UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, DC 

Request for Comments on Draft Clarification of November 2012 Guidance on Review and 

Approval of Public Charter Operations and Prospectuses 

The Department of Transportation's Office of International Aviation and Office of Aviation 

Enforcement and Proceedings are revising their guidance on public charter operations and 

prospectuses, and request interested persons to submit comments on the revision no later than 

January 8, 2013. The draft revision is set forth below and an electronic version of this document 

is available in the docket at http://www.regulations.gov under docket number DOT-OST-2013-

0002 to facilitate the filing of public comments before the document is published in final form. 

The offices plan to issue the revised guidance document in final form on or before January 14, 

2013. 

You may file comments on the draft guidance document by any of the following methods: 

Federal eRulemaking Portal: go to http://www.regulations.gov and follow the online instructions 

for submitting written comments. Mail: Docket Management Facility, U.S. Department of 

Transportation, 1200 New Jersey Ave., SE, Room Wl2-140, Washington, DC 20590-0001. 

Hand Delivery or Courier: West Building Ground Floor, Room W12-140, 1200 New Jersey 

Ave., SE, between 9 a.m. and 5 p.m. ET, Monday through Friday, except Federal Holidays. 

Fax: (202) 493-2251. All comments received will· be posted without change to 

http://www.regulations.gov, including any personal information provided. 
UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, DC 

CLARIFICATION OF NOVEMBER 2012 

GUIDANCE ON REVIEW AND APPROVAL OF PUBLIC CHARTER 

OPERATIONS AND PROSPECTUSES 

NOTICE 

On November 13, 2012, the Department's Office oflntemational Aviation and Office of 

Aviation Enforcement and Proceedings issued a joint notice regarding future filings under 14 

CFR Part 380, the Department's rule on public charters and enforcement policy under those 

rules. 1 That notice, which was an effort to prevent the kind of harm to consumers that took place 

when the charter operator Southern Sky Air & Tours, LLC d/b/a Direct Air ceased service, 

explained that the Department would in the future not approve prospectuses under Part 380 

absent certain supplemental assurances designed to avoid practices evident in the Direct Air case 

that were in violation of the public charter rules. 

Specifically, the notice described the offices' plan to reject public charter prospectus filings that 

do not affirmatively state that: (1) the contract between the charter operator and the direct air 

carrier is for the full price of the air transportation; and (2) the charter operator will retain control 

and access to its reservations records, and share those records with the direct air carriers. 

Furthermore, we stated that we would not permit the charter operator to accept payment by debit 

card (although we did state our willingness to consider waivers from this prohibition on 

demonstration that consumers would receive the protections of the Fair Credit Billing Act). The 

notice also stated that voucher programs, such as that offered by Direct Air, are not acceptable 

and will be considered to be per se violations of 14 CFR Part 380. 

Shortly after issuance of this notice, the Department received a number of comments from the 

public charter commtinity. Some comments questioned the legality of the notice .. Other 

comments sought clarification or revision of aspects of the guidance addressed in the notice. In 

order to have sufficient time to review and consider these comments, we extended the effective 

date of the guidance to January 14, 2013. 2 

77 Fed. Reg. 74729 (Dec. 17, 2012) 

2 In addition to being published in the Federal Register (77 Fed Reg. 69692 (Nov. 20, 2012)), the 

notice was also posted at www.regulations.gov and on the Enforcement Office website 

http://www.dot.gov/airconsumer/guidance-aviation-rules-and-statutes and was widely distributed byemail to persons who regularly communicate with the office. 
We have now fully considered the comments received and continue to believe that requiring 

supplemental assurances to prospectus filings is within our authority and is needed to prevent 

consumer harm. However, we agree with the public charter community that further clarification 

and revision of the guidance is needed to make certain that the assurances being requested as part 

of the prospectus filings address the practical business problems raised in the comments we 

received but still prevent the problematic situation that took place when Direct Air ceased 

service. As such, this notice modifies the prior guidance by providing citations to the existing 

laws that are the basis for the guidance, further clarifying the supplemental 

information/assurances that should be included in public charter prospectus filings and further 

clarifying our enforcement policy with respect to certain matters discussed in th~ guidance. 

Our prior notice stated that charter operators could not have contracts with direct air carriers that 

are limited to providing aircraft, crew, maintenance and insurance (ACMI). We stated that the 

contract between the charter operator and the direct air carrier must be for the full price of the air 

transportation. 3 This guidance is based on section 380.11 which provides that a direct air carrier 

shall be paid in full for the cost of the charter transportation prior to the scheduled date of flight 

departure. However, as a matter of enforcement policy, we have decided not to take action 

against public charter operators that have ACMI contracts provided that the charter operators and 

their escrow banks offer assurances that all passenger funds in charter programs are deposited in 

the relevant escrow and that the escrow banks involved maintain accounts and full and accurate 

accounting of disbursements to vendors such as fuel or ground handling providers in accordance 

with 14 CFR 380.34(b). 4 Our rules require that disbursements be identified on an individual 

flight by flight basis. Our primary intent is to reaffirm that all passenger funds must be deposited 

initially in the escrow accounts, apart from certain deductions allowed in travel agent sales. For 

charter operators using a security instrument, under section 380.34(a) the amount of the security 

instrument must be unlimited or for the full cost of the air transportation. (See footnote 3). 

