Preliminary Regulatory Analysis

Consumer Rulemaking NPRM:

Enhancing Airline Passenger Protections II 

Contract No.:

GS-10F-0269K

Order No.:

DTOS59-09-F-10089

Project No.:

1029-000

Submitted To:

Office of the Assistant General Counsel

Aviation Enforcement and Proceedings

U.S. Department of Transportation

1200 New Jersey Avenue, SE

West Wing

Washington, DC 20590-0001

Submitted By:

Econometrica, Inc.

4416 East-West Highway

Suite 215

Bethesda, Maryland 20814

&

HDR Decision Economics

Silver Spring, Maryland

May 24, 2010
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Table of Contents

Executive Summary...................................................................................................................... 1

Introduction................................................................................................................................... 4

1. An Overview of the Air Transportation Sector and Current Regulatory Structure ........ 5

1.1. U.S. and Foreign Air Carriers.............................................................................................. 5

1.2. Airports................................................................................................................................ 7

1.3. Flights and Passengers......................................................................................................... 8

1.4. Regulatory Authorities......................................................................................................... 9

1.5. Travel Agencies and Tour Operators................................................................................. 10

2. Current Regulatory Requirements, Industry Practices, and Need for Additional 

Requirements............................................................................................................................... 10

2.1. Additional Requirements for Tarmac Contingency Plans................................................. 11

2.2. Tarmac Delay Reporting.................................................................................................... 12

2.3. Minimum Standards for Customer Service Plans (CSPs).................................................. 13

2.4. Incorporation of Tarmac Contingency Plans and Customer Service Plans into Contracts of 

Carriage............................................................................................................................. 13

2.5. Requiring Foreign Carriers to Respond to Customer Complaints..................................... 14

2.6. Changes in Denied Boarding Compensation (DBC) Policy.............................................. 15

2.7. Required Disclosure of Full Fares in Advertising and Prohibition on Opt-Out Provisions 

in Ticket Sales................................................................................................................... 16

2.8. Expanded Disclosure of Baggage Fees and Other Optional Fees...................................... 17

2.9. Prohibition on Post-Purchase Fare Increases..................................................................... 18

2.10. Prompt Passenger Notification of Flight Status Changes................................................ 18

2.11. Limitations on Venue Provisions in Contracts of Carriage ............................................. 19

3. Proposed Regulatory Requirements and Alternatives for Addressing Identified Needs 19

3.1. Additional Requirements for Tarmac Contingency Plans................................................. 20

3.2. Expanded Reporting of Tarmac Delays............................................................................. 21

3.3. Minimum Standards for Customer Service Plans (CSPs).................................................. 22

3.4. Incorporation of Tarmac Contingency Plans and Customer Service Plans into Contracts of 

Carriage............................................................................................................................. 22

3.5. Requiring Foreign Carriers to Respond to Customer Complaints..................................... 22

3.6. Changes in Denied Boarding Compensation (DBC) Requirements.................................. 23

3.7. Required Disclosure of Full Fares in Advertising and Prohibition on Opt-Out Provisions 

in Ticket Sales................................................................................................................... 24

3.8. Expanded Disclosure of Baggage Fees and Other Optional Fees...................................... 25

3.9. Prohibition on Post-Purchase Fare Increases..................................................................... 25

3.10. Passenger Notification of Flight Status Changes............................................................. 26

3.11. Limitations on Venue Provisions in Contracts of Carriage ............................................. 26
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Table of Contents

(continued)

4. Framework for Analysis of Benefits and Costs................................................................... 26

4.1. Type of Air Travel Issues Being Addressed ...................................................................... 26

4.2. Availability of Alternatives to Carrier Services or Information ........................................ 28

4.3. General Assumptions Used in Estimating Benefits and Costs .......................................... 29

4.4. Alternatives Considered..................................................................................................... 30

5. Estimated Benefits of Proposed Requirements................................................................... 30

5.1. Additional Requirements for Tarmac Delay Contingency Plans....................................... 30

5.2. Expanded Reporting of Tarmac Delays............................................................................. 35

5.3. Minimum Standards for Customer Service Plans.............................................................. 35

5.4. Incorporation of Tarmac Contingency Plans and Customer Service Plans into Contracts of 

Carriage............................................................................................................................. 37

5.5. Requiring Foreign Carriers to Respond to Customer Complaints..................................... 37

5.6. Changes in Denied Boarding Compensation (DBC) Policy.............................................. 38

5.7. Required Disclosure of Full Fares in Advertising and Prohibition on Opt-Out Provisions 

in Ticket Sales................................................................................................................... 39

5.8. Expanded Disclosure of Baggage Fees and Other Optional Fees...................................... 43

5.9. Prohibition on Post-Purchase Fare Increases..................................................................... 43

5.10. Prompt Passenger Notification of Flight Status Changes................................................ 44

5.11. Limitations on Venue Provisions in Contracts of Carriage ............................................. 45

6. Estimated Costs of Proposed Requirements........................................................................ 45

6.1. Additional Requirements for Tarmac Delay Contingency Plans....................................... 45

6.2. Expanded Reporting of Tarmac Delays............................................................................. 47

6.3. Minimum Standards for Customer Service Plans.............................................................. 49

6.4. Incorporation of Tarmac Contingency Plans and Customer Service Plans into Contracts of 

Carriage............................................................................................................................. 50

6.5. Requiring Foreign Carriers to Respond to Customer Complaints..................................... 50

6.6. Changes in Denied Boarding Compensation (DBC) Policy.............................................. 51

6.7. Required Disclosure of Full Fares in Advertising and Prohibition on Opt-Out Provisions 

in Ticket Sales................................................................................................................... 53

6.8. Expanded Disclosure of Baggage Fees and Other Optional Fees...................................... 56

6.9. Prohibition on Post-Purchase Fare Increases..................................................................... 57

6.10. Prompt Passenger Notification of Flight Status Changes................................................ 58

6.11. Limitations on Venue Provisions in Contracts of Carriage ............................................. 58
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Table of Contents

(continued)

7. Results and Discussion of the Benefit and Cost Analysis................................................... 58

7.1. Overall Net Benefits of the Proposed Requirements......................................................... 58

7.2. Net Benefits of Specific Proposed Requirements.............................................................. 60

7.3. Annualized Benefits and Costs.......................................................................................... 63

7.4. Benefits and Costs for Alternative Requirement Scenarios............................................... 63

7.5. Conclusion ......................................................................................................................... 64

Appendix: Estimation of Benefits........................................................................................... A-1
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List of Tables

Table ES1 - Present Value of Net Benefits for Proposed Requirements, 2011-2020..................... 2

Table ES2 - Annualized Benefits and Costs, 2011 through 2020, $ millions 2011 ....................... 3

Table 1 - U.S. Carrier Scheduled Passenger Service, 2008 ............................................................ 6

Table 2 - Number of U.S. Carriers by Size Class, 2008 ................................................................. 7

Table 3 - Passenger Enplanements by Size of Airport, 2008 ......................................................... 8

Table 4 - Scheduled Passenger Service: Departures and Passengers ............................................. 9

Table 5 - Travel Agencies and Tour Operators, 2006 .................................................................. 10

Table 6 - Number and Percent of Flights with Tarmac Times of 3 Hours or More ..................... 12

Table 7 - Passenger Service Complaints Received by the Department, 2008 .............................. 14

Table 8 - Passengers Denied Boarding on Reporting Carriers, 2008 ........................................... 15

Table 9 - Projected Annual Numbers of Lengthy Tarmac Delays for Foreign Carriers............... 21

Table 10 - Projected 3-Hour Tarmac Delays, 2009 ...................................................................... 22

Table 11 - Projected Number of Consumer Complaints (Foreign Carriers)................................. 23

Table 12 - Illustration of Benefits Estimation for First Year, Requirement 1 .............................. 33

Table 13 - Illustration of Benefits Estimation for First Year, Requirement 3 .............................. 36

Table 14 - Illustration of Benefits Estimation for First Year, Requirement 5 .............................. 37

Table 15 - Illustration of Benefits Estimation for First Year, Requirement 7 .............................. 41

Table 16 - Illustration of Benefits Estimation for First Year, Requirement 9 .............................. 44

Table 17 - Unit Costs for Requirement 1...................................................................................... 46

Table 18 - Estimated Compliance Costs for Requirement 1......................................................... 47

Table 19 - Unit Costs for Requirement 2...................................................................................... 48

Table 20 - Estimated Compliance Costs for Requirement 2......................................................... 49

Table 21 - Unit Costs for Requirement 3...................................................................................... 50

Table 22 - Estimated Compliance Costs for Requirement 3......................................................... 50

Table 23 - Unit Costs for Requirement 5...................................................................................... 51

Table 24 - Estimated Compliance Costs for Requirement 5......................................................... 51

Table 25 - Unit Costs for Requirement 6...................................................................................... 52

Table 26 - Estimated Compliance Costs for Requirement 6......................................................... 53

Table 27 - Unit Costs for Requirement 7...................................................................................... 54

Table 28 - Estimated Compliance Costs for Requirement 7......................................................... 55

Table 29 - Unit Costs for Requirement 8...................................................................................... 56

Table 30 - Estimated Compliance Costs for Requirement 8......................................................... 57

Table 31 - Present Value of Net Benefits for Proposed Requirements, 2011-2020 ..................... 59

Table 32 - Present Value of Net Benefits for Proposed Requirements, 2011-2030 ..................... 59

Table 33 - Comparison of Requirement-Specific Benefits and Costs, 2011-2020....................... 60

Table 34 - Annualized Benefits and Costs, 2011 through 2020, $ millions 2011 ........................ 63

Table 35 - Benefits and Costs for Base Case and Four Alternative Scenarios............................. 63
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Executive Summary

The Department of Transportation (DOT) is proposing a rule to provide airline passengers with 

additional protections in the areas of airline service provision and consumer information. Some 

of the provisions in this proposed rule build on regulatory requirements recently adopted as part 

of the Final Rule on Enhanced Airline Passenger Protections (EAPP1), which was published in 

the Federal Register on December 30, 2009. Econometrica and its subcontractor HDR Decision 

Economics were tasked with developing a regulatory evaluation for each of the requirements that 

are included in the Notice of Proposed Rulemaking (NPRM). This regulatory evaluation 

estimates the economic impact, in terms of benefits and costs, to passengers, U.S. and foreign air 

carriers and other entities regulated under this proceeding, as required by Executive Order (EO) 

12866.1

In this preliminary analysis, we provide estimates of the benefits and costs for specific proposals 

in the NPRM that would add regulatory requirements in 11 areas, including extension of the 

EAPP1 requirements for tarmac contingency plans, customer services plans, and customer 

complaint responses to cover foreign carriers; expanded reporting of tarmac delays; changes in 

denied boarding compensation (DBC) requirements; and elimination of the break-out of 

government taxes and fees from advertised fares for air transportation. Benefits and costs are 

also estimated for alternatives to some of the proposed requirements.

For each area addressed in the NPRM, we present the rationale for adopting additional 

requirements. We also provide information on current regulatory requirements, Department 

enforcement policy, and industry practices; specify the nature of the benefits and costs involved 

in the proposals; and indicate the sources of data used to quantify (where possible) these benefits

and costs. Benefit and cost estimates are presented for individual requirements, and aggregate 

benefits and costs of the proposed requirements are summarized as the present value of net 

benefits over 10- and 20-year time periods.

Most of the proposed requirements would cover carriers offering passenger service to domestic 

and international destinations. The U.S. air carriers that account for nearly all domestic 

passenger trips and about 60 percent of international passenger trips from or to U.S. airports are 

already required to comply with several of the proposed requirements. There are 88 foreign 

carriers that would be required to comply with the requirements for tarmac contingency plans, 

customer service plans (CSPs), and customer complaint responses adopted for U.S. carriers in 

the EAPP1 Final Rule. In addition to U.S. and foreign carriers, the proposed requirement that

full fares be displayed in travel advertising and solicitations would also cover as many as 15,000 

firms in the travel agent and tour operator sectors.

All quantified benefits and costs estimated for individual requirements were translated into 

current values for each year in the 10- and 20-year periods beginning with calendar year 2011.2

 

1 An analysis of the impact of the proposed requirements on small carriers, travel agents, and tour operators is 

provided in the accompanying Regulatory Flexibility Analysis.

2

In this analysis, the affected parties are assumed to be compliant with the proposed regulations by January 1, 2011, 

with the exception of the full-fare advertising provision of proposed Requirement 9, which is assumed to be take 

effect 30 days later.
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In accordance with OMB guidelines, a discount rate of 7 percent is used in the primary analysis 

and is supplemented with overall estimates using a 3 percent discount rate as well.

Table ES1 - Present Value of Net Benefits for Proposed Requirements, 2011-2020

PV (millions)

Total Quantified Benefits 

10 Years, 7% discounting $87.59 

10 Years, 3% discounting $104.18 

Total Quantified Costs 

10 Years, 7% discounting $25.98 

10 Years, 3% discounting $28.45 

Net Benefits 

10 Years, 7% discounting $61.61 

10 Years, 3% discounting $75.73 

*Note: Totals may not sum due to rounding.

The expected present value (PV) of passenger benefits from the proposed requirements included 

in the NPRM over a 10-year period using a 7 percent discount rate is estimated at $87.59

million. The expected present value of costs incurred by carriers and other sellers of air 

transportation to comply with the proposed requirements is $25.98 million over 10 years, 

discounted at 7 percent. The PV of net benefits for a 10-year period at a 7 percent discount rate is 

thus $61.61 million.

A comparison of the estimated benefits and costs for each of the 11 proposed requirements is 

provided in Table 33 in Section 7.2, along with information on additional benefits for which 

quantitative estimates could not be developed. 

Substantial portions of the estimated benefits, costs, and net benefits from the proposed rule are 

attributable to the full-fare advertising provision of Requirement 7. The expected benefits 

estimated for this single provision total $73.50 million over the 10-year period from 2011 

through 2020 using a discount rate of 7 percent. Benefits estimated for the full-fare advertising 

provision represent 84 percent of the total benefits estimated for all 11 proposed requirements 

during the period from 2011 through 2020.

The expected costs of complying with the full-fare advertising provision of Requirement 7 are 

estimated at $6.86 million over the 10-year period from 2011 through 2020 using a discount rate 

of 7 percent. Costs estimated for the full-fare advertising provision in Requirement 7 represent 

26 percent of the total costs estimated for all 11 proposed requirements during the period from 

2011 through 2020.

None of the present values for estimated benefits or for estimated costs associated with any of 

the other 10 requirements from 2011 through 2020 (discounted at 7 percent) are exceed $10 

million.

This preliminary regulatory evaluation also includes a presentation of the annual benefits and 

expenditures associated with this proposed rule. Table ES2 provides our best estimate of the 
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annualized dollar amount of these benefits and costs expressed in 2011 dollars at 7 percent and 

3 percent discount rates. We estimate that the benefits will be $25.59 million annualized at a 7

percent discount rate, or $25.01 million annualized at a 3 percent discount rate. Costs of this

proposed rule are estimated to be approximately $5.97 million annualized at a 7 percent

discount rate, or $5.26 million annualized at a 3 percent discount rate, over a 10-year period of 

analysis.3

Table ES2 - Annualized Benefits and Costs, 2011 through 2020, $ millions 2011

Estimates Units

Primary 

Estimate

Low 

Estimate

High 

Estimate

Year 

Dollar

Discount 

Rate

Period 

Covered

Annualized Monetized 

Benefits $25.59 $11.27 $53.41 2011 7%

2011-

2020

$25.01 $10.99 $52.24 2011 3%

2011-

2020

Annualized Monetized 

Costs $5.97 $4.64 $7.52 2011 7%

2011-

2020

$5.26 $4.16 $6.54 2011 3%

2011-

2020

This preliminary regulatory analysis indicates that adoption of the proposed requirements would 

result in projected benefits to the public that outweigh the estimated costs of the proposed rule.

 

3 This statement is presented in essentially the same format as the accounting statement that OMB Circular A–4 

requires for final rules.
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Introduction

The Department of Transportation (DOT) is proposing a rule to provide airline passengers with 

additional protections in the areas of airline service provision and consumer information. Some 

of the provisions in this proposed rule build on regulatory requirements recently adopted as part 

of the Final Rule on Enhanced Airline Passenger Protections (EAPP1).4

Econometrica and its subcontractor HDR Decision Economics were tasked with developing a 

regulatory evaluation for each of the requirements that are included in the Notice of Proposed 

Rulemaking (NPRM). This regulatory evaluation estimates the economic impact, in terms of 

benefits and costs, to passengers, U.S. and foreign air carriers and other entities regulated under 

this proceeding, as required by Executive Order (EO) 12866.

The regulatory impact analysis (RIA) is conducted to determine the economic impact, if any, of 

the proposed rule and to assess whether, on balance, the rule is in the public interest. This

analysis provides a baseline description of passenger protections, identifies the need for the 

proposed rule, and defines the analytic scope and parameters. It discusses the proposed rule‘s 

anticipated effects and presents a summary of the expected benefits and costs.

In this preliminary analysis, we provide estimates of the benefits and costs for specific proposals 

in the NPRM that would add regulatory requirements in the following areas:

Req. # Requirement Description

1 Expansion of tarmac delay contingency plan requirements and extension of 

EAPP1 Final Rule requirements to cover foreign carriers

2 Expanded tarmac delay reporting and application to foreign carriers

3 Establishment of minimum standards for customer service plans (CSPs) and 

extension of EAPP1 Final Rule requirements to cover foreign carriers

4 Incorporation of tarmac delay contingency plans and CSPs into carrier contracts 

of carriage

5 Extension of EAPP1 Final Rule requirements for carriers to respond to consumer 

complaints to cover foreign carriers

6 Changes in denied boarding compensation (DBC) policy

7 Full-fare advertising and prohibition on opt-out provisions

8 Expanded requirements for disclosure of baggage and other optional fees

9 Prohibition on post-purchase price increases

10 Prompt passenger notification of flight status changes

11 Limitations on venue provisions in contracts of carriage.

This document provides a preliminary economic evaluation of the proposed requirements in each 

of these areas. It should be noted that the Department has also presented and discussed several 

alternatives and possible additional requirements in the NPRM which have not been incorporated 

into the proposed regulatory text. 

 

4

―Final Rule on Enhancing Airline Passenger Protections,‖ DOT-OST-007-0022, December 30, 2009.
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For each area addressed in the NPRM, we present the rationale for adopting additional 

requirements and in some cases, possible alternatives for achieving these objectives. We provide 

information on current regulatory requirements, Department enforcement policy, and industry 

practices; specify the nature of the benefits and costs involved in the proposals; and indicate the 

sources of data used to quantify these costs and benefits, where possible. Benefit and cost 

estimates are presented for individual requirements, and the aggregate benefits and costs of the 

proposed requirements are summarized as the present value of net benefits over 10- and 20-year 

time periods. The accompanying Regulatory Flexibility Analysis assesses the extent to which the 

costs associated with these requirements could impact small carriers, travel agents, and tour 

operators. 

The scope of this analysis is broad, yet it involves estimating very detailed changes that can 

occur in a wide variety of situations. It was necessary to make many estimates and assumptions 

in cases where specific data were not available or to make the estimation exercise manageable. 

The Department solicits any comments to improve the analysis to the greatest extent possible. 

Comments may be submitted to the regulatory docket using any of the methods listed under 

―Addresses‖ in the preamble to the Proposed Rule. All input received during the public comment 

period will be considered.

1. An Overview of the Air Transportation Sector and Current 

Regulatory Structure

This section provides an overview of important features of the passenger air travel sector: U.S. 

and foreign carriers, airports, flights and passengers, regulatory authorities, and travel agencies 

and tour operators.

1.1. U.S. and Foreign Air Carriers

More than 200 domestic and foreign air carriers provide some combination of scheduled and 

non-scheduled passenger and all-cargo air service to U.S. and international destinations. All 

U.S. air carriers operating any aircraft of 60 seats or more must have a certificate under 49 USC 

41102 (or an exemption issued by DOT from that section) to provide scheduled passenger 

service. Some carriers operating fleets consisting only of smaller aircraft may also be 

―certificated carriers.‖ A relatively limited number of carriers operating small aircraft are 

authorized as ―commuter air carriers‖ under the definition provided in 14 CFR 298.3(b). 

Foreign air carriers must hold permits issued under 49 USC 41302 (or an exemption issued by 

DOT from that section) to operate flights that arrive or depart at U.S. airports.

Several revenue- and aircraft size-based distinctions among categories of U.S. carriers are 

relevant for regulatory purposes. The most important of these are discussed in more detail below. 

In contrast, all foreign carriers operating flights to and from the United States are currently 
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subject to the same regulatory requirements and nearly all would be subject to the additional 

requirements being proposed by the Department in this proceeding.5

Reporting Carriers

The applicability of some current regulatory requirements varies not only between domestic and 

foreign carriers, but also between different categories of domestic carriers, based on the sizes of 

the aircraft operated or the carrier‘s share of total industry revenues from scheduled air passenger 

service on domestic routes. ―Reporting carriers‖—those that account for at least 1 percent of 

domestic scheduled passenger service revenues—must report information to the Bureau of 

Transportation Statistics monthly on lengthy tarmac delays, on-time performance (OTP), 

payment of denied boarding compensation (DBC), and other aspects of carrier performance. 

Reporting carriers include seven mainline carriers (Alaska, American, Continental, 

Delta/Northwest, Hawaiian, United, and US Airways), four low-cost model major airlines 

(AirTran, Frontier, JetBlue, and Southwest), and seven regional carriers (American Eagle, 

Atlantic Southeast, Comair, ExpressJet, Mesa, Pinnacle, and SkyWest).

6

Table 1 - U.S. Carrier Scheduled Passenger Service, 2008

Number of 

Carriers Departures Passengers

Passengers/ 

Departure

Reporting Carriers 18 7,559,996 667,562,183 88

Other U.S Carriers 99 2,640,027 88,265,323 33

Total 117 10,200,023 755,827,506 74

Reporting % of Total 15.4% 74.1% 88.3%

Note: Delta and Northwest are shown as a single reporting carrier, although they did not 

consolidate reporting under the Delta name until 2010.

Source: BTS T-100 Segment database, 2008

Aircraft Size-Based Distinctions among U.S. Carriers

Many regulatory requirements apply only to carriers that operate at least one aircraft originally 

designed to hold 30 passengers or more. Carriers that provide passenger service using at least 

one aircraft originally designed to hold 30 passengers or more, but none that have more than 60 

seats, are considered small businesses for purposes of assessing impact under the relevant 

requirements of the Regulatory Flexibility Act. There are also a significant number of carriers 

that operate only aircraft with fewer than 30 seats. The regulatory requirements for these carriers 

are less extensive than those for larger carriers. Finally, there are several carriers that do not offer 

scheduled service, but operate public charter flights. Most of these carriers provide charter 

service using at least one aircraft with more than 60 seats.

 

5

Since the preliminary RIA was prepared, it has been determined that 2 of these 88 foreign carriers operate 

passenger service to and from the United States exclusively with aircraft having fewer than 30 seats. These two 

carriers would not have to comply with the proposed requirements that apply only to U.S. and/or foreign carriers 

that provide passenger service on at least one aircraft that has 30 or more seats.

6

In 2009, two carriers (ExpressJet and Pinnacle) had market shares that did not meet this threshold but will continue 

to report these data voluntarily; both carriers are therefore included in the definition of ―reporting carrier.‖ Delta and 

Northwest reported as separate carriers through 2009, but reporting has been consolidated under the Delta name 

beginning in 2010.
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Table 2 - Number of U.S. Carriers by Size Class, 2008

Group

Seat 

Criterion Total

Out of 

Business Active

Contract 

Carriers Other

Large > 60 41 2 39 17 22

Small 30 - 60 14 1 13 6 7

Very Small < 30 43 8 35 2 33

Charter-only 19 2 17 0 17

Total 117 13 104 25 79

Note: 6 large contract carriers, 1 small contract carrier, and 12 other large carriers were reporting 

carriers in 2008.

Source: BTS T-100 Segment database, 2008; BTS B-43 Aircraft database, 2007

The U.S. domestic airline industry continues to undergo significant consolidation. Of the 117 

U.S. carriers operating at the beginning of 2008, 13 were no longer providing service 2 years 

later. Some of the remaining carriers are wholly-owned subsidiaries, but are treated as separate 

airlines for some reporting and regulatory compliance purposes.

Mainline and Regional Airlines

Several U.S. carriers, including 6 of the 19 reporting carriers in 2009, operate flights primarily or 

exclusively on a contract basis, providing service primarily for the largest mainline network 

carriers. Most of these carriers do not sell scheduled air transportation services directly to the 

general public; the flights they operate are listed on the contracting carriers‘ schedules under 

code-share agreements. A few small regional carriers (e.g., Cape Air and Great Lakes) operate 

both contract and independently-marketed flights.

Regional carriers—both contract carriers and those that market flights independently—provide 

service to a much larger network of communities than do the mainline and low-cost national 

carriers. The Regional Airlines Association (RAA) estimates that its 68 member carriers provide 

the only scheduled service available at 442 of 635 U.S. airports.

7

Regional carriers are typically subject to the same reporting and regulatory requirements as other 

airlines in the same size classes. In some instances, however, contract carriers must comply with 

their mainline partners‘ commitments and compliance requirements—including relevant 

provisions in the customer service plans and contracts of carriage that would be affected by the 

proposed requirements in this NPRM.

8

1.2. Airports

The Federal Aviation Administration (FAA) categorizes airports based on the annual numbers of 

passengers boarded (―enplanements‖). There were 503 U.S. airports with at least 2,500 passenger 

enplanements in 2008. More than two-thirds of domestic and international passengers departed 

 

7 Regional Airline Association, 2009 Annual Report.

8 The term ―regional carrier‖ is also used to refer to U.S. airlines with less than $100 million in revenues annually, 

including those that independently market air transportation to the public. Most of these carriers are included in the 

―very small‖ category. A large number of them operate solely within the State of Alaska.
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from 29 major metropolitan hubs, and another one-fifth from one of 37 medium hubs. On the 

other end of the size spectrum, there were 121 airports with 2,500–10,000 passenger 

enplanements in 2008. More than half of these (64) were located in Alaska.

Table 3 - Passenger Enplanements by Size of Airport, 2008

Category

Minimum %/# 

of Passengers

# of 

Airports

Passengers 

(millions) % of Total

Passengers 

/ Airport 

(millions)

Large Hub >1% of total 29 504.0 68.5% 17.38

Medium Hub >0.25% of total 37 147.0 20.0% 3.97

Small Hub >0.05% of total 72 60.8 8.3% 0.84

Non-Hub >10,000/year 244 22.9 3.1% 0.09

Other 

Commercial >2,500/year 121 0.6 0.1% 0.00

Total 503 735.3 1.46

Source: Federal Aviation Administration, Primary and Non-Primary Commercial Service Airports, 2008

International flights depart from every large and medium hub, most small hubs, and about onethird of non-hub airports. However, only 7 of the 121 airports with between 2,500 and 10,000 

passenger departures in 2008 offered international service.

