Federal Register / Vol. 72, No. 223 / Tuesday, November 20, 2007 / Proposed Rules 65237 

with Indian Tribal Governments’’). 

Because none of the options on which 

we are seeking comment would 

significantly or uniquely affect the 

communities of the Indian tribal 

governments or impose substantial 

direct compliance costs on them, the 

funding and consultation requirements 

of Executive Order 13084 do not apply. 

D. Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) requires an agency to 

review regulations to assess their impact 

on small entities unless the agency 

determines that a rule is not expected to 

have a significant economic impact on 

a substantial number of small entities. 

The regulatory initiatives discussed in 

this ANPRM would have some impact 

on some small entities but we do not 

believe that it would have a significant 

impact on a substantial number of small 

entities. We invite comment to facilitate 

our assessment of the potential impact 

of these initiatives on small entities. 

E. Paperwork Reduction Act 

The ANPRM proposes several new 

collections of information that would 

require approval by the Office of 

Management and Budget (OMB) under 

the Paperwork Reduction Act (49 U.S.C. 

3501 et seq.) The ANPRM solicits 

comment on requiring certificated and 

commuter airlines that operate domestic 

scheduled passenger service using any 

aircraft with more than 30 passenger 

seats to retain for two years the 

following information about any ground 

delay that triggers their contingency 

plan or lasts at least four hours: (1) The 

length of the delay, (2) the cause of the 

delay, and (3) actions taken to minimize 

hardships for passengers. The 

Department plans to use this 

information to conduct reviews of 

incidents involving long delays on the 

ground and to identify any trends and 

patterns that may develop. The ANPRM 

further proposes to require the 

collection of flight delay data from 

certain U.S. and foreign air carriers 

regarding their flights to and from the 

U.S. and also to require certain U.S. 

carriers to compile and publish 

complaint information. We invite 

comments regarding any aspect of these 

information collections, including the 

following: (1) The necessity and utility 

of the information collection, (2) the 

estimated burden, (3) ways to enhance 

the quality, utility, and clarity of the 

information collected, and (4) ways to 

minimize the collection burden without 

reducing the quality of the information 

collected. 

F. Unfunded Mandates Reform Act 

The Department has determined that 

the requirements of Title II of the 

Unfunded Mandates Reform Act of 1995 

do not apply to this notice. 

Issued this 15th day of November, 2007, at 

Washington, DC. 

Michael W. Reynolds, 

Deputy Assistant Secretary for Aviation and 

International Affairs. 

[FR Doc. 07–5760 Filed 11–15–07; 4:15 pm] 

BILLING CODE 4910–13–P 

DEPARTMENT OF TRANSPORTATION 

Office of the Secretary 

14 CFR Part 250 

[Docket No. DOT–OST–01–9325] 

RIN No. 2105–AD63 

Oversales and Denied Boarding 

Compensation 

AGENCY: Office of the Secretary (OST), 

Department of Transportation (DOT). 

ACTION: Notice of Proposed Rulemaking 

(NPRM). 

SUMMARY: The Department of 

Transportation (DOT or Department) is 

proposing to amend its rules relating to 

oversales and denied boarding 

compensation to increase the limits on 

the compensation paid to ‘‘bumped’’

passengers, to cover flights by certain 

U.S. and foreign air carriers operated 

with aircraft seating 30 to 60 passengers, 

which are currently exempt from the 

rule, and to make other changes. Such 

changes in the rule, if adopted, would 

be intended to maintain consumer 

protection commensurate with 

developments in the aviation industry. 

DATES: Comments are requested by 

January 22, 2008. Late-filed comments 

will be considered to the extent 

practicable. 

ADDRESSES: You may file comments 

identified by the docket number DOT–

OST–01–9325 by any of the following 

methods: 

• Federal eRulemaking Portal: go to 

http://www.regulations.gov and follow 

the online instructions for submitting 

comments. 

• Mail: Docket Management Facility, 

U.S. Department of Transportation, 1200 

New Jersey Ave., SE., West Building 

Ground Floor, Room W12–140, 

Washington, DC 20590–0001. 

