This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

59880 

Vol. 78, No. 189 

Monday, September 30, 2013 

DEPARTMENT OF TRANSPORTATION 

Office of the Secretary 

14 CFR Parts 295 and 298 

[Docket No. DOT–OST–2007–27057] 

RIN 2105–AD66 

Enhanced Consumer Protections for 

Charter Air Transportation 

AGENCY: Office of the Secretary (OST), 

U.S. Department of Transportation. 

ACTION: Notice of Proposed Rulemaking 

(NPRM). 

SUMMARY: The U.S. Department of 

Transportation (Department) seeks 

comment on four new proposals to 

strengthen the legal protections 

provided to consumers of charter air 

transportation. First, this proposal 

would require air taxis and commuter 

air carriers that sell charter air 

transportation but rely on others to 

perform that air transportation to make 

certain consumer disclosures as 

recommended by the National 

Transportation Safety Board (NTSB). 

This proposal would also create a new 

class of indirect air carriers to be called 

‘‘air charter brokers’’ to provide as 

principals single entity charter air 

transportation of passengers aboard 

large and small aircraft. In addition, this 

NPRM would codify the exemption 

authority granted to indirect air carriers 

to engage in the sale of air 

transportation related to air ambulance 

services. Finally, the NPRM would 

make clear and codify that certain air 

services performed under contract with 

the Federal Government are in common 

carriage. 

DATES: Interested persons are invited to 

submit comments regarding this 

proposal. Comments must be received 

on or before November 29, 2013. 

ADDRESSES: You may file comments 

identified by the docket number DOT– 

OST–2007–27057 by any of the 

following methods: 

Æ Federal Rulemaking Portal: go to 

http://www.regulations.gov and follow 

the online instructions for submitting 

comments. 

Æ Mail: Docket Management Facility, 

U.S. Department of Transportation, 1200 

New Jersey Ave. SE., West Building 

Ground Floor, Room W12–140, 

Washington, DC 20590–0001. 

Æ Hand Delivery or Courier: West 

Building Ground Floor, Room W12–140, 

1200 New Jersey Ave. SE., between 9:00 

a.m. and 5:00 p.m. ET, Monday through 

Friday, except Federal Holidays. 

Æ Fax: (202) 493–2251. 

Instructions: You must include the 

agency name and docket number DOT– 

OST–2007–27057 or the Regulatory 

Identification Number (RIN) for the 

rulemaking at the beginning of your 

comment. All comments received will 

be posted without change to http://

www.regulations.gov, including any 

personal information provided. 

Privacy Act: Anyone is able to search 

the electronic form of all comments 

received in any of our dockets by the 

name of the individual submitting the 

comment (or signing the comment, if 

submitted on behalf of an association, 

business, labor union, etc.) You may 

review DOT’s complete Privacy Act 

statement in the Federal Register 

published on April 11, 2000 (65 FR 

19477–78), or you may visit http://

DocketsInfo.dot.gov. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http://

www.regulations.gov or to the street 

address listed above. Follow the online 

instructions for accessing the docket. 

FOR FURTHER INFORMATION CONTACT: 

Jonathan Dols, Deputy Assistant General 

Counsel, Office of Aviation Enforcement 

and Proceedings, Department of 

Transportation, 1200 New Jersey 

Avenue SE., Room W98–312, 

Washington, DC 20590, (202) 366–9342, 

jonathan.dols@dot.gov. You may also 

contact Lisa Swafford-Brooks, Chief, 

Aviation Licensing and Compliance 

Branch, Office of Aviation Enforcement 

and Proceedings, Department of 

Transportation, 1200 New Jersey 

Avenue SE., Room W98–304, 

Washington, DC 20590, (202) 366–9342, 

lisa.swaffordbrooks@dot.gov. 

SUPPLEMENTARY INFORMATION: The U.S. 

Department of Transportation (DOT) is 

issuing this notice of proposed 

rulemaking (NPRM) to improve the air 

travel environment for consumers of 

single entity charter air transportation 

based on its statutory authority to 

license entities engaging in air 

transportation, 49 U.S.C. 41101, and its 

statutory authority to prohibit unfair 

and deceptive practices in air 

transportation, 49 U.S.C. 41712. First, 

the Department is taking action to 

protect consumers by ensuring that 

consumers of single entity charter air 

transportation have adequate 

information about the operator of 

chartered aircraft and by enumerating 

certain prohibited unfair and deceptive 

practices by air taxis and commuter air 

carriers. Second, also to protect 

consumers, the Department is creating a 

new class of indirect air carriers called 

air charter brokers and establishing 

required disclosures and enumerating 

certain prohibited unfair and deceptive 

practices for this class. Third, the 

Department is codifying a 1983 Civil 

Aeronautics Board order granting 

exemption authority to indirect air 

carriers that provide air ambulance 

services. Fourth, the Department is 

clarifying that the contracting for air 

transportation with the Federal 

government under a GSA Schedule 

involves common carriage operations. 

Subject Proposed rule 

1. NTSB Recommendation ........................ Requires air taxis and commuter air carriers that sell charter air transportation, but rely on others to 

perform that air transportation, to make certain disclosures, including the name of the direct air 

carrier operating the service and any other name in which that direct air carrier holds itself out to 

the public. 

Enumerates certain prohibited unfair and deceptive practices or unfair methods of competition by air 

taxis registered with the Department and commuter air carriers. 

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Federal Register / Vol. 78, No. 189 / Monday, September 30, 2013 / Proposed Rules 59881 

Subject Proposed rule 

2. New Class of Indirect Air Carrier .......... Creates an ‘‘air charter broker’’ class of indirect air carrier. 

Requires air charter brokers to make certain disclosures. 

Enumerates certain prohibited unfair and deceptive practices or unfair methods of competition by air 

charter brokers. 

3. Air Ambulance Services ........................ Codifies the exemption authority granted in 1983 to indirect air carriers that provide air ambulance 

services. 

4. Air Services Provided Under Contract 

with the Federal Government.

Clarifies and codifies that certain air services performed under contract with the Federal government 

are in common carriage. 

A. NTSB Recommendation 

As a result of an aircraft accident that 

involved, among other issues, questions 

regarding the identity of the operator of 

the aircraft, on August 4, 2006, the 

National Transportation Safety Board 

(NTSB) recommended that the 

Department require the following 

information be disclosed to customers 

and passengers at the time an air charter 

contract is arranged and anytime 

thereafter if such information changes: 

(1) The name of the company in 

operational control of the aircraft during 

flight; (2) any other ‘‘doing business as’’ 

names contained in the Operations 

Specifications of the carrier in 

operational control during the flight; (3) 

the name of the aircraft owner; and (4) 

the names of all brokers involved in 

arranging the flight (available at http:// 

www.ntsb.gov/Recs/letters/2006/A06_

43.pdf). In response, on January 26, 

2007, the Department issued an 

Advance Notice of Proposed 

Rulemaking (ANPRM) seeking comment 

from interested parties on the 

recommendations of the NTSB. We 

received 23 comments on this 

rulemaking. 

Of the 18 comments that touched on 

the disclosure requirements proposed in 

the ANPRM, 14 supported requiring 

disclosure of the entity in operational 

control of the aircraft during the flight 

and seven of those comments further 

supported requiring disclosure of 

associated ‘‘doing business as’’ names. 

Only one comment supported disclosing 

the name of the aircraft owner, and that 

comment suggested that such disclosure 

should be made only ‘‘upon request’’ of 

the person or entity contracting for air 

transportation. According to the 

commenters, owners do not affect the 

safety of the flight, members of the 

public might get a false sense of security 

based on the reputation of the owner of 

the aircraft, and owners would be less 

likely to make aircraft available for 

charter should they not be entitled to 

privacy. In addition, most commenters 

opposed the disclosure of the aircraft 

owner and all brokers involved in 

arranging the flight, if different from the 

entity in operational control of the 

aircraft, primarily on the basis that these 

entities do not affect the safety of the 

flight. Four comments objected to any 

disclosures. 

Of the 23 comments, 13 addressed the 

form in which the disclosures would be 

made. Of these, five indicated that 

verbal notice would be sufficient, four 

indicated that written notice should be 

required, two indicated that the 

adequacy of verbal notice would be 

dependent on the specific situation, and 

two indicated that an ‘‘express 

communication’’ would be sufficient. 

‘‘Express communication’’ was not 

defined. 

Aside from the accident that resulted 

in the recommendation to the 

Department from the NTSB regarding 

notice to consumers of the name of the 

operator of an on-demand charter flight, 

the Department is aware that ondemand charter operators often 

‘‘broker’’ or ‘‘sub-service’’ a contract for 

air transportation to another carrier 

when they are unable to perform the 

service themselves. There are various 

reasons why this may occur. For 

example, a suitable aircraft may be 

available when the contract for the air 

service is made with the customer, but 

may not be available due to mechanical 

or other reasons at the planned 

departure time. In other cases, the 

carrier may not operate the type of 

aircraft best suited or requested for the 

flight, but in order not to lose a valued 

customer or new business, the carrier 

accepts the contract knowing it will 

have to find another carrier to operate 

the flight. 