1.3. Flights and Passengers

Airline passengers travel to both domestic and international destinations using both scheduled 

and non-scheduled (charter) service provided by U.S. and foreign carriers. Carrier-specific data 

on the annual numbers of domestic and international departures and passengers boarded for each 

type of flight are available from the Bureau of Transportation Statistics (BTS) T-100 database.

Most passenger travel is on scheduled service flights, and seven out of every eight scheduled 

flights are to destinations within the United States. Virtually all domestic flights are on U.S. 

carriers. Foreign carriers may transport passengers between two U.S. airports only on segments 

of flights that originate from or continue on to international destinations. U.S. carriers also 

account for a significant majority of international departures, although the share of passengers on 

international flights is split more evenly between U.S. and foreign carriers because the average 

number of passengers per departure is larger on flights operated by foreign carriers.
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Table 4 - Scheduled Passenger Service: Departures and Passengers

Domestic International Combined

Departures

U.S. Carriers 9,373,657 826,366 10,200,023

Foreign Carriers 2,562 511,283 513,845

Total 9,376,219 1,337,649 10,713,868

Passengers

U.S. Carriers 666,990,665 88,836,841 755,827,506

Foreign Carriers 526,450 69,539,809 70,066,259

Total 667,517,115 158,376,650 825,893,765

Passengers/Departure

U.S. Carriers 71 108 74

Foreign Carriers 205 136 136

Total 71 118 77

Source: BTS T-100 Segment database, 2008

The total numbers of departures and passengers flown typically rise each year, but both fell in 

2008 and again in 2009. The FAA Aerospace Forecast for 2009 anticipated an 8.0 percent drop 

from 2008 in passenger enplanements on U.S. carrier flights. This decline was expected to be 

more pronounced for domestic flights, with a projected decrease of 8.8 percent from 2008, 

compared with a forecast reduction of 2.4 percent for international flights. The FAA Aerospace 

Forecast projected even larger percentage decreases in capacity, measured by available seat 

miles (ASMs), as some carriers ceased operations or reduced the size of their aircraft fleets in 

active service.

1.4. Regulatory Authorities

The Office of the Secretary (OST) conducts economic licensing of U.S. carriers; establishes 

regulatory requirements relating to advertising and provision of scheduled and non-scheduled 

passenger service; issues guidelines and letters to codify and clarify Department enforcement 

policy; and enters into consent orders to enforce regulations and impose penalties for noncompliance. All of the proposed requirements evaluated in this regulatory analysis represent 

modifications or clarifications to existing OST rules and enforcement policy.

During 2008 and 2009 the OST entered into 48 enforcement orders with U.S. and foreign 

carriers, travel agencies, and tour operators. One-third of these consent orders involved noncompliance with established rules and policy relating to the advertising of air fares. 

Regulatory authority for matters involving airports is vested in the FAA. Some of the proposed 

requirements (especially those relating to tarmac contingency plans) may have a limited impact 

on airport operations, but we have not estimated the costs, if any, that would be incurred by 

airport authorities.
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Air travel security issues are under the jurisdiction of the Transportation Security Administration 

(TSA).

Arriving passengers on international flights need to be cleared for entry by Customs and Border 

Patrol (CBP) representatives. One provision in the NPRM would require covered carriers to 

coordinate their tarmac contingency plans with CBP authorities at diversion airports. This would 

ensure that arriving international passengers could be deplaned and allowed to leave the airport 

in a timely fashion.

1.5. Travel Agencies and Tour Operators

While most regulation of the air transportation sector is concerned with carriers and airports, 

other sellers of air transportation must comply with OST advertising regulations and guidelines. 

Travel agencies and tour operators are the two largest industry sectors (in addition to carriers) 

that sell tickets to passengers for scheduled service flights. These sales sometimes are made on a 

stand-alone basis and sometimes as part of a package that may include accommodations, 

activities, and ground transportation. Both carrier and non-carrier websites also offer packages 

that do not include any air transportation.

According to a recent study, about 17 percent of travel agencies have online ticketing capability. 

However, four large online travel agencies (OTAs)—Expedia, Orbitz, Priceline, and 

Travelocity—reportedly account for 96 percent of all online sales by travel intermediaries in the 

leisure travel market segment.9 Howcver, the travel agent and tour operator sectors consist 

primarily of small businesses with fewer than 20 employees per firm.

Table 5 - Travel Agencies and Tour Operators, 2006

Total Firms

Large 

OTAs

Online 

Sales 

Capability

Offline 

Sales Only

20+ 

Employees

<20 

Employees

Travel Agencies 12,248 4 2,078 10,166 669 11,579

Tour Operators 2,629 0 447 2,182 254 2,375

Sources: Bureau of the Census, County Business Patterns, 2006; PhoCusWright, The Role and Value of the 

Global Distribution Systems in Travel Distribution, 2009.

2. Current Regulatory Requirements, Industry Practices, and Need for 

Additional Requirements

This section outlines the current regulatory requirements and/or DOT enforcement policy in each 

of the areas for which additional passenger protections are being considered, presents a summary 

of current industry practices in each of these areas, and describes the needs that would be 

addressed by each of the specific requirements proposed in the NPRM.

 

9

 PhoCusWright, The Role and Value of the Global Distribution Systems in Travel Distribution, November 2009.
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2.1. Additional Requirements for Tarmac Contingency Plans

The EAPP1 Final Rule requires any certificated or commuter air carrier that offers scheduled 

passenger service or public charter service using any aircraft with 30 or more seats to develop a 

contingency plan for long delays on the tarmac for all flights they operate, including those on 

aircraft containing fewer than 30 seats. For domestic flights, carriers covered by the EAPP1

Final Rule have to ensure that (a) passengers on planes delayed on the tarmac for 2 hours will 

have access to food, water, clean lavatories, and the assistance of medical personnel if needed, 

and (b) passengers on planes delayed on the tarmac for 3 hours will be permitted to deplane, 

unless there is a safety and/or security-related impediment to deplaning passengers or air traffic 

control (ATC) advises the pilot that permitting passengers to return and deplane would 

significantly disrupt airport operations. The requirement for a tarmac contingency plan also 

applies to U.S. carriers operating international flights to and from the United States. However, 

carriers are allowed to set their own time limits in the contingency plans for deplaning 

international flights. Tarmac contingency plans must be coordinated with the authorities of largehub and medium-hub airports.

As noted in Section 2.2 below, there were just over 900 tarmac delays of 3 hours or longer 

involving scheduled domestic flights operated by reporting carriers in 2009. While current 

regulations mandate reporting of tarmac delays only at large- and medium-hub airports, it is our 

understanding that every reporting carrier has provided the BTS with tarmac delay information 

for all of their scheduled domestic flights.10 However, the EAPP1 Final Rule does not require 

assurance that carriers have coordinated their tarmac contingency plans with the authorities at 

the small-hub and non-hub airports they serve.

Foreign carriers are not required to comply with the EAPP1 Final Rule stipulations relating to 

carrier handling of lengthy tarmac delays. As Table 4 in Section 1.3 indicates, 44 percent of all 

passengers on international flights departing from the United States in 2008 flew on foreign 

carriers. Many of these flights departed from large-hub airports that have a history of problems 

with lengthy tarmac delays. Consequently, passengers who fly on foreign carriers lack the same 

minimum guarantee-of-service provision in the event of a lengthy tarmac delay that is currently 

afforded to travelers to and from the same destinations on covered U.S. carriers.

Recent BTS data on tarmac delays associated with arriving aircraft indicate that these situations 

almost always arise as a result of landings at diversion airports. This is especially likely to be an 

issue in the event that an international flight is diverted to an airport that does not have CBP 

staffing in place at the time of the arrival. Without a CBP presence it may not be possible to 

admit (or readmit) to the United States passengers who are arriving on an international flight. 

These passengers may therefore not be allowed off of the airplane and into a diversion airport. 

The current EAPP1 requirements do not address this potential obstacle to avoiding or reducing 

the incidence of lengthy tarmac delays associated with inbound international flights.

 

10 As noted above, the BTS also receives reports on tarmac delays of less than 3 hours on scheduled domestic flights 

operated by reporting carriers. The BTS may also have some information on delays involving flights operated by 

non-reporting carriers. These additional data were not obtained and reviewed as part of this regulatory evaluation.
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2.2. Tarmac Delay Reporting

As noted above, reporting carriers are currently required to report flight delay data for regularly 

scheduled domestic flights, including information on all tarmac delays of 3 hours of more, to the 

BTS. Beginning with October 2008, these reports were required to include tarmac delays 

associated with flights that returned to the gate and subsequently departed; those that were 

diverted from their destination airports; and those that were ultimately cancelled.

11

Just over 900 tarmac delays of 3 hours or more were reported to the BTS in 2009 by the 19 

reporting carriers. Most of these involved delays at departure. Of the 77 delays associated with 

arriving flights, 75 involved landings at diversion airports. As Table 6 shows, the number of 

reported tarmac delays varied substantially on a month-to-month basis.

Table 6 - Number and Percent of Flights with Tarmac Times of 3 Hours or More

Total

Stage of Operation of the 3-Hour Tarmac Time

Prior to 

Cancellation

Multiple 

Gate 

Departure Taxi-Out Taxi-In

At 

Diversion 

Airport

Jan 2009 87 7 10 70 0 0

Feb 2009 43 5 4 34 0 0

Mar 2009 88 6 9 66 0 7

Apr 2009 81 12 10 47 0 12

May 2009 35 7 2 25 1 0

Jun 2009 278 40 42 172 1 23

Jul 2009 164 21 20 105 0 18

Aug 2009 70 7 11 45 0 7

Sep 2009 6 0 0 4 0 2

Oct 2009 12 0 0 12 0 0

Nov 2009 4 0 1 2 0 1

Dec 2009 35 5 3 22 0 5

Year 903 110 112 604 2 75

% of Delays 12.2% 12.4% 66.9% 0.2% 8.3%

Source: BTS, Monthly Summary of Tarmac Times Jan 2009 - Dec 2009

At present, however, the Department does not collect information on the number and 

characteristics of tarmac delays associated with domestic flights operated by non-reporting U.S. 

carriers and with international flights operated by either U.S. or foreign carriers. Information 

about these delays would improve the Department‘s ability to understand the extent and causes 

of lengthy tarmac delays and provide the basis for assessing whether carriers are complying with 

current and proposed requirements for tarmac contingency plans.

 

11 Final Rule on Revision of Airline Service Quality Performance Reports, Docket No. OST 2007-28522.
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2.3. Minimum Standards for Customer Service Plans (CSPs)

Under the recently adopted Final Rule, any domestic certificated or commuter air carrier that 

operates scheduled passenger service is required to develop a customer service plan (CSP) that 

addresses the issues covered by the 12 areas of the Air Transport Association‘s (ATA) Customer 

Service Commitment (CSC). These carriers are also required to self-audit their adherence to this 

customer service plan. Airlines participating in the ATA CSC commit to the following:

1. Offering the lowest fare available

2. Notifying customers of known delays, cancellations and diversions

3. Delivering baggage on time

4. Setting a reasonable baggage liability limit

5. Allowing reservations to be held or canceled

6. Providing prompt ticket refunds

7. Properly accommodating passengers with disabilities and other special-needs 

passengers

8. Meeting customers' essential needs during lengthy tarmac delays

9. Handling "bumped" passengers with fairness and consistency

10. Ensuring good customer service from code-share partners

11. Ensuring responsiveness to customer complaints

12. Identifying the services it provides to mitigate passenger inconveniences resulting from 

cancellations and misconnects.

The EAPP1 Final Rule does not establish specific standards for most of these components 

(although some are already fixed by existing regulatory requirements), nor does the ATA CSC 

define the meaning of terms used in some of the 12 parts (e.g., ―lowest fare,‖ ―timely 

reporting‖). The current CSP requirements also do not apply to foreign carriers, which creates a 

potential disparity in the level of service guaranteed to passengers on international flights 

operated by U.S. and foreign carriers.

The lack of specified minimum standards for CSPs also makes it difficult for both passengers 

and the Department to evaluate the specific guarantees of service provision that are being made 

by carriers. In addition, passengers traveling to destinations outside the United States are not 

currently assured a minimum level of customer service in the areas addressed by the ATA CSC 

and EAPP1 Final Rule requirements if they choose to fly on a foreign carrier.

2.4. Incorporation of Tarmac Contingency Plans and Customer Service Plans 

into Contracts of Carriage

Under the EAPP1 Final Rule, covered U.S. carriers are required to develop tarmac contingency 

plans and to post them on their websites. The Final Rule also requires covered U.S. carriers to 

develop, follow, and self-audit compliance with customer services plans; these plans must also 

be posted on carrier websites. However, there is no specific requirement that these plans be 

incorporated into the carriers‘ contracts of carriage; the Department indicated in the Final Rule 

that it hoped that carriers would do so on a voluntary basis.
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Similarly, the Department decided not to require that covered carriers incorporate the required 

CSPs into their contracts of carriage in the EAPP1 Final Rule.

A February 2010 review of the websites of reporting U.S. carriers that sell air transportation to 

the general public indicated that all have posted their CSPs, either on a stand-alone basis or as 

part of their contracts of carriage on their websites. However, we did not attempt to determine 

whether or not any carriers posted tarmac contingency plans or incorporated them into their 

contracts of carriage in advance of the April 2010 effective date for the requirements for these 

plans included in the Final Rule.

2.5. Requiring Foreign Carriers to Respond to Customer Complaints

The EAPP1 Final Rule requires covered U.S. carriers to acknowledge customer complaints in 

writing and to provide substantive responses to the concerns raised within specified time limits.

In 2008 the Department received reports of almost 9,200 problems concerning service on U.S. 

carriers and an additional 1,200 complaints related to problems on foreign carriers. The share of 

total complaints relating to foreign carriers is higher than the proportion of passengers 

transported on these airlines.

Table 7 - Passenger Service Complaints Received by the Department, 2008

Complaint Category Domestic Foreign Total

Flight problems (cancellations, 

delays, etc.) 3,011 218 3,229

Baggage 1,671 406 2,077

Reservations/ticketing/ boarding 1,147 186 1,333

Customer service 1,201 116 1,317

Refunds 632 139 771

Disability 428 46 474

Oversales 370 61 431

Fares 324 44 368

Discrimination 99 16 115

Advertising 28 7 35

Animals 5 0 5

Other (includes frequent flier) 278 33 311

Total 9,194 1,272 10,466

Passengers Boarded 755,827,506 70,066,259 825,893,765

Complaints per 100,000 

Passengers 1.22 1.82 1.27

Source: OST, Air Travel Consumer Reports, Jan-Dec 2008; BTS, T-100 Segment database, 

2008.

The Department currently lacks the regulatory authority to require that foreign carriers respond 

to customer complaints within a specified time frame. As airline passengers become increasingly 
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familiar with the U.S. carrier CSPs mandated in the EAPP1 Final Rule, they are unlikely to be 

aware that these requirements do not apply to flights operated by foreign carriers when making 

decisions about booking international travel.

2.6. Changes in Denied Boarding Compensation (DBC) Policy

DOT requires that airlines pay specified amounts of denied boarding compensation (DBC) to 

passengers on an overbooked flight in cases where the carrier is not able to recruit a sufficient 

number of passengers to voluntarily surrender their boarding passes in exchange for cash and/or 

vouchers. While nearly 90 percent of boarding refusals attributable to carrier oversales in 2008 

were resolved by recruiting volunteers, BTS data indicate that more than 65,000 passengers were 

involuntarily bumped from oversold flights operated by reporting carriers.12

Table 8 - Passengers Denied Boarding on Reporting Carriers, 2008

Number % of Total

Involuntarily Bumped Passengers 65,431 0.011%

# w/ DBC Paid 56,294 0.011%

Voluntarily Bumped Passengers 623,673 0.107%

Total Passengers Boarded 580,269,246

Source: BTS, Report of Passengers Denied Confirmed Space, 2008

Currently, involuntarily bumped travelers are required to be given DBC equal to 100 percent of 

the fare (200 percent if alternative transportation is not provided within the specified time limits) 

to the next stopover on the flight itinerary, up to the cap specified in the regulation. In 2008, the 

maximum level of DBC for involuntarily ―bumped‖ passengers on oversold flights was raised 

from $200 to $400 when alternative transportation is provided by the carrier within 2 hours for 

domestic flights and within 4 hours for international flights and from $400 to $800 otherwise.13

Based on preliminary analysis of a sample of data from the BTS passenger origins and 

destinations (O&D) survey, about 7 percent of each-way fares on round-trip tickets and just 

under one-quarter of one-way fares exceed $400.14

The current DBC policy is not clear on the amount of compensation that must be paid to a holder 

of a zero-fare (e.g., tour consolidator or frequent flyer) ticket who is involuntarily bumped from 

an oversold flight. In the O&D survey data analyzed, about 4.5 percent of round-trip fares have 

an each-way value of less than $50, the minimum amount that the BTS includes in its statistical 

 

12 Under the present requirements, DBC must be paid only to passengers involuntarily bumped from flights on 

aircraft with 30 or more seats. Additionally, DBC does not have to be paid to passengers bumped from flights on 30-

60 seat aircraft to reduce the amount and/or distribution of weight carried for safety reasons.

13 DOT, ―Final Rule on Oversales and Denied Boarding Compensation,‖ DOT-OST-2001-9325-1328, April 18, 

2008. The original maximum levels for DBC were established in 1978. The 1978 limits of $100 and $200 for DBC 

are equivalent to $650 and $1,300, respectively, in July 2009 after taking into account increases in the Consumer 

Price Index over the past 21 years.

14 The sample analyzed included over one million records for flights originating in Illinois during the second quarter 

of 2008; the average fare for a round-trip ticket in this sample was $349. The O&D market file data do not identify 

the type of fares associated with individual tickets, but analysis of the accompanying coupon file indicates that firstclass tickets accounted for about 10 percent of flights in the sample.
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estimation of the average fares paid by passengers for air travel.15 The Department is requesting 

information on current carrier practices with respect to compensation of these travelers, who may 

or may not be treated equitably.

Carriers are required to provide a full explanation of the DBC policy in written form, but airline 

representatives may not always provide complete information about the DBC regulation 

provisions when orally advising passengers who are involuntarily bumped. BTS Form 251 

reports do not include the amounts of DBC paid in the form of vouchers rather than cash or 

check payments, nor is information available on the extent to which the value of these vouchers 

typically exceeds the prescribed amount of DBC payable by cash or check. Thus it is not 

possible to determine the number or share of passengers who would have been involuntarily 

bumped, but who chose to accept travel vouchers or coupons instead.

The current DBC requirements may not be sufficient to ensure that all passengers bumped from 

the same flight are treated equitably. Those flying on tickets that exceed the maximum DBC 

threshold will receive less compensation in relation to the amount of the fare paid; those flying 

on zero-fare tickets may not be compensated on a basis consistent with those who purchased 

tickets; and the extent and completeness of the verbal explanations of the compensation options 

available to potential volunteers for bumping on oversold flights may vary among passengers 

and/or gate agents.

2.7. Required Disclosure of Full Fares in Advertising and Prohibition on OptOut Provisions in Ticket Sales

Existing regulations require that advertising of air travel prices must include all fees, surcharges, 

and taxes. However, the Department has a long-standing enforcement policy that permits 

carriers and other sellers of air transportation to break out from the advertised price any airport 

or government fees that are charged on a fixed or per-segment basis. 

In February 2010, we conducted a review of the prices advertised on the websites of five 

mainline carriers, three low-cost carriers, and the four largest online travel agencies (OTAs).16

Of the eight carrier websites, only Delta‘s displayed the full-fare prices along with the pre-tax 

prices at the flight selection stage. All eight carrier websites displayed the additional fees at the 

flight booking stage.

17

In contrast, full-fare prices were displayed for each available option at the flight selection stage 

on all four OTA sites, along with prices that did not include the additional taxes and fees.

However, the full-fare prices were shown more prominently on the Expedia and Orbitz flight 

selection pages than on those for Priceline and Travelocity.

 

15 Including one-way fares in the analysis does not materially alter the estimate of the proportion of passengers 

traveling on zero-fare tickets: just over 5 percent of one-way fares in this sample were below $50.

16 For each of these sites, we requested two round-trip fares from Baltimore-Washington International Airport 

(BWI) to the George W. Bush Houston International Airport (IAH) departing on March 26, 2010, and returning on 

March 29, 2010. The review included capture of screen displays at the flight selection and booking stages.

17 The United Airlines flight selection page displayed only the fare for a specific combination of outbound and 

return flights at a single time , so determining the full-fare price for each combination of available flights required 

return trips to the flight selection and booking pages.
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At present there are no specific prohibitions on the ability of carrier, travel agency, and tour 

operator website purchase engines to include and charge for services in addition to the fare 

unless the purchaser takes affirmative action to opt-out of paying for these services. The most 

common charges added on this basis are for travel insurance and preferred seating assignments.18

Advertised prices that do not include the full amount of the fare being charged, including all 

mandatory fees and taxes, complicate consumer comparison of alternative travel itineraries to 

reach the same destination, which may involve different amounts of these mandatory fees and 

taxes. For example, booking a flight with a connection will incur additional airport departure and 

security fees that may partially or even totally offset the price advantage of a non-direct flight. 

Experienced travelers will incur longer search times to confirm that they have found the lowest 

or most appropriate fare when searching on multiple carrier or OTA sites. Inexperienced 

travelers may find themselves purchasing tickets at prices that are higher than those for other 

alternatives they reviewed once the charges for all mandatory fees and taxes are included. They 

may also unwittingly purchase optional services at prices that exceed what they would be willing 

to pay for these additions.19

In addition, substantial Department resources are required to review carrier, travel agent, and 

tour operator solicitations that have fees and taxes broken out of the advertised prices to 

determine if these advertisements comply with current enforcement policy.

2.8. Expanded Disclosure of Baggage Fees and Other Optional Fees

In recent years many of the major U.S. carriers have instituted additional charges for checked 

baggage. While consumer awareness of the existence of checked baggage fees is increasing 

rapidly, the major carrier and other online booking engines currently do not have an option that 

allows purchasers to calculate these fees and incorporate them into the prices displayed in flight 

search results. This complicates purchaser price comparisons and reduces the likelihood that 

advertised fares accurately represent the actual cost of air travel.

DOT issued guidance on May 19, 2008, published in the Federal Register at 73 F.R. 28854, that 

was designed to ensure that prospective air travelers receive timely and effective notice about 

charges for checked bags. The guidance references the steps needed to meet ―implicit 

requirements‖ relating to the avoidance of unfair and deceptive practices with respect to 

disclosure of checked baggage fees. Specifically, DOT advised that:

...air carriers and foreign air carriers should place a notice regarding the above-described 

additional baggage charges on the first screen in which the carrier offers a fare quotation of a 

 

18 Our research on full-fare advertising did not in most cases proceed to the step (after entry of credit card 

information) at which some booking engines may add charges for optional services on an opt-out basis. However, 

one large OTA site (Travelocity) added travel insurance at the flight booking stage on an opt-out basis.

19 While consumers may report that they would not have purchased services such as travel insurance or preferred 

seating assignment on an opt-in basis, it is likely that many would do so if the price of these services was lower. For 

example, it is possible that nearly all passengers would purchase travel insurance if it were offered for $1 or less.
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specific itinerary selected by a consumer... Airline reservations agents should disclose these 

baggage charges and limitations during telephone or counter sales prior to completing a sale.20

The method by which notice must be provided is also specified in the guidance. 

Based on a February 2010 review of reporting carrier websites, information on checked baggage 

fees and other optional fees appears to be available to most passengers on major airlines. In 

addition, information about the fees charged by major U.S. and foreign carriers are readily 

available on several OTA websites, including Expedia, Travelocity, and Kayak, in formats that 

facilitate cross-carrier comparisons by consumers.

However, it is possible that a significant number of travelers may visit only the site of the carrier 

on which they purchased a flight.21 In many cases, these passengers would not be aware of the 

amounts of baggage fees and optional fees charged in the absence of notices on these sites, 

resulting in them incurring more charges for checked baggage and other optional services than if 

they had known about the additional costs for these items.

2.9. Prohibition on Post-Purchase Fare Increases

The Department is aware of several instances in the past few years in which tour operators have 

imposed post-purchase increases in the prices for air travel or combined travel packages on their 

customers. Consumers could also possibly find themselves incurring higher costs for air travel 

than were contracted for at the time of purchase because of increases in checked baggage fees, 

notwithstanding the May 19, 2008 DOT guidance on checked baggage fees, which states that:

Internet displays and airline agents should also make clear when the added charges or revised 

policies are to take effect. In no case should more restrictive baggage policies or additional 

charges be applied retroactively to a consumer who purchased his or her ticket at a time when the 

charges did not apply, or when a lower charge applied.

A February 2010 review of reporting carrier websites indicated that all reported increases in 

checked baggage fees were accompanied by effective dates for the change specified in terms of 

when tickets were purchased. 

It is possible that the current DOT guidance may not continue to be effective for enforcing the 

current prohibition on post-purchase price increases. Codifying this policy would also reduce 

the amount of resources and effort required for the Department to determine if entities are 

complying with its provisions.

2.10. Prompt Passenger Notification of Flight Status Changes

Passengers learn about changes in flight status (most importantly, delays or cancellations) by 

gate announcements, electronic displays at airports, checking carrier websites, and increasingly, 

 

20 Department of Transportation, ―Guidance on the Disclosure of Policies and Charges Associated with Checked 

Baggage,‖ 73 F.R. 28854, May 19, 2008.

21 This is particularly likely to be true for passengers on low-cost airlines. About 75 percent of AirTran, JetBlue, and 

Southwest passengers reportedly book flights directly on the carrier websites.
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by automated notifications sent to cell phones or e-mail accounts. At present there are no 

regulatory requirements relating to the methods of provision, accuracy, or timeliness with which 

carriers inform passengers about flight status changes.

In particular, carriers are not currently required to offer passengers the option to subscribe to email or text messaging services that provide automatic notification of flight status changes. 

However, it is possible to sign up to receive these notifications on the websites of all but 2 of the 

11 reporting carriers that sell tickets directly to the public. Flight status updates are also 

available from a number of third-party providers, including FlightStats.com, 4Info, and Google. 

A review of some airline passenger forums and other online sources indicates that in some 

instances, certain third-party notification services provide more timely updates on flight delays 

and cancellations than some of the carrier messaging systems offer.

Because of the increasingly widespread provision of real-time updates, passengers may 

reasonably expect that all of the channels from which they learn about flight status changes 

provide prompt updates as new information becomes available. In the absence of any current 

regulatory requirements, the speed of updates being posted could vary substantially among 

carriers or notification channels, and many consumers may not have sufficient information to 

assess which methods of notification provide relatively more prompt updates.

