BEFORE THE DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION PIPELINE HAZARDOUS MATERIALS SAFETY ADMINISTRATION WASHINGTON, D.C.

________________________________________________ ) In re ) ) REGULATION OF NOTICE TO PASSENGERS ) Docket No

. OF HAZARDOUS MATERIALS ON AIRCRAFT ) ) ________________________ _______________________)

PETITION OF THE AMERICAN SOCIETY OF TRAVEL AGENTS

TO AMEND REGULATION

Communications with respect to this document should be directed to: Paul M. Ruden, Esq. Senior Vice President Legal & Industry Affairs American Society of Travel Agents, Inc. 1101 King Street Suite 200 Alexandria, VA 22314 pruden@asta.org March 25, 2014 703-739-6854- 2 - BEFORE THE DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION PIPELINE HAZARDOUS MATERIALS SAFETY ADMINISTRATION WASHINGTON, D.C.

________________________________________________ ) In re ) ) REGULATION OF NOTICE TO PASSENGERS ) Docket No

. OF HAZARDOUS MATERIALS ON AIRCRAFT ) ) ________________________ _______________________)

PETITION OF THE AMERICAN SOCIETY OF TRAVEL AGENTS

TO AMEND REGULATION

The American Society of Travel Agents, Inc. (ASTA) petitions the Federal Aviation Administration (FAA) and the Pipeline Hazardous Mat erials Safety Administration (PHMSA) to amend 49 CFR 175.25(b) (hereafter the “Phone Notice Regulation”) by deleting the words “or phone,” or revising the text so that it means what the International Civil Aviation Organization (ICAO) intended it to mean, which is that it applie s to Internet-enabled mobile phones only, rather than to all assisted (e.g. telephone, face-t o-reservations, online chat, etc.) reservations. Failing that, the government should replace the Pho ne Notice Regulation with a disclosure requirement similar to the DOT regulation on baggag e fee disclosure using e-ticket confirmations. See 14 CFR 399.85(c). As currently interpreted by FAA and PHMSA, the Phone Notice Regulation, when applied to assisted reserva tions, will impose a costly, redundant and unnecessary burden on the airline ticketing process

.- 3 -

The relevant text of 49 CFR 175.25(b) states: (b) Ticket purchase. During the ticket purchase process, regardless if the process is completed remotely (e.g., via the Intern et or phone) or when completed at the airport, with or without assistanc e from another person (e.g., automated check-in facility), the aircraft operator must ensure that information on the types of hazardous materials a passenger is forbidden to transport aboard an aircraft is provided to passengers. Infor mation may be in text or in pictorial form and, effective January 1, 2015, must be such that the final ticket purchase cannot be completed until the passenger or a person acting on the passenger's behalf has indicated that it understand s the restrictions on hazardous materials in baggage. [emphasis added] 1 While technically applicable only to airlines, the Phone Notice Regulation applies to all passengers carried and thus the airlines will have no choice but to impose the requirement on travel agents as well. Technically, the Phone Noti ce Regulation, other than the compulsory expression of understanding requirement, is effecti ve now, but enforcement appears to have been suspended while the industry works with the FAA/PHM SA to develop guidelines for implementation of the Phone Notice Regulation. An Aviation Rulemaking Committee (“ARC”) was created and held public meetings for discussion of the issues. The ARC report was issued November 1, 2013, and proposed a formal Advisory Ci rcular (“AC”) for issuance by the FAA. Comments on the proposed AC are due April 3, 2014. 2 The ARC Recommendations did not, however, resolve the issues raised by the Phone Not ice Regulation:

The ARC ... discussed how the regulatory language cou ld be improved in the future but did not incorporate these improvements i n the draft AC. For purposes of this ARC, the regulations contained in 49 CFR 175.25 were treated as static (i.e., will not change). Nonethel ess, there are various issues highlighted in this report that make compliance dif ficult for air operators from a process and/or cost perspective. 3

1 The entire text of 49 CFR 175.25 is set out in Appe ndix A to this Petition. 2 79 Fed. Reg. 12133, March 4, 2014. 3 Passenger Notification of Hazardous Materials Regul ations Aviation Rulemaking Committee (ARC) Membersh ip Recommendations to the FAA Assistant Administrator of the Office of Security and Hazardous Materials S afety, November 1, 2013 (“ARC Recommendations”) at 3.- 4 -

The ARC process and the recommended AC cannot, ther efore, be expected to resolve the problems created by the introduction of the Phone N otice Regulation. In this petition we will explain the burdens this rule will entail and why safety will not be impaired by removing the phone notice requirement. We begin with some history to show that the process by which the rule was adopted was flawe d and that the Phone Notice Regulation is not required in order to harmonize ticketing practi ces in the United States with the rest of the

world.

