[Federal Register Volume 83, Number 180 (Monday, September 17, 2018)]
[Rules and Regulations]
[Pages 46867-46878]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-18345]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Parts 295 and 298

RIN No. 2105-AD66
[Docket No. DOT-OST-2007-27057]


Increasing Charter Air Transportation Options

AGENCY: Office of the Secretary (OST), Department of Transportation 
(DOT).

ACTION: Final rule.

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SUMMARY: The Department of Transportation (DOT or Department) is 
issuing a final rule to facilitate innovation and growth in the air 
charter industry while strengthening the legal protections provided to 
consumers of charter air transportation. First, this rule allows ``air 
charter brokers'' as principals or bona fide agents to provide single 
entity charter air transportation of passengers. Second, it requires 
air charter brokers to make certain disclosures including those 
responsive to a National Transportation Safety

[[Page 46868]]

Board (NTSB) recommendation and to make other disclosures upon request. 
Third, it enumerates certain practices by air charter brokers as 
prohibited unfair or deceptive practices or unfair methods of 
competition. Fourth, this rule requires air taxis and commuter air 
carriers that sell charter air transportation to make certain 
disclosures including those responsive to an NTSB recommendation and 
other disclosures upon request. Fifth, it enumerates certain practices 
by an air taxi or commuter air carrier as prohibited unfair or 
deceptive practices or unfair methods of competition. At the same time, 
the Department is not adopting a proposal to codify exemption authority 
allowing indirect air carriers to engage in the sale of air 
transportation related to air ambulance services. Nor is it adopting a 
proposal to codify that certain air transportation services performed 
under contract with the Federal Government are in common carriage.

DATES: This rule is effective February 14, 2019.

FOR FURTHER INFORMATION CONTACT: Jonathan Dols, Deputy Assistant 
General Counsel, Office of the Assistant General Counsel for Aviation 
Enforcement and Proceedings, Department of Transportation, 1200 New 
Jersey Ave. SE, Washington, DC 20590, 202-366-9342 (phone), 202-366-
7152 (fax), <a href="/cdn-cgi/l/email-protection#d9b3b6b7b8adb1b8b7f7bdb6b5aa99bdb6adf7beb6af"><span class="__cf_email__" data-cfemail="adc7c2c3ccd9c5ccc383c9c2c1deedc9c2d983cac2db">[email protected]</span></a>. You may also contact Lisa Swafford-
Brooks, Chief, Aviation Licensing and Compliance Branch, Office of the 
Assistant General Counsel for Aviation Enforcement and Proceedings, 
U.S. Department of Transportation, 1200 New Jersey Ave. SE, Washington, 
DC 20590, 202-366-9342 (phone), 202-366-7152 (fax), 
<a href="/cdn-cgi/l/email-protection#7a1613091b54090d1b1c1c15081e1808151511093a1e150e541d150c"><span class="__cf_email__" data-cfemail="d5b9bca6b4fba6a2b4b3b3baa7b1b7a7bababea695b1baa1fbb2baa3">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 

Background

    On September 30, 2013, the Department published a notice of 
proposed rulemaking (NPRM) in the Federal Register, 78 FR 59880, in 
which it addressed the following areas: (1) An NTSB recommendation for 
air taxis and commuter air carriers to make certain disclosures and a 
prohibition on certain practices by air taxis and commuter air 
carriers; (2) the creation of a new class of indirect air carrier, a 
requirement for these entities to make certain disclosures, and a 
prohibition on certain practices by these entities; (3) the authority 
of indirect air carriers to engage in sale of air transportation 
related to air ambulance services; and (4) a clarification regarding 
air services performed under contract with the Federal Government.
    The Department's proposal to act in response to the NTSB 
recommendation built upon an advance notice of proposed rulemaking 
(ANPRM) published in the Federal Register on January 26, 2007, 72 FR 
3773. The Department received 23 comments in response to the ANPRM, 
which were summarized in the NPRM.
    The Department received 21 comments in response to the NPRM, 
including one comment representing the views of multiple entities. Of 
these, 18 comments were from members of the industry, including direct 
and indirect air carriers, as well as associations representing both 
direct and indirect air carriers and other aviation businesses. 
Specifically, these comments represented the views of the Air Charter 
Association, the Air Medical Operators Association, Air Methods, the 
Association of Air Medical Services, Blue Feather Charter, Chapman 
Freeborn, Corporate Flight Management, CSI Aviation, Flex Jet, Flight 
Options, Jet Logistics, Jet Solutions, the National Air Carrier 
Association, the National Air Transportation Association (NATA), the 
National Business Aviation Association (NBAA), Premier Aviation 
Charter, Public Charters Inc., Sentient Jet, Sentient Jet Charter, and 
Ultimate Jetcharters. One comment was from Consumers Union, a consumer 
rights organization; one comment was from the American Society of 
Travel Agents (ASTA), an association representing travel agents; and 
another comment was made anonymously. Three comments addressed the NTSB 
recommendation, 17 addressed the creation of a new class of indirect 
air carrier, six addressed air ambulance services, and one addressed 
air services performed under contract with the Federal Government.
    In general, almost all commenters supported the proposals regarding 
the NTSB recommendation, the creation of a new class of indirect air 
carrier, and codifying the exemption authority for air ambulance 
services. These comments also provided suggested changes to the 
Department's proposals. The one comment regarding air services 
performed under contract with the Federal Government objected to the 
Department's proposal on that topic in its entirety. The section-by-
section analysis will describe each provision of the final rule and 
respond to the comments received.

Comments and Responses

1. New Class of Indirect Air Carrier

A. Recognition of an ``Air Charter Broker'' Class of Indirect Air 
Carrier (14 CFR 295.1, 295.3, 295.5, 295.7, 295.10, 295.12)
    The NPRM: In the NPRM, the Department proposed to recognize 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. The Department proposed allowing this class of 
indirect air carrier to self-identify, rather than establish a formal 
licensing or registration scheme. The Department solicited comment on 
the establishment of such a scheme, particularly whether one should 
apply to non-U.S. citizen air charter brokers. In addition, the 
Department sought comment on whether ``single entity charter'' should 
include individuals who self-aggregate to form a single entity charter 
and whether including self-aggregated groups in this definition would 
require a change to the definition of a single entity charter in 14 CFR 
212.2.
    Comments: The comments received by DOT demonstrated general support 
for the recognition of a new class of indirect air carrier. There was 
some support for expanding the definition of ``air charter broker'' to 
include ``bona fide agents.'' NBAA noted that charter customers using 
the services of an air charter broker acting as an agent were no less 
deserving of consumer protections than customers of air charter brokers 
acting as indirect air carriers. Further, NATA encouraged the 
Department to harmonize the regulatory language regarding disclosures 
required by air taxi operators/commuter air carriers and by air charter 
brokers.
    Support for a registration scheme, on the other hand was mixed. 
Entities that favored the creation of a registry commented that self-
identification might not adequately protect consumers because 
unscrupulous air charter brokers could easily change names, that a 
registry could be used to ensure minimum standards among air charter 
brokers (e.g., a certain level of insurance or bonding), and that a 
registry would provide consumers and DOT with contact information for 
and basic information about the regulated entities. Some commenters 
stated that such a registry would be inexpensive to maintain, while 
others stated it would