2.11. Limitations on Venue Provisions in Contracts of Carriage

There are currently no specific regulatory restrictions on the inclusion of venue provisions in 

carrier contracts of carriage. However, OST considers the inclusion of restrictive venue 

restrictions in contracts of carriage to be an unfair and deceptive trade practice. The Aviation 

Enforcement Office has threatened enforcement action against carriers that have previously 

included restrictions precluding passengers from filing suit in jurisdictions other than those in 

which the carriers were headquartered. 

A February 2010 review of the contracts of carriage for the largest U.S. carriers indicated that 

only Spirit Airlines included a limitation on the venue for filing claims in its contract of carriage.

The absence of a prohibition on venue restrictions means that passengers of the same airline with 

the same complaint or claim may face very different costs to pursue the matter, depending on 

their proximity to the carrier‘s headquarters. In the case of Spirit Airlines, a passenger residing 

in Miami who had a claim arising from a round-trip flight to Los Angeles would need only make 

a short drive for a court appearance, while a passenger residing in southern California with the 

same type of claim on the same round-trip flight may need to incur substantially higher travel 

costs associated with pursuing a claim that must be filed in southeastern Florida.

3. Proposed Regulatory Requirements and Alternatives for 

Addressing Identified Needs

This section outlines the proposed regulatory requirements in each area for which additional 

passenger protections are being considered; describes the entities that would be affected by each 
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of the proposed requirements; and identifies regulatory and non-regulatory alternatives that 

would meet the passenger protection needs identified by the Department.

It is important to note that although the regulatory evaluation attempts to mirror the terms and 

wording of the proposed regulation, no attempt is made to precisely replicate the proposed 

regulatory language. Readers are cautioned that the actual regulatory text in the NPRM, and not 

the text of this regulatory evaluation, presents the specific proposed regulatory requirements..

3.1. Additional Requirements for Tarmac Contingency Plans

The Department is proposing to extend the coverage of the tarmac contingency plan 

requirements promulgated in the EAPP1 Final Rule to cover foreign carriers operating scheduled 

passenger service flights to and from the United States. In addition, covered U.S. and foreign 

carriers would now be required to coordinate their contingency plans with authorities at all U.S. 

airports with 10,000 or more passenger enplanements annually that the carrier services, including 

small-hub and non-hub airports that are not within the scope of the current EAPP1

requirements.22 Finally, while U.S. carriers are currently required to coordinate their contingency 

plans and efforts with regularly used airports, the recent Final Rule does not specifically require 

that carriers must coordinate these contingency plans with Customs and Border Protection (CBP) 

officials to enable passengers on diverted incoming international flights to deplane after 

extended on-tarmac delays. The Department is proposing to add a requirement to ensure that 

carriers coordinate plans with appropriate CBP personnel at any U.S. airport that the carrier uses 

as a diversion airport for its international flights.

It is difficult to predict the length of a tarmac delay that would trigger mandatory deplanement of 

passengers—it may be as much as 6 hours for long cross-Pacific flights, but may be much 

shorter for flights to and from Canada, Mexico, and the Caribbean. For the base case in this 

regulatory evaluation, we have assumed that the tarmac delay limit in foreign carrier contingency 

plans (other than Air Canada‘s) would be 5 hours.23

The number of lengthy tarmac delays that would require carrier actions under the proposed 

requirements can be projected using the distribution of 2007–2008 tarmac delay times for 

reporting U.S carriers.24

 

22 The Final Rule requires this assurance of coordination only with the authorities of large and medium hub 

airports—those that account for at least 1 percent, and between 0.25 and 1 percent, respectively, of total U.S. 

enplanements.

23 Air Canada and Air Canada Regional already have a tarmac contingency plan in place that affords passengers 

protections against lengthy on-board delays that are at least equivalent to those guaranteed to passengers on U.S. 

carriers under the EPP1 Final Rule.

24 This distribution was presented previously in the regulatory evaluation accompanying the EAPP1 Final Rule and 

is reproduced as ―Number of Flights and Passengers with Extended Tarmac Delays,‖ in the Source Notes section of 

the Appendix.
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Table 9 - Projected Annual Numbers of Lengthy Tarmac Delays for Foreign Carriers

Air Canada Other Carriers Total

2+ hour delay 77.30 221.78 299.08

3+ hour delay 17.37 49.83 67.20

4+ hour delay 3.18 9.13 12.31

5+ hour delay 0.45 1.30 1.75

Note: Air Canada's tarmac contingency plan has 60-minute food and water and 90-minute deplaning limits.

Source: Econometrica projections based on BTS tarmac delay reports for reporting carriers

As in the previous rulemaking, the Department may consider setting a maximum allowable time 

limit for tarmac contingency plans on international flights operated by both domestic and foreign 

carriers. The Department may also consider limiting the required coordination of plans to 

exclude non-hub airports if sufficient information exists to indicate that lengthy tarmac delays do 

not typically occur at these airports.

3.2. Expanded Reporting of Tarmac Delays

The Department is proposing to require all covered U.S. carriers and foreign carriers to report 

specified information to the BTS on all tarmac delays of 3 hours or more involving domestic 

flights or international flights departing from, or arriving at, a U.S. airport. 

Information on 3-hour tarmac delays involving domestic flights of reporting carriers is available 

since October 2008. Reporting carriers reported tarmac delays of 3 hours or more for 903 flights 

in 2009; almost half of these delays occurred in June or July. These reporting carriers accounted 

for 77 percent of domestic departures and 49 percent of international departures in 2008. If 

tarmac delays of 3 hours or more are uniformly distributed among reporting carriers, nonreporting U.S. carriers, and foreign carriers, and between domestic and international flights, the 

projected number of reportable delays would be as shown in Table 10.25

 

25 As noted above, of the 903 reported 3-plus hour tarmac delays reported in 2009, 77 involved arriving flights. We 

did not use separate delay projections for departures and arrivals in the evaluation of this proposed requirement.
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Table 10 - Projected 3-Hour Tarmac Delays, 2009

Total Domestic International

U.S. Carriers Reporting 989 903 86

Non-Reporting 289 268 21

Total 1,278 1,171 107

Foreign Carriers 67 0 67

All Carriers 1,345 1,171 174

Source: Projections based on BTS tarmac delay reports for reporting carrier domestic flights (n=903).

3.3. Minimum Standards for Customer Service Plans (CSPs)

The Department is proposing to establish specific standards for the customer service plans 

(CSPs) required by the EAPP1 Final Rule. Some of these standards are already fixed by existing 

regulatory requirements. Foreign carriers would also be required to establish CSPs that would 

cover passengers on their flights to and from the United States; they would also be required to 

conduct the annual self-audits of compliance now required of covered U.S. carriers.

The proposed requirement would also stipulate that covered U.S. and foreign carriers would 

have to make the results of the required annual self-audits of compliance available for 

Department review on request for 2 years following the date on which the audit is completed.

For this analysis, we have assumed that subsidiaries of foreign carriers would not be required to 

develop independent CSPs. All 88 foreign carriers that are not subsidiaries of other foreign 

carriers with flights to and from the United States would need to develop, adhere to, and selfmonitor compliance with their own CSPs.

3.4. Incorporation of Tarmac Contingency Plans and Customer Service Plans 

into Contracts of Carriage

The Department is proposing that U.S. carriers covered by the EAPP1 Final Rule and foreign 

carriers that would be covered under Requirements 1 and 3 of the proposed rule would be 

required to incorporate their tarmac contingency and customer service plans into their contracts 

of carriage. Because the EAPP1 Final Rule had not yet taken effect when this regulatory 

evaluation was prepared, it is not possible to determine whether any covered carriers may 

incorporate either of these plans into their contracts of carriage voluntarily in the absence of this 

proposed requirement being adopted.

3.5. Requiring Foreign Carriers to Respond to Customer Complaints

The Department is proposing to extend the requirements for covered U.S. carriers in the EAPP1

Final Rule relating to designation of an advocate for customers‘ interests; acknowledgement of 

customer complaints in writing; and provision of a substantive response to the concerns raised 

within specified time limits to provide passengers on foreign carrier flights to and from the 

United States with the same guarantee of response.
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For this analysis, we have assumed that all 88 foreign carriers that are not subsidiaries of other 

foreign carriers with flights to and from the United States would need to respond to customer 

complaints in a manner that complies with the proposed requirement. The total number of 

customer complaints requiring responses is estimated to be 61 times the number of complaints 

reported directly to the OST, based on a 2001 report by the DOT Inspector General.26 Improved 

carrier responsiveness to complaints was estimated to reduce the level of complaints by 20 

percent in the DOT regulatory evaluation for the EAPP1 Final Rule.

Table 11 - Projected Number of Consumer Complaints (Foreign Carriers)

Variable Estimate

Number of Complaints Received by DOT 1,272

Ratio of Total to Reported Complaints 61

Estimated Total Complaints 77,592

% Reduction from CSP Implementation 20%

Post-CSP Number of Complaints 62,074

Source: OST, Air Travel Consumer Reports, Jan-Dec 2008; DOT, “Final Report on Airline Customer 

Service Commitment,” Office of the Inspector General, report AV-2001-020, February 12, 2001; and DOT, 

Final Regulatory Impact Analysis of Rulemaking on Enhanced Airline Passenger Protections, 

December 17, 2009.

3.6. Changes in Denied Boarding Compensation (DBC) Requirements

The Department is proposing to make five changes in the existing requirements relating to 

denied boarding compensation (DBC):

Carriers would be required to ―advise each passenger solicited to volunteer for denied 

boarding, no later than the time the carrier solicits that passenger to volunteer, (1) 

whether he or she is in danger of being involuntarily denied boarding (in doing so, the 

carrier must fully disclose the boarding priority rules that the carrier will apply for that 

specific flight), and (2) the compensation the carrier is obligated to pay if the passenger is 

involuntarily denied boarding.‖

The Department is also proposing to increase the maximum amount of DBC that must be 

paid to involuntarily bumped passengers from $400 to $650 when alternative 

transportation is provided by the carrier within 2 hours for domestic flights and within 4 

hours for international flights and from $800 to $1,300 otherwise.

A third proposal would clarify the existing DBC rule by explicitly stating that the 

definition of ―confirmed reserved space‖ on a flight includes seats held by zero-fare 

tickets (e.g., tickets obtained from consolidators, as part of a tour package, or by using 

frequent flyer miles), thus entitling the holders to DBC if bumped. These passengers 

would be entitled to compensation at the lowest rate paid by cash, check or credit card for 

a comparable class of ticket on the same flight, up to the maximum amount currently 

specified.

 

26 DOT, “Final Report on Airline Customer Service Commitment,” Office of the Inspector General, report AV-2001-020, 

February 12, 2001.” See the Source Notes section of the Appendix for further details.
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The Department is also proposing to implement a bi-annual inflation adjustment to the 

maximum DBC levels based on changes in the CPI-U, with the amount of the adjustment 

rounded to the nearest $25. Incorporating this adjustment would obviate the need for 

periodic notice and comment rulemakings while maintaining the real value of the 

maximum compensation amounts set forth in the existing DBC rule.

Another proposed amendment would ensure that involuntarily bumped passengers are 

informed orally of their ability to receive payment of DBC to which they are entitled by 

cash or check, rather than in the form of free or discounted air transportation.

Changes in the DBC policy would require training and communications with gate agents for 

carriers in each airport they serve using aircraft with 30 or more seats. In this analysis, we have 

assumed that 1⁄4 of the 94,000 airline employees reported in the ―passenger handling‖ category on 

Schedule P-10 for 2008 would need to receive training and information on changes in the current 

DBC policy.27

The Department is considering extending the applicability of the DBC requirements to include 

flights sold on aircraft with 19 to 29 seats. This would increase the number of U.S. carriers 

covered by the DBC policy from 52 to as many as 87. These additional carriers would be 

considered small businesses under the definition currently used in Regulatory Flexibility Act 

(RFA) analyses prepared by the Department. In addition, carriers currently covered by the DBC 

policy that serve additional airports using only aircraft with 19 to 29 seats would incur training 

and communications costs for additional gate agents and other passenger handling personnel.

3.7. Required Disclosure of Full Fares in Advertising and Prohibition on OptOut Provisions in Ticket Sales

The Department is proposing to discontinue its current enforcement policy on full-fare 

advertising requirements, which permits carriers and other sellers of air transportation to break 

out from the advertised price any mandatory airport or government fees that are charged on a 

fixed or per-segment basis. The proposed regulatory language would prohibit break-out of these 

charges and fees from advertised fares. This would have the effect of reaffirming the stated 

policy and eliminating the variance from stated policy that limits consumers‘ access to full fare 

information when they are in the process of making air travel purchase decisions.28

These requirements would cover any advertising or solicitation by ―a direct air carrier, indirect 

air carrier, an agent of either, or a ticket agent, for passenger air transportation, a tour (i.e., a 

combination of air transportation and ground accommodations), or a tour component (e.g., a 

hotel stay) that states a price for such air transportation, tour, or tour component.‖ The policy 

would apply to all carriers, travel agencies, and tour operators, and cover both print and online 

advertising as well as online travel booking engines.

 

27 Most air carriers with fewer than 2,000 employees report passenger handling personnel under the more general 

category of ―Passenger/General Services & Administration.‖ However, the total number of employees reported in 

this category by smaller carriers is about 7,400, the majority of whom are not likely to have responsibilities 

associated with boarding passenger flights.

28 A previous reconsideration of this enforcement policy was conducted in Docket No. OST–2005–23194, which 

ended with the Notice of Proposed Rulemaking being withdrawn.
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In addition, advertising and solicitations that display one-way fares for air transportation that are 

conditional on purchase of a round-trip ticket would be required to display in a conspicuous 

manner that they are ―each-way fares.‖

The Department is also proposing to prohibit covered entities from requiring customers to 

purchase additional optional services in connection with air transportation (such as travel 

insurance or preferred seating assignment) unless a consumer affirmatively chooses to have any 

such services included in the purchase price.

Because of the long lead times involved in some forms of print media advertising vehicles (e.g., 

annual visitors‘ guides, promotional brochures for spring break travel packages), the Department 

is expected to permit covered entities to distribute or post advertising materials booked or 

produced before the rule date that comply with the current enforcement policy standards for a 

short period of time after the rule is published. This regulatory evaluation assumes that all print 

advertising created after the rule publication date will need to comply with the proposed 

requirement and that all online and print solicitations still in circulation would need to comply 

with the new requirements by the anticipated effective date for the rule. 

In addition, the Department may consider restricting the applicability of this requirement to 

cover only the price for the air transportation component of a tour or tour component. This 

would permit covered entities to advertise prices for other travel-related services, such as hotels 

and ground transportation, on the same basis as businesses (including hotels and rental car 

companies) that are not under DOT jurisdiction. However, this alternative would increase the 

costs and difficulty of determining whether or not sellers of air transportation are complying 

with the proposed full-fare advertising requirements.

3.8. Expanded Disclosure of Baggage Fees and Other Optional Fees

The Department is proposing to require that each covered U.S. and foreign carrier disclose 

checked baggage fees on e-ticket confirmations; post notice of any increases in baggage fees on 

its home page and maintain any such notice for at least 3 months after the increase; and provide a 

link from its home pages to a page that contains a full disclosure of all optional fees for services 

that passengers may be charged by the airline.

The proposed regulatory language currently defines covered carriers as those that have ticketcapable websites accessible to the general public. Following this definition, we have assumed 

that carriers that operate flights only on a contract basis for other carriers would not incur costs 

to comply with these requirements. The Department may also consider extending these 

requirements to cover online travel agencies and other sellers of air transportation.

3.9. Prohibition on Post-Purchase Fare Increases

The Department is proposing to prohibit any ―seller of scheduled air transportation, or of a tour 

or tour component that includes the price of scheduled air transportation‖ from making any postpurchase increases in the price of that air transportation, including, but not limited to, increases 

in checked baggage fees.
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The Department does not believe that air carriers, travel agencies, and tour operators currently 

attempt to impose post-purchase fare increases on prior purchasers of air transportation, but lacks 

adequate information to confirm this assessment.

3.10. Passenger Notification of Flight Status Changes 

The Department is proposing to require that reporting carriers provide information on flight 

status changes to passengers through whatever means they use (electronic messaging services, 

website flight status tools, departure/arrival boards at airports, and gate attendant 

announcements) within 30 minutes of when that information either becomes available to the 

carrier or should have become available to the carrier.

No information is currently available on the extent to which flight status updates are now 

disseminated to passengers by various communications channels within 30 minutes of new 

information becoming available. The Department is soliciting comments from parties who are 

able to provide information on this issue. 

3.11. Limitations on Venue Provisions in Contracts of Carriage

The Department is proposing to codify its current enforcement policy on permissible restrictions 

imposed by venue provisions in carrier contracts of carriage. The proposed requirement would 

proscribe any such provisions from eliminating the right of consumers to bring claims against the 

carrier in any court with jurisdiction, treating any such restrictions as an unfair and deceptive 

trade practice.

The Department may also consider limiting the restrictions on venue provisions to ensure that 

customers have the ability to file claims in their State of residence, the State in which the ticket 

was purchased, and/or the State(s) of the flight‘s origin and destination.

4. Framework for Analysis of Benefits and Costs

The NPRM includes 11 requirements containing more than a dozen provisions that would 

provide airline passengers with additional protections. While the benefits and costs for each of 

11 requirements were evaluated on a stand-alone basis, there are two dimensions of the 

evaluation that cut across the specific requirements: (1) the aspect of passenger air travel that 

would be addressed, and (2) the ability of passengers (or prospective passengers) to obtain 

needed services or information from other sources. The first of these considerations shapes the 

methodologies used to estimate benefits; the second informs the estimation of both benefits and 

costs. We also present a listing of the general assumptions used in developing these estimates.

4.1. Type of Air Travel Issues Being Addressed

The first is the element of passenger air travel that the proposed requirement would address:
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Carrier Service: Several of the requirements under consideration would standardize 

and/or improve aspects of service provision for passengers that have already booked 

flights (such as Requirements 9 and 10) and, in the case of tarmac delays (Requirement 

1), already boarded the aircraft. In many of these areas, some carriers typically provide 

the level of service contemplated in the proposed regulations, but others fall short of the 

potential requirement to a degree that the service provided is qualitatively different from 

that which would be reasonable for consumers to expect. Adopting regulations to address 

these issues would reduce the amount of time consumers lose to delays, move some of 

the time spent waiting to more comfortable situations, and reduce uncertainty associated 

with air travel. There are also benefits to consumers at the time of purchase from limiting 

the frequency and consequences of possible service failures.

Purchaser Information: Other requirements would improve the extent and presentation 

of information available to consumers who are in the process of making air travel 

purchase decisions. While online search tools provide potential customers with access to 

much more extensive information about carriers, flight times, and prices than was 

previously available, it is often difficult to determine the final price of the purchase being 

contemplated. Adopting additional requirements for the provision of information about 

flight pricing, fees, and likelihood of delays (Requirements 2, 7, and 8) will reduce 

consumer search time and improve the chances that purchase decisions are made with 

sufficient information.

Passenger Equity: Two types of possible requirements—those dealing with overbooking 

(Requirement 6) and limitations on venue provisions in contracts of carriage 

(Requirement 11)—primarily address carrier-passenger equity issues, but may have 

subtle economic effects as well.29 Ensuring equitable treatment of involuntarily bumped 

passengers may reduce potential passenger reluctance to purchase and/or use consolidator 

or frequent flyer tickets for trips at busy air travel times. Eliminating restrictions on 

venue may prompt airlines to be more responsive to the complaints of unsatisfied 

passengers and avoid increased litigation exposure.

In our development of benefits estimation methodologies, we have therefore grouped the 

regulatory requirements under consideration into three categories based on the type of impact 

and benefits they are expected to have. The three major categories involve requirements to: (1) 

improve the delivery of services to passengers who have already booked air travel; (2) provide 

additional or clearer information to consumers who are making travel purchase decisions; and (3) 

provide more equitable treatment of similarly-situated passengers. The benefits that can be 

expected from adopting each of these three categories of requirements will need to be estimated 

using different approaches:

 

29 More specifically, these provisions would ensure that similarly situated passengers would be treated equitably. 

For example, requiring an increase in the maximum DBC level to account for inflation would compensate future 

passengers who are involuntarily bumped at the same (real) rate as those who are currently denied the ability to 

board oversold flights. Prohibiting restrictions on the venue for filing claims would ensure that the costs and 

inconvenience associated with filing a consumer-related claim would be similar for consumers in different states, 

instead of varying with the distance between the carrier‘s and the passenger‘s home states. 
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Carrier Service: In general, the benefits of requirements that would provide service 

improvements have been valued using the approaches already developed in the RIA for the 

recently adopted EAPP1 Final Rule. Provisions which would potentially improve carrier 

delivery of services have been evaluated by assessing the impact on the aggregate amount of 

time and the quality/comfort of where that time is spent (e.g., in the terminal vs. on the 

tarmac on diverted international flights) during travel for affected passengers. In some 

instances, the benefit of a proposed requirement will be to increase the certainty of service 

delivery within expected levels of provision quality and timeliness. Estimating the benefits 

of these requirements involved making an assessment of the likely ranges of uncertainty 

premiums that passengers might attach to air travel services. 

Purchaser Information: A consumer surplus methodology has been used to estimate the 

benefits of requirements that are expected to improve the availability and ease-of-use of prepurchase air fare information. Evaluating the benefits for each requirement area involves

developing an estimate of the number of prospective purchasers who would make use of the 

additional information and the value to these purchasers of having this additional information 

available. The estimated benefits also depend on the extent to which options are already 

available to consumers who wish to incorporate them into their purchasing decisions. In 

addition, valuation of the benefits from improved information required estimating the perpurchaser time savings from reduced search costs.

Passenger Equity: The proposals that address passenger equity issues involve transfers 

from carriers to passengers. The amounts of these transfers are relatively straightforward to 

calculate in the case of the possible changes to the DBC policy, but the extent of any transfer 

resulting from limitations on carrier venue restrictions cannot be quantified.

4.2. Availability of Alternatives to Carrier Services or Information

The second cross-cutting dimension is the extent to which consumers have available alternatives 

to relying on the carrier to provide adequate service or to obtaining adequate information to 

inform purchase decisions:

Post-Purchase Changes in Terms of Service: The requirements for tarmac contingency 

plans for foreign carriers and for all carriers to coordinate these plans with Customs and 

Border Protection at diversion airports fall at one end of the spectrum of situations with 

readily available alternatives, with well-publicized instances of passengers being held ontarmac for prolonged periods of time. The proposals to modify the existing rules on 

overbooking and prohibit post-purchase increases in checked baggage fees and other optional 

fees also address situations where the carrier unilaterally makes post-purchase alterations in 

the terms of service. In these areas, the proposed requirements would limit the range of 

discretion that could be taken by one party to an airline travel contract (the carrier) in 

situations where the other party (the passenger) is unable to make welfare loss-mitigating 

responses to those actions.

Pre-Travel Services or Information Available: In contrast, some of the deficiencies in the 

pre-purchase information available to potential purchasers of air travel on carrier websites 
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may be mitigated by use of other online booking services that provide more extensive or 

more readily accessible information. Similarly, electronic updates on flight status can be 

obtained from a variety of sources in addition to current carrier notification systems. The 

economic benefits of additional requirements in these areas depend on the extent of the time 

costs associated with the increased searching that must be undertaken to obtain the desired 

information from alternative sources, as well as the extent to which some purchasers of air 

travel would have access to information that they presently do not know how to obtain. The 

regulatory evaluation of these provisions includes an assessment of present industry and 

consumer practices to determine the incremental benefits of more extensive and universal 

information provision and the extent to which online purchasers of air travel make use of the 

information that is already available.

4.3. General Assumptions Used in Estimating Benefits and Costs

The ability to evaluate and interpret the results of an economic analysis depends to a significant 

degree on the documentation of the baseline data and assumptions used. The following general 

assumptions apply throughout the entire analysis of benefits and costs:

In accordance with OMB guidelines, a real discount rate of 7 percent is used in the 

primary analysis and is supplemented with overall estimates using a 3 percent discount 

rate as well.

The proposed requirements become effective on January 1, 2011, with quantifiable 

benefits and costs calculated over the 10-year period from 2011 through 2020. 

Supplementary results are calculated over a 20-year period from 2011 through 2030.

This analysis includes benefits and costs for foreign business and citizens.

The numbers of flights and passengers are assumed to have declined in 2009 and then 

increase annually beginning in 2010, based on current FAA forecasts. 

The value of travel time assumed to be at $28.60 per hour for all airline travelers while 

traveling based on Department guidance. The value of travel time for these consumers 

while searching on-line for fares is a weighted average (based on the portion of personal 

travelers and business travelers) of half of the average hourly earnings of travelers on 

personal trips and 100% of the average hourly earnings of travelers on personal trips as 

estimated by the U.S. Department of Transportation ($24.15).30

The cost of air travel delay is estimated at $57.11 per minute31 to carriers and $28.60 per 

hour32 to passengers.

The cost of a flight cancellation is estimated at $11,600 to carriers33 per flight.

 

30 U.S. Department of Transportation, ―Revised Departmental Guidance: Valuation of Travel Time in Economic 

Analysis, February 11, 2003.

31 ―Evaluating the True Cost to Airlines of One Minute of Airborne or Ground Delay,‖ University of Westminster, 

May 2004. Value in 2004 Euros, converted to dollars using the exchange rate of $1.364 per Euro in 2004, and 

inflated to 2008 dollars.

32 Economic Values for FAA Investment and Regulatory Decisions, A Guide, Contract No. DFTA 1-02-C00200, 

prepared by GRA Inc.

33 Estimate for 1998 in Zalman Shavell, ―The Effects of Schedule Disruptions on the Economics of Airline 

Operations,‖ The MITRE Corporation, April 14, 2000, adjusted to 2010.
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A more detailed listing of the baseline data and assumptions used in developing these estimate is 

provided in an attached Appendix.

4.4. Alternatives Considered

The Department is considering several alternatives for achieving the goals of improved 

passenger protections in some of the areas addressed by the proposed rule. Benefits and costs 

were specifically estimated for four alternatives for comparison with the proposed rule:

Requirement 1 - Alternative A: The Department requires a maximum time limit of 4 

hours, instead of a carrier-determined limit (expected to be 5 hours), for tarmac delays 

before requiring the deplaning of passengers on international flights.

Requirement 1 - Alternative B: The contingency plan requirements for foreign carriers 

apply only to those carriers with at least one flight designed to seat 61 or more 

passengers.

Requirement 7 - Alternative C: The full fare advertising requirement would apply to 

carrier websites only.

Requirement 7 - Alternative D: The effective date for full fare advertising for carriers 

and other advertisers of air travel would be within 30 days of final rule publication.

The benefits and costs of these alternatives are compared with those for the base case in Section 

7.4.

5. Estimated Benefits of Proposed Requirements

This section presents the methodology used to evaluate the benefits for each of the proposed 

requirements in the NPRM; preliminary estimates for the components that could be evaluated 

quantitatively; and descriptions of the benefits for which no quantitative estimates could be 

developed.