Another area of clarification concerns control by public charter operators of passenger 

reservation records and the sharing of these records with direct air carriers. Our prior notice 

indicated that we would not approve public charter prospectus filings that do not include an 

assurance that the public charter operator will retain direct control.of all passenger reservation 

records and will share those records with the direct air carrier to ensure that, in the event of a 

major disruption in the program, the direct air carrier would be able to identify and contact tour 

participants regarding returning flights. Representatives of charter operators contended that the 

Department was creating new requirements through guidance. However, a number of sections in 

Part 380 require public charter operators to provide notifications to passengers under certain 

specific circumstances. See, e;g., sections 380.12 and 380.33. In addition, sections 249.21 and 

380.36 require public charter operators to maintain passenger records for six months after the 

completion or cancellation of the flight or series of flights. To comply with these obligations, 

public charter operators must have access to passenger reservation records. In addition, section 

The full cost of the direct air transportation includes the cost of aircraft, crew, maintenance, 

insurance, fuel, ground handling, landing fees, reservations costs, passenger facility fees and taxes, and all 

other costs associated with the direct air transportation. 

4 We are aware of markets, for example Cuba, in which payments for ground services may only be 

made by the charter operator, not the direct carrier. 
14 CFR 212.3(±) requires direct air carriers conducting public charter operations to return 

passengers who purchased round trip transportation on the charter and who were transported by 

that carrier on their outbound flights to their point of origin. Without passenger reservation 

records, direct air carriers would be unable to comply with this existing requirement. Therefore, 

we view the existing requirements as mandating that public charter operators share these records 

with direct air carriers when needed to return passengers to their points of origin. 

Representatives of charter operators also appeared to be under the misconception that the 

guidance would not allow charter operators to rely on reservations systems provided by thirdparties. Direct air carriers and charter operators can rely on such outside vendors for these 

services but must ensure that they still have access to the records. Our intent was and remains to 

emphasize to both the charter operator and the direct carrier the importance of the obligation to 

return passengers under section 212.3, and not to preclude the use of third-party vendors. Both 

the public charter operator and the direct air carrier have discretion in how to meet this 

obligation, but the Department needs assurances in the prospectus filings that the public charter 

operator will maintain access to the reservation records as required by existing rules and share 

this information with the direct air carrier in case of a disruption in a charter program to comply 

with the requirement to return passengers under section 212.3. 

The third issue that we addressed in our guidance concerned the use of debit cards in the 

purchase of charter transportation. Our November 13 notice prohibited the use of debit cards in 

the purchase of charter transportation, citing the explicit language of section 380.31 5

, which only 

provides for payment by check, money order or credit card, but not by debit card. We were 

particularly concerned that debit cards lack the chargeback protections afforded credit card users 

under the Fair Credit Billing Act (15 U.S.C. 1601 et seq.). As a matter of enforcement policy, 

we have now determined not to pursue action against charter operators that accept payment by 

debit card if they can provide assurances to the Department that their merchant banks and credit 

card/debit card processors will provide the same chargeback protections to those using debit 

cards as credit card users receive. If a charter operator cannot obtain such assurances then it may 

not accept debit card payments for transportation. 

Finally, we wish to clarify our position regarding vouchers. We stated in our November 13 

notice that the Enforcement Office would consider any voucher program similar to that offered 

by Direct Air to be a per se violation of 14 CFR Part 3 80. In the case of Direct Air, the charter 

operator sold vouchers for travel at unspecified dates in the future. Consumer funds did not, as a 

result, receive the escrow protection required under Part 380. However, the proscription on the 

use of vouchers applies only to voucher programs for which the charter operator receives money. 

Purely gratuitous or complementary vouchers distributed for passenger goodwill are not affected 

by this policy and they will not be considered to be per se violations. 

This revised policy regarding approval of charter prospectuses, supplants the notice of November 

13, 2012, and will take effect 60 days from the date of this notice. Prospectuses filed after that 

date will not be approved without the supplemental assurances, outlined above. The 

Enforcement Office intends to undertake enforcement action, where appropriate, if it obtains 

evidence of violations of commitments made in those statements, or of the acceptance of debit 

The provision cited should have been 14 CFR 380.34(b)(2)(i). 
purchases without the appropriate assurances as discussed above, or of sales initiatives such as 

the voucher program described above. Moreover, 14 CFR 380.24 continues to require the 

Department "to deny the exemption authority of any charter operator, without hearing, if [the 

Department] finds that such action is necessary in the public interest or is otherwise necessary in 

order to protectthe rights of the travelling public" and it will do so. Questions regarding this 

notice may be addressed to the Office of Aviation Enforcement and Proceedings (C-70), 1200 

New Jersey Avenue, S.E., Washington, D.C. 20590 or you may contact Lisa Swafford-Brooks, 

Chief, Aviation Licensing Compliance Branch (lisa.swafford-brooks@dot.gov), or Nicholas Lowry, 

Senior Attorney (nick.lowry@dot.gov) in that office, at (202) 366-9342. 

By: 

Paul L. Gretch 

Director 

Office of International Aviation 

Dated: 

Samuel Podberesky 

Assistant General Counsel for 

Aviation Enforcement and Proceedings 

An electronic version of this document is available at http://www.regulations.gov