I. INTRODUCTION ASTA, headquartered in Alexandria, VA, with over 8, 000 members in all fifty states and 170 countries, was established in 1931 and is the w orld’s leading professional travel trade organization. ASTA’s voting membership is comprise d of retail travel agents, including traditional brick-and-mortar leisure agencies, Trav el Management Companies (TMCs), Online Travel Agents (OTAs), as well as individual home-ba sed travel agents and many others engaged in various aspects of retail and wholesale distribu tion of transportation services. ASTA is widely recognized as a responsible representative of the i nterests of travel agents and consumers and has participated in a multitude of proceedings before f ederal and state agencies. In particular, ASTA has long been a regular participant in Department o f Transportation consumer protection proceedings, including the Enhancing Airline Passen ger Protections rulemakings #1, #2 and #3, the Oversales and Denied Boarding Compensation dock et, antitrust issues and many others. A representative of ASTA was also a member of the 200 8 National Task Force to Develop Model Contingency Plans to Deal with Lengthy Airline On-B oard Ground Delays (the “Tarmac Delay”- 5 -

task force). An ASTA representative was an active participant in the hazardous materials notification ARC during 2013. Travel agents, both online and traditional “brick a nd mortar” agencies, are responsible for the sale of the majority of airline tickets in the U.S. In 2013, online and traditional travel agents processed $86 billion of total air sales, including 142.6 million air transactions. 4 The vast majority (98 percent) of travel agency businesses a re “small” under Small Business Administration (SBA) standards. 5 Travel agencies fulfill a range of needs for the tr aveling public. They save consumers money and time by facilitating effective comparison shopping and decision-making as to how best to spend their travel dollars. Travel agencie s also help government and corporate organizations manage employee travel spending, redu ce costs and negotiate savings that would otherwise be missed. On a macroeconomic level, the activities of travel agents produce a more competitive and efficient marketplace that optimize s consumer welfare while improving the communication of consumer value preferences to the producers of travel services such as

airlines. Travel safety is of the utmost importance to travel agencies and their customers. The agency business, along with many others, was devast ated by the collapse of travel demand following the September 11, 2011 attacks. The rebu ilding process has been long. Many agencies were driven out of the business permanentl y as a result. ASTA and its members are acutely aware of the primacy that safety considerat ions must have in national transportation policy and support reasonable and achievable practi ces that will add to traveler safety.

4 https://www.arccorp.com/news/stat/2013-12.jsp. 5 Bureau of Labor Statistics, U.S. Census Bureau and Airlines Reporting Corporation data.- 6 -

This recognition does not mean, however, that every conceivable tactic is appropriate. Consideration must also be given to the question wh ether the problem at hand warrants the tactical solution being proposed or whether the saf ety gains are marginal and the costs of implementation are so great as to lead to a misallo cation of resources. The latter more accurately characterizes the Phone Notice Regulation in 175.25 (b). On its face the Phone Notice Regulation contains a number of dubious concepts. The obvious and most important is the inclusion of the “phone” transaction, which has expanded to include all assisted reservations, within the ambit of the disclosure requirement. The ARC explicitly found that the phone element was not jus tified by a need to harmonize U.S. practices

with the rest of the world:

The ICAO TI [technical instructions] does not conta in an explicit requirement to obtain an indication of understanding from the p assenger when the ticket purchase process is conducted via telephone. 6 The Phone Notice Regulation also states that the h azmat information may be in “text or in pictorial form,” strongly implying that it was n ot intended to apply to assisted telephone purchases with a live person, but rather was intend ed to apply to non-assisted Internet-enabled mobile phone transactions, which is how the rest of the world has applied 49 CFR 175.25(b). Finally, there is the concept that the indication of understanding may be obtained from “a person acting on the passenger’s behalf.” But the purpose of the rule is plainly to try to influence the behavior of the traveler, not the person making a reservation on the traveler’s behalf. The language as written allows for the possibility (hig h probability, we believe) that an assistant, an in-house travel department employee or a group lead er would be the party receiving the hazmat information and indicating understanding, with no a ssurance whatsoever that the information

6 ARC Recommendation at 11.- 7 -

would be passed to the traveler for consideration w hen packing (often months later) for the flight. This ill-considered collection of mandates is poor ly calculated to give notice to the person, and at the time, when it will have impact o n flight safety. And, as the airlines noted in the ARC, “every additional second of talk time duri ng a passenger transactions adds significant

costs.” 7

II. SUMMARY OF POSITION Section 49 CFR 175.25(b) is not based on any demons trated need of consumers and will have a significant adverse impact on the travel age ncy industry. Since the Phone Notice Regulation was not accompanied by either effective outreach to impacted parties or by the costbenefit analyses required of high-economic-impact r egulations, the FAA should rescind the Phone Notice Regulation, conduct and publish for co mment Regulatory Flexibility Act costbenefit analyses as a proper basis for considering whether a regulation on this subject is actually required and, if so, what the content of the regula tion should be. If, after such analyses, it is found essential to expand the scope of the hazmat n otifications, the rule should be amended to remove the phone requirement and replace it with th e use of the E-ticket confirmation document that the Department of Transportation has already d etermined is a viable means of giving notice of baggage charges. See 14 CFR 399.85(c).