5.1. Additional Requirements for Tarmac Delay Contingency Plans

Extending the EAPP1 Final Rule‘s contingency plan requirements for domestic carriers 

contingency plans to foreign carriers will provide passengers on foreign carriers‘ flights 

departing from or arriving to the United States with the same benefits that passengers on flights 

of domestic carriers currently receive. Benefits are measured as the total value of improvements 

in comfort and certainty, measured using premiums on the value of time, for passengers that are 

expected to experience greater comfort in waiting and/or certainty of departure or arrival time as 

a result of the proposed requirement. The benefits from greater comfort are estimated as 

follows:34

 

34 A similar methodology was used to estimate the benefits of tarmac contingency plans for domestic carriers in the 

regulatory analysis that accompanied the EAPP1 Final Rule. The only variance from the approach used in that 

analysis is that benefits for ―meeters and greeters‖ are not included here, as nearly all arriving international flights 
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This proposed requirement will shift the portion of total trip time spent in less 

comfortable conditions (such as the sixth hour on a plane spent sitting on the tarmac) to 

being spent in more comfortable conditions (such as waiting in an airport terminal). No 

change in overall trip time is assumed except in cases of flight cancellation. 

While studies that specifically address consumer responses to long on-board air travel 

delays have not been located, estimates from studies of consumer behavior and user 

experience on other modes of transportation are available to use as proxies. Specifically, 

analyses on transit systems provide estimates of ―premiums‖ on the value of user time 

based on the value people place on quicker or easier access to move from one place to 

another and on improved comfort during travel. This regulatory analysis adopts the 

premiums on the value of time used in the RIA for the EAPP1 to evaluate applying a 

similar requirement to covered U.S. carriers.35 

The value of the projected difference in comfort resulting from the proposed requirement 

is estimated using a percentage of the base value of travel time saved (or ―premium‖), 

developed from survey-based estimates of the values attached by travelers to different 

waiting, walking and transfer conditions. Since no specific estimate of time values for 

level of service ratings for airline travel are available, values were taken from other 

modal studies. The most applicable study estimated a time-value premium based on 

differing levels of service that incorporated factors such as comfort, convenience and 

reliability for various categories of public transportation and auto users. In this research, 

―level of service ratings‖ were used to determine the value of different time spent in 

different conditions. Based on this study, a premium of 0.34 was used for the greater 

comfort derived from access to food, water and clean lavatory facilities; a premium of 

0.68 was used for the greater comfort of waiting in the terminal rather than in a plane on 

the tarmac. These premiums are within the range found for the value transit passengers 

place on being able to sit versus stand (0.20 and 0.87 in two studies that address the 

quality of travel experience).

36

 

with extensive on-tarmac delays are at airports to which the planes have been diverted and therefore are unlikely to 

keep ―meeters and greeters‖ waiting in the arrival airport.

35

 For example, studies show that transit riders value sitting more than standing without regard to any change in 

total travel time required. Travelers also prefer to spend time in transit rather than part of the time waiting for service 

if total trip length is the same. See William Waters, The Value of Times Savings for the Economic Valuation of 

Highway Investments in British Columbia, BC Ministry of Transportation and Highways, 1992, as discussed in 

Transportation Cost and Benefit Analysis – Travel Time Costs, Victoria Transport Policy Institute, revised August 

10, 2007 and Marcus von Wartburg and W.G. Waters II, Chapter 2: Congestion Externalities and the Value of 

Travel Time Savings, in Towards Estimating the Social and Environmental Costs of Transportation in Canada, 

Anming Khang, et al, eds. Center for Transportation Studies, University of British Columbia, August 2004, for 

reviews of the literature. 

36 William Waters presents data that the difference between the value of time sitting versus standing is 0.20 of the 

prevailing wage rate (William Waters, The Value of Times Savings for the Economic Valuation of Highway 

Investments in British Columbia, BC Ministry of Transportation and Highways, 1992, as discussed in Transportation 

Cost and Benefit Analysis – Travel Time Costs, Victoria Transport Policy Institute, revised August 10, 2007). An 

older study (P.B. Goodwin) presents premiums ranging from 0.25 to 0.87 (averaging 0.50) for sitting versus 

standing in either a public or segregated (demand response only) vehicle (P.B. Goodwin, Human Effort and the 

Value of Travel Time, Journal of Transport Economics and Policy, January 1976).
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In addition, the simple existence of contingency plan to address long on-tarmac delays may have 

a benefit to passengers, because they would have more knowledge about carrier policies and 

know that there are limits on a plane sitting on the tarmac without working lavatories, as well as 

how long the plane can sit on the tarmac before food and water are provided and before 

passengers must be allowed to deplane. For instance, if a passenger waits for 1.5 hours on the 

tarmac, he or she knows that food, water and lavatory facilities will be guaranteed if the delay 

continues. Measuring the benefits to passengers provided by this guarantee requires the 

estimation of a ―certainty premium‖ that places a monetary value on the knowledge that future 

discomfort will be avoided. 

No research studies were located that directly quantify the value of decreased anxiety during

extended on-tarmac waiting periods. Consequently, based on studies of auto and public transit 

passengers‘ value of levels of service summarized above, a conservative estimate of a 1 percent 

premium was selected as a proxy for the value of the decreased anxiety/discomfort passengers 

would place on knowledge that a contingency plan exists to address conditions and airline 

commitments during on-tarmac delay situations.37 The total value of this benefit is calculated as 

the product of of the hours spent by all passengers waiting on the tarmac for more than one hour, 

the premium for decreased anxiety/greater security of knowing a tarmac contingency plan exists 

(assumed to be 0.01), and the DOT-specified value of time for air travelers. 

For passengers waiting on the tarmac after two hours and who have not deplaned, a premium of 

0.34 is used to valued the benefits of ensured access to adequate food, water and lavatory 

facilities. The total value of this benefit is calculated as the product of the hours spent by all 

passengers waiting on the tarmac for more than two hours, the premium for greater comfort 

(assumed to be 0.34), and the DOT-specified value of time for air travelers. 

Benefits to passengers allowed to deplane after a tarmac delay of a specified length accrue from 

the greater comfort of waiting in the terminal, instead of on the plane on the tarmac. The total 

value of this benefit is calculated as the product of the amount of time that would have been 

spent on the tarmac by passengers, the premium for greater comfort associated with time spent 

waiting in the terminal rather than on the tarmac (assumed to be 0.68), and the DOT-specified 

value of time for air travelers. 

This proposed requirement may result in some flights being cancelled that would not otherwise 

have been cancelled in order to free up needed gates. The additional cancellations will result in 

additional costs to passengers and carriers.38 These passengers would thus experience a 

―disbenefit‖ or negative impact because the cancellation will increase overall travel time. The 

 

37

 A recent review of literature on the value of travel time found changes based on various level of comfort as low 

as 8%, or .8, (Chapter 5, Transportation Cost and Benefit Analysis – Travel Time Costs, Victoria Transport Policy 

Institute, revised August 10, 2007)..

38

 While there is some research into the factors behind flight cancellations (such as hub destination, weather, time of 

day, day of the week) little data exists to estimate the incremental impact on flight cancellations arising from 

additional delays due to outside requirements. One of the few such studies was conducted on airport closures for 

security reasons and found an additional 5% of flights were cancelled when the closure time was extended by one 

hour (Nicholas Rupp, George Holmes and Jeff DeSimone, ―Airline Schedule Recovery After Airport Closures: 

Empirical Evidence since September 11th,‖ NBER Working Paper No. 9744, June 2003).
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increase in travel time is valued using DOT estimates for air travelers and research on the 

average increase in trip time when a flight is cancelled.39

The benefits of the proposed requirements for domestic and foreign carriers to coordinate 

contingency plans with airport authorities at small hub and non-hub airports and with CBP 

authorities at diversion airports are difficult to quantify. The regulatory evaluation prepared in 

support of the EAPP1 Final Rule assumed that the recently adopted regulations would be 

adequate to ensure complete compliance by carriers. However, the proposed enhancements to 

the contingency plan requirements may increase the probability that covered domestic carriers 

completely comply with the EAPP1 requirements. The benefits of these enhancements are 

therefore estimated to range from zero to 1 percent of the total benefits previously estimated for 

domestic carriers‘ tarmac contingency plans.

The estimates of benefits incorporate two key assumptions:

The distribution of on-tarmac delays among foreign carriers‘ flights to and from U.S.

airports is identical to the distribution of reporting domestic carriers‘ flights.

40

The rate of increase in flight cancellations due to the implementation of contingency 

plans is similar to the incremental cancellation rate for domestic carriers‘ due to 

contingency plan requirements.

41

The estimated benefits for the proposed requirement are as follows:

Table 12 - Illustration of Benefits Estimation for First Year, Requirement 1

2011

Monetized Time Saved from Comfort (1+ hour delays) $33,949 

Monetized Time Saved from Access (2+ hour delays) $179,020 

Monetized Time Saved from Comfort (5+ hour delays) $501 

Monetized Savings from Added Coordination with CBP $0

Monetized Benefits from Coordination w/ Additional Airports $7,984 

Monetized Benefits from All Components $221,454 

Total Component Benefits (millions) $0.23 

 

39 Estimates of the likely number of flights that would exceed each of the time limits (or triggers) for both arriving 

and departing flights are needed for these calculations, but the BTS does not currently collect these data from 

foreign carriers. Therefore, the distribution of arriving and departing flights of US reporting carriers by the length of 

on-tarmac delay was applied to the numbers of flights operated by foreign carriers. Because carriers would be able 

to set the time limit for deplaning and the difficulties associated with cancelling international flights, the proposed 

requirement is expected to result in very few additional flight cancellations (see the source notes in the Appendix for 

additional details).

40 Data for the distribution of flights by length of on-tarmac delay are not available for foreign carriers, which are 

not required to report on-time statistics to BTS.

41 The proposed requirement allows a foreign carrier to determine what the time-limit for deplaning will be, as long 

as it is made available on its website beforehand, which gives the carrier greater flexibility in limiting cancellations.
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A complete presentation of the procedures used to calculate these benefits is provided in the 

attached appendix.

Adoption of this proposed requirement may provide several additional categories of potential 

benefits that could not be quantified in this regulatory evaluation, including the following:

Improved Management of Flight Delays. As with domestic carriers, there is a 

possibility that the existence of contingency plans for long on-board delays could lead to 

heightened sensitivity to additional delay costs among foreign carrier management. This 

could lead to improved management of delayed flights, diversion schedules, and other 

flight management issues as carriers have additional incentive to avoid long on-board 

delays.

Decreased Anxiety with Regard to Flying. Knowing that contingency plans exist may 

bring relief during long on-board delays and lower overall flight anxiety for some 

passengers, making some passengers less uneasy about overall about traveling by air. 

This may lead to a significantly improved travel experience for some passengers (more so 

than is estimated) and may even lead to an increase in overall demand for air travel.

Reduced Stress among Delayed Passengers and Crew. A possible decrease in passenger 

anxiety, together with improved comfort and convenience brought by contingency plans,

may lead to reduced stress among delayed passengers and crew. This may decrease minor 

conflicts and occasional altercations that arise when people are under stress for extended 

periods in close quarters.

Improved Overall Carrier Operations. Carriers may be able to improve general 

operations based on analysis of data now required to be stored on substantive delays and 

carrier responses. This recalls the business management maxim, ―What you can measure, 

you can manage.‖ If carriers measure substantive delays and their responses to them, the

result will establish benchmarks for improvements. From these benchmarks, carriers can 

improve service, leading to more unquantified passenger benefits.

Improved Customer Good Will towards Carriers. As the level of service provided by 

carriers improves and complaints decline, overall customer good will towards carriers 

should improve. Improved good will may lead to a slight increase in demand.

The Department is expressly soliciting comments regarding the estimation of the percentage of 

international flights which are likely to have on-tarmac delays of greater than two hours, greater 

than three hours, greater than four hours, and greater than five hours. The Department is also 

expressly soliciting comments regarding the estimation of a premium on the value of time for 

certainty/security of knowing that if carriers are required to have contingency plans and the 

premiums for time spent with access to food, water and clean lavatories after 2 hours of ontarmac delays and for the time spent in an airport instead of on-tarmac after an extended period 

of time.
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5.2. Expanded Reporting of Tarmac Delays

This requirement would result in more complete information being made to be available to 

Department, which could improve their ability to identify, analyze, and respond to issues and 

enforcement matters relating to carrier adherence to tarmac contingency plans. Passengers may 

also benefit from the BTS making available delay statistics from more carriers of air travel. 

However, it is not possible to quantify the benefits from these improvements in data coverage 

and availability.

Since these data will be used for tarmac delay reports published by the BTS, it is also possible 

that benefits may accrue to consumers as they become more aware of the range of incidents of 

long on-tarmac delays and adjust their purchasing decisions. Such a scenario would result in 

improved performance among carriers, especially among international carriers who may set a 

time limit for on-tarmac delays before allowing deplaning that is greater than the 3 hour 

requirement for domestic flights. This analysis does not attempt to estimate such benefits at this 

point.

There is also a possibility that the publication of incidents of lengthy on-board delays could 

generate increased negative passenger attention, in turn leading to heightened sensitivity to 

additional delay costs among carrier management. This could lead to improved management of 

delayed flights, diversion schedules, and other flight management issues, as carriers have 

additional incentive to avoid long on-board delays.

5.3. Minimum Standards for Customer Service Plans

The Department believes that the proposed minimum standards will assist carriers in better 

preparing their customer service plans and decrease confusion among carrier and consumers as 

to the Customer Service Plans requirements. Since there has not yet been an opportunity to 

assess the impact of Customer Service Plans for domestic carriers, benefits for the new 

guidelines have not been estimated yet.

Regarding the requirement that foreign carriers have customer service plans, it is assumed that 

adoption of a customer service plan will improve the level of service provided. As noted in the 

Regulatory Impact Analysis for Enhance Airline Passenger Protections, a review of data from 

domestic carriers that were self-auditing compliance with customer service plans previous to the 

proposed rule showed a greater reduction customer complaints beginning in the two years after 

adoption of self-auditing than for carriers that did not audit in the same time frame.42 The 

historical difference in complaint rates between carriers that self-audited and those that did not is 

used to estimate the decline in complaints for carriers that will now audit compliance. A 

preliminary estimate of benefits from requiring foreign carriers to implement and self audit-

 

42

 For carriers implementing self audits of adherence to customer service plans, complaints decline in the 2 years 

following implementation by 39%. During the same years, carriers that did not self-audit saw only a drop of 19% in 

complaints. New self auditing carriers are expected to see a 10% decline in complaints, or half the difference in 

historical complaint rates between previously self-auditing carriers and other carriers. See the appendix for more 

details.
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customer service plans is presented using a premium on the value of that trip (represented by 

average ticket price) of 0.054:

43

Table 13 - Illustration of Benefits Estimation for First Year, Requirement 3

2011

Number of Complaints (Foreign Carriers) 1,275

Complaint Multiplier (ratio of higher # of complaints 

received by carriers vs. sent to BTS) 61

Number of "Ground Level" Complaints 77,775

Percentage Reduction of Complaints by Implementing CSP 20%

Reduction in Complaints 15,555

Benefits from Premium on Complaint Free Air Travel

Premium on Foreign Flights for Complaint-Free Travel 1.054

Average Price of Airfare (Domestic) $316.44 

Average Price of Airfare (International) $1,955.00 

Percentage of Foreign Carriers PAX that Fly Domestic 

Routes 0.75%

Weighted Average Air Fare $1,942.69 

Average Savings per Complaint Free Flight per Complaining 

Passenger $97.13 

Benefits from Loss of "Bad Experience" Trips $755,463 

Total Component Benefits (millions) $0.76 

Adoption of this proposed requirement may provide several additional categories of potential 

benefits that could not be quantified in this regulatory evaluation, including the following:

Decreased Confusion and Uncertainty Regarding Department’s Requirements. The 

specification of standards for the provisions required in carrier customer service plans 

should lead to a decrease in confusion among carriers and passengers as to what 

protections are actually provided by the customer service plans. The decrease in 

confusion may also lead to less time spent by carriers answer consumer questions 

regarding the plans.

Value of Improved Customer Service Based on Self-Auditing of Adherence to 

Customer Service Plans for Foreign Carriers. Historical data on complaints filed with 

DOT shows that carriers that implement customer service plans and self-audit adherence 

to the plan have fewer complaints than other carriers. This presumably is based on an 

improvement in services from carriers to passengers, including better baggage handling, 

fewer ticketing errors, less discrimination and other problems for passengers. Carriers 

 

43 This approach requires several assumptions that may be misleading, including: that each avoided complaint 

affects one individual flight in equal proportion to all complaints; that premiums on the comfort of travel are 

applicable to all customer complaints, including problems with fares, ticketing, discriminatory events, delayed

flights, etc.; and that complaints are equally distributed for all trip lengths and should therefore be considered 

preliminary and open to public comment.
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are providing service in a better manner to consumers, but the value of this change is 

difficult to estimate.

Improved Customer Good Will towards Carriers. Simply having standards to which all 

carriers can refer may, by itself, lead to improvements in overall customer satisfaction 

more quickly and more efficiently than without the standards. This effects would, in 

turn, lead to greater customer good will sooner than would otherwise be the case, and/or a 

decrease in costs as carriers implement and manage adherence to their customer service 

plans.

5.4. Incorporation of Tarmac Contingency Plans and Customer Service Plans 

into Contracts of Carriage

It was not possible to develop quantitative estimates of benefits for this requirement. However, it 

is possible that simply incorporating the customer service plan into the contract of carriage, 

independent of any action to audit adherence to that plan, will cause customer service to 

improve. Carriers will be required both to incorporate their customer service plans into their 

contracts of carriage and to self-audit their adherence to those plans. There are sufficient 

examples of carriers that have adopted an audit of their customer service plan to estimate the 

impact of such action on overall customer service, but not enough information to track the 

impact of incorporating those plans into the contract of carriage.

5.5. Requiring Foreign Carriers to Respond to Customer Complaints

The benefits of this provision include reduced barriers to filing a complaint, saving time, and 

increasing satisfaction due to more prominently displayed complaint filing information. 

Quantitative benefits associated with reducing time required to file a complaint, which includes 

time spent locating the appropriate address to send the letter or email but not the resolution of 

complaints, are estimated in the same manner as for domestic carriers under the previous 

regulation.

Table 14 - Illustration of Benefits Estimation for First Year, Requirement 5

2011

Number of Complaints (Foreign Carriers) 1,275

Complaint Multiplier (# of Complaints not filed actually 

received by Carriers) 61

Number of "Ground Level" Complaints to Foreign Carriers 77,775

Benefits from Increase in Consumer Surplus

Percent Change in Cost of Complaining 3.23%

Elasticity of Cost of Complaining 1.07

Percentage Increase in Complaints 3.47%

Incremental Increase in Number of Complaints 2,698

Decrease in the Cost of Complaining $0.32 

Benefits from Increase in Consumer Surplus $432 

Total Component Benefits (millions) $0.00 
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As with passengers on domestic carriers covered under the EAPP1 Final Rule, passengers on 

flights of foreign carriers who file complaints may experience greater reassurance and less 

agitation while awaiting resolution of a complaint. Passengers may feel that their complaints are 

legitimate when carriers respond to them specifically instead of just noting that a communication 

has been received. However, this analysis does not include a quantitative analysis of increased 

satisfaction from these responses because of a lack of information about likely carrier responses 

and the degree of impact on consumers. The Department is expressly soliciting comments 

regarding estimating the dollar value to customers of receiving a response to their complaint 

which acknowledges the issues involved, instead of a more generic acknowledgement of the 

communication.

5.6. Changes in Denied Boarding Compensation (DBC) Policy

Several of the proposed changes in the current DBC policy would increase the amounts paid by 

carriers to passengers who are bumped involuntarily from oversold flights. However, any benefit 

to passengers in the form of higher DBC compensation payments would be offset by a cost to 

carriers of the same amount. As such, the value of these additional payments represents a 

transfer from carriers to passengers and not a net economic benefit of the proposed requirements.

It is possible that some passengers—those who feel that all the costs of a trip (including 

monetary outlays, time, risks of travel, etc.) just barely outweigh the benefits—may decide that 

the improved DBC policies make travel more comfortable or less risky and decide to purchase a 

ticket or a trip that otherwise would not have occurred. This would lead to increased economic 

activity, which would represent a net benefit to the rule, but more data and research are needed 

before estimating such benefits.

It is also possible that carriers may reduce overbooking rates on some flights in response to the 

potential increase in DBC compensation costs. However, while fewer passengers would be 

involuntarily bumped in this scenario, it is likely that other passengers would now not be able to 

purchase tickets and ultimately travel on their preferred flights since fewer tickets would be sold. 

A reduction in involuntary bumping would generate an increase in social welfare, and reduction 

in being able to travel on preferred flights would result in a loss of social welfare. It is likely 

that the negative impact would outweigh the positive impact, since involuntary bumping is 

required to resolve overbooking on only a small percentage of all flights that are oversold. 

However, adequate information to calculate the costs and benefits of this potential impact has not 

been located and therefore no estimates of the positive or negative benefits resulting from 

changes in overbooking rates are included in this evaluation.

Adoption of this proposed requirement may provide additional categories of potential benefits 

that could not be quantified in this regulatory evaluation, including the following:

Decrease in Confusion Regarding Denied Boarding Compensation Provisions. The 

requirement that carriers must provide information regarding customer DBC rights in the 

same manner as other compensation is offered (such as a carrier coupon) should decrease 

confusion among passengers. When passengers are presented information in different 

formats (such as orally and written), there are an ample opportunities for confusion.
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Decreased Resentment among Some Passengers Regarding Different Compensation 

Received. Under current guidelines, some passengers on the same flight and entitled to 

the same amount of compensation may unwittingly chose different methods of 

compensation and resent what that other passengers received (such as cash).

5.7. Required Disclosure of Full Fares in Advertising and Prohibition on OptOut Provisions in Ticket Sales

Passengers benefit from full-fare advertising in one of two ways: either by making more 

informed, and thus ―better‖ purchasing decisions, or by saving time searching for the full-fare in 

individual or across multiple websites. Passengers are assumed to fall into one of two categories: 

1) those who visit multiple ticketing websites to ensure that they can adequately compare prices 

with all fees and taxes across the universe of websites (some of which include all taxes and fees 

and some of which do not), rather than comparing currently displayed fares (some of which do 

not include these taxes and fees) and 2) passengers who do not seek and review pricing data on 

multiple websites to compare all available prices inclusive of taxes and fees. The first group is

referred to as Multi-Site Shoppers regarding Taxes and Fees; the second as One-Site Shoppers or 

Non-Shoppers regarding Taxes and Fees. Only those passengers who purchase tickets online 

would benefit from this provision of the rule. 

Under the proposed rule, passengers who already search for full fare information and compare 

ticket prices among carriers, the Multi-Site Shoppers regarding Taxes and Fees will avoid the 

additional time needed to ensure that they are looking at comparable prices and are making

decisions based upon the actual final cost of purchase. Note that the provision will not eliminate 

the value of comparison shopping across websites for prices, it will simply eliminate the need to 

search multiple websites for the best fares including all taxes and fees and/or the need for 

additional time to collect full-fare information on website sites that do not provide full-fare 

prices up-front (such as sites requiring a consumer to select a flight and continue partially 

through the purchase process in order to see the full-fare price). 

The analysis uses estimates of domestic travelers and the proportion of tickets purchased online 

to estimate the total number of consumers who could potentially benefit. We estimate benefits 

for that portion of the travelers assumed to be Multi-Site Shoppers and the portion who are 

assumed to be as One-Site Shoppers or Non-Shoppers regarding Taxes and Fees. The Multi-Site 

Shoppers regarding Taxes and Fees are assumed to be shopping for an average of 2.6 people, 

which is the average travel party size on commercial airlines. The number of tickets purchased 

online is therefore divided by 2.6 to arrive at an estimate of the number of persons searching 

multiple web sites and making purchases. The analysis assumes that these purchasers would 

save an average of 5 minutes of search and/or estimation time if all websites presented full-fare 

information up-front. This time saving was multiplied by a value of time derived from the US 

Department of Transportation data developed for estimating air travelers value of time and uses a 

weighted average of the estimated non-work value of time of leisure travelers and the average 

hourly earnings of business travelers ($24.14 per hour, see Source Notes and Appendix for 

greater detail).
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While independent data is available on the percentage of air passengers who purchase tickets online and for the value of time for air travelers, independent estimates have not yet been found for 

the:

Percent of online air tickets purchased by consumers who search and examine multiple 

websites to compare fares and who spend time specifically examining prices including all 

taxes and fees while shopping for the best price.

Average amount of time that these consumers would save if all websites presented fullfare information up front.

The estimate of 2 percent of online purchasers searching multiple websites is a conservative 

estimate prepared for this analysis. The likely amount of search time that would be saved has 

been estimated from a review of online purchase websites. The Department is specifically 

seeking comment on whether these estimates are appropriate and if other, better estimates are 

available (see the source notes section of the Appendix for more information).

Of the other passengers who do not fully-search online carrier websites and online travel 

agencies to ensure that they are making decisions based upon the entire fare, some make a 

suboptimal choice and purchase air travel at a price higher than desired. A consumer surplus 

methodology is used with estimates of consumer price sensitivity for airfare, to estimate what is 

essentially a ―deadweight loss‖ arising from some consumers at the margins making purchases at 

a price higher than is optimum. Using estimates of price sensitivity (price elasticity), the change 

in demand due to the increase in full fare due to the undisclosed taxes and fees is estimated, and 

the value of reduced efficiency from non-equilibrium purchases is estimated.

The number of potentially affected ticket purchases was derived from the total number of 

travelers, adjusted to reflect the proportion of tickets purchased online, and purchasers who 

searched multiple websites (noted above). This figure was further adjusted by a conservative 

estimate that 90 percent of these consumers are already purchasing from a website which is 

compliant or may adjust their purchase between different carriers. The analysis does not attempt 

to value the adjustment of consumer purchases from one carrier to another.

While no evidence was found directly measuring the differential impact that the timing of the 

appearance of the full-fare purchase price would make on air ticket purchaser decisions, research 

on the impacts in similar situations demonstrates that the timing of the presentation of the fullprice can have substantial impacts on the final demand. One study used a field experiment to 

compare purchases at grocery stores when prices were posted with and without sales tax and 

found that presenting price tags including taxes on the shelf (i.e. when first encountering the 

opportunity to select the product for purchase) led to an overall decrease in purchases by 8

percent, even though demand for groceries is relatively more inelastic (i.e. less sensitive to unit 

changes in price) than demand for air travel.44 

This analysis uses a more conservative method of estimating the impact of full-fare advertising 

than the 8 percent decline in demand noted above. A national elasticity of -0.4 estimated by the 

 

44

 Raj Chety, Adam Looney and Kory Kroft, ―Salience and Taxation: Theory and Evidence,‖ American Economic 

Review, 2009.
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International Air Transport Association (―Air Travel Demand‖) was used together with average 

ticket prices and the costs of fees which are not currently required to be included when prices are 

first posted in order to estimate average change in price and resulting reduction in demand that 

would occur (estimated at 2 percent) from full-fare pricing up-front.45

Table 15 - Illustration of Benefits Estimation for First Year, Requirement 7

2011

Number of Tickets for Domestic Flights Sold by Reporting Carriers 236,903,727

Percentage of PAX using U.S. Domestic Reporting Carrier 88%

Number of Total Passengers on Domestics Flights 270,251,225

Percentage of Domestic Passengers to Total Passengers on U.S. 

