NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 1



### UNITED STATES OF AMERICA

+ + + + +
ADVISORY COMMITTEE ON AVIATION CONSUMER PROTECTION

+ + + + +
FIRST MEETING

+ + + + +
THURSDAY JUNE 28, 2012

+ + + + + The Advisory Committee on Aviation Consumer Protection met in the Oklahoma City Room, Department of Transportation (DOT), 1200 New Jersey Avenue, SE, Washington, D.C., at 9:00 a.m., Lisa Madigan, Chairperson, presiding.

MEMBERS PRESENT LISA MADIGAN, Chairperson DEBORAH ALE-FLINT, Member DAVID BERG, Member CHARLES LEOCHA, Member
ALSO PRESENT ROBERT RIVKIN, General Counsel, DOT SAMUEL PODBERESKY, Assistant General Counsel, DOT, Designated Federal Officer BLANE WORKIE, Principal Deputy Assistant General Counsel, Office of Aviation Enforcement and ProceedingsNEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 2



### C-O-N-T-E-N-T-S

Call to Order 7 Samuel Podberesky Assistant General Counsel for Aviation Enforcement and Proceedings Department of Transportation

Introduction of Committee Members 9 Samuel Podberesky Assistant General Counsel for Aviation Enforcement and Proceedings Department of Transportation

Introductory Remarks 12 Robert S. Rivkin General Counsel Department of Transportation

Housekeeping Matters 22 Samuel Podberesky Assistant General Counsel for Aviation Enforcement and Proceedings Department of Transportation

Introductory Remarks of Committee Members 29 Lisa Madigan 29 Chairperson David Berg 32 Committee Member Deborah Ale-Flint 33 Committee Member
Charles Leocha 35 Committee MemberNEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 3



### C-O-N-T-E-N-T-S (CONTINUED) Overview of Office of Aviation 43 Enforcement and Proceedings Jonathan Dols Deputy Assistant General Counsel DOT Questions and Comments 72 Air Travel Consumer Protection Statutes 80 and Regulations Barbara Marrin Senior Attorney Aviation Enforcement Office DOT Questions and Comments 111 Air Travel Civil Rights Statues and 134 Regulations Kathleen Blank-Riether Senior Attorney Aviation Enforcement Office DOT Aviation Consumer Protection Division 154 Norman Strickman Director Aviation Consumer Protection Division Questions and Comments 171 Organizational Presentations 192 Edmund Mierzwinski 192 U.S. PIRG
Paul Hudson 203 Aviation Consumer Action Project Also representing Kate Hanni of flyersrights.orgNEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 4 

### Questions and Comments 212NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 5 

### C-O-N-T-E-N-T-S (CONTINUED) Organizational Presentations (Continued)
Jack Corbett 213 airlinepassengers.org Questions and Comments 220 Sally Greenberg 223 National Consumers League Questions and Comments 237 Erik Hanson 244 U.S. Travel Association Questions and Comments 252 Kevin Mitchell 257 Business Travel Coalition Questions and Comments 270
Arthur Sackler 282 Open Allies for Airfare Transparency Roger Cohen 292 Regional Airline Association Questions and Comments 299 Bruce Bishins 301 Association of Retail Travel Agents
Eben Peck 306 American Society of Travel Agents Questions and Comments 314 Terry Dale 319 U.S. Tour Operators Association Questions and Comments 325NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 6 

### C-O-N-T-E-N-T-S (CONTINUED)

Organizational Presentations (Continued) Deborah McElroy 326 Airports Council International - North America Questions and Comments 336 Joseph Rubin 342 Interactive Travel Services Association Questions and Comments 356 Sharon Pinkerton 359 Airlines for America Questions and Comments 368 Douglas Lavin 372 International Air Transport Association Questions and Comments 379 Closing Remarks 394 Deborah Ale-Flint 394 Acting Chairperson Samuel Podberesky 395 Assistant General Counsel for Aviation Enforcement and Proceedings Department of TransportationNEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 7



