBA received a request on June 

29, 2004 to waive the Nonmanufacturer 

Rule for Miscellaneous Electrical 

Equipment and Components 

Manufacturing. In response, on July 28, 

2004, SBA published in the Federal 

Register a notice of intent to waive the 

Nonmanufacturer Rule for 

Miscellaneous Electrical Equipment and 

Components Manufacturing, North 

American Industry Classification 

System (NAICS) 335999. 

SBA explained in the notice that it 

was soliciting comments and sources of 

small business manufacturers of this 

class of products. In response to this 

notice, comments were received from 

interested parties. SBA has determined 

from these sources that there are no 

small business manufacturers of this 

class of products, and is therefore 

granting the waiver of the 

Nonmanufacturer Rule for 

Miscellaneous Electrical Equipment and 

Components Manufacturing, NAICS 

335999.

Authority: 15 U.S.C. 637(a)(17).

Dated: October 8, 2004. 

Emily Murphy, 

Acting Associate Administrator for 

Government Contracting.

[FR Doc. 04–23272 Filed 10–15–04; 8:45 am] 

BILLING CODE 8025–01–P

DEPARTMENT OF TRANSPORTATION

Office of the Secretary 

Notice on the Role of Air Charter 

Brokers in Arranging Air 

Transportation

AGENCY: Office of the Secretary, 

Department of Transportation.

ACTION: Notice on the role of air charter 

brokers in arranging air transportation. 

SUMMARY: The Department is publishing 

the following notice to provide guidance 

to the aviation industry on the 

permissible role of air charter brokers in 

the provision of air transportation.

FOR FURTHER INFORMATION CONTACT:

Dayton Lehman, Jr., Deputy Assistant 

General Counsel, or Jonathan Dols, 

Senior Attorney, Office of Aviation 

Enforcement and Proceedings (C–70), 

400 7th Street, SW., Washington, DC 

20590, (202) 366–9349. 

Notice 

The purpose of this notice is to 

provide guidance regarding the lawful 

role of air charter brokers (i.e., entities, 

including persons, that link prospective 

charter customers with direct air 

carriers) in the provision of air 

transportation.1 This guidance will be 

used by the Office of the Assistant 

General Counsel for Aviation 

Enforcement and Proceedings 

(Enforcement Office) in its compliance 

and enforcement activities associated 

with 49 U.S.C. 41101 and 41301, which 

establish the certificate and permit 

requirements for U.S. and foreign air 

carriers, respectively, and 49 U.S.C 

41712, which prohibits unfair and 

deceptive practices.

In order to hold out or otherwise 

engage in air transportation, either 

directly or indirectly, as a common 

carrier, a person is required to hold 

economic authority from the 

Department of Transportation pursuant 

to 49 U.S.C. 41101 or 41301, or an 

exemption from those provisions, such 

as that provided to air taxis under 14 

61430 Federal Register / Vol. 69, No. 200 / Monday, October 18, 2004 / Notices 

2Under Department enforcement case precedent, 

violations of 49 U.S.C. 41101 and 41301 and the 

Department’s licensing requirements constitute 

unfair and deceptive practices and unfair methods 

of competition in violation of 49 U.S.C. 41712. See, 

e.g., DB Air, Ltd., Violations of 49 U.S.C. 41101 and 

41712, Order 2004–2–21 (Feb. 23, 2004); Trans 

National Travel, Inc., Violations of the Public 

Charter Rules, 49 U.S.C. 41101 and 49 U.S.C. 41712, 

Order 94–8–17 (Aug. 12, 1994). Pursuant to 49 

U.S.C. 46301, violations of these statutory 

provisions subject violators to the assessment of 

civil penalties of up to $25,000 for each violation 

and $25,000 for each day each such violation 

continues. The maximum amount is $2,500 per 

violation per day for individuals or an entity that 

is a ‘‘small business’’ as defined in 15 U.S.C. 632.

3A broker would not be considered to be 

engaging in air transportation and thus would not 

need to be acting as an agent where, for example, 

it did not hold out air transportation and merely 

arranged for the charterer to sign a contract for air 

transportation directly with the airline.

4See, e.g., Frontier Airlines, Inc., Violations of 49 

U.S.C. 41712 and 14 CFR part 212, Order 2004–8–

19 (Aug. 18, 2004); Miami Air International, Inc., 

Violations of 49 U.S.C. 41712, Order 2004–4–15 

(Apr. 20, 2004); Ryan International Airlines, Inc. 

Violations of 49. U.S.C. 41712 and 14 CFR part 212, 

Order 2003–12–15 (Dec. 15, 2003). We note that, 

pursuant to 14 CFR 212.3(d), a direct air carrier 

‘‘must make a reasonable effort to verify that any 

charterer with which it contracts, and any charter 

it conducts, meets the applicable requirements of 

this chapter.’’