Carriers(Dom & Int) 87%

Number of Total Tickets for U.S. Carriers 310,434,804

Percentage of PAX using internet for Airfare Purchase 72%

Tickets Purchased on Websites to Purchase Airfare 223,513,059

Multi-Site Shoppers regarding Taxes and Fees

Passengers Who Research Airfare Prices on Multiple Websites for 

lowest Taxes and Fees 2%

Passengers Who Benefit from Amending Price Advertising 4,470,261

Average Travel Trip Party Size 2.6

Passengers Who Benefit from Amending Price Advertising per Trip Party 1,719,331

Value of Time for Passenger (Personal Non-Traveling) $24.15 

Average Incremental Time Spent by Savvy Passengers finding Taxes

and Hidden Fees (hours) 0.08

Average Cost per Search per Passenger for Airline Taxes and Fees $2.01 

Monetized Time Saved from Reduction in Search Cost $3,460,154 

 

45

 Derived from data in the BTS American Travel Survey; see source notes in the Appendix for greater detail.
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Table 15, ctd. - Illustration of Benefits Estimation for First Year, Requirement 7

2011

One-Site Shoppers or Non-Shoppers regarding Taxes and Fees

Passengers 219,042,798

Percentage of Passengers Using Websites Already Presenting Full 

Fare 90%

Passengers Benefit from Amending Price Advertising 21,904,280

Percentage of Total Price of Taxes Revealed (Price Increase) 5%

Average Price of Airfare (Domestic) $316.44 

Average Price of Airfare (International) $1,955.00 

Percentage of Passengers in U.S. Carrier Flights that are Domestic Flights 87%

Weight Average Airfare for Passengers of U.S. Domestic Carriers $528.54 

Revelation in Price ("Increase in Price") $26.43 

National Level Elasticity for Air Travel Demand -0.4

Percentage Decrease in Demand -2%

Decrease in Passengers 438,086

Monetized Benefits from Elimination of Dead Weight Loss $5,788,643 

Multiplier to Account for 6-Month Lag in Benefits 0.5

Total Component Benefits (millions) $4.62 

A complete presentation of the procedures and formulas used to calculate these benefits is 

provided in the attached appendix.

The full-fare advertising requirement may also improve customer good will towards carriers. 

With all carriers consistently providing full-fare advertising to consumers, customers may 

perceive the carriers are treating them more ―honestly.‖ Some customers may have more positive 

experiences purchasing tickets than otherwise, making them slightly more likely to travel by air 

in the future, or to avoid the carriers or websites used previously.

By requiring that a customer take a specific action to opt-out of the purchase of an additional 

service or amenity, some customers mistakenly make a purchase they did not want or intend. 

Some customers may misunderstand or simply miss the fact that an op-out feature is an 

additional, optional purchase. By prohibiting opt-outs for additional services and amenities, this 

provision will increase consumer welfare by decreasing unwanted purchases. While the nature 

of this effect is well understood, adequate information needed to estimate these benefits has not 

yet been found.

The Department is expressly soliciting comments regarding the estimation of several factors in 

the estimation of benefits for this provision, including that average search time saved for 

passengers who already search for full fare information; the percent of passengers who spend 

time searching websites to find full fare ticket information; the percent of online ticket 

purchasers who purchase only from websites which provide full-fare pricing up-front; the 

percent of passengers who are fully aware of added fees and taxes when purchasing tickets from 

web pages that do not automatically display that data up front; the likely change in demand for 
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those passengers not aware of taxes and fees until the end of the purchase process; and the 

percentage of airline customers who purchase additional services and amenities due to an opt-out 

feature who would otherwise not have made that purchase.

5.8. Expanded Disclosure of Baggage Fees and Other Optional Fees

Insufficient data was found to adequately estimate the benefits from adoption of this proposed 

requirement. However, the provisions included in requirement 8 may provide potential benefits 

that could not be quantified in this regulatory evaluation, including the following:

Decrease in Time at Check-in. Some consumers are not fully aware of their carrier‘s 

baggage fees until they arrive for check-in, even though all the information is available 

on line at the time of purchase. In such cases, some passengers may be delayed at checkin as they attempt to repack so as to reduce their checked-in baggage. Such situations not 

only increase the amount of time spent checking-in, but also increases time spent waiting 

for those later in line. Ensuring that baggage fees are prominently displayed will 

minimize such problems.

Improved Customer Good Will towards Carriers. With all carriers consistently providing 

full information regarding checked baggage fees to consumers in a conspicuous 

placement, customers may perceive that carriers are treating them more ―honestly.‖ 

Some customers may have more positive experiences than otherwise, making them 

slightly more likely to travel by air in the future.

It should also be noted that if some passengers are not currently fully aware of baggage fee 

changes currently and become so due to the proposed rule, a portion of those passengers may 

decide to pack differently. These passengers would be more likely to take more into the cabin 

with them, which may lead to further crowding in the cabin.

5.9. Prohibition on Post-Purchase Fare Increases 

The Department has determined that currently, carriers are essentially already compliant but that 

some tour operators who provide packages which include air transportation (plus cruises, hotel, 

etc.) may not be. Benefits from this provision accrue from the increase certainty in price (level 

of comfort) when purchasing packages include air travel. The benefit of this provision in 

addition to the value of the price increase is some level of comfort or certainty to the passenger. 

For this analysis a provisional estimate of incremental benefit was made by adding a premium to 

the value of search time and purchase time of air travelers.
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Table 16 - Illustration of Benefits Estimation for First Year, Requirement 9

2011

Number of Tickets for Domestic Flights Sold by Reporting Carriers 236,903,727

Percentage of PAX using U.S. Domestic Reporting Carrier 88%

Number of Total Passengers on Domestics Flights 270,251,225

Percentage of Domestic Passengers to Total Passengers on U.S. 

Carriers(Dom & Int) 87%

Number of Total Tickets for U.S. Carriers 309,829,668

Percentage of Passengers Who Purchase Airfare Outside of The 

Internet 28%

Number of Passengers Who Purchase their Airfare on Travel 

Websites 86,752,307

Percentage of Non-Internet Using Passengers Purchasing Through 

Carriers 80%

Number of Passengers Who May Benefits from Prohibition of PostPurchase Increase 17,350,461

Benefits of Certainty

Value of Time for Passenger (Personal Non-Traveling) $24.15 

Premium on Certainty of Purchase 1.01

Incremental Savings per Passenger per Hour 0.24

Average Amount of Time Spent Purchasing Airfare 0.17

Average Savings per Passenger $0.04 

Monetized Benefits of Certainty $698,356 

Total Component Benefits (millions) $0.70 

In addition to the benefits for which quantitative estimates could be developed, a prohibition on 

post-purchase increases may well lead to an improvement in consumer good will toward noncarrier travel organizations such as ticket agents and tour operators.

The Department is expressly soliciting comments regarding the estimation of the appropriate 

premium on the value of air ticket purchasers‘ time from the certainty that there will be no postpurchase price increase, as well as the estimation of the average amount of time to purchase 

ticket. In addition, the Department is interested in comments on other methodologies to value 

the benefit to consumers of knowing that their tour package price is a final price.

5.10. Prompt Passenger Notification of Flight Status Changes

Conceptually, being assured that carriers will promptly disseminate information about flight 

status changes may reduce the time and amount of effort that passengers expend to check on 

possible flight delays and cancellations, allow passengers (and those meeting arriving 

passengers) to leave a smaller margin of safety in choosing what time to leave for the airport, 
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and help travelers feel more secure while traveling to the airport, knowing that they will be 

promptly updated if the status of their flight changes. 

The Department currently does not have information on the extent to which reporting carriers 

currently comply with the proposed requirement. Consequently, it is not possible to develop 

quantitative estimates of the benefits that passengers would receive from any changes in the 

promptness with which carriers notify travelers about flight status changes.

5.11. Limitations on Venue Provisions in Contracts of Carriage

The benefits from this provision include avoidance of cost that some claimants may incur to 

travel to other states or for hiring out-of-state lawyers. In addition, some lawsuits with merit may 

not be filed because of the financial and time costs of filing in another state and potentially 

having to travel there for adjudication. The courts of law are one avenue of ensuring appropriate 

company conduct toward consumers. By adding limits as to where a lawsuit can be filed, 

carriers may stifle the number of legitimate lawsuits filed. If legitimate lawsuits act as a 

deterrent to unlawful corporate behavior, it is possible that their limitation may lead to an 

increase in some inappropriate or unlawful actions unchecked.

6. Estimated Costs of Proposed Requirements

This section presents the methodology used to evaluate the costs for each of the proposed 

requirements in the NPRM; preliminary estimates for the components that could be evaluated 

quantitatively; and descriptions of the costs for which no quantitative estimates could be 

developed.

The costs for domestic carriers to comply with Requirements 1 (tarmac contingency plans), 3

(customer service plans), and 5 (complaint response) were estimated in the regulatory evaluation 

for the EAPP1 Final Rule. The costs estimates in this analysis assume that the per-carrier costs 

of compliance are equal for domestic and foreign carriers.

Per-hour costs for various categories of carrier, travel agent, and tour operator employees were 

estimated using BLS wage rates, increased by 30 percent to reflect fringe benefits (per FAA 

guidance), and rounded up to the nearest $5 increment. A mark-up of 150 percent was applied to 

each of these per-hour cost estimates to account for supervisory and management 

communication, training, and oversight time, as well as corporate overhead.

6.1. Additional Requirements for Tarmac Delay Contingency Plans

Foreign carriers (other than Air Canada) will incur one-time costs to develop and implement 

tarmac delay contingency plans and per-flight costs that vary with the length of time that the 

delayed aircraft remains on the tarmac. In Section 3.1 we estimated that these carriers would 

have needed to apply these plans to respond to an expected average of 222 tarmac delays of 2 or 

more hours in 2009. About nine of these delays would have extended to the 4-hour mark, and a 

delay of 5 hours or more can be expected to occur once every 9 months. In the baseline scenario, 
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we have assumed that foreign carrier contingency plans will contain a 5-hour time limit after 

which passengers must be afforded the opportunity to deplane in the absence of any Departmentspecified threshold. Costs were also estimated for an alternative scenario in DOT sets a 4-hour 

maximum limit to deplane passengers in foreign carrier contingency plans (Alternative A) and 

for a scenario in which compliance with this requirement is limited to foreign carriers that 

operate flights to and from the U.S. using at least one plane with more than 60 seats (Alternative 

B).

46

Specific compliance cost elements include:

Staff and management costs to develop, post, and monitor the contingency plan and to 

collect data on actions triggered by the plan.

Per-person costs to provide adequate food, water, and lavatory facilities and medical 

attention. The per-person cost to provide adequate food and water was assumed to be 

$3.71.47

Per-person costs associated with deplaning and reboarding passengers. Per-person costs 

for passengers on flights required to taxi back to the gate (instead of using buses and 

mobile stairs) are based on the average taxi time and fuel burn per minute by plane size. 

Per-person costs were also calculated for passengers deplaned on the tarmac and 

transferred to the terminal by bus. Airport boarding and deplaning fees were included in 

the unit costs for both groups of passengers.

For this analysis, we have assumed that the unit costs for foreign carriers to comply with the 

proposed requirements would be equal to those estimated for domestic carriers in the regulatory 

evaluation for the EAPP1 Final Rule, as follows:

Table 17 - Unit Costs for Requirement 1

Base Low High

Fixed costs of developing tarmac delay 

contingency plan, per-carrier $22,500 $11,250 $45,000

Fuel costs of tarmac delay contingency plans 

(4+ hours with reboarding), per-flight $176.48 $88.24 $352.96

Per-passenger costs of tarmac delay 

contingency plans (2+ hour delays) $3.71 $1.86 $7.42

Additional per-passenger costs of tarmac 

delay contingency plans (4+ hours with 

reboarding) $2.74 $1.37 $5.48

Source: DOT, “Final Regulatory Impact Analysis of Rulemaking on Enhanced Airline 

Passenger Protections,” December 17, 2009.

 

46 All but the few smallest foreign carriers would be required to have tarmac contingency plans under this 

alternative.

47

 Carrier costs for servicing toilets are expected to be minimal. This analysis assumes that no increase in on-board 

medical personnel or equipment will be needed to comply with the proposed requirement.
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Based on these estimates and assumptions, costs incurred by affected carriers to comply with 

proposed Requirement 1 in the base case are expected to be $2.098 million in 2011 and $147,804

in 2012.

Table 18 - Estimated Compliance Costs for Requirement 1

2011 2012

Development of contingency plan

Number of foreign carriers without compliant 

contingency plans 87

Cost per carrier of developing contingency plan $22,500

Cost of developing contingency plans $1,957,500 $0

Variable costs of tarmac delay contingency plans

Average number of passengers per segment, non-Air 

Canada foreign carriers 165 165

Projected tarmac delays of 2+ hours, non-Air Canada 

foreign carriers 214 218

Passengers affected by tarmac delays of 2+ hours on nonAir Canada foreign carriers 37,865 39,607

Per-passenger costs of tarmac delay contingency plans, all 

delays $3.71 $3.71

Projected tarmac delays of 5+ hours, non-Air Canada 

foreign carriers 1.3 1.3

Passengers affected by tarmac delays of 5+ hours on nonAir Canada foreign carriers 222 232

Additional per-passenger costs of tarmac delay 

contingency plans, 5+ hour delays with reboarding $2.74 $2.74

Per-flight fuel costs of tarmac delay contingency plans, 5+ 

hour delays with reboarding $176.48 $176.48

Variable costs of tarmac delay contingency plans $141,309 $147,804

Total costs of tarmac delay contingency plans $2,098,809 $147,804

Note: Number of flights and passengers incurring tarmac delays increases in subsequent years by the 

growth rates for international passengers and flights projected in the 2009 FAA Aerospace Forecast.

The estimated costs incurred by affected carriers to comply with proposed Requirement 1 are 

slightly higher in the Alternative A scenario and slightly lower in the Alternative B scenario.

6.2. Expanded Reporting of Tarmac Delays

In Section 3.2 we estimated that in 2009 there were 264 3-hour tarmac delays on flights operated 

by non-reporting U.S. carriers and 61 on flights operated by foreign carriers that would have to 

be reported to the BTS under Requirement 2.
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Reportable tarmac delays on domestic flights occurred at a rate of about 13 per 100,000 

departures in 2009. Carriers that expect to report an average of 1 tarmac delay monthly (i.e.,

those that have more than 100,000 departures annually) are assumed to set up systems to 

program the collection and transmission of tarmac delay data in an electronic format suitable for 

submission to the BTS. There are 10 non-reporting U.S. carriers and one foreign carrier that 

would be expected to exceed this threshold number of reportable tarmac delays annually.48

For this analysis, we have utilized the following estimates of per-carrier costs for the steps that 

would be required to achieve compliance with the provisions in proposed Requirement 2:

Table 19 - Unit Costs for Requirement 2

Base Low High

Set-up costs to program flight delay data in 

BTS format (first year)

$35,000 $10,000 $60,000 

Annual costs to maintain/update 

programming (future years)

$3,500 $1,000 $6,000 

Per-report costs for data collection, form 

completion and review, and forwarding to 

BTS (first year)

$1,200 $600 $1,800 

Per-report costs for data collection, form 

completion and review, and forwarding to 

BTS (future years)

$600 $300 $900 

Sources: Set-up costs for programming are from RIA in RITA-2007-28522-0012. Per-report 

cost based on $30/hour in direct labor wages and benefits, $45/hour for management 

review and corporate overhead.

 

48 The affected carriers would include five regional carriers that provide passenger service using at least one aircraft 

with 61 or more seats (Colgan, Horizon, Mesaba, PSA, and Republic) and five carriers that operate at least one 

aircraft with 30 to 60 seats (Air Wisconsin, Cape Air, Chautauqua, Piedmont, and Trans States). It is possible that 

Piedmont would be able to report through its parent company (US Airways). Among foreign carriers, only Air 

Canada/Air Canada Regional would be expected to have an average of 1 or more reportable tarmac delays monthly.
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Based on these estimates and assumptions, costs incurred by affected carriers to comply with 

proposed Requirement 2 are expected to be $796,309 in 2011 and $248,473 in 2012.

Table 20 - Estimated Compliance Costs for Requirement 2

2011 2012

Automated reporting system (carriers with >100k 

departures/year)

Cost of initial system setup $35,000 $0 

Maintenance/update costs per year $0 $3,500 

Number of carriers not currently reporting with >100k 

departures/year 11 11

Total cost of automated reporting system $385,000 $38,500 

Filing individual reports (carriers with <100k 

departures/year)

Cost per hour of reporting $75 $75

Hours required per report 16 8

Reportable tarmac delays per year, non-reporting US 

carriers 278 284

Reportable tarmac delays per year, foreign carriers 65 66

Total cost of filing individual reports $411,309 $209,973

Total cost of reporting tarmac delays $796,309 $248,473

Note: Number of flights with reportable tarmac delays increases in subsequent years by the total 

departure growth rate projected in the 2009 FAA Aerospace Forecast.

6.3. Minimum Standards for Customer Service Plans

The 88 foreign carriers that are not subsidiaries of other foreign carriers would have to develop, 

implement, and self-audit compliance with customer service plans (CSPs) that meet the 

minimum standards set forth in the proposed requirement. The regulatory evaluation for the 

EAPP1 Final Rule provided separate compliance cost estimates for large and small domestic 

U.S. carriers. We have adopted a similar treatment here, assuming that the 10 foreign carriers 

that boarded at least one percent of all international passengers (about 150,000 enplanements) in 

2008 would need to develop and implement more extensive CSPs. The Department is soliciting 

comments as to whether this size-based distinction appropriately captures the likely extent of 

variation in compliance costs among foreign carriers.

Per-carrier compliance costs to develop and self-audit acceptable CSPs are assumed to be equal 

to those estimated for domestic carriers in the RIA for the EAPP1 Final Rule:
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Table 21 - Unit Costs for Requirement 3

Base Low High

Develop and implement CSP (large carriers) $35,000 $17,500 $70,000

Develop and implement CSP (other carriers) $3,850 $1,925 $7,700

Annual cost of CSP self-audit (large carriers) $56,800 $28,400 $113,600

Annual cost of CSP self-audit (other carriers) $6,248 $3,124 $12,496

Source: DOT, “Final Regulatory Impact Analysis of Rulemaking on Enhanced Airline 

Passenger Protections,” December 17, 2009. Large carriers are those with at least 1% of 

passengers on international flights to and from the United States.

Based on these estimates and assumptions, costs incurred by affected carriers to comply with 

proposed Requirement 3 are expected to be $1,705,644 in 2011 and $1,055,344 in 2012.

Table 22 - Estimated Compliance Costs for Requirement 3

2011 2012

Cost of developing customer service plans (CSPs)

Number of large foreign carriers (>1% of international 

passengers) 10 10

Number of other foreign carriers 78 78

Cost of implementation, large foreign carriers $35,000 $0

Cost of implementation, other foreign carriers $3,850 $0

Annual self-audit, large foreign carriers $56,800 $56,800

Annual self-audit, other foreign carriers $6,248 $6,248

Total cost of customer service plans $1,705,644 $1,055,344

6.4. Incorporation of Tarmac Contingency Plans and Customer Service Plans 

into Contracts of Carriage

Incorporating tarmac contingency plans and customer service plans into carrier contracts of 

carriage is estimated to involve minimal administrative and website programming costs. In 

addition, the Department is not able to estimate the number of carriers that would incorporate 

these plans into their contracts of carriage voluntarily if this proposed requirement was not 

adopted. Therefore, quantitative estimates of carrier compliance costs have not been developed 

for this provision.

6.5. Requiring Foreign Carriers to Respond to Customer Complaints

The 88 foreign carriers that are not subsidiaries of other foreign carriers would have to comply 

with the minimum standards for responding to customer complaints set forth in the proposed 

requirement. The regulatory evaluation for the EAPP1 Final Rule provided separate compliance 

cost estimates for large and small domestic U.S. carriers. We have adopted a similar treatment 

here, assuming that the 10 foreign carriers that boarded at least one percent of all international 
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passengers (about 150,000 enplanements) in 2008 would need to develop and implement more 

extensive systems and procedures to handle complaints from customers on flights to and from 

the United States. The Department is soliciting comments as to whether this size-based 

distinction appropriately captures the likely extent of variation in compliance costs among 

foreign carriers.

Per-carrier compliance costs are assumed to be equal to those estimated for domestic carriers in 

the RIA for the EAPP1 Final Rule:

Table 23 - Unit Costs for Requirement 5

Base Low High

Establish/upgrade complaint handling 

system and procedures (large carriers) $41,371 $20,686 $82,742

Establish/upgrade complaint handling 

system and procedures (other carriers) $4,261 $2,131 $8,522

Per-complaint cost to respond $1.85 $0.93 $3.70

Source: DOT, “Final Regulatory Impact Analysis of Rulemaking on Enhanced Airline 

Passenger Protections,” December 17, 2009. Large carriers are those with at least 1% of 

passengers on international flights to and from the United States.

Based on these estimates and assumptions, costs incurred by affected carriers to comply with 

proposed Requirement 5 are expected to be $860,905 in 2011 and $114,837 in 2012.

Table 24 - Estimated Compliance Costs for Requirement 5

2011 2012

Cost of responding to complaints

Number of large foreign carriers (>1% of international 

passengers) 10

Number of other foreign carriers 78

Cost of implementation, large foreign carriers $41,371

Cost of implementation, other foreign carriers $4,261

Cost of implementing response systems $746,068 $0

Number of complaints 64,099 67,048

Per-complaint response cost $1.85 $1.85

Cost of responding to individual complaints $118,583 $124,038

Total cost of responding to complaints $864,651 $124,038

Note: Number of passengers complaining increases in subsequent years by the international passenger 

growth rate projected in the 2009 FAA Aerospace Forecast.

6.6. Changes in Denied Boarding Compensation (DBC) Policy

As noted in Section 5.3, any increases in the amount of DBC that would be paid under these 

proposed amendments represent transfers from carriers to passengers, rather than actual 
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economic costs and benefits. However, there are also real economic costs associated with 

implementing changes in the DBC policy and updating the maximum amounts payable on a biannual basis. These costs will be higher in the first year than in subsequent years because the 

proposed changes to the current DBC policy include new provisions relating to zero-fare 

tickets and verbal explanations provided to passengers who may be involuntarily bumped from 

oversold flights.

The 2008 BTS P-10 schedule data on airline employment indicate that there were 

approximately 94,000 people employed in ―passenger handling‖ positions, a category which 

includes reservations staff (both at airports and in call centers), ticket agents, gate or boarding 

attendants, and airport lounge staff, but not flight-related or baggage handling employees. For 

this analysis we have assumed that carriers will need to train and communicate with onequarter of these employees to implement the new DBC policy in the first year. We have 

assumed that half as much time per-employee will be needed to train and communicate with 

gate attendants and other relevant carrier employees when the threshold amount of DBC is 

increased biennially in alternating future years.49

For this analysis, we have utilized the following estimates of per-employee costs for the steps 

that would be required to achieve compliance with the provisions in proposed Requirement 6:

Table 25 - Unit Costs for Requirement 6

Base Low High

Cost per gate attendant for communication 

and training (first year changes to DBC 

policy)

$10.00 $5.00 $20.00

Cost per gate attendant for communication 

and training (biennial updates to maximum 

DBC amount)

$5.00 $2.50 $10.00

Source: Per-employee cost based $60/hr in direct labor wages and benefits, $90/hour for 

management review and corporate overhead.

 

49 For this analysis, the Department has assumed that any bi-annual changes in the maximum DBC limit will be 

made using the July CPI-U and become effective on January 1st of the following year. These costs may be increased 

if the adjustments must be made more rapidly, because it reduces the opportunities for carriers to communicate 

changes to gate agents and other passenger-handling personnel who must be informed. 
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Based on these estimates and assumptions, costs incurred by affected carriers to comply with 

proposed Requirement 6 in the base case are expected to be $235,000 in 2011 and $117,500 in 

each future year in which the maximum DBC limit is increased.

Table 26 - Estimated Compliance Costs for Requirement 6

2011

DBC Update 

Years*

Training costs for gate agents

Minutes required to train agents on zero-fare and verbal 

notification DBC policy changes 10 0

Minutes required to train agents on biennial DBC 

inflation adjustments 0 5

Cost per hour of training (gate agent wages + overhead 

including supervisory review time) $60 $60

Number of gate agents 23,500 23,500 

Total cost of training gate agents $235,000 $117,500

* "DBC Update Years" are those years in which the maximum amount of DBC will be adjusted, starting 

2013 and biennially thereafter.

6.7. Required Disclosure of Full Fares in Advertising and Prohibition on OptOut Provisions in Ticket Sales

Compliance costs would be incurred to revise both online and print media advertising by 

carriers, travel agents, and tour operators that do not currently display in their advertising and 

solicitations full fares that include all applicable taxes and fees. The extent of these costs will 

depend in part on the length of time between the date on which the rule is published and the 

effective date of this requirement. In the base case analyzed in this evaluation, sellers of air 

transportation will need to ensure that any new print advertising developed after the rule date 

will need to comply with the proposed requirement, but will be able to distribute advertising 

already in production or distribution until the effective date for the rule. In this scenario, most 

(90 percent) print advertising materials will not require revisions, either because they do not 

display prices, display prices that include full fares for any air transportation being sold, or are 

not expected to remain in circulation by the effective date of the rule.50 We also estimated costs 

for an alternative scenario (Alternative D) in which 25 percent of current print media advertising 

materials would have to be revised.

For this analysis, large travel agencies and tour operators are defined as those with 20 or more 

employees. Our cost estimates assume that these companies will incur larger per-firm costs to 

revise online and print media advertising and solicitations that do not display full fares for air 

transportation. Small travel agents and tour operators with fewer than 20 employees are assumed 

to incur smaller per-firm costs to revise print advertising materials.

 

50 For example, advertising for spring break travel packages that does not reflect full fares for any air travel could be 

distributed after an assumed rule publication date of January 1, 2010, as long as it did not offer tours that could be 

booked 180 days later.
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The unit costs for revising online and print advertising materials to comply with the proposed 

requirement are as follows:

Table 27 - Unit Costs for Requirement 7

Base Low High

Website reprogramming to display full fares, 

remove any opt-outs (large firms) $12,000 $6,000 $24,000

Website reprogramming to display full fares, 

remove any opt-outs (small firms) $3,000 $1,500 $6,000

Modify print media advertising (large firms) $12,000 $6,000 $24,000

Modify print media advertising (small firms) $3,000 $1,500 $6,000

Source: Unit cost for both web programming and print advertising assumed to be $60/hr in 

direct labor wages and benefits, $90/hour for management review and corporate 

overhead.