### P-R-O-C-E-E-D-I-N-G-S 1 

### 8:59 a.m. 2 

### MR. PODBERESKY: It is nine 3 

### o'clock. I am pretty sure we are going to have 4 

### people floating in as we move along, but I think 5 

### we are going to get started on time. We have 6 

### people who have to leave early, and let's try to 7 

### keep on schedule. 8 

### It is my pleasure to welcome you to 9 

### the first meeting of the Advisory Committee on 10 

### Aviation Consumer Protection. I lose track of 11 

### the terminology this early in the morning. 12 

### For those ofyou who are not here for 13 

### that, if that isn't your destination, you can 14 

### leave by the back door instead of the front door. 15 

### (Laughter.) 16 

### If it is healthcare you are 17 

### interested in, just go out New Jersey Avenue 18 

### about a mile and a half to the Supreme Court. 19 

### And if it is highway funding, you could either 20 

### go up a mile and a half to Congress or up to the 21 

### 10th floor, and you can deal with those kinds of 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 8



### things in this building. But, in any event, we 1 

### are going to be dealing with aviation consumer 2 

### protection here. 3 

### My name is Sam Podberesky. I am the 4 

### required Designated Federal Officer for this 5 

### Advisory Committee. And the Office of the 6 

### General Counsel, and, in particular, my office, 7 

### the Office of the Assistant General Counsel for 8 

### Aviation Enforcement and Proceedings, is 9 

### responsible for staffing this Committee and 10 

### helping this Committee carry out the functions 11 

### which are required under Section 411 of the FAA 12 

### Modernization and Reform Act of 2012. 13 

### And those duties are very simple, 14 

### straightforward. They are supposed to review 15 

### existing aviation consumer protection 16 

### provisions and the state of our efforts in that 17 

### regard, and then to make recommendations to the 18 

### Secretary with regard to any improvements they 19 

### see fit to recommend. 20 

### The Secretary, in turn, will have to 21 

### respond in a report to Congress with regard to 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 9



### his views on the recommendations, either 1 

### indicating that he agrees with them and will move 2 

### forward. Or if he doesn't, to give reasons why 3 

### he won't be moving forward. 4 

### I am just going to very quickly 5 

### introduce the members of the Committee. They 6 

### were appointed by the Secretary of 7 

### Transportation. The statute provides for four 8 

### members, including a Chairperson. They are 9 

### required to be from certain areas or 10 

### organizations or representations, and the 11 

### people that are on this Committee fall within the 12 

### categories required by statute. The statute 13 

### called for four members, and that is why we have 14


### four. 15 

### Lisa Madigan, sitting at your far 16 

### left as you look at the dais, is the Attorney 17 

### General of Illinois. Next to her is Dave Berg, 18 

### who is the General Counsel and a bunch of other 19 

### positions at A4A, Airlines for America. Next to 20 

### him is Deborah Ale-Flint, who is the Director of 21 

### Aviation at Oakland International Airport. And 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 10



### next to her is Charlie Leocha -- did I get that 1 

### right this time, Charlie? 2 

### MEMBER LEOCHA: You did it 3 

### perfectly. Thanks. 4


### MR. PODBERESKY: Excellent. 5 

### He is the Director of the Consumer 6 

### Travel Alliance. 7 

### I have a bunch of housekeeping 8 

### matters that I need to give you, but I am not 9 

### going to bore Bob Rivkin with that. The 10 

### attendees and I have to be bored with it, but I 11 

### am not going to keep him here for that because 12 

### he has got an important meeting that he has got 13


### to attend. 14 

### Let me just say a few remarks about 15 

### Bob. I am not going to embarrass him, but I 16 

### guess I will anyway. I work for him; I have got 17 

### to say nice things. 18 

### (Laughter.) 19 

### But I am going to say nice things, 20 

### notwithstanding that I work for him. 21 

### I have been in this job for 26 years, 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 11



### in the job I am in now. I can honestly say that 1


### I have never had a General Counsel who has been 2 

### as totally committed to aviation consumer 3 

### protection, and making sure that we have the 4 

### resources to carry out our responsibilities, as 5 

### Bob Rivkin. 6 

### Together with that, and as part of 7 

### this introduction, I have to also say that he has 8 

### been a driving force in all the rulemaking 9 

### efforts and enforcement and compliance 10 

### initiatives that the Office has been involved 11 

### in. 12 

### And at the same time, he is a person 13 

### who has the intelligence and desire to learn from 14 

### all the people involved in this industry, all the 15 

### parties, all the players. So, he doesn't make 16 

### rash decisions. He thinks things through. He 17 

### makes decisions that are fully justified legally 18 

### and are fully justified from a cost/benefit 19 

### perspective. 20 

### I can only say there is only one 21 

### other person in the Department who is more 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 12



### devoted to consumer protection, and that is the 1 

### Secretary. And he is sorry he can't be here, but 2 

### he has got a bunch of other initiatives that he 3 

### is dealing with right now. 4 

### So, with that said, I am going to 5 

### introduce Bob for opening remarks. 6 

### MR. RIVKIN: Thank you, Sam. 7 

### MR. PODBERESKY: Thanks, Bob. 8 

### MR. RIVKIN: Sam is very kind, as 9 

### always. 10 

### Those of you in the industry who are 11 

### here understand that Sam and his 12 

### recently-departed Principal Deputy Dayton 13 

### Lehman, his Deputy Blane Workie, and Jonathan 14 

### Dols, now his Deputy, and the whole team of folks 15 

### from the Aviation Enforcement Office have been 16 

### doing a great job for years on this and have 17 

### really been open to your suggestions, your 18 

### concerns, your criticisms. And they continue 19 

### to be the really excellent civil servants that 20 

### they are. 21 

### Welcome. Again, we do our work in 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 13



### public here. So, our newly-designated Advisory 1 

### Committee, we are really excited to have you 2 

### here. We know it is an imposition. Two of you 3 

### have to come in from out of town, and that can 4 

### be difficult. 5 

### We don't have all that much time, 6 

### given the timing of things, for you to come to 7 

### some recommendations for this year. And so, we 8 

### really do appreciate the imposition that this is 9 

### and the public service that you already do and 10 

### that you are continuing to do by agreeing to 11 

### serve on the Secretary's Advisory Committee. 12 

### We can always do better. I think 13 

### that is a driving notion that we have within the 14 

### Department. We are very proud of what we have 15 

### done, but we think that there are a lot of 16 

### interesting and complex issues here that we 17 

### really do need a broad perspective of views on 18 

### to sort of figure out what we can do and, more 19 

### important, what we should do. 20 

### With respect to what we can do, I 21 

### just want to point out something that I said to 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 14



### members of the House T&I [Transportation and 1 

### Infrastructure] Committee yesterday, which is a 2 

### lot of folks, including occasionally the 3 

### Secretary, say, "That's terrible. Can we stop 4


### that?" 5 

### And sometimes the answer is “No,” 6 

### because we are not the regulator of the airline 7 

### industry. The industry has been deregulated 8 

### since the 1970s, and rates, routes, and services 9 

### are not something within the purview of DOT to 10 

### regulate. 11 

### However, something that is just as 12 

### important to those who cry loudly about 13 

### deregulation, the Congress specifically did not 14 

### deregulate our ability to supervise, oversee, 15 

### and enforce on fairness and transparency in the 16 

### way the airlines and travel agents do business. 17 

### So, we have specifically the power 18 

### to oversee and take action when we determine that 19 

### there has been unfair or deceptive practices in 20 

### the industry. We have, I think in this 21 

### Administration, been very, very aggressive 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 15



### about figuring out ways to do that that really 1


### haven't been done before. 2 

### So, you are basically familiar with 3 

### the two consumer rules we have put out, the 4 

### three-hour tarmac delay rule, and the rule that 5 

### followed that expanded upon that rule and 6 

### required disclosure of fees and full-fare 7 

### advertising. 8 

### I just want to mention full-fare 9 

### advertising right now because there has been a 10 

### lot of dispute about things related to that. 11 

### After many years of not insisting upon the 12 

### enforcement of the full-fare advertising rule, 13 

### we decided that it was appropriate, in light of 14 

### some activities within the industry, to very 15 

### specifically enforce that provision, so that 16


### consumers can see the cost of travel. 17 

### It gets muddied in the public 18 

### debate, but when you have to pay something to 19 

### travel, that is part of the cost of travel. When 20 

### there is other stuff that is nice to have, you 21 

### know, if you want to get a special seat, if you 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 16



### want to have a great meal on the plane, if that 1 

### is possible, those things are beyond the basic 2 

### costs of travel, and we are not concerned. You 3 

### know, airlines can offer as many different 4 

### options as they want to consumers who want to pay 5


### for them. 6 

### But when something is part of the 7 

### cost of travel, it needs to be disclosed and it 8 

### needs to be easily understood by consumers. And 9 

### so, one thing that I personally have bristled at 10 

### is when airlines try to deceive, in my view, the 11 

### public by putting forth what they call a base 12 

### fare and, then, having a whole bunch of other 13 

### stuff that is essentially part of the base fare 14 

### because it is required to travel. 15 

### So, my pet peeves include things 16 

### like fuel surcharges and convenience fees and 17 

### other nondescript and, frankly, 18 

### potentially-inherently-misleading statements 19 

### or fees that, really, consumers have no choice 20 

### but to pay. 21 

### We are not trying to hide government 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 17



### taxes and fees. You know, airlines and travel 1 

### agents can, and in some cases maybe should, make 2 

### very clear what portion of the total fare is 3 

### comprised of those sorts of fees. But the key 4 

### and most prominent number needs to be the total 5 

### cost of travel, of non-optional travel cost, 6 

### because that is what consumers need to know. 7 

### So, baggage fee disclosure has been 8 

### another issue. I think when we get down beyond 9 

### these kind of sound bites we have to face some 10 

### realities. I know Charlie has strong feelings 11 

### about this. 12 

### There are 100-and-something 13 

### categories of ancillary fees currently out there 14 

### in the industry. You can't easily disclose in 15 

### a quick and easily-understood way all of those 16 

### fees immediately, unless there is some system 17 

### where consumers have complete functionality; 18 

### where they can enter exactly what they want to 19 

### do and get the cost of that. And I know that is 20 

### something that Charlie and others have 21


### advocated. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 18



### But that is something that would 1 

### require departmental intervention into the 2 

### marketplace, and that is something that we are 3 

### looking at very carefully, as you know, but we 4


### have to make sure we understand all the 5 

### unintended and intended consequences of that. 6 

### I don't want to go on too long, 7 

### except to describe a couple other things for sort 8 

### of setting the stage of where we are. We know 9 

### there is more to be done. We put out the fact 10 

### that we are doing a notice of proposed rulemaking 11 

### (NPRM) that we expect to issue in December that, 12 

### among other things, will examine whether we need 13 

### to ensure that airlines provide these sorts of 14 

### ancillary-fee data electronically to GDSs 15 

### [Global Distribution Systems] and travel 16 

### agents. That is an issue that we are looking at 17 

### and that we have said that we will address in the 18


### NPRM. 19 

### There are a number of other issues 20 

### that we will address as well. We are doing a 21 

### rulemaking pursuant to a GAO [Government 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 19



### Accounting Office] report that will require more 1 

### information about the amount and types of 2 

### airline fees. That will be useful information 3 

### for the Department to get. We have had a public 4 

### meeting about that. 5 

### We are doing rulemakings in several 6 

### other areas, like the use of electronic 7 

### cigarettes and the accessibility of automated 8 

### airport kiosks, which is an issue of great 9 

### importance to the blind community. 10 

### And we are putting in The Federal 11 

### Register tomorrow a proposal to amend our rule 12 

### on the loss, injury, or death of animals during 13 

### air transport, which is an important issue to 14 

### many who travel. 15 

### I want to touch briefly on our 16 

### enforcement work. We have been very aggressive 17 

### in enforcement. Sam and his team have done 18 

### onsite investigations this year, over the past 19 

### four years, at more than 25 different sites. 20 

### They go to airline offices, inspect the books, 21 

### and look at their numbers. And many of those 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 20



### inspections have resulted in cease and desist 1


### orders. 2 

### We have also been very aggressive in 3 

### assessing fines for violations for our rules, 4 

### including a fine that was assessed against 5 

### American Eagle last year, $900,000 for violating 6 

### the tarmac-delay rule for a number of flights 7 

### that were on the tarmac at O'Hare on May 29th, 8 

### 2011. 9 

### So, I like to point out that in the 10 

### three years prior to this Administration taking 11 

### office, comparing the three years prior to our 12 

### taking office and the first three years of this 13 

### Administration, the assessed penalties for 14 

### enforcement of these rules basically tripled. 15 

### We think that is a reflection of how seriously 16 

### we take these matters and the lengths to which 17 

### we will go to ensure that the industry takes it 18 

### seriously. 19 

### So, I will just close because the 20 

### real meat of this is going to come from Sam and 21 

### his staff, by summarizing that we take this very 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 21



### seriously. We think we have been very 1 

### aggressive on behalf of consumers. We want to 2 

### be fair and judicious about the use of the 3 

### limited powers that the Secretary has in this 4



### area. 5 

### But there may be other creative ways 6 

### of looking at these powers. It is particularly 7 

### interesting to me that we have Attorney General 8 

### Madigan chairing the panel because the statute 9 

### that we operate under essentially mimics state 10 

### consumer protection standards. We at DOT in 11 

### this area, essentially, preempt state ability to 12 

### act. So, we have to act as the State Attorney 13 

### General for the aviation industry across the 14 

### country. And so, we look to the states sort of 15 

### as a model of what is fair, where do you cross 16 

### the line into unfair and deceptive? And what 17 

### are the ways that are both just and reasonable, 18 

### but also strong on behalf of consumers to 19 

### exercise that authority? 20 

### So, I hope this meeting is 21 

### productive. Thank you again for coming. And I 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 22



### will see the panel again later today. Thanks. 1 

### MR. PODBERESKY: Thank you, Bob. 2 

### I promised some housekeeping 3 

### matters. So, I am going to go through them, and, 4 

### Bob, you can leave whenever you want, whenever 5 

### you get bored. 6 

### The first has to do with security. 7 

### This building, as you are already aware, has 8 

### strict security requirements. DOT personnel 9 

### are supposed to be with you at all times when you 10 

### are wandering in the building, particularly 11 

### outside this conference area. 12 

### We have, more or less, my entire 13 

### staff floating around here at different times of 14 

### the day to get you around the building and in and 15 

### out of the building as your needs require. If 16 

### you need to leave early or if you need to go 17 

### someplace in the building, just ask one of the 18 

### staff members around, and they will escort you. 19 

### Next, in an effort to try to minimize 20 

### the number of trees we cut down, we are trying 21 

### to save paper. So, we don't have a whole lot of 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 23



### handouts outside. If you haven't gotten them, 1 

### you should have gotten an agenda, a one-page 2 

### agenda, two-sided. You should have gotten a 3 

### copy of the latest Air Travel Consumer Report, 4 

### which is available out there. 5 

### You should have a map which shows 6 

### eating areas, eating locations around the 7 

### building, restaurants and other establishments 8 

### where you can buy food. 9 

### Just outside this door is a small 10 

### snack bar. So, for people who want coffee or a 11 

### banana or apple, or something along those lines, 12 

### you can obtain that right outside this door to 13 

### my left. 14 

### If you will look at your agenda, 15 

### which I will do, just to give you an overview of 16 

### how the day is going to work. The morning is 17 

### going to be devoted to presentations by members 18 

### of my staff about what my office does, the laws 19 

### that we enforce, the regulations, the statutes, 20 

### as well as the procedures we use, an overview of 21 

### our aviation consumer protection 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 24



### responsibilities. That will take up the whole 1 

### morning, and it will close with a 2 

### question-and-answer period. 3 

### The main purpose of this first 4 

### meeting is to educate our Committee members. 5 

### So, the question-and-answer periods, unless the 6 

### Chairperson decides otherwise, should be 7 

### devoted to questions and answers to questions 8 

### from the Committee. 9


### Two of the members have a 10 

### significant background in aviation consumer 11 

### protection work. Two of the members, while 12 

### familiar with consumer protection, while 13 

### familiar with the aviation industry, may not 14 

### have the same background. So, we are going to 15 

### try to devote as much time as possible on 16 

### questions from Committee members. Now, to the 17 

### extent that the Chairperson wants to entertain 18 

### a question from the floor, that is obviously her 19 

### right. 20 

### One small change. In the afternoon 21 

### we are going to have organization presenters. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 25



### That is on the back of the agenda. One 1 

### change -- is Joe Rubin in the room? Not yet? We 2 

### have Roger Cohen scheduled for a 4:15 3 

### presentation, and he just notified us late 4 

### yesterday after this was printed that he has to 5 

### leave by three o'clock. So, somebody in the 6 

### first group of presenters is going to trade 7 

### places with him. It may be Joe Rubin, but it may 8 

### be somebody else, depending on who is available. 9 

### So, with that said, we move on to 10 

### some other items. The restrooms are out the 11 

### back door, and as you are walking to your left, 12 

### you will find restrooms. There are also signs 13 

### in the corridor that will point you to rest 14



### rooms. 15 

### Lunch options, again, we gaveyou the 16 

### map which shows the establishments in the area, 17 

### which there are not very many. There's Five 18 

### Guys and Subway across the street. There is a 19 

### Potbelly's in the back of this place. Those are 20 

### probably your best bets for getting a quick 21 

### lunch. And there are also food trucks that you 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 26



### will find outside the door you came in, again, 1 

### on M Street. Some people swear by them, and 2


### others don't. 3 

### (Laughter.) 4 

### Just in case of an emergency, if you 5 

### have a medical emergency, inform my staff, and 6 

### we will make sure that we will call the right 7 

### people and get you to the right place. 8 

### If there happens to be a fire 9 

### alarm -- and we do get fire alarms -- we have to 10 

### leave. So, we go out the same door you came in 11 

### on New Jersey Avenue and then just head left 12 

### towards the water. We are supposed to get 13 

### together in a place and make sure everybody is 14 

### still alive. So, the best bet is to head toward 15 

### the water in the back of the building. Let's 16 

### hope we don't have a fire alarm. 17 

### With respect to microphones, we are 18 

### going to ask everyone to use microphones, so that 19 

### everybody can hear you. And we do have a loop 20 

### system in our microphone system, so that persons 21 

### with hearing disabilities will be able to hear. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 27



### It also helps our court reporter. 1 

### You know, this presentation, this day's meeting 2 

### is going to be transcribed. That transcription 3 

### will be placed in the docket after it is checked 4 

### by the Chairperson and by us, just to make sure 5 

### it is accurate. That will probably be in two or 6 

### three weeks from now, is our expectation. 7 

### Again, for people who are presenting 8 

### with PowerPoint presentations or have written 9 

### remarks that they are going to be reading, if you 10 

### want to give them to us, we will put them in the 11 

### docket. We have a docket devoted for this 12 

### proceeding. 13 

### The morning session and the 14 

### PowerPoint presentation from my office, which is 15 

### about 100 slides, we didn't print that out, but 16 

### if it isn't already available, it will be 17 

### available in the docket for this Advisory 18 

### Committee as well. 19 

### And the docket for the Advisory 20 

### Committee will remain open. Anyone wishing to 21 

### submit comments or critiques or suggestions or 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 28



### anything along those lines, please feel free to 1 

### submit the material to the docket. 2 

### I think that is about all I have. 3 

### Any questions from the Committee members? 4 

### (No response.) 5 

### Okay. With that, I am going to turn 6 

### it over to our first presenter, Jonathan Dols, 7 

### who is the Deputy Assistant General Counsel. He 8 

### is going to start with an overview of the 9 

### Office -- 10 

### CHAIRPERSON MADIGAN: [presiding] 11 

### We would like to at least say hello to everybody. 12 

### MR. PODBERESKY: Oh, I'm sorry. 13 

### Yes, I am supposed to follow the agenda, and I 14 

### skipped over opening remarks by the Committee 15


### members. 16 

### CHAIRPERSON MADIGAN: Ladies and 17 

### gentlemen, I am Lisa Madigan. I am normally the 18 

### Attorney General of the State of Illinois, but 19 

### for today, and a number of other days in the 20 

### coming years, I will serve as the Chairperson of 21 

### this Committee. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 29



### I want to say thank you for the 1 

### opportunity to do so. In particular, thank you 2 

### to Secretary LaHood for appointing me to this. 3 

### And I would like to give credit to 4 

### Sam and to everybody who works with Sam. They 5 

### have all done a terrific job in getting us 6 

### materials, getting us organized, and getting us 7 

### here today in a very timely manner. 8 

### I would like to also acknowledge 9 

### some of what Bob Rivkin said. Really, when you 10 

### look at the work that has been done under this 11 

### Administration, it is clear that consumer 12 

### protection has become a priority, and certainly 13 

### a desperately-needed priority. 14 

### And I also appreciate the fact that 15 

### you have acknowledged that there is certainly 16


### more that can be done. Because from the 17 

### perspective that I come from as an Attorney 18 

### General, really, one of the foremost things that 19 

### I do on a day-to-day basis is handle consumer 20 

### complaints and work on consumer protection. 21 

### And so, I think in the past year, in Illinois we 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 30



### received well over 200,000 -- and don't get 1 

### scared, airlines; it is not about you -- 200,000 2 

### consumer inquiries, resulting in about 25,000 3 

### consumer fraud complaints being filed. 4 

### Because of deregulation, we 5 

### obviously don't have any control over the 6 

### consumer issues regarding airlines and air 7 

### travel, but we do still receive 8 

### approximately -- I looked back over the numbers 9 

### over the past five-six years -- it is about 85 10 

### a year that we get. And then, we try to work on 11 

### this, not always successfully, but maybe this 12 

### position will change that. And there is 13 

### certainly, as I said, a lot to be done. 14 

### So, I am the person on the Committee 15 

### who is not connected to the industry, with the 16 

### exception of being an air traveler. So, I have 17 

### a lot to learn, but I am very excited about being 18 

### able to bring the expertise that I have from the 19 

### perspective of somebody in law enforcement who 20 

### has to deal with consumer protection and really 21 

### takes pride, I think, in the good work that we 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 31



### do. And certainly, we can use those skills to 1 

### improve the situation for air travelers as well. 2 

### So, thank you very much. 3 

### Let me just go down the line here and 4 

### hand this off to one of my Committee members, 5 

### David Berg. 6 

### MEMBER BERG: Thank you, Lisa. 7 

### So, I am David Berg. I am General 8 

### Counsel of Airlines for America, which is the 9 

### airline industry trade association, 10 

### representing the passenger and cargo airlines. 11 

### Let me first, like Lisa, thank the 12 

### Secretary and DOT for this opportunity. I think 13 

### this is going to be a very interesting exercise. 14 

### I can confirm what Bob Rivkin has said, in that 15 

### consumer protection has been a priority of this 16 

### Secretary and Bob's office and his staff and Sam. 17 

### And we have seen an uptick in enforcement 18 

### actions. That is a very real part of our world. 19 

### And also, as Bob said, there has been 20 

### a lot of debate about the issues. There has been 21 

### a lot of rhetoric about the issues. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 32



### And I was thinking about how this 1 

### Committee might function and provide added value 2 

### to the debate. What I am hopeful is that in the 3 

### course of educating my colleagues and myself as 4 

### well about the issues, which is the focus, I 5 

### think, of this Committee, at least this meeting, 6 

### it would be useful not to simply make this 7


### another forum for the same debate and 8 

### discussion. As presenters come today and talk 9 

### about the issues that they are concerned about, 10 

### be sure to talk about the data, the information, 11 

### the studies that support the statements that you 12 

### are making, because that will be helpful for us, 13 

### I think, more than simply broad-based statements 14 

### that all of us make from time to time. 15 

### So, with that, I will pass it on. 16 

### Thank you. 17 

### MEMBER ALE-FLINT: Good morning. 18 

### I am Deborah Ale-Flint, and I 19 

### represent the airport industry. As I sit on the 20 

### Board of Directors for Airports Council 21 

### International - North America, which represents 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 33



### over 300 commercial service airports in the 1 

### United States, I am very proud to be here as the 2 

### voice of airports in this panel. 3 

### As Tony Tyler of IATA said, aviation 4 

### is really a force for good across the world. I 5 

### certainly view that airports are a very 6 

### important part of that equation and a partner in 7 

### that. Airports directly employ 1.3 million 8 

### people across the country and indirectly over 10 9 

### million jobs. So, we are very important to be 10 

### part of this discussion. 11 

### And certainly for airports like 12 

### mine, Oakland International -- which is, if you 13 

### don't know, your favorite airport in the San 14 

### Francisco Bay Area and the best way to the 15 

### Bay -- we take issues of choice, fairness, and 16 

### value very much to heart. We know that this is 17 

### a very important industry to the economy, to 18 

### local economies, as well as to the global 19


### economy. 20 

### So, again, as the airport 21 

### representative on this panel, I am very proud and 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 34



### look forward to representing the voice of 1 

### airports, as we seek collaboration and 2 

### cooperation on these issues. 3 

### MEMBER LEOCHA: Hello, I am Charlie 4 

### Leocha, and I am the Director of the Consumer 5 

### Travel Alliance. 6 

### A little background: I am a 7 

### long-term journalist. Years ago, I worked with 8 

### DOT writing a book called Travel Rights. I kind 9 

### of am a talking head that talked about consumer 10 

### issues on TV a lot, ended up moving to D.C. about 11 

### three years ago, and decided that maybe I should 12 

### do something on the inside to try to change 13 

### issues rather than throw rocks from the outside. 14 

### So, here I am. We have been working 15 

### for three years in pulling things together. 16


### I have sort of a statement that I 17 

### would like to read and a broad overview of areas 18 

### that I would like to see this Committee move in, 19 

### beyond some of the minutia that we find ourselves 20 

### dragged into every day as we work on consumer 21 

### issues. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 35



### So, aviation consumers are families 1 

### struggling with getting their luggage into their 2 

### overhead, struggling with getting their luggage 3 

### crammed under their front seat. They are 4 

### seniors going out to meet their grandchildren. 5 

### They are leisure travelers on their way to Disney 6 

### World, to play the slots in Vegas, to ski in New 7 

### Hampshire, or go to the wilds of New Mexico. 8 

### They also head over to explore history in Europe 9 

### and art in the Orient. 10 

### But those aren't the only people 11 

### that we are going to be talking about. They are 12 

### also everyday warriors who really make the 13 

### economic engine of America run. They are 14 

### salesmen who present their benefits day after 15 

### day. They are politicians connecting with the 16 

### public. They are journalists looking for the 17 

### next big scoop, musicians on the way to their 18 

### next gig. All of these passengers have to deal 19 

### with a unique part of the American economy, a 20 

### part of the economy where consumer issues are 21 

### handled very differently than they are in any 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 36



### other country. 1 

### Bob Rivkin quickly outlined where we 2 

### are. In this meeting, I would like to, and right 3 

### now I would like to, paint as broad a mandate as 4 

### possible for our Committee. Let's spread our 5 

### wings, like the airlines would say, and take a 6 

### look from a 10,000-foot level at consumers in the 7 

### aviation world. 8 

### We have a historical opportunity for 9 

### the first time to exam the aviation world after 10 

### 30-plus years of airline deregulation from the 11 

### viewpoint of consumers. We find ourselves 12 

### moving into a different world, a world where 13 

### passengers are looking for more, for less, and 14 

### where airlines are finding themselves in the 15 

### economic position of having to provide less for 16 

### more money or having to differentiate between 17 

### passengers' desires. 18 

### The Consumer Travel Alliance and 19 

### this Committee's job is to focus on airline 20 

### passengers and ensure that in this aviation 21 

### world of shrinking mainline carriers, 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 37



### mushrooming low-cost carriers, code-sharing, 1 

### antitrust immunities, consumer protections and 2 

### market transparency, they don't get forgotten 3


### for all consumers. 4 

### Today we are going to hear from the 5 

### government about consumer protections all 6 

### morning long which are already enshrined in 7 

### federal regulations. We will hear from 8 

### consumer and industry groups in the afternoon 9 

### about airline price transparency, baggage fees, 10 

### seat reservation fees -- fees, fees, 11 

### fees -- compensation for flight delays, lost 12 

### luggage, family prerogatives, purchase 13 

### protections, PNRs [Passenger Name Records], 14 

### GDSs, MCOs [ miscellaneous charge orders] 

### , PFCs 15 

### [Passenger Facility Charges], and a lot more. 16 

### This is an industry where the 17 

### rulemakers at the Department of Transportation 18 

### not only write the rules, but their small staff 19 

### enforces the rules nationally and 20 

### internationally. And they serve as the sole 21 

### judge and jury for most violations. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 38



### This is a part of our economy that 1 

### faces unique jurisdictional issues such as who 2 

### is responsible for privacy of 3 

### personally-identified information held by the 4 

### airlines in globe-spanning central computer 5 

### reservation systems. The FTC [Federal Trade 6 

### Commission] doesn't have jurisdiction. DOT has 7 

### nothing to do with privacy. Who has 8 

### jurisdiction if something goes wrong? 9 

### This is a portion of our economy 10


### where state and local rule of law has been 11 

### superseded by federal preemption. Aggrieved 12 

### airline passengers have access to small claims 13 

### courts for paltry damages, but then are faced 14 

### with the challenges of federal courts for any 15 

### legal claims resulting in significant damages. 16 

### The State Attorneys General, the 17 

### bastion of consumer protections across the 18 

### country, are disenfranchised. This legal 19


### conundrum should be addressed. We need to take 20 

### a look at enforcement of uniform federal law 21 

### through state courts. This Committee cannot 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 39



### solve this problem, but, hopefully, we can raise 1 

### the issue. 2


### Even the IRS treats travelers 3 

### differently. Many taxes, government charges, 4 

### and fees paid for tickets that we don't use and 5 

### we cancel cannot be reimbursed. This is 6 

### something else we need to look at. 7 

### Besides writing the rules of legal 8 

### protections, DOT holds the keys to airline 9 

### safety. That is through the FAA [Federal 10 

### Aviation Administration]. The FAA, all part of 11 

### the DOT, makes rules that affect every single 12 

### flight from pilot certification to aircraft 13 

### maintenance and from specifications for child 14 

### seats and details of onboard effects of Kindles, 15 

### iPads, iPhones, and other electronics. And 16 

### plus, they manage the massive air traffic 17 

### overhaul that is underway. This is another area 18 

### we need to keep somewhere on our radar screen. 19 

### And finally, I would like to take a 20 

### look at how consumers can learn details of 21 

### contracts of carriage and the arcane federal 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 40



### rules. We are going to hear a lot of this today. 1 

### Should DOT take a more proactive 2 

### approach to educating consumers about their 3 

### passenger rights? Should they look for a way to 4 

### do some sort of a public/private partnership, 5 

### together with airlines, airports, and travel 6 

### service companies, to keep consumers informed 7 

### about what their rights are and where to find the 8 

### rights? 9 

### And so, before we start with the 10 

### presentations, I want to emphasize our aviation 11 

### system is an absolute marvel. It connects the 12 

### world. It makes our modern lives possible by 13 

### joining people, moving cargo, and facilitating 14 

### our international and domestic economies. 15 

### The FAA operates the safest aviation 16 

### transportation system in the world. The 17 

### airlines were created by visionaries who love to 18 

### travel and for whom underregulation/excellence 19 

### in consumer service was the prime 20 

### differentiator. 21 

### The fact that the airline has had 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 41



### virtually no enumerated consumer protections 1 

### for decades, other than lost baggage and 2 

### overbooking rules, speaks volumes about the 3 

### primary focus that airlines once placed on 4 

### treating their passengers well. 5 

### Today we are faced with a growing 6 

### litany of DOT rules and regulations, together 7 

### with emerging consumer issues. It is time to 8 

### take a fresh look at passenger protections that 9 

### have evolved over the past few years and take a 10 

### good look into the future. I hope that the 11 

### Committee will get to move in those directions. 12 

### MR. PODBERESKY: Thank you, Lisa 13 

### and Committee members. 14 

### And now, we will start our 15 

### presentations regarding the Office of Aviation 16 

### Enforcement and Proceedings with Jonathan Dols. 17 

### Charlie, are you able to see? 18


### MEMBER LEOCHA: Yes. 19 

### MR. DOLS: Good morning, Committee 20 

### members. Good morning, everyone. 21 

### I am Jonathan Dols. I am a Deputy 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 42



### Assistant General Counsel. 1 

### Over the next two hours or so, you 2 

### will receive a comprehensive briefing on the 3 

### Office of Aviation Enforcement and Proceedings 4 

### or, as we call it for short, the Enforcement 5 

### Office. 6 

### A note on the slides that are an 7 

### essential component to our presentation today. 8 

### Sam mentioned that we have over 100 of them, and 9 

### I can sort of see gasps of horror back there in 10 

### the crowd. Many of the slides are very 11 

### detailed. So, I promise you that, at least 12 

### during my portion of the presentation, I won't 13 

### belabor you by hitting every single point and 14 

### every single sub point. In fact, there will be 15 

### times when I talk about something that is not on 16 

### a slide. 17 

### So, what I would ask you to do, and 18 

### to facilitate your understanding, is to follow 19 

### me first, and then, when I point to something 20 

### that is particularly important, I will refer you 21 

### to the slides. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 43



### So, then, please, next slide. 1 

### Let's start by talking about who we 2 

### are, who the Enforcement Office is. 3 

### Paradoxically, we are going to begin by telling 4 

### you who we are not. We are not these other 5 

### agencies. We are not the FAA. We are not the 6 

### TSA [Transportation Security Administration]. 7 

### The FAA and TSA regulate the safety and security 8 

### aspects of the airline industry. 9 

### We at DOT are the economic 10 

### regulators of the airline industry, and 11 

### specifically in the Enforcement Office we are 12 

### the consumer protectors. We do, however, work 13 

### very closely with our sister government 14 

### agencies. 15 

### Next slide. 16 

### Now this is who we are. We are a 17 

### component of the DOT General Counsel's Office. 18 

### We are 45 people strong. We are organized into 19 

### two divisions, a legal division on one hand and 20 

### a non-legal division on the other. The 21 

### non-legal division is called the Aviation 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 44



### Consumer Protection Division, or ACPD for short. 1 

### And we go into that office's functions in detail 2 

### later on in the presentation this morning. 3 

### Now something that is not on the 4 

### slide. I want to tell you a little bit about 5 

### where we have come from, where the Enforcement 6 

### Office has come from, our history. We are a 7 

### vestige of an entity called the Civil 8 

### Aeronautics Board, or the CAB, that regulated 9 

### the airline industry between 1938 and its sunset 10 

### in 1984, at the end of 1984. 11 

### During that time, the CAB told 12 

### airlines where it could fly and what they could 13 

### charge. It also had a consumer protection set 14 

### of responsibilities as well. 15 

### Well, starting in 1978 with the 16 

### passage of the Airline Deregulation Act, slowly, 17 

### most of those functions went away, opening up a 18 

### free market. But the consumer protection 19 

### functions or responsibilities, in large 20 

### measure, did not. They reside with us here 21 

### today in the Enforcement Office. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 45



### Next slide. 1 

### A moment to describe -- you know who 2 

### we are and you know where we come from -- but what 3 

### is it exactly that we do? What do we regulate? 4 

### What is our jurisdiction? 5 

### Our jurisdiction starts with a 6 

### statutorily-defined term called "air 7 

### transportation," which I will attempt to 8 

### paraphrase for you here today. Air 9 

### transportation is the transportation by air of 10 

### persons or property for compensation or hire as 11 

### a common carrier between -- and this is the 12 

### critical part -- between a point in a state and 13 

### a point in another state or between a point in 14 

### a state and a point outside of our country. 15 

### Of course, when you look at the 16 

### statute, you will notice it is a little more 17 

### detailed than that and nuanced, but you get the 18 

### gist of it for now. That is what we regulate. 19 

### But who do we regulate? We regulate 20 

### three things: direct air carriers, indirect 21 

### air carriers, and ticket agents. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 46



### Let's start with direct air 1 

### carriers. That is an easy concept to grasp. In 2 

### fact, that is how many of you came here today, 3 

### came to Washington, to be with us. You were 4 

### flown on American Airlines or United or U.S. 5 

### Airways, or what have you. They are direct air 6 

### carriers. They are what the FAA considers to be 7 

### in operational control of your flight. The FAA 8 

### regulates them, as do we. 9 

### What about indirect air carriers? 10 

### That is a slightly more amorphous concept. It 11 

### is not defined in statute. You can find 12 

### versions of definitions in various places in the 13 

### Department's regulations, but, in essence, an 14 

### indirect air carrier is an entity that purchases 15 

### air transportation from a direct air carrier 16 

### and, then -- and this is critical -- in its own 17 

### right as a principal, resells that air 18 

### transportation to consumers. 19 

### Perhaps the best example I can think 20 

### of, of a legal indirect air carrier, are Part 380 21 

### public charter operators. Now what are they? 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 47



### So, what I want you to do here is think back to 1 

### your college days and those cold 2 

### January/February days when you walked into the 3 

### student union and you saw something posted on the 4 

### bulletin board that said, "Hey, spend spring 5 

### break in Cancun. Sign up here." 6 

### Chances are, if you took the offer, 7 

### you were flown on a public charter flight to 8 

### Cancun. Your contract of carriage -- that is 9 

### not the term we use -- but your contract was with 10 

### the indirect air carrier that, in turn, placed 11 

### you on a direct air carrier to take you down for 12 

### your holiday. 13 

### And what about ticket agents? 14 

### Ticket agents, as with the term "air 15 

### transportation," is defined in our statutes. 16 

### And I will attempt again to paraphrase what they 17



### are. 18 

### A ticket agent is an entity other 19 

### than an air carrier or an air carrier's employee 20 

### that, as a principal in its own right or as an 21 

### agent of the air carrier, holds out, sells, or 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 48



### arranges -- that is a keyword -- arranges air 1 

### transportation. 2 

### Examples of ticket agents are your 3 

### travel agents, your online travel agents, the 4 

### Expedias of the world, Travelocity, Orbitz, et 5 

### cetera. But they are also your 6 

### brick-and-mortar, mom-and-pop, corner travel 7 

### agents as well. Significantly, GDSs, Global 8 

### Distribution Systems -- Amadeus, Sabre, et 9 

### cetera -- are also ticket agents and fall under 10 

### our purview, our regulatory purview. 11 

### Next slide, please. 12 

### This is a busy slide, just three 13 

### things I want you to note here. Firstly, the 14 

### consumer protection jurisdiction at the federal 15 

### level in the airline vis-a-vis air 16 

### transportation lies solely with the Enforcement 17 

### Office. The FTC, by contrast, has jurisdiction 18 

### over a much wider range of industries. 19 

### The second point here: the Airline 20 

### Deregulation Act, which I mentioned earlier. 21 

### When Congress deregulated, it took out the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 49



### ability to regulate rates and routes and 1 

### services, et cetera, it prevented states from 2 

### filling that void via a preemption provision 3 

### which exists today in our statute. 4 

### Thirdly, there is no private right 5 

### of action under our aviation statutes for 6 

### individuals to vindicate their rights. 7 

### However, there are methods via contractual 8 

### claims in which they can do so. 9 

### Next slide, please. 10 

### A note on economic licensing. In 11 

### order to be an airline in the United States, a 12 

### direct air carrier, one has to have two forms of 13 

### licenses from the federal government, one of 14 

### which is a safety license from the FAA. So, you 15 

### will often hear people say, "Hey, we have a 121 16 

### certificate" or a 135 certificate. That is what 17 

### they are talking about, their FAA authority. 18 

### Just incidentally, they are technically not 19 

### using the terminology right, but they are 20 

### referring to their FAA authority. 21 

### Over on the economic side of the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 50



### house, the DOT side of the house, we give 1 

### economic authority in the form of a Certificate 2 

### of Public Convenience and Necessity or an 3 

### exemption from the certificate requirement. A 4 

### good example of an exemption is the regulatory 5 

### exemption that exists under Part 380. 6 

### Now how does one get one of these 7 

### certificates? One applies to our Fitness 8 

### Office here within DOT. It is separate from the 9 

### Enforcement Office and the DOT General Counsel's 10 

### Office. And the Fitness Office looks at several 11 

### criteria, four basic criteria. 12 

### Firstly, it looks to see whether an 13 

### applicant has sufficient financial resources in 14 

### place to fund its operations for an initial 15 

### startup period without during that period 16 

### putting passenger funds at risk. The idea there 17 

### is so that an airline starts business. It goes 18 

### two weeks and then it goes out of business. At 19 

### that point, it should still have the passenger 20 

### funds in place to make refunds. And so, those 21 

### passenger funds weren't used to fund the two 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 51



### weeks of operations that already occurred. 1 

### Secondly, the Fitness Office will 2 

### evaluate the managerial competence of the 3 

### applicants to make sure that they have 4 

### sufficient experience running airlines in the 5 

### airline industry, et cetera. 6 

### Thirdly, they will look to see 7 

### whether the owners, the officers and directors, 8 

### and the key managers have demonstrated a 9 

### willingness/ability to comply with the aviation 10 

### regulations. We call that having a positive 11 

### compliance disposition. 12 

### And lastly, and a criteria that I 13 

### believe is unique to the airline industry, we 14 

### require, in order to get a certificate, one to 15 

### be a citizen of the United States. And that is 16 

### a statutorily-defined term. Again, I am 17 

### unaware that that exists anywhere else but here 18 

### in the airline industry. 19 

### A final note on economic licensing 20 

### and fitness. It is a continuing requirement. 21 

### So, you don't just get a certificate and then go 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 52



### on your merry way and never come back to DOT. 1 

### You always have to be fit. 2 

### So, let's just suppose that within 3 

### a year of receiving a certificate an applicant 4 

### decides, for some reason, to replace its 5 

### president and CEO with a second grader. 6 

### Clearly, that will affect the managerial 7 

### competence of the airline, and it would no longer 8 

### be fit. 9 

### Next slide, please. 10 

### At this point, I want to transition 11 

### to the second part of my presentation. Here I 12 

### want to talk about the two types of 13 

### investigations that the Enforcement Office 14 

### engages in. I want to tell you a little bit 15 

### about how we get our cases, the various avenues 16 

### that they come to us. I want to tell you about 17 

### what we do when we have a case, and then, lastly, 18 

### I want to tell you about how we resolve those 19



### cases. 20 

### This slide, it describes our formal 21 

### and informal investigations. Essentially, 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 53



### there is very little difference between the two. 1 

### We have two regulations, Part 300 and Part 302, 2 

### that govern our procedures during 3 

### investigations, and they govern our conduct. 4 

### Next slide, please. 5 

### How do we get our cases? Let's 6 

### start by how we reach out. We exercise our own 7 

### initiative to get those cases. Bob has already 8 

### mentioned our onsite compliance inspections, a 9 

### great example of, when we send a team into the 10 

### field -- we have had sufficient resources since 11 

### 2008 to do this -- send teams into the field, they 12 

### subject an airline to a comprehensive evaluation 13 

### of its records in areas such as advertising, 14 

### refunds, oversales, code-share disclosure, et 15 

### cetera, to make sure that the carrier has 16 

### sufficient mechanisms in place to ensure 17 

### compliance. It has been an excellent tool for 18



### us. 19 

### But there are other ways in which we 20 

### reach out ourselves. We use our meager staff of 21 

### 45 to monitor websites on a daily basis, to 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 54



### monitor newspapers on a daily basis, other 1 

### advertising. 2 

### I see Howard smiling at my use of the 3 

### term "meager". 4 

### We are out there. We are also, not 5 

### surprisingly, a group of people that likes to 6 

### travel by air. So, when we see violations, 7 

### things that we think are wrong, we will bring 8 

### those back to the office and perhaps institute 9 

### an investigation. 10 

### So, those are the ways that we reach 11 

### out. But what about things that come to us? 12 

### Firstly, we rely on our sister agency, 13 

### principally the FAA. As I have said, 45 people, 14 

### that is not enough to cover the whole country, 15 

### but the FAA has significantly more. More 16 

### importantly, they have inspectors in the field 17 

### that serve as our eyes and as our ears. 18 

### So, the FAA are the ones who tell us 19 

### when they see a Canadian Air Taxi that doesn't 20 

### have an economic license and it just happens to 21 

### have landed at an airport in upstate New York. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 55



### They are also the ones, critically, who are down 1 

### in south Florida and are able to identify the 2 

### charter operator that is, in fact, engaging in 3 

### scheduled service between Florida and the 4


### Bahamas. 5 

### Passengers and consumers bring us a 6 

### lot of complaints, as you can imagine, as well; 7 

### in fact, thousands of them. Norman, when he 8 

### discusses the ACPD [Aviation Consumer 9 

### Protection Division] later today, Norman 10 

### Strickman will mention that as well. 11 

### When our non-legal division, ACPD, 12 

### receives these complaints, they look at them. 13 

### If they are particularly egregious ones, or if 14 

### there is a pattern in practice that they are able 15 

### to discern, they will refer the matter over to 16 

### the Legal Division for institution of an 17 

### investigation. 18 

### Also, from time to time, carriers do 19 

### self-report. That is a mitigating factor that 20 

### we will take into account in how we handle the 21 

### investigation beyond that. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 56



### And lastly, but not least, 1 

### competitor complaints. We have Airline A, and 2 

### it is down there in the field and it has a pretty 3 

### good idea of what Airline B is doing wrong. And 4 

### they don't hesitate to come to us to let us know 5 

### what is going on. They have an economic 6 

### incentive for doing it. Our incentive for 7 

### encouraging it is to protect consumers. To the 8 

### extent that we can under law, we keep the 9 

### identity of complainants anonymous -- to the 10


### extent that we can. 11 

### Now those are the ways that we get 12 

### our cases, most of the ways. What do we do when 13 

### we get them? We typically issue a letter of 14 

### investigation, an investigation letter. It 15 

### sounds pretty much what you would think. It 16 

### outlines the facts as we know them. It, then, 17 

### will solicit from the respondent additional 18 

### information. It is an informal method, but it 19 

### works very, very well almost all the time. We 20 

### get complete, timely, forthright responses upon 21 

### which we are able to base fairly-sound judgment. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 57



### However, if there are situations, 1 

### when there are situations in which a respondent 2 

### drags its feet, we do have the ability to compel 3 

### production of the information that we need. We 4 

### have the ability to have subpoenas issued and 5 

### information directives in certain conditions. 6 

### When we have the information before 7 

### us, we look to see whether a violation has 8 

### occurred. And if one has occurred, then we have 9 

### to consider penalties. 10 

### We have a range of penalties from 11 

### which to choose, probably the lightest of which 12 

### is the warning letter. It is a private letter 13 

### between our office and a respondent, and it 14 

### essentially says, "Listen, we believe you have 15 

### violated a regulation or statute." For now, we 16 

### recognize that there are certain mitigating 17 

### circumstances here, and we presuppose before we 18 

### send this letter that the carrier or entity is 19 

### already in compliance, but, for now, we are going 20 

### to close our file on the matter. However, we 21 

### reserve the right to resurrect the situation if 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 58



### we see a similar violation in the future. 1 

### On the next step up in terms of our 2 

### penalties, our consent, cease and desist orders, 3 

### which usually levy civil penalties, I will talk 4 

### about those more in a moment. Except, right 5 

### now, I do want to mention the fact that, with fair 6 

### regularity, at least 10 or 15 times in the last 7 

### two decades by my unscientific count, we have 8 

### included as part of our consent orders bans on 9 

### individuals from various aspects of the airline 10 

### industry, in one case a total ban. 11 

### Further up on the level of penalties 12 

### and remedies are suspensions or revocations of 13 

### economic authority. If we see a recidivist, for 14 

### example, or we see a situation where a carrier 15 

### has done something particularly beyond the pale, 16 

### it may be appropriate at that point for our 17 

### office, the Enforcement Office, to refer the 18 

### matter to the Fitness Office to ask them to 19 

### institute a proceeding to modify, suspend, or 20 

### revoke the carrier's economic authority. 21 

### And lastly, we do have the ability 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 59



### to ask for criminal penalties for violations of 1 

### the aviation statutes and regulations. In that 2 

### situation, we would refer the matter generally 3 

### to our Inspector General's shop for further 4 

### follow-up. 5 

### Next slide, please. 6 

### On to our settlement practices and 7 

### more on consent orders, because consent orders 8 

### really are the way by which we settle our cases. 9 

### A few things here. 10 

### Firstly, they are a private 11 

### agreement to start between the Enforcement 12 

### Office and the respondent. They do become 13 

### public. We publish them in our docket, make 14 

### them available. Our Public Affairs Office 15 

### often issues press releases that accompany them. 16 

### We believe consent orders are an efficient tool 17 

### for conserving our resources and those of the 18 

### respondent, but, more importantly, for ensuring 19 

### future compliance. 