7 ARC Recommendations at 11.- 8 -

III. THE EXISTING PHONE NOTICE REGULATION WAS NOT PROPERLY ADOPTED AND IS NOT ENTITLED TO DEFERENCE.

T he current version of 49 CFR 175.25(b) is not entit led to deference by virtue of the fact that it was created through a full rulemaking proce ss or that it has sat on the books for a period of time. The immediately prior text of the rule requi red notices of hazardous materials restrictions to be provided at air carrier locations where they would be seen by air travelers. The current version adds the requirement that ticketing must be inhibited until each passenger is informed and affirmatively expresses an understanding of the hazmat restrictions. The current regulation has been challenged by the airlines’ Council on Saf e Transportation of Hazardous Articles (“COSTHA”), 8 but COSTHA’s call for revision by rulemaking appea rs to have been ignored. While the recently adopted recommendations of the A RC have much merit, they do not repair the basic flaws in the regulation that is driving t his process.

As will be seen in detail below, the financial imp act of this new requirement on travel agents and on airline booking agents will be extens ive, in addition to predictable disruptions of the booking process. Normally, it would be expecte d that the travel distribution industry, travel agency representatives and airlines alike, would ha ve reacted strongly to the prospect of adoption of such a rule. But they didn’t, and the reasons a re clear.

The Advance Notice of Proposed Rulemaking that ini tiated the current version of 175.25(b) did not even mention the potential for th e Phone Notice Regulation. See 74 Fed. Reg. 53982, October 21, 2009. The ANPRM issued at about the same time that ICAO was changing

8 Letter from Thomas W. Ferguson, DGSA, Sr. Technica l Consultant for COSTHA to Mr. Charles Betts, Direc tor of Hazmat Standards at the FAA, dated July 31, 2013. For convenience of the parties, a copy of the lette r is attached to this Petition as Exhibit B.- 9 -

its Technical Instructions. 9 PHMSA’s subsequent proposal to amend the notice r equirements was based, as near as the record reveals, on the id ea of catching-up with the airlines’ use of new technologies to sell tickets and to align U.S. noti ce requirements with ICAO’s international standards. This is where the trail goes cold.

The use of telephones to complete ticket sales is manifestly not the “new technology” for which a “catch-up” rule was necessary. Moreover, t he ICAO Technical Instructions, and the process leading to changes in them, are not realist ically available to the public 10 as fees are required to obtain them, assuming, unrealistically, that the public had notice that changes were even being considered. More troubling still is the fact that the ICAO Technical Instruction changes do not apply to telephone contacts regardin g ticket purchases but only to passenger check-in by phone, as noted by COSTHA’s July 31, 20 13 letter to the FAA 11 :

2.8.2 Electronic Check-In and Ticket Purchase (DGP/22-WP/23) 2.8.2.1 A proposal to strengthen the requirements f or the provision of information to passengers in respect of dangerous g oods in baggage was discussed. It was suggested that use of the Interne t to purchase tickets, to check in, and the use of automated check-in machine s at the airport or by telephone made traditional methods of providing inf ormation to passengers obsolete.... It is implausible to construe that paragraph as ev incing an intention, and effectively communicating it, to inject into the ticket purchas e process a revolutionary idea (inhibiting ticket

9 See Report of the 22 nd Meeting of the Dangerous Goods Panel, October 5-16 , 2009, ICAO Document DGP/22- WP/100. 10 Internet research indicates that the ICAO Technica l Instructions can only be purchased for charges of $195. http://www.thecompliancecenter.com/store/us/bk-icao 13.html. 11 See COSTHA letter at 2-3- 10 -

purchase in the absence of a travel agent confirmat ion that a notice has been orally given and an expression of understanding orally returned). To our knowledge, no other explanation of the genes is of the Phone Notice Regulation

exists. ICAO never consulted the travel distributi on industry about adding the Phone Notice Regulation and, from the record available to us, ne ver consulted with the U.S. airline industry. Eventually, the proposal for the Phone Notice Regul ation was buried in a 68-page NPRM. 75 Fed. Reg. 52070, August 24, 2010