It should be noted that these per-advertiser cost estimates do not include costs for carrier, travel 

agency, and tour operator websites to bring the price displays on their online flight selection 

pages into compliance with current Department guidelines and enforcement policy (see the 

discussion in Section 2.7).
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Based on the base case estimates and assumptions, costs incurred by affected carriers to comply 

with proposed Requirement 7 are expected to be $6.86 million in 2011. Of this total, $5.4 million 

is associated with revisions to print media advertising materials. If the provisions in this 

requirement are applied only to carrier websites (Alternative C), then compliance costs would be 

much lower ($1.4 million in 2011). For the second alternative scenario (Alternative D), 

compliance costs are estimated to be $15.0 million in 2001; $13.6 million of this total would be

associated with revisions to print media advertising materials.

Table 28 - Estimated Compliance Costs for Requirement 7

2011 only

Reprogramming websites to show full fares

Number of large U.S./foreign carriers 110

Largest online travel agencies (OTAs) 4

Number of small/very small U.S. carriers (assume 1⁄2 have 

websites currently showing full fares, none have opt-outs) 40

Hours required to reprogram noncompliant websites, large 

carriers/largest OTAs 80

Hours required to reprogram noncompliant websites, 

small/very small carriers 20

Cost per hour of web programming (wages plus overhead 

including supervisory review) $150

Total cost of reprogramming $1,428,000

Modification of print advertising to reflect full fares

Number of large U.S./foreign carriers 110

Largest online travel agencies (OTAs) 4

Number of other large online travel agencies/tour operators 

(20+ employees) 923

Hours required to modify large firm print advertising 80

Number of small/very small U.S. carriers (assume 1⁄2 have 

print ads currently showing full fares, none have opt-outs) 40

Number of offline travel agencies (tickets sold via GDS or 

other airline systems) 11,579

Number of offline tour operators (assume tickets not sold 

independently of package) 2,375

Hours required to modify small firm print advertising 20

Percentage of advertising requiring revision with effective 

date of 07/01/2010 (full-fare only) 10%

Cost per hour of print advertising revision (wages plus 

overhead including supervisory review) $150

Total cost of revising print advertising $5,436,600

Total cost of revising websites and advertising $6,864,600
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No additional compliance costs would be incurred in subsequent years, as sellers of air 

transportation have the option of displaying full-fare prices in all future advertising and 

solicitations. 

6.8. Expanded Disclosure of Baggage Fees and Other Optional Fees

Because most carriers already post notices on their websites with current fees for checked 

baggage and other optional products and services, the compliance costs for the provisions of this 

requirement that apply to carrier websites are limited to the incremental costs of updating and 

posting notices when these fees changes. However, carriers may incur more significant costs to 

program e-ticket generators to display any checked baggage fees that may apply. The 

Department does not have extensive information about the likely magnitude of these costs. For 

this analysis, we have utilized the following estimates of per-carrier costs for the steps that would 

be required to achieve compliance with the provisions in proposed Requirement 8:

Table 29 - Unit Costs for Requirement 8

Base Low High

Add/remove notice of increased baggage 

fees to website (1 time/year) $600 $300 $1,200

Program e-tickets to include bag fees (onetime cost) $6,000 $3,000 $12,000

Post list of optional fees (1 time/year) $1,200 $600 $2,400

Source: Unit cost for both web programming and print advertising assumed to be $60/hr in 

direct labor wages and benefits, $90/hour for management review and corporate 

overhead.
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Based on these estimates and assumptions, costs incurred by affected carriers to comply with 

proposed Requirement 8 are expected to be $906,000 in 2011 and $246,000 in 2012.

Table 30 - Estimated Compliance Costs for Requirement 8

2011 2012

Reprogramming websites after baggage fee increases

Number of large/small/foreign carriers 110 110

Hours required to update/post/remove increased fee 

notices 4 4

Cost per hour of web programming (wages plus 

overhead including supervisory review) $150 $150

Total cost of baggage fee disclosure updates $66,000 $66,000

Reprogramming e-tickets to display baggage fees

Number of large U.S./foreign carriers 110

Hours required to reprogram e-tickets 40

Cost per hour of web programming (wages plus 

overhead including supervisory review) $150

Total cost of reprogramming e-tickets $660,000 $0

Reprogramming websites after optional fee increases

Number of large U.S./foreign carriers 110 110

Number of small/very small U.S. carriers 40 40

Hours required to update/post/remove increased fee 

notices 8 8

Cost per hour of web programming (wages plus 

overhead including supervisory review) $150 $150

Total cost of optional fee disclosure updates $180,000 $180,000

Total cost of posting baggage/optional fee information $906,000 $246,000

6.9. Prohibition on Post-Purchase Fare Increases

Most, if not all, domestic and foreign carriers are believed to be currently complying with this 

proposed requirement. Some travel agents and tour operators may not be following current 

Department guidelines that prohibit post-purchase price increases without prior disclosure to, and 

agreement by, customers at the time of purchase. However, we have no information on the 

number of travel agents and tour operators that may engage in practices that would be proscribed 

by this requirement. In any event, it is unlikely that there are significant compliance costs 

associated with refraining from imposing post-purchase price increases on future purchasers of 

air transportation and travel packages.
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6.10. Prompt Passenger Notification of Flight Status Changes

The Department does not have information on the extent to which the 19 reporting U.S. carriers 

currently comply with the proposed requirement. Consequently, it is not possible to develop 

quantitative estimates of the compliance costs, if any, that may be incurred by the carriers to 

which this requirement would apply.

6.11. Limitations on Venue Provisions in Contracts of Carriage

Air travelers are expected to be slightly more likely to pursue claims against carriers in the 

absence of venue restrictions in carrier contracts of carriage, because they would be able to avoid 

the time and financial costs of out-of-state travel to adjudicate these claims. However, the 

Department does not possess adequate information to estimate the costs associated with lawsuits 

that would be incurred by carriers.

7. Results and Discussion of the Benefit and Cost Analysis

The goal of a regulatory impact analysis is to estimate the incremental benefits and costs of 

adopting proposed requirements. The difference between benefits and costs quantified over the 

planning horizon lifecycle and discounted to the present represents the primary indicator of 

regulatory value.51 A present value (PV) of net benefits greater than zero indicates that measured 

benefits exceed measured costs and that the regulation is likely to increase the general level of 

economic welfare accordingly. A PV of net benefits that is less than zero means that measured 

costs exceed measured benefits.

This section summarizes the benefits, costs, and net benefits estimated for the proposed 

requirements included in the NPRM. A requirement-by-requirement comparison of benefits and 

costs, and estimates for benefits and costs for possible regulatory alternatives, follow.

7.1. Overall Net Benefits of the Proposed Requirements

All quantified benefits and costs estimated for individual requirements were translated into 

current values for each year in the 10- and 20-year periods beginning with calendar year 2011.52

In accordance with OMB guidelines, a real discount rate of 7 percent is used in the primary 

analysis and is supplemented with overall estimates using a 3 percent discount rate.

The expected present value (PV) of passenger benefits from the proposed requirements included 

in the NPRM over a 10-year period using a 7 percent discount rate is estimated at $87.59 

million. The expected present value of costs incurred by carriers and other sellers of air 

transportation to comply with the proposed requirements is $25.98 million over 10 years, 

 

51 This follows the guidance of OMB Circular A-4, which stipulates that this difference—the net present value 

(NPV)—should be regarded as the principal measure of value produced by a benefit-cost analysis. Further, 

Executive Order 12866 states that agencies should attempt to maximize the net benefits of their rulemakings, subject 

to statutory requirements.

52 The affected parties are assumed to be compliant with the proposed regulations by January 1, 2011, with the 

exception of the full-fare advertising provision of proposed Requirement 9.
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discounted at 7 percent. The PV of net benefits for a 10-year period at a 7 percent discount rate is 

thus $61.61 million. Using a 3 percent discount rate, the PV of net benefits for 2011 through 

2012 is estimated at $75.73 million.

Table 31 - Present Value of Net Benefits for Proposed Requirements, 2011-2020

PV (millions)

Total Quantified Benefits 

10 Years, 7% discounting $87.59 

10 Years, 3% discounting $104.18 

Total Quantified Costs 

10 Years, 7% discounting $25.98 

10 Years, 3% discounting $28.45 

Net Benefits 

10 Years, 7% discounting $61.61 

10 Years, 3% discounting $75.73 

*Note: Totals may not sum due to rounding.

The NPV of net benefits is higher when estimated over a 20-year period, with the present values 

of benefits and costs estimated at $150.51 million and $34.09 million, respectively, using a 7 

percent discount rate. This is because many of the benefits from the proposed requirements will 

accrue to passengers on an ongoing basis, while most of the costs to comply with these 

requirements will be incurred by carriers, travel agents, and tour operators on a one-time basis.

The estimated NPV of net benefits for the 20-year period is $116.41 million using a 7 percent 

discount rate, and $170.44 if a 3 percent discount rate is used. 

Table 32 - Present Value of Net Benefits for Proposed Requirements, 2011-2030

PV (millions)

Total Quantified Benefits 

20 Years, 7% discounting $150.51 

20 Years, 3% discounting $212.84 

Total Quantified Costs 

20 Years, 7% discounting $34.09 

20 Years, 3% discounting $42.40 

Net Benefits 

20 Years, 7% discounting $116.41 

20 Years, 3% discounting $170.44 
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7.2. Net Benefits of Specific Proposed Requirements

A requirement-by-requirement summary of benefit and cost estimates, as well as the 

unquantifiable benefits identified, is provided in the table below.

Table 33 - Comparison of Requirement-Specific Benefits and Costs, 2011-2020

(discounted at 7%/year to 2011 $ millions)

Requirement 1: Expansion of tarmac delay contingency plan requirements 

and extension of EAPP1 Final Rule requirements to cover foreign carriers Total

Estimated Quantified Benefits $1.99

Estimated Quantified Costs $3.24

Net Benefits -$1.25

Additional Benefits not Quantified in this Evaluation:

Improved Management of Flight Delays

Decreased Anxiety with Regard to Flying

Reduced Stress among Delayed Passengers and Crew

Improved Overall Carrier Operations

Improved Customer Good Will towards Carriers

Requirement 2: Expanded tarmac delay reporting and application to foreign 

carriers Total

Estimated Quantified Benefits not estimated

Estimated Quantified Costs $2.31

Net Benefits not estimated

Additional Benefits not Quantified in this Evaluation:

Increased Efficiency of US DOT Oversight and Enforcement Office Operations

Improved Management of Flight Delays

Requirement 3: Establishment of minimum standards for customer service 

plans (CSPs) and extension of EAPP1 Final Rule requirements to cover 

foreign carriers Total

Estimated Quantified Benefits $6.25

Estimated Quantified Costs $8.58

Net Benefits -$2.33

Additional Benefits not Quantified in this Evaluation:

Decreased Confusion and Uncertainty Regarding Department’s Requirements

Value of Improved Customer Service Based on Self-Auditing of Adherence to Customer Service Plans for Foreign 

Carriers

Improved Customer Good Will towards Carriers
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Table 33, ctd. - Comparison of Requirement-Specific Benefits and Costs, 2011-2020

(discounted at 7%/year to 2011 $ millions)

Requirement 4: Incorporation of tarmac delay contingency plans and CSPs 

into carrier contracts of carriage Total

Estimated Quantified Benefits not estimated

Estimated Quantified Costs not estimated

Net Benefits not estimated

Additional Benefits not Quantified in this Evaluation:

Decreased Occurrence of and Improved Resolution of Customer Complaints

Requirement 5: Extension of EAPP1 Final Rule requirements for carriers to 

respond to consumer complaints to cover foreign carriers Total

Estimated Quantified Benefits $0.00

Estimated Quantified Costs $1.82

Net Benefits -$1.82

Additional Benefits not Quantified in this Evaluation:

Decreased Anger toward Carriers During Resolution of Complaints

Requirement 6: Changes in denied boarding compensation (DBC) policy Total

Estimated Quantified Benefits not estimated

Estimated Quantified Costs $0.66

Net Benefits not estimated

Additional Benefits not Quantified in this Evaluation:

Decrease in Confusion Regarding Denied Boarding Compensation Provisions

Decreased Resentment among Some Passengers Regarding Different Compensation Received

Requirement 7: Full-fare advertising and prohibition on opt-out provisions Total

Estimated Quantified Benefits $73.50

Estimated Quantified Costs $6.86

Net Benefits $66.64

Additional Benefits not Quantified in this Evaluation:

Travelers Less Likely to Mistakenly Purchase Unwanted Services and Amenities

Improved Customer Good Will Towards Carriers

Requirement 8: Expanded requirements for disclosure of baggage and other 

optional fees Total

Estimated Quantified Benefits not estimated

Estimated Quantified Costs $2.51

Net Benefits not estimated

Additional Benefits not Quantified in this Evaluation:

Decrease in Time at Check-in

Improved Customer Good Will towards Carriers
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Table 33, ctd. - Comparison of Requirement-Specific Benefits and Costs, 2011-2020

(discounted at 7%/year to 2011 $ millions)

Requirement 9: Prohibiting Post-Purchase Increase Total

Estimated Quantified Benefits $5.83

Estimated Quantified Costs not estimated

Net Benefits not estimated

Additional Benefits not Quantified in this Evaluation:

Improved Customer Good Will towards Carriers

Requirement 10: Prompt passenger notification of flight status changes Total

Estimated Quantified Benefits not estimated

Estimated Quantified Costs not estimated

Net Benefits not estimated

Additional Benefits not Quantified in this Evaluation:

Greater Comfort and Certainty from Knowing that Information Will Be Available In Timely Manner

Requirement 11: Limitations on venue provisions in contracts of carriage Total

Estimated Quantified Benefits not estimated

Estimated Quantified Costs not est

Net Benefits not est

Additional Benefits not Quantified in this Evaluation:

Improved Customer Good Will towards Carriers

Requirements 1 -11: TOTAL Total

Estimated Quantified Benefits $87.6

Estimated Quantified Costs $26.0

Net Benefits $61.6

Substantial portions of the estimated benefits, costs, and net benefits from the proposed rule are 

attributable to the full-fare advertising provision of Requirement 7. The expected benefits 

estimated for this single provision total $73.50 million over the 10-year period from 2011 

through 2020 using a discount rate of 7 percent. Benefits estimated for the full-fare advertising 

provision represent 84 percent of the total benefits estimated for all 11 proposed requirements 

during the period from 2011 through 2020.

The expected costs of complying with the full-fare advertising provision of Requirement 7 are 

estimated at $6.86 million over the 10-year period from 2011 through 2020 using a discount rate 

of 7 percent. Costs estimated for the full-fare advertising provision in Requirement 7 represent 

26 percent of the total costs estimated for all 11 proposed requirements during the period from 

2011 through 2020.

None of the present values for quantified benefits or costs associated with any of the other 10 

requirements from 2011 through 2020 (discounted at 7 percent) are estimated to exceed $10 

million.
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7.3. Annualized Benefits and Costs

This preliminary regulatory evaluation also includes a presentation of the annual benefits and 

expenditures associated with this proposed rule. The table provides our best estimate of the 

annualized dollar amount of these benefits and costs expressed in 2011 dollars at 7 percent and 3 

percent discount rates. We estimate that the benefits will be $25.59 million annualized at a 7

percent discount rate, or $25.01 million annualized at a 3 percent discount rate. Costs of this

proposed rule are estimated to be approximately $5.97 million annualized at a 7 percent discount 

rate, or $5.26 million annualized at a 3 percent discount rate, over a 10-year period of analysis.53

Table 34 - Annualized Benefits and Costs, 2011 through 2020, $ millions 2011

Estimates Units

Primary 

Estimate

Low 

Estimate

High 

Estimate

Year 

Dollar

Discount 

Rate

Period 

Covered

Annualized Monetized 

Benefits $25.59 $11.27 $53.41 2011 7%

2011-

2020

$25.01 $10.99 $52.24 2011 3%

2011-

2020

Annualized Monetized 

Costs $5.97 $4.64 $7.52 2011 7%

2011-

2020

$5.26 $4.16 $6.54 2011 3%

2011-

2020

7.4. Benefits and Costs for Alternative Requirement Scenarios

Benefit and cost estimates were also developed for four alternative requirement scenarios: two 

for Requirement 1 (Alternatives A and B) and two for Requirement 7 (Alternatives C and D).

The only significant variation in benefits is for Alternative C, in which the full-fare advertising 

provision is assumed to cover only carrier websites.

Table 35 - Benefits and Costs for Base Case and Four Alternative Scenarios

Present Value, 2011-2020 ($ millions 2011)

Discount 

Rate Base Case

Requirement 1 Requirement 7

Alternative A Alternative B Alternative C Alternative D

Total Benefits 7% $87.59 $87.68 $87.59 $48.80 $92.19 

3% $104.18 $104.28 $104.18 $57.96 $108.78 

Total Costs 7% $25.98 $25.28 $25.84 $20.49 $34.13

3% $28.45 $27.70 $28.32 $22.97 $36.60

Net Benefits 7% $61.61 $62.40 $61.75 $28.31 $58.06

3% $75.73 $76.58 $75.87 $34.99 $72.18

See Section 4.4 for a description of the four alternative scenarios analyzed.

 

53 This statement is presented in essentially the format as the accounting statement that OMB Circular A–4 requires 

for final rules.
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7.5. Conclusion 

This preliminary regulatory analysis indicates that adoption of the proposed requirements would 

result in projected benefits to the public that outweigh the estimated costs of the proposed rule.
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Appendix: Estimation of Benefits

The table below lists overall inputs and assumptions into the benefits calculations. Inputs that are sourced as ―estimate‖ are subject 

matter expert estimates that are used where more precise data were not found. The Department is particularly interested in any 

additional, evidence-based estimates for these variables which are more robust than the current estimates. Following the table below 

are formulas listing for the benefits calculations and tables detailing the first year‘s estimates. 

Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

U.S. Carrier Flight Data

Number of Annual Passengers using Air

Travel (Domestic & International) for All U.S. 

Carriers, Market 740,454,238 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -8.03% in 2009, 1.96% in 2010, and 

2.6% beyond.

Percentage of PAX (Dom & Int) using 

Reporting U.S. Carriers, Market 87.93% 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Number of Annual Passengers using Air 

Travel (Domestic) for All U.S. Carriers, 

Market 651,703,245 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -8.8% in 2009, 1.9% in 2010, and 

2.4% and beyond.

Percentage of PAX (Dom) using Reporting 

U.S. Carriers, Market 87.66% 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Number of Annual Passengers using Air 

Travel (International) for All U.S. Carriers, 

Market 88,750,993 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -2.4% in 2009, 2.4% in 2010, and 

4.4% beyond.

Percentage of PAX (Int) using Reporting U.S. 

Carriers, Market 89.93% 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics
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Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

Number of Annual Passengers using Air 

Travel (Domestic & International) for All U.S. 

Carriers, Segment 755,827,506 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -8.03% in 2009, 1.96% in 2010, and 

2.64% beyond.

Percentage of PAX (Dom & Int) using 

Reporting U.S. Carriers, Segment 88.01% 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Number of Annual Passengers using Air 

Travel (Domestic) for All U.S. Carriers, 

Segment 666,990,665 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -8.8% in 2009, 1.9% in 2010, and 

2.4% beyond.

Percentage of PAX (Dom) using Reporting 

U.S. Carriers, Market 87.76% 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Number of Annual Passengers using Air 

Travel (International) for All U.S. Carriers, 

Segment 88,836,841 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -2.4% in 2009, 2.4% in 2010, and 

4.4% beyond.

Percentage of PAX (Int) using Reporting U.S. 

Carriers, Market 89.87% 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Number of Annual Flights (Domestic & 

International), All U.S. Carriers 10,200,023 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -5.7% in 2009, and 2.1% beyond.

Percentage of Flights (Dom & Int) from 

Reporting U.S. Carriers 64.12% 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -5.7% in 2009, and 2.1% beyond.

Number of Annual Flights (Domestic), All 

U.S. Carriers 9,373,657 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -5.7% in 2009, and 2.1% beyond.

Number of Annual Flights (International), All 

U.S. Carriers 826,366 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -5.7% in 2009, and 2.1% beyond.
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Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

Foreign Carrier Flight Data

Number of Annual Passengers using Air 

Travel (Domestic & International) for All 

Foreign Carriers, Market 68,976,137 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -0.9% in 2009, 4.2% in 2010, and 

4.6% beyond.

Number of Annual Passengers using Air 

Travel (Domestic) for All Foreign Carriers, 

Market 34,450 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -0.9% in 2009, 4.2% in 2010, and 

4.6% beyond.

Number of Annual Passengers using Air

Travel (International) for All Foreign Carriers, 

Market 68,941,687 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -0.9% in 2009, 4.2% in 2010, and 

4.6% beyond.

Number of Annual Passengers using Air 

Travel (Domestic & International) for All 

Foreign Carriers, Segment 70,066,349 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -0.9% in 2009, 4.2% in 2010, and 

4.6% beyond.

Number of Annual Passengers using Air 

Travel (Domestic) for All Foreign Carriers, 

Segment 526,450 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -0.9% in 2009, 4.2% in 2010, and 

4.6% beyond.

Number of Annual Passengers using Air 

Travel (International) for All Foreign Carriers, 

Segment 69,539,809 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -0.9% in 2009, 4.2% in 2010, and 

4.6% beyond.
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Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

Number of Annual Flights (Domestic & 

International), All Foreign Carriers 513,845 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -5.9% in 2009, and 2.1% beyond.

Number of Annual Flights (Domestic), All 

Foreign Carriers 2,562 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -5.9% in 2009, and 2.1% beyond.

Number of Annual Flights (International), All 

Foreign Carriers 511,283 FAA 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Only includes Scheduled Passenger 

Flights. Uses the FAA forecasted growth 

of -5.9% in 2009, and 2.1% beyond.

Tarmac Delays (Taxi-In and Tax-Out Delays)

Taxi In - Percentage of Passengers with 

Tarmac Delay Over 1 hours 0.0420%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi In - Percentage of Passengers with 

Tarmac Delay Over 2 hours 0.0030%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi In - Percentage of Flights with Tarmac 

Delay Over 1 hours 0.0323%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi In - Percentage of Flights with Tarmac 

Delay Over 2 hours 0.0024%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 
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Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi In - Percentage of Passengers with 

Tarmac Delay Over 3 hours 0.0006%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi In - Percentage of Flights with Tarmac 

Delay Over 3 hours 0.0004%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi In - Percentage of Passengers with 

Tarmac Delay Over 4 hours 0.0001%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi In - Percentage of Flights with Tarmac 

Delay Over 4 hours 0.0001%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics
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Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

Taxi In - Percentage of Passengers with 

Tarmac Delay Over 5 hours 0.0000%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi In - Percentage of Flights with Tarmac 

Delay Over 5 hours 0.0000%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi In - Percentage of Passengers with 

Tarmac Delay Over 6 hours 0.0000%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi In - Percentage of Flights with Tarmac 

Delay Over 6 hours 0.0000%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi Out - Percentage of Passengers with 

Tarmac Delay Over 1 hours 0.7347%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 
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Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

(BTS) -RITA Database, Aviation 

Statistics

Taxi Out - Percentage of Passengers with 

Tarmac Delay Over 2 hours 0.0755%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi Out - Percentage of Flights with Tarmac 

Delay Over 1 hours 0.8391%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi Out - Percentage of Flights with Tarmac 

Delay Over 2 hours 0.0881%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi Out - Percentage of Passengers with 

Tarmac Delay Over 3 hours 0.0182%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi Out- Percentage of Flights with Tarmac 

Delay Over 3 hours 0.0200%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

Page A-8

Econometrica, Inc. Last Revised March 29, 2010

Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi Out - Percentage of Passengers with 

Tarmac Delay Over 4 hours 0.0039%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi Out - Percentage of Flights with Tarmac 

Delay Over 4 hours 0.0037%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi Out - Percentage of Passengers with 

Tarmac Delay Over 5 hours 0.0005%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi Out - Percentage of Flights with Tarmac 

Delay Over 5 hours 0.0005%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

Page A-9

Econometrica, Inc. Last Revised March 29, 2010

Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

Taxi Out - Percentage of Passengers with 

Tarmac Delay Over 6 hours 0.0001%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Taxi Out - Percentage of Flights with Tarmac 

Delay Over 6 hours 0.0001%

2007-

2008

Distribution of flights by delay time 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections analysis 

of data on Reporting Carriers as per 

On-Time Performance database, 

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Value of Time

Value of Travel Time Per Passenger (Personal 

Travel) $23.30 2000

FAA Office of Aviation Policy and 

Plans - "Economic Values for FAA 

Investment and Regulatory Decisions, 

A Guide"

Value of Travel Time Per Passenger (Business 

and Personal) $28.60 2000

FAA Office of Aviation Policy and 

Plans - "Economic Values for FAA 

Investment and Regulatory Decisions, 

A Guide"

Value of Time for Air Passenger (Time Not 

Traveling) $24.15 

HDR|Decision Economics; FAA 

Office of Aviation Policy and Plans -

"Economic Values for 

Weighted value using 50% of hourly 

earnings of air travelers on personal 

travel and 100% of hourly earnings of 

business air travelers; earnings estimates 

from FAA Office of Aviation Policy and 

Plans - "Economic Values for FAA 

Investment and Regulatory Decisions, A 

Guide"

Other Variables
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

Page A-10

Econometrica, Inc. Last Revised March 29, 2010

Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

Percentage of Flights Canceled (same-day) 1.95% 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, On-Time 

Performance Statistics

Average Price of Airfare (Domestic) $246 2008 American Express Business Travel

Average Price of Airfare (International) $1,955 2008 American Express Business Travel

Number of Complaints (Both U.S. and Foreign 

Carriers) 10,473 2008

Office of Aviation Enforcement and 

Proceedings "Air Travel Consumer 

Report" Issued January 2009 -

December 2009

Number of Complaints (Foreign Carriers) 1,275 2008

Office of Aviation Enforcement and 

Proceedings "Air Travel Consumer 

Report" Issued January 2009 -

December 2009

Complaint Multiplier (# of Complaints not 

filed actually received by Carriers) 61 2009

―Final Report on Airline Customer 

Service Commitment,‖ Office of the 

Inspector General, US Department of 

Transportation, report AV-2001-020, 

February 12, 2001 and ―Air Travel 

Consumer Report, U.S. Department of 

Transportation.‖

Average Travel Trip Party Size 2.60 

Bureau of Transportation Statistics 

(BTS), American Travel Survey

Percentage of Passengers That Are RoundTrips 71% 2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

http://www.transtats.bts.gov/Oneway.asp

?Display_Flag=0&Percent_Flag=0

Req 5: Application of Tarmac Delay Policy 

and Contingency Plan to Foreign Carriers

Number of Passengers Who Travel on Foreign 

Carriers Already in Compliance 25,341,355

2007-

2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics

Number of flights From Foreign Carriers 

Already in Compliance 115,907

2007-

2008

Bureau of Transportation Statistics 

(BTS) -RITA Database, Aviation 

Statistics
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

Page A-11

Econometrica, Inc. Last Revised March 29, 2010

Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

Estimated Number of Flights 3-Hour Tarmac 

Delay for Foreign Carriers 61 1% 2009

Average Wait Time After An Hour Tarmac 

Delay (Taxi-In Passengers) (hours) 0.36 2009

Flight on-tarmac delay distribution 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections

Calculated using BTS data subject matter 

expert using distribution of delays for 

domestic flights in the U.S. DOT Final 

RIA Enhanced Airline Passenger

Average Wait Time After An Hour Tarmac 

Delay (Taxi-Out Passengers) (hours) 0.45 2009

Flight on-tarmac delay distribution 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections

Calculated using BTS data subject matter 

expert using distribution of delays for 

domestic flights in the U.S. DOT Final 

RIA Enhanced Airline Passenger

Average Wait Time After 2 Hours Tarmac 

Delay (Taxi-In Passengers) (hours) 0.51 2009

Flight on-tarmac delay distribution 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections

Calculated using BTS data subject matter 

expert using distribution of delays for 

domestic flights in the U.S. DOT Final 

RIA Enhanced Airline Passenger

Average Wait Time After 2 Hours Tarmac 

Delay (Taxi-Out Passengers) (hours) 0.68 2009

Flight on-tarmac delay distribution 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections

Calculated using BTS data subject matter 

expert using distribution of delays for 

domestic flights in the U.S. DOT Final 

RIA Enhanced Airline Passenger

Average Wait Time After 3 Hours Tarmac 

Delay (Taxi-In Flights) (hours) 0.53 2009

Flight on-tarmac delay distribution 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections

Calculated using BTS data subject matter 

expert using distribution of delays for 

domestic flights in the U.S. DOT Final 

RIA Enhanced Airline Passenger

Average Wait Time After 3 Hours Tarmac 

Delay (Taxi-Out Flights) (hours) 0.59 2009

Flight on-tarmac delay distribution 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections

Calculated using BTS data subject matter 

expert using distribution of delays for 

domestic flights in the U.S. DOT Final 

RIA Enhanced Airline Passenger

Average Wait Time After 4 Hours Tarmac 

Delay (Taxi-In Flights) (hours) 0.56 2009

Flight on-tarmac delay distribution 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections

Calculated using BTS data subject matter 

expert using distribution of delays for 

domestic flights in the U.S. DOT Final 

RIA Enhanced Airline Passenger

Average Wait Time After 4 Hours Tarmac 

Delay (Taxi-Out Flights) (hours) 0.58 2009

Flight on-tarmac delay distribution 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections

Calculated using BTS data subject matter 

expert using distribution of delays for 

domestic flights in the U.S. DOT Final 

RIA Enhanced Airline Passenger

Average Wait Time After 5 Hours Tarmac 

Delay (Taxi-In Flights) (hours) 0.50 2009

Flight on-tarmac delay distribution 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections

Calculated using BTS data subject matter 

expert using distribution of delays for 

domestic flights in the U.S. DOT Final 
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

Page A-12

Econometrica, Inc. Last Revised March 29, 2010

Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

RIA Enhanced Airline Passenger

Average Wait Time After 5 Hours Tarmac 

Delay (Taxi-Out Flights) (hours) 0.71 2009

Flight on-tarmac delay distribution 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections

Calculated using BTS data subject matter 

expert using distribution of delays for 

domestic flights in the U.S. DOT Final 

RIA Enhanced Airline Passenger

Average Wait Time After 6 Hours Tarmac 

Delay (Taxi-In Flights) (hours) 0.50 2009

Flight on-tarmac delay distribution 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections

Calculated using BTS data subject matter 

expert using distribution of delays for 

domestic flights in the U.S. DOT Final 

RIA Enhanced Airline Passenger

Average Wait Time After 6 Hours Tarmac 

Delay (Taxi-Out Flights) (hours) 0.71 2009

Flight on-tarmac delay distribution 

from U.S. DOT Final RIA Enhanced 

Airline Passenger Protections

Calculated using BTS data subject matter 

expert using distribution of delays for 

domestic flights in the U.S. DOT Final 

RIA Enhanced Airline Passenger

Comfort Knowing There is a Contingency Plan

Number of Tarmac Delays of 1 or more of 

Non-Compliant Foreign Carriers 2,022

Distribution of flights by delay time from 

U.S. DOT Final RIA Enhanced Airline 

Passenger Protections

Percentage of 1+ Hr Delays that Are Arrivals 4%

Distribution of flights by delay time from 

U.S. DOT Final RIA Enhanced Airline 

Passenger Protections

Premium for Reduced Anxiety from 

Contingency Plan 1.01 2009

As used for domestic carriers in U.S. 

DOT Final RIA Enhanced Airline 

Passenger Protections See source notes 

Benefit from Provision of Adequate Food, Drink, and Lavatory Access
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

Page A-13

Econometrica, Inc. Last Revised March 29, 2010

Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

Number of 2+ Tarmac Delays From NonCompliant Foreign Flights 210

Calculated using BTS data from subject 

matter expert using distribution of delays 

for domestic flights in the U.S. DOT 

Final RIA Enhanced Airline Passenger 

Protection

Percentage of 2+ Hr Delays that Are Arrivals 3%

Calculated using BTS data from subject 

matter expert using distribution of delays 

for domestic flights in the U.S. DOT 

Final RIA Enhanced Airline Passenger 

Protection

Premium for Access to Food, Drink, and 

Lavatory 1.34 2007

As used for domestic carriers in 

U.S. DOT Final RIA Enhanced Airline 

Passenger Protections

See Source Notes titled ―Value of Time 

Premiums for Differing Qualitative 

Levels of Service‖

Waiting at Gate Instead of the Tarmac

Premium of Waiting at Gate Instead of on 

Tarmac 1.68

As used for domestic carriers in U.S. 

DOT Final RIA Enhanced Airline 

Passenger Protections

See Source Notes, ―Value of Time 

Premiums for Differing Qualitative 

Levels of Service‖

Benefits to Carriers

Average Cockpit Crew Wage (per hour) $68.50 2009

Standardized Occupational 

Components for Research and 

Analysis of Trends in Employments 

System, from Occupational 

Employment and Wages (OES) 

program, BLS

Average Cockpit Crew per Airplane 2.00 2009

As used in U.S. DOT Final RIA 

Enhanced Airline Passenger 

Protections

See Source Notes, ―Average Cockpit 

Crews per Type of Aircraft.‖

Average Flight Attendant Crew Wage (per 

hour) $42.43 2009

Standardized Occupational 

Components for Research and 

Analysis of Trends in Employments 

System, from Occupational 

Employment and Wages (OES) 

program, BLS
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

Page A-14

Econometrica, Inc. Last Revised March 29, 2010

Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

Average Flight Attendant Crew per Airplane 12.00 2009

As used for domestic carriers in U.S. 

DOT Final RIA Enhanced Airline 

Passenger Protections

Assuming Large Aircraft for Foreign 

Carriers. See Source Notes, ―Average 

Number of Flight Attendents per Aircraft 

Type.‖

Benefits from Extending Coordination to CBP to Small Hub and Non Hub Airports

Annual Benefits from Component 1 in EAPP1 

Rule RIA (includes large and medium hubs 

already) $ 1,596,885 

U.S. DOT Final RIA Enhanced Airline 

Passenger Protections

See Source Notes, ―Benefits to 

Passengers from Deplaning, Annually.‖ 

Percentage of Benefits that can accrue due to 

coordination with CBP and that were not 

considered in RIA for Enhanced Airline 

Passenger Protections previously 0.5% Estimate Estimate

Application of Customer Service Plan (CSP) to 

Foreign Carriers

Percentage Reduction of Complaints by 

Implementing CSP 20%

U.S. DOT Final RIA Enhanced Airline 

Passenger Protections

Estimate from historical complaint data.

See Source Notes, ―Change in 

Complaints due to Self Auditing of 

Customer Service Plans.‖

Benefits from Premium on Complaint Free Air travel

Premium on Foreign Flights for ComplaintFree Travel 1.05 Estimate

Estimated as a value between the 

premium for knowing that a plan exists 

and the premium for greater comfort from 

access to food and water

Applying the Requirements to Respond to 

Consumer Problems to Foreign Carriers for 

Their Scheduled Service to and from U.S.

Benefits from Increase in Consumer Surplus and Decline in Deadweight Loss

Percent Change in Cost of Complaining 3.23% 2009

Derived from BLS, subject matter 

experts as in Table A-22 from U.S. 

DOT Final RIA Enhanced Airline 

Passenger Protections

See Source Notes, ―Value of Time to 

Prepare and File a Complaint.‖
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

Page A-15

Econometrica, Inc. Last Revised March 29, 2010

Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

Elasticity of Cost of Complaining 1.07 1980

Morris, David. "The Cost of 

Complaining and the Efficiency of 

Consumer Complaints Agencies". 

Journal of Consumer Studies and 

Home Economics, 1980

Decrease in the Cost of Complaining $ 0.32 2009

Derived from change in cost of 

complaining as per U.S. DOT Final 

RIA Enhanced Airline Passenger 

Protections

Amend Price Advertising (Full Fare and OptOut)

Percentage of Passengers Who Use the Internet 

for Ticket Purchases 74% 2009

Hoffman, Cole. "The Role and Value 

of the Global Distribution Systems in 

Travel Distribution". Interactive 

Travel Services Association.

Average Incremental Time Spent by Passengers 

who already search for full fare information 

finding Taxes and Hidden Fees (hours) 0.08 Estimate

Estimated from examined of carrier and 

ticketing websites

Passenger Benefits for Passengers Who Already Compare Full Fares

Passengers Who Research Airfare Prices on 

Multiple Websites Specifically for lowest 

Taxes and Fees 2% Estimate Estimate

Passenger Benefits for Passengers Not Currently Comparing Full Fares

Percentage of Passengers Not Searching to 

Compare Full Fare Who Purchase from 

Compliant Websites 90% Estimate Estimate

Percentage of Total Price of Taxes Revealed 

(Price Increase) 5.0% 2006

Bureau of Transportation Statistics 

(BTS), American Travel Survey

Used the 16 percent as a high, and then 

subtracted 7.5% of USDOT tax already 

shown in all airfares

National Level Elasticity for Air Travel 

Demand -0.4 2009

International Air Transport 

Association. "Air Travel Demand"

The lowest elasticity (since not really 

measuring a change in price, but a 

revelation in price)
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

Page A-16

Econometrica, Inc. Last Revised March 29, 2010

Overall Inputs Assumptions in Benefits Analysis

Common Assumptions Average Value 

Growth 

Rate 

Used

Source 

data 

year Source Notes

Average Price of Airfare (Domestic) $246 2008 American Express Business Travel

Average Price of Airfare (International) $1,955 2008 American Express Business Travel

Prohibiting Post-Purchase Increase

Benefits of Certainty

Percentage of Passengers Who Purchase 

Airfare Outside of The Internet 28% 2009

Hoffman, Cole. "The Role and Value 

of the Global Distribution Systems in 

Travel Distribution". Interactive 

Travel Services Association.

Percentage of Non-Internet Using Passengers 

Purchasing Through Carriers 80% Estimate Estimate

Premium on Certainty of Purchase 1.01 Estimate

As proxy used same premium as used for 

Premium for Reduced Anxiety from 

Contingency Plan

Average Amount of Time Spent Purchasing 

Airfare (hours) 0.17 Estimate Estimate
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

 Page A-17

Econometrica, Inc. Last Revised March 29, 2010

Req. 1: Application of Tarmac Delay Policy and Contingency Plan to Foreign Carriers

The formula below illustrates the inputs and calculations used to estimate benefits for this provision. The 

abbreviation PAX is used for the word passenger(s)

Overall Assumptions

(1) Passengers Who May Benefit= PAX using Foreign Carriers (Dom & Int‘l), Segment

PAX on Foreign Carriers already in Compliance

(2) Flights That May Benefit= No. of Foreign Carrier Flights (Dom & Int‘l)

No. of Flights on Foreign Carriers already in Compliance

(3) Avg. No. of PAX Who May Benefit

Per Flight That May Benefit= Passengers Who May Benefit (1)

÷ Flights That May Benefit (2)

Benefits from Comfort of Knowing There is a Contingency Plan

In-Scope Passengers (Arrivals) = Number of Flights with a Tarmac Delay Over 1+ hour

On Foreign Carriers Not Already Compliant

X % of Flights with Tarmac Delay Over 1+ hour that are 

Arrivals

X Avg. No. of PAX Who May Benefit Per Flight (3)

Flight In-Scope Passengers (Departures)= Number of Flights with a Tarmac Delay Over 1+ hour

On Non-Compliant Foreign Carriers

X % of Flights with Tarmac Delay Over 1+ hour that are 

Departures

X Avg. No. of PAX Who May Benefit Per Flight (3)

Incremental Savings per Hour from

Contingency Plan= Value of Travel Time

X Premium of Comfort

Total Savings from Arrivals= In-Scope Passengers (Arrivals)

X Incremental Savings per Hour from Contingency Plan

X Avg. Wait Time After Hour Tarmac Delay (Arrivals)

Total Savings from Departures= In-Scope Passengers (Departures)

X Incremental Saving per Hour from Contingency Plan

X Avg. Wait Time After Hour Tarmac Delay (Departures)

Calculation of Benefits= Total Savings from Arrivals

+ Total Savings from Departure

Benefit from Provision of Adequate Food, Drink, and Lavatory

In-Scope Passengers (Arrivals) = Number of Flights w/ Long Tarmac Delays Two+ Hours

on Foreign Carriers Not already Compliant

X % of 2+ Hr Delays that are Arrivals

X Avg. No. of PAX Who May Benefit per Potential

Flight (3)

In-Scope Passengers (Departures) = Number of Flights w/ Long Tarmac Delays Two+ Hours

On Non-Compliant Carriers

X % of 2+ Hr Delays that are Departures

X Avg. No. of PAX Who May Benefit per Potential

Flight (3)
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

 Page A-18

Econometrica, Inc. Last Revised March 29, 2010

Incremental Savings per Hour from

Food, Drink, Lavatory= Value of Time

X Premium of Comfort

Total Savings from Arrivals= In-Scope Passengers (Arrivals)

X Incremental Savings per Hour from Food, Drink, Lav

X Avg. Wait Time After 2 Hour Tarmac Delay (Arrivals)

Total Savings from Departures= In-Scope Passengers (Departures)

X Incremental Saving per Hour from Food, Drink, Lav

X Avg. Wait Time After 2 Hour Tarmac Delay (Depart)

Calculation of Benefits= Total Savings from Arrivals

+ Total Savings from Departures

Benefit from Waiting at Gate Instead of Airplane

In-Scope Passengers (Arrivals): Number of Flights with On Tarmac Delays 6+ hours

On Non-Compliant Foreign Carriers

X % of 6+ Hr Delays that are Arrivals

= No. of Flights with 6+ Hr Arrivals Tarmac Delays

 No. of Flights that get Canceled after 6 Hour Tarmac

Delay (Arrivals)

= No. of Flights with a ―true‖ Tarmac Delay over 6 hours

X Avg. No. of PAX Who May Benefit Per Flight (3)

In-Scope Passengers (Depart): Number of Flights with On Tarmac Delays 6+ hours

On Non-Compliant Foreign Carriers

X % of 6+ Hr Delays that are Departures

= No. of Flights with 6+ Hr Departure Tarmac Delays

 No. of Flights that get Canceled after 6 Hour Tarmac

Delay (Departures)

= No. of Flights with a ―true‖ Tarmac Delay over 6 hours

X Avg. No. of PAX Who May Benefit Per Flight (3)

Incremental Savings per Hour from

Waiting at the Gate= Value of Time

 (Value of Time ÷ [1 + Premium of Comfort])

Total Savings from Arrivals= In-Scope Passengers (Arrivals)

X Incremental Savings per Hour from Waiting at Gate

X Avg. Wait Time After 6 Hour Tarmac Delay (Arrivals)

Total Savings from Departures= In-Scope Passengers (Departures)

X Incremental Saving per Hour from Waiting at Gate

X Avg. Wait Time After 6 Hour Tarmac Delay (Depart)

Calculation of Benefits= Total Savings from Arrivals

+ Total Savings from Departures
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

 Page A-19

Econometrica, Inc. Last Revised March 29, 2010

Benefits to Carriers

In-Scope Flights= Number of Flights with On Tarmac Delays 6+ hours

On Non-Compliant Foreign Carriers

X % 6+ Hr Tarmac Delays that are Arrivals

Average Hourly Cost for Flight Crew= (Avg. Cockpit Crew Wage

X Avg. No. of Cockpit Crew Per Flight)

+ (Avg. Flight Attendant Wage

X Avg. No. of Flight Attendants per Flight)

Calculation of Benefits= In-Scope Flight

X Average Hourly Cost for Flight Crew

X Avg. Wait Time after 3 Hour Tarmac Delay (Arrival)

Dis-Benefits to Consumers from Cancelled Flights 

In-Scope Flights Cancelled Due to Rule= Number of Flights with On Tarmac Delays 6+ hours

On Non-Compliant Foreign Carriers

X Additional cancelled flights 

Calculation of Dis-Benefits= Number of In-Scope Flights Cancelled Due to Rule

X Average Number of Passengers per flight

X Net Increase in Total Trip Time (avg. increase in trip time 

due to a cancelled flight minus the 5 hours spent 

delayed on tarmac) (hours)

X Passengers value of time (hours) 

Application of Tarmac Delay Policy and Contingency Plan to 

Foreign Carriers - General Assumptions 2011

Number of Annual Passengers using Air Travel (Domestic & 

International) for All Foreign Carriers, Segment 72,352,053

Number of Passengers Who Travel on Foreign Carriers Already 

in Compliance 25,939,791

Passengers Who May Benefit 46,412,262

Number of Annual Flights (Domestic & International), All 

Foreign Carriers 494,732

Number of flights From Foreign Carriers Already in Compliance 118,644

Number of Flights that May Benefit 376,088

Average Passengers per Flight for Potential Benefits 123
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

 Page A-20

Econometrica, Inc. Last Revised March 29, 2010

Application of Tarmac Delay Policy and Contingency Plan to 

Foreign Carriers - Benefits After 1+ Hr Tarmac Delay 2011

Comfort Knowing There is a Contingency Plan

Number of 1+ Tarmac Delays From Non-Compliant Foreign 

Flights 2,137

Value of Time for Passenger (All Purpose) $28.60 

Premium for Reduced Anxiety from Contingency Plan 1.01

Incremental Savings per Hour per Passenger with a Contingency 

Plan $0.29 

Percentage of 1+ Hr Delays that Are Arrivals 3.83%

Number of Arrival Flights with 1 hr Tarmac Delays that May 

Benefit 82

Passengers Who May Benefit & Experience Over an Hour 

Tarmac Delay during Arrivals 10,101

Average Wait Time After An Hour Tarmac Delay (Taxi-In 

Passengers) (hours) 0.36

Average Savings per Passenger with a Contingency Plan during 

Arrivals from Comfort $0.11 

Total Savings with a Contingency Plan during Arrivals from 

Comfort $1,111 

Number of Departure Flights with 1 hr Tarmac Delays that 

May Benefit 2,055

Passengers Who May Benefit & Experience Over an Hour 

Tarmac Delay during Departures 253,603

Average Wait Time After An Hour Tarmac Delay (Taxi-Out 

Passengers) (hours) 0.45

Average Savings per Passenger with a Contingency Plan during 

Departures from Comfort $0.13 

Total Savings with a Contingency Plan during Departures from 

Comfort $32,968 

Monetized Time Saved from Comfort $34,080 
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

 Page A-21

Econometrica, Inc. Last Revised March 29, 2010

Benefit from Provision of Adequate Food, Drink, and Lavatory 

Access - Benefits After 2+ Hr Tarmac Delay 2011

Value of Time for Passenger (All Purpose) $28.60 

Premium for Access to Food, Drink, and Lavatory 1.34

Incremental Savings per Hour per Passenger with Access to 

Food, Drink, and Lavatory $9.72 

Number of 2+ Tarmac Delays From Non-Compliant Foreign 

Flights 222

Percentage of 2+ Hr Delays that Are Arrivals 2.89%

Number of Arrival Flights with 2 hr Tarmac Delays that May 

Benefit 6

Passengers Who May Benefit & Experience Over 2+ Tarmac 

Delay during Arrivals 792

Average Wait Time After 2 Hours Tarmac Delay (Taxi-In 

Passengers) (hours) 0.51

Average Savings per Passenger with Access to Food, Drink, and 

Lavatory during Arrivals $4.96 

Total Savings with Access to Food, Drink, and Lavatory during 

Arrivals $3,927 

Number of Departure Flights with 2 hr Tarmac Delays that 

May Benefit 215

Passengers Who May Benefit & Experience Over 2 Hours 

Tarmac Delay during Departures 26,533

Average Wait Time After 2 Hours Tarmac Delay (Taxi-Out 

Passengers) (hours) 0.68

Average Savings per Passenger with Access to Food, Drink, and 

Lavatory during Departures $6.61 

Total Savings with Access to Food, Drink, and Lavatory during 

Departures $175,443 

Monetized Time Saved from Access $179,369 
Preliminary Regulatory Analysis 1029-000/DTOS59-09-F-10089

 Page A-22

Econometrica, Inc. Last Revised March 29, 2010

Waiting at Gate Instead of the Tarmac - Benefits After 6+ Hr 

Tarmac Delay 2011

Value of Time for Passenger (All Purpose) $28.60 

Premium of Waiting at Gate Instead of on Tarmac 1.68

Incremental Savings per Hour per Passenger Waiting in Airport $20.09 

Number of X+ Tarmac Delays From Non-Compliant Foreign 

Flights 0.3

Percentage of X+ Hr Delays that Are Arrivals 0%

Number of Arrivals with X+ Hrs Tarmac Delays from Non 

Compliant Foreign Flights -

Percentage of Flights Canceled (same-day) 2%

Number of Flights Canceled After Over X Hours of Tarmac 

Delay during Arrivals -

Number of Flights that Experience Over X Hours Tarmac Delay 

during Arrivals (minus Cancellations) -

Passengers Who May Benefit & Experience Over 3 Hours 

Tarmac Delay during Arrivals 0

Average Wait Time After 6 Hours Tarmac Delay (Taxi-In Flights) 

(hours) 0.5

Average Savings per Passenger Waiting at the Airport during 

Arrivals $9.72 

Total Savings Waiting at the Airport during Arrivals $0

Taxi Out - Percentage of Flights with Tarmac Delay Over 6 

hours 0.00%

Number of Flights that May Benefit & Experience Over 3 Hours 

Tarmac Delay during Departures 0

Percentage of Flights Canceled (same-day) 2%

Number of Flights Canceled After Over 3 Hours of Tarmac 

Delay during Departures 0

Number of Flights that Experience Over 3 Hours Tarmac Delay 

during Departures (minus Cancellations) 0

Passengers Who May Benefit & Experience Over 3 Hours 

Tarmac Delay during Departures 36

Average Wait Time After 6 Hours Tarmac Delay (Taxi-Out 

Flights) (hours) 0.71

Average Savings per Passenger Waiting at the Airport during 

Departures $13.81 

Total Savings Waiting at the Airport during Departures $501 

Monetized Time Saved from Comfort $501 
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Benefits to Carriers - Benefits After 6+ Hr Tarmac Delay 2011

Taxi In - Percentage of Flights with Tarmac Delay Over 6 hours 0.00%

Number of Flights that May Benefit & Experience Over 3 Hours 

Tarmac Delay during Arrivals 0

Average Wait Time After 6 Hours Tarmac Delay (Taxi-In Flights) 

(hours) 0.5

Average Cockpit Crew Wage (per hour) $68.89 

Average Cockpit Crew per Airplane 2

Average Flight Attendant Crew Wage (per hour) $42.26 

Average Flight Attendant Crew per Airplane 11.57

Average Hourly Cost for All Flight Crew $627 

Average Savings from Flight Crew Wage per Flight that 

Experiences Over 3 Hours Tarmac Delay during Arrivals $313 

Monetized Savings from Added Coordination with CBP $0

Benefits from Extending Coordination to Small Hubs and Nonhub Airports - General Benefits 2011

Annual Benefits from Component 1 in EAPP1 Rule RIA 

(includes large and medium hubs already) $1,596,885 

Percentage of Benefits that can accrue that were not 

considered previously 0.50%

Monetized Benefits from Coordination with Small Hubs and 

Non-hub Airports $7,984 
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Econometrica, Inc. Last Revised March 29, 2010

Req. 7: Amend Price Advertising (Full Fare and Opt-Out)

The formula below illustrates the inputs and calculations used to estimate benefits for this 

provision:

Overall Assumptions

No. of Round Trip Purchases= No. PAX Who Use U.S. Carriers (Dom & Int‘l), 

Market

X % of PAX Who Purchase Airfare via Internet

= No. of PAX who Purchase Airfare via the Internet

X % of PAX that are Making Round Trips

No. of One-Way Purchases= No. PAX Who Use U.S. Carriers (Dom & Int‘l), 

Market

X % PAX Who Purchase Airfare via the Internet

= No. of PAX who Purchase Airfare via the 

Internet

X % of PAX that are Making One-Way Trips

In-Scope Passengers= No. of Round Trip Purchases

+ No. of One-Way Purchases

Benefits to Passengers who already search for full fare information

In-Scope Passengers= (1) Passengers Who May Benefit

X % of On-Line Customers Who Research 

Multiple Websites (one of which does not use 

full-fare advertising up-front)

÷ Average Number of People in Travel Party

Calculation of Benefits= In-Scope Passengers

X Avg. Extra Time Spent on Internet Searching for 

Taxes/Fees 

X Value of Time

Benefits to Passengers Who Do Not Currently Compare Full Fares (Elimination of Dead-Weight 

Loss)

In-Scope Passengers= (1) Passengers Who May Benefit

X (1- On-Line Customers Who Research on 

Multiple Websites (one of which uses 

hidden fees)

X (1-% of PAX Who Use Website Already 

Showing Full Fare)

Decrease in Price= Weighted Average Price of Airfare

X % of Airfare that Make-Up Hidden Fees

Increase in Market Demand= In-Scope Passengers

X Decrease in Price

X Elasticity of Air Travel Demand
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Calculation of Benefits= (In-Scope Passengers

X Decrease in Price)

+ (Increase in Market Demand

X 1⁄2

X Decrease in Price)

Req. 9: Prohibiting Post-Purchase Increase

The formula below illustrates the inputs and calculations used to estimate benefits for this 

provision:

Overall Assumptions

In-Scope Passengers= No. of Passengers Using U.S. Carriers, Market

X % of Passengers Who Buy Airfare Outside 

Online

X (1-% of Non-internet PAX buying through 

Carriers)

Benefits of Uncertainty

Calculation of Benefits= In-Scope Passengers

X Value of Time

X Premium for Increased Comfort from Knowing 

Will Be Notified
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Econometrica, Inc. Last Revised March 29, 2010

Source Notes

Number of Flights and Passengers with Extended Tarmac Delays

Variable Description: The number of flights and passengers for foreign flagged carriers by 

amount of on-tarmac delay time is estimated using the distribution of flights by on-tarmac delay 

for domestic  ̳reporting carriers‘ (those with 1% or more of scheduled passenger service) since 

foreign carriers do file the necessary detailed statistics with the Federal government. To estimate 

delays, the ratios each of delay, by length, for reporting domestic carriers were used on the 

foreign carrier flight population to estimate number of delays at each time interval. 