20 

### Now I mentioned at first that they 21 

### start out as a private agreement. But, under 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 60



### Department regulations, after a certain period 1 

### of time, a consent order becomes under certain 2 

### situations an order of the Department, in which 3 

### case we believe that it has a broader 4 

### applicability. 5 

### Some of the factors that we consider 6 

### when we propose a civil penalty as part of a 7 

### consent order, we are required to consider 8 

### these: the size, the sophistication of a 9 

### carrier, the economic condition of an entity. 10 

### So, if an entity is in financial extremis, that 11 

### would certainly be a mitigating circumstance. 12 

### The idea here is not to put entities 13 

### out of business and reduce competition. We want 14 

### to see free, fair, and open competition that 15 

### benefits consumers. 16 

### We also look at the length of time 17 

### that a violation has occurred, and we look at, 18 

### to the extent that we can, quantifiable consumer 19


### harm. 20 

### And lastly, but not least, we look 21 

### at whether the respondent has cooperated with us 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 61



### throughout the investigation. All of those 1 

### factors come into play. 2 

### Next slide, please. 3 

### Two more points about our consent 4 

### orders and our settlement practices - both of 5 

### which have been misunderstood for years. And 6 

### so, I want to take the opportunity now to clear 7 

### it up a little bit. 8 

### First are our doubling provisions. 9 

### The way a doubling provision works is this: a 10 

### consent order will have an assessed penalty 11 

### amount, let's say $100,000. But it will also 12 

### usually have a paid penalty amount, $50,000 13 

### we'll say. The $50,000 is the amount that our 14 

### office feels is appropriate to be paid under the 15 

### circumstances of the case. 16 

### Now, to ensure future compliance, we 17 

### build in a provision into the consent order that 18 

### says, listen, if you violate the order within a 19 

### given period of time, that $50,000 paid amount 20 

### doubles to $100,000. 21 

### Now, offset provisions, what are 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 62



### those? You will typically find offset 1 

### provisions in our civil rights order. But the 2 

### key concept, the concept that is most often 3 

### misunderstood, is that an offset provision is an 4 

### expenditure that a respondent makes above and 5 

### beyond complying with our regulations. 6 

### So, for example, if a carrier 7 

### expends a certain amount on wheelchairs above 8 

### and beyond what is necessary to comply, under 9 

### certain circumstances it could take that 10 

### expenditure and offset it against the paid 11 

### amount of the penalty in our consent order. 12 

### In essence, it is our way of 13 

### benefitting consumers more directly. That way, 14 

### the funds go directly to their benefits rather 15 

### than to the U.S. Treasury and the General Fund. 16 

### Next slide, please. 17 

### We settle 99 percent of our cases. 18 

### But what happens when we don't? We start a 19 

### formal enforcement action at that point. It 20 

### begins with filing of a complaint with an 21 

### administrative law judge here at DOT, an ALJ. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 63



### And essentially, what transpires 1 

### there is your basic lawsuit. We have an answer 2 

### period. There is a discovery period. It all 3 

### culminates in a hearing before the ALJ. 4 

### Then, we will issue a decision. 5 

### That decision is then appealable to the 6 

### Secretary of Transportation or his or her 7 

### designate. 8 

### We also have the ability to seek 9 

### injunctions, although that is a rare instance. 10 

### Next slide, please. 11 

### Now this is a busy slide, a lot of 12 

### numbers here. And I know, especially those of 13 

### you in the back have no way that you are going 14 

### to be able to see it. That's okay because you 15 

### are going to get a copy of these. It is 16 

### available to all of you publicly. 17 

### But I am going to tell you the two 18 

### important things I want you to take from it. 19 

### Okay? The first of which, the numbers show that 20 

### we are active now like we have never been active 21 

### before. In 2010 and 2011, we set records for 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 64



### total numbers of consent orders issued. Last 1 

### year, we had the second-highest amount of 2 

### assessed civil penalties ever. That is point 3



### one. 4 

### But what about point two? That is 5 

### what you don't see in these numbers. What you 6 

### do not see are the many, many, many hours and many 7 

### things that we do that are aside from enforcement 8 

### that benefit consumers; that bring entities into 9 

### compliance. 10 

### Specifically, we have a wide range 11 

### of outreach activities. In the past several 12 

### years, we have organized disability forums. We 13 

### have organized consumer rights forums. We are 14 

### here today participating, organizing this 15 

### Advisory Committee. It has a public education 16 

### function, an important public interest 17 

### function. 18 

### But it is more than that. We speak. 19 

### We speak at conventions. We speak to consumer 20 

### groups. We speak to airline groups. We speak 21 

### to anyone who wants us to come and speak to them. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 65



### We are always out there wanting to spread the 1 

### word about our regulations and what we do and how 2 

### things can be done right. 3 

### We are also on the phone on a daily 4 

### basis with private attorneys, with consumers who 5 

### call, explaining the way we believe they can 6 

### comply. 7 

### And lastly, what you don't see here 8 

### is the effort, the massive effort, that we put 9 

### into rulemaking. And I think at some point I 10 

### might ask Sam if he can have our office renamed 11 

### to include "rulemaking" in our official title 12 

### because we seem to be doing so much of it. More 13 

### on that in a moment. 14 

### Next slide, please. 15 

### Again, it is a busy slide, a lot of 16 

### numbers here. But when you look at your slide 17 

### packet, you will be able to see several things. 18 

### This just basically breaks down our consent 19 

### orders by category and by amount. 20 

### And what you can see here are 21


### enforcement trends and areas where we have had 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 66



### a particular focus at a given period of time. 1 

### For example, you will see that recently, in the 2 

### last couple of years, we have had a high number 3 

### of advertising-related consent orders and a high 4


### number of what we call other consent orders. 5 

### Those are consent orders involving violations of 6 

### our oversales regulations, our baggage 7 

### liability regulations, our refund regulations, 8


### et cetera. 9 

### Next slide, please. 10 

### Compliance tools. I have mentioned 11 

### the ways, several of the ways, in which we 12 

### monitor compliance. We have people looking at 13 

### websites every day. We send teams into the 14 

### field for onsite compliance inspections. I 15


### have also talked about several of our outreach 16 

### initiatives. 17 

### But rulemaking, that is the big one 18 

### of late. In the past five or six years, we have 19 

### been responding to consumer demand and to 20 

### changes in the airline industry, to really bring 21 

### our regulations up-to-date, to respond to the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 67



### way that things are now. 1 

### Next slide, please. 2 

### We have engaged in several rounds of 3 

### rulemaking, two rounds thus far, and we are well 4 

### along in a third. I am calling each of those 5 

### Consumer I, Consumer II, and Consumer III, and 6 

### the other presenters will refer to them as well 7 

### that way. 8 

### Here are the major provisions that 9 

### came out in Consumer I. Significantly, that was 10 

### the rulemaking that imposed the tarmac-delay 11 

### ban, the prohibition on keeping people out on 12 

### tarmacs for an extended period of time. 13 

### Next slide, please. 14 

### Consumer II, which was promulgated 15 

### last year, and it has gone into effect in phases, 16 

### last August and, then, January. I will let you 17 

### read at your leisure the many things that it 18 

### included, but I will say this is where we 19 

### responded to the unbundling of services and the 20 

### innovative ways in which airlines were 21 

### advertising their fares. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 68



### We had a full-fare rule in place for 1 

### many years, and there had been an exception that 2 

### we had allowed in which certain government taxes 3 

### and fees could be broken out from the advertised 4 

### fare and put in the fine print. That isn't the 5 

### case anymore under Consumer II. 6 

### Furthermore, Consumer II has 7 

### several vital provisions regarding disclosure 8 

### of baggage fees and optional fees. 9 

### Particularly, there are several points in a 10 

### consumer's purchase process where he or she is 11 

### made aware of the amount of baggage fees that may 12 

### be applicable. The next presenter will detail 13 

### that, go into more detail there. 14 

### Next slide, please. 15 

### Consumer Rule III, this is what is 16 

### coming soon to you. We expect an NPRM to be out 17 

### sometime in the fall. I will just read the top 18 

### two things here for you, and I will let you look 19 

### at your slides later on to get the rest. 20 

### One of the considerations is a 21 

### requirement for an enhanced reporting by 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 69



### mainline carrier of code-share operations. A 1 

### second consideration is codifying a statutory 2 

### requirement regarding code-share disclosure. 3 

### And the third, of course, is expanding the flight 4 

### delay and mishandled baggage reporting to 5 

### smaller carriers. Currently, I believe there 6 

### are 18 reporting carriers? Fifteen. And we 7 

### are considering expanding the threshold 8 

### reporting level to include more. 9 

### Next slide. 10 

### Now this is why we are here today. 11 

### Okay? The FAA Reauthorization Act, at long 12 

### last, after many, many extensions, it has 13 

### imposed a half-dozen requirements on the 14 

### Enforcement Office, the most significant of 15 

### which right now is the establishment of an 16 

### Aviation Advisory Committee for Consumer 17 

### Protection. But there are other pieces of it as 18 

### well that we believe may at some point become 19 

### part of a Consumer IV rulemaking. 20 

### Next slide, please. 21 

### Now at this point I believe our 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 70



### agenda calls for a 15-minute break. So, I will 1 

### leave the stage now, and I will be succeeded by 2 

### Barbara Marrin, who will discuss in detail the 3 

### regulations and statutes that the Enforcement 4 

### Office enforces. 5 

### Thank you. 6 

### MEMBER LEOCHA: May I ask you a 7 

### question? 8


### MR. DOLS: Yes. 9 

### MEMBER LEOCHA: On your last slide, 10 

### you said that the FAA Reauthorization Act came 11 

### up with these things. Do each of those have to 12 

### be handled by rulemakings? 13 

### MR. DOLS: No. I mean, the 14 

### establishment of an Advisory Committee, 15 

### correct, Sam? 16 

### MR. PODBERESKY: Let me give you an 17 

### example. Most of them do require rulemaking at 18 

### some point. For example, the tarmac-delay 19 

### contingency plan requirement requires airports 20 

### and airlines to submit tarmac-delay contingency 21 

### plans to the Department for approval. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 71



### We are in the process right now 1 

### of -- I am happy to report, I think at the current 2 

### time every airport that is required to comply and 3 

### every airline except one has filed tarmac-delay 4 

### contingency plans with us, and we are well along 5 

### in the approval process. 6 

### However, all we can really require 7 

### of those plans before we approve them is what is 8 

### already in existence in the regulation or what 9 

### is in existence in the statute. We can't go 10 

### beyond that unless we issue rules saying what has 11 

### to be in those plans beyond what is stated in the 12 

### regulation or the statute. 13 

### With respect to, for example, the 14 

### toll-free hotline, if we ever have the money to 15 

### really have a toll-free hotline office within 16 

### our office, which will cost millions of dollars 17 

### for us to have people and staff to answer 18 

### consumer calls, if we have the money to fund that 19 

### office, what would be required would be some kind 20 

### of a rule requiring airlines to provide that 21 

### information, post signage in airports, as to who 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 72



### and where to call. 1 

### So, the answer is some of the things 2 

### can be accomplished just because they are in the 3 

### statute and by us giving guidance about how to 4 

### go about doing it, like filing tarmac-delay 5 

### contingency plans with us, and letting carriers 6 

### know where there are requirements regarding this 7 

### dis-insectification or the insecticide use 8 

### onboard airlines, where that exists on our 9 

### website, so that they can comply with the statute 10 

### which requires airlines and agents to provide 11 

### that information to consumers. Other things, 12 

### more detailed implementation of the statutory 13 

### provisions are going to require rulemaking. 14 

### MEMBER LEOCHA: Okay. So, I guess 15 

### my question is, just because a law is passed, 16 

### like the 800-number hotline, it doesn't really 17 

### come into effect until someone says, "Okay. 18 

### Here's the money to pay for it." And I think it 19 

### had some relatively-specific requirements to 20 

### put the number on all of the airline counters, 21 

### and so on, so people knew what was going on. And 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 73



### all that has to wait, that part has to wait for 1 

### a rulemaking or for money, is that it? 2 

### MR. PODBERESKY: Yes, we would have 3 

### to issue a rule telling carriers that, "Here's 4 

### our 800-number for consumer complaints. Here, 5 

### you have got to post it on signage, and the 6 

### signage has got to be this size and it has got 7 

### to be in these locations," et cetera, et cetera. 8 

### While it sounds easy to issue a rule 9 

### saying that, but once somebody puts an 10 

### 800-number up, there has got to be somebody to 11 

### answer the phone. There isn't going to be 12 

### anybody answering the phone unless we get 13 

### millions of dollars. Our estimates are that it 14 

### probably is going to take 100 people to man that 15 

### kind of a system, just based on our talking to 16 

### airlines and the FTC about similar kinds of 17 

### hotline complaint systems. 18 

### MEMBER LEOCHA: Is it within our 19 

### purview, I guess as a Committee, to make 20 

### recommendations on that? Because one of my 21 

### problems with the 800-number is that it is so 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 74



### 20th century. I mean, with all of us with cell 1 

### phones today, nobody has to run over to an 2 

### 800-number. We are not limited to punching into 3 

### the pay phone. 4 

### But if you move forward on a 5 

### rulemaking for that, to bring it out, instead of 6 

### making it only DOT, to encourage 800-numbers for 7 

### airlines who can actually respond in real-time 8 

### to passenger problems, perhaps set up of 9 

### electronic communications between like Facebook 10 

### or Twitter or Tumblr, emails, and so on? Is that 11 

### something which we could suggest go into a 12 

### rulemaking as a Committee? 13 

### MR. PODBERESKY: I think it is 14 

### within the purview of the Committee to make those 15 

### kinds of recommendations -- 16 

### MEMBER LEOCHA: Okay. Thank you. 17 

### MR. PODBERESKY: -- if they think it 18 

### is in the best interest of the public. 19 

### MS. WORKIE: Charlie, if I could 20 

### just add, the FAA modernization already requires 21 

### the airlines to respond to complaints by 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 75



### telephone. 1 

### And with respect to the toll-free 2 

### hotline, as Sam said, the specifics on the 3 

### signage, and so forth, would need to be addressed 4 

### with rulemaking. But if Congress were to fund 5 

### a hotline, then we could provide guidance to the 6 

### airlines to simply comply with the general 7 

### standards that already exist in the statute. 8 

### The rulemaking is only for more detailed 9 

### requirements on how to comply. 10 

### MEMBER LEOCHA: I understand, and 11 

### that will be good. It is just that I don't know 12 

### if anybody has tried to get the customer service 13 

### number from an airline. It is like pulling 14 

### teeth. They want to know, "Why do you want it? 15 

### Who do you want to...?" You know, you go through 16 

### three or four levels, and then, finally, they 17 

### will come up with it. 18 

### So, I am just looking at this as 19 

### something which we can, under that aegis, 20 

### because we have the opening now from Congress to 21 

### allow us to give consumers better access to their 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 76



### airlines. That is what I am looking for. 1


### MR. PODBERESKY: For those who 2 

### didn't recognize the voice of the person, this 3 

### is Blane Workie. She is the Principal Deputy in 4 

### my office. She will be chirping in to correct 5 

### me and to add information that is necessary. 6 

### Again, Charlie, there are various 7 

### issues. I think the Committee should think 8 

### about, you know, we have had issues with things; 9 

### for example, with things like Twitter and 10 

### Facebook. Some carriers accept complaints on 11 

### those, through those entities; some carriers 12


### don't. 13 

### There are privacy issues associated 14 

### with filing complaints that way that may or may 15 

### not be in the interest of the public to do. 16 

### There are also, using systems like that where you 17 

### are limited to 140 characters or telephone 18 

### systems to file complaints, there are always 19 

### questions about what really was the complaint; 20 

### what really was the response; what really was the 21 

### resolution. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 77



### If it is in writing, you have a 1 

### record and you know what has been done. And that 2 

### is why, as Blane said, our rule requires written 3 

### responses to written complaints, and it does 4 

### require airlines to respond in that way. But 5 

### those are all things the Committee should 6 

### consider in deciding upon recommendations. 7 

### CHAIRPERSON MADIGAN: All right. 8 

### Let's adjourn until 10:30. 9 

### (Whereupon, the foregoing matter 10 

### went off the record at 10:13 a.m. and went back 11 

### on the record at 10:28 a.m.) 12 

### MR. PODBERESKY: If everybody can 13 

### take their seats, we are going to move on. 14 

### We were advised that there was one 15 

### presenter who didn't get signed up, probably 16 

### because of some miscommunications. So, we are 17 

### going to try to squeeze him in after we finish 18 

### my office's presentations this morning. 19 

### Hopefully, we will be able to get that done 20 

### before noon. I think we will. 21 

### He is not on the agenda. His name 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 78



### is Paul Hudson with the Aviation Consumer Action 1 

### Project. I will let him say who he is 2 

### representing here. I don't see him in the room 3 

### now, but it won't be until later when he has his 4 

### opportunity to speak. 5 

### With that, I am going to turn it over 6 

### to Barbara Marrin, Senior Attorney on my staff, 7 

### who will continue with our presentation. 8 

### MS. MARRIN: Good morning. 9 

### As Sam said, I am Barbara Marrin. I 10 

### am a Senior Attorney in the Office of Aviation 11 

### Enforcement and Proceedings. 12 

### Before we begin, I am going to 13 

### apologize. I have a little bit of a throat thing 14 

### going on. So, I may lose my voice and have to 15 

### pause for some water. 16 

### But I am in charge of presenting our 17 

### current regulations substantively to you in the 18 

### area of consumer protection. I am going to sort 19 

### of build off of what Jonathan started at the end 20 

### of his presentation when he briefly introduced 21 

### Consumer I and Consumer II to you. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 79



### So, my presentation is going to 1 

### focus on our existing regulations with a 2 

### particular focus on the new rules and new changes 3 

### that went into effect as part of Consumer I and 4


### Consumer II. 5 

### However, we are going to begin with 6 

### what we call the keystone provision. It is the 7 

### statute that pretty much all of our rules come 8 

### from, and it is the authority that we have to make 9 

### rules. That is 49 USC Section 41712. 10 

### This broadly prohibits unfair and 11 

### deceptive practices and unfair methods of 12 

### competition. This statute is broadly written. 13 

### It does mirror similar consumer protection 14 

### statutes with the FTC in its language, but it 15 

### does pretty much give the authority to the 16 

### Secretary to investigate and decide unfair 17 

### methods of competition and unfair and deceptive 18 

### practices. As you can see by this list, it is 19 

### the basis for pretty much all the consumer rules 20 

### that I am going to be discussing. 21 

### So, I am going to begin with 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 80



### advertising. There are many components to our 1 

### advertising rules. I am going to start with 2 

### probably the biggest component to our 3 

### advertising rules, which is our full-fare rule. 4 

### Bob touched on it earlier, and I am going to sort 5 

### of elaborate on it now. 6 

### As a part of Consumer II that went 7 

### into effect January 26th, 2012, the new 14 CFR 8 

### 399.84(a) changed the Enforcement Office's 9 

### enforcement policy regarding full-fare 10 

### disclosure. So, now when a seller of air 11 

### transportation -- this rule covers travel agents 12 

### as well as air carriers -- presents a price for 13 

### air transportation, the price must include all 14 

### mandatory fees and taxes. So that, basically, 15 

### everything a consumer has to pay to get on that 16 

### plane has to be included in that advertised 17 

### price. 18 

### And as you can see, there are some 19 

### other components of full fare, such as if there 20 

### are restrictions to a fare and a banner 21 

### advertisement or a newspaper ad, those 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 81



### restrictions must be disclosed, such as a 1 

### blackout period or a limited availability of 2


### seats. 3 

### So, my next slide is just sort of an 4 

### illustrative slide of what the full-fare change 5 

### meant for consumers. The first example on the 6 

### left is what it used to be, which is the base 7 

### fare. The 829 is the base fare. And then, that 8 

### plus sign typically was a hyperlink that would 9 

### take the consumer to a pop-up or another web page 10 

### which would detail that government taxes and 11 

### fees apply and it would detail the amount of 12 

### those taxes and fees. That is no longer 13


### allowed. 14 

### On the left is a better example of 15 

### what is allowed now under our full-fare 16 

### advertising policy. The most prominent price 17 

### is the full fare, which in this example is $958. 18 

### And then, the components of that full fare, the 19 

### government taxes and the base fare, are below it. 20 

### As Bob mentioned in his 21 

### presentation, carriers, even though they have to 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 82



### have the full fare be the most prominent, they 1 

### still can disclose to consumers government taxes 2 

### and fees, charges, and things of that nature, in 3 

### a descriptive way, an accurate and descriptive 4 

### way. But our goal is that consumers know what 5 

### they are paying for air transportation, and that 6 

### is why we have the new full-fare rule. 7 

### Another new part of full fare, which 8 

### is 14 CFR 399.84(b), went into effect January 9 

### 26th as part of Consumer II. It codified 10 

### longstanding Enforcement Office policy 11 

### regarding the advertisement of air 12 

### transportation that had a roundtrip purchase 13 

### requirement. 14 

### So now, if an airfare advertisement 15 

### is advertised and there is a roundtrip purchase 16 

### requirement, that price to be paid must be 17 

### labeled as each way, and the roundtrip purchase 18 

### requirement must be clear and conspicuous. 19 

### And then, the third component that 20 

### Consumer II added was a prohibition against 21 

### opt-out provisions. This is 14 CFR 399.84(c). 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 83



### This came about because often times 1 

### carriers and other sellers of air 2 

### transportation, such as tour operators, were 3 

### preselecting and adding on certain ancillary 4 

### services to the price of someone's air 5 

### transportation. These ancillary services 6 

### ranged from travel insurance to car rentals, to 7 

### extra leg room, to seat assignments. 8 

### And oftentimes, travelers were 9 

### unaware that this was being automatically added 10 

### into their cost of air transportation. 399.84(c) 11 

### prohibits it being added in, but it still allows 12 

### carriers to offer these services on an opt-in 13 

### basis, so that consumers must actually 14 

### affirmatively say that they want these ancillary 15 

### services. 16 

### Another aspect of advertising is 17 

### pre-licensing sales. This goes into what 18 

### Jonathan was talking about in relation to 19 

### economic authority and safety authority. An 20 

### applicant for an authority cannot advertise the 21 

### schedules or accept reservations before their 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 84



### authority has been actually approved. 1


### MEMBER LEOCHA: Can we have 2 

### questions afterwards? 3 

### MS. MARRIN: Yes, after all three of 4 

### our presentations, we are going to have a 5 

### question-and-answer session. 6 

### MEMBER LEOCHA: Okay. 7


### MS. MARRIN: Another element of 8 

### advertising is our unrealistic scheduling 9 

### rules. Basically, this touches on Consumer I, 10 

### which basically prohibited chronically-delayed 11 

### flights, and we have advertising regulations 12 

### related to chronically-delayed flights. 13 

### One thing I do want to touch on that 14 

### Consumer Rule I did was regarding on-time 15 

### performance disclosure in internet advertising. 16 

### The new section 234.11, which went into effect 17 

### under Consumer Rule I, April 29th, 2010, 18 

### requires carriers now, reporting carriers, 19 

### which is important -- Norm is going to talk more 20 

### about what reporting carriers are, but there are 21 

### 15 reporting carriers now. They now on their 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 85



### website flight displays must disclose on-time 1 

### performance, and they have to do this in three 2


### ways. 3 

### First, they have to disclose the 4 

### percentage of flights that are on time. That is 5 

### defined as the percentage of flights that arrive 6 

### within 15 minutes of the scheduled arrival time. 7 

### They have to disclose percentage of flights that 8 

### are more than 30 minutes late. And then, they 9 

### have to disclose the percentage of flights that 10 

### are cancelled if that number is more than 5 11 

### percent of the flights. 12 

### Now this has to be disclosed on 13 

### website displays. And the method that carriers 14 

### do disclose this is they will, in response to a 15 

### search initiated by a consumer, they will have 16 

### the list of flight options. And those flights 17 

### will either be a hyperlink or underneath the 18 

### flight listing they will say something like 19 

### "flight information" or "on-time information". 20 

### And the consumer will click on it, and a pop-up 21 

### will come up that has that on-time performance 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 86



### disclosure. 1 

### And we do, as an Enforcement Office, 2 

### have a team that checks every month to make sure 3 

### that the on-time performance disclosures are 4 

### updated appropriately with the appropriate 5 

### month's information. 6 

### And then, another aspect of our 7 

### advertising, which also goes into disclosure to 8 

### consumers, is code-share disclosure. 9 

### Code-share operations are those operations 10 

### where a marketing carrier will sell a flight that 11 

### is actually operated by a different carrier. 12 

### Congress passed 49 USC 41712(c), 13 

### which basically says that, on a website, 14 

### following a search initiated by a consumer, in 15 

### a format that is easily visible to the viewer, 16 

### this code-share operation must be disclosed. 17 

### Something that is important to note is that it 18 

### has to be disclosed, not just the name of the 19 

### operating carrier, but also if that operating 20 

### carrier is acting under a business name, such as 21 

### an Express or Connection Partner, that name 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 87



### needs to be disclosed to consumers as well. 1 

### So, moving away from advertising and 2 

### disclosure, I am going to briefly talk about our 3 

### refund rules and regulations. It is important 4 

### to note that the DOT does have the responsibility 5 

### to enforce U.S. and foreign air carrier 6 

### compliance with all the credit protections as 7 

### passed by Congress. And there are two methods 8 

### we do this. 9 

### The first is that a credit to a 10 

### credit card charge, the airline or seller of air 11 

### transportation must submit within seven 12 

### business days after receiving a complete ticket 13 

### refund application to the credit card company. 14


### Refunds for cash and check sales must be made 15 

### within 20 days. That 20 days is something new 16 

### that we put in Consumer Rule II, 14 CFR 259.5. 17 

### I am going to move on to another 18 

### large area of regulation for us and an area that 19 

### the office views as very important to consumer 20 

### protection, and that is our oversales 21 

### regulation, which is 14 CFR Part 250, commonly 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 88



### referred to as bumping or involuntarily-denied 1 

### boarding. 2 

### And this regulation governs the 3 

### practice of air carriers to sell tickets on a 4 

### flight to offset no-shows, and then sometimes 5 

### they will have to bump passengers because the 6 

### flight is oversold. 7 

### Just a few important things I would 8 

### like to point out about this. The first is 9 

### Consumer II amended this section pretty heavily. 10 

### The main amendment I am going to talk about on 11 

### the next slide, which is it increased 12 

### compensation amounts. But I do want to point 13 

### out some things on this slide. 14 

### First, airlines must seek 15 

### volunteers willing to give up their reservation 16 

### in exchange. In your Air Travel Consumer 17 

### Reports, oversales is something that carriers 18 

### have to report. You will see the statistics on 19 

### involuntarily-denied/bumping and volunteers. 20 

### Additionally, something new that 21 

### Consumer II instituted was that, to the extent 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 89



### that someone is involuntarily denied boarding, 1 

### and on their subsequent flight they are unable 2 

### to use ancillary services that they purchased, 3 

### such as early boarding or a premium seat or an 4 

### extra leg-room seat, a carrier must refund those 5 

### fees for all unused ancillary services. 6 

### So, on the next slide, I just have 7 

### a quick chart of the compensation levels. 8 

### Consumer II provided that the DBCs [Denied 9 

### Boarding Compensations] be adjusted 10 

### biennially based on the CPI [Consumer Price 11 

### Index]. And the first chart here is a 12 

### compensation chart for domestic flights. 13 

### So, there are two components 14 

### carriers look at when compensating consumers for 15 

### being involuntarily denied boarding. The first 16 

### thing they look at is how long the delay will be 17 

### for that bumped passenger. And then, if it is 18 

### zero to one hour, no compensation under our rule. 19 

### One to two hours, 200 percent of one-way fare, 20 

### but no more than $650. And if it is over two 21 

### hours, 400 percent of the one-way fare, but no 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 90



### more than $1,300. 1 

### The next slide shows the 2 

### compensation for international flights. As you 3 

### can see, the compensation levels are the same, 4 

### but what has changed is the arrival delay. 5 

### Instead of one to two hours, it is one to four 6


### hours and over four hours. 7 

### I am going to move on to another 8 

### important piece which Jonathan did mention, and 9 

### that is baggage liability limits. In addition 10 

### in 2011 code-share disclosure and baggage 11 

### liability limits, and other consent order 12 

### category, baggage liability violations and 13 

### code-share disclosure violations made up a large 14 

### part of that 24 number for consent orders issued 15 

### last year. 16 

### There are two regimes for baggage 17 

### liability reimbursement for passengers whose 18 

### baggage is damaged, lost, or delayed. The first 19 

### is for domestic transportation. And that limit 20 

### may not be less than $3,300 per passenger. 21 

### Just to point out something, the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 91



### limit for assistive devices is the original 1 

### purchase price with no $3,300 limit. And my 2 

### colleague, Kathleen Riether, will be talking 3 

### more about our disability regulation after me. 4 

### And then, the international 5 

### transportation has a different regime. And 6 

### that is under the Montreal Convention. The 7 

### liability and limit is 1,131 special drawing 8 

### rights. Special drawing rights is a currency 9 

### basket that the IMF [International Monetary 10 

### Fund] has. Currently, as of two days ago, it 11 

### equaled $1.51 in U.S. dollars. And so, that is 12 

### usually about $1,600 to $1,700 U.S. dollars. 13 

### A big difference between these two 14 

### is that, for international transportation under 15 

### the Montreal Convention, a carrier cannot 16 

### exclude from liability any special class of 17 

### checked items, such as a valuable electronic 18 

### item or jewelry; whereas, under domestic 19 

### transportation, they could. 20 

### And still talking about baggage and 21 

### baggage fees, under Consumer II, we instituted 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 92



### a regime of baggage fee disclosure. As Jonathan 1 

### said, Consumer II is really our answer to the 2 

### unbundling of fees and how consumers can readily 3 

### access this information, so they can understand 4 

### the total price to be paid for air travel before 5 

### they even purchase their air travel. 6 

### So, it has five sections. The first 7 

### bullet is 399.85(a), which basically means, when 8 

### a carrier changes their bag fees, they have to 9 

### have notice of that change on their home page and 10 

### it needs to be a descriptive link such as 11 

### "changed bag fees," and that link must take the 12 

### consumer to a page that details the change. 13 

### 399.85(b) deals with baggage fee 14 

### disclosure in response to a consumer search 15 

### itinerary. So, say you want to fly from D.C. to 16 

### Tampa and you enter in that search itinerary. 17 

### When the seller of air transportation comes back 18 

### with a fare matrix, at the top it needs to say 19 

### "Baggage fees may apply," and it needs to be a 20 

### link to take the consumer to tell them their 21 

### baggage fees. It is important to note that 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 93



### 399.85(b) does apply to travel agents as well as 1 

### air carriers. 2 

### 399.85(c), which is the third bullet 3 

### on the right side of the screen, is on e-ticket 4 

### confirmations. Sellers of air transportation 5 

### must include information about applicable 6 

### baggage fees. So, this is a summary page that 7 

### gets emailed to you at the end of an online 8 

### purchase. It needs to have enough information 9 

### so that the consumer can understand what they are 10 

### going to be paying for their baggage fees, and 11 

### it should be taking into account special 12 

### circumstances such as frequent flyers or the 13 

### type of itinerary the person is flying on. 14 

### 399.85(d), which is the second 15 

### bullet that is on the right side of the screen, 16 

### deals with all other fees from unaccompanied 17 

### minors to seat selections. And carriers must 18 

### have a page that just lists all these fees, easy 19 

### for the consumer to find with a link from the home 20 

### page that has a descriptive link such as 21 

### "optional fees" or "fees for our services," or 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 94



### something like that. 1 

### So, a consumer can just say, you 2 

### know, "I want to take my pet in cabin." Click, 3 

### there's the fee. So, they can find it fairly 4 

### easily. 5 

### And then, the final section of 6 

### 399.85 is 399.85(e), which requires carriers to 7 

### disclose on its websites differences between its 8 

### optional services and fees and that of its 9 

### code-share partners. 10 

### 399.87 is a new section under 11 

### Consumer II. The goal of this section is that 12 

### consumers are not surprised by changed or 13 

### different baggage fees or allowances 14 

### mid-itinerary, especially in code-share and 15 

### interline itineraries. 16 

### I think it is important to note, sort 17 

### of taking a break, this is not about a particular 18 

### rule, but all the rules I am talking about 19 

### oftentimes have a component of notice for 20 

### consumers. So, in one way or another, sometimes 21 

### on e-ticket confirmations, sometimes at the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 95



### airport, these notices have to be given to 1


### passengers. 2 

### One of the most important is the 3 

### oversales notice. Under Part 250, we actually 4 

### have the language of the oversales notice that 5 

### carriers have to give passengers who are 6 

### involuntarily denied boarding, so that they 7 

### understand their rights in a denied-boarding 8 

### situation. 9 

### Part 253 governs the U.S. domestic 10 

### contracts of carriage and what disclosures must 11 

### be in those and on tickets and e-tickets. As you 12 

### can see, a lot of the disclosure is in general 13 

### terms in terms of contract terms incorporated by 14 

### reference and the liability limits and claim 15 

### restrictions. 16 

### And this slide also deals more with 17 

### the notices, but there is one thing I wanted to 18 

### point out that Consumer Rule II did, and that is 19 

### it has a form restriction that now U.S. carriers 20 

### for U.S. domestic transportation cannot limit a 21 

### passenger from bringing a claim against a 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 96



### carrier in any court of competent jurisdiction, 1 

### including a court within the jurisdiction that 2 

### is the passenger's residence in the United 3


### States. 4


### Another element of consumer 5 

### protection that this office is in charge of 6 

### enforcing and implementing is the family 7 

### assistance after aviation disasters. These are 8 

### two statutes that Congress passed in the 1990s, 9 

### in response to a series of high-profile airline 10 

### accidents where Congress and the public felt 11 

### that the families of the victims were not treated 12 

### properly. So now, carriers have to have these 13 

### plans which you see include establishing a 14 

### toll-free number and assisting family members in 15 

### traveling to the accident location. And they 16 

### have to file these plans with the DOT and the 17 

### National Transportation Safety Board [NTSB]. 18 

### So, now I am going to move on to 19 

### probably one of the biggest changes that we have 20 

### had recently. That is our new so-called 21 

### tarmac-delay rule. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 97



### Part 259 is a bigger section than 1 

### just tarmac delays. It is enhancing airline 2 

### passenger protections. And I am going to be 3 

### talking about other sections. But it is 4 

### commonly referred to as the tarmac-delay rule. 5 

### But the tarmac-delay section is actually 259.4. 6 

### Consumer Rule I applied a three-hour 7 

### time limit for the deplanement of passengers on 8 

### a domestic flight at a large or medium hub 9 

### airport. And this went into effect April 29th, 10 

### 2010. In addition to providing assurances that 11 

### carriers will deplane passengers, carriers also 12 

### provide assurances that they will serve adequate 13 

### food and potable water after two hours after the 14 

### aircraft door is closed. Additionally, the 15 

### carrier has to provide assurances that they will 16 

### provide operable laboratories and adequate 17 

### medical assistance. 18 

### As Bob said in his presentation, 19 

### since the rule has gone into effect, we have had 20 

### one carrier fined. That was the American Eagle 21 

### case. And the Aviation Enforcement Office has 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 98



### investigated nearly 300 separate alleged 1 

### tarmac-delay incidents. 2 

### Now I just wanted to do a quick note 3 

### of where we get information about these alleged 4 

### tarmac-delay incidents. Probably the No. 1 5 

### source we get is from the carriers themselves and 6 

### the reporting that they are required to do. 7 

### Every month it is published in the Air Travel 8 

### Consumer Report [ATCR]. And those ATCR delays 9 

### do get a lot of attention in our investigation. 10 

### However, we also get consumer 11 

### complaints about when they are stuck on the 12 

### tarmac. To the extent that they allege a delay 13 

### that would fall under the tarmac-delay rule, we 14 

### investigate those complaints. We request the 15 

### information from the carriers. 16 

### And then, a third way is we also hear 17 

### about it through media incidents. You go to bed 18 

### one night, and then you wake up and there was a 19 

### Twitter explosion of some diverted flight that 20 

### happened overnight. And we will take a look and 21 

### see if there are any merits to those types of 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 99



### incidents as well. 1 

### Continuing on with tarmac delays, 2 

### Consumer II extended the applicability of the 3 

### tarmac-delay rule in a few areas. The first 4 

### thing it did is it extended the provisions to 5 

### non-U.S. carriers. It also established a time 6 

### limit for international flights. 7 

### Under Consumer Rule I, the rule 8 

### allowed domestic carriers to set their own time 9 

### limit for international flights. After a 10 

### series of some high-profile events, and also 11 

### taking a look at the U.S. carriers' plans, the 12 

### office determined that a four-hour time limit 13 

### for international flights was appropriate. 14 

### Additionally, Consumer II extended 15 

### the plan beyond large and medium hub airports to 16 

### small and non-hub airports. So, basically, all 17 

### U.S. airports are now covered by this rule. 18 

### Additionally, Consumer II has 19 

### notification triggers, so that passengers 20 

### understand what is going on the plane when they 21 

### are in the middle of one of these delays. This 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 100



### came from many passenger complaints we received 1 

### where they would be on a large plane , say a 747 2 

### with over 350 passengers, and they didn't know 3 

### the door was open and they had the opportunity 4 

### to get off the plane. So now, if the opportunity 5 

### to deplane actually exists, an announcement has 6 

### to be made to the passengers. 7 

### In addition to the extensions that 8 

### Consumer Rule II made, the FAA Reauthorization 9 

### Act signed by President Obama on February 14th 10 

### extended the tarmac-delay rule even a little 11 

### further. So now, an air carrier's plans must 12 

### also cover assurances that they will ensure a 13 

### comfortable cabin temperature during these 14 

### flights, and, also, that they will make a 15 

### commitment to share gates and facilities in the 16 

### event of an emergency. 17 

### And something new for our office was 18 

### that the FAA reauthorization bill also requires 19 

### large, medium, small, and non-hub airports to 20 

### develop contingency plans and to submit those 21 

### plans with the DOT. The airport contingency 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 101



### plans must have three parts. 1 

### The first is assist in the deplaning 2 

### of passengers. The second, similar to air 3 

### carriers, is sharing facilities and gates in the 4 

### event of an emergency. And the third is, to the 5 

### extent practicable, providing sterile areas for 6 

### Customs for international flight deplanement. 7 

### So, as I said, there are many parts 8 

### of 259, which is our main passenger protection 9 

### regulation. One of those parts is the 10 

### establishment of customer service plans. 11 

### Consumer Rule I required U.S. 12 

### carriers to establish customer service plans. 13 

### Consumer Rule II extended that requirement to 14 

### non-U.S. carriers and also established minimum 15 

### standards in the 12 areas of the customer service 16 

### plans. So, I am going to talk about each area. 17 

### The first is carriers must disclose 18 

### that a lower fare may be available elsewhere. 19 

### It is pretty self-explanatory. 20 

### The second thing is that carriers 21 

### now must notify consumers of known delays, in 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 102



### accordance with 14 CFR 259.8. 259.8 is our 1 

### flight-status change rule, and it is intended to 2 

### help consumers plan their travel closer to the 3 

### date of their travel, so within seven days of 4 

### their travel. 5 

### And if there is a delay or 6 

### cancellation that is known to the air carrier, 7 

### consumers must be notified in a variety of ways 8 

### within 30 minutes of the carrier becoming aware 9 

### of the delay. The ways that they must be 10 

### notified are airport signage and gate boards 11 

### that they control. Their websites must be 12 

### updated. And to the extent that they offer a 13 

### service of telephone, text, or email 14 

### notification, and the consumer subscribes to 15 

### that service, they must adhere to that. 16 

### I have to say I was a beneficiary of 17 

### this rule. I was flying out of LaGuardia last 18 

### Friday. There were a lot of storms rolling 19 

### through. I got text messages when my flight was 20 

### changed, and it was very helpful to me as a 21 

### consumer last Friday. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 103



### No. 3 is to make reasonable efforts 1 

### to return mishandled baggage within 24 hours. 2 

### This includes an assurance to adhere to the 3 

### baggage liability rules, but it also requires 4 

### carriers to reimburse passengers for any fee 5 

### charged to transport a bag if that bag is lost. 6 

### No. 4 is a new section that actually 7 

### went into effect a little bit later than the rest 8 

### of these. No. 4 went into effect in January. 9 

### And that is, carriers must allow reservations to 10 

### be held at the quoted fare without payment or 11 

### cancelled without penalty for at least 24 hours 12 

### after the reservation is made. This provision 13 

### allows the carriers to choose, how they want to 14 

### comply. They can allow the reservations to be 15 

### held or cancelled, but they don't have to do 16


### both. 17 

### No. 5 is refunds, which I covered, 18 

### just following the rules relating to refunds for 19 

### credit, and then, within 20 days, for cash or 20 

### check purchases. 21 

### No. 6 is properly accommodate 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 104



### passengers with disabilities. My colleague 1 

### will talk more about that very comprehensive 2 

### regulation next. 3 

### No. 7 is meet customers' essential 4 

### needs in the event of a lengthy tarmac delay. I 5 

### already covered the requirements of that. 6 

### No. 8 is handling bumped passengers 7 

### with fairness and consistency in accordance with 8 

### 14 CFR Part 250. 9 

### No. 9 is a disclosure requirement 10 

### for several things, cancellation policies, 11 

### frequency flyer rules, seating configuration, 12 

### and lavatory availability. 13 

### No. 10 is to notify consumers in a 14 

### timely manner of travel itinerary changes. 15 

### This is intended for itinerary changes that 16 

### occur prior to flight, more than seven days. 17 

### Oftentimes, you will buy a few months in advance, 18 

### and sometimes the carriers will change the 19 

### schedule. The carriers should notify. 20 

### I was the beneficiary of this when 21 

### I was on my honeymoon last year. My flights were 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 105



### changed. It shorted a connection. So, I was 1 

### able to change my flight to make sure I had enough 2 

### connection time when I was coming back from my 3 

### honeymoon. 4 

### So, No. 11 is to ensure 5 

### responsiveness to consumer problems, as 6 

### required by 259.7, which I will talk about on the 7 

### next slide. 8 

### And then, No. 12 is to identify 9 

### services it provides to mitigate passenger 10 

### inconveniences resulting from flight 11 

### cancellations and missed connections. 12 

### Now 14 CFR 259.6 is a disclosure 13 

### requirement. Carriers must post these customer 14 

### service plans, their contracts of carriage, and 15 

### their tarmac-delay contingency plans on their 16 

### websites. 17 

### 259.7 is our rule governing response 18 

### to consumer problems. As you can see from the 19 

### slide, it has three main components. 20 

### The first is the carrier must 21 

### designate an employee to monitor the effects of 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 106



### irregular flights on consumers. 1 

### The second is that the carrier must 2 

### inform consumers how to complain. And in 3 

### Consumer II, we detailed what that means. It 4 

### means having a place on your web page that has 5 

### a website address and mailing address for 6 

### consumers to file complaints. To the extent 7 

### that a carrier maintains a Twitter or Facebook 8 

### page, and they don't accept complaints through 9 

### those pages, those pages must have information 10 

### on how a consumer can file a written complaint. 11 

### And it requires carriers to respond 12 

### to written complaints by acknowledging their 13 

### receipt of the complaint within 30 days and 14 

### substantively responding within 60. 15 

### And so, then, finally, I am going to 16 

### talk about our prohibition against 17 

### post-purchase price increases. 14 CFR 399.88, 18 

### which is the text that is on the left side of this 19 

### slide, deals with when a consumer has paid the 20 

### full amount for air transportation, a carrier 21 

### and/or a seller of air transportation cannot 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 107



### increase the price of that ticket except in the 1 

### limited circumstance of an increase in 2 

### government taxes or fees. 3 

### In Consumer II, the proposed rule 4 

### actually prohibited all types of increases. 5 

### But, in response to comments received, we 6 

### realized that there is a very limited case when 7 

### government-imposed taxes and fees can increase. 8 

### And so, in response to those consumers, we 9 

### modified our proposed text to include that 10 

### limited exception. 11 

### 399.89, which is on the right side 12 

### of the screen, deals with mainly consumers who 13 

### purchase air transportation as part of a tour 14 

### package or a component of an air tour. In that 15 

### case, a lot of consumers will pay a deposit for 16 

### this package, and the tour operator will accept 17 

### the deposit. This prohibits a seller from 18 

### raising the price unless it receives written 19 

### consent from the passenger acknowledging the 20 

### potential for an increase and accepting that 21 

### increase before the seller of air transportation 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 108



### accepts the deposit. 1 

### So, that is just our brief overview 2 

### of the consumer protections we have and some of 3 

### the substance behind them. I will turn it over 4 

### to my colleague Kathleen now. 5 

### CHAIRPERSON MADIGAN: Why don't we 6 

### let Charlie ask some questions at this point, or 7 

### anybody else? 8 

### MEMBER LEOCHA: We just heard an 9 

### awful lot, and I have got a 6-inch binder filled 10 

### with what we just went over in a few minutes. 11 

### I think that part of our charter as 12 

### a Committee is to look at the current enforcement 13 

### actions and the current rules and regulations 14 

### and comment on whether we think that they are 15 

### being enforced, you know, well enforced or not. 16 

### Is this something we are going to sort of look 17 

### at and question today as we move through this? 18 

### Or is this something that you want to move and 19 

### deal with in another meeting? Because I have 20 

### just got a whole series of questions which we 21 

### glossed over everything, and with every one of 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 109



### these points there are consumer issues involved 1 

### which either are being handled or not handled. 2 

### CHAIRPERSON MADIGAN: So, I think 3 

### all of this is obviously open to us to decide -- 4 

### MEMBER LEOCHA: Right. 5


### CHAIRPERSON MADIGAN: -- how we 6 

### want to respond. If you have substantive 7 

### questions that aren't going to completely throw 8 

### us off our schedule, I think this is a good time 9 

### to start asking some of those. 10 

### MEMBER LEOCHA: Okay. I will just 11 

### put these out in terms of general thoughts. We 12 

### don't have to answer them right now. 13 

### But in terms of enforcement of your 14 

### full-fare advertising rule, I don't think that 15 

### DOT has put in any kind of an IT system to scour 16 

### the internet to see who is breaking the law and 17 

### who is not breaking the law. As I understand it, 18 

### DOT is looking at the major airlines and what 19 

### they have on their websites, and then reacting 20 

### to that and working their way through the system. 21 

### I just didn't know if you were exploring using 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 110



### some sort of a system to scour web advertising 1 

### to find out who might be following the rules and 2


### where the scofflaws are. 3 

### MR. PODBERESKY: We clearly monitor 4 

### all the larger carriers. You will find consent 5 

### orders against carriers that go to maybe the 6 

### 20th, 25th largest carriers. And as far as 7 

### online travel agents are concerned, we monitor 8 

### all the big online travel agents regularly. And 9 

### again, if you go look at the enforcement orders 10 

### we issue, we go after a lot of small online travel 11 

### agencies as well. 12 

### As far as getting some kind of a 13 

### computerized monitoring system, that would 14 

### involve a lot of money to develop that kind of 15 

### a system. Right now, we don't have the kind of 16 

### resources to do something like that. 17 

### But our general view is that, based 18 

### on our monitoring, the larger carriers and the 19 

### online travel agencies that we are looking at are 20 

### in compliance with our full-fare advertising 21 

### rules now in general. I mean, we still have 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 111



### enforcement cases, obviously. 1 

### MEMBER LEOCHA: Right. Okay. I 2 

### just bring it up because that will be a question 3 

### of maybe we need financing, something to help out 4 

### to do that kind of thing and to develop those 5 

### kinds of systems. 6 

### In terms of code-share, in general, 7 

### we just glossed over it. I would just like to 8 

### say that I think that code-sharing is prima facie 9 

### absolutely deceptive. They paint the airplanes 10 

### to look the same. In the back pocket, you have 11 

### got the major airlines magazine. When you get 12 

### your boarding pass, it has the airline's code 13 

### number. Like it will say "United" even though 14 

### you are flying on Republic or you are flying on 15 

### Chattaqua or you are flying on a different 16 

### airline. 17 

### Just as a general statement, I just 18 

### think that there is nothing that the airlines can 19 

### do with code-sharing that they can't do with 20 

### interlining -- it is basically the same 21 

### thing -- and letting us know what airline we are 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 112



### actually flying on. The only time that we, as 1 

### consumers, learn about the problems is if there 2 

### is a big problem, such as the Colgan Air crash. 