[[Page 46869]]

be costly to maintain. Of the comments in favor of the establishment of 
a registration scheme, some favored requiring only U.S.-citizen air 
charter brokers to register, others favored requiring only foreign-
citizen air charter brokers to register, and still others favored 
requiring all air charter brokers to register.
    The Department received over a half-dozen comments regarding the 
proposed definition of ``single entity charter,'' all but one of which 
supported the inclusion of individuals who self-aggregate to form a 
single entity. NBAA proposed making clear that this class of indirect 
air carrier does not include ``fractional ownership program managers'' 
and ``in-house corporate travel departments,'' and proposed definitions 
of those two terms. The Air Charter Association of North America 
expressed concern that the proposed definition was overly broad and 
undermined consumer protections, including those found in DOT's rule 
governing public charters, 14 CFR part 380.
    DOT Response: The Department is finalizing its proposed rule to 
recognize an ``air charter broker'' class of indirect air carrier. 
Because many commenters raised a valid point that charter customers 
deserve the same consumer protections whether they use air charter 
brokers who are acting as indirect air carriers or as bona fide agents, 
the Department has decided to widen its definition of air charter 
broker to include bona fide agents and, further, to define that term by 
regulation. Based on the multiple comments received, this is a natural 
outgrowth of the NPRM. The Department is also harmonizing, to the 
extent practicable, the regulatory language regarding disclosures 
required by air taxi operators/commuter air carriers and by air charter 
brokers.
    The Department has decided not to create a registry of air charter 
brokers, either U.S. or non-U.S. citizens. After thoroughly reviewing 
the arguments raised in favor of and in opposition to such a registry, 
DOT has determined that at this time the potential benefits are ill-
defined. The Department may revisit this issue in the future should the 
need become apparent. The Department notes, however, that this 
rulemaking does not preclude voluntary registration or 
``certification'' through third parties. For example, air charter 
brokers may determine that voluntary membership in an association or 
organization provides the same benefits cited in the comments favoring 
the creation of a DOT-run registry.
    Finally, recognizing the support of most commenters to including 
self-aggregated individuals within the definition of ``single entity 
charter,'' DOT adopts its proposed definition, but limits the ability 
of individuals to form self-aggregated groups only to flights to be 
operated using small aircraft. Thus, there is no need to change the 
definition of single entity charter in 14 CFR 212.2, since that part is 
not applicable to any flights performed by a commuter air carrier, air 
taxi operator, or certificated air carrier operating ``small aircraft'' 
under Part 298. Further, it acknowledges concerns, including those of 
the Air Charter Association of North America that the definition as 
proposed in the NPRM unnecessarily broadens the definition of a single 
entity charter and could undermine the consumer protections in the 
Department's rule governing public charters, 14 CFR part 380. In 
addition, the Department is making a non-substantive change by removing 
the word ``passenger'' from its ``air charter broker'' definition so 
that it references ``single entity charter,'' a term defined by 
regulation, rather than ``single entity passenger charter.'' The 
Department has decided not to accept NBAA's proposals regarding 
``fractional ownership membership program managers'' and ``in-house 
corporate travel departments'' because those two entities do not 
provide common carriage air transportation and are therefore already 
excluded from the scope of this rule.
B. Disclosures (14 CFR 295.20, 295.23, 295.24, 295.26)
    The NPRM: In the NPRM, the Department proposed 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. The Department also proposed requiring 
written disclosure of (1) the corporate name of the direct air carrier 
in operational control of the aircraft and any other names in which the 
carrier holds itself out to the public (as recommended by the NTSB); 
(2) the capacity in which the air charter broker is acting; (3) the 
existence of any corporate or business relationships with a particular 
direct air carrier; (4) the aircraft type; (5) the total cost of air 
transportation paid to the air charter broker; (6) the existence of any 
other amount 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 such insurance. Further, the Department sought 
public comment on whether any additional disclosures should be 
required.
    Under the proposed rule, any required disclosure must be made 
within a ``reasonable'' time, defined as enough time for the charterer 
to make an informed decision as to whether to accept the change. 
Failure to provide notice within a ``reasonable'' time would entitle 
the consumer the option of receiving a full refund. The Department 
sought comment on whether to provide a specific time frame for the 
disclosures and whether to require some sort of confirmation of receipt 
of the disclosures. In addition, DOT solicited comment on whether the 
refund requirements of 14 CFR part 374 should apply to air charter 
brokers.
    Comments: The comments received in response to the disclosure 
proposals ran the gamut, with some support for and some objection to 
each of the seven proposed disclosures. When expressing support for a 
disclosure, commenters generally cited a consumer need to possess that 
information. When expressing opposition to a disclosure, commenters 
generally asserted that consumers would not benefit from that 
information. In particular, many commenters noted that consumers need 
not learn the identity of the aircraft's owner so long as they know the 
name of the direct air carrier. In addition, some commenters stated 
that because most customers of air charter brokers are sophisticated 
consumers with significant bargaining power, the proposed disclosures 
would be better handled through a negotiated contract. In response to 
the disclosure of insurance (or lack thereof), several commenters 
suggested that DOT not only require disclosure, but require that air 
charter brokers maintain a certain level of insurance. Finally, NATA 
requested that the Department clarify the meaning of ``any corporate or 
business relationship between the air charter broker and the direct air 
carrier.'' The NBAA further requested that the disclosure of such 
relationships be limited to those ``which may have a substantial 
bearing upon the air charter broker's selection of a direct air 
carrier.'' Finally, Chapman Freeborn Airchartering questioned at what 
level of detail any required itemization must be made.
    Both industry and ASTA provided comments against establishing a 
fixed time in which air charter brokers must disclose any changes in 
the air transportation arrangements. These comments explained that it 
would be an unworkable requirement, as some

[[Page 46870]]