It has been the longstanding policy of 

the Department in other contexts that it 

is an unfair and deceptive practice and 

unfair method of competition for an air 

carrier or a ticket agent to hold out or 

sell air transportation on one carrier 

when the service will be performed by 

another carrier. (See 14 CFR Part 257, 

requiring notice of the operating carrier 

involving scheduled code-share and 

long-term wet lease operations; see also 

14 CFR 380.30 and 380.32, requiring 

that public charter participants be told 

the name of the direct carrier operating 

the charter flight.) 

Consumers deserve to be protected in 

situations in which direct air carriers 

enter into contracts for air 

transportation, either (1) intending from 

the outset to ‘‘broker’’ or ‘‘sub-service’’ 

that contract to be operated by another 

direct air carrier, or (2) subsequent to 

entering into the contract, out of 

necessity, needing to broker or subservice that contract to be operated by 

another direct air carrier, regardless of 

the reason for such action. Accordingly, 

the Department is proposing to amend 

14 CFR Part 298 to prohibit air taxis and 

commuter air carriers from soliciting or 

executing contracts for single entity 

charter air transportation to be 

performed by another carrier without 

first providing clear and conspicuous 

written disclosure to the person or 

entity that contracts for that air 

transportation of: (1) The corporate 

name of the direct air carrier in 

operational control of the aircraft on 

which the air transportation is to be 

performed and any other names in 

which that carrier holds itself out to the 

public; (2) the capacity in which the air 

taxi is acting in contracting for the air 

transportation; (3) the existence of any 

corporate or pre-existing business 

relationship with the direct air carrier 

that will be in operational control of the 

aircraft on which the air transportation 

is to be performed; (4) the make and 

model of the aircraft to be used for the 

air transportation (e.g., Learjet 60 XR); 

(5) the total cost of the air 

transportation, including any carrierimposed fees or government-imposed 

taxes and fees; and (6) the existence of 

any fees and their amounts, if known, 

including fuel, landing fees, and aircraft 

parking or hangar fees, charged by third 

parties for which the charterer will be 

responsible for paying directly. If the 

carrier that is to operate the flight 

changes after a contract is arranged, this 

NPRM would require that a written 

notice be provided to the charterer 

within a reasonable time after the carrier 

that contracted with the charter 

customer learns of the change. A 

‘‘reasonable’’ time would be enough 

time for the consumer to make an 

informed decision as to whether he or 

she wants to accept the change. For 

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example, should the carrier to operate 

the flight change one week before the 

flight date, the Department would find 

it ‘‘reasonable’’ for notice to be given 

within 24 hours of the carrier becoming 

aware of the change. On the other hand, 

the Department would not find it 

‘‘reasonable’’ for notice to be given less 

than two hours before departure in such 

a circumstance, since that would not 

give the consumer time to make an 

informed decision as to whether to 

accept the change. At that point, the 

consumer would already be fully 

prepared for the flight and may in fact 

already be en route to the airport. The 

Department asks for comments on 

whether it should set a specific time 

limit, e.g., 24 hours, for such notice to 

be provided. Moreover, we are 

proposing that the charter customer be 

entitled to a full refund, at his or her 

option, if reasonable notice is not given 

as described above. We are not 

proposing to require carriers to obtain 

confirmation from the charter customer 

of receipt of the notice; however, we ask 

for comment on whether we should 

require such confirmation and, if so, 

what type of confirmation would be 

appropriate in any given situation, 

including oral contracts. 

We are also proposing to enumerate 

certain prohibited unfair and deceptive 

practices or unfair methods of 

competition by air taxis registered and 

commuter air carriers. We request 

comment on whether any of these 

practices should not be enumerated in 

the final rule. 

We wish to make clear that nothing in 

this proposal is intended to authorize a 

direct air carrier to hold out service as 

a direct air carrier on a specific aircraft, 

or type of aircraft, that it is not 

authorized to operate by Department 

and the Federal Aviation 

Administration (FAA). This includes 

holding out large aircraft services when 

one has authority to operate only small 

aircraft and holding out scheduled 

services when one has authority to 

operate only on-demand services. Such 

actions always have been, and remain, 

a violation of the direct air carrier’s 

authority and an unfair and deceptive 

practice and unfair method of 

transportation. We invite all interested 

persons to comment on the issues raised 

in this notice. Our final action will be 

based on the comments and supporting 

evidence filed in this docket and on our 

own analysis. 

B. New Class of Indirect Air Carriers 

Air charter brokers are persons or 

companies that do not currently hold 

DOT economic authority to function 

either as an indirect air carrier or as a 

direct air carrier, but that arrange air 

transportation services for prospective 

charter customers (charterers) to be 

provided by direct air carriers. Under 

current law, since brokers have no 

authority to hold out air transportation 

in their own right as a direct or an 

indirect air carrier, to comply with 

existing law they must act as the agent 

of a charterer or the agent of a carrier. 

Of course, they may also act as a true 

‘‘middle-person’’ and simply facilitate a 

contract directly between the charterer 

and carrier, but such arrangements are, 

in the Department’s experience, the 

exception rather than the rule. The 

typical air charter broker operating 

lawfully today is, under applicable law, 

a ‘‘ticket agent.’’ A ticket agent is 

defined in 49 U.S.C. 40102(a)(45) as ‘‘a 

person (except an air carrier, a foreign 

carrier, or an employee of an air carrier 

or foreign air carrier) that as a principal 

or agent sells, offers for sale, negotiates 

for, or holds itself out as selling, 

providing, or arranging for air 

transportation.’’ 

The increased market for business 

aviation-related air charters, primarily 

using small aircraft, along with the 

growth of the Internet, has, in turn, 

created a significant growth in the 

number and role of air charter brokers. 

In today’s business aviation market, air 

charter brokers increasingly play a role 

in marketing air transportation services 

to be operated by direct air carriers and 

in providing charterers with convenient 

access to thousands of direct air carriers 

and a wide range of aircraft. Air charter 

brokers also often provide charterers 

with various ancillary services that are 

not provided by most direct air carriers, 

such as ground transportation, catering 

special meals, and general concierge 

services. The Department has responded 

to the proliferation of air charter 

brokers, as described more fully below, 

by conducting considerable industry 

outreach to make clear to air charter 

brokers that they may not mislead the 

public about their status. In addition, 

the Department has taken enforcement 

action against a number of air charter 

brokers found to have engaged in unfair 

and deceptive practices and unfair 

methods of competition. 

In order to engage directly or 

indirectly in air transportation of 

passengers, a citizen of the United 

States is required to hold economic 

authority from the Department pursuant 

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

from that statutory requirement, such as 

those provided by 14 CFR Part 298 for 

direct air carriers operating small 

aircraft, by 14 CFR Part 296 for indirect 

air carriers that hold out and sell air 

freight services, and by 14 CFR Part 380 

for indirect air carriers that hold out and 

sell public charter passenger flights. 

Similarly, persons or entities that are 

not U.S. citizens are required to hold 

economic authority under 49 U.S.C. 

41301, or an exemption from that 

statutory requirement, such as those 

provided by 14 CFR Part 294 to 

Canadian charter carriers to operate 

small aircraft, by 14 CFR Part 297 to 

foreign indirect air carriers to engage in 

indirect air carriage of cargo, and by 14 

CFR Part 380 to foreign indirect air 

carriers to hold out and sell public 

charter passenger flights. Indirect air 

carriers must use direct air carriers that 

meet the economic licensing 

requirements of the Department and the 

appropriate safety certification 

requirements of the FAA or, if 

appropriate, a foreign government 

authority. 