5A ‘‘large aircraft’’ means any aircraft designed to 

have a maximum passenger capacity of more the 60 

seats or a maximum payload capacity of more than 

18,000 pounds. 14 CFR 298.2. The Department and 

the Civil Aeronautics Board, which held 

jurisdiction over aviation licensing matters prior to 

the Department, have consistently used an aircraft’s 

original design capacity as the test for determining 

whether an aircraft met this definition, rather than 

the number of seats or the payload capacity that the 

aircraft is configured to hold. Order 2003–7–7, 

issued July 7, 2003; Order 2002–9–4, issued 

September 5, 2002; See also Part 298 Weight 

Limitation Investigation, 60 CAB 142, 143 (1972); 

44 FR 30081 (May 24, 1979).

6Similar protections exist for public charter 

flights, where the authorized indirect air carrier is 

required to have a bond or other security 

arrangement and to escrow payments from charter 

participants until payment is made to the direct air 

carrier’s own escrow account. 14 CFR 380.34.

7 14 CFR 399.80(a), (b) and (j), respectively.

8Arrangements in which the air charter broker 

markets its own aircraft that it has paid a direct air 

carrier to place on the air carrier’s operations 

specifications have raised issues when the broker 

seeks to use its livery on the aircraft. Bearing in 

CFR part 298, to certain indirect air 

carriers functioning as public charter 

operators pursuant to 14 CFR part 380, 

or to air freight forwarders pursuant to 

14 CFR parts 296 and 297. (This 

economic authority is in addition to any 

safety authority necessary under 

applicable Federal Aviation 

Administration requirements.) 

Therefore, air charter brokers without 

appropriate economic authority may not 

hold out air transportation in their own 

right or enter as principals into 

contracts with customers to provide air 

transportation.2 Rather, in entering into 

contracts to provide air transportation, 

these air charter brokers must act either 

as an agent of the direct air carrier or of 

the customer.3

The Enforcement Office has become 

aware that there are air charter brokers 

not holding economic authority from 

the Department who solicit and contract 

directly with a charter customer for air 

transportation and then solicit and 

separately contract directly with a direct 

air carrier to operate the air service 

promised to the charter customer under 

the charter broker’s contract with that 

customer. With respect to payment for 

the proffered air transportation, two 

separate transactions commonly occur: 

(1) The air charter broker collects all of 

the monies paid by the charter customer 

pursuant to the broker’s contract with 

the customer, and (2) the air charter 

broker then turns over a portion of these 

monies to the direct air carrier pursuant 

to the broker’s separate contract with 

the carrier. In such instances, the air 

charter broker is not acting as an agent 

for the operating carrier or for the 

charter customer. Rather, the air charter 

broker is acting as a principal in both 

transactions, and, with respect to its 

relationship with the customer, is 

engaged in air transportation as an 

indirect air carrier without economic 

authority in contravention of the 

statutory and Department licensing 

requirements described above. 

In addition, the Enforcement Office 

has recently learned that certain air 

charter brokers that lack economic 

authority have arrangements with 

licensed air carriers, in which the 

brokers hold out in their own right and, 

as principals, sell charter flights on 

aircraft that they own or lease and have 

had placed on the operating certificates 

of the licensed carriers. In such 

situations, the Department has found 

that, to the extent that a direct air carrier 

knows or has reason to know of the 

broker’s unlawful conduct, the direct air 

carrier is also engaged in an unfair and 

deceptive practice or unfair method of 

competition in violation of 49 U.S.C. 

41712.4 However, we recognize that air 

charter brokers can provide important 

public benefits in connection with air 

transportation, particularly when, akin 

to public charter operators, they assume 

the economic risk of such service and 

are also involved in purchasing and 

funding the operation of aircraft by 

certificated carriers. We note that this 

notice does not preclude brokers from 

seeking from the Department exemption 

authority that could permit them to offer 

services directly to the public in their 

own right, subject to their 

implementation of necessary consumer 

safeguards.

The Enforcement Office is particularly 

concerned about the unlawful practices 

described above pertaining to brokers 

that lack economic authority because 

they bypass the protections put in place 

by the Department to afford the public 

a measure of financial protection where 

charter flights are involved. In this 

regard, with respect to traditional 

single-entity charters using large 

aircraft,5 section 212.8 of the 

Department’s rules (14 CFR 212.8) 

requires a direct air carrier that engages 

in charter air transportation to maintain 

a bond, in an unlimited amount, to 

guarantee performance of all charter 

flights for which it has contracted, or to 

maintain an escrow account into which 

it must deposit immediately all 

payments received for charter flights 

until after the flight has been operated.6

Where an air charter broker is the 

principal in the transaction with a 

charter customer and receives payment 

directly, its actions are not only 

unlawful, but also create the type of 

unacceptable risk to the public’s funds 

that the economic licensing 

requirements of 49 U.S.C. 41101 and the 

Department’s regulations, when 

followed, are designed to preclude.