3 

### Then, there was a big problem, and, all of a 4 

### sudden, it wasn't a Continental flight anymore; 5 

### it was a Colgan Air flight. And I just think 6 

### this should be made upfront to consumers, and 7 

### that is something we need to look at. 8 

### In terms of oversales, the airlines 9 

### are already beginning to set up bidding 10 

### processes. So, when you sign in for your 11 

### flight, they will say, "Your flight may be 12 

### oversold. Would you be willing to take $300 to 13 

### be moved onto another flight?" 14 

### All of this is done without 15 

### notifying you that you could get $1300, 16 

### according to the rules and regulations, if you 17 

### are involuntarily bumped. And so, I just think 18 

### that if you are into an oversold situation at an 19 

### airport, I know that the airlines are required 20 

### to give you this in writing, what your rights 21



### are. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 113



### But, before that, it is a game that 1 

### is played with consumers. I just think that 2 

### somewhere we should have something written in 3


### that lets consumers know. 4 

### CHAIRPERSON MADIGAN: If you have 5 

### specific questions for the people, for the 6 

### staff, can we focus on the questions and we can 7 

### get comments at the end? 8 

### MEMBER LEOCHA: Okay. 9


### CHAIRPERSON MADIGAN: Thanks. 10 

### MEMBER LEOCHA: In terms of baggage 11 

### fees, in terms of your new regulations that on 12 

### the flight itineraries the baggage fees need to 13 

### be passenger-specific, flight-specific, how are 14 

### you enforcing that? I am flying to Spain on 15 

### Delta, and I have got my itinerary and receipt 16 

### with the Delta thing, and nowhere on here is 17 

### there anything flight-specific. I come back 18 

### and I get on U.S. Airways, and I fly up to Boston, 19 

### and nowhere is there something specific for me. 20 

### I can figure it out if I go all the 21 

### way down and they give me all the exceptions. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 114



### But I thought that the idea of DOT's rule was 1 

### that, when you got your flight itinerary, it 2 

### would say, "This is your baggage fee." Even 3 

### though we are learning it after the fact, at 4 

### least it was a step ahead, but the airlines 5 

### aren't even doing that. 6 

### So, have you looked at that or had 7 

### any enforcement actions on these things? 8 

### MS. WORKIE: The first thing I will 9 

### say is that there may be a little bit of a 10 

### misunderstanding in terms of what is required 11 

### with respect to baggage disclosure. Under 12 

### Consumer Rule II, what the Department requires 13 

### is that, both for the e-ticket confirmation as 14 

### well as when a passenger is doing a search for 15 

### a particular itinerary online, that there be 16 

### specific baggage fee information, so that the 17 

### consumer can figure out what baggage fee applies 18


### to them. 19 

### So, there is no requirement, for 20 

### example, for any airline on the e-ticket 21 

### confirmation to say that, "Charlie, your 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 115



### specific baggage fee with the credit card you are 1 

### using with the kind of frequent flyer level you 2 

### are, and the advanced purchase," all that stuff, 3 

### "that your specific fee would be $25." 4 

### However, they are required to 5 

### provide sufficient information so that you, 6 

### knowing what frequent flyer level you are, 7 

### whether you are going to buy the bag in advance, 8 

### and so forth, can figure that out. 9 

### I know, Charlie, you are aware of 10 

### what the Department is considering doing in 11 

### Consumer Rule III. It is partly to address that 12 

### gap, which is the gap that exists right now --- 13 

### that isalthough there is enough information for 14 

### consumers to figure out what baggage fee may 15 

### apply in their particular itinerary, there is 16 

### some work the consumer has to do. It is not that 17 

### there is a number that is displayed upfront. 18 

### So, it is not that easy, although some carriers, 19 

### I understand, may choose to go that route. 20 

### MEMBER LEOCHA: Okay. My 21 

### understanding was that, under Consumer Rule II, 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 116



### DOT allowed the carriers to have one page with 1 

### general baggage fees, such as you link from their 2 

### home page -- 3 

### MS. WORKIE: Right. 4 

### MEMBER LEOCHA: -- to a page that 5 

### has all of the ancillary fees. In that 6 

### ancillary fee page, it would say, "baggage". 7 

### And it will say zero to $250. They are allowed 8 

### to put it into ranges. 9 

### MS. WORKIE: Actually, they are 10 

### not. With respect to non-baggage-related 11 

### ancillary services, you are correct, they are 12 

### allowed to put it in a range. With respect to 13 

### baggage fees, whether it is a baggage fee that 14 

### is listed from a home page, the list of ancillary 15 

### services, or whether it is the baggage fee that 16 

### you link into when you are doing a search for an 17 

### online itinerary, or on the e-ticket, they have 18 

### to provide specific baggage information. 19 

### So, for example, they wouldn't be 20 

### able to say the baggage fee for a first bag is 21 

### from zero to $50. They would have to specify 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 117



### when it is zero, when it is $25, when it is $50, 1 

### as opposed to food, they are allowed under the 2 

### existing rule to say food may cost from zero to 3 

### $20. So, they are allowed to provide a range for 4 

### ancillary services that are not baggage. For 5 

### baggage, it needs to be specific. They have to 6 

### actually provide you specific information, so 7 

### you can figure out, in my particular situation, 8 

### it is going to be $25 or it is going to be $20. 9 

### MEMBER LEOCHA: Okay. My 10 

### understanding was that, on the ticket itinerary 11 

### when we got it, it would be passenger-specific 12 

### based upon level of frequent flyers, based upon 13 

### what credit card you used to buy the ticket. 14 

### So, as of right now, consumers are 15 

### still left -- when we get our itinerary, and then 16 

### the airlines just give us the blurb, you get 17 

### "It's first bag," this; "That bag," there, and 18 

### then you link to something else and it tells you, 19 

### "By the way, if you are a frequent flyer 20 

### member...," and then, you go somewhere else and 21 

### it says, if you use a certain credit card -- 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 118



### MS. WORKIE: Okay. And I am sorry 1 

### to go -- 2 

### MEMBER LEOCHA: That is -- 3 

### MS. WORKIE: Almost. I am sorry to go 4 

### into all the different details of this. But, 5 

### for example, for email, the carriers are not 6 

### allowed to provide a link. So, for email 7 

### confirmations, the carrier has to provide that 8 

### specific information on the confirmation 9 

### itself. 10 

### On the other hand, if you buy your 11 

### ticket from Orbitz, Expedia, and so forth, they 12 

### are allowed to provide that information through 13 

### a link. 14 

### So, for your e-ticket confirmation, 15 

### if you are getting it from Delta or United, or 16 

### so forth, under Consumer Rule II, the specific 17 

### information so that you can determine what fee 18 

### applies to you needs to be included on the 19 

### e-ticket confirmation. It would be a violation 20 

### of our rules if they provided a hyperlink for you 21 

### in order to get that information. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 119



### A hyperlink is allowed for airlines 1 

### with respect to searches you do for a specific 2 

### itinerary online. They can simply say, "Click 3 

### here for the baggage." And then, you would have 4 

### to click and then figure it out. 5 

### But I think you are making a good 6 

### point, and the Department recognizes that we are 7 

### not completely there, which is why we are looking 8 

### into whether a Consumer Rule III is needed and 9 

### exactly what the Department should be requiring 10 

### in the third consumer rule. 11 

### MEMBER LEOCHA: Okay. I will 12 

### discuss this with you later. 13 

### MS. WORKIE: Okay. 14 

### MEMBER LEOCHA: This is just to show 15 

### you these examples to look at. 16 

### MS. WORKIE: Okay. 17 

### MEMBER LEOCHA: On customer service 18 

### plans, are those enforceable under law or are 19 

### they just enforceable under DOT? Customer 20 

### service plans as opposed to contract of 21 

### carriage? 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 120



### MR. PODBERESKY: Customer service 1 

### plans are enforceable by us. 2 

### MEMBER LEOCHA: Okay. 3


### MR. PODBERESKY: Consumers 4 

### wouldn't have the opportunity to enforce them. 5 

### The contract of carriage is something that a 6 

### consumer could enforce in the courts, if they 7 

### wanted, and we can enforce them as well under our 8 

### authority under 41712. 9 

### MEMBER LEOCHA: Okay. And I guess 10 

### the one recent example that we ran into was the 11 

### example of Delta Air Lines, in their customer 12 

### commitment through their customer service plan, 13 

### saying that the price you see on the website is 14 

### the lowest-possible price. But if two 15 

### different people look at the same time, I guess, 16 

### I mean, they get two different prices. Yes, for 17 

### that guy, it is the lowest-possible price and for 18 

### this guy it is the lowest-possible price, but in 19 

### the universe of prices I guess -- I am just 20 

### trying to figure out how that happens. 21 

### MS. WORKIE: Similar to baggage, in 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 121



### terms of the lowest fare available, I can 1 

### understand why there is a misunderstanding 2 

### because of the language that is used in the rule 3 

### text. For instance, for baggage, we use the 4 

### word "specific," and people have in their minds 5 

### what they view to be specific. And even in terms 6 

### of lowest fares, on the customer service 7 

### commitment, we say they have to provide you the 8 

### lowest fare. We don't mean Delta has to tell you 9 

### that you can get a cheaper fare by American or 10 

### that you can get it through Expedia. We just 11 

### mean that that particular carrier has to tell you 12 

### the lowest fare that they have available. 13 

### So, for example, if the lowest fares 14 

### available on the internet versus at the airports 15 

### versus calling on the telephone, if you are 16 

### calling on the telephone, they will need to let 17 

### you know that there could be a lower price 18 

### available on the internet. 19 

### MEMBER LEOCHA: However, a consumer 20 

### reading Delta Air Lines' customer commitment 21 

### that says, "The prices you see on this website 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 122



### are the lowest fares" has a reasonable 1 

### expectation that they are looking at the lowest 2 

### fare. And the problem we run into is there has 3 

### been a case where the guy right next door to you 4 

### has got a different fare when you look it up at 5 

### the same time. 6 

### MS. WORKIE: Yes, and we can talk 7 

### about it in terms of the appropriate language 8 

### that should be used. But, generally, when you 9 

### look on a carrier's website and they talk about 10 

### this as the lowest fare, they are talking about, 11 

### for that particular carrier, that is where you 12 

### get the lowest fare, not that that is the lowest 13 

### fare available anywhere. 14 

### MEMBER LEOCHA: Okay. And then, I 15 

### have got some questions on baggage setup. When 16 

### you talk about making sure everybody in the 17 

### code-shares and airline alliances have the same 18 

### baggage fees as we move across, I think this is 19 

### a little bit arcane, but this is what we deal 20 

### with. 21 

### We get on a plane. I buy my ticket 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 123



### from Delta. It has a Delta flight number on it. 1 

### And I never step in Delta metal. I fly on Air 2 

### France to Paris. I fly on Alitalia to Rome. I 3 

### fly on KLM to Amsterdam. 4 

### And maybe when I am getting on the 5 

### plane in New York, they are pretty good about it. 6 

### They say, "Oh, yeah, you get the Delta baggage 7 

### rules and Delta charges." But when I continue 8 

### the trip with a Delta flight number in Paris, 9 

### they say, "Sorry, we've got different rules" and 10 

### "You can't bring this big a bag onboard. You 11 

### have to pay extra," and so on. 12 

### MS. WORKIE: Is this after January 13 

### 24th? Or is this in the past? 14 

### MEMBER LEOCHA: This has been in the 15 

### past that I have experienced it, yes. 16 

### MS. WORKIE: Okay. One of the 17 

### things that Barbara was talking about is Section 18 

### 399.87, which basically has a requirement that 19 

### the same baggage fee and allowances need to apply 20 

### throughout a passenger's itinerary. This did not 21 

### become effective until January 24th. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 124



### There was also an extension request 1 

### that, while we denied it, we said as an 2 

### enforcement policy for a six-month period we 3 

### were going to provide some grace period for 4 

### interline and certain code shares, not in terms 5 

### of complying with the same baggage fee 6 

### provision, but in terms of -- it is all 7 

### related -- but e-ticket confirmation 8 

### information, the information that is provided on 9 

### e-ticket confirmations. 10 

### And let me actually just backtrack. 11 

### The main thing that I want to point out is that, 12 

### after January 24th of 2011, a consumer should not 13 

### be charged different fees for their itinerary. 14 

### They should have the same fee so long as it is 15 

### the same baggage. If they add a bag mid-trip, 16 

### they could be charged additional, but they 17 

### should be charged the same fee for the same bag. 18 

### And if they are not, then please let us know so 19 

### that we can look into it, because that is one of 20 

### the new requirements in terms of Consumer Rule 21


### II. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 125



### MEMBER LEOCHA: The last thing, and 1 

### then I will let them go on, is you talked about 2 

### the most significant carrier and marketing 3 

### carrier. DOT is accepting in some conditions 4 

### that the most significant carrier's rules will 5 

### apply and in other conditions that the marketing 6 

### carrier's rules -- I am trying to figure out 7 

### whose rules apply in terms of baggage. 8 

### MS. WORKIE: Okay. So, in terms of 9 

### baggage, the marketing carrier will get to set 10 

### the rules. But the marketing carrier can select 11 

### what is termed the most significant carrier's 12 

### rules to apply. 13 

### So, if you are a consumer, I mean, 14 

### from a consumer standpoint, what I think 15 

### consumers would care about is that, one, they 16 

### know beforehand what the baggage fee is. And 17 

### secondly, the baggage fee that they are assessed 18 

### and charged is the same baggage fee throughout 19 

### the itinerary. And that is certainly required 20 

### by our rules. 21


### There should never be a case after 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 126



### January 24th that a carrier is providing wrong 1 

### baggage information though this is a little more 2 

### complicated for certain code-share and 3 

### interline arrangements until July 24 th 

### as we 4 

### provide a little bit of a grace period. And 5 

### again, we can talk about the specifics but 6 

### passengers certainly should not be getting 7 

### charged different fees throughout their 8 

### journey. And if they are, again, let us know. 9 

### But the most significant carrier is 10 

### just a mechanism that the airlines have figured 11 

### out as the manner/method to comply with the rule, 12 

### and still respect one another's baggage rules. 13 

### And for those of you that are not 14 

### aware of the most significant carrier concept, 15 

### it really came out of IATA [International Air 16 

### Transport Association] Resolution 302, where 17 

### the airlines worked together and they tried 18 

### figuring out whose baggage fee should apply, 19 

### particularly for interline and code-share 20 

### situations. 21 

### MEMBER LEOCHA: Okay. So, someone 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 127



### who buys a ticket on Delta, and at that point you 1 

### are looking at a Delta contract of carriage. 2 

### That contract of carriage doesn't necessarily 3 

### apply, then, to international flights until they 4 

### make their decision whether you are going to be 5


### on the -- 6

7


### MS. WORKIE: The contract of 8 

### carriage would still apply. The contract of 9 

### carriage needs to be consistent with how they are 10 

### applying the MSC. So, a contract of carriage 11 

### should be consistent with how they are applying 12 

### it. 13 

### MR. PODBERESKY: If you are buying 14 

### a ticket on Delta Air Lines from Delta Air Lines 15 

### for a flight that is going to be operated out of 16 

### Dulles Airport to Paris on Air France, when you 17 

### get your e-ticket confirmation, you should have 18 

### Air France baggage information on your e-ticket 19 

### because that is what is going to apply to you. 20 

### And in addition, if you have a 21 

### connecting flight in Paris on the same itinerary 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 128



### taking you to Marseille, you should be getting 1 

### the same baggage rules that apply on your first 2 

### flight applying on your second flight and on your 3


### return as well -- 4 

### MS. WORKIE: Right. 5 

### MR. PODBERESKY: -- all the way 6 

### through. 7 

### MEMBER LEOCHA: Okay. 8


### MR. PODBERESKY: That's the rule. 9 

### MEMBER LEOCHA: Okay. I mean, we 10 

### can continue -- 11 

### MS. WORKIE: But this is a 12 

### complicated area. And I should just mention 13 

### there is an extension request for this 14 

### enforcement grace period that we received from 15 

### the carrier associations that the Department is 16 

### currently considering. So, this is a very 17 

### complicated area. 18 

### We have been to a number of meetings 19 

### of the airlines as well as ATPCO [Airline Tariff 20 

### Publishing Company] to try to explain exactly 21 

### what is required under our rules. But, again, 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 129



### the most important concept here is that the 1 

### passengers should be charged the same bag fee 2 

### throughout. 3 

### MEMBER LEOCHA: Thank you. 4 

### CHAIRPERSON MADIGAN: Thank you, 5 

### Charlie. 6 

### Let's continue with the 7 

### presentations. 8 

### MS. BLANK-RIETHER: Good morning, 9 

### members of the Committee, members of the public. 10 

### My name is Kathleen Blank-Riether. 11 

### I am a Senior Attorney in the Aviation 12 

### Enforcement Office. 13 

### This morning I will be speaking to 14 

### you about the statutes and regulations that we 15 

### enforce that prohibit discrimination on the 16 

### basis of disability and, also, prohibit 17 

### discrimination against individuals who are 18 

### members of other protected classes. 19 

### Like the consumer rules, our 20 

### disability rules are very complicated and 21 

### detailed. So, I will be giving you a 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 130



### fairly-high-level overview to give you an idea 1 

### of the breadth and depth of coverage of this 2 

### regulation, of the disability regulations. And 3 

### then, I will touch on our enforcement work 4 

### regarding the other protected classes. 5 

### I want to start off by giving you 6 

### some historic background on the ACAA [Air 7 

### Carrier Access Act] and Part 382. I believe 8 

### Dave will be familiar with some of this historic 9 

### background, having been a participant. 10 

### Actually, although Part 382 is the 11 

### implementing regulation for the ACAA, it 12 

### actually preceded the ACAA in time. 14 CFR Part 13 

### 382, which was at the time “Non-discrimination 14 

### on the Basis of Handicap -- and from now on, I 15 

### am going to be using the word "disability" in air 16 

### travel -- was promulgated by the Civil 17 

### Aeronautics Board [CAB], which Jonathan 18 

### mentioned earlier, in 1982. And as the legal 19 

### authority for the regulation, the CAB used the 20 

### provisions of Section 504 of the Rehabilitation 21 

### Act of 1973, which prohibits discrimination on 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 131



### the basis of disability in federally-assisted 1 

### programs and the provisions of the Federal 2 

### Aviation Act of 1958, which require safe and 3 

### adequate service and that prohibit unjust 4 

### discrimination in air transportation. So, 5 

### there was no ACAA when Part 382 was originally 6 

### promulgated. 7 

### The regulation was intended to 8 

### prohibit discrimination on the basis of 9 

### disability by certificated air carriers -- that 10 

### is the larger airlines -- and commuters air 11 

### carriers. There were three subparts to the 12 

### regulation at that time. There are ten today. 13 

### But the first Subpart A was a general 14 

### prohibition against discrimination, very 15 

### general. Subpart B had all the specific 16 

### requirements for service that the carriers were 17 

### supposed to provide. And Subpart C had the 18 

### recordkeeping and complaint and reporting 19 

### provisions. 20 

### Only Subpart A applied to all 21 

### certificated and commuter carriers. All the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 132



### detailed provisions of service were only applied 1 

### to carriers that received a direct federal 2 

### subsidy under the Essential Air Service Program. 3 

### So, with so many carriers not 4 

### obligated under the regulation to provide 5 

### accommodation services, the regulation didn't 6 

### really remedy the situation faced by people with 7 

### disabilities in air travel generally, which was 8 

### a complete lack of predictability and 9 

### consistency regarding accommodation and 10 

### assistance they could expect to receive from 11 

### carrier to carrier and from airport to airport. 12 

### They simply could not rely on whether a 13 

### wheelchair would be available at an airport, 14 

### whether the carrier would accept a wheelchair 15 

### for transport, or whether there would be 16 

### assistance in the baggage claim area, if they 17 

### needed it. 18 

### So, as a result of this situation, 19 

### the Paralyzed Veterans Association -- I'm 20 

### sorry -- the Paralyzed Veterans of America sued 21 

### the CAB. And their argument was that the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 133



### carriers that did not receive subsidies under 1 

### the Essential Air Services Program actually were 2 

### receiving significant federal assistance in the 3 

### form of air traffic control services and airport 4 

### and airway improvement grants from the FAA. 5 

### Well, this case made its way to the 6 

### Supreme Court, and the Supreme Court decided 7 

### that the Subparts B and C, which contained all 8 

### the detailed regulations about the services that 9 

### needed to be provided, only applied to carriers 10 

### that were receiving a direct subsidy, direct 11 

### federal assistance, under Section 504. 12 

### Well, that was not the outcome that 13 

### the disability community was looking for. 14 

### Frankly, I am not even sure that that is what the 15 

### carrier community was looking for. 16 

### But what happened was, shortly 17 

### thereafter, Congress enacted -- and this is 18 

### where the Air Carrier Access Act was born -- they 19 

### enacted the Air Carrier Access Act of 1986 which 20 

### amended the Federal Aviation Act and added a new 21 

### subsection that read, "No air carrier may 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 134



### discriminate against any otherwise qualified 1 

### handicapped individual by reason of such 2 

### handicap in the provision of air 3 

### transportation." It also defined disability 4 

### for purposes of protection under the regulation, 5 

### and it gave the Department 120 days to draft a 6 

### regulation. 7 

### Well, the Department was going to 8 

### publish the existing Part 382 as an Interim Final 9 

### Rule, and then they would do another NPRM to 10 

### figure out any other provisions that the 11 

### stakeholders felt needed to be part of the 12 

### regulation. But, instead of actually doing an 13 

### Interim Final Rule, they were persuaded by the 14 

### members of the disability community to embark 15 

### upon a reg-neg to develop proposed and final 16 

### regulations. 17 

### So, the Department convened an 18 

### Advisory Committee like you under the Federal 19 

### Aviation Advisory Committee Act -- I'm 20 

### sorry -- the Federal Advisory Committee Act, 21 

### which was chaired by a neutral mediator, to 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 135



### conduct the reg-neg. And this group, this 1 

### Advisory Committee, met from June through 2 

### November of 1987. And they made substantial 3 

### progress on a lot of issues, but they never 4 

### actually came to full consensus. 5 

### The deal-breaker was a provision 6 

### about seating in emergency exit rows for people 7 

### with disabilities. It was very unfortunate 8


### that that had to be the deal-breaker. 9 

### But what ended up happening was that 10 

### the Committee then came to an end and never 11 

### submitted a full package of recommendations to 12 

### the Department. But the Department did use what 13 

### had been done to date cumulatively through the 14 

### process of their meeting to develop its own 15 

### regulation that it submitted for public comment. 16 

### It was quite a lengthy public comment period, 17 

### seven months. And finally, in March 1990, Part 18 

### 382 was revised, taking into account all the 19 

### public comments, and all the new provisions that 20 

### the public felt were needed were incorporated. 21 

### So, I just wanted to mention that 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 136



### when the Air Carrier Access Act was enacted in 1 

### 1986, it only applied to U.S. carriers. But on 2 

### April 5th, 2000, the Congress enacted the 3 

### Wendell H. Ford Aviation Investment and Reform 4 

### Act for the 21st Century, which is otherwise 5 

### known as AIR-21. They amended the ACAA to 6 

### specifically include foreign carriers. 7


### Just a few months after that 8 

### legislation was enacted, we, the Department, 9 

### issued a notice of our intent to investigate 10 

### complaints against foreign carriers according 11 

### to the amended provisions of the ACAA and using 12 

### Part 382 as a guide in our enforcement of the ACAA 13 

### against foreign carriers. 14 

### We also announced our intention to 15 

### initiate a final rulemaking to include foreign 16 

### air carriers in Part 382, because that 17 

### legislation only incorporated them into the 18 

### statute. So, we did that in November of 2004. 19 

### We put out a rulemaking to include foreign air 20 

### carriers, and then, on May 13th, 2008, we amended 21 

### the final rule to apply Part 382 to foreign 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 137



### carriers, and we also substantially rewrote the 1 

### rule and we added many substantial new revisions 2 

### regarding oxygen service on aircraft, which 3 

### actually was not oxygen service, but actually to 4 

### permit the use of portable oxygen concentrators 5 

### on aircraft; and to provide additional 6 

### accommodations for people who are deaf and hard 7 

### of hearing. 8 

### Okay. The Part 382 definition of 9 

### disability is based on the definition of 10 

### disability in the Rehabilitation Act, which, as 11 

### you may know, was amended to conform to the 12 

### [Americans with Disabilities Act] (ADA’s) 13 

### definition that includes individuals who have a 14 

### record of an impairment or who are regarded as 15 

### having an impairment. 16 

### So, for example, if an individual 17 

### who has a facial disfigurement was to board an 18 

### aircraft and would be asked to move to sit in the 19 

### back of the aircraft, presumably, because their 20 

### appearance was disturbing to other passengers, 21 

### that person would be protected under Part 382. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 138



### Something noteworthy about Part 1 

### 382's definition, though, in terms of how it 2 

### differs from ADA and the Rehabilitation Act 3 

### definition is that, whereas those two statutes 4 

### generally exclude those having short-term, 5 

### temporary impairments with no long-lasting or 6 

### permanent effects on a major life activity -- for 7 

### example, people who would have a broken leg or 8 

### somebody who was prohibited from lifting more 9 

### than 10 pounds because of recent surgery, those 10 

### people wouldn't necessarily be protected under 11 

### the ADA or Rehabilitation Act, but they are under 12 

### Part 382. 13 

### So, we will be discussing carrier 14 

### responsibilities in four broad headings: 15 

### accessibility, physical accessibility 16 

### generally; the assistance that they must 17 

### provide; the training to their personnel, as 18 

### well as contractors who are performing any 19 

### responsibilities that are required for them to 20 

### perform under Part 382, and no complaint 21 

### resolution and reporting provisions. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 139



### Under the airline accessibility 1 

### provisions, the carriers are responsible for 2 

### ensuring accessibility of their aircraft, for 3 

### airport facilities that are under their control, 4 

### and for communication and access to information, 5 

### particularly for people who are deaf and hard of 6 

### hearing. 7 

### In terms of providing assistance, 8 

### the types of assistance and service 9 

### accommodations the carriers must provide to 10 

### assist individuals with enplaning, deplaning, 11 

### and connecting include wheelchair assistance 12 

### for those with mobility impairments or escort 13 

### assistance for those with visual or cognitive 14 

### impairments. 15 

### Services within the terminal that 16 

### carriers are required to provide include 17 

### assistance with carry-on and checked baggage for 18 

### individuals with physical limitations, 19 

### providing assistance in check-in areas where 20 

### check-in kiosks are inaccessible to people who 21 

### are blind or visually-impaired, providing 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 140



### escort assistance to a service-animal relief 1 

### area, providing individuals with visual and 2 

### hearing impairments with access to the same 3 

### information provided to other passengers, at 4 

### designated areas in the terminal. 5 

### Services on aircraft that carriers 6 

### are required to provide -- and I am just giving 7 

### a very high-level overview now -- include such 8 

### things as assistance with stowing, carry-on bags 9 

### and assistive devices in the cabin. 10 

### And other assistive services that 11 

### are required are, for example, we don't have any 12 

### provisions in our rule presently that say that 13 

### a carrier's website has to be accessible. What 14 

### we do say is, if an individual is not able to 15 

### access your website because it is inaccessible 16 

### and they have a visual impairment, and they let 17 

### you know that, then you must let them know, you 18 

### must disclose to them any web-based fare 19 

### discounts that they could obtain if they were 20 

### able to get onto that website. And if they have 21 

### to call you to make a reservation and you charge 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 141



### a reservation fee, you have to waive that 1 

### reservation fee because they couldn't use the 2 

### website. 3 

### I also talk about our training 4 

### requirements and spell out what carriers must do 5 

### to ensure not only that their own staff are able 6 

### to meet the requirements of Part 382, but also 7 

### ensure that their contracts -- I think I 8 

### mentioned that before. 9 

### And finally, we will discuss the 10 

### requirements to make Complaint Resolution 11 

### Officers available and to respond to disability 12 

### complaints and to submit an annual report that 13 

### summarizes all the disability-related 14 

### complaints that they have received from the 15 

### public from the previous year. 16 

### Okay. Aircraft accessibility. 17 

### This first bullet, I want to point out, is not 18 

### correct. What it should say is that new 19 

### aircraft that U.S. carriers ordered after April 20 

### 5th, 1990, or had delivered after April 5th, 21 

### 1992, have to provide these physical 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 142



### accommodations, these physical accessibility 1


### features. 2 

### For foreign carriers, these 3 

### aircraft accessibility requirements did not 4 

### kick in until the most recent amended version 5 

### that incorporated the foreign air carriers. 6 

### So, any aircraft that they ordered after May 7 

### 13th, 2009, not 2008, or any that were delivered 8 

### after May 13th, 2010, have to incorporate these 9


### features. 10 

### So, if you have an aircraft with 30 11 

### or more seats, half of the aisle armrests in each 12 

### class of service have to be accessible, or have 13 

### to be moveable, I should say. If the aircraft 14 

### has 100 seats or more, you have to have priority 15 

### stowage space in the cabin for one folding 16 

### wheelchair. Only on twin-aisle aircraft must 17 

### one of the lavatories onboard be accessible. 18 

### And by that, I mean the person in an onboard chair 19 

### has to be able to get in, close the door, maneuver 20 

### and use all the facilities, and get out again, 21 

### with the same privacy that anyone else would 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 143



### have. 1 

### And with aircraft that have more 2 

### than 60 seats, the onboard wheelchair has to be 3 

### stowed if there is an accessible laboratory. 4 

### And if there is not, then if any individual 5 

### requests it, it has to be kept onboard for their 6



### use. 7 

### Regarding access onto the aircraft, 8 

### airlines have to ensure that lifts and ramps are 9 

### provided at U.S. airports if boarding by jet10 

### bridge is not available, and they must also enter 11 

### into contracts, written contracts, with the 12 

### airports concerning their responsibilities, 13 

### especially regarding lifts to make sure that 14 

### those lifts are available and present when the 15 

### individual needs them. 16 

### At foreign airports, I want to add, 17 

### the requirements to provide a lift, there aren't 18 

### any requirements to provide a lift at foreign 19 

### airports. But carriers would be required to use 20 

### any available means to which the passenger 21 

### consents to get them on that aircraft at a 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 144



### foreign airport. 1 

### Regarding information, I want to 2 

### just stop here and ask, “Where are we in terms 3 

### of time? How far are we?” Okay. 4 

### Let's see, both U.S. and foreign 5 

### carriers must ensure that passengers with a 6 

### disability who identify themselves as 7 

### individuals needing visual or hearing 8 

### assistance have prompt access to the same 9 

### information provided to other passengers at each 10 

### gate, ticketing area, and customer service desk 11 

### that a carrier owns, leases, or controls at a 12 

### U.S. airport. 13 

### Now U.S. carriers have the same 14 

### obligation at foreign airports, and foreign 15 

### carriers at foreign airports have more limited 16 

### obligations. And that is that they would have 17 

### to provide this information at only those places 18 

### used with respect to flights to and from the 19 

### United States. 20 

### Examples of information that they 21 

### must provide promptly, upon request, would 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 145



### include, but be not limited to schedule changes, 1 

### ticketing, flight check-in, flight delays or 2 

### cancellations, volunteer solicitations on 3 

### oversold flights, boarding information, et 4


### cetera. 5 

### So, one issue that I want to just 6 

### raise quickly here not regarding accessibility 7 

### of information per se , but, rather, regarding 8 

### accessibility information that must be 9 

### communicated to passengers, , if a passenger is 10 

### booking a flight and they ask to know with 11 

### respect to a specific flight, what are the 12 

### accommodations that you can provide, the carrier 13 

### must be able to disclose it to them, except in 14 

### certain limited circumstances where it may not 15 

### be possible for them to know. For example, 16 

### there is a last-minute equipment change. But 17 

### they have to be able to tell them if there is 18 

### going to be a lift needed to get on and off the 19 

### aircraft, and this must be disclosed to a 20 

### passenger who uses a wheelchair to board, 21 

### whether or not he or she asks for the information 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 146



### explicitly. 1 

### But other types of assistance, for 2 

### example, whether they can use portable oxygen, 3 

### can use an assistive device, a respiratory 4 

### assistive device, they would have to be able to 5 

### let them know whether they can do that or not. 6 

### Airlines must also ensure that 7 

### certain information, for example, safety and 8 

### informational videos on the aircraft, and any 9 

### kind of audio-visual displays that they have 10 

### control and in the airport terminal must be 11 

### captioned. 12 

### I do want to mention 13 

### that there are certain accessibility 14 

### requirements regarding the airport terminal 15 

### before I go into the discussion about 16 

### assistance. Carriers do have to be sure at the 17 

### U.S. airports that systems of intra- and 18 

### inter-terminal transportation, such as moving 19 

### sidewalks, shuttle vehicles, and people movers, 20 

### are accessible. They have to ensure that any 21 

### equipment that they have, the audio-visual 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 147



### displays in the terminal have the captions 1 

### enabled on them at all times. 2 

### And they must also ensure that the 3 

### pathway through the airport is accessible to an 4 

### individual to get them to the gate, and if they 5 

### have to board from the tarmac, from the gate area 6 

### onto the tarmac, where they will be boarding. 7 

### I just wanted to mention at foreign 8 

### airports none of those apply that I mentioned 9 

### except for the fact that they must provide an 10 

### accessible means through the airport to get to 11 

### the gate area and onto the aircraft if boarding 12 

### is from the tarmac. 13 

### I think that we are going to be 14 

### keeping on schedule. Okay. Let's skip ahead 15 

### to the very end, to discrimination. 16 

### Our office enforces 49 USC 40127 17 

### that prohibits carriers, both U.S. and foreign, 18 

### from subjecting a person to discrimination on 19 

### the basis of any of those protected classes: 20 

### race, color, national origin, religion, sex, or 21 

### ancestry. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 148



### We had a number of cases shortly 1 

### after 9/11, probably five or six enforcement 2 

### cases, against major air carriers in which 3 

### significant civil penalties were imposed for 4 

### violations. And there were, as part of those 5 

### settlement agreements, significant offsets 6 

### granted in order to expend funds for civil rights 7 

### training for public-facing employees. 8 

### So, since that time, we have not had 9 

### the volume of discrimination complaints. But 10 

### this year, within the last year, we have had two 11 

### enforcement cases against carriers for 12 

### discrimination in which the individuals were 13 

### removed from an aircraft. They were screened by 14 

### TSA or they were questioned by TSA and by the 15 

### corporate security. They were found by both to 16 

### be no threat. But the airlines, then, did not 17 

### promptly reboard them onto the aircraft that 18 

### they had been removed from, which had not 19 

### departed. And so, they placed them on other 20 

### aircraft later in the day. 21 

### So, it is our office's view that, 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 149



### when there has been a determination that there 1 

### is no threat, and that determination has been 2 

### made officially, that carrier is obligated to 3 

### reboard the passengers onto the flight that they 4 

### were originally on that had not departed, unless 5 

### there is a valid safety or security threat that 6


### has not been resolved. 7 

### So, I basically did not give about 8 

### half of my presentation, but I will just turn it 9 

### over now to Norman Strickman, who will be talking 10 

### to you about the Aviation Consumer Protection 11 

### Division. 12 

### MR. STRICKMAN: My name is Norman 13 

### Strickman. I am the Director of the Aviation 14 

### Consumer Protection Division. 15 

### I am going to make this very, very 16 

### quick. I am going to accelerate my presentation 17 

### to try to get us back a little bit on schedule. 18 

### I can make it very quick by letting 19 

### you know that tomorrow marks my 39th anniversary 20 

### of federal service. 21 

### (Applause.) 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 150



### Thank you. 1 

### I am using this opportunity to give 2 

### notice of my retirement from the federal 3 

### government. I am only kidding. 4 

### (Laughter.) 5 

### Okay. A little levity. Sorry. 6 

### I am going to accelerate my 7 

### presentation. I will be available for 8 

### questions during the course of the day, and you 9 

### will have the benefit of my slides. But I am 10 

### going to be working through this very, very 11 

### quickly. 12 

### As Jonathan Dols mentioned early on, 13 

### we have 20 people on my staff, a variety of 14 

### backgrounds, bringing over a century of 15 

### experience and expertise to handling aviation 16 

### consumer protection issues. 17 

### I started, initially, my career was 18 

### with the Drug Enforcement Administration [DEA], 19 

### but early on in my federal aviation consumer 20 

### protection work, I was with the Civil 21 

### Aeronautics Board. I don't know if Tim Kelly is 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 151



### in the room -- Tim Kelly, in the back, as well. 1 

### We have been working together; we started 2 

### working together at the Civil Aeronautics Board 3 

### at the mid-1970s. 4 

### I know there are some other people 5 

### in this room who also worked for the Civil 6 

### Aeronautics Board as attorneys. There are 7 

### people in our office, attorneys, that worked for 8 

### the CAB, as well as there are airline attorneys 9 

### and private aviation attorneys that are in the 10 

### room as well who worked back together at the 11 

### Civil Aeronautics Board. 12 

### We are going to kind of move through 13 

### this slide because it is just going to summarize 14 

### what I am going to be talking about. 15 

### What do we really do? We are the 16 

### complaint office. We are kind of the official 17 

### repository for the federal government for people 18 

### who want to express an opinion, a complaint, some 19 

### issue regarding airline service. 20 

### It was mentioned earlier by Jonathan 21 

### that we do not handle safety or security issues. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 152



### Those are the responsibilities of the FAA and the 1


### TSA. 2 

### What we do, we receive complaints. 3 

### We receive cases from consumers who generally 4 

### are upset with aviation service issues. If you 5 

### have flown, which I imagine everybody in this 6 

### room has, and you have either experienced 7 

### personally an airline service issue or you know 8 

### somebody who has, or if you can even imagine what 9 

### an airline service problem would be, chances are 10 

### that we have received a case, a complaint, about 11 

### it. We receive complaints about U.S. and 12 

### foreign airlines, about both domestic and 13 

### international itineraries and scheduled and 14 

### charter service. 15 

### Our handling of airline service 16 

### issues comes through us by phone call, by letter, 17 

### and by an online electronic complaint form that 18 

### we make available on our website. The majority 19 

### of our cases come to us by our online submission 20


### form. 21 

### Carriers who write to us either 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 153



### contact us directly or they cc us in a letter. 1 

### And they are going to write to, if not us 2 

### directly, they are going to write to a local or 3 

### a state or other federal agency. And they refer 4 

### them to us. Chances are some of the airline 5 

### complaints that have gone to the Illinois 6 

### Attorney General's Office may have been 7 

### forwarded to our office. We receive them from 8 

### other consumer organizations, from the media, as 9 

### well as referrals from the congressional offices 10 

### that have been contacted by their constituents. 11 

### Our phone system, Sam mentioned 12 

### before regarding that the FAA Reauthorization 13 

### Act is pushing for a toll-free hotline for 14 

### consumer complaints. Without funding, we are 15 

### not going to be able to do that. But we 16 

### currently do have a toll-free hotline system 17 

### that is intended for passengers with a 18 

### disability to contact us. That way, the intent 19 

### is to assist those individuals whose issue is 20 

### associated with a disability to receive 21 

### real-time assistance. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 154



### Next slide, please. 1 

### All cases that we receive are 2 

### reviewed by an analyst. My staff are referred 3 

### to as analysts or investigators. Every case 4 

### that comes in is reviewed by them. 5 

### In addition to complaints, we also 6 

### receive people who are asking questions. They 7 

### are asking about what their rights are, what the 8 

### carrier's obligations are. They are also 9 

### providing opinions about the airline service. 10 

### And on occasion, we receive a compliment about 11 

### airline service -- on occasion. 12 

### (Laughter.) 13 

### It is nice to receive those as well. 14 

### Every case that we receive, whether 15 

### it comes in by letter, whether it comes in by 16 

### phone call, whether it comes in by our online 17 

### electronic submission, is acknowledged back to 18 

### the inquirer. They are aware that we have 19 

### received it. 20


### We code all of our cases based on 21 

### passenger perception. For those who deal in the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 155



### consumers affairs field, perception is reality. 1 

### If the person believes it, then it doesn't 2 

### necessarily mean it is true, but that is what 3 

### they are representing to us. We code based on 4 

### passenger perception. 5 

### That doesn't necessarily mean that 6 

### there has been a violation of one of our 7 

### regulations, but we are coding it into our 8 

### database. And every case we get gets coded and 9 

### tracked into a database, so that we are able to 10 

### monitor it through its entire process. 11 

### It gets coded in one of twelve 12 

### different categories. We are, because of 13 

### limited staff size -- and we only have 20 people 14 

### to deal with all this -- while we are referring 15 

### every case we receive to the airline or online 16 

### ticket agency about which the person has come to 17 

### us, everything goes to them. We really, because 18 

### of our resources, are only going after or 19 

### pursuing the cases that touch on one of our 20 

### regulations. That is a broad-based statement, 21 

### but for the most part we are pursuing cases that 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 156



### touch on one of our regulations. 1 

### Our goal is that, if a person is 2 

### entitled to something because it touches on one 3 

### of our regulations, we want to try to get it for 4 

### that person, if they have not already received 5 

### it. So, we can talk about denied-boarding 6 

### compensation. If a passenger is bumped from 7 

### their flight, if they are entitled to 8 

### denied-boarding compensation, but didn't 9 

### receive it, after they contact us, our goal would 10 

### be to recover for them what they are entitled to. 11 

### If they are entitled to a refund, not 12 

### that they just want a refund, but if they are 13 

### entitled to a refund, and they haven't received 14 

### it, then our goal would be to try and recover that 15


### for them as well. 16 

### The same thing with a baggage issue. 17 

### If an airline has not resolved an issue 18 

### applicable to either our domestic or 19 

### international baggage liability rules, we want 20 

### to try to resolve that for the passenger as well. 21 

### The majority of the cases that we 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 157



### receive do not touch on one of our federal 1 

### consumer protection regulations. The majority 2 

### of the cases that we get are people who are upset 3 

### with an airline policy or procedure, and the 4 

### airline is in the best position in that case to 5 

### resolve and respond to the consumer. And if the 6 

### person is looking for something tangible, then 7 

### the airline is in the position to give it. 8 

### Our office, the federal government, 9 

### does not have sort of a slush fund with which we 10 

### can pay consumers because they are unhappy with 11 

### airline service. If somebody wants something 12 

### in the federal government and it touches on a 13 

### regulation then they are required to get it, if 14 

### not, then they need to go to the airline or the 15 

### court to try and recover that. 16 

### Primarily, what we are looking for 17 

### patterns in practices regarding cases that we 18 

### receive. And if we see those and when we see 19 

### those, we are working very closely with the 20 

### office's enforcement attorneys to pursue those 21 

### cases, although there can be a single incident 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 158



### in which an incident is so egregious that we will 1 

### proceed with potential enforcement action 2 

### against a carrier. 3 

### Next slide, please. 4 

### I mentioned before that not every 5 

### case that we receive is a complaint. Some 6 

### consumers contact us, many consumers contact us, 7 

### wanting to know their rights and the carrier's 8 

### obligations. So, we speak to consumers. We 9 

### are a consumer-friendly office. We actually 10 

### speak to people. We talk to them. We give them 11 

### advice. We give them information, not only to 12 

### consumers, though. On a daily basis, we are 13 

### also speaking with representatives from the 14 

### airlines, both their liaisons and legal people, 15 

### operations people, to provide them with 16 

### information and advice, whether a specific issue 17 

### or a particular policy issue. 18 

### We have established contacts with 19 

### just about every airline for which we forward a 20 

### case. The largest U.S. carriers have 21 

### designated a primary and a backup liaison with 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 159



### our office. This helps to facilitate the 1 

### handling of cases and issues. 2 

### I see at least one representative 3 

### from an airline here. Heather Harvey from 4 

### Spirit Airlines is participating today, and she 5 

### is the carrier's designated liaison with our 6 

### office. 7 

### In addition to talking to consumers 8 

### and attorneys, we also speak to Members of 9 

### Congress and to their staff, providing the 10 

### information about what we do and how we do it; 11 

### private attorneys; the news media; academics, 12 

### and foreign governments, who on a 13 

### fairly-frequent basis we provide briefings to 14 

### them about what the U.S. Government does in terms 15 

### of aviation enforcement and consumer 16 

### protection. 17 

### Next slide, please. 18 

### Consumer complaints that we receive 19 

### as well as the airline data required to be 20 

### provided to the Department's Bureau of 21 

### Transportation Statistics: flight performance 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 160



### data, mishandled baggage, and oversales, as well 1 

### as traffic and financial data are used to review, 2 

### examine, cure specific issues as well as issues 3 

### that involve the entire industry. This helps us 4 

### to identify areas for consideration about 5 

### issuing guidance, considering enforcement 6 

### action, or considering consumer rules. 7 

### Next slide, please. 8 

### Always an interesting slide, this 9 

### talks about the number of complaints that my 10 

### office received. This is not carrier-supplied 11 

### information. This is complaints that came into 12 

### the Aviation Consumer Protection Division. We 13 

### are looking here at calendar years 2010 and 2011. 14


### You can see the totals on the bottom. 15 

### The numbers of complaints that you 16 

### see at the top regarding flight problems, 17 

### baggage, customer service, reservations and 18 

### ticketing, refunds and fares, those have been 19 

### the top six categories since we have been putting 20 

### out complaint numbers going way, way back. 21 

### Flight problems, there has always 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 161



### been -- maybe there was an exception with one 1 

### month -- have always been the No. 1 complaint 2 

### category. Delays, cancellations, missed 3 

### connections, some sort of flight irregularity. 4 

### In most of those, they did not touch on one of 5 

### our regulations. It was just somebody was 6 

### upset, somebody was expressing some discontent 7 

### regarding how the airline handled their 8 

### particular issue. 9 

### Again, these complaints do not 10 

### necessarily represent a violation of a 11 

### regulation. It is just how we captured the 12 

### passenger's perception of what they were 13 

### bringing to the attention of the federal 14 

### government. 15 

### For January through June of this 16 

### year, so far we have received just about 6500 17 

### complaints. So, we are kind of on target where 18 

### we are from last year. 19 

### Next slide, please. 20 

### We educate the public. We just 21 

### don't take complaints and enforce our 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 162



### regulations. We spend quite a bit of time 1 

### educating the public. 2 

### Let's go to the next slide. 3 

### I made available a copy of the Air 4 

### Travel Consumer Report, if people have something 5 

### like that. Everybody has that. 6 

### We have been putting out -- we, the 7 

### government, have been putting out -- statistics 8 

### about air travel and consumer complaints since 9 

### 1970 at the Civil Aeronautics Board. Numbers 10 

### were first published about consumer complaints. 11 

### It, then, evolved to add oversales 12 

### data. And then, at the Department of 13 

### Transportation in 1987, we added on-time 14 

### performance and mishandled baggage data. And 15 

### then, subsequent to that, we have added in 16 

### information that was provided to us by the 17 

### Transportation Security Administration and, 18 

### also, airline-provided data to us about the 19 

### loss, injury, or death of pets. 20 

### There are six components to the Air 21 

### Travel Consumer Report. There are seven 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 163



### bullets up there. But the delayed and cancelled 1 

### flights and the tarmac and chronic delays are all 2 

### part of the flight delay section. 3 

### The flight performance data, the 4 

### mishandled baggage data, the oversales data, and 5 

### the loss, injury, or death of pets data is all 6 

### airline-provided data to the Department of 7 

### Transportation. 8 

### The consumer complaint category, 9 

### again, is only information that comes to us, not 10 

### provided to us from the airlines. The only 11 

### requirement that the airlines have to provide us 12 

### with their complaint data is that on an annual 13 

### basis providing us with their disability 14 

### complaints. 15 

### Let's go to the next slide. 16 

### If anybody has any questions during 17 

### the break about the Air Travel Consumer Report, 18 

### it has been my responsibility for a bunch of 19 

### years, so I will be able to answer your questions 20


### on that. 21 

### Other publications that we have 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 164



### available, they are all listed on our website. 1 

### Pretty good information for the traveling 2 

### public, and we have been told that these 3 

### publications on our website are one of the 4 

### largest hits offered by the federal government. 5 

### So, please take time to review those. 6 

### Next slide, please. 7 

### Our website, 8 

### www.airconsumer.dot.gov, again, we have been 9 

### told that it is one of the most active federal 10 

### government websites. We think it is a good one. 11 

### There is a lot of information on it. Our 12 

### publications, our complaint form, the industry 13 

### letters that we have issued, guidance for the 14 

### airlines, a number of fact sheets, and also 15 

### advising people how to link to other 16 

### organizations, and the site meets accessibility 17 

### standards. And we have a Spanish version as 18


### well. 19 

### Next slide. 20 

### We also deal with the media. There 21 

### may be some media representatives here today. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 165



### We issue consumer alert news releases on an 1 

### annual basis around the time of the Super Bowl. 2 

### We issue a release kind of putting consumers on 3 

### notice that, if they are going to be buying 4 

### something that says it is going to include a 5 

### ticket to the event, that they should be certain 6 

### that the ticket is really going to be provided 7


### to them. 8 

### Interviews on a fairly-regular 9 

### basis to media organizations explaining what we 10 

### do and how we do it. And then, also, providing 11 

### to the media information, the types of 12 

### complaints that we receive, including examples 13 

### of complaints that we have received. 14 

### Next slide. 15 

### And then, information on here in 16 

### terms of our contact points, which will be 17 

### included on the website. 18 

### Is that it? That's good. Thank 19 

### you all very much. Appreciate it. 20


### CHAIRPERSON MADIGAN: Can I ask a 21 

### quick one? So, I, actually, have gotten on the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 166



### website. It is fascinating, but why aren't all 1 

### airlines required to report? 2 

### MR. STRICKMAN: All right. This is 3 

### based on carriers -- it goes back to 14 CFR Part 4 

### 234. I will give you that kind of -- 5


### CHAIRPERSON MADIGAN: That was the 6 

### answer I was hoping for. 7 

### (Laughter.) 8 

### MR. STRICKMAN: Yes, which goes 9 

### back to 1987. There was a process that we went 10 

### through that advised any carrier that has at 11 

### least 1 percent of the domestic scheduled 12 

### passenger revenue is required to report on a 13 

### monthly basis their on-time performance and 14 

### mishandled baggage to the Department's Bureau of 15 

### Transportation Statistics. They, then, 16 

### provide that to us to include in the Air Travel 17 

### Consumer Report. 18 

### We determined -- I forget when it 19 

### was -- in an oversales rulemaking that the same 20 

### carriers that are required to report on-time 21 

### performance and mishandled baggage data would be 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 167



### the same carriers required to report oversales. 1 

### Prior to that, there were a whole lot more 2 

### airlines that were required to report. 3 

### For the consumer complaint section, 4 

### we rank the same airlines that are required to 5 

### report on-time performance, mishandled baggage, 6 

### and oversales data in the complaint section. 7 

### But every airline for which we received at least 8 

### five complaints during the course of the month, 9 

### they are identified by name. Whether it is a 10 

### U.S. carrier, a foreign carrier, or a travel 11 

### agency, or a ticket agency, they are identified 12 

### by name in the report. If we receive less than 13 

### five complaints about an airline during the 14 

### course of a month, then they are glommed under 15 

### a group of other U.S. airlines, other travel 16 

### agents, other foreign carriers. 17 

### Our database provides us with the 18 

### opportunity and the ability to provide an answer 19 

### to anybody who asks us whether we have received 20 

### a complaint about a particular company. But 21 

### just for size and manageability, it is limited 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 168



### to carriers, the ranking tables are limited to 1 

### carriers that account for at least 1 percent of 2 

### the domestic scheduled service passenger 3



### revenue. 4


### MR. PODBERESKY: When the rules 5 

### were originally adopted back in the 1987-88 6 

### timeframe, they had to take into account two 7 

### other statutes. One is the Paperwork Reduction 8 

### Act, which requires us to minimize paperwork, 9 

### and the reporting of on-time performance 10 

### information and oversales information and 11 

### mishandled baggage information is a reporting 12 

### requirement. 13 

### And the second statute is the 14 

### Regulatory Flexibility Act, which says that we 15 

### have to treat small businesses with kid gloves, 16 

### and in adopting the rule, we took into account 17 

### that some of the companies that we weren't going 18 

### to cover were the smaller companies. We were 19 

### covering like 90 percent of the people that were 20 

### traveling at that time by going after the, quote, 21 

### "major" carriers, the carriers that carried 1 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 169



### percent of the passengers. 1 

### You should note that in the Consumer 2 

### Rule III that we mentioned there are two 3 

### proposals in that rulemaking that could change 4 

### this. One is going from the 1 percent down to 5 

### perhaps .5 percent or .25 percent, which would 6 

### increase the number of carriers reporting to 7 

### include carriers like Virgin America and Spirit 8 

### Airlines and Allegiant Airlines, and a number of 9 

### other smaller airlines. 10 

### And another provision that is being 11 

### considered in that rulemaking is requiring a 12 

### separate set of reports by the major carriers 13 

### that have big code-share operations. The 14 

### numbers that they are reporting now, Delta will 15 

### report Delta numbers, but SkyWest will report 16 

### SkyWest numbers. Some of SkyWest's flights are 17 

### Delta flights. Some of the SkyWest flights may 18 

### be United flights. 19 

### And one of the things that is going 20 

### to be considered in that rulemaking is 21 

### requiring, for example, Delta to submit one 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 170



### report for Delta flights that are operated by 1 

### Delta and, then, a separate report of Delta 2 

### flights that includes everything that flies 3 

### under the Delta code domestically. 4 

### So, it is a good question, and it is 5 

### actually something we have been thinking about 6 

### and is going to be dealt with in our next 7 

### rulemaking. 8 

### CHAIRPERSON MADIGAN: I know David 9 

### has questions. 10


### MEMBER BERG: Thanks. 11 

### You mentioned that most of the 12 

### complaints do not touch on your regulations. Do 13 

### you keep that data as to what percentage of the 14 

### complaints do touch on regulations and which 15 

### percentage does not? 16


### MR. STRICKMAN: I don't have a 17 

### specific number. I am guessing -- I would just 18 

### be guessing, David; I really would. 19 

### MEMBER BERG: Well, no need to guess 20 

### now. I just wondered if you keep that 21 

### information. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 171



### MR. STRICKMAN: The majority, yes. 1 

### We can break it down by complaint codes in terms 2 

### of what touches on our regulated areas and what 3


### doesn't. 4 

### MEMBER BERG: Any consideration to 5 

### publishing that on a regular basis with your 6 

### monthly reports? 7 

### MR. STRICKMAN: Well, what we do is 8 

### we put out, we have our 12 complaint categories 9 

### in the Air Travel Consumer Report. Well, again, 10 

### the complaints don't necessarily mean a 11 

### violation of -- 12 

### MEMBER BERG: Right. 13 

### MR. STRICKMAN: -- the regulations. 14 

### So, we have our complaint categories which we 15 

### think represent, I mean at least in terms of what 16 

### is out there in terms of the categories -- 17 

### MS. WORKIE: Dave, one of the other 18 

### things we should mention is that, because in 19 

### Consumer Rule II, and actually even I, there are 20 

### a number of additional requirements, Norm and 21 

### some of our folks have been working on refining 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 172



### the existing categories so that we can capture 1 

### some of these new regulated areas. 2 

### So, for example, in the first 3 

### category that Norm was talking about for flight 4 

### problems, which involves delays and 5 

### cancellations, and so forth, there are things, 6 

### complaints when we have received them in the past 7 

### that were not in the regulated areas where the 8 

### same kind of complaint today would be in the 9 

### regulated areas. So, we do need to kind of go 10 

### back and fix our own method of categorizing, 11 

### particularly the subcategories. 12 

### MR. PODBERESKY: For example, three 13 

### years ago, it would have been safe to say that 14 

### flight problems, all complaints related to 15 

### flight problems didn't involve a regulated area. 16 

### That is not safe anymore because we get a lot of 17 

### complaints about tarmac delays now. And we get 18 

### complaints about flight delays in a context that 19 

### could implicate the chronically-delayed flight 20 

### rules. So, it is not very safe to say that. 21 

### There are some areas that are still fairly safe 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 173



### to say; others not. 1 

### I think Norm is right; the vast 2 

### majority of complaints we receive do not deal 3 

### with regulated areas. 4


### MEMBER BERG: Thanks. 5


### CHAIRPERSON MADIGAN: Let me ask 6 

### you a question. Norm, can you get us a chart 7 

### like that, even if it would be apples-to-oranges 8 

### based on how they are broken out over a longer 9 

### period of time -- 10


### MR. STRICKMAN: Sure. You bet. 11 

### CHAIRPERSON MADIGAN: -- like the 12 

### last five-ten years? 13


### MR. STRICKMAN: We have data that 14 

### goes back a long way. 15


### CHAIRPERSON MADIGAN: I bet. And 16 

### it is easy? I am not going to force one of your 17


### few staff to -- excellent. 18 

### (Laughter.) 19 

### MR. STRICKMAN: No, we can do it 20 

### fairly quickly. 21


### CHAIRPERSON MADIGAN: Excellent. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 174



### That would be interesting. 1 

### MR. PODBERESKY: Just very 2 

### generally, the complaint numbers run anywhere 3 

### from 44,000 in the late 1980s; the more recent 4 

### cap or top was around 20,000 or 22,000 back in 5 

### the year 2000. 6


### MR. STRICKMAN: Yes. 7


### MR. PODBERESKY: And the numbers we 8 

### are running now have been about the same for the 9 

### last three or four years. 10 

### MR. STRICKMAN: But 45,000 was the 11 

### high mark in 1987. And that is when we had about 12 

### 70 percent of the industry consolidating and 13 

### merging. So, it was nuts. 14 

### (Laughter.) 15


### CHAIRPERSON MADIGAN: Deborah? 16 

### MEMBER ALE-FLINT: Yes, I have 17 

### become aware of a GAO report on the Department's 18 

### enforcement and regulations. Is that more 19 

### focused on Consumer I and II or more broadly 20


### towards the enforcement areas of DOT? And can 21 

### we, as the Committee, learn more about any 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 175



### prescribed -- or how the DOT is addressing those 1 

### recommendations? 2 

### MR. PODBERESKY: A GAO report? 3


### MEMBER ALE-FLINT: GAO. 4 

### MR. PODBERESKY: The only recent 5 

### GAO report that I am familiar with is the one 6 

### where they recommended that we develop more 7 

### information on ancillary fees that airlines are 8 

### collecting, just in gross revenue numbers, which 9 

### is a part of one of the rulemakings that was 10 

### mentioned earlier today, by Bob in fact, that we 11 

### are proposing to require more data filing by 12 

### carriers, more specific data on what they are 13 

### collecting in terms of gross revenues with 14 

### regard to the ancillary fees. 15 

### The IG's Office, or the Department's 16 

### Inspector General's Office, did have some 17 

### recommendations with respect to dealing with 18 

### flight delays, cancellations, and tarmac 19 

### delays. But some of the work we have done with 20 

### respect to regulating tarmac delays results from 21 

### that. That was also more than five or seven 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 176



### years ago. 1 

### They are conducting further 2 

### studies; they have to under one of the provisions 3 

### in the FAA modernization legislation. 4 

### CHAIRPERSON MADIGAN: Charlie? 5 

### MEMBER LEOCHA: Just real quickly, 6 

### the GAO report that you are referring to I 7 

### believe also talked about ancillary fees, and we 8 

### will be talking about that an awful lot in the 9 

### afternoon. So, that will be taken care of. 10 

### And the question of complaints going 11 

### into DOT, most of these complaints -- and your 12 

### responses require study, right, to find out 13 

### whether or not, you know, how DOT is going to 14 

### respond? Otherwise, you pass them directly on 15 

### to the airlines? 16 

### A consumer might get a response from 17 

### you and say, "Yes, we received your complaint." 18 

### And then, you pass it off to the airlines, and 19 

### the airlines might immediately solve the 20 

### problem. 21 

### But what you will do is, if it has 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 177



### to do with one of your regulations, you might 1 

### aggregate it with other problems and, then, 2 

### perform -- 3 

### MR. STRICKMAN: That is correct. 4 

### MEMBER LEOCHA: Well, when will the 5 

### consumers hear from you again after they have 6 

### heard from you and you say, "Okay, we've got your 7 

### complaint?" Then, what happens? 8 

### MR. STRICKMAN: A lot depends on, if 9 

### it touches on one of our regulated areas, and we 10 

### are pursuing it to ensure compliance with the 11 

### regulation, then if it is something that the 12 

### consumer did not receive initially that they are 13 

### entitled to, then we are contacting the airline 14 

### to see that the passenger gets or try to get the 15 

### passenger what they are entitled to. 16 

### Again, going back to the majority of 17 

### the complaints we receive not touching on a 18 

### regulation and not something we are going to 19 

### pursue, the acknowledgment that they receive 20 

### from us may be our involvement with them, other 21 

### than providing them with information how to 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 178



### contact through our website, the brochures, the 1 

### publications to provide them with assistance in 2


### the future. 3 

### So, the majority of our time is spent 4 

### pursuing those cases that touch on our 5 

### regulations. And then, my staff is going to be 6 

### back in touch with that consumer, whether it is 7 

### by email or by phone, after they are getting a 8 

### response back from the airline, to try to draw 9 

### a conclusion as to whether, in fact, the airline 10 

### violated one of our regulations or did not. 11 

### Again, it is based on receiving an 12 

### allegation. We receive a lot of allegations 13 

### where a passenger says the airline did not do 14 

### something. And there is the passenger's story 15 

### and there is the airline's story. And so, we are 16 

### trying to make a determination as to whether 17 

### there really was compliance with our regulation. 18 

### MEMBER LEOCHA: Okay. If a 19 

### consumer complained about something and it had 20 

### nothing to do with the regulation -- 21


### MR. STRICKMAN: Yes. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 179



### MEMBER LEOCHA: -- and you sent it 1 

### to the airlines, do the airlines report back to 2 

### you what they did? Or is it just it has gone over 3 

### to them, and then the consumer may or may not hear 4 

### from the airline? 5 

### MR. STRICKMAN: Well, the airlines, 6 

### there is a requirement now for the airlines to 7 

### provide an acknowledgment within 30 days and a 8 

### substantive reply within 60 days. 9 

### MEMBER LEOCHA: And that applies to 10 

### those that you forward on? 11 

### MR. STRICKMAN: That applies not 12 

### just to the ones that come to us; it applies to 13 

### somebody who writes directly to an airline 14 

### without coming to us. 15 

### MEMBER LEOCHA: Okay. 16 

### MR. STRICKMAN: If the airline has 17 

### not received it directly from the passenger, and 18 

### we forward it to the airline, then the airline 19 

### has that obligation to do it. But if the 20 

### passenger never comes to us or they go to the 21 

### airline first, the airline still has that 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 180



### obligation to respond within the 30- and 60-day 1 

### period. 2 

### Many of the airlines, in fact, I am 3 

### guessing most of the airlines provide that one 4 

### reply that satisfies the substantive reply 5 

### without having to go through this two-stage 6


### process. 7 

### But it is likely, it is probable that 8 

### the majority of the cases that we receive, we 9 

### provide the acknowledgment to the consumer, and 10 

### that is probably going to be the last time that 11 

### we are going to have contact with that consumer. 12 

### If we forward something on to the 13 

### airline, we are providing the airline with a 14 

### roadmap of what we want them to do. We are 15 

### providing them with something that says, "Here's 16 

### something we want you to look at. We want a 17 

### reply back." That happens with most of the 18 

### regulated areas. It certainly happens with 19 

### anything in our civil rights area, in which the 20 

### airlines are mandated by law to provide us with 21 

### a dispositive reply within 30 days. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 181



### The airlines know when we are asking 1 

### them to provide us with a copy of the reply, and 2 

### we follow up with the airlines in those regulated 3



### areas. 4 

### MEMBER LEOCHA: Thank you. 5 

### MR. STRICKMAN: Okay. 6 

### MS. WORKIE: You know, we do onsite 7 

### investigations. One of the things we look at 8 

### when we do onsite investigations of airlines is 9 

### whether they are complying with the rules, 10 

### including whether they sent such-and-such 11 

### responses within 60 days, as required. 12


### MR. STRICKMAN: Just one comment. 13 

### Most of our work with the airlines is done on; 14 

### we are able to resolve the majority of all these 15 

### consumer issues on a very informal basis, by 16 

### referring things to the airlines, our contact 17 

### with the airline liaisons on a daily basis. So, 18 

### when we contact the airline or call the airline 19 

### and bring to their attention a particular issue, 20 

### most things are resolved informally that way. 21 

### It doesn't mean it does not record 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 182



### it as a potential violation of our regulations, 1 

### but most issues are resolved informally without 2 

### having to go through the more formal enforcement 3


### process. 4 

### MEMBER LEOCHA: Okay. I just want 5 

### to commend you guys on your work. Because 6 

### anytime someone sends you an email and you 7 

### forward it on to the airlines, things happen. 8 

### And so, it is nice from a consumer's point of 9 

### view. 10 

### MR. STRICKMAN: Thank you. I take 11 

### it on behalf of my staff. Many are here today. 12 

### Sam, thank you. 13 

### CHAIRPERSON MADIGAN: So, Sam, I 14 

### would propose that we attempt to get back in this 15 

### room by 10 after, as opposed to 15 after, to try 16 

### to accommodate Paul Hudson's presentation, and 17 

### if it is all right with everybody if we could 18 

### start with him. No? No? 19 

### (Laughter.) 20


### MR. PODBERESKY: I don't know. We 21 

### will have to check with the first speaker at 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 183



### 1:15, who is scheduled to be out of here by 1:30, 1 

### I believe. 2


### CHAIRPERSON MADIGAN: I am sure Ed 3


### and Paul can arm wrestle. 4 

### MR. PODBERESKY: Yes, we will work 5


### that out. 6 

### CHAIRPERSON MADIGAN: Okay. 7 

### That's no problem. 8


### MR. PODBERESKY: Just one 9 

### announcement. People were asking about wifi, I 10 

### guess. I got network and username and password 11 

### information. I am going to leave it right on 12 

### this table. 13 

### MS. WORKIE: Let's put it on the 14



### screen. 15 

### MR. PODBERESKY: Can you put it on 16


### that screen? 17 

### MS. WORKIE: We can just type it up 18 

### and put it on. 19 

### MR. PODBERESKY: Okay. 20 

### CHAIRPERSON MADIGAN: Okay. We 21 

### are in recess. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 184



### MR. PODBERESKY: We are in recess. 1 

### Ten after, we will be back. 2 

### (Whereupon, the foregoing matter 3 

### went off the record for lunch at 12:14 p.m. and 4 

### went back on the record at 1:11 p.m.) 5
6

7
8
9
10
11
12
13
14


### A-F-T-E-R-N-O-O-N S-E-S-S-I-O-N 15 

### 1:11 p.m. 16 

### CHAIRPERSON MADIGAN: All right. 17 

### We are going to start with the presentations. 18 

### First up we have Ed Mierzwinski from U.S. PIRG 19 

### [Public Interest Research Groups]. 20 

### MR. MIERZWINSKI: Thank you, 21 

### General Madigan, members of the Committee. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 185



### I will be very brief. But I am Ed 1 

### Mierzwinski with the national association, the 2 

### Federation of State Public Interest Research 3 

### Groups, nonprofit, nonpartisan consumer 4 

### advocacy organizations that got involved in 5 

### airline passenger rights issues about five or 6 

### six years ago, when I know in the airline 7 

### contracts of carriage there is a force majeure 8 

### provision. 9 

### And a force of nature came to visit 10 

### me, Kate Hanni. And Kate Hanni was a stranded 11 

### passenger back in Austin, Texas. She and her 12 

### family were on the same plane for 10 hours. I 13 

### think I want to credit Kate for much of the 14 

### impetus for the airline passenger rights that we 15 

### have today that were first put into regulations 16 

### by Secretary LaHood -- I commend him for 17 

### that -- and then, codified by the Congress in the 18 

### reauthorization earlier this year. 19 

### And so, U.S. PIRG primarily works on 20 

### a number of other consumer issues, but we do care 21 

### about specific consumer issues and are very 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 186



### happy to work with not only flyersrights.org, 1 

### Kate's group, but also with Paul Hudson's group, 2 

### the Aviation Consumer Action Project, and with 3 

### airlinepassengers.org, Jack's new group. And I 4 

### think we share a lot of the same goals. 5 

### The Advisory Committee is, in 6 

### addition to the passenger rights that were 7 

### enacted, a very important part of the 8 

### legislation. I encourage this Committee to 9 

### continue to work. I hope that you don't have all 10 

### your meetings in this particular building. I 11 

### hope you reach out and have some meetings where 12 

### passengers will be able to find you more easily 13 

### and more quickly. If you don't have the money 14 

### to go to Chicago O'Hare or to JFK, go across the 15 

### river to National and have a hearing there and 16 

### talk to passengers about the issues that they 17 

### face. It won't cost very much on the Metro. 18 

### The key issues that I want to simply 19 

### highlight, I just want to lay out a few ideas for 20 

### you to look into over the next year. And I have 21 

### hard copies of a longer presentation that Katlin 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 187



### will leave with you. 1 

### Well, first of all, I think one issue 2 

### that is an overarching issue is it has been very 3 

### difficult for consumers over the years to 4 

### enforce their rights in airline complaint areas 5 

### because of preemption. Federal preemption is 6 

### limited or restricted. The rights of states and 7 

### state attorneys general to enforce the law, it 8 

### is restricted and made it almost impossible for 9


### consumers to enforce the laws. 10 

### When you have got a situation where 11 

### the laws can't be enforced by private rights of 12 

### action or by local enforcers, that is a situation 13 

### where companies are going to take advantage; 14 

### companies are going to push the envelope. They 15 

### are going to ignore complaints. They are not 16 

### going to comply with the law if they know they 17 

### are going to get a slap on the wrist by some weak 18 

### federal regulator. 19 

### So, I just want to highlight a few 20 

### issues that we encourage the Committee to look 21 

### into. A lot of this comes from my 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 188



### communications with flyersrights.org. 1 

### But we believe there is a lack of 2 

### concern for delayed and cancelled passengers. 3 

### We encourage the Committee to investigate the 4 

### general lack of cooperation, information, 5 

### compensation, or protections. When handling 6 

### passengers of flights who have been delayed or 7 

### cancelled, their problems have been exacerbated 8 

### by the switch by bigger planes to smaller, 9 

### narrow-bodied planes and the consolidation in 10 

### the industry, the fewer routes that planes are 11 

### flying, the lack of the old reciprocity rule that 12 

### gave you the opportunity to get on another 13 

### carrier and your carrier would pay for it. 14 

### Roundabout travel is a new problem. 15 

### Because of these changes in routes, more 16 

### consumers are getting stuck with roundabout 17 

### routes and getting stuck missing planes, flying 18 

### on the wrong planes, and not getting 19 

### compensation. 20 

### The obvious big issue related to 21 

### that is lost or delayed luggage. I think one 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 189



### thing I would encourage the Department to 1 

### do -- and you can encourage the Department to 2 

### do -- is to do a better job of telling people 3 

### their rights to refunds and compensation, not 4 

### only when their luggage is lost, but also when 5 

### their luggage is delayed. 6 

### The flyersrights.org's view, by the 7 

### way, is that the airlines simply game the system. 8 

### They don't care if you get your luggage back. 9 

### They sell it to websites by the pound to make a 10 

### little bit of revenue back. And customers that 11 

### come in for complaints, they try to push them to 12 

### not get compensation. Consumers end up in a 13 

### kind of version of those odd TV shows "Storage 14 

### Wars" or "Pawn Stars," trying to look for their 15 

### luggage. But it is a serious problem to arrive 16 

### somewhere without luggage or to never get your 17 

### luggage and not be told that you have the right 18 

### to compensation. 19 

### Flyersrights.org has also 20 

### identified that, with the new a-la-carte seating 21 

### on airlines, the need to extract a dollar for 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 190



### every possible seat on the plane, it costs more 1 

### to sit in a seat that you got early. It costs 2 

### more to sit in a seat by the aisle. It costs more 3 

### to sit in a seat in the front, et cetera, et 4 

### cetera. People are squeezed in the back, and 5 

### families are being separated. 6 

### Every time I fly now, there are 7 

### families that find that they are all separated. 8 

### The flight attendants try to help them get back 9 

### together, but other people have to move. If 10 

### they paid for an aisle seat, they don't want to 11 

### give it up. 12 

### The back of economy is possibly a 13 

### safety hazard as well. The seats are too small. 14 

### The problems that people have with less leg room 15 

### include DVT [Deep Venous Thrombosis], a serious, 16 

### life-threatening disease caused by being 17 

### cramped in a small place for a long time. That 18 

### is something that maybe the Committee could look 19 

### into. 20 

### One of the things that I have been 21 

### encouraged by some of the other consumer 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 191



### agencies in Washington to do lately is making it 1 

### easier to find out about competition and 2 

### complaints. While the DOT's complaint database 3 

### has been around for a long time, I would 4 

### encourage the DOT to take a look at the Consumer 5 

### Financial Protection Bureau's new database, the 6 

### Consumer Product Safety Commission's 7 

### saferproducts.gov searchable database. And I 8 

### would encourage the Department to take all of its 9 

### data on airlines -- and I don't know if this is 10 

### true, but I couldn't find it -- and put it into 11 

### downloadable databases, so that researchers can 12 

### look at something other than a PDF summary of the 13


### data. 14 

### The CFPB [Consumer Financial 15 

### Protection Bureau], the new consumer financial 16 

### agency, also has a very excellent tool on its 17 

### website called "Ask the CFPB a question." And 18 

### it populates new questions and new answers based 19 

### on a very simple website that consumers simply 20 

### go on and ask questions or look for the answers 21 

### to the questions that are already up there. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 192



### So, I think that we could do a lot 1 

### with making more information available in a more 2 

### machine-readable way to help consumers and 3 

### researchers analyze the data about airline 4 

### passenger rights and about whether companies are 5 

### complying. 6 

### The point that I know that Paul 7 

### Hudson will be making, and that I have long 8 

### supported, is that there is no funding for 9 

### airline consumer advocacy. There is, General 10 

### Madigan, right in your home State, the Citizens' 11 

### Utility Board, Illinois CUB, that is funded 12 

### through inserts in State motor vehicle mailings. 13 

### There is another club in Oregon that 14 

### receives its funding from intervener status. 15 

### It applies to the Department of Public Utilities 16 

### whenever there is a rate case, and it says, "We 17 

### are experts. We have expert lawyers and 18 

### advocates. We, however, can't afford to 19 

### participate in this case to balance the scales 20 

### unless we get some funding." 21 

### And so, here in the airline 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 193



### passenger rights area, I would encourage you to 1 

### look at ways to figure out a way to get one penny 2 

### of the airline taxes somehow into a dedicated 3 

### fund for consumer protection. The airlines and 4 

### the airports have extracted billions of dollars 5 

### of subsidies and payments for their purposes. 6 

### We should have more money going to consumer 7 

### protection. 8 

### I want to summarize very briefly 9 

### with just a couple of points. The Department 10 

### should both evaluate and regulate the airlines' 11 

### notification to passengers during flight delays 12 

### and cancellations. 13 

### The Department should disaggregate 14 

### mishandled luggage into three categories: 15 

### lost, damaged, and stolen to make it easier to 16 

### analyze the results. 17 

### Again, the Department should do a 18 

### good job of educating consumers about their 19 

### rights to compensation in all the categories 20 

### where they are allowed compensation. 21 

### The Department should upgrade the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 194



### website. Take a look at the CFPB website for 1 

### ideas. 2 

### Flyersrights.org recommends the DOT 3 

### should mandate for safety reasons alone minimum 4 

### standards for seat pitch, seat size, and leg room 5 

### in economy. 6 

### And the DOT should manage that a 7 

### schedule change not damage the passenger in any 8 

### way, and the airline should be responsible for 9 

### those losses and returning the passenger to 10 

### whole on his or her trip. 11 

### I think there is a great opportunity 12 

### for this Committee to provide a lot of benefits 13 

### to the flying public, and I look forward to 14 

### working with you over the next several years of 15 

### your work. 16 

### Thank you very much. 17 

### CHAIRPERSON MADIGAN: Thank you, 18


### Ed. 19 

### Do we have any questions from the 20 

### members of the Committee? 21 

### (No response.) 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 195



### If not, next up is Paul Hudson. 1 

### Paul is with the Aviation Consumer Action 2 

### Project. 3 

### MR. HUDSON: Thank you, Chairman 4 

### Madigan, members of the Committee. 5 

### I am here also representing Kate 6 

### Hanni with flyersrights.org. As many of you may 7 

### know, she was the principal advocate for what is 8


### now called the three-hour rule or the 9 

### tarmac-delay rules that were really a major 10 

### victory for consumer protection. 11 

### I would like to focus, my remarks, 12 

### on the complaints that are most prevalent by 13 

### consumers and what can be done to deal with some 14 

### of these problems and complaints. 15 

### Overwhelmingly, delays are the No. 16 

### 1 complaint that airline passengers have had. 17 

### To put it in a little context, up until 1980, 18 

### every decade saw air travel get faster and more 19 

### reliable. But since 1980, every decade has seen 20 

### air travel get slower and less reliable. That 21 

### means more delays, more cancellations, and 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 196



### generally a slower flight schedule. 1


### Now we feel there are a number of 2 

### reasons for this. They are systemic. I have in 3 

### my printed remarks what they are. But it is 4 

### basically the capacity has been reduced in 5 

### various ways while the number of people has 6 

### increased. 7 

### The airlines, since 1978, have been 8 

### deregulated, as everyone knows. That means 9 

### that there are no restrictions that used to be 10 

### put on them to try to balance the capacity with 11


### the demand. 12 

### With respect to delays, there is no 13 

### regulation for compensation right now for 14 

### domestic delays. Internationally, in theory, 15 

### you can get up to $7,000 for a delay on a strict 16 

### liability basis under the Montreal Convention of 17 

### 1999. But nobody knows about this. Consumers 18 

### have never been informed. Most lawyers have no 19 

### idea it exists. 20 

### When someone says, "Well, I was 21 

### delayed in my international flight," say coming 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 197



### back from China, the airline says, "Well, we are 1 

### not going to pay you anything." So, they go to 2 

### small claims court or they go to a state court. 3 

### And the airline, then, has the right now to 4 

### remove that case to federal district court. And 5 

### so, then you have to hire a lawyer and your legal 6 

### fees are going to be 10 to 100 times what you 7 

### could potentially recover. 8 

### This is also a similar problem with 9 

### EU [European Union] flights, which also provide 10 

### for delay compensation. Once again, consumers 11 

### are not informed, and their rights are generally 12 

### ignored and there is no enforcement by any agency 13


### of that. 14 

### With respect to passengers stranded 15 

### overnight, it used to be common practice that you 16 

### would get a voucher for a hotel room and for 17 

### transportation and for meals. But, for the most 18 

### part, that is not available anymore. Or, if it 19 

### is, it is only in a very limited, begrudging way. 20 

### Then, we have insurance that is 21 

### supposed to protect you against delays and 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 198



### cancellations. But if you look at the policies, 1 

### they are really largely a scam because they don't 2 

### cover anything, but they want to charge you up 3 

### to 10 percent of the airline ticket price for 4 

### this insurance. 5 

### I had a recent experience a year or 6 

### so ago. I was flying to Brazil on a U.S. Airways 7 

### flight. Excuse me. I was flying to Paraguay and 8 

### I was going through Brazil. And the airline 9 

### assured me I didn't need a visa for Brazil 10 

### because I was just changing planes there. Well, 11 

### that turned out to be wrong. I was delayed a day 12


### and a half. 13 

### I had insurance, but the insurance 14 

### wouldn't cover my time. The most I would get is 15 

### maybe $10 for a meal I had to buy and I had to 16 

### sleep in the airport.. 17 

### The Committee here, I think, should 18 

### look at insurance and, at the very least, I think 19 

### a study needs to be done that will determine 20 

### whether the rates being charged are excessive, 21 

### to possibly be unconscionable under normal 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 199



### insurance standards. 1 

### And secondly, whether there should 2 

### be a set policy that is required if you are going 3 

### to buy insurance. Insurance should also cover, 4 

### if you have something valuable in your luggage, 5 

### you should be able to get excess-value 6 

### insurance. It is something that consumers are 7 

### willing to pay for. Most airlines are not 8 

### willing to offer it. 9 

### And for lost baggage, it is only 10 

### $3,000 max for domestic and $1,400 for 11 

### international. That is not enough to cover many 12 

### things. 13 

### The reports presently on lost 14 

### luggage do not unbundle them. They do not say 15 

### how much is lost versus how much is mishandled, 16 

### how much is delayed. They do not report what we 17 

### estimate is probably a 94 percent rejection rate 18 

### on claims to the airlines for lost luggage. 19 

### I would like to touch on another 20 

### complaint category. It is frequent flyer 21 

### programs. Now, once again, there are no 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 200



### regulations on this by the federal government as 1 

### a rule, and states are prohibited from consumer 2 

### regulation in this area. 3 

### There was a recent study done 4 

### independently, and it found that the use of 5 

### frequent flyer miles varied from 100 percent to 6 

### 5 percent. So, for instance, two airlines, 7 

### American and Delta, which I happen to have their 8 

### cards and I am always trying to build up miles. 9 

### And it was shocking to me to find out that only 10 

### 5 percent are actually getting used. 11 

### At the very least, there should be 12 

### disclosure required by the airlines as to the 13 

### real nature of these frequent flyer programs. 14 

### There is, actually, at least a potential 15 

### liability for the airlines because, in effect, 16 

### you are building up a credit for free travel, and 17 

### the airlines have incentive to change the 18 

### programs or devalue them. They do not consider 19 

### them to be enforceable contract rights, just 20 

### marketing programs which they can change or 21 

### eliminate at will. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 201



### Now, for oversales and bumping, 1 

### which coincidentally was the lawsuit that Ralph 2 

### Nader brought many years ago that resulted in the 3 

### bumping rule, and also the establishment of 4 

### ACAP, the airlines have recently proposed that 5 

### the reporting on bumping be eliminated. This 6 

### would be a real mistake, and we have suggested 7 

### how we think it should be reformed. 8 

### I would like to finish with talking 9 

### about enforcement, remedies, and advocacy. 10 

### Consumer protection is great. I was general 11 

### counsel for nine years to a major state agency 12 

### that provided regulations and compensation for 13 

### violent crime victims. But it is no substitute 14 

### for individual action. And when we talk about 15 

### consumer rights, we are normally talking about 16 

### individual rights that can be enforced in some 17 

### reasonable, efficient, cost-effective way. 18 

### Airline passengers, as consumers, 19 

### as far as their rights are concerned, even if 20 

### they theoretically have them, are in a black 21 

### hole. No other category of consumers is 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 202



### deprived of going to state and local courts. 1 

### Other speakers have talked about 2 

### this preemption thing. What it really amounts 3 

### to is immunity because, when you bring an action 4 

### into local court, the airline has the automatic 5 

### right to remove it to district court. If you are 6 

### one of, say, a thousand people that has had the 7 

### same problem, you will not get class action 8 

### status. Therefore, it is completely, as a 9 

### practical matter, inefficient to deal with that 10 

### kind of case. 11 

### There are many other areas where the 12 

### federal government and states cooperate with 13 

### each other -- the lemon law, for instance, is a 14 

### well-known success story -- and where consumers 15 

### are able to deal with the complaints in an 16 

### efficient manner. 17 

### There are some things that the DOT 18 

### could do without legislation I think that would 19 

### at least give consumers a little more of a chance 20 

### to get their complaints resolved. Some of these 21 

### things involve the methods that are used by the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 203



### consumer protection people at DOT. 1 

### Lastly, I would like to talk about 2 

### the airline passenger emergency hotline, which 3 

### Kate Hanni and flyersrights.org has set up. It 4 

### is completely funded by volunteers right now, 5 

### operated by volunteers. It has been operating 6 

### now for almost two years. 7 

### There is no reason why there 8 

### shouldn't be a real consumer hotline. This 9 

### could be funded with far less than the millions 10 

### that are requested by DOT staff for this. 11 

### We have suggested here a tax or an 12 

### amount allocated of one penny, one single cent, 13 

### per airline ticket, would generate $6 to $10 14 

### million, which could easily fund this and a 15 

### number of other necessary consumer protection 16 

### activities. 17 

### Thank you. 18 

### CHAIRPERSON MADIGAN: Thank you, 19


### Paul. 20 

### Any questions from the Committee? 21 

### MEMBER LEOCHA: Just a quick 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 204



### comment. To Ed, the CFPB website, I have looked 1 

### at it. They do a very good job, and it is 2 

### something I think we can look at, encouraging DOT 3 

### to look at, and it is probably non-regulatory and 4 

### nothing we really need to deal with. But it is 5 

### a very good suggestion. 6 

### And then, once again, thank you very 7 

### much, Paul. 8 

### And for those of you who don't know, 9 

### Paul is an important person in the airline 10 

### industry. Singlehandedly, he has been fighting 11 

### for the Pan Am victims and successfully working 12 

### to move consumer issues forward where the rubber 13 

### really meets the road. He has been successful 14 

### internationally. He is someone we should 15 

### really look up to, a good man. 16 

### CHAIRPERSON MADIGAN: Thank you, 17


### Paul. 18 

### Next up, Jack Corbett with 19 

### airlinepassengers.org. 20


### MR. CORBETT: Good afternoon. 21 

### I am Jack Corbett, a Director of 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 205



### airlinepassengers.org. We thank you for the 1 

### opportunity to suggest some issues that this 2 

### Advisory Committee can consider during your 3 

### statutory two-plus years of operation. 4 

### You have our one-page list of 5 

### recommendations in front of you. And for the 6 

### people in the audience, copies of that one-pager 7 

### should be available at the registration desk. 8 

### Our comments also represent the 9 

### views and positions of the Association for 10 

### Airline Passenger Rights, AAPR. 11 

### The first question we are addressing 12 

### today is, is this Advisory Committee really 13 

### needed? The scheduled airlines have suggested 14 

### that the recent FAA Reauthorization Act plus two 15 

### past sets of airline consumer regulations have 16 

### already imposed more requirements on a seemingly 17 

### deregulated domestic airline industry than most 18 

### of the segments of our society receive. As a 19 

### United Airlines CEO said yesterday, "We are 20 

### brutally regulated." 21 

### We are very sensitive to that. From 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 206



### the viewpoint of airline passengers, they need 1 

### airlines who can make a profit, because without 2 

### a profit, there is going to be fewer airlines and 3 

### less competition, and more competition is very 4 

### important for airline passengers. 5 

### Our answer is, yes, this Advisory 6 

### Committee is needed for two important reasons. 7 

### First, there are a number of airline consumer 8 

### issues that still need federal regulatory or 9 

### statutory solutions, and we will help you to 10 

### identify them over the next two years. 11


### The second -- and Paul and others 12 

### have spoken about this -- if the federal 13 

### government doesn't act to protect airline 14 

### passengers on these remaining areas, it just 15 

### won't happen. Because of federal preemption, 16 

### there are no effective state ways for enhancing 17 

### consumer rights. So, unless DOT does it, it 18 

### ain't going to happen. We will talk about 19 

### preemption later on. 20 

### What are the issues that we hear most 21 

### about from airline passengers? Our numbers may 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 207



### be a little bit different than ACAP's. No. 1 for 1 

### us is frustration with TSA's passenger and 2 

### baggage screening operations, but your 3 

### Committee doesn't have jurisdiction over TSA 4 

### matters. That is really a shame. 5 

### Issue No. 2 is consumer confusion in 6 

### calculating the total cost of flying. The 7 

### airlines are resisting sharing all of the 8 

### information consumers need about their 9 

### unbundled ancillary fees, so that consumers can 10 

### compare costs among competing carriers in a 11 

### side-by-side fashion. Price transparency is a 12 

### huge issue for airline passengers. One of the 13 

### major benefits of this internet era has been the 14 

### consumer's ability to compare each airline's 15 

### prices against it’s competitors' prices and 16 

### quality of service to determine the best deal. 17 

### As you heard this morning, this 18 

### issue is before the DOT. What can you, as an 19 

### Advisory Committee, do? Well, the comments 20 

### will be received in the docket, and DOT will make 21 

### its decision based on those comments. We urge 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 208



### you to keep pressure on DOT to resolve this 1 

### regulation as quickly as possible because there 2 

### will be a minimum of five years since the first 3 

### time the airlines announced their ancillary fees 4 

### before DOT can have a regulation effectively on 5 

### that issue. 6 

### The next issue is federal aviation 7 

### taxes. As everybody knows, the airlines are 8 

### sensitive to governments imposing aviation 9 

### taxes and fees that collectively can total some 10 

### 20 percent of the fare. Airline passengers have 11 

### a similar, but narrower issue on which we could 12 

### use this Advisory Committee's help. 13 

### It irritates passengers who have 14 

### purchased non-refundable fares on tickets that 15 

### they don't use that the Treasury keeps all the 16 

### federal ticket taxes that have been prepaid by 17 

### the passengers, but they never use. There is no 18 

### problem with the airline keeping the 19 

### non-refundable fare. That is the deal the 20 

### passenger has made with the airline, and that is 21 

### not an issue. The amount of money the Treasury 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 209



### keeps from prepaid and unused taxes is really 1 

### large. It can be as much as $50 on a long-haul 2 

### flight. 3 

### A statutory change is needed. 4 

### Specifically, we need your support in DOT's 5 

### first report to Congress next February for 6 

### amending the federal aviation tax statute to 7 

### allow passengers to get refunds for federal 8 

### taxes paid on flights not taken. 9 

### The last issue has already been 10 

### raised, and I won't go into the weeds on it. It 11 

### has to do with the enforceability of airline 12 

### contracts of carriage and federal preemption. 13 

### As you know, contracts of carriage 14 

### is supposed to be the airline's promise to the 15 

### passengers as to what they will abide by. We 16 

### think that this is a serious issue, and this 17 

### Advisory Committee should focus its time on this 18 

### and maybe a few other issues in its two years of 19 

### operation. 20 

### Before you consider the issue of 21 

### contract of carriage and whether it is really 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 210



### effective, we think you should ask DOT's Office 1 

### of the Inspector General to take this issue up 2 

### for a year. They should review the airline's 3 

### contract of carriage to determine whether their 4 

### provisions are often so hedged by legalese to the 5 

### extent possible, that passenger rights are not 6 

### practically enforceable in courts. 7 

### You should also ask the OIG to review 8 

### past federal litigation, as Paul mentioned, as 9 

### to whether the provision in the Federal Aviation 10 

### Act preempting state regulation of airline 11 

### services has been so broadly interpreted, so 12 

### that you can make a recommendation to the 13 

### Secretary as to whether this provision should be 14 

### narrowed by Congress when the next FAA 15 

### Reauthorization Act is enacted. 16 

### This legal analysis and your 17 

### subsequent review will take considerable time. 18 

### If we request it now, this important project 19 

### could be completed well before your Advisory 20 

### Committee finishes its work and has to make its 21 

### final recommendations. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 211



### Again, we appreciate the 1 

### opportunity to present our initial and AAPR's 2 

### suggestions to this Advisory Committee, and we 3 

### hope to participate fully in all of your future 4 

### agenda items. 5 

### Thank you very much. 6 

### CHAIRPERSON MADIGAN: Thank you, 7


### Jack. 8 

### Questions? 9 

### MEMBER BERG: Mr. Corbett, 10 

### regarding the preemption issue -- 11 

### MR. CORBETT: I thought you might 12 

### raise that. 13


### MEMBER BERG: Yes. You are aware 14 

### that the majority of the circuits that have 15 

### considered it support the broad reading of the 16 

### statute as well as the Supreme Court's review of 17


### the statute? 18 

### MR. CORBETT: We do, and I think 19 

### Paul has been more active than we have on this 20 

### issue. We think the term "services" has been so 21 

### broadly interpreted by a majority of the federal 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 212



### circuits that it goes well beyond what 1 

### passengers think should be services, and that 2 

### the OIG should look into this issue, make some 3 

### findings, come back to you. And this Advisory 4 

### Group should make a decision as to whether you 5 

### agree that this is too broadly interpreted and 6 

### whether you should recommend a narrowing of it 7 

### to some just basic issues to the Congress next 8


### year. 9 

### MEMBER BERG: And you are aware that 10 

### the Department has filed briefs in several cases 11 

### supporting the current view and interpretation 12 

### of the preemption provision as being very broad? 13 

### MR. CORBETT: And that is why we are 14 

### looking forward to this Committee for a new look 15 

### at the issue, and maybe a recommendation that it 16 

### is much broader in many circuits than it should 17


### be. 18 

### We have been working with the 19 

### National Association of Attorneys General 20 

### [NAAG], and we are hoping that they and we and 21 

### you can look at this issue and say, "Gee, it is 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 213



### worth a new look." 1 

### CHAIRPERSON MADIGAN: Any more 2 

### questions, comments? 3 

### MEMBER LEOCHA: One other thing, I 4 

### mean, I would like to ask if you think this might 5 

### work. In discussions that I had earlier this 6 

### week, actually, with the National Association of 7 

### Attorneys General, they informed me that under 8 

### the Consumer Financial Protection Bureau there 9 

### are federal laws which allow the airlines to not 10 

### have -- in this case, it is the financial groups, 11 

### but we could have something similar that allows 12 

### the airlines to only be subject to the same law 13 

### across -- they don't have to deal with 50 14 

### different state laws. But the states are 15 

### allowed to enforce the Consumer Financial 16 

### Protection Bureau federal regulations. 17


### MR. CORBETT: Yes. 18 

### MEMBER LEOCHA: That might be a 19 

### solution to this kind of an issue. 20 

### MR. CORBETT: I am happy for you to 21 

### look into that. We have looked at that 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 214



### language. 1 

### Because the court decisions that 2 

### Dave Berg just mentioned are so detailed, I think 3 

### we would be much better off with an aviation 4 

### approach to this, coordinated with the NAAG, 5 

### rather than using the new and untested Consumer 6 

### Rights Bureau's language as the basis of our 7


### attack. 8 

### So, we would hope that aviation 9 

### could do its own look, and then maybe we can get 10 

### a broader look by other groups, such as the new 11 

### consumer group established by Congress. 12 

### Thank you very much. 13 

### CHAIRPERSON MADIGAN: All right. 14 

### Thank you, Jack. 15 

### Next up, we have Sally Greenberg who 16 

### is with the National Consumers League. 17 

### MS. GREENBERG: Well, good 18 

### afternoon. I am very pleased to be here. 19 

### This is a really exciting 20 

### opportunity, I think, for consumers. It is 21 

### really democracy in action. This is what 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 215



### democracy looks like. We have brought four of 1 

### our interns with us because I really wanted them 2 

### to be part of this session and to see what happens 3 

### when we open the windows and let everybody have 4 

### their say. 5 

### The Committee's charge is a very 6 

### serious one. And some have cast their doubts on 7 

### whether this Committee is going to be effective 8 

### and can do what it will do as consumer advocates. 9 

### And that is to make the experience a much better 10 

### one for consumers who fly in airplanes in the 11 

### United States and abroad. 12 

### Someone said that the group won't be 13 

### effective because at least two seats will be 14 

### filled by people whose employers have opposed 15 

### most, if not all, aviation consumer protection 16 

### regulation. So, that is of concern. 17 

### However, I am cheered -- I am reading 18 

### from a USA Today article -- by the airline 19 

### industry's comments that they hope that the 20 

### airlines are committed to building, they believe 21 

### airlines are committed to building on their 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 216



### record operational performance and delivering 1 

### an even better customer experience through 2 

### passenger feedback and coordination with other 3 

### industry stakeholders. 4 

### So, we truly do believe that 5 

### sunshine is the best disinfectant. I think this 6 

### process will be not only good for consumers, but 7 

### I think it will be good for the airlines as well. 8 

### So, the National Consumers League 9 

### has been in operation since 1899. We were 10 

### formed in the progressive era, and we have always 11 

### championed the interests of both consumers and 12


### workers. 13 

### So, our comments are going to be 14 

### focused today on several areas: privacy, fare 15 

### and fee transparency, fair pricing, frequent 16 

### flyer program changes, and I am going to also 17 

### sign on to the comments of some of my colleagues 18 

### that we believe that consumers should have 19


### access to state courts. If the law has been 20 

### interpreted that preemption means that they 21 

### don't have access to state courts, I think we 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 217



### need to take a look at what the law currently 1


### says. 2 

### So, let me launch into my comments 3 

### on the privacy issue. I will start there. The 4 

### airlines collect a lot of information about each 5 

### of us when we make a reservation. They get our 6 

### name and address, our telephone numbers, our 7 

### date of birth, our gender, our traveler number, 8 

### our email addresses, cell phone, fax, SkyMiles 9 

### account, credit card or debit card information; 10 

### also, the travel-related information about our 11 

### health, emergency contacts, passport numbers. 12 

### That is a lot of information, personal 13 

### information. 14 

### So, what are the obligations on the 15 

### airlines to keep that information confidential? 16 

### Well, most airline sites give assurances that 17 

### they don't sell personal information, but their 18 

### privacy statements are so full of caveats that 19 

### you could drive a truck through them. 20 

### For example, I went to Delta Air 21 

### Lines' site. And what I saw there was a 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 218



### statement that this privacy policy, quote, "This 1 

### privacy policy will answer frequently-asked 2 

### questions about the kinds of information we or 3 

### our agents collect and how well it is used." 4 

### Then, it says, "Delta reserves the 5 

### right to modify this privacy policy at anytime 6 

### and without prior notice." I always love those 7 

### very open-ended statements in any kind of 8 

### so-called policy protections that companies 9 

### provide. Because what that means is that they 10 

### can change the rules at anytime, and you, as a 11 

### consumer, have no rights or protections. 12 

### And then, they also say, "We 13 

### routinely share your information with our 14 

### SkyMiles partners and promotional partners" -- I 15


### don't know who those folks are -- "and 16 

### subsidiaries, including Delta connection 17 

### carriers." 18 

### So, we are going to make a 19 

### recommendation to this Committee that the 20 

### Advisory Committee recommend adoption of an 21 

### airline-wide privacy protection standard for 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 219



### personal information. 