The Department, and its predecessor, 

the Civil Aeronautics Board (CAB), have 

long sought to permit the marketplace to 

govern the sale of air transportation, 

provided appropriate consumer 

protections are in place. To this end, the 

Department has authorized various 

classes of indirect air carriers to engage 

in air transportation. For example, as 

described above, in 1977, the 

Department authorized air freight 

forwarders by exemption to engage in 

indirect air carriage of cargo, provided 

that foreign air freight forwarders first 

register with the Department and that 

both U.S. and foreign freight forwarders 

give consumers certain important 

notices, including whether they are 

acting in their individual capacity or as 

the agent of an airline. (14 CFR Parts 

296 and 297.) In 1980, with regard to 

passenger air transportation, the CAB 

implemented 14 CFR Part 380 to 

authorize a class of indirect air carrier 

called public charter operators to engage 

in charter air transportation on a perseat basis. Unlike direct air carriers, 

public charter operators are not required 

to undergo fitness determinations 

examining their financial fitness, 

managerial competence, and 

compliance disposition. However, 

public charter operators must instead 

comply with strict requirements set 

forth in Part 380 designed to ensure an 

adequate level of protection for 

consumers and their funds. In this 

regard, for example, public charter 

operators may not hold out or sell 

charter flights without first having a 

contract with a direct air carrier to 

perform those flights; they must have in 

place comprehensive financial security 

measures to protect passenger deposits; 

they must adhere to certain contract 

conditions governing important 

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provisions, such as flight changes or 

cancellations and refunds; and they 

must file with and have approved by the 

Department a prospectus covering each 

flight in their public charter program. In 

addition, in 1983, the CAB authorized 

entities that arranged air ambulance 

services to operate as indirect air 

carriers to engage in the sale of air 

ambulance services provided that they 

used direct air carriers holding 

appropriate economic and safety 

authority. (Order 83–1–36, 99 C.A.B. 

801 (1983)) 

The Department also has always 

believed that accurate, timely, and 

clearly presented information is 

essential so that consumers can make 

informed decisions about their flight 

choices. Therefore, the Department has 

had longstanding, comprehensive rules 

applicable to ticket agents, including air 

charter brokers, that prohibit them from, 

among other things: (1) Misleading the 

public into believing they are air 

carriers; (2) misleading the public about 

the qualifications of pilots or the safety 

record or certification of air carriers, 

aircraft, or crew; (3) misleading the 

public about the quality or kind of 

service, including the size or type of 

aircraft and route to be flown; and (4) 

selling air transportation without a 

binding commitment with a direct air 

carrier for that transportation. (14 CFR 

399.80.) 

In October 2004, in response to the 

growth in the air charter broker industry 

and certain problems that accompanied 

that growth which had come to the 

Department’s attention, including the 

unlawful holding out of air 

transportation by air charter brokers, the 

Department’s Office of Aviation 

Enforcement and Proceedings 

(Enforcement Office) issued a notice 

providing guidance on the lawful role of 

air charter brokers in providing air 

transportation. http://

airconsumer.ost.dot.gov/rules/

BrokerNoticeFinal.pdf. That notice 

reminded air charter brokers that: (1) 

Without authority, they may not hold 

out air transportation in their own right 

or enter as principals into contracts with 

customers to provide air transportation; 

and (2) as ticket agents, they may not 

engage in various practices enumerated 

in 14 CFR 399.80 as unfair and 

deceptive or unfair methods of 

competition, including creating the false 

impression that they are an air carrier. 

The Enforcement Office suggested in the 

guidance that each air charter broker 

should, in any advertisement of its 

services, clearly convey the fact that the 

broker is not a direct air carrier and that 

the air service advertised will be 

provided by a properly licensed direct 

air carrier. Although the guidance 

recognized the public benefits that 

could flow where air charter brokers 

were able to act as a principal in 

providing air transportation and invited 

air charter brokers to seek exemptions 

from existing Department regulations to 

offer such services, that offer has not 

proven useful, primarily due to the 

business model of today’s air charter 

brokers, as described below. Moreover, 

despite this guidance and continued 

outreach efforts by Department staff 

through participation at industry 

seminars and conferences, as well as 

through more informal guidance, there 

have been many instances in which the 

Department has found it necessary to 

take enforcement action against air 

charter brokers for violations of the 

licensing requirements of 49 U.S.C. 

41101 and the prohibition against 

engaging in unfair and deceptive 

practices and unfair methods of 

competition of 49 U.S.C. 41712 and 14 

CFR 399.80. 

Despite the growth in the marketplace 

for the services of air charter brokers, 

the regulations that now exist to 

authorize indirect air carriers to engage 

in passenger air transportation are not 

conducive to the industry served by air 

charter brokers. In this regard, air 

charter brokers, particularly those 

involved with business aviation-related 

air charters, have not been able to take 

advantage of the authorizations noted 

above for other indirect air carriers, a 

situation that may have stifled 

innovation and consumer benefits that 

normally flow from a more open, 

competitive marketplace. For example, 

Part 380 has been the only lawful means 

of offering indirect air transportation 

services for passengers other than those 

in need of air ambulance services, but 

it would be extremely difficult for an air 

charter broker to comply with that 

regulation for single entity businessrelated air charters. In particular, under 

Part 380 an air charter broker would 

need to file a prospectus with the 

Department detailing the charter 

program and could not vary from the 

schedule of flights filed without first 

filing an amendment. In addition, Part 

380 dictates the specific terms of the 

contract of carriage between the 

passenger and indirect air carrier, such 

as those involving advertising, delays, 

cancellations, and refunds, in order to 

protect passenger expectations. Part 380 

also is designed to protect passengers’ 

financial interests as well, through 

bonding and escrow requirements 

applicable to public charter operators as 

well as to the airlines that operate 

public charter flights. 

The business models of the ondemand air charter industry, including 

the services provided by the majority of 

air charter brokers that use the services 

of on-demand air carriers, do not easily 

fit into the requirements of Part 380. 

Customers are often businesses or highnet worth individuals, and the flight 

itinerary is of the customer’s choice and 

the customer can change it at any time, 

including en route. In addition, other 

important contract terms, such as 

aircraft type and charter price, are 

subject to negotiation. Moreover, unlike 

the vast majority of airlines operating 

flights for public charters, which must 

undergo a stringent fitness test and also 

escrow charter funds, the fitness and 

financial protections applicable to the 

small air carriers operating on-demand 

charter flights are minimal. In this 

regard, air taxi operators may operate 

‘‘small aircraft’’ (those that as originally 

designed to have 60 passenger seats or 

fewer or a maximum payload capacity 

of 18,000 pounds or less) after filing a 

registration statement with the 

Department stating that they are a U.S. 

citizen and have requisite liability 

insurance and listing the aircraft that 

they operate. Under Part 298, air taxi 

operators must provide public notice of 

their policies on baggage liability and 

denied boarding compensation. (14 CFR 

298.30.) Because of the nature of their 

business model and the nature and 

specific provisions of Part 380, air 

charter brokers cannot reasonably be 

expected to provide their services under 

Part 380 or an exemption from certain 

of its provisions. Accordingly, in 

recognition of the important public 

benefits in connection with air 

transportation that air charter brokers 

might provide, we are proposing to 

allow air charter brokers to operate as 

indirect air carriers, subject to 

appropriate consumer protection 

provisions. 

More specifically, we are proposing to 

create a class of indirect air carrier to be 

named ‘‘air charter brokers’’ that are 

permitted as principals in their own 

right to engage in single entity charter 

air transportation aboard large and small 

aircraft pursuant to exemptions from 

certain provisions of Subtitle VII of Title 

49 of the United States Code 

(Transportation) and to establish rules 

for the provision of indirect air 

transportation of passengers by air 

charter brokers. 

The Department also seeks comment 

on the last clause in the proposed 

definition of a ‘‘single entity charter’’ 

that would allow individuals who selfaggregate to form a single entity, despite 

the fact that they may be bearing a 

portion of the cost of the charter. If the 

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59884 Federal Register / Vol. 78, No. 189 / Monday, September 30, 2013 / Proposed Rules 

Department were to accept the 

definition as it is currently proposed, 

would it be necessary to change to the 

definition of single entity charter in 14 

CFR Part 212? 

Under this proposal, air charter 

brokers would, in essence, self-identify. 

In other words, there would be no 

formal licensing process or registration, 

as is the case currently with indirect air 

carriers engaging in air transportation in 

connection with air ambulance services 

and U.S. air freight forwarders engaging 

in the indirect air carriage of cargo. 

(Nothing in this proposal would apply 

to persons or entities that, as an 

employee or bona fide agent of an air 

carrier, hold out, sell, or undertake to 

arrange air transportation, or as a bona 

fide agent of a charterer, arrange for air 

transportation for that charterer.) 

Commenters who do not want the 

Department to allow air charter brokers 

to self-identify should propose an 

alternative and provide information 

regarding the costs to the government to 

administer and to air charter brokers to 

comply with their proposed alternative. 