. The explanation of the proposal was misleading

at best: PHMSA is proposing to require operators to provide certain information to

passengers regarding what hazardous materials they may check-in or carry-on a flight. Effective January 1, 2011, this informati on is to be provided at points of ticket sale and, effective January 1, 2013, at a utomated or remote passenger check-in. Consistent with the ICAO TI, if adopted t hese amendments will require a passenger to acknowledge limitations befo re a ticket purchase and automated or remote check-in can be finalized. PHMS A believes these amendments only clarify existing regulatory require ments in § 175.25 that have not been updated due to changing technologies used by air carriers to either sell tickets (Internet) or check-in passenge rs (automated kiosks). Additionally, these amendments provide air carriers greater flexibility in how the information they are required to provide passen gers on hazardous materials is disseminated to them. 12 The 2010 version of 175.25 reads in pertinent part as follows: 13

§ 175.25 Notification at air passenger facilities o f hazardous materials restrictions. Each person who engages in for-hire air transportat ion of passengers shall display notices of the requirements applicable to t he carriage of hazardous materials aboard aircraft, and the penalties for fa ilure to comply with those requirements. Each notice must be legible, and be p rominently displayed so it can be seen by passengers in locations where the ai rcraft operator issues tickets, checks baggage, and maintains aircraft boa rding areas....

12 75 Fed. Reg. 52090 (emphasis added). Note that the first proposed effective date for what would become the Phone Notice Regulation was barely over four months from the date of the formal proposal for such a ru le. 13 49 CFR 175.25 (2010), emphasis added.- 11 -

That regulation only required posting of signs at s ites where the airline issued tickets, checked bags or boarded aircraft. Nothing in this language intimated that an effort to “clarify” would impose upon the entire travel agenc y distribution system an obligation to convey complex skull-and-crossbones type warnings t o every ticket purchaser, let alone to inhibit ticketing if the traveler does not someh ow signify and the travel agent does not somehow record the traveler’s acknowledgement of th e warning and his understanding of

it. The Regulatory Flexibility Act (“RFA”) analysis in the NPRM did not separately address the Phone Notice Regulation, and no cost-impact ana lysis or balancing of costs against benefits was specifically conducted. The relevant RFA text in the NPRM states:

.... This proposed rule facilitates the transportatio n of hazardous materials in international commerce by providing consistency wit h international standards. This proposed rule applies to offerors and carriers of hazardous materials, some of whom are small entities, such as chemical m anufacturers, users and suppliers, packaging manufacturers, distributors an d training companies....the majority of amendments in this proposed rule should result in cost savings and ease the regulatory compliance burden for shippers engaged in domestic and international commerce, including trans-border ship ments within North America. Many companies will realize economic benef its as a result of these amendments. Additionally, the changes effected by t his final rule will relieve U.S. companies, including small entities competing in foreign markets, from the burden of complying with a dual system of regul ations. Therefore, I certify that these amendments will not, if promulgated, hav e a significant economic impact on a substantial number of small entities. T his proposed rule has been developed in accordance with Executive Order 13272 (‘‘Proper Consideration of Small Entities in Agency Rulemaking’’) and DOT’s procedures and policies to promote compliance with the Regulatory Flexibility Act to ensure that potential impacts of draft rules on small enti ties are properly considered. 14 Travel agencies are not mentioned in the RFA analys is because they obviously were not

considered.

14 75 Fed. Reg. 52093.- 12 -

The final rule then simply repeats the language of the certification from the NPRM. See 76 CFR 3340 (2011). The entire issue thus went unn oticed by U.S. airlines and distribution community. These omissions infected the process to such a degr ee that the Phone Notice Regulation was adopted based on general findings that it was n ot a “significant rule” and that it would not have a “significant economic impact on a substantia l number of small businesses.” The ultimate conclusion was that the costs to the regulated comm unity would be inconsequential.

These decisional flaws led to an over-extension of 175.25(b) beyond the stated rational for the Phone Notice Regulation. The current rule actually lacks a rationale – harmonization with ICAO cannot suffice because the target of harm onization, an ICAO rule mandating a Phone Notice Regulation, does not exist. And there is no factual or economic analysis to support such a rule independent of what ICAO may or may not believ e is needed. In any case there is an exception in the internatio nal harmonization requirement for “overriding public interest,” 15 which is clearly implicated here. The rule adds yet another layer of warnings from travel sellers to their customers on top of the existing code-share rules 16 and the new insecticide spraying warnings imposed by th e 2012 FAA Reauthorization Act, 17 while ignoring the cost impact of the disclosure requirem ents on travel agencies, of which 98 percent

are small businesses under Small Business Administr ation criteria. Air travel has more warnings than a pack of cigarettes. For the reasons set out below, the application of the regulation as now written will impose an enormous burden on the trave l agency distribution system, without

15 75 Fed Reg. 52070. 16 14 CFR sec. 257.5. 17 FAA Modernization and Reform Act of 2012 (Act, P.L. 112-95, Feb. 14, 2012).- 13 -

accomplishing much in the way of notice to traveler s about hazardous materials in their luggage.

