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December 13, 2011

BY U.S. MAIL

Samuel Podberesky, Esq. Assistant General Counsel U.S. Department of Transportation 1200 New Jersey Avenue, SE Washington, DC 20590

RE: Enhancing Airline Passenger Protections I and II Dockets OST-2007-0022 and OST-2010-0140 Memorandum October 26, 2011

Dear Mr. Podberesky:

Thank you for your response dated October 26, 2011 to our memorandum expressing concerns regarding tarmac delay limits for domestic and international flights. We have attached your response to our memorandum for your convenience. We sincerely appreciate the time taken to review and respond to our letter. We felt it imperative to respond on several key points raised. We hope that our constructive feedback is helpful to you and the Department.
First, we note your use of the term "unintended consequences" in your response. While the Department may not have intended to inconvenience millions of passengers annually stranded by cancelled flights, the consequence was predicted long in advance of the rule. In addition to airlines, we filed comments during the tarmac rule rulemaking period stating the "havoc that will be placed on the flying public by this rule is totally predictable."
Second, your response states the tarmac rule "has virtually eliminated instances on covered carriers from being stuck on the tarmac for hours on end." Declaring victory in the face of obvious harm from the tarmac rule is arrogant and premature. Such comments demonstrate a fundamental lack of understanding of airline operations and how best to serve the consumer. As the October 2011 ontime data show, numerous long tarmac delays still occur, even in the face of huge fines. The combination of severe weather, FAA management and operational failures, and deficient contingency planning by airports forces an

4833 Rugby Avenue, Suite 301 • Bethesda, Maryland 20814 www.aviationinstitute.org Page 1 of 4approach that encourages cooperation, and does not rely on punitive fines on airlinesto force collaboration by airports, DHS and FAA.

We are encouraged by initial progress made at the November 30, 2011 forum led by DOT, but information sharing alone is not nearly enough to address the core problems in the tarmac rule. Fundamental change to both the rule itself and to enforcement must occur. Third, we urge the Department to consult academic and statistical experts to understand the methods and results of the GAO study on tarmac delays. The GAO report answered the core trade-offs of the tarmac rule. In the main body of their report, GAO used non-technical terms to explain the relationship between the tarmac rule and flight cancellations in form understandable to Congress and policy makers. However, GAO provided full detail on their models and methodology in the Appendix to their report. GAO's two models demonstrate, beyond a reasonable doubt, a relationship between the rule and elevated cancellations that is statistically grounded and isolate the impact of the rule versus the myriad factors that also influence cancellations. Your response fundamentally misinterprets GAO's work.

Your position has also been directly challenged by GAO. The GAO report criticizes the Department's statements that cancellations have not increased, writing that your "analysis is limited" because "it includes only a portion of all flights, considers the total number of cancellations instead of the rate of cancellation, and does not control for other factors that can affect cancellations." Because of this, your estimates and standards do not meet the standards set by the Office of Management and Budget. (GAO p31) If DOT disagrees with GAO's models and conclusions, all industry stakeholders await a rebuttal that identifies failures in GAO's analysis and demonstrates, conclusively, what specific factors actually caused the notable increase in flight cancellation rates.
Fourth, your letter states that we "mistakenly assert that Econometrica is not independent" in conducting an independent review of the tarmac rule. We respectfully remind you that on Page 6 of the Regulatory Impact Analysis for the international tarmac delay rule, Econometrica wrote (emphasis added):
[An] analysis 

### we recently conducted for the Department indicates that while the cancellation rate for domestic flights experiencing tarmac delays of 2 1;2 hours or more (the time limit at which a decision to return to the gate must typically be made) has increased since the EAPP1 Rule requirements took effect, the number of cancellations among this cohort of flights has actually decreased relative to the number for the same time period in previous years

... The impact on cancellations of international flights

4833 Rugby Avenue, Suite 301 • Bethesda, Maryland 20814 www.aviationinstitute.org Page 2 of 4

### operated by foreign carriers (for which tarmac delays of 4 hours trigger the contingency plan) is also projected to be minimal.

Econometrica has publicly confirmed its role in supporting and justifying the Department's tarmac rule statements. They are not independent. Their methodology was defective and criticized by GAO in its report. We encourage you to engage neutral parties for the GAO-recommended review. That would be both comprehensive and honest. We suggest the Department contact the Transportation Research Board and provide them with all materials, exhibits, analysis, and models developed in conjunction with Econometrica for external, independent validation by neutral academics.
Fifth, in regards to your comments about introduction of a fifth cancellation code related to tarmac events, we are amused that inconsistency in airline procedures now stops the Department from collecting data. We have commented multiple times on rulemaking dockets this year where the Department seeks to standardize reporting procedures across a wide range of data. We urge the Department to remain vigilant of airline inconsistencies and halt rulemaking that imposes similar burdens on airlines as the fifth cancellation code, including ancillary revenue reporting and changes to Part 234 baggage metrics.
Sixth, we note you did not respond to our comments on enforcement. Threats of punitive fines cause airlines to cancel more flights than needed to avoid even the remotest possibility of a tarmac delay. As GAO has stated, airlines operate under the assumption that DOT will prosecute violations of the rule on a per-passenger basis. This assumption has been proven correct based on DOT's recent consent order with American Eagle Airlines that clearly stated:

"Because the purpose of section 259.4 is to protect individual passengers from being forced to remain on aircraft for more than 3 hours in the case of domestic flights without the opportunity to deplane, the Office of Aviation Enforcement and Proceedings (Enforcement Office) takes the position that a separate violation occurs for each passenger who is forced to remain on board an aircraft**~or** 

### longer than the set amount of time without the opportunity to deplane. Pursuant to 49 U.S.C. 

### § 46301, violations of 14 CFR Part 259 or 49 U.S.C. 

### § 41712 subject a carrier to civil penalties of up to $27,500 per violation."

We fully agree that Congress authorized enforcement of 14 CFR Part 259 under 49 U.S.C. 