Source: Percentages as reported in Enhanced Airline Passenger Protection (EAPP1) Regulatory 

Impact Analysis. Original data flight data are from the Bureau of Transportation Statistics

(BTS).

Percentage Distribution of Tarmac Delays

Arrivals (Taxi-In) Passengers Percentage Flights Percentage

Up to 1/4 hours 309,583,268 49.79397% 3,689,525 50.12271%

1/4 and1/2 hours 18,414,418 2.96181% 172,488 2.34327%

1/2 and 3/4 hours 2,215,131 0.35629% 20,584 0.27964%

3/4 and 1 hours 477,573 0.07681% 4,279 0.05813%

1 - 1.25 hours 153,870 0.02475% 1,404 0.01907%

1.25 - 1.5 hours 53,289 0.00857% 482 0.00655%

1.5 and 2 hours 35,826 0.00576% 316 0.00429%

2 and 2.5 hours 12,888 0.00207% 122 0.00166%

2.5 and 3 hours 2,434 0.00039% 27 0.00037%

3 and 3.5 hours 2,434 0.00039% 18 0.00024%

3.5 and 4 hours 239 0.00004% 4 0.00005%

4 and 4.5 hours 295 0.00005% 3 0.00004%

4.5 and 5 hours 0 0.00000% 0 0.00000%

5 and 6 hours 51 0.00001% 1 0.00001%

More than 6 hours 0 0.00000% 0 0.00000%

Total Population 621,728,440 100% 7,360,984 100%
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Departures (Taxi-Out) Passengers Percentage Flights Percentage

Up to 1/4 hours 166,397,035 26.76362% 2,404,297 32.66271%

1/4 and1/2 hours 139,537,841 22.44354% 1,638,730 22.26238%

1/2 and 3/4 hours 23,204,937 3.73233% 277,711 3.77274%

3/4 and 1 hours 5,948,002 0.95669% 76,709 1.04210%

1 - 1.25 hours 2,246,710 0.36137% 29,968 0.40712%

1.25 - 1.5 hours 1,023,316 0.16459% 13,900 0.18883%

1.5 and 2 hours 828,564 0.13327% 11,415 0.15507%

2 and 2.5 hours 269,388 0.04333% 3,729 0.05066%

2.5 and 3 hours 86,689 0.01394% 1,284 0.01744%

3 and 3.5 hours 64,326 0.01035% 911 0.01238%

3.5 and 4 hours 24,667 0.00397% 289 0.00393%

4 and 4.5 hours 14,378 0.00231% 167 0.00227%

4.5 and 5 hours 6,528 0.00105% 65 0.00088%

5 and 6 hours 2,682 0.00043% 30 0.00041%

More than 6 hours 495 0.00008% 8 0.00011%

Total Population 621,728,440 100% 7,360,984 100%

Passenger Value of Time

Variable Description: This is the monetized value of time for air passengers. This estimate is 

used to calculate time savings and increased level of comfort. 

Estimates of the value of time for air travelers while traveling are those prepared by the 

Department of Transportation for economic analyses. The value of time for air travelers while 

not traveling was estimated using earnings estimates used by the Department of Transportation 

for calculation of the above estimates as follows: a weighted average (by proportion of all 

travelers) of a) 100% times the average hourly earnings of those traveling by air on business and 

b) 50% times the average hourly earnings of those traveling by air for personal trips.

Source: U.S. Department of Transportation, ―Revised Departmental Guidance Valuation of 

Travel Time in Economic Analysis‖, 2003.

Value of Time

Lower 10% Limit Median Upper 10% Limit

Value of Time for Passenger 

(Personal Non-Traveling) $24.15 $21.74 $26.57 

Value of Time for Passenger (All 

Purpose Traveling) $28.60 $23.80 $35.60 

Meeter-and-Greeter VOT $10.60 $8.82 $13.19 
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Number of Air Carrier Complaints

Variable Description: This is the annual number of complaints filed with an air carrier i. 

Complaints can relate to flight problems, oversales, customer service, lost baggage, etc. Baseline 

figures are taken from data compiled by the US Department of Transportation. But since 

carriers receive many more complaints than are filed with the US Department of Transportation a 

complaint  ̳multiplier‘ is used calculate the actual number of ―ground-level‖ complaints received 

by carriers from passengers. 

Source: U.S. Department of Transportation, Office of Aviation Enforcement and Proceedings, 

―Air Travel Consumer Report‖, January 2008 – December 2008; Final Report on Airline 

Customer Service Commitment,‖ Office of the Inspector General, US Department of 

Transportation, report AV-2001-020, February 12, 2001 and ―Air Travel Consumer Report, U.S. 

Department of Transportation.

2008 Filed Complaints

Lower 10% Limit Median Upper 10% Limit

Number of Complaints (Both U.S. 

and Foreign Carriers) 10,473 9,426 11,520

Number of Complaints (Foreign 

Carriers) 1,275 1,148 1,403

Complaint Multiplier (# of 

Complaints not filed actually 

received by Carriers)* 61 61 61

* Multiplier Source: “Final Report on Airline Customer Service Commitment,” Office of the Inspector General, US 

Department of Transportation, report AV-2001-020, February 12, 2001 and “Air Travel Consumer Report, U.S. 

Department of Transportation.

Factor to Adjust Number of Annual Complaints to Covered Carriers that Do Not Already 

Self-Audit Adherence to Customer Service Plans

Variable Description: Using complaint data reported for domestic carriers as proxy for foreign 

carriers, measures the average number of complaints to all covered carriers that are not already 

self-auditing adherence to customer service plans. The DOT Air Travel Consumer Reports lists 

complaints received by the Department, but not complaints directly to the carriers. The DOT 

Inspector General found in 2001 that it received 1,352 complaints for the 10 major airlines, but 

that those carriers received 82,587 complaints, or 61 times the number of complaints recorded by 

DOT. To arrive at a total number of complaints for covered carriers, the number of complaints in 

DOT Air Travel Consumer Reports for covered carriers that are not already self-auditing 

adherence to customer service plans was multiplied by 61.

Source: ―Final Report on Airline Customer Service Commitment,‖ Office of the Inspector 

General, US Department of Transportation, report AV-2001-020, February 12, 2001 and ―Air 

Travel Consumer Report, U.S. Department of Transportation. 
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Average Travel Trip Party Size

Variable Description: This figure is the estimated average number of people per group or trip 

on a commercial airline flight. This variable may also be interpreted as the average number of 

tickets purchased per trip or transaction. The average trip party size for flight travel is estimated 

at 2.6.

Source: American Travel Survey, 1995, downloaded from RITA Database.

Average Price of Airfare

Variable Description: Estimate of average prices for domestic and international flights. A 

weighted average of the two estimates is calculated to arrive at an all-purpose average price of 

airfare.

Source: American Express Business Travel, ―Domestic and International Airfare Increased in 

2008 as Hotel Rates Decreased‖, April 2009.

Average Price of Airfares

Median

Average Price of Airfare (Domestic) $246 

Average Price of Airfare (International) $1,955 

Weighted Average Airfare $464

Percentage of Passengers Purchasing Airfare Online

Variable Description: Estimate of the proportion of passengers purchasing airfares on 

websites. This data also distinguishes between passengers purchasing on online travel agencies 

(OTAs) or carrier web sites, but is combined to form an estimate of all online air ticker 

purchases.

Source: PhoCusWright and Interactive Travel Services Association, ―The Role and Value of 

Global Distribution Systems in Travel Distribution‖, 2009.

Proportion of Online Consumers for Flight Travel

Median

Percentage of Passengers Who Purchase Airfare on Carrier Websites 34%

Percentage of Passengers Who Purchase Airfare on OTAs 38%
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Elasticity of Air Travel Demand

Variable Description: This elasticity estimates the percentage change in demand in relation to a 

change in price. The elasticity is applied to current demand in response to up-front advertising 

of hidden fees. Since this is a revelation in prices rather than an increase, a low elasticity is used 

to represent this change. An elasticity of -0.4 is used in the analysis.

Source: International Air Transport Association, ―Air Travel Demand‖, 2009.

Elasticity of Demand for Complaining

Variable Description: This figure (1.0741) estimates the change in number of complaints due to 

a unit change in the cost of complaining.

Source: David Morris, ―The Cost of Complaining and the Efficiency of Consumer Complaints 

Agencies,‖ Journal of Consumer Studies and Home Economics, 1980. 

Value of Time Premiums for Differing Qualitative Levels of Service 

Variable Description: Several aspects of Provision 5 of the Proposed Rule will shift the portion 

of total trip time spent in less comfortable conditions (such as the fifth hour on a plane waiting 

on the tarmac) to time spent in more comfortable conditions (the fifth hour spent in the terminal). 

The value of the difference in comfort is estimated using the base value of travel time saved (as 

noted above) and applying a premium to that time. Estimates for this ―comfort premium‖ were 

developed from economic literature on transportation. Premiums have been derived from surveybased data that reflect travel time values which incorporate the quality waiting, walking and 

transfer conditions. Level of service ratings were rider-determined and are used to determine the 

value of different levels. The values used can be seen in the table below. 

Source: Level of service estimates of value of travel time from Todd Litman, ―Valuing Transit 

Service Quality Improvements,‖ the Victoria Transport Policy Institute, 2007.
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Value of Time Premiums for Differing Qualitative Levels of Service

Category LOS A - C LOS D LOS E LOS F

Ratio of A-C 

to D (Proxy 

for 2-5 Hours 

Delay)

Ratio of A-C 

to E (Proxy 

for >5 Hours 

Delay)

Adult transit passenger -

seated 35% 47% 58% 70% 1.34 

 

1.68 

Adult transit passenger -

standing 50% 67% 83% 100% 1.34 

 

1.68 

Note: LOS refers to level-of-service and incorporates qualitative factors such as comfort, convenience and reliability for various 

modes’ waiting, walking, and transfer conditions. LOS A refers to the best conditions and F to the worst. The difference in the 

value of time between the average for LOS rating A-C and LOS rating D is used to estimate a premium for the greater comfort 

from access to food, water and clean lavatory facilities. The difference in the value of time between the average for LOS rating 

A-C and LOS rating E for transit passengers is used to estimate a premium for the greater comfort of waiting in the terminal 

instead on in the plane on the tarmac.54

Cockpit Crew per Aircraft Type 

Variable Description: Average cockpit crew per aircraft type. Based on the variety of sub-types 

of aircraft (e.g., there are six commonly used versions of the 747), crew members for some types 

of aircraft are based on unweighted averages of these versions. Data as prepared for Final RIA 

on Rule Enhancing Airline Passenger Protections, December 2009

Data Sources: Variety of airline manufacturer websites.

Average Cockpit Crews per Type of Aircraft

 

54 These premiums are similar to premiums estimated for the value of sitting instead of standing during a transit trip, 

which have ranged from 20% to 50%. See Marcus von Wartburg and W.G. Waters II, ―Chapter 2: Congestion 

Externalities and the Value of Travel Time Savings,‖ in Towards Estimating the Social and Environmental Costs of 

Transportation in Canada, Anming Khang, et al eds., Center for Transportation Studies, University of British 

Columbia, August 2004 and P.B. Goodwin, ―Human Effort and the Value of Travel Time,‖ Journal of Transport 

Economics and Policy, January 1976.

 Average Cockpit Crews per Type of Aircraft

Variable Lower 10% Limit Median Upper 10% Limit

Average Cockpit Crew for “Large” Aircraft (747) 2 2 2

Average Cockpit Crew for “Medium” Aircraft 

(A320) 2 2 2

Average Cockpit Crew for “Small” Aircraft 

(Fairchild F-27) 2 2 2

Average Cockpit Crew for “Tiny” Aircraft (SaabFairchild 340/B) 2 2 2

Note: 747 is for 747-400 and 747-8 models; 

Source: Various Aircraft Manufacturer websites.
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Number of Flight Attendants by Aircraft Type

Variable Description: Average number of non-cockpit crew members. These are 

predominantly, if not entirely, flight attendants. Data as prepared for Final RIA on Rule 

Enhancing Airline Passenger Protections, December 2009.

Data Sources: Various aircraft manufacturer websites.

Average Number of Flight Attendants per Aircraft Type

Average Commuting Times to and From Airports

Variable Description: This is the average time it takes an individual to travel from the airport to 

the Hilton Hotel located closest to the airport or in the closest downtown metropolitan area – for 

example, the time it would take to travel from the Cincinnati Airport to the downtown Cincinnati 

Hilton. If a Hilton Hotel was not available, a hotel of similar reputation was used as a proxy. 

This term was calculated by estimating travel time from each class of airport (i.e., large hub, 

medium hub, etc.). This, in turn, was done by estimating the travel times for each airport that 

composed each category. Travel times were weighted by airline passengers departing from each 

airport. These figures can be seen in the below table. Average travel time for all airports was also 

calculated. This was weighted by passenger departures from each category of airport. The upper 

and lower 10% boundary ranges were the actual 10% upper and lower ranges based on the 

results derived for each category of airport. 

All times are for ―non-peak,‖ as defined by GoogleMap.com‘s ―destination‖ feature. It is 

assumed that travel times to and from airports are equal. 

Data Sources: Travel times estimated from ―directions‖ feature of GoogleMaps.Com for 

airports. Passenger departures used as a basis of weighing were from the Federal Aviation 

Administration‘s Air Carrier Activity Information System. 

Average Number of Flight Attendants per Aircraft Type

Variable Lower 10% 

Limit

Median Upper 10% 

Limit

Average Flight Attendant Crew for “Large” Aircraft (747) 9 12 14

Average Flight Attendant Crew for “Medium” Aircraft (A320) 4 5 6

Average Flight Attendant Crew for “Small” Aircraft (Fairchild F-27) 1 1 1

Average Flight Attendant Crew for “Tiny” Aircraft (Saab-Fairchild 340/B) 1 1 1

Note: Information for Fairchild F-27 FH-227E variant; Data for A320 and 747 based on unweighted average of commonly used 

variants of A320 and 747.

Source: Various Aircraft Manufacturer websites.
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Cost of Posting a Contingency Plan Dealing with Flight Delays on an Airline’s Website

Variable Description: This is the cost of posting a contingency plan dealing with flight delays 

on an airline website. 

Source: Estimate provided by subject matter experts among HDR IT staff compared against 

figures provided by reporting carriers to modify computer systems to provide additional 

reporting data to BTS regarding cancellations, diversions and gate returns, as reported in 

Regulatory Evaluation on Revision or Airline Service Quality Performance Reports, US 

Department of Transportation, Docket No OST 2007-28522 for reasonableness.

Cost of Posting a Contingency Plan Dealing with Flight Delays on an Airline’s Website

Source Lower 10% Limit Median Upper 10% Limit

Regulatory Evaluation on Revision 

of Airline Service Quality 

Performance Reports* $10,000 $22,500* $30,000

Subject Matter Expert $15,000 $22,500 $30,000

In Use $15,000 $22,500 $30,000

*Median estimated based upon high and low.

Cost of an Average Airline Meal

Variable Description: This is the average national cost of an airline meal per passenger in the 

U.S. in 2007. 

Data Sources: Karen Aho, ―The Death of the Airline Meal,‖ MSN Money, Feb. 22, 2008.

Cost of an Average Airline Meal per Passenger (2009 Dollars)

Cost of Deplaning Passengers (per Passenger) 

Variable Description: This is the cost of deplaning passengers on a per passenger basis. The 

cost is what an airport would charge airlines to deplane passengers. This is assumed to be $1.37 

per passenger (in 2008 dollars). This is the fee that Atlanta International Airport charged airlines 

to deplane passengers. 

Source: Paul Meyer, Operations Department, Atlanta International Airport. 

Lower 10% Limit Median Upper 10% Limit

Cost of Average Airline Meal Per 

Passenger $2.65 $3.71 $4.77

Updated with the Congressional Budget Office (CBO) 2009 inflation forecast, 0.1%.
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Average Cost to an Air Carrier of a Flight Cancellation 

Variable Description: This is the cost to airlines, of a flight cancellation. In 1998 this value was 

estimated at $11,600.55

Source: Zalman Shavell, ―The Effects of Schedule Disruptions on the Economics of Airline 

Operations,‖ The MITRE Corporation, April 14, 2000.

Forecast Average Growth of Airline Passenger Traffic (per Year) on U.S. Airlines

Variable Description: This is the estimated annual growth in airline passenger traffic (defined 

as paying passengers) transported by U.S. carriers on both domestic and international trips from 

and to airports in the U.S. forecast for the future. These rates are applied in the year 2011 and 

beyond.

Source: US DOT 2007 FAA Aerospace Forecast Fiscal Years 2007 – 2020, available at: 

http://www.faa.gov/data_statistics/aviation/aerospace_forecasts/2007-2020/

Forecast Growth of Airline Passenger Traffic (per Year) on U.S. Airlines 

Domestic & Int’l Flights Domestic Flights International Flights

2.6% 2.4% 4.4%

Forecast Growth of Airline Passenger Traffic (per Year) on Foreign Airlines

Domestic & Int’l Flights Domestic Flights International Flights

4.6% 4.6% 4.6%

Cost of Complaining

Variable Description: These are the elements that comprise the cost incurred by the passenger 

to file a complaint. In the absence of information breaking down complaints to carrier by method 

used to file, one third of complaints are assumed to be submitted online, one third via mail, and 

one third via phone. Cost components independent of time include: for writing a letter, $0.42 for 

a stamp and $.10 for paper and envelope; for making a phone call, $0.15 phone charge; for 

emailing a complaint, it was assumed that the incremental cost for those choosing the method 

would be $0. The value of a consumer‘s time is assumed at the average hourly wage rate and the 

amount of time required to prepare and file a complaint varies from 10 to 30 minutes.

 

55 Zalman Shavell, ―The Effects of Schedule Disruptions on the Economics of Airline Operations,‖ The MITRE 

Corporation, April 14, 2000.
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Value of Time to Prepare and File a Complaint

Cost Component

Lower 10% 

Limit

(10 Minutes 

Spent)

Median

(20 Minutes 

Spent)

Upper 10% 

Limit

(30 Minutes 

Spent)

Materials Cost

% of 

complaints

Materials cost of letter writing:

Stamp $ 0.42 

paper and envelope $ 0.10 

33% $ 0.17 $ 0.17 $ 0.17 

Equipment cost of calling:

Phone charge $ 0.15 

33% $ 0.05 $ 0.05 $ 0.05 

Additional equipment/materials cost of 

going online:

$ - 33% $ - $ - $ - 

Time Spent 

 (variable from 10 to 30 minutes)

Value of Time for Air 

Passengers

$28.60 per hour $9.53 $ 4.77 $14.30

Total $ 9.76 $ 4.99 $ 14.52 

Source: Bureau of Labor Statistics; subject matter experts.

Cost to Airlines of Providing Information to Travelers on how to File a Complaint on 

Website or at Check-In Counter for Reporting Carriers and Non-Reporting Carriers (Also 

used as proxy for Cost to Airlines of Implementing a Customer Service Plan for Reporting 

Carriers and Non-Reporting Carriers)

Variable Description: The cost of modifying a website for reporting carriers would be, based on 

subject matter expert opinion, between $10,000 and $60,000 (with $35,000 the most likely cost 

and a 90% probability of the actual number falling within the $10,000 to $60,000 range).

The cost for reporting carriers to modify counters to provide information to customers on how to 

file complaints is estimated at $6,347. At OfficeDepot.com, on May 1, 2008 an acrylic engraved 

wall sign cost $13.99. The national median salary for a building and grounds maintenance 

employee, according to the BLS was, $9.75 in 2006. Inflating this to 2008 terms (using national 

Employment Cost Index from the Bureau of Labor Statistics) it becomes $10.26. According to 

the FAA "Calendar Year 2006 Passenger Activity Commercial Service Airports in US‖, there 

were 566 airports in the United States that handled passenger flights. If it is assumed that each 

airport, on average, requires 20 signs and that it takes maintenance employee one hour to put 

each sign up, sign costs would be $158,367 and labor costs $114,558 for a grand total of 

$272,925. In 2007 there were 43 air carriers in the United States with gross revenues of $20 

million or higher. Dividing total costs of $272,925 by 43 carriers results in a mean airline cost of 

$6,347.
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It is assumed that since reporting carriers have much larger operations, on average, than nonreporting carriers, the implementation costs for non-reporting carriers would be proportionally 

smaller. Websites for some carriers could be updated with a simple link that would require less 

than a day of an experienced computer programmer‘s time (at a median hourly wage in 2008 of 

$33.47 an hour). The average cost for non-reporting carriers is therefore assumed to be lower 

than for reporting carriers, and is estimated at 11% of that for reporting carriers, reflecting the 

portion of passengers on non-reporting carrier flights, or $4,261.

This cost to provide information to customers is also used as a proxy to estimate the costs of 

implementing a customer service plan for reporting carriers and non-reporting carriers (at the 

same ratios as above).

Source: Estimate for website modification provided by reporting carriers to modify computer 

systems to provide data for additional reporting requirements per Final Rule on Airline Service 

Quality Performance Reports (as reported in Draft Regulatory Evaluation on Revision of Airline 

Service Quality Performance Reports, U.S. Department of Transportation, Docket No. OST 

2007-28522, November 2007), used as a proxy. This also used to as proxy for cost to implement 

customer service plan.

Additional Costs to Provide a Response to all Complaints Within 60 Days Which 

Specifically Address Individual Passenger Complaints 

Variable Description: This is the incremental cost, to airlines, of providing a response to a 

passenger complaint within a 60 day period from which the complaint was lodged. Theses 

responses need not be resolutions to the problems raised, rather a targeted acknowledgement of 

the type/purpose of the complaint. It is assumed that carriers will be able to develop response 

templates which will streamline this process. This cost assumed to be the equal to the additional 

labor cost of handling a complaint, estimated at $1.34, when compared to a standard 

acknowledgement that a communication was received (for example, the difference between 

sending a letter that the complaint regarding a baggage delay is being examined versus sending a 

standard response simply thanking the customer for their letter). This number was estimated by 

finding the hourly wage of ―Office and Administrative Support Workers‖ in the United States 

(median of $13.08 per hour in 2006 dollars), inflating it to 2008 dollars ($13.60) and adding 

benefits of 35% of wages ($18.10). Assuming that a standard, targeted response to an average 

complaint can be sent in six additional minutes yields a cost of $1.85 per hour. 

Source: Office and Administrative Support Worker wage data from the Bureau of Labor 

Statistics, 2006 Occupational Employment Survey; Benefits for national airlines were calculated 

based on data from Aviation Specialists Group, Inc., Economic Values for FAA Investment and 

Regulatory Decisions, A Guide, Contract No. DFTA 01-02-C00200, p. 4-4. This report was 

prepared for the Federal Aviations Administration‘s Office of Aviation Policy and Plans, U.S. 

Federal Aviation Administration.
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Econometrica, Inc. Last Revised March 29, 2010

Summary of Annual Costs for Self-Auditing Service for Reporting and Non-Reporting 

Carriers

Variable Description: This is the annual cost to reporting carriers of self-auditing additional 

service (customer complaint) calls stemming from the implementation of the new regulations. 

The mean annual salary of a customer service representative in 2007, according to the BLS, was 

$31,040. The Department of Homeland Security 2006 Cost-Benefit Analysis Guidebook56

recommends using a mark-up of 32.8% to wages to take into account benefits received over and 

above wages.

In addition to the costs of the customer representative, it is assumed that the airlines also hire a 

contractor to test the quality of the customer service representatives. Northwest contracts a third 

party to place ―mystery calls‖ to five reservations centers to test DOT mandates and other 

compliance issues. The Northwest Airlines customer service plan (available at 

www.nwa.com/plan/comm5.html) describes that this service is extrapolated to include 100 calls 

per center per quarter (500 calls/quarter) to test their customer service plan compliance and 

adjust training/coaching accordingly. Extrapolating further, 2,000 external audit calls need to be 

made each year. Each of these is assumed to cost $15 per hour and last an average of 30 minutes. 

The total annual cost of this external audit process is estimated at $15,000 per airline. 

It is assumed that since reporting carriers have much larger operations, on average, than nonreporting carriers, the implementation costs for non-reporting carriers would be proportionally 

smaller. The average cost for non-reporting carriers to self-audit is at 11% of that for reporting 

carriers, reflecting the portion of passengers on non-reporting carrier flights, or $6,248.

Data Sources: Mean starting salary of customer service representative was from the Bureau of 

Labor Statistic‘s May 2007 National Occupational Employment and Wage Estimates; Benefits 

multiplier from U.S. Department of Homeland Security, 2006 Cost-Benefit Analysis Guidebook; 

Data regarding Northwest external audit costs a subject matter expert. 

Annual Costs to Airlines of Self Auditing Customer Complaint Calls

Change in Complaints Due to Self Auditing of Customer Service Plans 

Variable Description: This variable measures the decrease in customer complaints that would 

occur due to self-auditing of adherence to customer plans. For those four carriers which have 

already implemented self audits (Alaska in 2000, Continental in 2001, Northwest in 1999, 

 

56 Page 15.

Cost

Customer Service Cost $41,798 

Mystery Calling Contract $15,000 

Total $56,798 

Source: Bureau of Labor Statistics’ May 2007 National Occupational Employment and Wage Estimates; Benefits 

multiplier from U.S. Department of Homeland Security, 2006 Cost-Benefit Analysis Guidebook; Data regarding 

Northwest external audit costs from subject matter expert.
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Econometrica, Inc. Last Revised March 29, 2010

Southwest in 1999), the average change in complaints in the two years following implementation 

was calculated to be -39%. During those same periods, the change in complaints to carriers that 

did not self audit was calculated to be -19%, a difference of 20 percentage points from selfauditing carriers. Under the conservative assumption that those carriers most likely to benefit 

from self audits of customer service plans were the first to implement them, remaining carriers 

that will now implement self audits as a result of the Final Rule are expected to realize an 

improvement in complaint rates equal to half of difference in comparative complaint rates noted 

above, i.e., a 10% decrease in complaints.

Source: Calculations based on data from DOT Air Travel Consumer Report, 1998 through 2007. 

Information on self auditing of customer service plans from DOT and email communication.