changes could be very last-minute and thus too late to comply with the 
prescribed time frame while others could become known far in advance 
thus rendering the time frame unnecessarily restrictive.
    Most commenters expressed opposition to requiring that air charter 
brokers obtain some form of confirmation of the receipt of any changes 
to the required disclosures. These commenters stated that obtaining 
confirmation would not be practicable, as some consumers may simply 
decline to confirm receipt, and would create an undue burden for air 
charter brokers forced to obtain one.
    Comments regarding DOT's proposal to subject air charter brokers to 
the refund requirements of 14 CFR part 374 indicated general 
disapproval. Most commenters wanted parties to negotiate refund 
provisions in the original contract. These commenters noted that 
customers of air charter brokers are sophisticated parties with 
significant bargaining power, that Part 374 may prove unworkable in the 
air charter broker context, and that DOT should not substitute its 
judgment for that of individuals in the marketplace. Several suggested 
that DOT could require refund provisions be disclosed in the original 
contract rather than impose Part 374 by default. The minority of 
commenters who expressed support for this portion of the NPRM stated 
that consumers of air charter broker services deserve the same 
protections as consumers of other forms of air transportation.
    DOT Response: Of the seven proposed disclosures, the Department is 
requiring three and making three others required upon request. Having 
considered the comments both for and against the proposal, the 
Department believes that on the whole consumers, regardless of 
sophistication level, would benefit from an increased amount of 
information. The Department is not requiring that the type of the 
aircraft be disclosed since it believes that information is already a 
part of most charter negotiations. The Department is clarifying what 
type of ``corporate or business relationship between the air charter 
broker and the direct air carrier'' must be disclosed upon request by 
adding the example of a pre-existing contract between the two entities. 
Further, the Department is adopting in part NBAA's suggestion that this 
definition be further refined by adding language that the relationship 
must have a ``bearing'' on the transaction. Finally, the Department is 
changing the language of the disclosure upon request relating to costs 
to make clear that detailed itemization is not required.
    The Department is not requiring that air charter brokers maintain a 
certain level of insurance. The Department is aware that most air 
charter brokers already maintain a certain level of insurance as a good 
business practice. Establishing a minimum level of insurance would 
therefore not add additional protection for consumer funds.
    The Department agrees with industry and ASTA that regulating the 
time frame in which disclosures must be made is impracticable, for the 
reasons provided by those commenters. Therefore, the Department adopts 
the ``within a reasonable time after such information becomes 
available'' standard as proposed in the NPRM. The Department has 
clarified in the final rule that it is within a reasonable time of 
becoming available ``to the air charter broker.'' 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 additional information or the 
change. For example, should the direct air carrier to operate the 
flight change one week prior to the flight date, the Department would 
find it ``reasonable'' for notice to be given within 24 hours after 
such information becomes available to the air charter broker. 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 charterer time to make an informed decision as 
to whether to accept the change. At that point, the charterer would 
already likely be fully prepared for the flight and may in fact already 
be en route to the airport.
    Having reviewed the public comments, the Department has decided not 
to add a requirement that air charter brokers obtain written 
confirmation that the required disclosures were made or that charterers 
received notice of any changes to the information that must be 
disclosed or of any information that was not known at the time the 
contract was entered. The Department appreciates the burden such a 
requirement would place on air charter brokers and that some consumers 
may simply ignore requests for confirmation. Furthermore, such a 
requirement is likely not necessary since, as several commenters noted, 
the original signed contract may serve as confirmation that the air 
charter broker made, and that the consumer received, the required 
disclosures. The Department notes, however, that air charter brokers 
are free to obtain such confirmations as a method of guarding against 
claims that they did not make the disclosures.
    The Department has considered the arguments against applying the 
refund requirements of 14 CFR part 374 to air charter brokers. The 
Department nevertheless believes that these requirements are not overly 
burdensome on air charter brokers, as their crux is establishing a time 
frame in which refunds should be processed, and provide consumers with 
useful protections. The Department believes that these are important 
consumer protections. As such, the Department is adopting the proposed 
rule on refunds.
C. Enumerated Unfair and Deceptive Practices (14 CFR 295.22 and 295.50)
    The NPRM: In the NPRM, the Department proposed to enumerate ten 
prohibited unfair and deceptive practices and unfair methods of 
competition by air charter brokers. First, air charter brokers may not 
misrepresent themselves as direct air carriers. Second, air charter 
brokers must not use their names and slogans in connection with the 
name of the direct air carrier in such a manner that may confuse 
consumers as to the status of the air charter broker. Third, air 
charter brokers must not misrepresent the service, type of aircraft, or 
itinerary. Fourth, air charter brokers must not misrepresent the 
qualifications of pilots or the safety record and certification of 
pilots, aircraft, and air carriers. Fifth, air charter brokers must not 
make misrepresentations regarding insurance. Sixth, air charter brokers 
must not misrepresent the cost of the air transportation. Seventh, air 
charter brokers must not misrepresent membership in or involvement with 
organizations that audit air charter brokers or direct air carriers. 
Eighth, air charter brokers must not represent that they possess a 
contract with a direct air carrier until they have received a binding 
commitment from the direct air carrier. Ninth, air charter brokers must 
not sell or contract for air transportation that they know cannot be 
legally performed by the entity that is to operate the air 
transportation. Tenth, air charter brokers must not misrepresent the 
requirements that must be met by charterers to qualify for charter 
flights. The Department solicited comments on which, if any, of these 
should be enumerated in the final rule. In addition, the Department 
asked the public to comment on a potential record-keeping requirement 
to ensure compliance with the proposed regulations.
    Comments: Members of the public expressed widely divergent views on

[[Page 46871]]

what practices, if any, should be enumerated as unfair and deceptive. 
Two commenters stated that DOT should enumerate only one unfair and 
deceptive practice and unfair method of competition: That air charter 
brokers must not misrepresent themselves as direct air carriers. A 
third commenter expressed a view along these lines, noting that DOT 
should merely continue its existing enforcement policy of finding an 
unfair or deceptive practice or unfair method of competition when an 
air charter broker misrepresents itself as a direct air carrier. A 
fourth mirrored these comments but also supported enumerating as unfair 
or deceptive the practice of telling consumers that the broker 
maintains a certain level of insurance that it does not, in fact, 
maintain. Three commenters supported all the proposed enumerated unfair 
and deceptive practices. Another commenter opposed this portion of the 
proposal in its entirety. In addition, FlexJet asked that the 
Department clarify that it is not unfair or deceptive to advertise a 
price that changes due to circumstances beyond the air charter broker's 
control.
    The Department received input regarding a record retention 
requirement. CSI Aviation expressed support for a requirement, noting 
that pursuant to Internal Revenue Service requirements, records are 
maintained for seven years following the date of transportation. NATA 
proposed a two-year retention requirement. The Air Charter Association 
voiced support for a retention requirement without proposing a time-
frame.
    DOT Response: The Department is making changes to its proposed rule 
to harmonize language where appropriate with the text of the section 
enumerating prohibited unfair and deceptive practices by air taxis/
commuter air carriers, 14 CFR 298.90. The significant amount of 
enforcement activity in this area has led the Department to find such 
enumeration necessary. In fact, the Department believes that codifying 
certain actions as unfair or deceptive will lower the amount of 
enforcement action necessary, as all air charter brokers will be fully 
aware of what behavior is prohibited. In turn, this will level the 
playing field for those air charter brokers that do not misrepresent 
themselves or any part of their services. In response to FlexJet's 
query, the Department notes that the final rule requires that an air 
charter broker have a binding contract with a direct air carrier or 
direct foreign air carrier before representing such to the public. As a 
result, the largest portion of the charter transportation cost should 
already be established at the point where FlexJet's question arises. 
The final rule already provides air charter brokers with flexibility in 
quoting total costs and DOT does not believe greater flexibility is 
needed, despite FlexJet's request.
    The Department is choosing at this time not to require a specific 
record retention period, but may revisit this issue if it becomes clear 
that efforts to enforce this part are impeded by a lack of such a 
period, air charter brokers are evading their disclosure obligations to 
charterers, or charterers are otherwise being harmed.