While the Department proposes a 

system of self-identification for all air 

charter brokers, we ask whether the 

Department should adopt a registration 

system applicable only to non-U.S. 

citizen air charter brokers, similar to 

that in place for foreign air freight 

forwarders, so that the Department can 

ensure that a grant of such authority to 

non-U.S. citizens is in the public 

interest, including consideration of 

whether there is effective reciprocity in 

the treatment of U.S. air charter brokers 

in other countries? Regardless of 

whether a registration system for nonU.S. air charter brokers is adopted, we 

are tentatively of the opinion that 

requiring certain disclosures by all air 

charter brokers to protect charter 

customers is in the public interest. In 

this regard, we propose to require that 

an air charter broker disclose clearly 

and conspicuously in any solicitation 

materials its status and the fact that it 

is not a direct air carrier and will use 

an authorized direct air carrier to 

provide the transportation it offers. We 

also propose to require that a charterer 

be informed in writing, prior to 

purchasing the air transportation, of the 

following: (1) The corporate name of the 

direct air carrier in operational control 

of the aircraft on which the air 

transportation is to be performed and 

any other names in which that carrier 

holds itself out to the public; (2) the 

capacity in which the air charter broker 

is acting in contracting for the air 

transportation, i.e., as an indirect air 

carrier, as an agent of the charterer, or 

as an agent of the direct air carrier that 

will be in operational control of the 

flight; (3) the existence of any corporate 

or business relationships with a 

particular direct air carrier(s) that may 

or will be used for the air transportation; 

(4) the make and model of the aircraft 

to be used for the transportation (e.g., 

Learjet 60 XR); (5) the total cost of the 

air transportation paid to the air charter 

broker, including any air charter broker 

or carrier-imposed fees, or governmentimposed taxes and fees; (6) the existence 

of any fees and their amounts, if known, 

including fuel, landing fees, and aircraft 

parking or hangar fees, charged by third 

parties for which the charterer will be 

responsible for paying directly; and (7) 

the existence or absence of liability 

insurance held by the air charter broker 

covering the charterer and passengers 

and property on the charter flight, and 

the monetary limits of any such 

insurance. We ask for comment on 

whether there is additional information 

that should be provided to charterers or 

whether any of the aforementioned 

information is not essential and need 

not be provided charterers. For example, 

we are disposed to conclude, as we have 

in other contexts, that consumers 

deserve to know the direct air carrier on 

which they will be travelling before 

committing to a charter flight. (See 14 

CFR Parts 257 and 380) 

Under this NPRM, if any of the seven 

items listed above that we are proposing 

that air charter brokers disclose in 

writing to charter customers prior to 

purchase changes subsequent to the 

contract being formed, the air charter 

broker would be required to provide this 

new information to the consumer within 

a reasonable time of such information 

changing. A ‘‘reasonable’’ time would be 

enough time for the charterer to make an 

informed decision as to whether he or 

she wants to accept the change. For 

example, should the carrier to operate 

the flight change one week before the 

flight date, the Department would find 

it ‘‘reasonable’’ for notice to be given 

within 24 hours of the carrier becoming 

aware of the change. On the other hand, 

the Department would not find it 

‘‘reasonable’’ for notice to be given two 

hours before departure in such a 

circumstance, since that would not give 

the charter customer time to make an 

informed decision as to whether to 

accept the change. At that point, the 

charterer would already be fully 

prepared for the flight and may in fact 

already be en route to the airport. The 

Department asks for comments on 

whether it should set at specific time 

limit, e.g., 24 hours, for such notice to 

be provided. 

If reasonable notice is not provided, 

the consumer would have the option of 

receiving a full refund if he/she no 

longer wished to take the flight because 

of the change. We are not proposing to 

require air charter brokers obtain 

confirmation from the charterer of 

receipt of the notice; however, we ask 

for comment on whether we should 

require such confirmation and, if so, 

what type of confirmation would be 

appropriate in any given situation, 

including oral contracts. 

With regard to the proposed 

requirement to provide written notice of 

the total cost of the air transportation 

prior to purchase, we recognize that, as 

is customary in the on-demand charter 

industry, the ultimate price of the air 

transportation normally borne by the 

charterer, including the amount of 

government taxes and fees applicable to 

that price, may be dependent on factors 

whose cost is not known at the time a 

contract is signed, such as the cost of 

fuel at the time of travel, aircraft wait 

time, or aircraft repositioning costs. We 

propose that, in such an event, the 

requirement to disclose the ‘‘total’’ cost 

in writing prior to purchase would be 

considered met so long as the air charter 

broker conspicuously identifies and 

discloses the existence of all items that 

may impact the total cost, including the 

range of fees associated for each item, as 

well as any factors which would cause 

the fees to be in the high or low range. 

The fare advertising requirements in 14 

CFR 399.84 would not apply. We ask for 

comment on this approach. 

In addition, the Department asks for 

comment on its proposal to subject air 

charter brokers to 14 CFR Part 374, 

which implements statutes and 

regulations governing credit 

transactions, including those requiring 

credit card refunds within seven 

business days of receiving complete 

documentation. The Department’s 

longstanding policy on cash refunds, 

which recently was codified with regard 

to scheduled airlines, requires cash 

refunds within 20 days of receipt of full 

documentation of such a request. 

Should the Department impose similar 

cash refund requirements in this rule for 

air charter brokers? If not, what 

distinguishes the business of air charter 

brokers that supports their not being 

required to comply with such refund 

requirements? 

We are also proposing to enumerate 

certain prohibited unfair and deceptive 

practices or unfair methods of 

competition by air charter brokers. We 

request comment on whether any of 

these practices should not be 

enumerated in the final rule. 

We are also considering imposing a 

requirement on air charter brokers to 

retain certain records for the purpose of 

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determining regulatory compliance. If 

so, what specific records should the 

Department require air charter brokers 

to retain? 

C. Air Ambulance Services 

Entities that arrange air ambulance 

services as indirect air carriers have 

been authorized through a blanket 

exemption granted in 1983 by the Civil 

Aeronautics Board to engage in the sale 

of air transportation in connection with 

air ambulance services. Order 83–1–36, 

99 C.A.B. 801 (1983). The only 

condition placed to date upon this class 

of indirect air carrier has been that they 

use direct air carriers holding 

appropriate Federal economic and 

safety authority for such operations. 

Over the years, the Department’s 

Aviation Enforcement Office has 

received informal complaints, primarily 

from companies involved in the air 

ambulance industry, regarding the 

conduct of other individual air 

ambulance indirect air carriers. Those 

complaints generally have alleged that 

an indirect air carrier has misled the 

public about the nature of its operations, 

such as inducing the public to believe 

that it operates aircraft when it does not. 

Such conduct violates the licensing 

requirements of 49 U.S.C. 41101 and 

therefore the exemption authority of 

Order 83–1–36 and constitutes an unfair 

and deceptive practice and unfair 

method of competition in violation of 49 

U.S.C. 41712. The Department has 

provided guidance about the role of 

indirect air carriers providing air 

ambulance services and has found it 

necessary to take enforcement action 

against a number of air ambulance 

indirect carriers for engaging in the 

unlawful practices noted above. Similar 

enforcement action has been taken 

based on information uncovered during 

investigations undertaken by the 

Enforcement Office on its own 

initiative. 

The fundamental nature of these 

violations stems from the failure of air 

ambulance indirect air carriers to 

provide the public information about 

the nature of their operations in a clear 

and conspicuous manner. Consumers of 

the services of air ambulance indirect 

air carriers deserve no less protection 

than persons using the services of the 

air charter brokers. As such, we are 

proposing to require that indirect air 

carriers that provide air transportation 

in connection with air ambulance 

services ensure appropriate protections 

for consumers of those services similar 

to those proposed for air charter brokers. 

Specifically, we propose to codify the 

blanket exemption authority granted air 

ambulance indirect air carriers by Order 

83–1–36 under the new Part 295. Under 

the proposed rule, the provisions 

prohibiting unfair and deceptive 

practices and enumerating specific 

prohibited practices in section 295.50 

would apply to air ambulance indirect 

air carriers, e.g., misrepresentations that 

the air charter broker is a direct air 

carrier. However, air ambulance indirect 

air carriers would be excluded from the 

disclosure requirements of section 

295.24, e.g., the corporate name of the 

direct air carrier in operational control 

of the aircraft. We invite comment on 

this proposal in general, as well as on 

whether any of the specific provisions 

of proposed section 295.24 should apply 

to indirect air carriers engaged in air 

ambulance services. Commenters 

opposed to including air ambulance 

indirect air carries under proposed Part 

295 should be specific as to why the 

rule or any specific provision contained 

in the rule, such as the disclosure 

requirements in section 295.24, should 

not apply. For example, are there certain 

types of air ambulance indirect air 

carriers for which the complying with 

the disclosure requirements would not 

be feasible or reasonable given the 

nature of their operations, e.g., 

emergency medical evacuations. 

D. Air Services Performed Under 

Contract With the Federal Government 

This NPRM also addresses air charter 

broker issues relating to contracts with 

the Federal government. On November 

25, 2009, CSI Aviation Services, Inc., an 

aviation broker providing services to the 

Federal government, filed an 

application for an exemption to permit 

it to act as a principal in contracts with 

Federal government agencies. On April 

14, 2010, the Department issued a final 

order exempting CSI and other similarly 

situated air charter brokers from the 

requirements of 49 U.S.C. 41101 and 

applicable Department regulations to 

the extent necessary for such air charter 

brokers to engage in domestic and 

foreign indirect air transportation of 

persons, property, and mail pursuant to 

contracts with Federal government 

agencies arranged under the General 

Services Administration (‘‘GSA’’) 

Schedule Special Item Number (‘‘SIN’’) 

599–5, Air Charter Services-Brokers. 