It therefore needs to be revisited.

IV. THE PROBLEM THAT THE RULE PURPORTS TO SOLVE HAS NOT BEEN SHOWN TO EXIST. We think that, since the September 11, 2011 terrori st attacks, travelers whose behavior may reasonably be expected to be affected by a regu lation already understand that that the disclosable items in the rule, including “explosive s, compressed gases, flammable liquids and solids, oxidizers, poisons, corrosives and radioact ive materials,” are forbidden on airplanes. Prominent display of these restrictions has been re quired since 1980 in a manner assuring that they “can be seen by passengers in locations where the aircraft operator issues tickets, checks baggage, and maintains aircraf tboarding areas.” To conclude that more notices are required, implies that the long history of notices given thus far has failed to achieve its intended goal, b ut no analysis has been presented to the industry

to make the case that consumers are not sufficientl y aware that explosives, compressed gases, flammable liquids and solids, oxidizers, poisons, c orrosives and radioactive materials are not allowed on planes. If there is in fact a material safety risk to aircraft arising from travelers bringing such items on aircraft in their luggage, t here should be robust data available to support such a finding. If air travelers are in fact conti nuing to pack forbidden items in luggage or to hand carrry them on flights despite security screen ing, the conclusion seems to be inescapable that the entire long-standing notice/mandatory chec k-off during check-in process has failed to achieve ots intended purpose. If so, forcing trave l agents to add their disclosures and obtain acknowledgement will provide little incremental be nefit and some other approach should be

considered.- 14 -

V. THE ANALYSIS PURPORTING TO SUPPORT THE RULE FAILS T O IDENTIFY THE FINANCIAL IMPACT OF THE RULE ON TRAVEL AGENCIES Measuring the economic impact of 49 CFR 175.25(b) o n travel agencies would consider three scenarios, none of which was evaluated when t he rule was adopted: (1) Initial agent training costs and programming cost t o provide disclosure, collect consent and record consent; (2) Ongoing disclosure and consent collection costs – r eading the script, recording consent and answering consumer questions about the requested information; and, (3) Opportunity costs. (1) Initial Agent Training costs and Programming Costs for Disclosure, Consent Collection and Recordation Before travel agencies can begin to provide disclos ure and collect consent as required in 49 CFR 175.25(b), it will be necessary for them to develop procedures, training programs and redesign systems to prompt individual agents to rea d the required disclosure and record the traveler’s acknowledgement. It will also be essent ial that each agency train its agents on their responsibilities as well as how to handle the myria d questions that may arise when consumers ask questions about the disclosure. In a 2007 study of 127 ASTA “Premium” members, whic h include firms ranging from a start-up to the largest travel agencies in the worl d and everything in between, regarding agency costs for preparing for the Transportation Security Administration’s (TSA) Secure Flight initiative, which is similar in scope to the Phone Notice Regulation, we have insight into the magnitude of these costs.- 15 -

The ASTA Premium Survey responses showed an average estimated training cost of more than $3,100 per agency, with responses ranging from $100 to $20,000, as would be expected from a range of businesses running from th e very smallest to some of the largest. While there may be economies of scale here, in that , once created, training materials can be disseminated to any size group electronically with little incremental costs; it is also true that corporate practices in larger firms may entail more elaborate training. We therefore concluded that $3,000 was a fair representation of the averag e training cost that agencies would incur to comply with Secure Flight collection requirements. There is no reason to believe that the costs of compliance with the Phone Notice Regulation woul d be substantially different or that the average cost has declined since 2007. Since every firm will have to comply, regardless of size, the training cost should be applied to the 7,218 airline accredited travel agen cy firms in business at the end of 2013 to estimate the total initial training cost at $21,654 ,000 for the industry. There also will be costs associated with modifying systems to prompt reservations agents with all telephone and face-to-face reservations to provide disclosure and record consent. Most travel agencies rely on electronic “scripts” to gui de agents through the reservation process. These scripts are software programs that overlay th e core booking system provided by the Global Distribution Systems. These dynamic interfaces pro mpt the travel agent to provide specific information to the client based on the type of rese rvation. Travel agents will be required to reprogram these scripts to prompt for disclosure an d to obtain and record consent as a consequence of this regulation. We have provided n o estimate of this burden, although it is certain to be substantial because, among other thin gs, it must try to account for the diverse traveler reactions that will be inspired by the ini tial disclosures.- 16 -