2. Air Taxis and Commuter Air Carriers

A. Disclosures (14 CFR 298.80)
    The NPRM: In the NPRM, the Department proposed 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 and any other names 
in which the carrier holds itself out to the public (as recommended by 
the NTSB) (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; (4) the 
make and model of the aircraft to be used; (5) the total cost of the 
air transportation, including carrier- and government-imposed fees and 
taxes; and (6) the existence of any fees and their amounts, if known, 
charged by third parties for which the charterer will be responsible 
for paying directly. In addition, should the operating carrier change, 
the Department proposed requiring that written notice be provided to 
the charter customer when the change becomes known. Should reasonable 
notice not be given, the Department proposed that the charter customer 
be entitled to a full refund. The Department sought comment on whether 
it should set a specific timeframe for such notice and whether it 
should require carriers to obtain confirmation of receipt of that 
notice and, if so, what type of confirmation.
    Comments: Of the three comments on this topic, those from NATA and 
NBAA generally supported the Department's proposed disclosure 
requirements, albeit with some changes and clarifications. For example, 
both sought clarification of what type of ``corporate or business 
relationship'' must be disclosed and NBAA sought clarification on 
whether the parties could agree in writing to forgo certain 
disclosures. Furthermore, NATA suggested that the Department harmonize 
the disclosure requirements imposed on air taxi operators/commuter air 
carriers and on air charter brokers.
    NATA also commented that the Department should refine the 
requirement that air taxi operators and commuter air carriers disclose 
the total cost. As proposed, the regulation indicates that government-
imposed taxes and fees must be disclosed only as they apply to the 
total cost of air transportation but not as they apply to any fees 
(e.g., landing fees and fuel) charged by third parties for which the 
charterer will be responsible for paying directly. In addition, NATA 
suggested that the Department change its ``make and model'' references 
to ``type of aircraft'' in order to use an industry standard term.
    Neither association advocated for a specified time frame in which 
disclosures must be made, noting that the fact-specific situations 
require a flexible ``reasonable time'' standard like that originally 
proposed by the Department. Moreover, neither advocated for a 
regulation requiring the confirmation of the receipt of the proposed 
disclosures.
    On the other hand, the comment filed jointly by Corporate Flight 
Management, Public Charters Inc., and Ultimate Jetcharters opposed all 
the Department's proposed disclosure requirements. They asserted that 
the Department failed to provide evidence of objectionable practices by 
air taxis and commuter air carriers that would provide a rationale for 
the proposed rule, noting that the NTSB had advocated only the limited 
disclosure of the name of the operating carrier and the type of 
aircraft. In the absence of a demonstrated need for greater regulation, 
the commenters suggested that DOT allow market forces to work, 
particularly in this situation, where DOT has acknowledged that the 
consumers are sophisticated entities. Moreover, they asserted that the 
Department could rely on its existing enforcement mechanisms should 
problems arise.
    DOT Response: The Department is amending 14 CFR part 298 to require 
air taxis and commuter air carriers to make three disclosures and to 
make three more upon request. The Department appreciates the comments 
it received and has incorporated the suggestions of NATA and NBAA into 
the final rule. First, the Department harmonizes the regulatory 
language regarding

[[Page 46872]]

disclosures applicable to air taxi operators/commuter air carriers in 
14 CFR 298.80 with those applicable to air charter brokers in 14 CFR 
295.24. The Department clarifies what type of ``corporate or business 
relationship between the air taxi operator or commuter air carrier and 
the direct air carrier'' must be disclosed upon request. The Department 
adopts in part NBAA's suggestion that the definition of a corporate or 
business relationship be further refined by adding language that the 
relationship must have a ``bearing'' on the transaction. The Department 
disagrees with NBAA's suggestion that the rule indicate that parties 
may agree in writing to forgo certain disclosures because allowing 
parties to contract away these protections would severely limit the 
benefits of the rule.
    In addition, based on NATA's suggestion, DOT is adding language to 
14 CFR 298.80(a)(5) to clarify that air taxi operators and commuter air 
carriers must disclose upon request any government-imposed taxes and 
fees levied on expenses collected by third parties (e.g., landing fees 
and fuel) and paid directly by the charterer. Further, the Department 
is not requiring the type of aircraft to be disclosed since it believes 
that information is already a part of most charter negotiations.
    The Department appreciates the positive feedback received regarding 
its ``reasonable time'' standard for making the required disclosures 
and, having received no alternative suggestions, adopts that standard. 
As the comments noted, because each situation is fact-specific, it 
would be difficult to enact a workable specific time frame for 
disclosures. The Department clarifies in the final rule that it is 
within a reasonable time of becoming available ``to the air or commuter 
air carrier.'' For this same reason, the Department clarifies in the 
final rule that in an exigent circumstance particular to a passenger 
the required disclosures do not have to be made prior to the start of 
the air transportation. In addition, the Department is not adding a 
requirement that air taxi operators and commuter air carriers obtain 
written confirmation that the required disclosures were made and that 
charterers received notice of any changes to the information that must 
be disclosed or of any information that was not known at the time the 
contract was entered. The Department notes, however, that air taxi 
operators and commuter air carriers are free to obtain such 
confirmations as a method of guarding against claims that they did not 
make the disclosures.
    The Department thoroughly considered the comments of Corporate 
Flight Management, Public Charters Inc., and Ultimate Jetcharters. 
Nevertheless, DOT agrees with NTSB that disclosures are necessary to 
enhance consumer protection in charter air transportation. Furthermore, 
DOT also believes that there are significant benefits regarding 
additional disclosures to charterers when weighing their air 
transportation options to know the capacity in which the air taxi or 
commuter air carrier is acting in contracting for the air 
transportation, the existence of any corporate or business relationship 
between the air taxi or commuter air carrier and the direct air carrier 
that will be in operational control of the flight that bears on the 
selection of the direct air carrier, the type of aircraft to be used 
for the flight, the total cost of the air transportation, and the 
existence of any fees and their amounts that are collected by third 
parties that the charterer will be responsible for paying directly. The 
Department firmly believes that within this regulatory framework, the 
market will continue to work, allowing parties to freely contract with 
each other. In fact, these required disclosures, many of which are 
already made as good business practices and/or customer service 
gestures, will provide a more level playing field for all air taxis and 
commuter air carriers, thus contributing to the correction of any 
existing market failures.
B. Enumerated Unfair and Deceptive Practices (14 CFR 298.90)
    The NPRM: The NPRM proposed to prohibit certain practices as unfair 
or deceptive or unfair methods of competition by air taxis and commuter 
air carriers. Specifically, these misrepresentations involved the 
entity in operational control of the aircraft, the quality of the 
aircraft involved, the schedule and itinerary, the insurance carried, 
the fares or charges levied, the presence of a contract for a specific 
air carrier or aircraft, and the legal impossibility of completing the 
specific flight.
    Comments: Only the NATA and NBAA comments addressed the 
Department's proposal to enumerate for air taxis and commuter air 
carriers certain unfair and deceptive practices and unfair methods of 
competition. Both associations supported the proposal in its entirety.
    DOT Response: The Department is adopting the proposed 14 CFR 
298.100 and codifying it as 14 CFR 298.90. However, the Department is 
making changes to its proposed rule to harmonize language where 
appropriate with the text of the section enumerating prohibited unfair 
or deceptive practices by air charter brokers, 14 CFR 295.50. This 
includes enumerating misrepresentations as to the qualifications and 
the safety records of pilots, aircraft, and air carriers; membership 
in, involvement with, and standards set by auditing organizations; the 
requirements that charterers must meet to qualify for charter flights; 
and the use of names, trade names or slogans. The Department already 
considers such misrepresentations by air carriers, including air taxis 
and commuter air carriers, to be prohibited under 49 U.S.C. 41712. The 
Department believes that codifying these and other actions as unfair or 
deceptive will forestall enforcement action as all air taxis and 
commuter air carriers will be fully aware of what behavior is 
prohibited. In addition, the second and third enumerated unfair or 
deceptive practices contained significant overlap. Thus, these 
subsections are changed in the final rule so that each is a distinct 
unfair or deceptive practice or unfair method of competition.