(Order 2010–4–7, Issued April 13, 

2010.) The Department noted that the 

rulemaking at issue here was being 

developed, but decided that it was not 

in the public interest to prohibit air 

charter brokers from engaging in 

indirect air transportation under 

contract with the U.S. Government via 

the GSA Schedule pending completion 

of a broader rulemaking proceeding. 

That exemption authority was 

subsequently extended in March 2011 

for another year. (Department Order 

2011–3–8, issued March 3, 2011.) 

Then, on April 1, 2011, the United 

States Court of Appeals for the District 

of Columbia Circuit (D.C. Circuit) issued 

its opinion in CSI Aviation Services, 

Inc., v. U.S. Dept. of Transportation, a 

case involving an air charter broker’s 

challenge to a warning letter from the 

Department’s Office of Aviation 

Enforcement and Proceedings 

(Enforcement Office). The Enforcement 

Office warned the air charter broker 

that, in its opinion, the air charter 

broker was unlawfully holding out air 

transportation by being on a General 

Service Administration’s schedule 

listing companies as available to 

contract as principals with Federal 

government agencies to provide air 

transportation when it held no 

economic authority to do so. The court 

found, among other things, that the 

Department failed adequately to explain 

its interpretation of the statutory 

definition for ‘‘air transportation,’’ and, 

in particular, why it considered CSI’s 

arrangement with GSA to constitute 

‘‘common carriage.’’ Although the court 

preliminarily determined that CSI’s 

operation under the GSA schedule 

arrangement involving only government 

entities did not appear to be ‘‘common 

carriage,’’ it left open the possibility that 

the Department may ‘‘reasonably 

conclude otherwise in the future after 

demonstrating a more adequate 

understanding of the statute.’’ (CSI 

Aviation Services, Inc., No. 09–1307, 

slip op. at 14 (D.C. Cir. April 1, 2011)). 

We appreciate the Court’s advice and 

take this opportunity to clarify any 

misunderstanding regarding the matter 

and to codify, through this rulemaking, 

the long-standing position of various 

courts, as followed by the Department 

and the Civil Aeronautics Board before 

it and as supported by Congressional 

intent, that contracting for air 

transportation with the Federal 

government, with limited exceptions 

not applicable to our action here, 

involves common carriage operations. 

As early as 1925, the U.S. Supreme 

Court held that transportation provided 

to a Federal government agency 

amounted to common carriage. St. 

Louis, B. & M. RY. CO. v. United States, 

268 U.S. 169, at 173 (Apr. 27, 1925.) 

(‘‘[i]n respect to furnishing 

transportation, a railroad ordinarily 

bears to the government the same 

relation that it does to a private person 

using its facilities.’’). Other Federal 

courts have made clear that 

transportation provided under contract 

with the government is no less common 

carriage than that provided private 

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parties. U.S.A.C. Transport, Inc., v. 

United States, 203 F.2d 878, at 879 

(10th Cir. 1953), citing United States v. 

Schupper Motor Lines, Inc., 77 F. Supp. 

737 (1948). Thus, transportation 

provided for or on behalf of the 

government, as opposed to 

transportation provided by the 

government, amounts to common 

carriage. 

The fact that transportation provided 

for a government entity amounts to 

common carriage is also seen in the 

longstanding policies and regulations of 

the Department and the CAB before it. 

In this regard, 14 CFR Part 212 provides 

non-safety related rules applicable to 

U.S. and foreign direct air carriers 

operating passenger or cargo charter 

flights in air transportation. ‘‘Air 

transportation’’ includes the 

transportation of passengers by air as a 

‘‘common carrier’’ between places in 

different states or between a place in the 

United States and a place outside the 

United States. (49 U.S.C. 40102(a)(5), 

(a)(23), and (a)(25)) In the context of 

aviation, a ‘‘common carrier’’ is a person 

or other entity that, for compensation or 

hire, holds out or provides to the public 

transportation by air between two 

points. (Woolsey v. NTSB, 993 F.2d 516, 

522–23 (5th Cir. 1993)) Section 

212.4(b)(2) of the Department’s 

regulations, 14 CFR 212.4(b)(2), 

specifically authorizes certificated and 

foreign air carriers to conduct single 

entity charters pursuant to contracts 

with the Department of Defense (DOD). 

The substantive requirements of section 

212.4(b)(2) were originally established 

in 1966 when the CAB revised its 

economic regulations to set forth the 

terms, conditions, and limitations for 

the conduct of ‘‘certificated 

supplemental air transportation,’’ which 

was defined, in essence, to mean charter 

trips in air transportation pursuant to a 

certificate of public convenience and 

necessity. In the final rule, the CAB 

defined the term ‘‘charter flight’’ to 

include ‘‘[a]ir transportation of persons 

and/or property pursuant to contracts 

with the Department of Defense where 

the entire capacity of one or more 

aircraft has been engaged by the 

Department.’’ 31 FR 4771, March 22, 

1966. Clearly the CAB and the 

Department, as well as the DOD, 

considered contracts with that agency to 

amount to common carriage operations 

to be regulated by the Department to the 

extent necessary. 

Support for this conclusion is also 

found in the Department’s regulations at 

14 CFR Parts 241 and 298 that require 

reporting of operations in air 

transportation and foreign air 

transportation by airlines. There is a 

special category in Part 241 for reporting 

of ‘‘Nonscheduled Military Passenger/

Cargo’’ and ‘‘Nonscheduled Military 

Cargo’’ operations by large certificated 

air carriers (14 CFR Part 241, Sec. 19– 

4) and the Department requires 

certificated air carriers, as well as air 

taxi and commuter air carriers to report, 

in these special categories, domestic and 

international military operations. (14 

CFR Part 241, Sec 19–6 and 14 CFR 

298.70, respectively) It is axiomatic that 

only flights in common carriage and 

therefore under the Department’s 

jurisdiction are subject to its reporting 

requirements. 

Support for the conclusion that 

contracts with the Federal government 

for air transportation constitute common 

carriage is also found in Congressional 

action. In this regard, the ‘‘Fly America 

Act’’ requires that U.S. government 

agencies shall ensure that government 

financed air transportation is provided 

by ‘‘an air carrier holding a certificate 

under 49 U.S.C. 41102.’’ (49 U.S.C. 

40118) The original text of the statute 

when it first became law in 1975 states 

that Federal agencies shall ‘‘procure, 

contract for, or otherwise obtain’’ air 

transportation provided by ‘‘air carriers 

holding certificates under section 401 of 

the [Federal Aviation Act] to the extent 

authorized by such certificates or by 

regulations or exemption of the Civil 

Aeronautics Board . . .’’ International 

Air Transportation Fair Competitive 

Practices Act of 1974 (Pub. L. 93–624, 

Jan. 3, 1975). Although the text of the 

statute has been substantially amended 

since 1975, it has retained the essential 

requirement that government funded air 

transportation must be provided by a 

certificated ‘‘air carrier,’’ which is a 

statutorily defined term—‘‘a citizen of 

the United States undertaking by any 

means, directly or indirectly, to provide 

air transportation’’ (49 U.S.C. 

40102(a)(2))—applicable only in the 

context of common carriage. Congress 

clearly envisioned that contracts with 

the government for air transportation are 

in common carriage. Had it thought 

otherwise, Congress could have used a 

broader term in the Fly America Act in 

place of ‘‘air carrier,’’ such as ‘‘aircraft 

operated by a U.S. citizen,’’ which 

would have covered both common 

carriage and private carriage, yet still 

achieve the main purpose of the Fly 

America Act. Congress chose not to do 

so, indicating that it was mindful of the 

difference between common carriage, 

requiring adherence to economic 

licensing requirements and the highest 

level of safety, and private carriage, 

which has no economic licensing 

requirements and is not required to 

meet the same higher safety standards 

required of common carriers. 

We are therefore taking this 

opportunity to reemphasize the 

Department’s longstanding 

determination that contracts with the 

Federal government arranged under the 

GSA Schedule involving government 

entities are in fact in ‘‘common 

carriage’’ and subject to the 

Department’s jurisdiction and to codify 

that such contracts arranged by air 

charter brokers also involve common 

carriage by including such a provision 

in our proposed rule on air charter 

brokers. In addition, in keeping with 

Congressional intent that government 

financed air transportation be provided 

by an air carrier holding a certificate 

under 49 U.S.C. 41102 or an exemption 

from that provision, we are proposing to 

require that all contracts for air 

transportation with government entities 

arranged by air charter brokers through 

the GSA Schedule must comply with 

the Fly America requirements of 49 

U.S.C. 40118. Failure to comply with 

this requirement would be cause to 

revoke an air charter broker’s authority 

on public interest grounds. 