### § 46301. Yet 49 USC 46301 (a)(2) states unequivocally

### that a separate violation occurs "for each day" or "if applicable, for each flight involving the violation". Neither 49 USC 46301 (a) nor 14 CFR 259.4 discusses violations

4833 Rugby Avenue, Suite 301 • Bethesda, Maryland 20814 www.aviationinstitute.org Page3of4in a "passenger" context. All references are to a "flight". The Office of Aviation Enforcement and Proceedings has pursued enforcement action beyond its statutory authority. If you disagree, we welcome a common-sense explanation that connects the Enforcement Office's position to specific authority and precedent.

The negative consumer implications of your enforcement actions are significant. In September, GAO noted "increases in cancellations may be at least partly due to airlines' assumptions about the significant enforcement penalties that could result from a violation of the rule." (GAO p59) They note that while your office "could issue guidance on their penalty structure" your team "has chosen not to in order to maintain flexibility". There is no dispute that flight cancellation rates have soared since the rule was effective, and GAO places partial blame on your unwillingness to set thorough and unambiguous guidance for airlines.
Finally, we appreciate your invitation to provide information for your review. We are confident that both the Department and Econometrica are familiar with our analysis. Secretary LaHood has repeatedly referred to our study findings on radio, television and on the Internet. Specifically, he dismissed us by writing we had "cooked up a report" demonstrating the rule's impact and then citing, incorrectly, our figures showing the impact on flight cancellations. Econometrica directly cited our analysis in its RIA for EAPP-2. We recognize that the Office of the General Counsel may not have been provided our studies, exhibits and supporting materials that were reviewed by the Secretary and by Econometrica. If so, all are available at www.tarmaclimits.com. We remain available to answer any questions or concerns your office or economic contractors may have.

Thank you for your consideration. Sincerely,

Darryl Jenkins Chairman djenkins@aviationinstitute.org Joshua Marks Executive Director jmarks@aviationinstitute.org

4833 Rugby Avenue, Suite 301 • Bethesda, Maryland 20814 www.aviationinstitute.org Page 4 of 4U.S. Department of Transportation Office ofthe Secretary of Transportation

Darryl Jenkins, Chairman JoshuaMarks, ExecutiveDirector AmericanAviation Institute 4833 RugbyAvenue, Suite 301 Bethesda, Maryland 20814

DearMr. Jenkins and Mr. Marks: GENERAL COUNSEL 1200 NewJerseyAvenue, SE Washington, DC 20590

October26, 2011

SecretaryLaHoodhas askedthat Irespond to yourletterofOctober3, 2011, concerning the impact oftheDepartment'sruleprohibitingU.S. airlines operatingdomestic flights from permitting an aircraftto sitonthetarmac for morethan threehours withoutprovidingpassengers an opportunityto deplane subjectto exceptions for safety, securityorAirTraffic Control (ATC) relatedreasons. As youknow, this rule has virtually eliminatedinstances on covered carriers of passengers being stuck onthe tarmac for hours on end. TheDepartmentis also committedto monitoringthe effects ofthe tarmac delayruleto ensure that there are no unintended consequences and that thebenefits oftherule exceed anycosts.

Withregard to your contention that anunintended consequence ofthis rule is a significantincrease inairline flight cancellationrates, ourinitial analysis ofthe effectofthe rule found no basis to concludetherule is the cause ofincreased flight cancellations. The GAO's review ofthe flight cancellations for limitedperiods before and aftertherulebecameeffective also didnot find a causal effect andrecommended that the Department "fully assess the impact ofthetarmac delayrule, includingtherelationship betweenthe rule and anyincreasein cancellations." The Departmenthas already selected acontractor and has begun work on a comprehensive independentreview and analysis ofthe impact ofthetarmac delayrule. This review and analysis needs to be completed to determinehow thethreehourtarmac delayrule affects passengers and whetheranymodification orclarificationoftherule'srequirements is needed.

I emphaticallydisagree with your accusation that theDepartmentis "moreinterested in coveringpast mistakes andre-hashing defective analysis than openly addressingthe impact of therule" because ofits selection ofEconometrica as the entityto conductthis independent review. Youmistakenly assert that Econometricais notindependentinthis matter as it produced the economic analysis accompanyingtheDepartment'srule establishingthe three hour tarmac delayrule. HDR andnotEconometricadevelopedthe economic analysis for the three hourtarmac delayrule. Also, Econometrica is notusingHDRas its subcontractoronthis project as you allege in your October 3rd letter.As for your suggestionthatthe Departmentintroduce a fifth cancellationcode to Airline Service QualityPerformance (ASQP) reports to track cancellations from therule, ourdiscussions with various large airlines onhow they determine whether a cancellationwasrelatedto the three hourtarmac delayrulehas further convincedus that such a codewouldbe oflimiteduse. The airlines do notuse anyobjective standard to determine whether a cancellationis aresult ofthe tarmac delayrule. Moreover, there are differences notonly among airlines but also among employees within individual airlines on whetheraparticular cancellationwas aresult ofthe tarmac delayrule.
Finally, Iwant to personallyassure youthat we at theDepartment are acutely aware of the importance ofconducting a comprehensive and honest analysis ofthe impactofthethreehourtarmac delayrule, andwe are workinghard to do so. Ourreview will considerall relevant information to assess the rule's impact on flight delays, cancellations, and consumers. To the extent you believe youhaveinformationthat could assist in that review, weinvite you to provide it to ourcontractors. Sincerely,

AviationEnforcement andProceedings