3. Air Ambulance Services

    The NPRM: Since 1983, the Department has authorized entities that 
arrange air ambulance services as indirect air carriers to engage in 
the sale of air transportation through a blanket exemption granted by 
the CAB in Order 81-1-36, 99 C.A.B. 801 (1983). In the NPRM, the 
Department proposed to codify that exemption. In addition, based upon 
the number of enforcement actions taken for violations of this 
exemption authority, as well as the licensing requirements of 49 U.S.C. 
41101 and the statutory prohibition on unfair and deceptive practices 
and unfair methods of competition, 49 U.S.C 41712, the Department 
proposed in the NPRM to apply to indirect air carrier air ambulances 
the same enumerated prohibited practices proposed for air charter 
brokers in Sec.  295.50, but not to apply to indirect air carrier air 
ambulances the disclosure requirements applicable to air charter 
brokers. DOT invited comments on this proposal in general, as well as 
comments regarding whether any of the specific provisions in section 
295.24 should apply to indirect air carrier air ambulances.
    Comments: All commenters expressed general support for the 
codification of the Department's long-standing exemption. Air Methods 
addressed the application of the enumerated prohibited practices in 
295.50 to indirect air carrier air ambulances by proposing that an 
indirect air medical program name or logo on an aircraft not be 
considered misleading, so long as the

[[Page 46873]]

name of the direct air carrier is displayed in accordance with 14 CFR 
119.9(b). Many commenters expressed opposition to applying to air 
ambulance services the disclosure requirements applied to air charter 
brokers. Among the reasons given for excluding air ambulance services 
from these requirements, commenters cited a lack of passenger need and 
the possible delayed provision of care that could result. The Air 
Charter Association and the Association of Air Medical Services, on the 
other hand, disagreed and instead commented that air ambulances should 
be subjected to the same disclosure requirements as air charter 
brokers. Moreover, the latter group commented that it would be 
beneficial for air charter brokers to disclose their medical training 
level to consumers so that those consumers can better judge the 
broker's ability to determine the appropriateness of various aspects of 
flight, e.g., aircraft type, medical staffing, pressurization, etc.
    DOT Response: The Department appreciates the general support 
expressed for the codification of its long-standing exemption, but 
chooses not to do so at this time. The Department will be studying this 
area further, including reviewing air ambulance complaints to determine 
what, if any, disclosure or other consumer protection requirements are 
appropriate in this area for direct and indirect air carrier air 
ambulances. Our decision here does not in any way alter the authority 
for entities that arrange air ambulance services as indirect air 
carriers to engage in the sale of air transportation under the blanket 
exemption granted by the CAB in Order 81-1-36, 99 C.A.B. 801 (1983).

4. Air Services Provided Under Contract With the Federal Government

    The NPRM: The Department proposed to codify the longstanding view 
of its Office of Aviation Enforcement and Proceedings that contracts 
with the Federal Government arranged under a GSA Schedule are in fact 
in common carriage and subject to DOT jurisdiction.
    Comments: CSI Aviation (CSI), the sole commenter on this portion of 
the NPRM, disagreed with the Department's proposal in its entirety. CSI 
stated that DOT failed to explain why air charter brokers operating 
under a GSA Schedule required economic authority from the Department. 
To the contrary, CSI argued that air transportation services conducted 
pursuant to the GSA Schedules were not common carriage but were, in 
fact, private carriage. In addition, CSI commented that because the GSA 
Schedules are governed by the Federal Acquisition Regulations, CSI (and 
similarly situated parties) are already subject to a consumer 
protection regime far more comprehensive that the regime proposed by 
DOT. For example, the Federal Acquisition Regulations subject violators 
to liquidated damages, nonpayment, and even criminal prosecution. 
Moreover, CSI asserted that the DOT proposal would interfere with GSA's 
contracting practices.
    DOT Response: The Department is deferring action on this proposal 
as it is not clear that additional action is necessary. First, the 
dearth of feedback on this portion of the NPRM makes it more difficult 
for the Department to consider the various viewpoints of all 
stakeholders; the views of the only stakeholder to comment had 
previously been made clear in Federal court. Second, the paucity of 
feedback received from stakeholders in the years following the 
litigation that prompted the proposed codification indicates that the 
existing consumer protection regime may suffice at this time as 
asserted by CSI. Third, by having only imperfect information available 
to it, the Department risks taking action that may have unintended 
consequences. The Department stresses, however, that it may revisit 
this issue in the future. It may, for example, receive more input from 
stakeholders or see that changes in Federal Government procurement 
practices and rules have changed the level of protection afforded 
consumers.

Regulatory Analyses and Notices

A. Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures

    This proposed rule is not a significant regulatory action under 
section 3(f) of E.O. 12866 (58 FR 51735, October 4, 1993), Regulatory 
Planning and Review, as supplemented by E.O. 13563 (76 FR 3821, January 
21, 2011), Improving Regulation and Regulatory Review. Accordingly, the 
Office of Management and Budget (OMB) has not reviewed it under that 
Order. It is also not significant within the meaning of DOT regulatory 
policies and procedures (DOT Order 2100.5 dated May 22, 1980; 44 FR 
11034 (February 26, 1979)).
    The final rule is in part an enabling regulatory action, which 
would eliminate existing regulatory barriers by recognizing air charter 
brokers as a new class of indirect air carrier, and would allow air 
charter brokers as principals to provide single entity charter air 
transportation of passengers. By removing current regulatory barriers 
to the sale of single entity charters by air charter brokers, the rule 
is expected to result in a reduction in the opportunity costs currently 
incurred by those air charter brokers that would prefer to act as a 
principal, thereby resulting in a cost savings for these air charter 
brokers. The magnitude of these potential costs savings cannot be 
estimated, in part because under the rule the decision by an air 
charter broker to act as a principal rather than as an agent is 
discretionary. Therefore, the number of air charter brokers affected by 
the enabling aspects of rule and that may experience a cost savings 
cannot be estimated.
    The final rule establishes requirements for actions and disclosures 
to be made by air charter brokers that result in more accurate and 
transparent information about brokered air transportation transactions 
being present in the marketplace for charterers. This includes 
disclosures that are to be made by air taxi operators that may be 
selling air charter flights that are operated by some other direct air 
carrier. The total annual costs of the information disclosure 
provisions of the final rule are estimated to range from $1.3 million 
to $2.7 million, with a mid-range estimate of $2.0 million expressed in 
2017 dollars.
    The Department believes that the final rule will result in benefits 
from the information disclosure requirements and from the enumeration 
of prohibitions on specific types of unfair or deceptive practices by 
air charter brokers, air taxis, and commuter air carriers. These 
benefits cannot be quantified however.
    Additional details regarding the cost savings, costs, and benefits 
of the final rule can be found in the Regulatory Impact Analysis (RIA) 
for the final rule which is available in the Docket for this 
rulemaking.\1\
---------------------------------------------------------------------------