There are other costs that travel agents will incur . Online Travel Agents (OTAs) and Travel Management Companies (TMCs) are highly relia nt on online reservation systems. These travel agencies will incur costs related to reprogr amming systems to electronically disclose the hazmat regulations and to record customer acknowled gement. In TSA’s Regulatory Evaluation of its Secure Flight rule, it determined that the r eprogramming costs to travel agencies of their electronic profiles to be $9,000 per agency. TSA n oted that agencies with sales over $2 million would likely be most impacted by this cost burden. Using this same approach, we anticipate the financial impact of upgrading systems to be $10.9 m illion. This amount is based on the 1,212 travel agency firms with air ticket sales over $2 m illion in business in 2013. (2) Ongoing disclosure and consent collection costs – r eading the script, recording consent and answering consumer questions In TSA’s draft regulatory evaluation examining the economic burden of the thenproposed Secure Flight rule on the travel agency in dustry, the initial analysis concluded that the rule would impose an incremental time for telephone reservations of 25 seconds 18 per reservation, the time travel agents would need to a sk for and obtain required Secure Flight

information. We estimate that FAA’s disclosure and acknowledgement rule would require travel agents to spend at least 50 seconds at normal rates of speech to read 49 CFR 175.25 (a) (1) and (2), as identified in the following script: “Agent: Federal rules requires that I read the fol lowing script to you before you purchase your ticket: (1) Federal law forbids the carriage of hazardous m aterials aboard aircraft in your luggage or on your person. A violation can result in five years’ imprisonment and penalties of

18 Regulatory Evaluation Final Rule Secure Flight, 49 CFR 1560, October 17, 2008 at 84.- 17 -

$250,000 or more (49 U.S.C. 5124). Hazardous mater ials include explosives, compressed gases, flammable liquids and solids, oxidizers, poisons, c orrosives and radioactive materials. Examples: Paints, lighter fluid, fireworks, tear ga ses, oxygen bottles, and radio-pharmaceuticals. (2) There are special exceptions for small quantiti es (up to 70 ounces total) of medicinal and toilet articles carried in your luggage and cer tain smoking materials carried on your person. For further information contact your airline repres entative.” In addition, the agent would need another 10 second s to ask for and receive verbal acknowledgement for the consumer, as indentified in the following script: “Agent: Do you understand these restrictions on haz ardous materials in baggage?

Customer: Yes Agent: (types answer in PNR to record response): Th ank you.” Of course, it is easy to see how a total of 50 seco nds could quickly expand to more time, especially the first time that a consumer hears the disclosure. 19 There will no doubt be customers that will have questions that the travel agent may or may not have the answers to. We recognize that the proposed AC shortens the mini mum statement by the agent to a single question, which requires about 10 seconds to speak. 20 ASTA is deeply appreciative of the

FAA’s decision to convene the ARC and to hear the c oncerns of the industry about the application of the regulation assisted phone intera ctions. The single question will, however, elicit questions from many travelers, expanding the time required to get to the affirmative

19 Many frequent travelers will hear the scripted mess age every time they travel. Some of them will sure ly reply with “I’ve been told this before – what has changed since the last time I was told?” followed by the a gent’s reassurance that nothing has changed. 20 Passenger Notification of Hazardous Regulations Avi ation Rulemaking Committee (ARC) Membership RECOMMENDATIONS to the FAA for an Advisory Circular (AC) effective January 1, 2015, at 15.- 18 -

acknowledgement stage of the process, without which a ticket may not be issued under the

current rule. For analysis purposes, we have used 25, rather than the 50, seconds per reservation as the basis for a simple economic impact analysis, accoun ting roughly for the use of the shorter statement but also for the likelihood of follow-up discussion with many travelers. This is the same time used in TSA’s Secure Flight Regulatory an d Economic Analysis. When TSA calculated the cost of 25 seconds per reservation, the economic impact to travel agents in 2008 was estimated to be approximately $20 million, or o ver $232 million over ten years. This was based on a fully loaded wage rate for travel agents and 139.5 million travel agent reservations. To determine the economic impact of the verbal disc losure of the Phone Notice Regulation, we have calculated the fully loaded hou rly travel agent wage rate at $36.61 based on 2012 data from the Bureau of Labor Statistics (BLS)

. 21 We have also calculated that traditional travel agencies processed 102.3 22 million air transactions. Based on an average time of 25 seconds per ticket, we calculate that this rule wil l impose an estimated economic burden of $26,008,354 a year on traditional travel agents, wh ich is a significant economic burden on an industry that is overwhelmingly small businesses. 23