Regulatory Analysis and Notices 

A. Executive Order 12866 (Regulatory 

Planning and Review) and DOT 

Regulatory Policies and Procedures 

This action has been determined not 

to be significant under Executive Order 

12866 and the Department of 

Transportation’s Regulatory Policies and 

Procedures. It has not been reviewed by 

the Office of Management and Budget 

under that Executive Order. The 

Regulatory Evaluation finds that the 

benefits for the proposed rule exceed its 

costs. The passenger benefits from the 

proposed requirements are not possible 

to quantify. The value of this 

rulemaking would be the increased 

transparency for both the public and 

competitors in this market. There is also 

value in the timely and accurate 

production of information to aid in 

consumer decision-making, but this also 

cannot be quantified. The baseline or 

midrange estimate of costs incurred by 

air charter brokers and carriers over a 

20-year period at a 7 percent discount 

rate is $1.256 million. More detail on 

the estimates can be found in the 

preliminary Regulatory Impact Analysis 

associated with this proposed rule. 

B. Executive Order 13132 (Federalism) 

This Notice of Proposed Rulemaking 

has been analyzed in accordance with 

the principles and criteria contained in 

Executive Order 13132 (‘‘Federalism’’). 

This notice does not propose any 

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regulation that has substantial direct 

effects on the States, the relationship 

between the national government and 

the States, or the distribution of power 

and responsibilities among the various 

levels of government. It does not 

propose any regulation that imposes 

substantial direct compliance costs on 

State and local governments. It does not 

propose any regulation that preempts 

state law, because States are already 

preempted from regulating in this area 

under the Airline Deregulation Act, 49 

U.S.C. 41713. Therefore, the 

consultation and funding requirements 

of Executive Order 13132 do not apply. 

C. Executive Order 13084 

This notice has been analyzed in 

accordance with the principles and 

criteria contained in Executive Order 

13084 (‘‘Consultation and Coordination 

with Indian Tribal Governments’’). 

Because none of the options on which 

we are seeking comment would 

significantly or uniquely affect the 

communities of the Indian tribal 

governments or impose substantial 

direct compliance costs on them, the 

funding and consultation requirements 

of Executive Order 13084 do not apply. 

D. Regulatory Flexibility Act 

The Regulatory Flexibility Act of 1980 

(Pub. L. 96–354) (RFA) was enacted by 

Congress to ensure that small entities 

are not unnecessarily and 

disproportionately burdened by 

government regulations. It requires that 

agencies review regulations that may 

have a significant economic impact on 

a substantial number of small entities, 

and if possible to fit regulatory and 

informational requirements to the scale 

of the entities subject to regulation. 

However, if it is determined that a rule 

is not expected to have a significant 

economic impact on a substantial 

number of small entities, section 605(b) 

of the RFA provides that the head of the 

agency may so certify and a regulatory 

flexibility analysis is not required. The 

certification must include a statement 

providing the factual basis for this 

determination, and the reasoning should 

be clear. 

Our analysis identified a total of 2,121 

small direct air carriers (i.e., U.S. air 

carriers that provide air transportation 

exclusively with aircraft that seat no 

more than 60 passengers) that could 

potentially be affected by the 

requirements of this NPRM. In addition, 

we are treating all the indirect air 

carriers (i.e., air charter brokers 

including those that provide air 

ambulance services) as small entities. 

The criteria for identifying small 

business entities are provided by the 

Small Business Administration in its 

publication, Table of Small Business 

Size Standards Matched to North 

American Industry Classification 

System Codes. These size standards are 

customarily based on an entity’s gross 

receipts or its employment. There is no 

North American Industry Classification 

System (NAICS) code for air charter 

brokers. Industries that are similar to air 

charter brokers are Nonscheduled 

chartered passenger air transportation 

(NAICS code 481211), Travel agencies 

(NAICS code 561510) and All other 

travel arrangements and reservations 

services (NAICS code 561599). It is 

important to note that firms in NAICS 

code 481211 provide transportation 

services, while air charter brokers do 

not. If air charter brokers were treated as 

analogous to these firms, all air charter 

brokers would be small entities. 

The Department believes that the cost 

impact of this rulemaking on air taxis is 

de minimis, since the only requirement 

in this NPRM that would mandate 

affirmative action on their part is a 

disclosure requirement. 

With regard to air charter brokers, 

there are three requirements that would 

apply to them. Two of these 

requirements involve disclosure. First, 

in their solicitations and advertising 

materials, the NPRM would require air 

charter brokers to disclose certain 

information in writing to consumers. 

Second, before entering into contracts 

for a flight or series of flights, the NPRM 

would require air charter brokers to 

disclose certain additional information. 

The third, the NPRM would mandate 

that air charter brokers make prompt 

refunds of monies paid for single entity 

charter air transportation when such 

refunds are due. 

The Department does not consider 

this cost to be significant, especially 

since a sizeable part of the air charter 

broker industry already makes such 

disclosures as part of current business 

practice. As a result, the Department 

certifies that the proposed rule would 

not have a significant economic impact 

on a substantial number of small 

entities. The Department requests 

comments from affected entities on this 

finding and determination. 

E. Paperwork Reduction Act 

This NPRM does not propose any new 

collections of information that would 

require approval by the Office of 

Management and Budget (OMB) under 

the Paperwork Reduction Act of 1995 

(Pub. L. 104–13, 49 U.S.C. § 3501 et 

seq.). 

F. Unfunded Mandates Reform Act 

The Department has determined that 

the requirements of Title II of the 

Unfunded Mandates Reform Act of 1995 

do not apply to this notice. 

List of Subjects 

14 CFR Part 295 

Air charter brokers. 

14 CFR Part 298 

Exemptions for air taxi and commuter 

air carrier operations. 

Issued this 11th day of September, 2013 at 

Washington, DC, under authority delegated 

in 49 CFR part 1.27. 

Kathryn B. Thomson, 

Acting General Counsel. 

Accordingly, 14 CFR chapter II is 

proposed to be amended as follows: 

■ 1. A new Part 295 is added to read as 

follows: 

PART 295—AIR CHARTER BROKERS 

Sec. 

Subpart A—General 

295.1 Purpose. 

295.3 Applicability. 

295.5 Definitions. 

Subpart B—Exemption Authority 

295.10 Grant of economic authority; 

exemption from the Statute. 

295.12 Suspension or revocation of 

exemption authority. 

295.17 Contract with government entities. 

Subpart C—Consumer Protection 

295.20 Use of duly authorized direct air 

carriers. 

295.22 Misrepresentations. 

295.24 Disclosures. 

295.26 Refunds. 

Subpart D—Violations 

295.50 Unfair and deceptive practices and 

unfair methods of competition. 

295.52 Enforcement. 

Authority: 49 U.S.C. Chapters 401, 411, 

413, and 417. 

Subpart A—General 

§ 295.1 Purpose. 

This part creates a new class of 

indirect air carrier—air charter 

brokers—to provide indirect air 

transportation of passengers on single 

entity charters aboard large and small 

aircraft by granting exemptions to such 

air charter brokers from certain 

provisions of Subtitle VII of Title 49 of 

the United States Code (Transportation), 

and establishes rules, including 

consumer protection provisions, for the 

provision of such air transportation by 

air charter brokers. 

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59888 Federal Register / Vol. 78, No. 189 / Monday, September 30, 2013 / Proposed Rules 

§ 295.3 Applicability. 

(a) This part applies to any person or 

entity acting as an air charter broker as 

defined in this part with respect to 

single entity charter air transportation 

that the air charter broker, as a principal 

in its own right, holds out, sells or 

undertakes to arrange aboard large and 

small aircraft. Except for the disclosure 

requirements found at 295.24, this part 

also applies to persons or entities 

authorized by Civil Aeronautics Board 

Order 83–1–36 to engage in air 

transportation as indirect air carriers in 

connection with air ambulance services 

and described in that order as air 

ambulance operators. 

(b) This part does not apply to a 

person or entity that, as an employee or 

as a bona fide agent of an air carrier, 

holds out, sells, or undertakes to arrange 

air transportation. This part does not 

apply to a person or entity acting as the 

bona fide agent of a charterer in 

arranging for air transportation for that 

charterer. This part does not authorize 

air charter brokers to hold out, sell, or 

undertake to arrange scheduled air 

transportation in their individual 

capacity or on behalf of air carriers. 

§ 295.5 Definitions. 

For the purposes of this part: 

(a) Air transportation means interstate 

or foreign air transportation, as defined 

in 49 U.S.C. 40102(5), 40102(23), and 

40102(25). 