    \1\ U.S. Department of Transportation (DOT), Office of the 
Secretary (OST). ``Increasing Charter Air Transportation Options. 
Final Rule. Regulatory Impact Analysis (RIA).'' June 2018. Available 
in Docket DOT-OST-2007-27057 at https://www.regulations.gov.
---------------------------------------------------------------------------

B. Executive Order 13771 (Reducing Regulation and Controlling 
Regulatory Costs)

    This rule is not an E.O. 13771 regulatory action because this rule 
is not significant under E.O. 12866.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (RFA) (5 U.S.C. 601 et seq.) 
requires Federal agencies to consider the effects of their regulatory 
actions on small businesses and other small entities, and to minimize 
any significant economic impact. When an agency issues a rulemaking 
proposal, the RFA requires

[[Page 46874]]

the agency to ``prepare and make available for public comment an 
initial regulatory flexibility analysis'' which will ``describe the 
impact of the proposed rule on small entities'' (5 U.S.C. 603(a)). 
Section 605 of the RFA allows an agency to certify a rule, in lieu of 
preparing an analysis, if the proposed rulemaking is not expected to 
have a significant economic impact on a substantial number of small 
entities.
    In the NPRM (78 FR 59880), in lieu of preparing an Initial 
Regulatory Flexibility Analysis under section 603(a) of the RFA to 
assess the impact of the rule, the Department performed a certification 
analysis under section 605(b) of the RFA and certified that the rule 
will not have a significant economic impact on a substantial number of 
small entities.\2\ \3\ No comments were received regarding this 
certification or on the threshold economic analysis and its underlying 
assumptions that were presented in the NPRM.
---------------------------------------------------------------------------

    \2\ U.S. Department of Transportation (DOT), Office of the 
Secretary (OST). ``Enhanced Consumer Protections for Charter Air 
Transportation. Notice of Proposed Rulemaking.'' 78 FR 59880. 
September 30, 2013. Available at: https://www.gpo.gov/fdsys/pkg/FR-2013-09-30/pdf/2013-23142.pdf (accessed May 21, 2018).
    \3\ Regulatory Impact Analysis for Enhanced Consumer Protections 
for Charter Air Transportation. Notice of Proposed Rulemaking. 
Available at: https://www.regulations.gov/contentStreamer?documentId=DOT-OST-2007-27057-0028&attachmentNumber=1&contentType=pdf (accessed May 21, 2018).
---------------------------------------------------------------------------

    The threshold economic analysis that was performed for the 
certification of the proposed rule under section 605(b) of the RFA 
determined that although a substantial number of air charter brokers 
would likely be considered small entities that would be affected by the 
rule, the economic impact on these small entities would not constitute 
a significant economic impact on these small entities relative to 
either gross revenues or profit. The primary changes made to the final 
rule from the proposed rule include the elimination of provisions that 
in the proposed rule would have applied to air ambulance services, and 
to certain air transportation services performed under contract to the 
Federal government. The elimination of these provisions does not 
substantively alter the economic analysis and certification of the rule 
under the RFA as compared to that performed for at the proposed rule 
stage, other than to remove one class of regulated entity, air 
ambulance services, that under the final rule are no longer affected 
and would no longer be subject to disclosure requirements or other 
provisions. The remaining provisions of the final rule still affect the 
same classes of regulated entities including air charter brokers, air 
taxis, and commuter air carriers, and affect these entities in 
essentially the same manner and to the same extent in terms of the 
costs and benefits of the rule.
    Accordingly, the Secretary of Transportation certifies that this 
final rule will not have a significant economic impact on a substantial 
number of small entities.

D. Executive Order 13132 (Federalism)

    This final rule has been analyzed in accordance with the principles 
and criteria contained in Executive Order 13132 (``Federalism''). This 
final rule does not include any provision that: (1) Has substantial 
direct effects on the States, the relationship between the national 
government and the States, or the distribution of power and 
responsibility among the various levels of government; (2) imposes 
substantial direct compliance costs on State and local governments; or 
(3) preempts State law. States are already preempted from regulating in 
this area by the Airline Deregulation Act, 49 U.S.C. 41713. Therefore, 
the consultation and funding requirements of Executive Order 13132 do 
not apply.

E. Executive Order 13084

    This final rule has been analyzed in accordance with the principles 
and criteria contained in Executive Order 13084 (``Consultation and 
Coordination with Indian Tribal Governments''). Because this final rule 
does not 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.

F. Paperwork Reduction Act

    This rule adopts new information collection requirements subject to 
the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 49 U.S.C. 3501 et 
seq.). (PRA) The Department will publish a separate notice in the 
Federal Register inviting the Office of Management and Budget (OMB), 
the general public, and other Federal agencies to comment on the new 
and revised information collection requirements contained in this 
document. As prescribed by the PRA, the requirements will not go into 
effect until OMB has approved them and the Department has published a 
notice announcing the effective date of the information collection 
requirements.

G. 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 rule.

H. National Environmental Policy Act

    The DOT has analyzed the environmental impacts of this action 
pursuant to the National Environmental Policy Act of 1969 (NEPA) (42 
U.S.C. 4321 et seq.) and has determined that it is categorically 
excluded pursuant to DOT Order 5610.1C, Procedures for Considering 
Environmental Impacts (44 FR 56420, Oct. 1, 1979). Categorical 
exclusions are actions identified in an agency's NEPA implementing 
procedures that do not normally have a significant impact on the 
environment and therefore do not require either an environmental 
assessment (EA) or environmental impact statement (EIS). See 40 CFR 
1508.4. In analyzing the applicability of a categorical exclusion, the 
agency must also consider whether extraordinary circumstances are 
present that would warrant the preparation of an EA or EIS. Id. 
Paragraph 3.c.5 of DOT Order 5610.1C incorporates by reference the 
categorical exclusions for all DOT Operating Administrations. This 
action is covered by the categorical exclusion listed in the Federal 
Highway Administration's implementing procedures, ``[p]romulgation of 
rules, regulations, and directives.'' 23 CFR 771.117(c)(20). The 
purpose of this rulemaking is to eliminate a regulatory barrier to the 
sale of charter air transportation while providing consumers with 
information to make informed purchasing decisions. The agency does not 
anticipate any environmental impacts, and there are no extraordinary 
circumstances present in connection with this rulemaking.

    Issued this 20th day of August 2018, in Washington, DC, under 
authority delegated in 49 CFR 1.27(n).
Steven G. Bradbury,
General Counsel.
    For the reasons set forth above, 14 CFR chapter II is amended as 
follows:

0
1. Add Part 295 to read as follows:

PART 295--AIR CHARTER BROKERS

Subpart A--General
Sec.
295.1 Purpose.
295.3 Applicability.
295.5 Definitions.
295.7 Agency relationships.
Subpart B--Exemption Authority
295.10 Grant of economic authority; exemption from the Statute.

[[Page 46875]]

295.12 Suspension or revocation of exemption authority.
Subpart C--Consumer Protection
295.20 Use of duly authorized direct air carriers.
295.22 Prohibited unfair or deceptive practices or unfair methods of 
competition.
295.23 Advertising.
295.24 Disclosures.
295.26 Refunds.
Subpart D--Violations
295.50 Enumerated unfair or deceptive practices or unfair methods of 
competition.
295.52 Enforcement.