21 Based on the average Full-Time Travel Agents Employ ed at Travel Agencies annual wage of $50,630 ($24.3 4 per hour) for NAICS code 561510, multiplied by 1.5 for the fully loaded rate, which includes all benefits and overhead (rent, computers, telephones, etc.). The latest BL S data is available for 2012 only. 22 According to the Airlines Reporting Corporation (AR C), travel agencies processed $86.2 billion in air ticket sales and 142.6 million transactions in 2013. Traditiona l travel agency sales accounted for $61.8 billion i n air. At an average ticket price of $604, non-OTAs accounted fo r 102.3 million transactions. We understand we are comparing 2013 data with 2012 in some instances, but data ava ilability limitations make this unavoidable. 23 ASTA 2012 Member Profile

. The calculation is Transactions times seconds/trans action, divided by 60 and divided by60 again, then multiply the result times the hour ly rate.- 19 -

The total cost of the Phone Notice Regulation is, s o far, the sum of $ 32,554,000 for initial training and programming and $26,008,354 fo r disclosure and confirmation costs, or a total direct cost of $58,562,354. (3) Opportunity costs of travel agents While we have attempted to quantify the direct econ omic impact of the FAA’s regulation on the travel agency industry, some consideration s hould also be given to the opportunity costs of travel agents who are forced to comply with a hu gely expensive unfunded mandate like 49 CFR 175.25(b). This cost is the lost opportunity t o invest those funds in new technologies and marketing efforts going forward. The $260 million over ten years (assuming constant wages) is an enormous cost to an industry with historically v ery low profit margins and which has suffered, just like the airlines, from the impacts of the ter rorist attacks in 2001 and the resultant new obstacles placed in the path of travelers. As technology has evolved, the travel space has bec ome the role model for both industry disruption and for rapid adaptive innovation. Much of what is new in distribution technology, including search and automated ordering, has been p roved out in travel. Mobile technology, for example, is widely predicted to be the next big dis ruptor to which firms must quickly accommodate or perish. Smaller firms, such as pred ominate in the retail travel space, are particularly at risk in this environment and need e very available resource to keep up with change. Small travel agencies are the last remaining vestig e of expert personal counseling for tens of millions of consumers and are working hard to adapt . Their efforts will be undermined, and

consumers of their services will face losses of eco nomic welfare, if additional unnecessary economic obstacles are placed in their path.- 20 -

VI. THE PROPOSED ADVISORY CIRCULAR DOES NOT RESOLVE THE PROBLEMS CREATED BY THE EXTENSION OF THE PHONE NOTI CE REGULATION TO ALL ASSISTED PHONE TICKETING TRANSACT IONS. One of the principal problems with the AC is that it does not account for frequent

travelers. The ARC recommended that “consideration ” be given to an opt-out program for members of airline frequent flyer programs combined with an “annual indication” of understanding of the hazmat rules. How this regime would work is unclear, but it certainly

would add costs that were not accounted for in the adoption of the Phone Notice Regulation and

that are not calculated in the ARC’s recommendation . Thus, if nothing is done to change the status quo, frequent travelers will receive the Pho ne Notice every time they book a trip, potentially dozens of times a year. The AC does not appear to address the problem of t hird parties who book flights for others. There is simply no realistic way to assure that the traveler, presumptively the person who will pack the luggage, will be reminded of the hazm at rules by the person who made the booking. But this creates a gap in the effectivene ss of this type of notice that raises further the question whether the regulation is reasonably calcu lated to achieve its stated purpose. ASTA’s proposed alternative to the Phone Notice Regulation , to which we will now turn, solves this problem efficiently and with full regard for the be neficial intended effects of regulating this subject.

VII. A SUBSTANTIALLY LESS COSTLY ALTERNATIVE TO TH E PHONE NOTICE REGULATION IS AVAILABLE. In April 2011, the Department of Transportation ado pted 14 CFR 399.85(c) as follows: (c) On all e-ticket confirmations for air transport ation within, to or from the United States, including the summary page at the co mpletion of an online purchase and a post-purchase email confirmation, a U.S. carrier, a foreign air carrier, an agent of either, or a ticket agent that advertises or sells air- 21 - transportation in the United States must include in formation regarding the passenger's free baggage allowance and/or the appli cable fee for a carry-on bag and the first and second checked bag. Carriers must provide this information in text form in the e-ticket confirmati on. Agents may provide this information in text form in the e-ticket confirmati ons or through a hyperlink to the specific location on airline websites or their own website where this information is displayed. The fee information provi ded for a carry-on bag and the first and second checked bag must be expressed as specific charges taking into account any factors (e.g., frequent flyer stat us, early purchase, and so forth) that affect those charges. While this regulation does not fully resolve the is sue of notice of ancillary fee charges for consumers, it does represent a model for a rule on hazardous materials that would be at least as effective as the existing rule, and at a fraction o f the cost. The use of e-ticket confirmations to give the hazmat warnings during the ticket purchase process creates at least as high a likelihood that the true target of the notice (the actual trav eler) will receive it. Since the traveler will hav e to check-in either online or at the airport before going through security, this is the optimum occasion to get confirmation that the traveler rece ived and understood the notice, using the same type of check-box that is now used for online trans actions through airline websites. ASTA submits that if the government continues to b elieve that a hazmat notice is required with respect to assisted travelers in phon e or face-to-face transactions, the most efficient and effective way to give that notice, all factors considered, is through an e-ticket type of notice analogous to 14 CFR 399.85(c) and we urge the Depar tment to proceed down that path through a rulemaking that rescinds, or defers, the current re gulation until that process can be completed.