Moreover, such arrangements by air 

charter brokers that do not hold 

economic authority from the 

Department also violate specific 

Department regulations designed to 

protect the public in other respects from 

unfair and deceptive practices and 

unfair methods of competition in 

violation of 49 U.S.C. 41712. In this 

regard, air charter brokers are ticket 

agents pursuant to 49 U.S.C. 

40102(a)(40), which defines a ticket 

agent as a person, other than a carrier 

or its employee, who, ‘‘as a principal or 

agent sells, offers for sale, negotiates for, 

or holds itself out as selling, providing, 

or arranging for air transportation.’’

Various provisions of 14 CFR part 399 

state that the Department will regard it 

to be an unfair and deceptive practice or 

unfair method of competition for a 

ticket agent, among other things, to 

create the false impression that it is an 

air carrier, to advertise in certain ways 

that confuse the traveling public with 

respect to a ticket agent’s status, and to 

enter into a contract for air 

transportation with a customer without 

first obtaining a binding commitment 

with an air carrier to perform the 

promised air transportation.7

Accordingly, any advertising by an air 

charter broker without economic 

authority should clearly convey the fact 

that the broker is not a direct air carrier 

and that the air service advertised will 

be provided by a properly licensed 

carrier.8

Federal Register / Vol. 69, No. 200 / Monday, October 18, 2004 / Notices 61431

mind the prohibition in 14 CFR 399.80(b) on a 

ticket agent displaying its name on aircraft in a 

manner that may mislead or confuse the traveling 

public as to the agency status of the ticket agent, 

the Enforcement Office has reviewed such matters 

on a case-by-case basis and has generally declined 

to take enforcement action where the name of the 

carrier is also displayed prominently on the aircraft 

and consumers are not otherwise misled into 

believing that the ticket agent is an airline.

9See, e.g., Premier Aircraft Management, Inc., 

Violations of 49 U.S.C. 41101 and 41712 and 14 

CFR Part 375, Order 2004–5–11 (May 13, 2004); 

SportsJet, LLC, Violations of 49 U.S.C. 41101 and 

41712, Order 2003–12–23 (Dec. 29, 2003). In 

addition, 14 CFR 125.11(b) provides that ‘‘[n]o 

certificate holder may conduct any operation which 

results directly or indirectly from any person’s 

holding out to the public to furnish transportation.’’

10We understand that some charter managers 

may manage air services for up to 200 separate 

customers.

11A Part 125 carrier may only contract to 

transport goods through a charter manager if the 

charter manager is acting legally as the agent of the 

customer. A Part 125 carrier may not enter into a 

contract with a charter manager in which the Part 

125 carrier’s obligation is to the charter manager 

(not the customer) to perform the transportation and 

the charter manager has a separate agreement to 

provide the customer air transportation. This is the 

case because, if the charter manager is not acting 

as the lawful agent of the customer in its contract 

with an air carrier, it would be acting either as a 

direct air carrier, in effect sub-servicing the 

operation (some charter managers do, in fact, hold 

authority as direct air carriers), or as an indirect air 

carrier, i.e., freight forwarder, pursuant to 14 CFR 

Part 296. A Part 125 carrier can never lawfully carry 

the traffic of an air carrier (Part 135 or 121) or a 

freight forwarder since such transportation clearly 

would be in common carriage. Indeed, we would 

view seriously the actions of any charter manager 

acting as a direct or indirect air carrier that 

contracted in such a manner with a Part 125 carrier. 

Such actions could, at a minimum, constitute an 

unfair and deceptive practice and unfair method of 

competition in violation of 49 U.S.C. 41712.

12Presuming the Part 125 carrier signs a contract 

with a charter manager/agent representing three 

customers, the carrier should not participate in any 

other bid quote solicitation system operated by 

another charter manager/agent unless doing so 

involved only bidding on and operating trips for the 

same three customers. To do so would likely trigger 

an investigation by the Enforcement Office to 

determine whether the carrier is engaging in 

common carriage.

Although the proscriptions on 

deceptive and anticompetitive conduct 

found in Part 399 are written in general 

terms, at a minimum, air charter brokers 

without economic authority (or other 

ticket agents for that matter) should take 

care not to hold out as ‘‘airlines,’’ ‘‘air 

carriers,’’ ‘‘operators,’’ ‘‘airways,’’ or in 

any other way likely to create the false 

impression that they are direct air 

carriers in their own right. Toward this 

end, such entities should not refer to an 

aircraft used in the air services that they 

are marketing in a manner that conveys 

the false impression that they are an air 

carrier or the operator of the air 

transportation (e.g., ‘‘our fleet,’’ or ‘‘our 

charters,’’ ‘‘our charter service,’’ ‘‘our jet 

operators,’’ or ‘‘we operate a fleet of’’). 