    Authority: 49 U.S.C. Chapters 401, 411, 413, and 417.

Subpart A--General


Sec.  295.1   Purpose.

    Air charter brokers, defined as an indirect air carrier, foreign 
indirect air carrier or a bona fide agent, provide indirect air 
transportation of passengers on single entity charters aboard large and 
small aircraft. This part grants 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.


Sec.  295.3   Applicability.

    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 an indirect air 
carrier, foreign indirect air carrier, or a bona fide agent, holds out, 
sells or undertakes to arrange aboard large and small aircraft.


Sec.  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(a)(5), 40102(a)(23), and 
40102(a)(25).
    (b) Air charter broker means a person or entity that, as an 
indirect air carrier, foreign indirect air carrier, or a bona fide 
agent, holds out, sells, or arranges single entity charter air 
transportation using a direct air carrier.
    (c) Bona fide agent means a person or entity that acts as an agent 
on behalf of a single entity charterer seeking air transportation or a 
direct air carrier seeking to provide single entity charter air 
transportation, when such charterer or direct air carrier, as 
principal, has appointed or authorized such agent to act on the 
principal's behalf.
    (d) Charterer means the person or entity that contracts with an air 
charter broker, direct air carrier, or foreign direct air carrier, for 
the transportation of the passengers flown on a charter flight.
    (e) Charter air transportation means charter flights in air 
transportation authorized under Part A of Subtitle VII of Title 49 of 
the United States Code.
    (f) Direct air carrier and foreign direct air carrier mean 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.
    (g) Indirect air carrier and foreign indirect air carrier mean a 
person or entity that, as a principal, holds out, sells, or arranges 
air transportation and separately contracts with direct air carriers 
and/or foreign direct air carriers.
    (h) 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 when individual 
passengers self-aggregate to form a single entity for flights to be 
operated using small aircraft.
    (i) Statute means Subtitle VII of Title 49 of the United States 
Code (Transportation).
    (j) 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.
    (k) 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.


Sec.  295.7   Agency relationships.

    An air charter broker acting as an indirect air carrier or foreign 
indirect air carrier may choose to act as a bona fide agent in 
individual cases where a charterer, direct air carrier, or foreign 
direct air carrier has expressly authorized such agency relationship.

Subpart B--Exemption Authority


Sec.  295.10   Grant of economic authority; exemption from the statute.

    To the extent necessary to permit air charter brokers, acting as 
indirect air carriers or foreign indirect air carriers, to hold out, 
sell, and undertake to arrange single entity charter air 
transportation, such 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, only if and so long as they 
comply with the provisions and the conditions imposed by this part: 49 
U.S.C. 41101-41113, 49 U.S.C. 41301-41313, and 49 U.S.C. 41501-41511. 
Air charter brokers are not exempt from the following provision: 49 
U.S.C. 41310 (nondiscrimination) with respect to foreign air 
transportation.


Sec.  295.12   Suspension or revocation of exemption authority.

    The Department reserves the power to alter, suspend, or revoke the 
exemption authority of any air charter broker acting as an indirect air 
carrier, without a hearing, if it finds that such action is in the 
public interest or is otherwise necessary to protect the traveling 
public.

Subpart C--Consumer Protection


Sec.  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, if applicable, a foreign safety 
authority. Air charter brokers are not authorized under this part to 
hold out, sell, or arrange air transportation to be performed by a 
direct air carrier or direct foreign air carrier that the direct 
carrier is not authorized in its own right to hold out, sell, or 
operate. Only direct air carriers that are citizens of the United 
States as defined in 49 U.S.C. 40102(a)(15) may provide direct air 
transportation operations in interstate or intrastate air 
transportation.


Sec.  295.22   Prohibited unfair or deceptive practices or unfair 
methods of competition.

    An air charter broker shall not engage in any unfair or deceptive 
practice or unfair method of competition.


Sec.  295.23   Advertising.

    (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 or a direct foreign air carrier in operational control of 
aircraft, and that the air service advertised shall be provided by a 
properly licensed direct air carrier or direct foreign air carrier.
    (b) Air charter brokers may display their name and logo on aircraft 
provided the name of the direct air carrier is displayed prominently 
and clearly on the aircraft and consumers are not otherwise misled into 
thinking that the

[[Page 46876]]

air charter broker is a direct air carrier or direct foreign air 
carrier.


Sec.  295.24   Disclosures.

    (a) Before entering a contract for a specific flight or series of 
flights with charterers, air charter brokers must disclose to the 
charterer the information in paragraphs (a)(1),(2), and (6) of this 
section. Before entering a contract for a specific flight or series of 
flights with charterers, air charter brokers must, upon request of the 
charterer, disclose to the charterer the information in paragraphs 
(a)(3), (4), and (5) of this section. The six disclosures may be 
accomplished through electronic transmissions.
    (1) The corporate name of the direct air carrier or direct foreign 
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 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, indirect foreign air carrier, as an agent of the charterer, or 
as an agent of the direct air carrier or direct foreign air carrier 
that will be in operational control of the flight.
    (3) If the air charter broker is acting as the agent of the 
charterer, the air charter broker must disclose the existence of any 
corporate or business relationship, including a preexisting contract, 
between the air charter broker and the direct air carrier or direct 
foreign air carrier that will be in operational control of the flight 
that may have a bearing on the air charter broker's selection of the 
direct carrier that will be in operational control of the flight.
    (4) The total cost of the air transportation paid by the charterer 
to or through the air charter broker, including any air charter broker 
or carrier-imposed fees or government-imposed taxes and fees. Specific 
individual fees, taxes, or costs may, but are not required to be 
itemized.
    (5) The existence of any fees and their amounts collected by third-
parties, if known (or a good faith estimate if not known), including 
fuel, landing fees, and aircraft parking or hangar fees, for which the 
charterer will be responsible for paying directly.
    (6) 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.
    (b) If any of the information in paragraph (a) of this section that 
is required to be disclosed to the charterer or requested by the 
charterer to be disclosed is not known at the time the contract is 
entered into or changes thereafter, air charter brokers must provide 
the information to the charterer within a reasonable time after such 
information becomes available to the air charter broker, such that the 
charterer has enough time to make an informed decision as to whether to 
accept the additional information or accept the change.
    (c) If the information in paragraph (a) of this section that is 
required to be disclosed to the charterer or requested by the charterer 
to be disclosed is not provided to the charterer within a reasonable 
time after such information becomes available to the air charter 
broker, air charter brokers must provide the charterer with the 
opportunity to cancel the contract for charter 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 charter brokers must disclose prior 
to the start of the air transportation the information in paragraph (a) 
of this section that is required to be disclosed or that the charterer 
has requested to be disclosed.
    (e) If the information in paragraph (a) of this section that is 
required to be disclosed to the charterer or requested by the charterer 
to be disclosed 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 to the air charter broker.
    (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 to the air charter broker, air charter brokers 
must provide the charterer with the opportunity to cancel the remaining 
portion of the contract for charter 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.


Sec.  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


Sec.  295.50   Enumerated unfair or deceptive practices or unfair 
methods of competition.