(b) Air charter broker means a person 

or entity that holds out, sells, or 

undertakes to arrange planeload, single 

entity passenger charter air 

transportation, other than as an 

employee or bona fide agent of an air 

carrier or a charterer, using a direct air 

carrier, or using another provider of air 

transportation. 

(c) Charterer means the person or 

entity that contracts with an air charter 

broker for the transportation of the 

passengers flown on a charter flight. 

(d) Charter air transportation means 

charter flights in air transportation and 

foreign air transportation authorized 

under Part A of Subtitle VII of Title 49 

of the United States Code. 

(e) Direct air carrier means a U.S. or 

foreign air carrier that provides or offers 

to provide air transportation and that 

has control over the operational 

functions performed in providing that 

transportation. 

(f) Indirect air carrier means a person 

or entity that, as a principal, holds out, 

sells, or arranges air transportation and 

separately contracts with direct air 

carriers or other providers to perform 

such air transportation. 

(g) Single entity charter means a 

charter for the entire capacity of the 

aircraft, the cost of which is borne by 

the charterer and not directly or 

indirectly by individual passengers, 

except in cases in which individual 

passengers self-aggregate to form a 

single entity. 

(h) Statute means Subtitle VII of Title 

49 of the United States Code 

(Transportation). 

(i) Large aircraft means any aircraft 

originally designed to have a maximum 

passenger capacity of more than 60 seats 

or a maximum payload capacity of more 

than 18,000 pounds. 

(j) Small aircraft means any aircraft 

originally designed to have a maximum 

passenger capacity of 60 seats or fewer 

or a maximum payload capacity of 

18,000 pounds or less. 

Subpart B—Exemption Authority 

§ 295.10 Grant of economic authority; 

exemption from the statute. 

To the extent necessary to permit air 

charter brokers to hold out, sell, or 

undertake to arrange single entity 

charter air transportation, air charter 

brokers are exempted from the following 

provisions of Subtitle VII of Title 49 of 

the United States Code, except for the 

provisions noted below, only if and so 

long as they comply with the provisions 

and the conditions imposed by this part: 

Chapter 411, Chapter 413, Chapter 415, 

and Chapter 419. Air charter brokers are 

not exempt from the following 

provisions: Section 41310 

(nondiscrimination) with respect to 

foreign air transportation. 

§ 295.12 Suspension or revocation of 

exemption authority. 

The Department reserves the power to 

suspend or revoke the exemption 

authority of any air charter broker, 

without a hearing, if it finds that such 

action is necessary in the public interest 

or is otherwise necessary in order to 

protect the traveling public. 

§ 295.17 Contracts with government 

entities. 

Contracts by air charter brokers with 

the Federal government arranged under 

the GSA Schedule for air transportation 

are in common carriage and must meet 

the requirements of 49 U.S.C. 40118. 

Subpart C—Consumer Protection 

§ 295.20 Use of duly authorized direct air 

carriers. 

Air charter brokers are not authorized 

under this part to hold out, sell, or 

otherwise arrange charter air 

transportation to be operated by a 

person or entity that does not hold the 

requisite form of economic authority 

from the Department and appropriate 

safety authority from the Federal 

Aviation Administration and/or, if 

applicable, a foreign safety authority. 

Air charter brokers are not authorized 

under this part to hold out air 

transportation to be performed by a 

direct air carrier that the direct air 

carrier would not in its own right be 

able to hold out. 

§ 295.22 Prohibited unfair and deceptive 

practices and unfair methods of 

competition. 

An air charter broker or foreign air 

charter broker shall not engage in any 

unfair or deceptive practice or unfair 

method of competition. 

§ 295.24 Disclosures. 

(a) All solicitation materials and 

advertisements, including Internet Web 

pages, published or caused to be 

published by air charter brokers shall 

clearly and conspicuously state that the 

air charter broker is an air charter 

broker, and that it is not a direct air 

carrier in operational control of aircraft, 

and that the air service advertised will 

be provided by a properly licensed 

direct air carrier. 

(b) Before entering into a contract for 

a specific flight or series of flights, air 

charter brokers must disclose the 

following information in writing to the 

charterer, which may be accomplished 

through electronic transmissions. If the 

transaction occurs orally, the following 

information must be disclosed orally, 

and again in any written 

correspondence, including 

correspondence confirming the 

purchased air transportation. 

(1) The corporate name of the direct 

air carrier in operational control of the 

aircraft on which the air transportation 

is to be performed and any other names 

in which that direct air carrier holds 

itself out to the public. 

(2) The capacity in which the air 

charter broker is acting in contracting 

for the air transportation, i.e., as an 

indirect air carrier, as an agent of the 

charterer, or as an agent of the direct air 

carrier that will be in operational 

control of the flight. 

(3) The existence of any corporate or 

business relationship between the air 

charter broker and the direct air carrier 

that will be used for the air 

transportation. 

(4) The make and model of the aircraft 

to be used for the transportation (e.g., 

Learjet 60 XR). 

(5) The total cost of the air 

transportation paid to the air charter 

broker, including any air charter broker 

or carrier-imposed fees, or governmentimposed taxes and fees. 

(6) The existence of any fees and their 

amounts, if known, including fuel, 

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landing fees, and aircraft parking or 

hangar fees, charged by third parties for 

which the charterer will be responsible 

for paying directly. 

(7) The existence or absence of 

liability insurance held by the air 

charter broker covering the charterer 

and passengers and property on the 

charter flight, and the monetary limits of 

any such insurance. 

(c) If the information required to be 

disclosed in paragraph (b) of this section 

is not known at the time the contract is 

entered into, air charter brokers must 

provide the information in paragraph (b) 

of this section to the charterer within a 

reasonable time after such information 

becomes available. 

(d) If the information in paragraph (b) 

of this section is not provided to the 

charterer within a reasonable time after 

becoming available, air charter brokers 

must provide the charterer with the 

opportunity to cancel the contract for air 

transportation, including any services in 

connection with such contract, and 

receive a full refund of any monies paid 

for the charter air transportation and 

services. 

(e) In all circumstances, air charter 

brokers must disclose the information in 

paragraph (b) of this section to the 

charterer prior to the start of the air 

transportation. 

(f) If the information in paragraph (b) 

of this section changes after the air 

transportation covered by the contract 

has begun, air charter brokers must 

provide information regarding any such 

changes to the charterer within a 

reasonable time after such information 

becomes available. 

(g) If the changes in information 

described in paragraph (f) of this section 

are not provided to the charterer within 

a reasonable time after becoming 

available, air charter brokers must 

provide the charterer with the 

opportunity to cancel the remaining 

portion of the contract for air 

transportation, including any services 

paid in connection with such contract, 

and receive a full refund of any monies 

paid for the charter air transportation 

and services not yet provided. 

§ 295.26 Refunds. 

Air charter brokers must make prompt 

refunds of all monies paid for charter air 

transportation when such transportation 

cannot be performed or when such 

refunds are otherwise due, as required 

by 14 CFR 374.3 and 12 CFR Part 226 

for credit card purchases, and within 20 

days after receiving a complete refund 

request for cash and check purchases. 

Subpart D—Violations 

§ 295.50 Unfair and deceptive practices 

and unfair methods of competition. 

(a) Violations of this Part shall be 

considered to constitute unfair and 

deceptive practices and unfair methods 

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

41712. 

(b) In addition to paragraph (a) of this 

section, the following enumerated 

practices, among others, by an air 

charter broker or foreign air charter 

broker are unfair or deceptive practices 

or unfair methods of competition in 

violation of 49 U.S.C. 41712: 

(1) Misrepresentations that may 

induce members of the public to 

reasonably believe that the air charter 

broker or foreign air charter broker is a 

direct air carrier. 

(2) Using or displaying or permitting 

or suffering to be used or displayed the 

name, trade name, slogan or any 

abbreviation thereof, of the air charter 

broker, in advertisements, on or in 

places of business, or on or in aircraft 

or any other place in connection with 

the name of an air carrier or with 

services in connection with air 

transportation, in such manner that it 

may mislead or confuse the traveling 

public with respect to the status of the 

air charter broker. 

(3) Misrepresentations as to the 

quality or kind of service, type or size 

of aircraft, time of departure or arrival, 

points served, route to be flown, stops 

to be made, or total trip-time from point 

of departure to destination. 

(4) Misrepresentations as to 

qualifications of pilots or safety record 

or certification of pilots, aircraft or air 

carriers. 

(5) Misrepresentations that passengers 

are directly insured when they are not 

so insured. For example, where the only 

insurance in force is that protecting the 

air carrier in event of liability. 

(6) Misrepresentations as to fares, 

charges, or special priorities for air 

transportation or services in connection 

therewith. 