1 

### Let me move next to airline change 2 

### fees and cancellation fees. I am going to take 3 

### issue with Jack Corbett about it being fair that 4 

### the airlines get to keep all my fees if I need 5 

### to change or cancel or postpone a trip to a later 6


### date. 7 

### I think, we think, we know that 8 

### consumers strongly dislike the hefty fees they 9 

### are asked to pay for simple transactions like 10 

### changing the time or date they need to fly or 11 

### canceling a flight because circumstances have 12 

### changed. Things happen in all of our lives that 13 

### make it sometimes impossible to fly on a certain 14 

### day or at a certain time. Why should the 15 

### airlines enjoy a windfall as a result of these 16 

### changed circumstances? 17 

### These inflated charges imposed by 18 

### the airlines for what is often a 19 

### quick-and-simple transaction doesn't set well 20 

### with the public. You know, Consumer Reports did 21 

### a survey in March of this year, and what they 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 220



### found was that 40 percent of consumers who fly 1 

### regularly said they are flying less these days 2 

### because of increased fees, and that was their 3 

### major reason, far more than those who blamed 4 

### flight delays, poor service, or any other 5


### annoyance. 6 

### So, our recommendation is that the 7 

### Committee determine from airline and DOT data 8 

### what the actual cost is of changing or canceling 9 

### a flight, and that the Advisory Committee 10 

### recommend that fees be tied closely to the actual 11 

### cost to the industry, insisting that consumers 12 

### not be gouged if their plans change. 13


### Let's talk for a moment about 14 

### consumer information. This is my third point. 15 

### As with all consumer rights and protections, 16 

### very often, we don't know what our rights are, 17 

### and we suspect the airlines like it that way 18 

### because they can create their own rules for 19 

### compensation when consumers are bumped from a 20 

### plane, their luggage is lost, their flight is 21 

### cancelled, or they are delayed without 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 221



### explanation. 1 

### But there is a better model. We 2 

### would like the Advisory Committee to review the 3 

### posters that the European Commission requires be 4 

### displayed in airports throughout the European 5 

### Commission countries, letting consumers know in 6 

### clear and concise language what their rights 7



### are. 8 

### Here is an example, and I would be 9 

### glad to submit this for the record. But this is 10 

### a European Commission poster and it says -- and 11 

### this is posted in airports throughout Europe, 12 

### throughout all the European Commission 13 

### countries -- "Denied boarding, cancelled, 14 

### delayed for a long time? Your rights and where 15 

### to complain." 16 

### So, as I said, I will leave this with 17 

### you. But, for the record, I think that this 18 

### would be a really important piece of basic 19 

### consumer information. Right now, consumers 20 

### really have no concept of what their rights are 21 

### or where to go to vindicate those rights. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 222



### Moving along, frequent flyer 1 

### programs, let me talk for a moment about that. 2 

### Consumers who are a member of frequent flyer 3 

### programs have very few protections because the 4 

### terms of these programs are subject to the whim 5 

### of the airlines. The way in which airlines 6 

### advertise their frequent flyer programs and what 7 

### they actually require in miles has become a form 8 

### of bait and switch. The rules have changed. 9 

### Now you need stepped-up award levels, usually 10 

### 50,000 miles, to travel on nearly any date you 11 

### are likely to want. 12 

### Now frequent flyer programs are 13 

### beneficial to the airlines because it gives them 14 

### a way of building customer loyalty and getting 15 

### consumers to buy their tickets as opposed to 16 

### those of a competitor. 17 

### So, Time magazine did a piece on 18 

### attempting to cash in frequent flyer miles just 19 

### a couple of years ago. They had a reporter try 20 

### to get a round trip from New York City to Los 21 

### Angeles. This was in 2010. Now that is one of 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 223



### the nation's most heavily-traveled routes. 1 

### What Time found was that on American 2 

### Airlines not a single 25,000-mile award round 3 

### trip was available for the month of July. A few 4 

### outbound seats were available in August, but 5 

### only a single return. 6 

### Delta Air Lines had not a single 7 

### frequent flyer trip available in July. For 8 

### August, just one outbound flight was available. 9 

### Continental, similar results, by the Time 10 

### magazine researchers. 11 

### As the reporter noted, this was all 12 

### done according not to your schedule as a 13 

### consumer, but according to the airlines' 14 

### timetable and the airlines' budget. 15 

### So, our recommendation is that the 16 

### Advisory Committee look at airline practices 17 

### regarding frequent flyer miles and recommend 18 

### standard contract protections for consumers. 19 

### The next point, fees for seat 20 

### assignments on coach flights. Others have 21 

### mentioned this, but it has gotten to the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 224



### point -- I mean, several years ago, it was 1 

### unheard of to charge consumers for getting a seat 2 

### ahead of time. Now it is de rigueur. 3 

### Today several airlines charge 4 

### anywhere from $6 to $36 for assigning seats. 5 

### And it presents significant added cost to 6 

### consumers, especially for families traveling 7 

### with young children. Some of the seats are, 8 

### let's say they are priced at $20. You are 9 

### traveling with a family of five. You have three 10 

### little kids. You want to sit together. That is 11 

### an additional $100 each way. So, it is not fair 12 

### to consumers and may, in fact, be prohibitive for 13 

### families traveling. 14 

### Our recommendation is that the 15 

### Committee review, in particular, the charging of 16 

### fees for the simple act of having a reserved seat 17 

### in your name in advance of a flight. 18 

### And it does feel like the airlines 19 

### nickel-and-dime the flying public, and more so 20 

### every day. It is what we would regard as just 21 

### old-fashioned gouging for those who want the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 225



### ability to travel. 1 

### I am going to sign onto the comments 2 

### of my colleagues on access to state courts to 3 

### bring claims. I think what Jack said is 4 

### absolutely right. If the federal government 5 

### doesn't have a process to protect consumers, it 6 

### ain't going to happen because we get thrown out 7 

### of state court unless you are going to small 8 

### claims court. 9 

### I noted that sometimes the claims 10 

### can be well in excess of the limits of small 11 

### claims courts. There was a woman who organized 12 

### an Alaskan cruise for her husband's 70th 13 

### birthday. It was supposed to be a 14 

### once-in-a-lifetime celebration. She had 11 15 

### family members going on the cruise. Her party 16 

### of 11 arrived at Phoenix Sky Airport with plenty 17 

### of time, but United Airlines, because of long 18 

### check-in lines, they somehow failed to listen to 19 

### the concerns of the passengers and didn't manage 20 

### to get them on the plane in time. 21 

### The result was the family missed its 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 226



### flight and the cruise, and they ultimately lost 1 

### the entire cost of the cruise. So, not until a 2 

### consumer reporter for an Arizona television 3 

### station intervened did United up the amount of 4 

### voucher they agreed to pay to members of the 5 

### family who never got on their flight. 6 

### So, our recommendation is that the 7 

### Advisory Committee allow consumers to use their 8 

### state courts to bring this kind of claim for 9 

### damages against the airline. 10 

### Let me just conclude by noting that 11 

### we, too, really like a database idea. I thought 12 

### Ed Mierzwinski's idea, it makes a lot of sense. 13


### We use the database for the Consumer Product 14 

### Safety Commission. We will use it for the 15 

### Consumer Financial Protection Bureau. Very 16 

### important avenue for consumer information, and 17 

### I think helpful to the industry as well to learn 18 

### what is going on with consumers. 19 

### And I love the idea of a penny on 20 

### every domestic flight, Paul's idea. 21 

### Let me say thank you again. We are 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 227



### very grateful to have this opportunity. Thank 1 

### you to the members of the Committee for your hard 2 

### work. I hope you live up to the standards that 3 

### were laid out by one representative of the 4 

### airlines. And we really think this is an 5 

### historic body, formed to hear and respond to 6 

### concerns of the consumers and the flying public. 7 

### Thank you very much. 8 

### CHAIRPERSON MADIGAN: Sally, thank 9


### you. 10 

### Do we have questions/comments from 11 

### members of the Committee? 12 

### MEMBER BERG: A question. So, I am 13 

### just curious, what do you think would happen to 14 

### the price of tickets if all these rules and 15 

### regulations that you are proposing, and others 16 

### have proposed, including access to state courts 17 

### and state litigation, what would happen to the 18 

### price of tickets if all of these came about? 19 

### MS. GREENBERG: Well, I would say 20 

### that if airlines had to be concerned about 21 

### answering for some of the egregious treatment 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 228



### that consumers experience, that their practices 1 

### would improve significantly. So, I am not going 2 

### to line up with you that lawsuits are necessarily 3 

### a bad thing. We believe that lawsuits are an 4 

### important avenue for consumers' ability to 5 

### vindicate their rights, and we think that it will 6 

### keep the industry more attentive to concerns 7 

### about being brought into court. 8 

### MEMBER BERG: I understand your 9 

### point of view. But the question is, what is 10 

### going to happen to the price of tickets? 11 

### MS. GREENBERG: Well, you won't get 12 

### sued if you are treating consumers right. 13 

### MEMBER BERG: So, you are not going 14 

### to answer the question? 15 

### MS. GREENBERG: That is my answer. 16 

### My answer is you figure out how to better provide 17 

### for the rights and take care of customers in a 18 

### more robust way, and you don't have to worry 19


### about -- 20 

### MEMBER BERG: But I am talking about 21 

### more than just state court access. You proposed 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 229



### a number of regulatory concepts, including 1 

### addressing frequent flyer programs, EU-style 2 

### posters, limitations on change fees. All of 3 

### these are regulatory changes. 4 

### So, I am trying to get at what your 5 

### understanding of the impact of those changes 6


### would be. 7 

### MS. GREENBERG: Well, we could take 8 

### them one-by-one, if you would like. 9 

### A poster, I mean, I think consumer 10 

### information -- 11 

### MEMBER BERG: No, I would like to 12 

### know what you think would happen to the price of 13 

### tickets. 14 

### MS. GREENBERG: It depends. It 15 

### depends on how the airlines respond to these 16 

### concerns. If you put posters up in airports, is 17 

### that a significant cost? And isn't consumer 18 

### information important? 19 

### I mean, your industry thought that 20 

### having a forum like this would probably -- I 21 

### mean, you probably have many, many regulatory 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 230



### lawyers here today. But I think this is a very 1 

### important process. 2 

### So, I can't sign onto an argument 3 

### that says providing consumers with information, 4 

### making sure consumers get a fair deal when they 5 

### do an exchange of tickets, and that you don't get 6 

### to pocket the money of consumers who do not 7 

### fly -- I am sorry, I can't sign onto we can't do 8 

### any of that because it is going to raise prices. 9 

### Because industries always argue that any form of 10 

### consumer protection is likely to raise prices. 11 

### MEMBER BERG: So, if the result were 12 

### that prices did go up for everyone -- for 13 

### example, if you were to eliminate, let's say, bag 14 

### fees. All right? So, not everyone checks a 15 

### bag. Lots of people fly without checking a bag. 16 

### If you eliminate bag fees, the cost of that 17 

### service is going to get spread across everyone 18 

### who flies. That is going to raise ticket 19 

### prices. Would you agree with that? 20 

### MS. GREENBERG: Well, notice I did 21 

### not mention bag fees. We want transparency 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 231



### about bag fees, but we have not taken a position 1 

### that there shouldn't be bag fees. 2 

### But that is why I said, if you want 3 

### to ask me one-by-one, I would be happy to answer. 4 

### I think posters are a great idea. I think 5 

### consumers ought to be able to change a ticket and 6 

### not be gouged because their plans have changed. 7 

### MEMBER BERG: Do you not think there 8 

### is a cost associated with changing tickets? 9 

### MS. GREENBERG: Well, sometimes, 10 

### you know, you have to weigh the relative value 11 

### of ensuring that consumers get a fair deal. And 12 

### I think everything I have said is -- you know, 13 

### certainly, the airlines are entitled to a fair 14 

### profit. That goes for every industry. We do 15 

### not want the airlines to go out of business. We 16 

### don't want any industry to go out of business. 17 

### But fees have skyrocketed over the last several 18


### years. 19 

### MEMBER BERG: Do you know what the 20 

### profit margin was for the airline industry last 21 

### year? 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 232



### MS. GREENBERG: Well, I read a Wall 1 

### Street Journal article that looked at number of 2 

### seats sold, but I understand the data came from 3 

### an industry study. So, I'm not sure, you know, 4


### whose data we need to look at. 5 

### That is why, let me just say, I think 6 

### this body is really important because we can look 7 

### at objective data, data that DOT is able to 8 

### collect and review. We should look at airline 9


### data as well. 10 

### But I am not going to go on what the 11 

### airline says were the profit margins. I do know 12 

### that airlines earned, you know, the fees have put 13 

### airlines in the black. So, I don't have those 14 

### figures right in front of me, but I would be happy 15 

### to have a conversation offline with you. 16 

### MEMBER BERG: I can tell you that 17 

### the profit margin last year was about 4/10ths of 18 

### a percent, 0.4 percent. 19


### MS. GREENBERG: And I know some 20 

### airlines are more profitable than others. So, 21 

### it depends on the airline and how it is operated. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 233



### MEMBER BERG: Thank you. 1 

### MS. GREENBERG: Okay. Anyone 2


### else? 3 

### CHAIRPERSON MADIGAN: Any other 4 

### questions or comments? Charlie? 5 

### MEMBER LEOCHA: Yes. One thing 6 

### that I will just mention in terms of Sally's 7 

### presentation is that the change fees we are 8 

### talking about aren't some minor thing. We are 9 

### talking $150 and $250. This is why her call to 10 

### sort of look at maybe trying to tie fees to the 11 

### actual cost might make some sense when we start 12 

### to talk about astronomical numbers. 13 

### Frequent flyer programs, I think 14 

### that you are exactly right. Just this year -- I 15 

### don't know if it actually happened, but I think 16 

### it did -- banks actually sent out [IRS form] 17 

### 1099-Miscellaneous to consumers for frequent 18 

### flyer miles that they got. So, frequent flyer 19 

### miles are no longer just a marketing tool. All 20 

### of a sudden, they are becoming real currency, and 21 

### people might have to pay taxes on them. So, it 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 234



### is something that makes it fair game right now. 1 

### And in terms of the database, I will 2 

### say that the BTS (Bureau of Transportation 3 

### Statistics) part of the DOT collects an enormous 4 

### amount of data. They probably can do a better 5 

### job of making it more accessible or easier to 6 

### access for consumers, but they do a great job. 7 

### If you are interested in looking at, digging out 8 

### data, it is a good place to go. They just need 9 

### to look at better ways to set up their interface. 10 

### But thank you very much for your 11 

### presentation. 12 

### MS. GREENBERG: Yes. Thank you. 13 

### CHAIRPERSON MADIGAN: Thank you, 14 

### Sally. 15 

### Next up, we have Erik Hansen with the 16 

### U.S. Travel Association. 17 

### MR. HANSEN: Thank you to the 18 

### Committee for having me here today. 19 

### I am pleased to be here on behalf of 20 

### the U.S. Travel Association, which is the 21 

### national nonprofit association which represents 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 235



### large portions, almost all aspects of the travel 1 

### and tourism industry. So, we have both the 2 

### public and private side of travel, so anywhere 3 

### from convention and visitors' bureaus to promote 4 

### destination, to almost every state director of 5 

### tourism, to also the private side of travel, 6 

### including hotels, car rental companies, 7 

### amusement parks, casinos, Disney, destinations. 8 

### So, we represent a broad range of stakeholders 9 

### in travel. 10 

### One of our challenges is finding 11 

### advocacy issues that we all agree on, right? 12 

### The online travel associations and online travel 13 

### companies certainly have some differences with 14 

### the hotels. And the airlines and the airports 15 

### often have differences in viewpoints on any 16 

### number of issues. 17 

### So, we have to navigate what can be 18 

### a tricky landscape to find issues that we all 19 

### agree upon. And I think we have found a mission 20 

### that has allowed us really to do that. That 21 

### mission is to increase travel to and within the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 236



### United States by eliminating barriers to travel. 1 

### The reason that that mission 2 

### statement works is because travel is viewed by 3 

### the consumer as a single product. It is a single 4 

### experience which they go through. Our customer 5 

### becomes our customer not when they enter a rental 6 

### car, not when they enter an amusement park, but 7 

### a traveler becomes a traveler when they think 8 

### about how they are going to purchase travel, 9 

### where they are going to go. And they evaluate 10 

### that experience all along the way. So, our 11 

### identity as an industry is actually derived from 12 

### the viewpoint of the consumer. 13 

### And that actually aligns us 14 

### oftentimes with the viewpoints of the consumer. 15 

### So, you have the unique situation here where the 16 

### consumer and the businesses have a single point 17 

### of view, and it doesn't happen always. 18 

### One of the examples of that, and why 19 

### that is so important, is travel agencies. They 20 

### sell travel as a single product. So, travel 21 

### industries and travel agencies are just as 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 237



### important to amusement parks, to hotels, to car 1 

### rental companies, as every other aspect of their 2 

### individual businesses. They are connected. 3 

### So, in business school they call 4 

### this the value chain. It is the series of 5 

### decisions that a consumer makes before 6 

### purchasing a product. To the extent that one of 7 

### the links in the chain is broken, it can have a 8 

### trickle-down effect to the entire industry. It 9 

### can impact entire segments, entire parts of our 10 

### business. 11 

### So, one of the things I want to talk 12 

### about today are two areas, two links in that 13 

### value chain that we believe need to be considered 14 

### by the Committee. Understandably, we have 15 

### spent a lot of time conducting research on the 16 

### decision points that a consumer goes through 17 

### before they decide whether or not to take a trip. 18 

### In 2010, we did a survey of the 19 

### air-traveling public and found that consumers 20 

### said price was the first decision point in 21 

### whether or not they were going to take a trip by 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 238



### air. If the price was too high, they wouldn't 1 

### go on the trip. That was the first thing they 2 

### thought about. And in fact, it was an 3 

### overwhelming statistic. It was 71 percent of 4 

### the traveling public said they consider price 5 

### first. So, we know that is important. 6 

### But in today's environment, we also 7 

### know that it can be difficult to compare prices 8 

### for the entire package of traveling. Now 9 

### airlines have certainly been great partners in 10 

### selling travel packages. They do that on their 11 

### website. But they also have competition from 12 

### travel agencies, brick-and-mortar, and online 13


### travel. 14 

### But to the extent that in certain 15 

### venues consumers are not able to compare prices, 16 

### it impacts other elements of our industry. So, 17 

### it is not just a consumer issue. If travel isn't 18 

### transparent and open in the marketplace, it 19 

### affects all the downstream businesses. So, 20 

### think of car rental companies, hotels, amusement 21 

### parks, bed and breakfasts, small businesses. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 239



### It has an impact. 1 

### And we haven't taken a position on 2 

### how to solve this issue yet. It is something we 3 

### are willing to look into. But we do think it is 4 

### an issue that this Committee should consider. 5 

### I would just want to reinforce again 6 

### that it is not just a consumer issue; it is an 7 

### economic issue as well. 8 

### In the same survey that we conducted 9 

### in 2010, the second decision point that 10 

### travelers identified as being important was 11 

### hassle. There are a lot of hassles in the air 12 

### travel system. 13 

### To the airlines' credit, they did 14 

### not always rank as the highest source of hassle. 15 

### There are great services that the airlines 16 

### provide. 17 

### But one of the problems in aviation 18 

### is hassles in the security screening checkpoint. 19 

### In 2011, we asked travelers to rank what their 20 

### frustrations were with the security screening 21 

### checkpoint. They identified an increase in 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 240



### carry-on bags as being one of the greatest 1 

### challenges and one of the highest frustrations 2 

### that they face. 3 

### Now, since 2009, or actually since 4 

### 2008, the number of carry-on bags has almost 5 

### exploded. There were 59 million more carry-on 6 

### bags in 2010 than there were in 2009. And from 7 

### 2010 to 2011, that went up to 89 million. That 8 

### is well above the number of increased travelers 9 

### for the same year. 10 

### So, this is impacting efficiency and 11 

### hassle, which has an impact on our business. 12 

### But if you listen to TSA, it also impacts 13 

### security. 14 

### Travelers, oftentimes now, to avoid 15 

### checked bag fees, will pack their carry-on bags 16 

### more densely with items. And it becomes harder 17 

### for TSA agents to resolve if dangerous items are 18 

### in those bags. 19 

### We have also heard from flight 20 

### attendants' unions that they oftentimes spend 21 

### more time before a flight figuring out what to 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 241



### do with carry-on bags than they do paying 1 

### attention to certain security elements and 2 

### certain responsibilities that they have for 3 

### security and safety before that flight. So, 4 

### that can become a challenge. 5 

### We had a panel that was commissioned 6 

### by the U.S. Travel Association to look at this 7 

### issue, and they came forward with some 8 

### recommendations. I am not going to talk about 9 

### them today, but I would encourage you to review 10 

### that report and to see what that Commission said. 11 

### But we think this is another 12 

### important issue that this Committee should 13 

### consider because we know that it is a high source 14 

### of frustration, and we do need to improve the 15 

### efficiency of that checkpoint process in order 16 

### for the entire travel experience to be improved. 17 

### So, with that, I am happy to answer 18 

### questions. And again, thank you for having me 19 

### here today. 20 

### CHAIRPERSON MADIGAN: Erik, thank 21


### you. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 242



### Why don't you, since you have a few 1 

### more minutes, give us some of the 2 

### recommendations that your organization has on 3 

### bags? 4 

### MR. HANSEN: Sure. You know, once 5 

### again, we commissioned a blue ribbon panel of 6 

### aviation security experts to look at the issues. 7 

### One of the things we said is we don't want to 8 

### cherry-pick certain recommendations that will 9 

### benefit us and not be credible on the issue. 10 

### That is what we will risk if we kind of censored 11 

### their work. 12 

### The recommendation that they came 13 

### back with was that the Department of 14 

### Transportation should issue regulations 15 

### requiring that airlines include in the contract 16 

### of carriage the price for one bag that could be 17 

### checked at no additional charge. So, that is 18 

### not saying that the airlines cannot charge for 19 

### the cost that they incur for that bag, but only 20 

### that it had to be included in the base fare of 21 

### the ticket. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 243



### And they thought that that would 1 

### incentivize travelers, those who wish, to check 2 

### a bag when they are purchasing a flight. We know 3 

### it is particularly important to age groups like 4 

### the elderly, also families oftentimes traveling 5 

### with children and extra items. So, that was one 6 

### of the ways in which they thought they could 7 

### solve the problem. 8 

### CHAIRPERSON MADIGAN: Give us one 9



### more. 10 

### MR. HANSEN: That was the only 11 

### recommendation they came forward with. 12 

### CHAIRPERSON MADIGAN: Oh, okay. 13 

### Terrific. 14 

### (Laughter.) 15


### MR. HANSEN: I know there are some 16 

### proposals in Congress. I know others have taken 17 

### a look at this issue. 18 

### CHAIRPERSON MADIGAN: Okay. 19 

### MR. HANSEN: But that was the only 20 

### one that the Committee did. 21 

### CHAIRPERSON MADIGAN: All right. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 244



### I had a sense there was more than one. 1 

### Any other questions or comments from 2 

### the Committee? 3 

### MEMBER LEOCHA: On your first issue 4 

### about knowing the price, so what you are talking 5 

### about is people don't know what the price to 6 

### travel is because it is hard to figure out what 7 

### your final price is going to be after you have 8 

### your airfare and, then, the other ancillary fees 9 

### are added in? Is that what you are generally 10 

### talking about? 11 

### MR. HANSEN: Yes, I think that is 12 

### one element of it, yes. I mean, I think, as 13 

### carriers and others have often said, the 14 

### marketplace is a very valuable tool for 15 

### facilitating travel, right? So, having 16 

### openness in the marketplace benefits the overall 17


### levels of travel. 18 

### Airlines on their own websites will 19 

### sell travel products and packages. They work 20 

### with our industry to do that. It is a great 21


### tool. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 245



### But, also, the travel agencies 1 

### perform an essential function in allowing 2 

### travelers to have that single product 3 

### experience. To the extent that they are not 4 

### competing on a level ground, we would be 5 

### interested in seeing what the overall impacts to 6 

### the industry are. So, that is one element. 7 

### Two is that, if they have a negative 8 

### experience while traveling, that can impact 9 

### their willingness to travel in the future. That 10 

### can impact all travel businesses. 11 

### We have heard just anecdotally that 12 

### there are international travelers now who will 13 

### come into the United States. They are 14 

### incredibly important to our economy. They will 15 

### shop here in the United States. They will use 16 

### foreign currency. It counts as an export. 17 

### They will go to retail stores. They will 18 

### basically buy out the store. In Miami, in 19 

### particular, Brazilian travelers will do this all 20 

### the time. 21 

### They come back and they fly back to 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 246



### Brazil, and they have more bags that they have 1 

### with them than they did on the way in. 2 

### Oftentimes, they are surprised and frustrated, 3 

### and they feel aggravated by having to pay 4 

### checked-bag fees that they weren't aware of. 5


### Now I understand that there are 6 

### certain requirements requiring disclosure for 7 

### international travel, but that, still, the fact 8 

### that we are hearing about it points to some 9 

### elements or some problems in the system where 10 

### they are not getting the information that they 11 

### may need. And it may be on the consumer; I don't 12


### know. 13 

### CHAIRPERSON MADIGAN: All right, 14 

### Erik. Thank you very much. We appreciate your 15 

### testimony here. 16 

### Kevin Mitchell with the Business 17 

### Travel Coalition [BTC] is up next. 18 

### MR. MITCHELL: General Madigan, 19 

### thank you very much for the opportunity to 20 

### present today to the Committee. 21 

### And I would like to begin by 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 247



### congratulating Charlie Leocha for his inclusion 1 

### on the Committee. I think he is going to 2 

### represent consumer groups here quite well. 3 

### I would also like to echo some of the 4 

### sentiment about the contribution of Kate Hanni. 5 

### I do believe that she moved the ball quite 6 

### significantly for the three-hour rule, which was 7 

### embodied in what is termed Consumer Protection 8 

### Rule No. I, which led to No. II, which led to No. 9 

### III. And it could be that we wouldn't be here 10 

### today were it not for her accomplishments. 11 

### I would also like to echo the need 12 

### for some permanent funding for consumer groups 13 

### along the lines perhaps as they do in Europe. 14 

### For nearly 20 years, BTC has 15 

### represented the large corporate buyers of 16 

### commercial air transportation systems or 17 

### services. Together with travel management 18 

### companies, we call this area of the industry the 19 

### managed travel community. 20 

### In providing some 70 percent of the 21 

### airlines' revenues, these corporations, the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 248



### business travelers that travel throughout the 1 

### system, largely underwrite the finances of the 2 

### airline industry. 3 

### As issues that BTC follows, there is 4 

### none more important than this one to the managed 5 

### travel community, and that is to say that 6 

### consumers, whether they are leisure travelers or 7 

### business travelers, depend on the ability to 8 

### comparison shop when they go about their travel 9 

### initiatives. 10 

### So, the Deregulation Act of 1978 led 11 

### to the democratization of air travel in this 12 

### country, and around the world as it was copied. 13 

### So, we went from a system that was really 14 

### designed early on for the affluent to one where 15 

### people of all means today can travel. 16 

### The hallmark of this deregulation 17 

### initiative was the ability to efficiently 18 

### comparison shop. This brought about a 19 

### discipline to the marketplace that kept fares in 20 

### check throughout the system. 21 

### What was not deregulated, of course, 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 249



### was safety and passenger protection. You have 1 

### heard enough already about federal preemption. 2 

### Suffice it to say that the protection of 3 

### consumers in this virtual no-man's land of 4 

### consumer protection resides with the DOT solely. 5 

### It has not been a pretty picture 6 

### financially. As Mr. Berg noted, the margins in 7 

### this industry are thin and volatile. In fact, 8 

### no mass transportation industry in the history 9 

### of the world has been profitable over time. 10 

### Ancillary fees, the primary focus of 11 

### my comments today, are potentially very good for 12 

### the airline industry and for all the 13 

### stakeholders connected to the industry. They 14 

### can generate sustainable and profitable revenue 15 

### streams and allow these carriers to reinvest in 16 

### equipment and services and safety. 17 

### However, consumers need safeguards. 18 

### The DOT is the sole place to go for consumers to 19 

### have some protections in this area. To 20 

### reiterate, this is the most important issue 21 

### facing the managed travel community today. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 250



### Let's take a look at this ancillary 1 

### fee issue in terms of the problem, the effects, 2 

### the causes, and the solutions. There are a 3 

### number of issues surrounding the ancillary 4 

### problem, but the problem itself is that the 5 

### airlines for nearly five years have refused to 6 

### share the ancillary fee data, how much a bag 7 

### costs, in a format with the management travel 8 

### community that would facilitate the purchasing 9 

### of these fees at the point of sale where the 10 

### entire trip is being purchased. 11 

### In terms of the managed travel 12 

### community, there are a lot of impacts, and I put 13 

### them all in the written submission to the 14 

### Committee. They include budgeting and 15 

### forecasting issues, having the data in terms of 16 

### what you have spent during the year to negotiate 17 

### with carriers, travel policy compliance, and 18 

### auditing, fraud, waste, and abuse. But the 19 

### three I would like to call to your attention 20 

### today are these: 21 

### Without the fee data being provided 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 251



### to the travel management companies, it results 1 

### in costly workarounds, searching different 2 

### websites for various fees. And likewise, if you 3 

### are an employee of a major company and you are 4 

### doing your purchasing, your shopping and your 5 

### purchasing on what is called an online booking 6 

### tool, that information is not there. So, you 7 

### actually have to get out and manually write down 8 

### from website to website what these fees might be 9 

### and try to calculate the all-in cost of travel. 10 

### Now, for a travel management 11 

### company, it may not seem like a lot, but if a 12 

### process that took three minutes suddenly takes 13 

### six minutes, your cost of labor just doubled. 14 

### Of course, that gets passed on to the consumer, 15 

### to the corporations, in the form of higher fees. 16 

### The second bullet here, fees and 17 

### fares are undisciplined. These fees, because 18 

### they are not able to be compared side-by-side in 19 

### an electronic fashion, are not disciplined by 20 

### market forces. Therefore, it is reasonable to 21 

### conclude that they are artificially-inflated. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 252



### What's more, where the airfares 1 

### themselves used to be efficiently compared, they 2 

### now are all over the map. Consumers don't 3 

### understand what is in some fares and what is not 4 

### included in others. So, actually, the base 5 

### fares now are not being fully disciplined by 6


### market forces. 7 

### And then, finally, anything that 8 

### weakens the travel management company or the 9 

### travel distribution system is not good for 10 

### consumers because we are in an era now where we 11 

### have increased domestic airline consolidation, 12 

### and it might get worse with American and United 13 

### or U.S. Airways, should they tie up. But we now 14 

### have all these global antitrust-immunized 15 

### alliances. So, more than ever, we need a 16 

### healthy, independent distribution system as a 17 

### check-and-balance on airlines' policies, 18 

### practices, and prices. 19 

### Now you might ask why it is that the 20 

### airlines are not providing the fee information 21 

### in a format that would allow consumers to see the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 253



### product, compare the product, and buy the 1 

### product. Well, the first problem is that there 2 

### is first-mover dilemma for the airlines. 3 

### Ben Baldanza of Spirit Airways 4 

### testified to this in July of 2010 by saying, the 5 

### first carrier to put its fees in the travel agent 6 

### display and show the all-in price is going to 7 

### look 20 or 30 or even 40 percent higher than its 8 

### competitors. So, it is a non-starter. It is 9 

### commercial suicide. 10 

### The second issue is that the network 11 

### carriers look more favorable when they unbundle 12 

### and lower the base fare compared with the 13 

### low-cost carriers that are in the marketplace. 14 

### The third is a theme that began 30 15 

### years ago. Airlines want to control the 16 

### passenger. When frequent flyer programs were 17 

### begun at American Airlines, the objective was to 18 

### circumvent the corporate travel department and 19 

### get travelers to book directly with American 20 

### Airlines. The same is the case today. The 21 

### carriers want to attract as many individual 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 254



### travelers and business travelers to their 1 

### websites as is possible, where there is no 2 

### comparison shopping and where the airlines will 3 

### over time generate higher yields. 4 

### The fourth issue is there is profit 5 

### in confusion. When consumers can't see 6 

### everything in front of them and compare it 7 

### efficiently, oftentimes they are going to 8 

### purchase an itinerary that may be higher than 9 

### what was necessary, or perhaps if they knew the 10 

### full cost, they wouldn't travel in the mode that 11 

### they chose. 12 

### And then, finally, there are some 13 

### carriers that would like to flip the current 14 

### economic model in the industry. By that, I mean 15 

### that they are resisting giving the fee data for 16 

### so long to try to get travel management companies 17 

### so frustrated about it that they would be willing 18 

### to pay for it. 19 

### Now, once that happens, the travel 20 

### management companies and the travel agencies are 21 

### going to have to recoup that cost by charging 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 255



### higher fees to service the traveler. So, in 1 

### effect, you are going to have the traveler paying 2 

### for the privilege of merchandising and 3 

### distributing the airlines' own ancillary 4 

### services. 5 

### So, what is the solution here? It 6 

### is a DOT rule that requires both disclosure of 7 

### the fees and requires them to be purchasable or 8 

### salable at the point of sale. 9 

### What is the rationale for this 10 

### solution? First of all, for the consumers to be 11 

### able to see, compare, and buy is a central DOT 12 

### tenet of truth-in-advertising regulations. It 13 

### would restore comparison shopping, which really 14 

### is the ungirding of airline competition. When 15 

### millions of consumers are looking at the all-in 16 

### price of travel day-in and day-out and making 17 

### these transactions, that is disciplining the 18 

### entire market. It is a beautiful thing and it 19 

### is how it works, but it hasn't worked for close 20 

### to five years. 21 

### There is this first-mover dilemma. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 256



### In this case, a very light touch with a rule like 1 

### this from the DOT can solve that problem for the 2 

### carriers. If they all have to jump in the pool 3 

### together at the same time, no one gets out of 4 

### competitive position vis-a-vis any of the 5


### others. 6 

### We definitely have what is 7 

### considered a market failure here. If you 8 

### consider that the airlines' largest companies 9 

### that buy their products, the IBMs and the 10 

### Lockheed Martins of the world, the Black and 11 

### Deckers of the world, have been demanding the fee 12 

### data for four years from the carriers, and they 13 

### don't get no for an answer. They get, "Hell, 14 

### no." So, if an industry's top customers can't 15 

### get an essential requirement to run their 16 

### programs, we have a failing marketplace, and DOT 17 

### can help here. 18 

### And then, finally, there is massive 19 

### computing power that is needed to run the fare 20 

### and the fee system. Static lists in PDF formats 21 

### or other static formats on a website do not solve 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 257



### the problem. 1 

### Next slide, please. 2 

### This is just San Francisco to 3 

### Boston. There are billions of possible 4 

### solutions to get a traveler from San Francisco 5 

### to Boston and back, and they are varied by 6 

### competitors and itineraries and routings and 7 

### fare, rules and exceptions, et cetera. And this 8 

### doesn't even include if you have to overlay 9 

### ancillary fees on top. 10 

### And there are 150, and growing, 11 

### ancillary fees on a worldwide basis across all 12 

### carriers. So, there is absolutely no way that 13 

### consumers can possibly navigate all this without 14 

### the power of these massive databases and 15 

### computing. 16 

### Next slide, please. 17 

### Conclusion: government 18 

### intervention in the marketplace is an anathema 19 

### to the companies that I represent. I testified 20 

### four times over 10 years against the three-hour 21 

### rule, or what was ultimately called the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 258



### three-hour rule, because it is something that 1 

### the carriers should have been able to solve for 2 

### themselves. But after 10 years of 3 

### stonewalling, not only did my organization 4 

### reverse itself, but the American Society of 5 

### Travel Agencies and the Global Business Travel 6 

### Association also reversed. So, we take 7 

### seriously anytime we go to the government and say 8 

### we need some help in fixing a problem, but this 9 

### is one of those rare cases where it is necessary. 10 

### We have a failing market. DOT is 11 

### the sole protector of consumers. Only a light 12 

### touch is required here. And the solution 13 

### benefits all stakeholders. 14 

### If you consider that it is not 15 

### mutually-exclusive to say that more disclosure 16 

### will result in higher sales of ancillary fees, 17 

### it is possible and it is likely consumers that 18 

### trust a process are likely to buy more and buy 19 

### more often. We can increase competition with 20 

### this disclosure, increase market efficiencies 21 

### and carriage innovation, expand markets, 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 259



### increase sales of ancillary services, and 1 

### satisfy customers. 2 

### So, with that, I would like to 3 

### conclude with the final slide of see, compare, 4 

### and buy. This is a central principle of 5 

### commerce for a very, very long time. The 6 

### internet has strengthened this principle except 7 

### for the purchasing of air travel today. We hope 8 

### that that is reversed soon. 9 

### Thank you. 10 

### CHAIRPERSON MADIGAN: Kevin, thank 11 

### you very much. 12 

### If there is anybody else, but 13 

### including Kevin, please make sure we get a copy 14 

### of the PowerPoint presentation -- 15


### MR. MITCHELL: Sure. 16 

### CHAIRPERSON MADIGAN: -- that you 17 

### have just played. I don't think I have a copy 18 

### of that. Maybe it is somewhere else. 19 

### And it looks like Dave is going to 20 

### want the microphone first. 21 

### (Laughter.) 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 260



### MEMBER BERG: Sure. 1 

### Thank you, Kevin, for those 2


### comments. 3 

### You say that comparison shopping was 4 

### a hallmark of deregulation. I have looked at 5 

### the Deregulation Act, and I am a little puzzled 6 

### because I don't see it in there. So, where is 7 

### it in the statute that comparison shopping is 8 

### obligatory on this industry? 9 

### MR. MITCHELL: Thank you for that 10 

### question, Mr. Berg. 11 

### Nowhere in the Deregulation Act does 12 

### it state that airlines are or will be at any time 13 

### permitted to withhold ancillary fee 14 

### information, either. It is not in the 15 

### Deregulation Act. I simply stated that 16 

### comparison shopping as it developed with the 17 

### GDSs or the CRSs of the time ended up being a 18


### hallmark. 19 

### There were a lot of things that were 20 

### not foreseen from deregulation. This perhaps 21 

### is one of them. But it is, nevertheless, one of 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 261



### the great things about deregulation that brought 1 

### so much benefit to consumers all over the 2 

### country. 3 

### MEMBER BERG: You know, I would 4 

### agree with you that the airline industry has been 5 

### a cutting-edge industry and a leader in 6 

### transparency over the years. That has come 7 

### about, in my experience, through the workings of 8 

### commerce, commercial relationships between 9 

### airlines and GDSs and travel agencies and the 10 

### distribution networks that are out there. 11 

### Why is it that we can't rely on the 12 

### marketplace to continue that great leadership 13 

### that we have had up to this point? 14 

### MR. MITCHELL: Well, 15 

### unfortunately, the market has not, after four 16 

### years, has not done what you just espoused that 17 

### it should do. I agree with you. 18 

### When the airlines began 19 

### aggressively unbundling their product and 20 

### charging separately for services that used to be 21 

### included in the price of the ticket, there should 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 262



### have been more obligation on the carriers to 1 

### fully disclose where those fees would come out. 2 

### For the first few years, mind you, 2008, 2009, 3 

### there were many, many cases where travelers 4 

### showed up at the airport and were completely 5 

### surprised by these fees. There is no excuse for 6 

### that, and that is not leadership. And I 7 

### wouldn't think that you would want to 8 

### characterize it as such. 9 

### MEMBER BERG: Yes, but I am not sure 10 

### that that would be the fault of the airline if 11 

### someone is buying a ticket from a third party. 12 

### There are plenty of people involved in that 13 

### chain. 14 

### But let me go back to another point. 15 

### I mean, you said there have been no negotiations 16 

### between airlines and who. Who would that be 17 

### with? 18 

### MR. MITCHELL: I am not sure I said 19


### that. 20 

### MEMBER BERG: You said that 21 

### airlines refused to share ancillary service and 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 263



### fee data. 1


### MR. MITCHELL: Uh-hum. 2 

### MEMBER BERG: Now with whom would 3 

### they be sharing it? 4 

### MR. MITCHELL: They would be 5 

### sharing it with anyone in any channel where they 6 

### are currently selling their base product, their 7


### base fare. 8 

### MEMBER BERG: So, the ability to 9 

### share is going to be based on a commercial 10 

### relationship? 11


### MR. MITCHELL: Correct. 12 

### MEMBER BERG: So, there would have 13 

### to be negotiations between airlines and GDSs as 14 

### other parties -- 15


### MR. MITCHELL: Uh-hum. 16


### MEMBER BERG: -- to share that data 17 

### and make it available in the third-party 18


### streams? 19


### MR. MITCHELL: Correct. 20 

### MEMBER BERG: So, you are saying 21 

### there has been no negotiations? 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 264



### MR. MITCHELL: No, I didn't say 1 

### that. I said there has been a failure. The 2 

### parties have not come to an agreement after four 3 

### years. The airlines have refused to share the 4 

### data after their largest, most important, and 5 

### valuable customers have been demanding the data. 6


### MEMBER BERG: Oh. 7


### MR. MITCHELL: There are collateral 8 

### damages throughout the entire system, and the 9 

### consumer is being harmed because of lack of 10 

### leadership on the airlines' part to provide this 11 

### fee data to the industry. 12


### MEMBER BERG: I would have to 13 

### disagree with you. I am looking at a report, a 14 

### recent report, that says, "Delta and Travelport 15 

### in deal for seat upgrades". So, there is some 16 

### negotiation going on, and there is some ability 17 

### of the parties to reach mutually-acceptably 18 

### commercial arrangement to get ancillary 19 

### services into the third-party stream. Is that 20 

### not right? 21 

### MR. MITCHELL: It is correct that 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 265



### there is some movement. In fact, there is a 1 

### solution that was collaboratively reached 2 

### between the global distributions and the 3 

### airlines with ATPCO to create a process, an 4 

### electronic process, to provide all these data to 5 

### the industry. It was tested by 26 U.S. carriers 6 

### and reservation systems, and the only carriers 7 

### to implement this product are a handful in 8 

### Europe. 9 

### It still remains that the vast 10 

### majority of network carriers in this country 11 

### refuse to provide the data to the travel agency 12 

### channel, where they are selling their base 13 

### fares. And you can't say that it is leadership, 14 

### that a consumer can have one part of the product 15 

### here and has to go over there and to this website 16 

### and elsewhere in order to construct a product. 17 

### You can't say that that is leadership. 18 

### MEMBER BERG: And you can't say that 19 

### it is refusing to provide the information if 20 

### there has been discussions and the parties 21 

### aren't able to reach agreement on -- 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 266



### MR. MITCHELL: The market has 1 

### failed. 2 

### MEMBER BERG: -- commercial terms. 3


### MR. MITCHELL: The market has 4 

### failed. In 2008 -- 5 

### MEMBER BERG: Well, then, that is a 6 

### marketplace that is at work because -- 7


### CHAIRPERSON MADIGAN: You know 8 

### what? Because we have someone who is a court 9 

### reporter -- 10 

### MEMBER BERG: Thank you. 11 

### CHAIRPERSON MADIGAN: -- you guys 12 

### can't talk over each other because they can't 13 

### take down what you are saying. And it would be 14


### a shame. 15 

### MR. MITCHELL: Since 2008, the 16 

### airlines have unbundled their product and have 17 

### provided services with associated fees. That 18 

### information has been withheld from the consumer, 19 

### and it is harming the consumer and it is harming 20 

### the corporations that rely on efficiency. It is 21 

### harming the distribution system. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 267



### MEMBER BERG: Well, first, I guess 1 

### two points. One is, with all due respect, I 2 

### would disagree that it is being withheld. It is 3 

### the nature of the commercial relationship, and 4 

### the relationship is developing. In fact, we 5 

### have an example of the marketplace working in 6 

### this announcement of the Delta and Travelport 7


### deal. 8 

### We also have the effort by a new 9 

### entrant into that market, Farelogix, working 10 

### with American Airlines and other carriers, to 11 

### get these services and fees distributed to 12 

### travel agencies. 13 

### So, I guess I would just say that the 14 

### marketplace is responding and it is working. It 15 

### may not be responding in the way you want it to 16 

### respond. It may not be responding in the 17 

### timeframe you want it to respond. But the 18 

### marketplace is working. 19 

### MR. MITCHELL: Thank you very much. 20


### CHAIRPERSON MADIGAN: Deborah? 21 

### MEMBER ALE-FLINT: One question. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 268



### Early in your discussion, you referenced 1 

### consumer groups and a model in Europe of 2 

### long-term stable funding. 3


### MR. MITCHELL: Yes. 4 

### MEMBER ALE-FLINT: Can you 5


### elaborate on that? 6 

### MR. MITCHELL: To my understanding, 7 

### the consumer groups at the national level in 8 

### Europe, and also groups that are based in 9 

### Brussels, get funding in part from the national 10 

### governments and from the EC. That helps them 11 

### remain sustainable, and it helps them enjoy 12 

### revenue streams without conflicts that 13 

### sometimes are entered into around the world, 14 

### only so that consumer groups can continue. So, 15 

### it is a much better model, in my view. 16 

### CHAIRPERSON MADIGAN: Charlie? 17 

### MEMBER LEOCHA: Everybody knows 18 

### that I support transparency of ancillary fees. 19 

### Just only to mention some things, and I will put 20 

### words in a friend's mouth or in an acquaintance's 21


### mouth. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 269



### Jim Davidson, who runs Farelogix, 1 

### would totally support the open sharing of 2 

### ancillary fee data, so that the whole market 3 

### could work. It would actually make his business 4 

### better and he could spread out and learn more 5 

### things. 6 

### I think that withholding these 7 

### fees -- and I think from Kevin's point of view, 8 

### and I will make this a question -- by withholding 9 

### these fees, I think it makes it harder for large 10 

### corporations to budget. And it also, I 11 

### believe -- let me know -- does it make it harder 12 

### for large corporations to reimburse their sales 13 

### people who are working all the way across the 14 

### country? 15 

### MR. MITCHELL: Charlie, the lack of 16 

### fee information and the ability to account for 17 

### it efficiently creates problems from the moment 18 

### a trip is initiated all the way through returning 19 

### home, where the traveler submits the expense 20 

### report. There are gaps in the information along 21 

### the way that, as I mentioned, harm the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 270



### negotiating results of corporations when they 1 

### sit down. 2 

### I will give you an example. If you 3 

### are committed to spending $5 million in a given 4 

### quarter with a given carrier, and the carrier 5 

### comes in for the meeting, and it looks like you 6 

### only spent $4,500,000, the carrier says, "Look, 7 

### that nice 10-percent discount that we agreed on 8 

### was contingent upon your fulfillment of your 9 

### obligations in this agreement." 10 

### Well, in the meantime, fees became 11 

### greater and greater and greater, but you can't 12 

### account for them. So, the 10-percent discount 13 

### goes away or gets sharply reduced. 14 

### That is a real-time problem that 15 

### corporate travel departments are having because 16 

### they don't have the data, because it is outside 17 

### the system. 18 

### MEMBER LEOCHA: So, would you say 19 

### that the problems that individuals have in 20 

### trying to figure out ancillary fees, basically, 21 

### are multiplied by thousands of people when you 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 271



### have to deal with a large corporation? 1 

### MR. MITCHELL: The problems are 2 

### more vexing for corporate travel programs by 3 

### orders of magnitude, without a doubt. 4 

### CHAIRPERSON MADIGAN: Businesses 5 

### are consumers, too. 6 

### With that, thank you very much, 7 

### Kevin. 8 

### MR. MITCHELL: Thank you. 9 

### CHAIRPERSON MADIGAN: Next up, we 10 

### have Arthur Sackler with Open Allies. 11 

### MR. SACKLER: Good afternoon, 12 

### General Madigan, members of the Committee. 13 

### I am pleased to be here today on 14 

### behalf of Open Allies for Airfare Transparency. 15 

### I am going to be picking up on a lot 16 

### of what you just heard from Kevin Mitchell. 17 

### Open Allies is here today because we believe 18 

### fairness requires consumers being able to see, 19 

### compare, and buy all-in airfares at any outlet 20 

### where an airline chooses to do business. 21 

### To do that, we have to address a 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 272



### market that isn't working, because data on fees 1 

### generally is not being made available. But 2 

### don't just take our word for it. 3 

### Look to GAO, which titled a 2010 4 

### report, in part, "Consumers Could Benefit from 5 

### Better Information about Airline-Imposed Fees.” 6 

### Look to the Federal Trade Commission 7 

### with jurisdiction over unfair and deceptive 8 

### practices that parallels DOT's on air travel, 9 

### which says that, "Withholding or failing to 10 

### generate critical price data leaves buyers with 11 

### insufficient information for informed 12 

### comparisons which undermines an essential 13 

### precondition to a free and informed consumer 14 

### transaction and, in turn, to a well-functioning 15


### market." 16 

### Look to the Department itself where 17 

### disclosure has been so central to its 18 

### truth-in-advertising regulations. 