    (a) Violations of this Part shall be considered to constitute 
unfair or deceptive practices or 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 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 is a direct air carrier 
or direct foreign air carrier when that is not the case.
    (2) Misrepresentations as to the quality or kind of service or type 
of aircraft.
    (3) Misrepresentations as to the 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 the 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 direct air carrier or air charter broker in 
event of liability.
    (6) Misrepresentations as to fares or charges for air 
transportation or services in connection therewith.
    (7) Misrepresentations as to membership in or involvement with an 
organization that audits air charter brokers, direct air carriers, or 
direct foreign air carriers, or that the air charter broker or any 
direct carriers to be used for a particular flight meets a standard set 
by an auditing organization.
    (8) Representing that a contract for a specified direct air 
carrier, direct foreign air carrier, aircraft, flight, or time has been 
arranged without a binding commitment with a direct air carrier or 
direct foreign air carrier for the furnishing of such transportation 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 direct air carrier or foreign direct air 
carrier that is to perform the air transportation.

[[Page 46877]]

    (10) Misrepresentations as to the requirements that must be met by 
charterers to qualify for charter flights.
    (11) 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 foreign air carrier or with services in connection 
with air transportation, in such manner that it may mislead or confuse 
potential consumers with respect to the status of the air charter 
broker.


Sec.  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 49 
U.S.C. 46101 before the Department, or 49 U.S.C. 46106-46108 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 
49 U.S.C. 46301, 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 49 U.S.C. 46316.

PART 298--EXEMPTIONS FOR AIR TAXI AND COMMUTER AIR CARRIER 
OPERATIONS

0
2. The authority citation for Part 298 is revised to read as follows:

    Authority:  49 U.S.C. 329 and chapters 401, 411, and 417.


0
3. Revise Sec.  298.80 to read as follows:


Sec.  298.80  Disclosures.

    (a) Before entering a contract for a specific flight or series of 
flights with charterers, air taxi operators and commuter air carriers 
must disclose to the charterer the information in paragraphs (a)(1) and 
(2) of this section. Before entering a contract for a specific flight 
or series of flights with charterers, air taxi operators and commuter 
air carriers must, upon request of the charterer, disclose to the 
charterer the information in paragraphs (a)(3), (4), and (5) of this 
section. The disclosures may be accomplished through electronic 
transmissions.
    (1) That the flight will be performed by another direct air carrier 
or direct foreign air carrier if that is the case. The corporate name 
of the direct air carrier or direct foreign 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 carrier holds itself 
out to the public.
    (2) If the flight is to be performed by another direct air carrier 
or direct foreign air carrier, 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) If the flight is to be performed by another direct air carrier 
or foreign direct air carrier and the air taxi operator or commuter air 
carrier is acting as the agent of the charterer, the air taxi operator 
or commuter air carrier must disclose the existence of any corporate or 
business relationship, including a preexisting contract, between the 
air taxi operator or commuter air carrier and the direct carrier that 
will be in operational control of the flight that may have a bearing on 
the air taxi operator's or commuter air carrier's selection of the 
direct carrier that will be in operational control of the flight.
    (4) The total cost of the air transportation paid by the charterer 
to or through the air taxi operator or commuter air carrier, including 
any carrier-imposed fees or government-imposed taxes and fees. Specific 
individual fees, taxes, or costs may, but are not required to be 
itemized.
    (5) The existence of any fees and their amounts collected by third 
parties, if known (or a good faith estimate if not known), including 
fuel, landing fees, and aircraft parking or hangar fees for which the 
charterer will be responsible for paying directly.
    (b) If any of the information in paragraph (a) of this section that 
is required to be disclosed to the charterer or requested by the 
charterer to be disclosed is not known at the time the contract is 
entered into or changes thereafter, air taxi operators and commuter air 
carriers must provide the information to the charterer within a 
reasonable time after such information becomes available to the air 
taxi operator or commuter air carrier, such that the charterer has 
enough time to make an informed decision as to whether to accept the 
additional information or accept the change.
    (c) If the information in paragraph (a) of this section that is 
required to be disclosed to the charterer or requested by the charterer 
to be disclosed is not provided to the charterer within a reasonable 
time after such information becomes available to the air taxi operator 
or commuter air carrier, air taxi operators and 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) Except in exigent circumstances particular to a passenger, air 
taxi operators and commuter air carriers must disclose prior to the 
start of the air transportation the information in paragraph (a) of 
this section that is required or requested to be disclosed.
    (e) If the information in paragraph (a) of this section that is 
required to be disclosed to the charterer or requested by the charterer 
to be disclosed changes after the air transportation covered by the 
contract has begun, air taxi operators and commuter air carriers must 
provide information regarding any such changes to the charterer within 
a reasonable time after such information becomes available to the air 
taxi operator or commuter air carrier.
    (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 to the air taxi operator or commuter air 
carrier, air taxi operators and commuter air carriers must provide the 
charterer with the opportunity to cancel the remaining portion of the 
contract for charter air transportation, including any services paid 
for in connection with such contract, and receive a full refund of any 
monies paid for the charter air transportation and services not yet 
provided.

0
4. Add Subpart I, consisting of Sec. Sec.  298.90 and 298.92, to read 
as follows:

Subpart I--Violations


Sec.  298.90  Prohibited unfair or deceptive practices or unfair 
methods of competition.

    (a) Violations of this Part shall be considered to constitute 
unfair or deceptive practices or 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 taxi operator or commuter 
air carrier 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 taxi operator or commuter air carrier 
will be, or is, in operational control of a flight when that is not the 
case.
    (2) Misrepresentations as to the quality or kind of service or type 
of aircraft.

[[Page 46878]]

    (3) Misrepresentations as to the 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 the 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 taxi operator or commuter air carrier in the 
event of liability.
    (6) Misrepresentations as to fares or charges for air 
transportation or services in connection therewith.
    (7) Misrepresentations as to membership in or involvement with an 
organization that audits direct air carriers or that the direct air 
carrier to be used for a flight meets a standard set by an auditing 
organization.
    (8) Representing that a contract for a specified direct air 
carrier, aircraft, flight, or time has been arranged without a binding 
commitment with a direct air carrier for the furnishing of such 
transportation 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 direct air carrier or foreign direct air 
carrier that is to perform the air transportation.
    (10) Misrepresentations as to the requirements that must be met by 
charterers in order to qualify for charter flights.
    (11) Using or displaying or permitting or suffering to be used or 
displayed the name, tradename, slogan or any abbreviation thereof, of 
an 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 
the air taxi or commuter air carrier in such manner that it may mislead 
or confuse potential consumers with respect to the status of the air 
charter broker.


Sec.  298.92   Enforcement.

    In case of any violation of the provisions of the Statute, or this 
part, or any other rule, regulation, or order issued under the Statute, 
the violator may be subject to a proceeding pursuant to 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 therewith; or to civil penalties pursuant to the 
provisions of section 46301 of the Statute; or, in the case of a 
willful violation, to criminal penalties pursuant to the provisions of 
section 46316 of the Statute; or other lawful sanctions including 
revocation of operating authority.

[FR Doc. 2018-18345 Filed 9-14-18; 8:45 am]
 BILLING CODE 4910-9X-P


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