VIII. CONCLUSION The government should revisit the provision in 49 C FR 175.25(b) that will, on January 1, 2015, require ticket sellers to read and obtain buy ers’ acknowledgement of the restrictions on hazardous materials in baggage. The economic impac t of the rule on travel agencies will be- 22 -

enormous. Under the Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.), the FAA must consider whether a proposed rule would have a signi ficant economic impact on a substantial number of small entities, including small businesse s. It has not done so.

ASTA therefore asks that this rule be amended to re scind the new disclosure and consent requirements of 49 CFR 175.25(b) as they relate to assisted telephone interactions. If a new regulation in this subject area is deemed necessary , a rule should be adopted along the lines of the baggage fee notification scheme of 14 CFR 399.8 5(c).

Respectfully Submitted, AMERICAN SOCIETY OF TRAVEL AGENTS, INC.

By: __________________________ Paul M. Ruden Senior Vice President Legal & Industry Affairs- 23 -

APPPENDIX A TO PETITION OF THE AMERICAN SOCIETY OF TRAVEL AGENTS TO AMEND REGULATION

Full text of 49 USC 175.25: §175.25 Notification at air passenger facilities of hazardous materials restrictions. (a) Notices of requirements. Each person who engages in for-hire air transporta tion of passengers must display notices of the requirements applicable to the carriage of hazardous materials aboard airc raft, and the penalties for failure to comply with those requirements in accordance with this section. Each notice must be legible, and be prominently displaye d so it can be seen by passengers in locations wher e the aircraft operator issues tickets, checks baggag e, and maintains aircraft boarding areas. At a

minimum, each notice must communicate the following information: (1) Federal law forbids the carriage of hazardous m aterials aboard aircraft in your luggage or on your person. A violation can result in five years' imprisonment and penalties of $250,000 or more (49 U.S.C. 5124). Hazardous materials include explosive s, compressed gases, flammable liquids and solids, oxidizers, poisons, corrosives and radioactive mate rials. Examples: Paints, lighter fluid, fireworks, tear gases, oxygen bottles, and radio-pharmaceuticals. (2) There are special exceptions for small quantiti es (up to 70 ounces total) of medicinal and toilet articles carried in your luggage and certain smokin g materials carried on your person. For further information contact your airline representative. (b) Ticket purchase. During the ticket purchase process, regardless if the process is completed remotely (e.g., via the Internet or phone) or when completed at the airport, with or without assistanc e from another person (e.g., automated check-in facility), the aircraft operator must ensure that information on the types of hazardous materials a passenger is for bidden to transport aboard an aircraft is provided to passengers. Information may be in text or in pictor ial form and, effective January 1, 2015, must be su ch that the final ticket purchase cannot be completed until the passenger or a person acting on the passenger's behalf has indicated that it understand s the restrictions on hazardous materials in baggag e. (c) Check-in. Effective January 1, 2015, when the flight check-i n process is conducted remotely (e.g., via the Internet or phone) or when completed at the airport, without assistance from another pe rson (e.g., automated check-in kiosk), the aircraft oper ator must ensure that information on the types of hazardous materials a passenger is forbidden to tra nsport aboard an aircraft is provided to passengers

. Information may be in text or in pictorial form and should be such that the check in process cannot be completed until the passenger or a person acting on the passenger's behalf has indicated that it

understands the restrictions on hazardous materials in baggage. (d) Signage. When the check in process is not conducted remotel y (e.g., at the airport with the assistance of an airline representative), passenger notification of permitted and forbidden hazardous materials may be completed through signage (electro nic or otherwise), provided it is legible and prominently displayed. [78 FR 65486, Oct. 31, 2013]- 24 -

APPPENDIX B TO PETITION OF THE AMERICAN SOCIETY OF TRAVEL AGENTS TO AMEND REGULATION- 25 -- 26 -- 27 -