19 

### Or, most viscerally, look to 20 

### consumers themselves, more than 60,000 of whom 21 

### in less than a month signed a petition to 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 273



### Secretary LaHood urging full disclosure of fees. 1 

### Open Allies represents nearly 400 2 

### independent travel sellers and distributors and 3 

### works closely with consumer organizations. 4 

### Travel agents, online travel companies, 5 

### corporate travel managers, TMCs, global 6 

### distribution systems, travel trade 7 

### associations, and more, are members of Open 8 

### Allies. Several of the organizations, 9 

### including Kevin's, which are speaking here today 10 

### are members of Open Allies. 11 

### And we collectively represent more 12 

### than 50 percent of all airline tickets which are 13 

### sold through this independent channel. 14 

### Open Allies appreciates the 15 

### opportunity to appear here today. Our members 16 

### were pleased that Congress directed the 17 

### formation of this Advisory Committee. The 18 

### Department of Transportation has been doing a 19 

### good job on consumer issues, but expert advice 20 

### can only help. 21 

### Our members are united in the view 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 274



### that full disclosure is key to resolving the 1 

### controversy surrounding fees. Full disclosure 2 

### means transparency; transactability, which is 3 

### both the ability to sell and the ability to 4 

### purchase; dynamic presentation, and all of that, 5 

### to enable full comparison shopping. This 6 

### should apply at least to core fees, those 7 

### unbundled from traditional airline fares, such 8 

### as baggage or seating, at least. 9 

### Enabling consumers to compare on 10 

### their selected itineraries all-in prices, 11 

### apples-to-apples, across airlines and all sales 12 

### outlets where the airlines choose to do business 13 

### is what the goal needs to be for consumers. This 14 

### is no simple business-to-business squabble. 15 

### This is about vindicating the interests of 16 

### consumers. It is not about GDS/airline 17 

### negotiations. It is about ensuring consumers 18 

### have all the information they need to make 19 

### informed choices, that they are not 20 

### disadvantaged by airlines withholding data. 21 

### Open Allies takes no position on 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 275



### fees themselves, but, once they are charged, 1 

### they should be fully disclosed. It is a new 2 

### world. Fees are here to stay, it appears. We 3 

### ask only that business and leisure air travelers 4 

### not be kept in the dark. 5 

### Failure to fully disclose, in our 6 

### view, is unfair to consumers; as a matter of 7 

### common sense, traditional expectations in 8 

### commerce and avoiding unpleasant experiences at 9 

### airports, some of which you have already heard. 10


### Consumers have been accustomed to 11 

### comparison shopping for air travel for decades, 12 

### the pioneer in digitization, e-commerce, and 13 

### comparison shopping, and still one of, if not 14 

### the, largest segments of e-commerce. With that 15 

### kind of track record, we shouldn't be going 16


### backwards. 17 

### And the unpleasantness we are 18 

### talking about, again, as you have already heard, 19 

### is not just in unexpected additional fees, but 20 

### in seating of families together and other 21 

### non-tangible outcomes. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 276



### In the legal sense, under the 1 

### Department's jurisdiction, which is parallel, 2 

### again -- its unfairness jurisdiction, which is 3 

### parallel to the FTC's in Section 5 of the Federal 4 

### Trade Commission Act -- it is useful to take a 5 

### look at what the FTC says, and its unfairness 6 

### policy targets outcomes, intentional or 7 

### inadvertent, that may prevent consumers from 8 

### effectively making their own decisions. 9


### The current rule from Consumer 10 

### Rulemaking II is a solid first step toward full 11 

### disclosure, but much more needs to be done. And 12 

### as you heard from Kevin, “consumers” means more 13 

### than individual air travelers and families. It 14 

### also means businesses. Corporations are 15 

### consumers, too. 16 

### So, why is full disclosure so vital 17 

### to protecting consumers? It is a prerequisite 18 

### for true comparison shopping. Transparency is 19 

### necessary, but not sufficient to establish 20 

### comparison shopping. Transactability is 21 

### essential. Consumers must be able to purchase 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 277



### what they see, and independent sellers must be 1 

### able to sell it to them. 2 

### Dynamic presentation ensures all 3 

### fee information is current. Static 4 

### presentation on airline sites presented in 5 

### ranges and changed once a quarter offers not only 6 

### no precise information on fees, but no 7 

### information at all on availability. 8 

### It saves on search time for 9 

### consumers, which the Department values at $42 an 10 

### hour. When you multiply that over the universe 11 

### of consumers searching for air travel, that 12 

### number is huge. And in the end, it spurs 13 

### competitive pricing. 14 

### Technology for independent 15 

### distribution of fully-disclosed fees is 16 

### available and in use. Effective software 17 

### protocols developed among industries, including 18 

### the carriers through the airline tariff 19 

### publishing company, ATPCO, and fully tested by 20 

### more than two dozen airlines, are in use. 21 

### GDS technology, GDSs are the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 278



### conduits and assemblers of this information to 1 

### be sent out to travel agents and other 2 

### independent sellers. The technology they use 3 

### is state-of-the-art. They use 21st century 4 

### mainframes, server technology, and already are 5 

### handling, as you heard from Mr. Berg, detailed 6 

### fee information for some airlines, including 7 

### airline customization of services to individual 8 

### consumers. It is not your father's GDS. Joe 9 

### Rubin of ITSA [Interactive Travel Services 10 

### Association] will address this issue in some 11 

### depth. 12 

### But there are a couple of things that 13 

### Open Allies does not want. It doesn't want to 14 

### force airlines to do business with any entity 15 

### with which they do not choose to do business, nor 16 

### to force airlines to share fee information with 17 

### any entity with which they are not doing 18 

### business. 19 

### So, again, to echo directly what 20 

### Kevin had to say, unbundling with full 21 

### disclosure has benefits for all: needed 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 279



### additional revenue stream for the airlines, 1 

### enabling comparison shopping for consumers, 2 

### passengers pay only for services being used and 3 

### at competitive prices, and innovation, 4 

### ultimately, will be enabled to enhance 5 

### marketing, revenues, and jobs, if this 6 

### information is out there. 7 

### So, Open Allies believes the best 8 

### way that the Department can protect consumers is 9 

### to compel full disclosure in Consumer Rulemaking 10 

### III. No airline wants to look more expensive 11 

### than its competitors, of course. There are 12 

### marketing advantages to opacity. 13 

### And I have to say airlines have 14 

### ignored the voices of consumers, including the 15 

### 60,000 who signed the petition to DOT, media 16 

### reports, Members of Congress, and their business 17 

### partners and customers, and have generally 18 

### declined to provide full disclosure 19 

### voluntarily. 20 

### So, in conclusion, once again, Open 21 

### Allies believes consumers must be enabled to 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 280



### see, compare, and buy fares and fees. The only 1 

### way that will happen is if the market works. And 2 

### the only way the market will work is if the 3 

### Department of Transportation simply requires 4 

### it, which is what we urge your advice to the 5 

### Department to be. 6 

### I will be happy to answer any 7 

### questions you may have. 8 

### CHAIRPERSON MADIGAN: Thank you, 9


### Arthur. 10 

### Does anybody on the Committee have 11 

### any questions? 12 

### (No response.) 13 

### All right. With that, I think this 14 

### is where we have the change in schedule. So, 15 

### next up is Roger Cohen with the Regional Airline 16 

### Association [RAA]. 17 

### MR. COHEN: Chairwoman Madigan and 18 

### Committee members, good afternoon. And I want 19 

### to thank you for the opportunity to appear here 20 

### today. 21 

### I would like to share just a couple 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 281



### of takeaways. No. 1 is to give you a clearer 1 

### snapshot of the regional airlines and the role 2 

### we play in the scheduled service here in the 3 

### United States. And second, to pledge our 4 

### assistance to you and the Department in your 5 

### mission of improving customer service. 6 

### While he is getting the presentation 7 

### set up, if you would pardon me with an aside, I 8 

### got a big kick out of Kevin's slide with the 9 

### Neanderthal. That is when I started in the 10 

### airline business. 11 

### (Laughter.) 12 

### When I started to take reservations, 13 

### it was before we had computers, though. 14 

### Next slide, please. 15 

### We have come a long way since 16 

### deregulation. These were RAA's 80 member 17 

### airlines or so back at the dawn of deregulation. 18 

### They were very small airlines flying small 19 

### aircraft independently between small cities 20 

### with modest, difficult, if not impossible, 21 

### connection to the broader national and 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 282



### international system. 1 

### Next slide, please. Just click 2 

### through, if you can, please. 3 

### Today the case could be made that the 4 

### regional airlines are the U.S. system. We are 5 

### 50 percent of the flights and, most notably, of 6 

### the 600-and-some communities that -- click 7 

### through, please -- nearly 500 communities of the 8 

### 600-and-so we serve have service exclusively 9 

### from regional airlines. That is about 10 

### three-quarters of the United States. 11 

### Next slide, please. And you can go 12 

### through these real quickly. 13 

### Our growth has been exponential. 14 

### This is the growth in revenue passenger miles, 15 

### passengers, the average size of the aircraft, 16 

### which has grown from about 16 seats to now over 17 

### 56, and the average trip length now approaches 18 

### about 500 miles. 19 

### Next slide, please. 20 

### Here is another huge difference, 21


### then versus now. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 283



### Yes, there we go. 1 

### Virtually all of our passengers 2 

### flying on our member airlines enjoy the 3 

### benefits, including frequent flyer miles, of 4 

### flying in partnership with the recognizable 5 

### brand-name airlines. 6 

### Next slide. 7 

### The result of this is that the 8 

### passenger in Springfield, Illinois, or 9 

### Springfield, MO, Chattanooga, or Monterey 10 

### enjoys the exact same benefits as passengers 11 

### from New York, Chicago, and Los Angeles. 12 

### And if you look at this map from the 13 

### flip side, without regional airlines, 14 

### three-quarters of the airports in this country 15 

### would have no scheduled service at all. 16 

### Next slide, please. 17 

### And kind of walk through this a 18 

### little bit, flip through this with me. 19 

### In today's global economy for these 20 

### communities, scheduled service on an airline is 21 

### just as critical as an internet connection. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 284



### Because of regional airlines, a passenger, with 1 

### one click of the mouse, one website, one ticket, 2 

### checks their bags once, and can travel 3 

### seamlessly from Bakersfield to Buenos Aires, 4 

### from Montgomery, Alabama to Prague, and from 5 

### Appleton, Wisconsin, to Beijing, on an 6 

### increasing number of flights. And it is usually 7 

### just one connection. And on many flights, you 8 

### can do it all in premium or first class and, 9 

### again, collect frequent flyer mileage to boot. 10 

### Because of this popularity -- next 11 

### slide, please -- our role has expanded. If you 12 

### will click through, you will see the growth rates 13 

### of the regional airlines in green, although I am 14 

### color-blind, compared to our mainline partners 15 

### over that same period of time. 16 

### As you conduct your very vital work, 17 

### you’re advising the DOT on these consumer 18 

### issues, I would urge you to focus on two words, 19 

### please, that best describe the consumer benefits 20 

### of regional airlines. 21 

### The first is "seamless". For our 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 285



### passengers, it is designed to be a one-stop-shop 1 

### from when the trip is being considered to when 2 

### the journey is completed, including, most 3 

### importantly, a single customer point for 4 

### feedback from that consumer. So that it is not 5 

### one of these deals; that is critical. 6


### The second word we would 7 

### offer -- flip through, please -- is 8 

### "transparency". So that at all times, from when 9 

### the reservation is first being researched to 10 

### when the passenger leaves the airport, the 11 

### airline is clearly identified. 12 

### The result of all this has been 13 

### through years of experience and improvements in 14 

### customer service, based on that consumer 15 

### feedback. And as recent DOT statistics would 16 

### indicate, mishandled bags are at an all-time 17 

### low; on-time performance at an all-time high, 18 

### record high, with mainlines and regional 19 

### airlines virtually identical on the metrics. 20 

### Compare that passenger experience 21 

### to back in the day --- and you can flip through 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 286



### it--. The modern aircraft then, seamless 1 

### service then, no; baggage check. Most 2 

### importantly, back then there was not one level 3 

### of safety for all commercial airlines. Since 4 

### 1995, there has been. 5 

### While it is one industry and one 6 

### customer experience, as you go about your work, 7 

### I would urge you to recognize and understand that 8 

### there are differences based on the broad 9 

### realities of serving 600 U.S. airports, 500 of 10 

### them exclusively, with all types and sizes of 11 

### aircraft and, as you can see, every type of 12 

### airport, those that are 13 

### geographically-challenged in mountain areas or 14 

### in valleys; small-terminal facilities, 15 

### including 130 very remote airports in Alaska. 16 

### So, as you go about this, I would urge you to 17 

### recognize that. 18 

### There are multiple code-sharing 19 

### partnerships amongst those carriers. And also, 20 

### it would be important to focus on the ownership 21 

### of the consumer process. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 287



### So, I realize it is break time. I 1 

### don't want to take any more of your time. 2 

### Ultimately, our passengers expect 3 

### excellence and consistency, and that is what our 4 

### system is designed to deliver. When we don't 5 

### meet those standards, we want to work with you 6 

### and DOT to keep that feedback process for the 7 

### consumer as simple and convenient as possible. 8 

### So, thank you very much. I would be 9 

### glad to answer any questions. 10 

### CHAIRPERSON MADIGAN: Thank you, 11 

### Roger. 12 

### Does anybody have a question to ask? 13


### Please. 14 

### MEMBER LEOCHA: Yes. Roger, you 15 

### spoke about the feedback process. You said 16 

### there is one single feedback process across the 17 

### regionals and the legacy carriers? 18 

### MR. COHEN: Well, for the consumer, 19 

### you know, I think the natural and the one that 20 

### is directed most is back to where that person 21 

### bought the ticket from, where he or she bought 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 288



### the ticket from. 1 

### Because when you are flying on Delta 2 

### Air Lines, it is a seamless service. You bought 3 

### the ticket from Delta Air Lines. You go back, 4 

### if something happens, your bag doesn't get 5 

### delivered, something is wrong with your ticket, 6 

### you go through Delta Air Lines. It only makes 7 

### sense that that portal, that entryway portal, 8 

### ought to be the portal for all of the experience. 9


### MEMBER LEOCHA: And does the 10 

### Delta -- let's use Delta as an example -- does 11 

### their contract of carriage cover your flights as 12 

### well? Or do you have a separate contract of 13 

### carriage? 14


### MR. COHEN: The contract of 15 

### carriage is with the passenger, and it is on the 16 

### ticket. No, it is the ticketing carrier's 17 

### contract of carriage. 18 

### MEMBER LEOCHA: Okay. So, that 19 

### carries through all the way to -- 20 

### MR. COHEN: Absolutely. 21


### MEMBER LEOCHA: -- to the end. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 289



### Okay. 1 

### MR. COHEN: And we are responsible 2 

### for delivering the service, just like any other 3 

### service provider. 4 

### Okay. Thank you. 5 

### CHAIRPERSON MADIGAN: All right. 6 

### If we have no more questions, and Sam doesn't say 7 

### I can't release you, I am going to release you, 8 

### but only for 10 minutes. So, you will be back 9 

### here at 10 after -- oh, yes, you will be back at 10 

### 10 after 3:00. 11 

### Thank you. 12 

### (Whereupon, the foregoing matter 13 

### went off the record at 2:58 p.m. and went back 14 

### on the record at 3:10 p.m.) 15 

### CHAIRPERSON MADIGAN: Next up we 16 

### have Bruce Bishins. He is with the Association 17 

### of Retail Travel Agents. 18 

### And he can start once the room is 19 

### quiet. Thanks. 20 

### MR. BISHINS: Thank you, Madam 21 

### Chairwoman. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 290



### I have fully disclosed that I had a 1 

### stroke several months ago, and I am speaking 2 

### slowly and ask your indulgence. 3 

### ARTA will celebrate its 50th year 4 

### next year, and I am Managing Director of ARTA. 5 

### Next slide. Next slide, 6 

### ARTA fully supports consumer 7 

### protection which makes sense, but the 8 

### regulations must be based on fairness, 9 

### practicality, and, above all, commercial 10 

### viability. 11 

### Next slide. 12 

### ARTA will address three topics. 13 

### One, in Rule No. III, it is being proposed that 14 

### customer service standards will be enacted by 15 

### all travel agents, including the trade 16 

### practices, commissions, and incentives of the 17 

### retail travel agency community. 18 

### The second is based on errors from 19 

### the GDSs which cause, among other things, 20 

### code-share problems, and we are held responsible 21 

### for the code-share violations. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 291



### And thirdly, ARTA doesn't feel among 1 

### its members that commercial negotiations 2 

### between airlines and third parties, GDSs, should 3 

### be subject to regulations. They need to work it 4


### out for themselves. I address these 5 

### individually. 6 

### There is not a shred of evidence 7 

### pointing to the failure by travel agents who did 8 

### not provide excellent customer service. We do. 9 

### And there are too many ways for the DOT to set 10 

### a standard by which the myriad of bookings and 11 

### sources are provided to consumers, and nothing 12 

### is sacrosanct more than the trade practices, 13 

### commissions, incentives, not only in the travel 14 

### industry, but all retailing and all forms of 15 

### commerce. We do not think the DOT should delve 16 

### into this matter at all. 17 

### Errors caused by GDSs sometimes 18 

### happen. The data is too complex and oftentimes 19 

### glitches appear through the systems, where the 20 

### travel agent's liability falls on the GDSs, and 21 

### the DOT sometimes goes after the retailer, 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 292



### knowing full well that the GDS is at fault. The 1 

### Committee will look, please, into this subject. 2 

### Ancillaries. There is a huge 3 

### opportunity for ancillaries. I don't need to 4 

### tell you, with a stroke, you have appreciated the 5 

### huge opportunities to airlines and travel 6 

### agencies. 7


### But ARTA members do not want the DOT 8 

### to have unintended consequences in the content 9 

### and delivery and technology and functionality in 10 

### the GDS environment. The airlines must come to 11 

### terms with the GDS community, and some have. It 12 

### was mentioned that Delta, Air France, KLM, all 13 

### began to enact ancillaries. Let the 14 

### marketplace be aware and let the marketplace 15 

### resolve, because travel agents do not want to pay 16 

### for the negotiation between the airlines and 17 

### GDSs, in particular. 18 

### The truth about comparative 19 

### shopping, most GDSs do not provide and can't 20 

### provide ancillary comparison today. They are 21 

### largely unwilling to adapt the systems necessary 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 293



### despite test market and test airlines. Years of 1 

### inaction are evidence enough. 2 

### The ancillaries are too diverse to 3 

### be compared. I note that Kevin Mitchell already 4 

### said that the fees are undisciplined and 5 

### alleged, also, that the fees have difficulty 6 

### being compared. 7 

### The Open Allies say this is about 8 

### transparency, comparative data, full 9 

### disclosure, ease of use, and consumers. What it 10 

### is really about is giving GDSs a free ride 11 

### because other companies have proven, such as 12 

### Farelogix, the result and successful result of 13 

### the agreement between airlines and third-party 14 

### travel technology providers. 15 

### The Open Allies case is so weak that 16 

### Congress is asked to make it for them. We think 17 

### the DOT should not get involved in the commercial 18 

### decision between air carriers and travel 19 

### technologies, including the GDSs. 20 

### Ancillaries represent a huge 21 

### benefit for the airline and the travel agents. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 294



### We want to sell ancillaries, but not at a cost 1 

### to which we are unprepared and until the airlines 2 

### have negotiated the commercial terms. 3 

### Thank you. 4 

### CHAIRPERSON MADIGAN: Thank you 5 

### very much, Bruce. 6 

### Does anybody on the Committee have 7 

### any questions? 8 

### (No response.) 9 

### Bruce, thank you very much again. 10 

### Anybody with PowerPoint 11 

### presentations, please make sure that those are 12 

### submitted -- 13


### MR. BISHINS: Yes. 14


### CHAIRPERSON MADIGAN: -- so 15 

### everybody can get a copy of those. 16 

### Next up, I have Eben Peck with the 17 

### American Society of Travel Agents, ASTA. 18 

### MR. PECK: I am having some 19 

### PowerPoint issues. I apologize. So, I am just 20 

### going to get started. 21 

### Chair Madigan, members of the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 295



### Committee, my name is Eben Peck. I am the Vice 1 

### President of Government Affairs at the American 2 

### Society of Travel Agents. I want to thank the 3 

### Committee for inviting me here today. 4 

### ASTA is a long-time participant in 5 

### DOT consumer protection rulemakings, and we look 6 

### forward to working with you. I hope we can be 7 

### a resource for you in your work. 8 

### ASTA was established in 1931. We 9 

### are a 501(c)(6) trade association that 10 

### represents the interests of travel agents to all 11 

### levels of government and industry, while 12 

### promoting professional and ethical conduct, as 13 

### well as consumer protection for the traveling 14 

### public. 15 

### We have over 8,000 domestically and 16 

### about 900 members in 170 countries across the 17 

### world. Our members include all segments of the 18 

### travel industry, including what are known as 19 

### traditional or brick-and-mortar travel agents, 20 

### home-based travel agents, travel management 21 

### companies, online travel agencies like 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 296



### Travelocity, Expedia, et cetera, and travel 1 

### suppliers as well, such as tour, cruise, hotel, 2 

### and car rental companies. 3 

### I had a pithy slide here, but you 4 

### will have to bear with me. 5 

### About the travel agency industry, to 6 

### paraphrase Mark Twain, reports of our death have 7 

### been greatly exaggerated. While the industry 8 

### has been through a lot of changes over the past 9 

### 20 years, I am happy to report that travel agents 10 

### are alive and well. In fact, those travel 11 

### agencies who have adapted to the internet era 12 

### have not only survived, but have thrived. 13 

### Consider this: travel agents, 14 

### traditional and online, sell the majority of air 15 

### travel in this country. Traditional travel 16 

### agents sell about two-thirds of cruise trips and 17 

### tour packages. This translates into $136 18 

### billion in sales and 144 million trips in 2011. 19 

### Of that $136 billion, $95 billion was sold by 20 

### traditional travel agents, including $60 21 

### billion worth of air travel or 45 percent of the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 297



### market. The sales volume is expected to grow by 1 

### 3 percent in 2012. 2 

### Our industry also generates 3 

### 83,000-plus full-time jobs, produces an annual 4 

### payroll output of $5.6 billion, operates 5 

### 14,000-plus retail locations, the vast majority 6 

### of which, 98 percent, are SBA-eligible small 7 

### businesses. 8 

### I also wanted to touch briefly on the 9 

### travel agent value proposition, as we call it. 10 

### Why do consumers still use travel agents in this 11 

### digital age? Well, travel is a complicated 12 

### business, especially air travel, as we have 13 

### heard from presenters today. 14 

### Travel agents do two things for the 15 

### consumer: save them money and save them time. 16 

### They do this by using their expertise to 17 

### facilitate effective comparison shopping and 18 

### decision-making as to how to best spend 19 

### consumers' limited travel dollars. 20 

### So, why does ASTA and the travel 21 

### agent community care about consumer protection 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 298



### issues? Well, our members, most of whom are 1 

### small businesses, are on the frontlines every 2 

### day of consumer protection issues and issues 3 

### consumers have with travel suppliers. Cruises, 4 

### hotels, air travel, you name it, conflicts and 5 

### misunderstandings are inevitable in an 6 

### enterprise as large as the U.S. travel system, 7 

### and our members have seen it all. 8 

### So, no surprise that ASTA has been 9 

### a long-time participant in DOT's consumer 10 

### protection rulemakings, and my slide had some 11 

### examples of that. 12 

### With that as a little bit of 13 

### background, I wanted to turn to what we see as 14 

### the most important consumer protection issue 15 

### being considered by DOT today, one that you have 16 

### heard a lot about. I am part of the choir on 17 

### ancillary fees. So, I appreciate the 18 

### Committee's patience. 19 

### Why do we think this is so important? 20 

### Well, as I mentioned, every day our members 21 

### experience this frustration this issue brings 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 299



### about. When consumers are surprised by hidden 1 

### fees or have to go through multiple transactions 2 

### to purchase air travel, our members are the ones 3 

### who hear about it, whether on the phone from 4 

### regular customers or from walk-ins. 5 

### Just a few examples: the family 6 

### whose vacation budget gets blown up when they 7 

### realize that the flight they bought, the one they 8 

### thought was the cheapest, turns out to be 9 

### anything but when you add in baggage and seat 10 

### fees. Corporate travel departments can't keep 11 

### track of, or budget for, ever-changing ancillary 12 

### fees. A small businesswoman whose company is 13 

### too small to have a travel department finds her 14 

### travel budget similarly impacted. 15 

### The bottom line is that ASTA 16 

### believes under the current system consumers 17 

### can't effectively comparison shop for air 18 

### travel, nor can travel agents do so for them. 19 

### I will just give you a quick example 20 

### as to why we think the system as it exists today 21 

### does not truly provide comparison shopping for 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 300



### consumers. It is a hypothetical couple flying 1 

### to Ft. Lauderdale from DCA [Reagan National 2 

### Airport]. They are going to take a cruise. 3 

### They know they are going to check one bag. They 4 

### know they are going to carry on one bag. And 5 

### they want to make sure that they can sit 6 

### together. So, given the opportunity, they are 7 

### going to buy seats. 8 

### If they were to do the search 9 

### results, a quick search -- they don't have all 10 

### day to do this; they just want to get their ticket 11 

### and be done with it -- the quick search today 12 

### would show -- and we did some research 13 

### here -- Spirit Airlines would be about $198; U.S. 14 

### Air, about $205; JetBlue, about $230. So, they 15 

### go with Spirit in that case. 16 

### The same hypothetical couple under 17 

### a different system, the one we have proposed to 18 

### DOT with full transparency and purchasability of 19 

### ancillary fees, under this scenario, if you add 20 

### in all the fees, Spirit goes from $198 to $333; 21 

### U.S. Air goes from $205 to $255; JetBlue stays 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 301



### at $230. So, in this case, JetBlue is the 1 

### winner, and the couple has been saved $210. It 2 

### looked better on the slide, I promise. 3 

### (Laughter.) 4 

### CHAIRPERSON MADIGAN: We promise 5 

### you we will look at your slides. 6 

### MR. PECK: Okay. I have a 7 

### PowerPoint. I am going to give you a copy of it, 8 

### I promise. 9 

### So, at the end of the day, ASTA views 10 

### this as a simple proposition. The millions of 11 

### consumers who fly every day, including my 12 

### hypothetical couple, should have the benefit of 13 

### full comparison shopping for air travel. 14 

### We agree with an airline executive 15 

### who told the GAO in 2010 that, quote, "Providing 16 

### the consumer an opportunity to pay for 17 

### additional services at the time of booking would 18 

### create both greater choice and transparency, 19 

### while still allowing the airline to offer 20 

### unbundled services." 21 

### So, in brief, we urge this Committee 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 302



### to recommend to DOT that the upcoming passenger 1 

### protection rulemaking include a requirement for 2 

### full transparency and purchasability of 3 

### ancillary fees and services. 4 

### Thank you, and I would be able to 5 

### answer any questions. 6 

### CHAIRPERSON MADIGAN: Thank you. 7 

### Does anybody have any questions? 8 

### MEMBER BERG: One question. 9 

### Thanks for your presentation. 10


### MR. PECK: Yes. 11 

### MEMBER BERG: In your hypothetical, 12 

### your hypothetical involves, does it involve a 13 

### travel agency selling tickets? 14


### MR. PECK: It does. 15 

### MEMBER BERG: So, what does the 16 

### travel agent tell the customer about ancillary 17 

### revenues, and isn't that part of the 18 

### relationship between your customer and the 19 

### travel agent? 20


### MR. PECK: We use that method as 21 

### something that would be quick. We put ourselves 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 303



### in the shoes of a travel agent. So, this quick 1 

### search -- again, this couple does not have a lot 2 

### of time -- included a GDS as a travel agent would 3 

### see and, also, going to airline websites. And 4 

### then, we did a secondary search on the same 5 

### flights through Kayak as well. 6 

### MEMBER BERG: So, my question 7 

### really was about if you have a travel agent 8 

### selling to customers. Presumably, the travel 9 

### agent is experienced and knows that there are 10 

### ancillary charges associated with whatever it is 11 

### they want to buy. 12


### MR. PECK: Yes. 13 

### MEMBER BERG: Isn't it the job of 14 

### the travel agent to inform the customer about 15 

### those charges and won't they know? In other 16 

### words, there is nothing hidden here. It is just 17 

### the way it is discovered. 18 

### MR. PECK: It is my understanding 19 

### that, under current requirements, ancillary 20 

### fees are reportable in a range and they are 21 

### reportable quarterly. In the GAO report, it 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 304



### makes a note that there are 170 different airline 1 

### websites. All this to say that we feel it would 2 

### be quite burdensome to have travel 3 

### agents -- maybe they haven't used a certain 4 

### airline in a couple of months and have to redo 5 

### that search each and every time. 6 

### CHAIRPERSON MADIGAN: Does your 7 

### hypothetical presume I pick up the phone, I say 8 

### to the travel agent, you know, "Hey, quickly, can 9 

### you tell me what the cheapest fare is if I want 10 

### to go with my husband from D.C. to Ft. 11 

### Lauderdale" as opposed to -- 12 

### MR. PECK: Take a week and do it? 13 

### CHAIRPERSON MADIGAN: Right. 14 

### "Call me back in a day." 15 

### MR. PECK: That is the presumption. 16 

### We think that this example could also be used 17 

### just for them doing this at home. 18


### CHAIRPERSON MADIGAN: It takes a 19 

### lot longer at home. 20


### MR. PECK: Yes. 21 

### CHAIRPERSON MADIGAN: Charlie? 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 305



### MEMBER LEOCHA: Just quickly, as 1 

### you look at this, is there any way for a travel 2 

### agent to get all of this information when they 3 

### are asked to compare prices, let's say, with 4 

### three airlines, the ones that you put, for, let's 5 

### say, let's just ask for the first bag? 6 

### Do the airlines provide you, in an 7 

### online usable method, information about 8 

### checking your first bag, including exclusive 9 

### changes based upon frequent flyer levels, 10 

### including what credit cards they give exemptions 11 

### for baggage, and so on? Is that provided? I 12 

### mean, I hear from Mr. Berg that it is very 13 

### available, but is that sent to travel agents? 14 

### Or is that something that travel agents -- I 15 

### guess they have to go out and dig up. Or does 16 

### it come from the airlines in some way? 17 

### MR. PECK: My understanding is 18 

### that -- and thank you for raising this -- it is 19 

### not just a matter of going to the website once. 20 

### For a lot of ancillaries, there are a lot of 21 

### conditions on when they can be booked. It could 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 306



### be just based on the time the purchase is made, 1 

### whether they are a frequent flyer, you know, et 2 

### cetera, et cetera, whether it is at check-in or 3 

### at the gate. So, it is a very cumbersome 4 

### process, I would say. 5 

### MEMBER LEOCHA: And is there any 6 

### clear explanation somewhere that a travel agent 7 

### could find that tells you under what conditions 8 

### baggage fees could be waived based upon a wife 9 

### traveling with her husband or a group of friends 10 

### traveling together, whether they are using the 11 

### same PNR, the same record locator, or whether 12 

### they are not on that record locator, because that 13 

### just adds another level of complexity to it? Is 14 

### that clearly described anywhere by the airlines 15 

### to travel agencies? 16 

### MR. PECK: Not that I am aware and, 17 

### if it were, it would have to be frequently 18 

### updated by someone. 19 

### MEMBER LEOCHA: Thank you. 20 

### CHAIRPERSON MADIGAN: All right. 21 

### Thank you. Thank you all. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 307



### Moving right along, Terry Dale with 1 

### the U.S. Tour Operators Association. 2 

### MR. DALE: Well, good afternoon, 3


### everyone. 4 

### My name is Terry Dale. I am the 5 

### President of the United States Tour Operators 6 

### Association. This is the first time that our 7 

### association has participated in a forum like 8 

### this. So, as a newcomer, I believe in less is 9 

### more. So, I will be very succinct. I will try 10 

### to do this in six minutes. 11 

### Let's start with a snapshot of who 12 

### USTOA is. We are celebrating our 40th 13 

### anniversary this year, founded in 1972. We have 14 

### approximately 45 corporate members, and those 45 15 

### corporate members own and operate approximately 16 

### 150 different brands. Now those 150 brands 17 

### carried last year, roughly, 11 million 18 

### passengers and generated annual sales in $9 19 

### billion. 20 

### The one thing that binds all of these 21 

### members together is our commitment to consumer 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 308



### protection. It is mandatory for each of our 1 

### members to participate in what is called the 2 

### Travelers' Assistance Program. That requires 3 

### each member to post $1 million in security, 4 

### either through a bond, letter of credit, or 5 

### Treasury bill. The USTOA Depositors' Trust 6 

### then holds that bond in the unlikely case of 7 

### insolvency or bankruptcy. 8 

### I think it is critical to also 9 

### highlight that this program is the only consumer 10 

### protection plan that is recognized by the 11 

### Attorney General's Office of California under 12


### that State's seller-of-travel law. 13 

### So, today our tour operator members 14 

### are regulated by DOT as a ticket agent, but we 15 

### do differ significantly from online travel 16 

### agencies as well as brick-and-mortar retailers. 17 

### Tour operators have multiple products involved 18 

### and wrapped into the package vacation. That 19 

### includes not just airlines, but cruise, rail, 20 

### hotels, car rentals, et cetera. 21 

### We provide extreme flexibility for 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 309



### our customers to pay over time, which allows for 1 

### choice. Our booking window can go from 12 2 

### months or longer. And we take complete 3 

### responsibility for that customer's entire 4 

### experience from start to finish. It is 5 

### important for us to have repeat business. So, 6 

### we take that responsibility very seriously. 7 

### Now, if we talk about tour 8 

### operators' sale of air transportation, 9 

### actually -- I think we can move one more there 10 

### [referring to PowerPoint presentation]. There 11 

### we go. Sorry about that. 12 

### The airline is one subcomponent of 13 

### the package vacation. Between the deposit and 14 

### the time of airline ticketing, international 15 

### airline fuel surcharges, over which the tour 16 

### operator has no control, often increase. And 17 

### the volatility of fuel prices places pressure, 18 

### then, obviously, on the airlines to suspend or 19 

### discontinue in some cases unprofitable routes, 20 

### leaving some of our members with very few 21 

### alternatives to provide that customer with their 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 310



### vacation. 1 

### I think it is also important to point 2 

### out that we print our brochures a year in 3 

### advance. That is because of the long booking 4 

### window, notwithstanding the 5 

### constantly-shifting airline prices, rules, and 6 

### service patterns. 7 

### Although the sale of air constitutes 8 

### just a fraction of our business, tour operators 9 

### can struggle at times with new DOT requirements 10 

### mandating additional airline-specific 11 

### disclosures, particularly on e-tickets and 12 

### websites, given technological challenges and 13 

### the frequency of changes to airline rules, 14 

### policies, and fees. 15 

### I think it is important to note that 16 

### USTOA has been an active participant in DOT's 17 

### consumer rulemakings. During the second round, 18 

### we supported DOT's proposals to ban 19 

### post-purchase-price increases other than those 20 

### increases attributable to government taxes. We 21 

### also supported consumers with the information on 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 311



### airline baggage fees. And we expect to fully 1 

### participate in upcoming rulemaking processes. 2 

### We think it is important to stress 3 

### that we appreciate DOT's continued efforts to 4 

### adopt enforcement policies that allow sellers 5 

### the ability and means to comply with some 6 

### flexibility. Given the current challenging 7 

### economic climate, it is always good to continue 8 

### to review existing requirements, to ensure that 9 

### stated objectives are, in fact, achieved at the 10 

### least-burdensome means, and still provide 11 

### operational flexibility. 12 

### We would also like to encourage that 13 

### in the future we continue to look at ways that 14 

### we can balance the need to protect consumers and 15 

### the important objectives of the Airline 16 

### Deregulation Act. In the future, we believe DOT 17 

### should focus on addressing practices that are 18 

### likely to deceive or confuse consumers, and when 19 

### requiring new requirements, should be reserved 20 

### for cases where DOT is aware of actual consumer 21 

### injury. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 312



### Let me just wrap up by saying we look 1 

### forward to working with the DOT to ensure that 2 

### their enforcement policies are understood by our 3 

### members, and that we are compliant, and that we 4 

### appreciate DOT's sensitivity to understanding 5 

### the role of the tour operator as they move 6 

### forward. We look forward to partnering with 7 

### this Committee and helping in any way that we 8



### can. 9 

### Thank you very much. 10 

### CHAIRPERSON MADIGAN: Terry, thank 11


### you. 12 

### Any questions/comments? 13 

### MEMBER LEOCHA: I would just like to 14 

### ask, you mentioned there are 150 brands -- 15


### MR. DALE: Correct. 16 

### MEMBER LEOCHA: -- which you 17 

### represent. What are some of the companies that 18 

### are members of your -- 19 

### MR. DALE: Sure. Actually, Tauck, 20 

### Abercrombie & Kent, Globus, Trafalgar. 21 

### MEMBER LEOCHA: Okay. And do you 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 313



### think that it would make your job easier as you 1 

### plan out your clients' trips from soup to nuts 2 

### to have disclosed ancillary fees, so that you can 3 

### let your customers know in terms of their entire 4 

### package how much it is going to cost them in 5 

### totality? 6 

### MR. DALE: Well, it is important 7 

### that we be able to give them that kind of 8 

### information. So, certainly, it would make it 9 

### easier. 10 

### MEMBER LEOCHA: Thank you. 11 

### CHAIRPERSON MADIGAN: Terry, thank 12 

### you very much. 13 

### MR. DALE: Thank you. 14 

### CHAIRPERSON MADIGAN: Next up, we 15 

### have Deborah McElroy with Airports Council 16 

### International. I presume you guys are called 17


### ACI. 18 

### MS. McELROY: Madam Chairman, 19 

### members of the Committee, thank you very much. 20 

### Airports Council International 21 

### represents local, regional, and state governing 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 314



### bodies that own and operate commercial service 1 

### airports in the United States and Canada. Our 2 

### 345-member airports enplane more than 95 percent 3 

### of the U.S. domestic traffic and virtually all 4 

### of the international airline passenger and cargo 5 

### traffic in North America. 6 

### Airports are the public face of 7 

### aviation in hundreds of communities throughout 8 

### the United States, working with airlines and 9 

### other service providers to meet passenger needs 10 

### and provide a pleasant travel experience. We 11 

### believe that it is critical that the Advisory 12 

### Committee consider the airport perspective, and 13 

### I very much appreciate the opportunity to appear 14 

### before you today. 15 

### It is true that many of the issues 16 

### being studied by the Committee are the 17 

### responsibilities of parties other than the 18 

### airports. However, a recent ACI and a 19 

### nationwide poll showed that the traveler 20 

### knowledge about who does what at airports is 21 

### quite limited. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 315



### For example, we found that 20 1 

### percent of consumers believe that airports were 2 

### responsible for delayed or canceled flights. 3 

### Almost a third blame airports for problems with 4 

### lost or mishandled bags. And almost half 5 

### believe that airports are responsible for planes 6 

### being stuck on the tarmac awaiting departure or 7 

### arrival at the gate. 8 

### Because the image of airports is 9 

### intrinsically linked to whether or not we are 10 

### meeting passenger needs, we have a critical 11 

### stake in resolving shortcomings throughout the 12 

### air travel experience. We also understand that 13 

### passengers expect airports to help resolve their 14 

### problems because airports are part of their 15 

### community, working not only to bring price and 16 

### service competition, but also to improve the 17 

### travel experience. 18 

### It is important to understand that 19 

### failure to meet consumer needs often has root 20 

### causes that also have significant impact on 21 

### airport operations and facilities. Whether the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 316



### problem involves providing timely and accurate 1 

### information, on-time departure or arrival 2 

### performance, baggage-handling, or resolving 3 

### extended tarmac delays, improvements to any or 4 

### all of these would help airports more 5 

### effectively serve passengers, airlines, and 6 

### cargo services. 7 

### Enhancing the passenger experience 8 

### and meeting consumer needs also ensures that 9 

### airports can continue to generate jobs and 10 

### economic development in their communities. The 11 

### unfortunate fact is that passengers often 12 

### associate a negative travel experience with the 13 

### airport at which the incident occurred, 14 

### regardless of the reason for the problem. If 15 

### passengers lose confidence in the operations at 16 

### an airport because of failures in customer 17 

### service, they may choose to fly out of another 18 

### airport in the future or use a competing mode of 19 

### transportation. This impacts the finances of 20 

### individual airports, the airport industry as a 21 

### whole, and the local communities in hundreds of 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 317



### cities throughout the United States. 1 

### ACI-NA's [Airport Council 2 

### International – North America’s] February 2012 3 

### study found that America's commercial airports 4 

### are a powerful economic engine generating 10.5 5 

### million jobs and $1.2 trillion in total economic 6 

### impact in 2010. Airports are responsible for 7 

### about 8 percent of Gross Domestic Product and an 8 

### estimated 7 percent of jobs. 9 

### Over the last four years, ACI has 10 

### been very active in responding to DOT regulatory 11 

### proposals on behalf of airports, and we 12 

### appreciate the Department's consideration of 13


### our comments. 14 

### I feel the need to correct something 15 

### that was said earlier by another speaker. Ms. 16 

### Greenberg with the National Consumer League was 17 

### incorrect in stating that airports have opposed 18 

### consumer protection initiatives. Whether the 19 

### proposal involved compensation for oversold 20 

### flights and denied boarding, 21 

### chronically-delayed flights, airline customer 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 318



### service plans, flight status change, delay data, 1 

### reporting of mishandled bags, or emergency 2 

### contingency plans, ACI-NA has consistently 3 

### advocated that the Department ensure that 4 

### passengers have relevant, accurate, and timely 5 

### information to assist them in making the most 6 

### informed travel decision. 7 

### ACI, also, has not only been active 8 

### in working with FAA and DOT, but also with the 9 

### U.S. Access Board, in improving access for 10 

### passengers with disabilities in the national 11 

### transportation system. Airport operators want 12 

### to ensure that the needs of passengers with 13 

### disabilities are accommodated, regardless of 14 

### who might be responsible for providing the 15 

### service to the passengers. 16 

### We have been a leader in working with 17 

### the airlines and organizations representing 18 

### passengers with disabilities. We have 19 

### participated in public hearings and seminars 20 

### provided by FAA, DOT, the Department of Justice 21 

### [DOJ], the Department of Labor [DOL], the U.S. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 319



### Access Board, and the National Council on 1 

### Disabilities, and have provided extensive 2 

### training and information to our member airports 3 

### regarding the accommodation of passengers with 4 

### disabilities. This is an important issue for 5 

### the airport community. 6 

### We have also provided the airport 7 

### perspective on numerous regulatory proposals in 8 

### this area. ACI-NA is very pleased that DOT and 9 

### other federal agencies have adopted many of our 10 

### suggestions in developing rules over the last 11 

### four years. We were particularly pleased in 12 

### 2011 when DOT expanded the tarmac-delay 13 

### regulations to cover small and non-hub airports, 14 

### and required domestic and international 15 

### airlines to coordinate their plans with each 16 

### U.S. large, medium, small, and non-hub airport 17 

### served as well as diversion airports. We have 18 

### long argued that it was critical to protect 19 

### passengers at these more than 300 smaller 20 

### airports, as the impact of tarmac delays at these 21 

### facilities can be even more pronounced than at 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 320



### larger facilities. 1 

### Even with these regulatory 2 

### enhancements, however, much work remains to be 3 

### done. As last year's early winter snowstorm in 4 

### the Northeast showed, there must be better 5 

### coordination before and during severe weather 6 

### events or other flight disruptions. 7 

### Further, airports must be empowered 8 

### to tell FAA and the airlines "No more flights," 9 

### if the facility cannot accommodate the aircraft 10 

### or respond to airline requests for help in a 11 

### reasonable time. FAA and airlines also must 12 

### provide airports with accurate information 13 

### about diverted flights and other diversion 14 

### airports to prevent the overloading of any 15 

### single airport. 16 

### Effective means of communicating 17 

### information about rapidly-changing airport 18 

### conditions and flight status, including 19 

### diversion information in real-time among all 20 

### operational stakeholders, airports, airlines, 21 

### the FAA, air traffic organization, TSA, and 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 321



### Customs and Border Protection [CBP], is a 1 

### critical component of enhancing the passenger 2 

### experience and minimizing passenger 3 

### inconvenience during severe weather and other 4 

### mass-diversion events. 5 

### We are heartened by the actions of 6 

### airport operators to implement surface 7 

### management solutions which are improving 8 

### airport and airline situational awareness in 9 

### good weather and bad. 10 

### We have also been impressed by the 11 

### private sector's development of tools, some of 12 

### which have been provided to the industry for 13 

### free, to share information, key operational 14 

### information, in real-time throughout the 15 

### system. 16 

### We encourage FAA to follow these 17 

### examples and provide mechanisms for airports and 18 

### airlines to have better situational awareness, 19 

### so better operational decisions can be made 20 

### before and during diversion events, for the 21 

### benefit of passengers. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 322



### In closing, we would ask this 1 

### Committee to recommend that DOT take action to 2 

### provide all consumers the same level of 3 

### protection. We believe it is long overdue for 4 

### DOT to expand delay and mishandled baggage 5 

### reporting as well as provisions related to 6 

### oversales and denied-boarding compensation to 7 

### all commercial airlines, not just those covered 8 

### carriers that count for at least 1 percent of 9 

### domestic scheduled passenger revenue. 10 

### To the passenger, the effects of 11 

### delays, baggage mishandling, or denied boarding 12 

### are the same, no matter which airline actually 13 

### operates the aircraft or the size of the 14 

### airplane. 15 

### Additionally, given the fact that 16 

### regional airlines now transport one out of every 17 

### four domestic passengers and operate half of the 18 

### daily domestic departures, as well as provide 19 

### the only scheduled service in more than 70 20 

### percent of U.S. airports, it is critical that DOT 21 

### include their operations in consumer protection 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 323



### regulations as well. 1 

### You heard Mr. Cohen earlier say that 2 

### passengers enjoy, quote, "the same benefits," 3 

### but we respectfully disagree. He also asked you 4 

### to focus on transparency, and we agree and would 5 

### ask you to do the same. But the fact of the 6 

### matter is data on regional airlines is not 7 

### provided to DOT. There is no justification for 8 

### providing consumer protection only to those 9 

### traveling on the nation's largest airlines. 10 

### All passengers deserve the customer service, 11 

### passenger protection, and legal rights afforded 12 

### by DOT regulations. 13 

### Thank you for the opportunity to 14 

### present the U.S. airport industry perspective. 15 

### I look forward to answering your questions. 16 

### CHAIRPERSON MADIGAN: Thank you, 17


### Deborah. 18 

### Do we have questions from members of 19 

### the Committee? 20


### MEMBER LEOCHA: Yes. 21 

### CHAIRPERSON MADIGAN: Charlie? 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 324



### MEMBER LEOCHA: On the new DOT rule 1 

### that requires -- it might be the FAA bill -- that 2 

### requires the airport and airline coordination on 3 

### tarmac-delay rules -- 4


### MS. McELROY: Uh-hum. 5


### MEMBER LEOCHA: -- I understand 6 

### most of those reports are into DOT already. Has 7 

### that been a positive process in coordinating 8 

### with -- I guess it would be between the airports, 9 

### TSA, Customs and Border Protection, and the 10 

### airlines. Has that been working about the way 11 

### you thought it might? 12 

### MS. McELROY: So, a couple of 13 

### things. The actual requirement for 14 

### coordination between the airlines and the 15 

### airport has been in effect for quite a while. 16 

### The recent FAA reauthorization bill signed into 17 

### law in February required airports and airlines 18 

### to file additional plans. 19 

### But regarding the coordination, 20 

### yes, it is going very well between the airlines 21 

### and the airports. We are working out systems to 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 325



### make sure that passenger needs are accommodated. 1 

### TSA has also been a really good partner in this. 2 

### I say there have been some 3 

### challenges with Customs in this area. We are 4 

### working with A4A [Airlines for America], IATA 5 

### [International Air Transport Association], and 6 

### the other airline organizations to address this. 7 

### But if I were to point out a concern, a potential 8 

### weak link in the system, it would be that 9 

### coordination with Customs, especially if you 10 

### have a diversion into an airport that has a very 11 

### small facility, limited staffing, or worst-case 12 

### scenario, where you don't have a federal 13 

### inspection service facility. 14 

### MEMBER LEOCHA: And did I hear you 15 

### right? You said that you urged more DOT/FAA 16 

### coordination with the industry in cases of 17 

### storms. It kind of sounds like the same thing 18 

### that the airlines are getting, that they need to 19 

### communicate with their passengers every 30 20 

### minutes. Would it almost sound like something 21 

### like that? You are looking for something like 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 326



### that from FAA/DOT? 1 

### MS. McELROY: I mean, all of us are 2 

### struggling now to determine the best way to 3 

### provide the up-to-date information. On a bad 4 

### weather day, for example, where you are having 5 

### irregular operations, the airports are putting 6 

### out what is called "Notice to Airmen," [NOTAM] 7 

### talking about the conditions at those airports. 8 

### But if I am a major airline operating 9 

### throughout the United States, there may be 10 

### hundreds of those that I am the recipient of. 11 

### So, we are struggling and working with FAA to 12 

### figure out what is the best way for all of us to 13 

### share that data in order that better decisions 14 

### can be made when the airline is looking to divert 15 

### a flight because it can't go to its scheduled 16 

### destination or if air traffic is also part of 17 

### that process. 18 

### Frankly, we haven't found that yet. 19 

### We are struggling to encourage the air traffic 20 

### organization to move a little more quickly on 21 

### this. I think it is just going to take time. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 327



### But, again, as I said, we are very 1 

### pleased that there have been some private 2 

### businesses that have brought forth some tools 3 

### that are available free to the industry. Not 4 

### everyone is taking advantage of those. So, 5 

### again, we think this is an area that is going to 6 

### require more attention, and a lot of it is going 7


### to come from FAA. 8


### MEMBER LEOCHA: What are some of 9


### those tools? 10 

### MS. McELROY: I am not the expert on 11 

### technical -- 12 

### MEMBER LEOCHA: What do they 13 

### generally do? 14 

### MS. McELROY: Well, it provides 15 

### situational awareness. It lets you know what is 16 

### going on at that airport. It is a tool provided 17 

### by Passer. 18 

### MEMBER LEOCHA: Okay. 19 

### MS. McELROY: And so, I can provide 20 

### you additional information offline. 21 

### MEMBER LEOCHA: And then, your 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 328



### comment about the regionals not being included 1 

### in the reporting setup. 2


### MS. McELROY: Not all of them. 3 

### Again, as was mentioned earlier, there are 15 -- 4 

### MEMBER LEOCHA: Right. 5 

### MS. McELROY: -- airlines that are 6 

### mandated to report. Some of those are the 7 

### larger regional carriers. But our point would 8 

### be it should be all airlines providing services 9 

### to passengers should be required to provide that 10 

### information. 11 

### MEMBER LEOCHA: So, that kind of 12 

### goes together with your look at code-share 13 

### arrangements. So, let's say now we would 14 

### include, if it is United, it would be United plus 15 

### all of their regional; their partners would be 16 

### included in an overall figure or at least listed 17 

### together? 18 

### MS. McELROY: You know, I think that 19 

### how you provide that information is something 20 

### that the airlines and DOT could work with us on. 21 

### I don't have the appropriate solution. I think 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 329



### that is something that we need to look at. 1 

### Because, again, our interest is providing the 2 

### data to consumers most efficiently. I don't 3 

### know whether that is in one big report or whether 4 

### that is separate by the carrier that is actually 5 

### providing the service. But I think it is 6 

### something we need to look at. 7 

### Thank you. 8 

### CHAIRPERSON MADIGAN: Thank you 9 

### very much. 10 

### Next up, we have got the other 11 

### switch. So, it is going to be Joseph Rubin, 12 

### Interactive Travel Services Association, ITSA. 13 

### MR. RUBIN: Thank you very much. 14 

### My name is Joe Rubin. I am the 15 

### President of ITSA, the Interactive Travel 16 

### Services Association. I appreciate the 17 

### opportunity to come here today. 18 

### Like some of the others, we would 19 

### love to be a resource going forward. We have 20 

### quite a few members that are very engaged in the 21 

### travel industry, and we think we have a lot of 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 330



### expertise that we can help provide to this 1 

### Commission. 2 

### So, we believe the Consumer 3 

### Protection Division of the Department of 4 

### Transportation does an excellent job carrying 5 

### out the mandate of their office. But we welcome 6 

### the entry of another outlet for consumer voices 7 

### to help the Department establish timely and 8 

### effective rules to fulfill their consumer 9 

### protection mission. 10 

### So, what is ITSA? Who are we? We 11 

### are independent travel distributors; that is, we 12 

### are not controlled by travel providers. In the 13 

### travel space, that is a very important 14 

### distinction. That means that our search 15 

### results, our rankings, our consumer information 16 

### isn't biased by interested parties. 17 

### One of our roles is to help airlines 18 

### sell and distribute their seats, and to help 19 

### consumers find and purchase flights and other 20 

### travel services that best fit their needs. That 21 

### is, we foster competition and lower prices among 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 331



### airlines and provide them with a very valuable 1 

### service. 2 

### ITSA members are also technology 3 

### companies. They are sophisticated, 4 

### innovative, technologically-savvy, and they 5 

### make up some of the most cutting-edge, 6 

### award-winning, and advanced technology 7 

### companies in the world. 8 

### So, primarily for your benefit, Ms. 9 

### Madigan, you are obviously, presumably, aware of 10 

### ITSA's online travel company members, and who 11 

### they are and what they do. They were one of the 12 

### first industries to take advantage of the 13 

### internet, to provide consumers with unbiased 14 

### research results, the ability to research and 15 

### comparison shop, and purchase any travel service 16 

### that they need from the comfort of their own 17 

### home, and increasingly, from their mobile 18 

### devices. In fact, about one-third of the 19 

### world's travelers booked online, and about 20 

### one-third of all U.S. e-commerce is 21 

### travel-related. So, it is a very significant 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 332



### portion of e-commerce. 1 

### But you may be less familiar with our 2 

### Global Distribution System [GDS] members. And 3 

### I know they have been mentioned a couple of times 4 

### here. So, let me give you a little bit of a 5 

### background on them. 6 

### These are the companies that 7 

### consolidate all airline flight and fare 8 

### information, and they power the worldwide 9 

### airline market, consolidating schedule and fare 10 

### information from more than 500 airlines 11 

### worldwide, analyzing billions of flight 12 

### possibilities, as Kevin Mitchell pointed out, 13 

### just for one pairing, and delivering accurate, 14 

### relevant, and organized flight results 15 

### thousands of times every second. 16 

### GDS companies are the backbone of 17 

### flight distribution. And so, are approximately 18 

### 50 percent of all airline tickets in the U.S. 19 

### They invest billions of dollars in technology 20 

### and in jobs, developing innovative ways to bring 21 

### products to market and working with their 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 333



### airline partners, travel agents, and others to 1 

### develop and run technology and reservation 2 

### services, and to fill other technological 3 

### requirements. 4


### Now ITSA members and consumer 5 

### travelers, our interests are aligned. Let me 6 

### explain a little bit what I mean. 7 

### Among other things, consumers and 8 

### the companies that we represent all seek to 9 

### maximize and improve the consumer air travel 10 

### experience. We all want easy and efficient 11 

### purchasing of air transportation. We want 12 

### maximum information, transparency, and 13 

### transactability. We want competitive 14 

### airfares. We want to minimize hassles. And we 15 

### want vigilance against unfairness and 16 

### deception. 17 

### ITSA members also thrive on openness 18 

### and transparency. In fact, it has filed an 19 

### amicus brief in support of the Department of 20 

### Transportation's full-fare advertising rule 21 

### against the challenge brought by some U.S. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 334



### airlines. 1 

### So, our recommended consumer 2 

### protection agenda, let me talk about that for a 3 

### moment. You have obviously heard a lot of 4 

### recommendations today about areas that you can 5 

### and should focus on. They range from relatively 6 

### simple and inexpensive to, as Dave pointed out, 7 

### potentially very expensive for the airlines. 8 

### It could be very disruptive for the travel 9


### market. 10 

### We have one area in particular, and 11 

### it has been mentioned before, airline ancillary 12 

### fees, where we see problems with the market. We 13 

### see the need for additional consumer protection. 14 

### We see specific action that would benefit 15



### consumers. 16 

### And perhaps most importantly, two 17 

### points that are perhaps most important. One, 18 

### the tables have already been set by the 19 

### Department of Transportation in at least their 20 

### enquiry and Consumer Protection Rule III. And 21 

### again, to Mr. Berg's point, the costs are de 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 335



### minimis. We see that this is a very easy 1 

### technological solution to what a number of 2 

### groups here today have complained about as a 3 

### major problem. 4 

### So, we recommend that the initial 5 

### focus of this Committee should be on 6 

### transparency and transactability of airline 7 

### ancillary fees. See it, compare it, and buy it. 8 

### Consumers want and deserve the right 9 

### to compare the all-in cost of their fare across 10 

### carriers and to purchase the core services they 11 

### need, such as pre-assigned seats, advanced 12 

### boarding, and checked-bags fees, in the same 13 

### manner that they purchase their tickets. 14 

### However, since unbundling began in 15 

### earnest a few years ago, many airlines, as we 16 

### have discussed before, won't disclose these core 17 

### ancillary services and fees to ITSA members and 18 

### other third-party distribution channels. 19 

### We don't begrudge the airlines the 20 

### opportunity to charge these fees as they attempt 21 

### to remain profitable. We all have a shared 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 336



### interest in that. But we are concerned about 1 

### how they are sold. 2 

### At the present time, the only 3 

### opportunity for consumers to directly compare 4 

### all-in costs in airfare is to click back and 5 

### forth between various sites, such as between an 6 

### online travel company to learn the base fare and 7 

### then back to an airline website to find out what 8 

### the ancillary fees are. 9 

### And the only way to purchase these 10 

### services is through the airlines directly, 11 

### adding unfairness, cost, time, and 12 

### inconvenience to consumers' traveling planning. 13 

### ITSA members have supported a simple 14 

### and inexpensive and technologically-feasible 15 

### solution that doesn't impose price or other 16 

### controls on airlines and, again, dovetails with 17 

### some of the rulemaking proposals that the 18 

### Department has already announced. 19 

### So, ITSA's recommendation here is 20 

### that you guys work with the Department on 21 

### proposed Consumer Protection Rule III to ensure 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 337



### that it is released expeditiously, and that it 1 

### has a limited and timely intervention to require 2 

### disclosure and transactability of core 3 

### ancillary airline services and fees to those 4 

### distribution channels that the airlines are 5 

### already doing business with. 6 

### The fact is that technology, 7 

### processes, and data already exist to make this 8 

### transparency and transactability of airline 9 

### ancillary fees for consumers a reality, and at 10 

### minimal cost, and with a very light regulatory 11


### touch. 12 

### So, let me emphasize one additional 13 

### point. That is, this is not a fight between 14 

### airlines and their distribution partners. It 15 

### is a fight against unfairness in airline pricing 16 

### mechanisms, again, with a simple, feasible 17 

### solution. 18 

### Unfortunately, as Kevin Mitchell 19 

### pointed out, there is an economic disincentive 20 

### for each individual airline to release this data 21 

### to ITSA members and other third-party 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 338



### distribution channels, and that the airline that 1 

### goes first is likely to display higher costs and 2 

### is likely to be displayed lower in a neutral 3 

### display, making them appear more expensive than 4 

### their competitors. 5 

### So, the only solution we see in this 6 

### situation is to have the Department break this 7 

### logjam through a disclosure requirement that 8 

### imposes a minimal disclosure burden on all 9 

### airlines concurrently. 10 

### Unfortunately, I think as Mr. Berg 11 

### alluded to, you may hear some opposition to some 12 

### of this by the airlines. They may claim to be 13 

### supportive, but then throw roadblocks in the way 14 

### or may claim that there are other burdens and 15 

### reasons that they can't provide this data. 16 

### So, let me address some of the 17 

### arguments. First, "We would like to do it, but 18 

### the distribution mechanisms, and particularly 19 

### the GDS members of ITSA, `are clunky,'" 20 

### quote/unquote, "and don't have the technology or 21 

### capability to do so." 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 339



### The response to this claim is simple 1 

### and straightforward: "Yes, we can." The GDS 2 

### companies are some of the most innovative, 3 

### advanced, and award-winning technology 4 

### companies in the world, and they actually run the 5 

### booking systems and websites for many of the 6 

### airlines around the world. So, this argument 7 

### simply rings hollow. 8 

### Further, if the airlines have a 9 

### better product such as more robust offering that 10 

### they think they should be able to offer, let the 11 

### market work. The solution here is to give 12 

### everybody the information and let consumers 13 

### decide where they want to book their tickets and 14 

### their travel, not to unfairly stifle competition 15 

### and create an unfair, unbalanced playing field. 16 

### Another claim you are going to hear 17 

### potentially -- and I think Mr. Berg, again, 18 

### raised this before -- is that there is already 19 

### available information on the website and the 20 

### market is already working. So, with regard to 21 

### the information that is available on the airline 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 340



### websites -- by the way, which was required by 1 

### Consumer Protection Rule II, and we think is a 2 

### good step, but it is not a sufficient step -- it 3 

### might otherwise not have been available at all 4 

### without Consumer Protection Rule II. 5 

### It is a static list, as I think Mr. 6 

### Peck mentioned before. It doesn't enable 7 

### consumers to accurately compare all-in costs 8 

### across airlines. They may present consumers 9 

### with a range of costs and fees, rather than the 10 

### real cost the consumers are actually going to 11 

### have to pay. 12 

### With regard to the functioning of 13 

### the market, if this is the market working, we 14 

### would hate to see what it looked like broken. 15 

### There is ample evidence that it most assuredly 16 

### is not working. As Kevin Mitchell indicated, 17 

### Ben Baldanza sort of peeled off the band-aid and 18 

### indicated we think why it is not. And that is 19 

### there is a real fear amongst the airlines that 20 

### the first one to jump is going to face a huge 21 

### economic disincentive. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 341



### Setting that aside, however, even if 1 

### the market is working, which, again, we don't 2 

### think it is, but even if it is and one drip here, 3 

### one additional service there indicates that the 4 

### market is working, perhaps working slowly, but 5 

### working nonetheless, we think there is real 6 

### consumer harm that is going on regardless of how 7 

### long this may take. 8 

### So, IATA, for example, who is coming 9 

### up next, I believe, has in the past said, "Well, 10 

### this may take three years or more for a system 11 

### to be developed." I am not going to speak for 12 

### you. You can speak for yourself. But that 13 

### means three more years of consumers not being 14 

### able to compare all-in costs, comparing costs of 15 

### airline services and fees. 16 

### So, in conclusion, independent 17 

### travel distribution companies play a vital role 18 

### in protecting consumer interests and enhancing 19 

### consumer protection among travel providers. 20 

### Again, this Committee's recommendations should 21 

### be to urge the Department of Transportation to 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 342



### ensure the consumer benefits of independent, 1 

### third-party distribution are not degraded by 2 

### airline efforts to restrict their fee content in 3 

### unfair or deceptive ways. 4 

### Thank you, and I look forward to 5 

### answering any questions. 6 

### CHAIRPERSON MADIGAN: All right. 7 

### David? 8


### MEMBER BERG: Thanks. 9 

### There is a report from May 2011 that 10 

### the Justice Department was conducting an 11 

### investigation or launched an investigation into 12 

### whether GDS practices violate the antitrust law. 13 

### I was wondering if you could give us a status 14 

### update on that. 15 

### MR. RUBIN: I don't have any 16 

### particular status update. But I can, I think, 17 

### easily conclude that the GDS share of the market, 18 

### the GDSs sell about 50 percent of all airline 19 

### tickets. That is down from 70-plus percent a 20 

### couple of years ago. And the distribution costs 21 

### are now lower per airline and per ticket than 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 343



### they were a few years ago. 1 

### So, it seems to us that sort of prima 2 

### facie evidence, if a company or group of 3 

### companies have a lower market share and lower 4 

### costs, that is prima facie evidence that there 5 

### is no monopolization going on there. 6 

### MEMBER BERG: But, to your 7 

### knowledge, that investigation is still going on? 8 

### MR. RUBIN: To my knowledge, it is. 9 

### I don't know the status of it. 10


### MEMBER BERG: Thanks. 11


### CHAIRPERSON MADIGAN: Go ahead. 12 

### MEMBER ALE-FLINT: A question 13 

### regarding your statements on the technology. I 14 

### heard you say technology is now available or it 15 

### can be developed. Is that technology 16 

### available, sort of part one? And what is the 17 

### additional incremental cost borne by the 18 

### carriers, and potentially consumers? 19 

### MR. RUBIN: Sure. Well, the 20 

### technology is available. A number of folks have 21 

### mentioned ATPCO, which is an airline-owned 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 344



### consolidation service. 1 

### MEMBER ALE-FLINT: The trial, that 2 

### trial that was -- 3 

### MR. RUBIN: Right. So, that trial 4 

### was gone through. The data, ATPCO has been 5 

### working to try to make sure that the airlines 6 

### provide that data to them. And then, we have the 7 

### capability -- we, the GDSs, I should say -- have 8 

### the capability to, then, take that data and make 9 

### it work and make it displayable for consumers 10 

### fairly quickly. 11 

### ATPCO has said that the cost is about 12 

### $20,000 per airline. So, when we say de 13 

### minimis, we really mean relatively de minimis. 14 

### MEMBER LEOCHA: Just a quick 15 

### question. You said ITSA, and you haven't 16 

### really -- who are the members of ITSA? 17 

### MR. RUBIN: Sure. Sorry, Charlie. 18 

### Sorry. That is a good question. 19 

### ITSA represents the major GDS 20 

### companies, Amadeus, Sabre, and Travelport, and 21 

### then some of the major online travel companies, 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 345



### Expedia, Travelocity, Orbitz, and Priceline. 1 

### MEMBER LEOCHA: And you mentioned 2 

### core fees. What do you mean by core fees? 3 

### MR. RUBIN: Core fees are the main 4 

### fees that traditionally the airlines have 5 

### provided consumers for free. So, seat 6 

### reservation fees, baggage fees primarily, and 7 

### then, also, early-boarding fees. 8 

### CHAIRPERSON MADIGAN: Joe, thank 9 

### you very much. 10 

### MR. RUBIN: Thank you. 11 

### CHAIRPERSON MADIGAN: And last up, 12 

### we have Doug Lavin and Sharon Pinkerton with the 13 

### International Air Transportation Transport 14 

### Association, IATA, and Airlines for America, 15


### A4A. 16 

### And I apologize if I leave in the 17 

### middle of your presentation. It is not because 18 

### I have taken a position on the ancillary fee 19


### matter. 20 

### (Laughter.) 21


### MS. PINKERTON: Good to know 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 346



### beforehand. Thank you very much, Madam 1 

### Chairwoman. 2 

### Thank you for having us here today. 3 

### Doug and I are combining our presentations in the 4 

### interest of time. 5 

### My name is Sharon Pinkerton. I am 6 

### here from the Airlines for America. I am just 7 

### going to start off, my whole time here, I am going 8 

### to try to step back a little bit from some of the 9 

### things we have heard to have a little bit of a 10 

### bigger picture. 11 

### And one of the things I would like 12 

### to do, although I know your specific mission is 13 

### to think about consumer issues, I also think it 14 

### is important to understand that part of DOT's 15 

### statutory mission is to place some emphasis on 16 

### competitive market forces in order to provide a 17 

### viable and private air traffic control system. 18 

### So, for those of you that don't know, 19 

### Airlines for America has undergone quite a 20 

### transformation in the last year and a half. We 21 

### have a new leader. And one of our initiatives 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 347



### has been to create what we call a National 1 

### Airline Policy. 2 

### In thinking about coming to talk to 3 

### you guys here today, it occurred to me that the 4 

### elements of our National Airline Policy are 5 

### absolutely in sync with what we think are in the 6 

### interests of consumers. The elements of our 7 

### National Airline Policy are having a rational 8 

### tax and regulatory burden, modernizing our air 9 

### traffic control system, reasonable jet fuel 10 

### costs, and increased global competitiveness. 11 

### And you might say, well, how does 12 

### that impact consumers? It occurred to me, when 13 

### Norm was talking about your No. 1 consumer 14 

### complaint being in the area of flight delays and 15 

### cancellations, our work on the air traffic 16 

### control system and NextGen has absolutely got to 17 

### be one of the most important things I think that 18 

### the DOT can do in trying to address consumer 19 

### issues. 20 

### And my hat is off to Charlie because 21 

### he has done a lot of work on the NextGen issues 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 348



### as well. 1 

### Again, stepping back and looking at 2 

### the bigger picture on consumers: we think that 3 

### today's air travel provides an enormous value 4 

### proposition for travelers. Travel today is 5 

### incredibly safe. It is on time. It is 6 

### reliable, and it is very affordable. 7 

### If you look at that bottom line right 8 

### there, fatal accidents are at an all-time low. 9 

### Fares are basically down since 1990 in real 10 

### terms. Our on-time performance, about 80 11 

### percent on time, not bad. And our fuel 12 

### efficiency keeps going up every day. 13 

### This is just another way to look at 14 

### that, if you look at the CPI, the Consumer Price 15 

### Index. Essentially, fares, when you look at 16 

### fares, including ancillary fees, fares haven't 17 

### kept up with CPI. In fact, if you look at it over 18 

### that same period of time, again, even when you 19 

### include ancillary services, the increase in the 20 

### fare and the services is about 15 percent 21 

### relative to a 30-percent CPI increase. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 349



### You have heard us talk a lot about 1 

### the financial condition of the airlines. We do 2 

### that just to educate people about the fact that 3 

### this is an incredibly-volatile industry. We 4 

### are trying to make a profit. As Dave Berg 5 

### mentioned, the last two years have been better, 6 

### but not great when you are talking about a .4 7 

### percent profit margin. 8 

### And you might ask, well, why should 9 

### consumers care or why should you care about the 10 

### airlines' profit margin? And that is, the 11 

### reason you should care is because when carriers 12 

### make a profit, they are able to reinvest that 13 

### profit in new planes, which, as a member of the 14 

### flying public, I can say I like traveling on new 15 

### equipment. 16 

### We are able to reinvest in our 17 

### workforce and training to provide better 18 

### community service, customer service, and we 19 

### create jobs. And it is not just the quality of 20 

### the service that improves when we are able to 21 

### reinvest, but it is certainly the quantity of 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 350



### service. 1 

### What we have seen in the last couple 2 

### of years, in order to cope with our financial 3 

### condition, is that we have had to reduce 4 

### capacity. At the end of the day, reducing 5 

### capacity means less service, and that is not good 6


### for consumers. 7 

### This is just a chart on the right. 8 

### If you look from 2001 to 2012, you can see what 9 

### reduced capacity looks like. And again, we 10 

### would like that to change. We think the 11 

### industry can be a growing industry, a robust 12 

### industry, but we are not going to be able to 13 

### achieve that unless we are operating in a policy 14 

### environment which, again, enables that growth. 15 

### And that means a rational tax and regulatory 16


### burden. 17 

### So, despite this very negative 18 

### profit story that we have to tell, these are 19 

### DOT's statistics. And what I have done on the 20 

### next slide, which you can turn to, is I have kind 21 

### of turned those on their head. The DOT's 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 351



### statistics, the way you usually see them, are 1 

### cast in the negative, but we have recast them in 2 

### the positive, so that we can see on-time 3 

### arrivals. In the first quarter of 2012, almost 4 

### 85 percent. 5 

### So, accommodated boardings, which 6 

### is the other side of denied boardings -- and I 7 

### think it is kind of humorous that my economist 8 

### decided he needed to go out three decimal 9 

### points -- 99.905 percent of passengers aren't 10 

### impacted by denied boardings. 11 

### Properly-handled bags, 99.7 percent 12 

### of passengers get their bags on time. 13 

### And then, completed flights, and 14 

### that is the other side of the cancellation 15 

### equation, almost 99 percent. 16 

### So, you can see, I think the point 17 

### I want to leave you with is consumers are 18 

### important to airlines. They are our lifeblood. 19 

### And so, we are committed to customer service. 20 

### We recognize when things need to be 21 

### improved, and we think we have heard a lot of 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 352



### consumer issues over the last several years. I 1 

### was struck, again, by something Norm said, that 2 

### consumer complaints have basically gone from 3 

### about 20,000 a year to 6,000-and-some; I think 4 

### he said 6500 for the first half of 2012, which, 5 

### if you think about it, is one complaint per every 6 

### 100,000 passengers. So, we think everybody can 7 

### do better; we think we are doing a pretty good 8 

### job, as the data indicates. But we are 9 

### committed always to improving our customer 10 

### service. 11 

### Before I introduce Doug, I did want 12 

### to just address, because what Doug is going to 13 

### do is talk about kind of this most recent issue 14 

### that was brought up, and that is this robust 15 

### debate that the airlines are having with the GDS 16 

### community. 17 

### One thing I want to make sure, that 18 

### we are very careful about our language. 19 

### Carriers are transparent. We have a very strong 20 

### interest in transparency. That is because we 21 

### want to sell our ancillary products. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 353



### And so, I don't think it is fair to 1 

### characterize to say we need to get toward 2 

### transparency. We are transparent. If we are 3 

### not, the Department should feel free to enforce 4


### Consumer Rule No. II. 5 

### I think what you are going to hear 6 

### from Doug is what we have here is a very common 7 

### commercial dispute between carriers and GDSs 8 

### about how to distribute product. It is a 9 

### dispute that happens in many other industries, 10 

### not just this industry, but we would like to be 11 

### able to control how we distribute our product. 12 

### We are in negotiations right now 13 

### with the GDSs. And one of the things that we 14 

### have asked the Department is, as these very 15 

### delicate negotiations take place, we are asking 16 

### them not to put their thumb on the scale of those 17 

### negotiations in favor of one party or the other, 18 

### which is essentially what a mandate to force 19 

### us -- and I thought Kevin Mitchell worded it very 20 

### carefully. It is not about putting the 21 

### information out there; it is about putting the 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 354



### information out there in a format that is 1 

### convenient for the GDSs. 2 

### So, Doug? 3 

### CHAIRPERSON MADIGAN: Before Doug 4 

### starts speaking -- 5


### MS. PINKERTON: Yes? 6


### CHAIRPERSON MADIGAN: -- I don't 7 

### know if Charlie wants to ask you questions. 8 

### I need to leave, and I apologize for 9 

### that. I designate Deborah Ale-Flint as the 10 

### Acting Chair. 11 

### There will be time for questions and 12 

### for closing comments when Doug is done with his 13 

### presentation. 14 

### MS. PINKERTON: I will be here. 15 

### CHAIRPERSON MADIGAN: But do you 16 

### want an opportunity to ask questions of her now? 17 

### MEMBER LEOCHA: Sure. I just have 18 

### a quick one. 19


### MS. PINKERTON: Sure. 20


### MEMBER LEOCHA: Because I love 21 

### asking you questions. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 355



### You just had a great chart up there 1 

### that showed everybody else's costs going up and 2 

### the airline not charging more. Why? Why 3 

### aren't the airlines charging what it costs us to 4 

### fly? 5 

### MS. PINKERTON: Well, that is an 6 

### age-old question, Charlie. We certainly would 7 

### if we could. We are trying our best to cover our 8


### cost. 9 

### As you can see, in some years we do 10 

### cover our costs, just barely. So, I am not 11 

### really sure what your question is getting at. 12 

### MEMBER LEOCHA: I guess everyone 13 

### else in the economy has been able to increase 14 

### their prices. A loaf of bread costs more. 15 

### MS. PINKERTON: Oh, right. 16 

### MEMBER LEOCHA: A gallon of gas 17


### costs more. 18


### MS. PINKERTON: Yes. 19


### MEMBER LEOCHA: A car costs more. 20 

### A house costs more. And an airline ticket costs 21


### the same. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 356



### I mean, I don't understand how does 1 

### that happen. I mean, the airlines have to make 2 

### conscious decisions in pricing. 3 

### MS. PINKERTON: Right. 4 

### MEMBER LEOCHA: So, someone is 5 

### deciding not to raise the prices. 6 

### MS. PINKERTON: Well, it is all 7 

### about what is happening in the market. The 8 

### airline industry is an incredibly-competitive 9 

### marketplace. So, we have got a lot of low-fare 10 

### carriers. We have got transparency. We have 11 

### got low-fare carriers like Spirit and others who 12 

### are doing a good job, I think, of keeping fares 13


### low. 14 

### I think, at the end of the day, it 15 

### might not be great for us in terms of we have got 16 

### very small margins, but it is good, it is 17 

### certainly good for consumers in terms of what 18 

### they have seen in terms of fares. 19 

### But, I mean, we are trying to make 20 

### a profit. We do work to try to balance supply 21 

### and demand. That is part of why we have reduced 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 357



### capacity. 1 

### And again, I think, that cuts both 2 

### ways for consumers. So, we are reducing 3 

### capacity, so that we don't have empty seats 4 

### flying in the air. That is costly. 5 

### Am I answering your question? 6 

### MEMBER LEOCHA: Yes. I am just, 7


### for me -- 8 

### MS. PINKERTON: It is not an easy 9 

### industry, Charlie. 10 

### MEMBER LEOCHA: Yes, I understand, 11 

### believe me. 12 

### (Laughter.) 13 

### MS. PINKERTON: It is tough, but it 14 

### is sexy. That is why we love it. 15 

### (Laughter.) 16 

### MEMBER LEOCHA: That's right. 17 

### Okay. Thank you. 18


### MS. PINKERTON: Great. 19 

### MR. LAVIN: Thank you. 20 

### For the few of you I don't know, my 21 

### name is Doug Lavin. I am the Regional Vice 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 358



### President for North America for the 1 

### International Air Transport Association. We 2 

### represent 230 international airlines, 3 

### including, along with our colleagues at A4A, 4 

### most of the major U.S. carriers. 5 

### I would like to spend a few minutes 6 

### this afternoon talking about the GDS issue. 7 

### Despite what you have heard today, it is very 8 

### clear, at least it is very clear to me, and I hope 9 

### it is clear to a lot of people in this audience 10 

### and to the panel, that the effort by some to 11 

### convince DOT to mandate airlines distribute to 12 

### GDSs has very little to do with passengers and 13 

### their rights -- very little to do with passengers 14 

### and their rights. In fact, it is somewhat of a 15 

### ludicrous argument on their part, as far as I am 16


### concerned. 17 

### Rather, it is an effort by some to 18 

### push DOT in protecting monopoly suppliers and, 19 

### as Sharon said, to tip the scales on the 20 

### commercial negotiations between airlines and 21 

### those suppliers. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 359



### So, let me explain what I wanted to 1 

### do today was explain yesterday, today, and 2 

### tomorrow in the distribution market at a very 3 

### high level. There are many details on these 4 

### slides I am going to show you that are not meant 5 

### to deceive you; I just think at a high level I 6 

### am sure this is factually correct. 7 

### So, let's go to the first slide. 8 

### Again, this provides a high-level 9 

### picture of the recent past of the airline 10 

### distribution model. As you can see, the GDS has 11 

### served as a primary channel, and continues to do 12 

### so, for airline tickets sales to consumers. 13 

### The GDSs are highly-profitable 14 

### organizations, unlike, Charlie, the airlines, 15 

### and they maintain market dominance in this area. 16 

### In fact, I guess we haven't given the statistics 17 

### that the two GDSs, two of the three GDSs that 18 

### dominate the market here control 92 percent of 19 

### the market in the United States, and our 20 

### calculations are 60 percent of the tickets by 21 

### value. Of course, that and their policies are 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 360



### what is getting the Justice Department quite 1 

### interested. 2 

### They have maintained this market 3 

### dominance for quite a long time. They charge 4 

### airlines very high transaction fees, which are 5 

### passed on to the consumers because the airlines 6 

### have no place else to send them. 7 

### So, if the GDSs were so determined 8 

### to support the consumer, it seems to me maybe 9 

### they should significantly cut those fees because 10 

### they know they are ending up in the consumers' 11 

### pockets. So, I know they are defendant of the 12 

### consumer; I just want to give them that option. 13 

### So, now let's go to today. What 14 

### happened is the internet came and gave airlines 15 

### something that only the GDSs could offer in the 16 

### past. And that was a channel to sell airline 17 

### tickets directly to consumers on a global basis 18 

### in real-time. Selling tickets and ancillary 19 

### services via airline websites reduced the GDS 20 

### market dominance. 21 

### Now some in the room today have 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 361



### argued that not selling those services via the 1 

### GDS prevents agents from meeting their 2 

### customers' needs. However, a recent study 3 

### showed that the majority of traditional and 4 

### online travel agents book ancillary airline 5 

### services via airline websites. 6 

### This has served to increase 7 

### competition, reduce costs, and better meet the 8 

### needs, the specific needs, of the passenger 9 

### which cannot be done via the GDS channel, and, 10 

### again, in a cheaper fashion. The transaction on 11 

### the websites is $2 to $3 for a transaction. The 12 

### average transaction on a GDS is between $12 and 13 

### $14. I am very curious to see how those prices 14 

### have gone down, as stated by some. 15 

### Now let's go to "coming soon", 16 

### because in the past GDS payments to agents and 17 

### restrictive airline contracts have made it 18 

### difficult for third parties to enter the airline 19 

### distribution market. Well, I am here to tell 20 

### you that change is coming, and whether the people 21 

### in this room and the people who have preceded me 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 362



### like it or not. 1 

### Later this year, the International 2 

### Air Transport Association will publish an 3 

### internet-based, open standard that allows all 4 

### different types of third parties to deliver the 5 

### dynamic, transactable, and fully-transparent 6 

### products and services that DOT suggests needs to 7 

### be available to consumers. 8 

### Now all different parties will be 9 

### able to offer those tickets and services to the 10 

### public, be it the existing companies like Google 11 

### and Facebook; new entrants that do not even exist 12 

### today will be able to provide those tickets and 13 

### provide those services. 14 

### Competition will reduce prices and 15 

### offer more choices and information to passengers 16 

### than GDSs can offer today. DOT's stated goals 17 

### will have been met not by a government mandate, 18 

### but by market forces, the market forces that 19 

### Kevin Mitchell was lauding in his remarks. 20 

### This is not an anti-GDS or agent 21 

### effort on the part of IATA. In fact, the GDS and 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 363



### agent community are participating in the 1 

### drafting of this statement. 2 

### We believe and are confident that 3 

### the distribution market is big enough for all 4 

### channels to thrive going forward, but they will 5 

### not be doing it in the monopoly setting that we 6 

### are faced with today. This market dynamic will 7 

### not be stopped by DOT regulation. It can only 8 

### be slowed down. But, certainly, it raises the 9 

### question, why would DOT step into this and stop 10 

### the competition that the GDSs themselves are 11 

### arguing for? 12 

### So, with that, I would stop on that 13 

### and just close my remarks with the next slide. 14 

### And that is really for the Committee, and it is 15 

### not on the GDS, but on your work generally. 16 

### Again, I would like to suggest, as 17 

### Sharon suggested, that you should consider in 18 

### your deliberations the positive impact aviation 19 

### has on the U.S. economy when you are considering 20 

### your recommendations. 21 

### On the screen are the highlights of 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 364



### a study done this year by Oxford Economics on the 1 

### contribution commercial aviation makes to the 2 

### U.S. economy. It is important to note -- and I 3 

### know that our colleagues at DOT know this because 4 

### they have studied it very 5 

### carefully -- regulations do come at a cost. In 6 

### this case, particularly on the GDS issues, 7 

### airlines will not be the only ones to pay for 8 

### these expensive government mandates. 9 

### Thank you very much, and I look 10 

### forward to your questions. 11 

### MEMBER ALE-FLINT: [presiding] 12 

### All right. Questions? 13 

### MEMBER LEOCHA: Okay. First of 14 

### all, as a consumer, I don't care; GDS, DDS, ITSA, 15 

### ASTA, IATA. All I want is tell me how much it 16 

### costs. Where's the beef? That is all we are 17 

### asking for. 18 

### We don't want the airlines to be 19 

### forced to give the GDS anything in the way they 20 

### want it. We want them to release it to the open. 21 

### If it is an HTML5 format, if it is through ATPCO, 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 365



### it is in some kind of a paired-out way -- all we 1 

### want is the information. 2 

### As I understand it, we are not only 3 

### talking GDSs. In your slide, you actually 4 

### managed to throw in Google. 5 

### MR. LAVIN: Absolutely. 6 

### MEMBER LEOCHA: Very good. I work 7 

### closely with Google. Google wants the same 8 

### information. 9 

### MR. LAVIN: Absolutely. 10 

### MEMBER LEOCHA: They can't get the 11 

### information. 12 

### MR. LAVIN: Ask them why they can't 13 

### get that information. 14


### MEMBER LEOCHA: What's that? 15 

### MR. LAVIN: Ask them why they can't 16 

### get that information. 17


### MEMBER LEOCHA: Because the 18 

### airlines won't give it to them. 19 

### MR. LAVIN: That is not what we 20 

### heard when the Google representative talked to 21 

### us in China three weeks ago. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 366



### MEMBER LEOCHA: Okay. 1 

### MR. LAVIN: He pointed to the GDSs. 2 

### MEMBER LEOCHA: Well, I speak to 3 

### them all the time. 4 

### MR. LAVIN: Okay. 5 

### MEMBER LEOCHA: They have asked me. 6 

### You know, I am working with them on the same price 7 

### transparency issues. 8


### MR. LAVIN: Uh-hum. 9 

### MEMBER LEOCHA: So, this has 10 

### become, it becomes a food fight between the GDSs 11 

### and the airlines. All we want is the 12 

### information, so we can make decisions. 13 

### I almost laughed when you got into 14 

### this fact that we have got a monopoly situation 15 

### with the GDSs, when airline alliances control 80 16 

### percent of international ticket sales. I mean, 17 

### everybody is, you know -- 18 

### MR. LAVIN: Where do those ticket 19 

### sales go through? They go through the GDSs. 20 

### MEMBER LEOCHA: Yes, but those 21 

### three airline alliances are the ones who control 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 367



### setting their prices and developing their 1 

### routes. The GDSs don't set the prices. The 2 

### GDSs don't control the routes. The airlines do 3


### that. 4 

### And then, finally, when you talked 5 

### about what the internet gave us, the internet 6 

### gave us the ability to compare prices. That is 7 

### what the American public loved. All of a 8 

### sudden, Expedia came out, and you could see how 9 

### much Airline A, B, C, and D cost against each 10


### other. 11 

### And it wasn't because we want to help 12 

### the GDSs. We want to see what the comparisons 13 

### are. And the airlines have the same ability to 14 

### sell through the GDSs, but they don't provide the 15 

### chance for us to compare prices across airlines. 16 

### And then, the final thing is, when 17 

### you talk about how much the airlines sell, a lot 18 

### of the airline business comes from people who 19 

### first go to online travel agencies, powered by 20 

### Google, powered by Farelogix, powered by GDSs. 21 

### They compare the prices, and then they go back 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 368



### to the airlines and they buy directly from the 1 

### airlines. 2 

### So, the airlines, in some system 3 

### that you are looking at where everything is 4 

### stovepiped, are going to end up, or 5 

### currently -- I know your new system yet to be 6 

### described and created might change the world. 7 

### But this comes from being able to 8 

### compare prices. It is good for business to be 9 

### able to compare prices. That is how the free 10 

### market works, and that is what we, as consumers, 11 

### are looking for. 12 

### I don't want DOT to say, "You have 13 

### to give the information to GDSs." Every airline 14 

### tomorrow could stop their business with a GDS, 15 

### but you can't because that is how you live. 16 

### Sixty percent of your money comes from them, 17 

### maybe more of your profits. 18 

### So, I mean, there is a market based 19 

### on both sides. And I just want to frame it, so 20 

### that what consumers are looking for is 21 

### information so we can compare prices and so that 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 369



### we can see the prices. That's it. 1 

### MR. LAVIN: So, why do you think 2 

### that airlines are not selling ancillary services 3 

### through GDSs? 4 

### MEMBER LEOCHA: I've got no idea. 5 

### MR. LAVIN: I think you do. 6 

### MEMBER LEOCHA: I really don't. 7 

### MR. LAVIN: Okay. I would be happy 8 

### to tell you. 9 

### MEMBER LEOCHA: Okay. Well, I will 10 

### just say, my idea is, if the airlines were to sell 11 

### ancillary services through GDSs, and if they 12 

### were to release it overall, we could develop 13 

### within the airline industry a whole new 14 

### airline/passenger interface. 15 

### Someone might develop an airline 16 

### passenger wallet. 17 

### MR. LAVIN: They will. 18 

### MEMBER LEOCHA: And then, they can 19 

### come up -- you can't develop anything without 20 

### the data, and we don't have the data because the 21 

### airlines won't give it to us. 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 370



### MS. PINKERTON: So, Charlie, there 1 

### is, for example, nerdwallet.com that does 2 

### exactly that. They have taken the information 3 

### that is definitely on our website, and they have 4 

### built a website where you can go, 5 

### nerdwallet.com, and compare all the carriers. 6 

### So, like I said, this really isn't 7 

### an issue about the information being out there. 8 

### It is about, for the GDSs, not you, but I think 9 

### for the GDSs, it is what Kevin Mitchell said, in 10 

### the format that they can sell it in. 11 

### But, otherwise, the information, it 12 

### is out there for somebody who wants to spend the 13 

### money, which is what this is all about, to create 14 

### a website which will compare. And 15 

### nerdwallet.com has done exactly that on bag 16


### fees. 17 

### MEMBER LEOCHA: Well, I have talked 18 

### with a lot of these developers. I am involved 19 

### in that. And I just have the feeling that we are 20 

### all fiddling while Rome burns. We are fighting 21 

### with each other, and the consumers are getting 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 371



### left out. We are the ones who don't know how 1 

### much our ticket is going to cost. 2 

### MS. PINKERTON: I think your point 3 

### about us needing the GDSs was a very good one. 4 

### MR. LAVIN: Yes, we do, and we will 5 

### continue to need them. 6 

### MS. PINKERTON: And that is why, for 7 

### example, Delta has made an agreement with 8 

### Travelport; U.S. Airways will be announcing an 9 

### agreement; United has an agreement to sell some 10 

### of their ancillary products. 11 

### So, again, I think this goes back to 12 

### the market is working. Technology has slowed it 13 

### down, and our negotiations have slowed it down. 14 

### But it is coming. It is coming. It will come. 15 

### And we will sell products. 16 

### MEMBER LEOCHA: Well, we, as 17 

### consumers, have waited half a decade, and we keep 18 

### hearing the market is coming. When we had the 19 

### problems of tarmac delays, I was involved way 20 

### back in 1999, when the first airplanes were stuck 21 

### on the tarmac in Minneapolis, and it was a big 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 372



### uproar. And we almost got something done, and 1 

### then the airlines said, "Don't worry. We can 2 

### handle it ourselves." And some of us believed 3


### them. 4 

### And you know what? Ten years later, 5 

### they still haven't handled it themselves. 6 

### Finally, DOT said, "We've had it. No more 7 

### three-hour tarmac delays." Guess what? It 8


### works. 9 

### We are in the same situation. I 10 

### don't want to wait a decade and then another 11 

### decade. We have waited half a decade. 12 

### I just think that we need to do 13 

### something now to get the data out there. If, 14 

### indeed, as you airlines said, the GDSs are old, 15 

### they are clunky, they can't work, this is your 16 

### perfect chance to put them out of business 17 

### because other people will come in, like Google, 18 

### like Farelogix, and they will clean the GDSs' 19 

### clocks because they can't do it. 20 

### MR. LAVIN: That's right. 21 

### MEMBER LEOCHA: That is the way 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 373



### competition works, if what you say is true. 1 

### MR. LAVIN: That is what we are 2 

### saying. 3 

### MEMBER LEOCHA: Okay. 4


### MR. LAVIN: Look forward to 5 

### competition. 6


### MEMBER LEOCHA: Release the data. 7


### MR. LAVIN: Yes. 8 

### MS. PINKERTON: It is out there, 9 

### Charlie. It is there. 10 

### MEMBER BERG: I guess a comment and 11 

### a question. The comment is, Charlie, you 12 

### pointed to the fact that the internet came along. 13 

### Expedia took advantage of that and developed a 14 

### new product to comparison shop. That was the 15 

### marketplace at work. It didn't take a 16 

### regulation. And that is what we are looking to 17 

### happen here, and it is happening. So, the market 18 

### does work, and it does produce products that are 19


### needed. 20 

### As Sharon said, to have DOT come out 21 

### with a regulation puts the thumb on the scale of 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 374



### the commercial relationship between parties, 1 

### and that interferes with the market. And it is 2 

### going to have consequences that aren't going to 3 

### be helpful for consumers. 4 

### The question, if I can remember it 5 

### now -- actually, let me stop here. Go ahead. 6 

### MEMBER ALE-FLINT: Well, I have a 7 

### question, and that is relative to your 8 

### statements on publishing the open-phase, the 9 

### open-space agreement. How definitive is that 10 

### and what timeframe can we expect it? 11 

### MR. LAVIN: It will be done by the 12 

### end of the year. 13 

### MEMBER ALE-FLINT: Meaning the 14 

### initiative or the platform is available? 15 

### MR. LAVIN: No, the standard itself 16 

### will be issued by the end of the year. We go 17 

### through a passengers' service conference, which 18 

### includes the GDSs participating in it. It 19 

### includes travel agents participating in it. 20 

### And they agree on the standard and, then, 21 

### developers will be able to build against that 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 375



### standard. 1 

### And again, that is important because 2 

### it unlocks the gridlock that we have now that 3 

### Charlie is concerned about. We are looking 4 

### forward to that day. 5 

### IATA sets standards for airlines, 6 

### and we think that it is an appropriate role for 7 

### us to play. 8 

### MEMBER ALE-FLINT: So, as we 9 

### consider, you know, as Charlie enumerated on a 10 

### timeframe and concerns about things not 11 

### happening, I mean, what would you project in 12 

### terms of truly having open-market information 13


### for consumers? 14 

### MR. LAVIN: Well, that suggests the 15 

### question that they don't have market information 16 

### now. It will be up to individual developers to 17 

### develop those products and services to support 18 

### the industry. But I can almost guarantee it 19 

### will be much faster than it would take a GDS to 20 

### develop their platform to support ancillary 21 

### services. That is one thing I will take a bet 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 376



### on. 1


### MEMBER LEOCHA: So -- 2 

### MR. LAVIN: Charlie, why don't we do 3 

### this: why don't we look for a federal mandate 4 

### that GDSs, because they are so concerned about 5 

### consumers, charge the airlines $1 per 6 

### transaction on ancillary fees? Is that 7 

### something the DOT, to protect consumers, should 8 

### intervene in? 9 

### MEMBER LEOCHA: That they what -- 10 

### MR. LAVIN: In other words, what I 11 

### am saying is the GDSs are arguing that there has 12 

### been a market failure and it has hurt consumers. 13 

### MEMBER LEOCHA: Right. 14 

### MR. LAVIN: So, therefore, they 15 

### need to mandate that airlines provide the data. 16 

### Why don't we switch it and say, to protect the 17 

### consumers, we are going to mandate that the GDSs 18 

### charge a non-monopoly-based fare/fee on the 19 

### transaction to make sure that consumers get this 20 

### information? Is that something that the 21 

### Department should consider? 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 377



### MEMBER LEOCHA: No. 1 

### MR. LAVIN: Okay. 2 

### MEMBER LEOCHA: I don't want this to 3 

### become -- I am trying to say, you keep couching 4 

### this every time as a GDS/airline issue. It's 5 

### not. It is disclosure of information of how 6 

### much our tickets cost to the consumers. Google 7 

### is involved. You know, I don't know how we are 8 

### negotiating. Farelogix is involved. 9 

### FareCompare is involved. There are lots of IT 10 

### companies who are chomping at the bit, they are 11 

### salivating at a chance to change things. 12 

### I don't know what your proposal 13 

### implies, whether it is only the release of 14 

### information or whether you are providing a new 15 

### network for how to develop tickets. 16 

### MR. LAVIN: No. No, it is not a 17 

### network. It is a standard that will allow 18 

### developers to develop, just like apps on an Apple 19 

### app; they develop on a platform on Apple that 20 

### allows for these things to be transparent. 21 

### You will now have, for example, 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 378



### fishing companies. You will have a company that 1 

### is a small company that has a fishing lodge in 2 

### Canada. You will be able to go on that lodge 3 

### site, look at that lodge site, and buy tickets 4 

### on the same site to meet your needs. That is 5 

### what is going to happen in the industry. 6 

### The GDSs know that, and that is why 7 

### they are trying to get -- a monopoly provider's 8 

### standard operating procedures, when the 9 

### monopoly is going away, is to go to the 10 

### government and ask for intervention to protect 11 

### it for a few years, so it can milk the monopoly. 12 

### That is what we are facing here. 13 

### MEMBER LEOCHA: Okay. Well, we 14 

### will look -- you know, I will be watching it 15 

### carefully. If, indeed, this happens by the end 16 

### of the year, I am overjoyed because we are going 17 

### to be right in the middle of the rulemaking then, 18 

### and we can see it. 19 

### MR. LAVIN: You will see the 20 

### standard by the end of the year. 21 

### MEMBER LEOCHA: And then, there 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 379



### might not be any need for it. But, somehow -- 1 

### MR. LAVIN: Agreed. 2 

### MEMBER LEOCHA: -- these things 3 

### take time. 4 

### MR. LAVIN: Agreed. 5


### MEMBER ALE-FLINT: No further 6 

### questions? 7


### MEMBER LEOCHA: No. 8 

### MEMBER ALE-FLINT: All right. 9 

### Thank you. 10 

### MR. LAVIN: Thank you. 11 

### MEMBER ALE-FLINT: We appreciate 12


### that. 13 

### Well, we have come to the close of 14 

### our first day, and we appreciate everybody's 15 

### participation. I think, as a panel, we have 16 

### learned an incredible amount, as we set out to 17 

### do, to gain understanding from a number and 18 

### variety of different perspectives. 19 

### I will ask for Sam to help with the 20 

### housekeeping as we wrap up. But the panel is 21 

### going to be looking forward to convening and 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 380



### working on our next meeting, where we delve into 1 

### our approach for this fiscal year's report as 2 

### well as for the next two years. 3 

### MR. PODBERESKY: I am just going to 4 

### close with just housekeeping. 5 

### Again, you are in a secure building. 6 

### So, you have to be escorted out. Hopefully, we 7 

### have people available to do that. There are a 8 

### bunch of them with their hands raised in the back 9


### of the room. 10 

### We have a tentative date for the next 11 

### meeting. Again, the meetings of this Advisory 12 

### Committee are going to be open to the public. 13 

### The tentative date is August the 7th. There is 14 

### no agenda for it as yet. We are going to be 15 

### working on an agenda. Under the Advisory 16 

### Committee Act, we are going to have to have a 17 

### Federal Register notice published within 15 18 

### days, at least no later than 15 days before the 19 

### August 7th date. So, just keep an eye out for 20


### that. 21 

### We have the address list, the email 22NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nea lrgross.com 381



### contact list. To the extent we have that, we 1 

### will try to get that, you know, we will get that 2 

### notice out to the people that are on that list. 3 

### Presenters, to the extent that you 4 

### have not gotten us your written programs, you can 5 

### either get them to us in writing, you can get them 6 

### to us by email, or you can put them into the 7 

### docket yourselves. To the extent we don't get 8 

### them, we will contact you to get them because we 9 

### would like to have them, if they exist. 10 

### With that, I want to thank the 11 

### Committee members for their hard work and, for 12 

### some, long trips; for others, cab rides, which 13 

### could even be worse here in D.C., or Metro. 14 

### (Laughter.) 15 

### And thanks again for all your 16 

### attendance and the input you have given us. 17 

### Thank you. 18 

### (Whereupon, at 4:42 p.m., the 19 

### meeting was adjourned.) 20