(7) Misrepresentations as to 

membership or involvement with a 

particular organization that audits air 

charter brokers or direct air carriers, or 

that the air charter broker or any direct 

air carriers to be used for a particular 

flight meets a particular standard set by 

an auditing organization. 

(8) Representing that a contract for a 

specified direct air carrier, aircraft, 

space, flight, or time, has been arranged, 

without a binding commitment with a 

direct air carrier for the furnishing of 

such definite reservation or charter as 

represented. 

(9) Selling or contracting for air 

transportation while knowing or having 

reason to know or believe that such air 

transportation cannot be legally 

performed by the entity that is to 

operate for the air transportation. 

(10) Misrepresentations as to the 

requirements that must be met by 

charterers in order to qualify for charter 

flights. 

§ 295.52 Enforcement. 

In case of any violation of any of the 

provisions of the Statute, or of this part, 

or any other rule, regulation, or order 

issued under the Statute, the violator 

may be subject to a proceeding under 

section 46101 of the Statute before the 

Department, or sections 46106 through 

46108 of the Statute before a U.S. 

District Court, as the case may be, to 

compel compliance. The violator may 

also be subject to civil penalties under 

the provisions of section 46301 of the 

Statute, or other lawful sanctions, 

including revocation of the exemption 

authority granted in this part. In the 

case of a willful violation, the violator 

may be subject to criminal penalties 

under the provisions of section 46316 of 

the Statute. 

PART 298—[AMENDED] 

■ 2. The authority citation for 14 CFR 

Part 298 continues to read as follows: 

Authority: 49 U.S.C. 41102, 41708, and 

41709. 

■ 3. A new § 298.90 is added to read as 

follows: 

§ 298.90 Disclosures. 

(a) Air taxi operators or commuter air 

carriers are prohibited from contracting 

with charterers for charter flights that 

will be operated by another direct air 

carrier without first clearly and 

conspicuously disclosing in writing to 

the charterer that the flight will be 

operated by another direct air carrier 

and providing the following disclosures 

to the charterer: 

(1) The corporate name of the direct 

air carrier in operational control of the 

aircraft on which the air transportation 

is to be performed, and any other names 

in which that direct air carrier holds 

itself out to the public. 

(2) The capacity in which the air taxi 

operator or commuter air carrier is 

acting in contracting for the air 

transportation, i.e., as a principal, as an 

agent of the charterer, or as an agent of 

the direct air carrier that will be in 

operational control of the flight. 

(3) The existence of any corporate or 

business relationship between the air 

taxi operator or commuter air carrier 

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59890 Federal Register / Vol. 78, No. 189 / Monday, September 30, 2013 / Proposed Rules 

and the direct air carrier that will be in 

operational control of the charter flight. 

(4) The make and model of the aircraft 

to be used for the transportation (e.g., 

Learjet 60 XR). 

(5) The total cost of the air 

transportation, including any carrierimposed fees or government-imposed 

taxes and fees. 

(6) The existence of any fees and their 

amounts, if known, including fuel, 

landing fees, and aircraft parking or 

hangar fees charged by third-parties for 

which the charterer will be responsible 

for paying directly. 

(b) If the information required to be 

disclosed in paragraph (a) of this section 

is not known at the time the contract is 

entered into, air taxi operators or 

commuter air carriers must provide in 

writing the information in paragraph (a) 

of this section to the charterer within a 

reasonable time after such information 

becomes available. 

(c) If the information in paragraph (a) 

of this section is not provided to the 

charterer within a reasonable time after 

becoming available, air taxi operators or 

commuter air carriers must provide the 

charterer with the opportunity to cancel 

the contract for air transportation, 

including any services in connection 

with such contract, and receive a full 

refund of any monies paid for the 

charter air transportation and services. 

(d) In all circumstances, air taxi 

operators or commuter air carriers must 

disclose the information in paragraph 

(a) of this section to the charterer prior 

to the start of the air transportation. 

(e) If the information required to be 

disclosed in paragraph (a) of this section 

changes after the air transportation 

covered by the contract has begun, air 

taxi operators or commuter air carriers 

must provide information regarding any 

such changes to the charterer within a 

reasonable time after such information 

becomes available. 

(f) If the changes in information 

described in paragraph (e) of this 

section are not provided to the charterer 

within a reasonable time after becoming 

available, air taxi operators or commuter 

air carriers must provide the charterer 

with the opportunity to cancel the 

remaining portion of the contract for air 

transportation, including any services 

paid for in connection with such 

contract, and receive a full refund of any 

monies paid the charter air 

transportation and services not yet 

provided. 

■ 4. A new § 298.100 is added to read 

as follows: 

§ 298.100 Prohibited unfair and deceptive 

practices and unfair methods of 

competition. 

An air taxi or commuter air carrier 

subject to this part shall not engage in 

any unfair or deceptive practices or 

unfair method of competition in holding 

out, selling, or operating charter flights. 

The following enumerated practices, 

among others, by an air taxi or 

commuter air carrier are unfair or 

deceptive practices or unfair methods of 

competition: 

(a) Misrepresentations that may 

induce members of the public to 

reasonably believe that the air taxi or 

commuter air carrier will be, or is, in 

operational control of a flight when that 

is not the case. 

(b) Misrepresentations as to the 

quality or kind of service, type or size 

of aircraft, and points served. 

(c) Misrepresentations as to the 

quality or kind of service, type or size 

of aircraft, time of departure or arrival, 

points served, route to be flown, stops 

to be made, or total trip-time from point 

of departure to destination. 

(d) Misrepresentations that passengers 

are directly insured when they are not 

so insured. For example, where the only 

insurance in force is that protecting the 

air taxi or commuter air carrier in the 

event of liability. 

(e) Misrepresentations as to fares, 

charges, or special priorities for air 

transportation or services in connection 

therewith. 

(f) Representing that a contract for 

specified direct air carrier, aircraft, 

space, flight, or time, has been arranged, 

without a binding commitment with a 

direct air carrier for the furnishing of 

such definite reservation or charter as 

represented. 

(g) Selling or contracting for air 

transportation while knowing or having 

reason to know or believe that such air 

transportation cannot be legally 

performed by the entity that is to 

operate the air transportation. 

[FR Doc. 2013–23142 Filed 9–27–13; 8:45 am] 

BILLING CODE 4910–9X–P 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Parts 201, 203, 1005, and 1007 

[Docket No. FR 5707–P–01] 

RIN 2502–AJ18 

Qualified Mortgage Definition for HUD 

Insured and Guaranteed Single Family 

Mortgages 

AGENCY: Office of Secretary, HUD. 

ACTION: Proposed rule. 

SUMMARY: The Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

(Dodd-Frank Act) created new section 

129C in the Truth-in-Lending Act 

(TILA), which establishes minimum 

standards for considering a consumer’s 

repayment ability for creditors 

originating certain closed-end, dwellingsecured mortgages, and generally 

prohibits a creditor from making a 

residential mortgage loan unless the 

creditor makes a reasonable and goodfaith determination of a consumer’s 

ability to repay the loan according to its 

terms. Section 129C provides lenders 

more certainty about meeting the 

ability-to-repay requirements when 

lenders make ‘‘qualified mortgages,’’ 

which are presumed to meet the 

requirements. Section 129C authorizes 

the agency with responsibility for 

compliance with TILA, which was 

initially the Federal Reserve Board and 

is now the Consumer Financial 

Protection Bureau (CFPB), to issue a 

rule implementing these requirements. 

The CFPB has issued its rule 

implementing these requirements, 

referred to throughout this proposed 

rule as the CFPB final rule. 

The Dodd-Frank Act also charges 

HUD and three other Federal agencies 

with prescribing regulations defining 

the types of loans that these Federal 

agencies insure, guarantee, or 

administer, as applicable, that are 

qualified mortgages. Through this 

proposed rule, HUD submits for public 

comment its definition of ‘‘qualified 

mortgage’’ for the types of loans that 

HUD insures, guarantees, or administers 

that aligns with the statutory ability-torepay criteria of TILA and the regulatory 

criteria of the CFPB’s definition, 

without departing from HUD’s statutory 

missions. In this rulemaking, HUD 

proposes that any forward single family 

mortgage insured or guaranteed by HUD 

shall meet the criteria of a qualified 

mortgage, as defined in this rule, and 

HUD seeks comment on all components 

of its definition. 

DATES: Comment Due Date: October 30, 

2013. 

ADDRESSES: Interested persons are 

invited to submit comments regarding 

this rule to the Regulations Division, 

Office of General Counsel, Department 

of Housing and Urban Development, 

451 7th Street SW., Room 10276, 

Washington, DC 20410–0500. 

Communications must refer to the above 

docket number and title. There are two 

methods for submitting public 

comments. All submissions must refer 

to the above docket number and title. 

1. Submission of Comments by Mail. 

Comments may be submitted by mail to 

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