In the course of several recent 

enforcement investigations, the 

Enforcement Office has also become 

aware of the use of air charter brokers 

by operators of commercial service with 

large aircraft operated pursuant to 14 

CFR part 125. Such operators may not 

hold out or provide air transportation to 

the public for compensation or hire, 

directly or indirectly through third 

parties.9 Therefore, air charter brokers 

who offer transportation services to the 

public, regardless of whether they hold 

economic authority in their own right, 

may not act as an agent of a Part 125 

operator with respect to the provision of 

air transportation. Such actions may be 

unfair and deceptive practices and 

unfair methods of competition on the 

part of the air charter broker, in 

violation of 49 U.S.C. 41712, and would 

subject the Part 125 operator to 

enforcement action for unlawfully 

engaging in common carriage.

Another area of interest regarding the 

relationship between Part 125 carriers 

and air charter brokers that has recently 

come to our attention involves the use 

of so-called Internet ‘‘bid bonds’’ The 

Enforcement Office understands that 

some air charter brokers, who often style 

themselves as ‘‘charter managers’’ or 

‘‘logistics companies,’’ manage the 

transportation of cargo for the major 

auto manufacturers, as well as scores of 

other customers,10 who may be the 

actual shippers of goods or air freight 

forwarders. These charter managers 

conduct business through an Internet 

bid-quote solicitation system that allows 

subscribing air carriers and Part 125 

operators to see and bid on the 

transportation needed. With respect to 

such computerized bidding processes, a 

Part 125 carrier could contract with 

customers through the charter manager, 

with the charter manager being an agent 

for the customers to be served, so long 

as either (1) the charter manager 

represents only a few customers or (2) 

the contracts signed by the Part 125 

carrier with the charter manager as 

agent are specific as to only a small 

number of delineated customers with 

whom the Part 125 carrier is dedicated 

to contracting.11 The Enforcement 

Office would likely investigate for 

unlawful common carriage any situation 

where the number of different 

customers whose trips the Part 125 

carrier bid on, or with whom the Part 

125 carrier contracted through the 

charter manager, exceeded three.12

If there are any questions regarding 

this notice, please contact Dayton 

Lehman, Deputy Assistant General 

Counsel, or Jonathan Dols, Senior 

Attorney, Office of Aviation 

Enforcement and Proceedings (C–70), 

400 7th Street, SW., Washington, DC 

20590, (202) 366–9349. 

An electronic version of this 

document is available on the World 

Wide Web at http://dms.dot.gov

Dated: October 8, 2004. 

Samuel Podberesky, 

Assistant General Counsel for Aviation 

Enforcement and Proceedings.

[FR Doc. 04–23268 Filed 10–15–04; 8:45 am] 

BILLING CODE 4910–62–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration 

[Summary Notice No. PE–2004–78] 

Petitions for Exemption; Dispositions 

of Petitions Issued

AGENCY: Federal Aviation 

Administration (FAA), DOT.

ACTION: Notice of dispositions of prior 

petitions. 

SUMMARY: Pursuant to FAA’s rulemaking 

provisions governing the application, 

processing, and disposition of petitions 

for exemption part 11 of Title 14, Code 

of Federal Regulations (14 CFR), this 

notice contains a summary of certain 

dispositions of certain petitions 

previously received. The purpose of this 

notice is to improve the public’s 

awareness of, and participation in, this 

aspect of FAA’s regulatory activities.

FOR FURTHER INFORMATION CONTACT: Tim 

Adams (202) 267–8033, or Sandy 

Buchanan-Sumter (202) 267–7271, 

Office of Rulemaking (ARM–1), Federal 

Aviation Administration, 800 

Independence Avenue, SW., 

Washington, DC 20591. 

This notice is published pursuant to 

14 CFR 11.85 and 11.91.

Issued in Washington, DC, on October 12, 

2004. 

Anthony F. Fazio, 

Director, Office of Rulemaking.

Dispositions of Petitions 

Docket No.: FAA–2002–13180. 

Petitioner: Ryan International 

Airlines, Inc. 

Section of 14 CFR Affected: 14 CFR 

91.203(a) and (b). 

Description of Relief Sought/

Disposition: To permit Ryan 

International Airlines, Inc., to operate 

temporarily its U.S.-registered aircraft 

following the incidental loss or 

mutilation of that aircraft’s 

airworthiness certificate or registration 

certificate, or both. 

Grant, 10/1/2004, Exemption No. 

6571D.

Docket No.: FAA–2003–14252.