• Hand Delivery or Courier: West 

Building Ground Floor, Room W12–140, 

1200 New Jersey Ave., SE., between 9 

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

Friday, except Federal Holidays. 

• Fax: (202) 493–2251. 

Instructions: You must include the 

agency name and docket number DOT–

OST–01–9325 or the Regulatory 

Identification Number (RIN) for the 

rulemaking at the beginning of your 

comment. All comments received will 

be posted without change to http:// 

www.regulations.gov, including any 

personal information provided. 

Privacy Act: Anyone is able to search 

the electronic form of all comments 

received in any of our dockets by the 

name of the individual submitting the 

comment (or signing the comment, if 

submitted on behalf of an association, 

business, labor union, etc.). You may 

review DOT’s complete Privacy Act 

statement in the Federal Register 

published on April 11, 2000 (65 FR 

19477–78), or you may visit http:// 

DocketsInfo.dot.gov. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http:// 

www.regulations.gov or to the street 

address listed above. Follow the online 

instructions for accessing the docket. 

FOR FURTHER INFORMATION CONTACT: Tim 

Kelly, Aviation Consumer Protection 

Division, Office of the General Counsel, 

Department of Transportation, 1200 

New Jersey Ave., SE., Washington, DC 

20590, 202–366–5952 (voice), 202–366–

5944 (fax), tim.kelly@dot.gov (e-mail). 

SUPPLEMENTARY INFORMATION: 

Background 

Part 250 establishes minimum 

standards for the treatment of airline 

passengers holding confirmed 

reservations on certain U.S. and foreign 

carriers who are involuntarily denied 

boarding (‘‘bumped’’) from their flights 

because they have been oversold. In 

most cases, bumped passengers are 

entitled to compensation. Part 250 

contains limits on the amount of 

compensation that is required to be 

provided to passengers who are bumped 

involuntarily. The rule does not apply 

to flights operated with aircraft with a 

design capacity of 60 or fewer passenger 

seats. 

In adopting the original rule in the 

1960’s, the Civil Aeronautics Board (the 

Department’s predecessor in aviation 

economic regulation) recognized the 

inherent unfairness in carriers selling 

more ‘‘confirmed’’ ticketed reservations 

for a flight than they have seats. 

Therefore, the CAB sought to reduce the 

number of passengers involuntarily 

denied boarding to the smallest 

practicable number without prohibiting 

deliberate overbooking or interfering 

unnecessarily with the carriers’

reservations practices. Air travelers 


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receive some benefit from controlled 

overbooking because it allows flexibility 

in making and canceling reservations as 

well as buying and refunding tickets. 

Overbooking makes possible a system of 

confirmed reservations that can almost 

always be honored. It allows airlines to 

fill more seats, reducing the pressure for 

higher fares, and makes it easier for 

people to obtain reservations on the 

flights of their choice. On the other 

hand, overbooking is the major cause of 

oversales, and the people who are 

inconvenienced are not those who do 

not show up for their flights, but 

passengers who have conformed to all 

carrier rules. The current rule allocates 

the risk of denied boarding among 

travelers by requiring airlines to solicit 

volunteers and use a boarding priority 

procedure that is not unjustly 

discriminatory. 

In 1981, the CAB amended the 

oversales rule to exclude from the rule 

all operations using aircraft with 60 or 

fewer passenger seats. (ER–1237, 46 FR 

42442, August 21, 1981.) At the time of 

that proceeding, the impact of the rule 

on carriers operating small aircraft was 

found to be significant. If a passenger 

was denied boarding on a typical small 

aircraft short-haul flight and 

subsequently missed a connection to a 

long-haul flight, the short-haul carrier 

usually had to compensate the 

passenger in an amount equal to twice 

the value of the passenger’s remaining 

ticket coupons to his or her destination, 

subject to a maximum limitation. For 

example, if the short-haul fare was $50 

and the connecting long-haul fare was 

$500, the first carrier often had to pay 

the passenger denied boarding 

compensation in an amount far greater 

than $50, depending on whether 

alternate transportation could be 

arranged to arrive within a short time, 

despite the minimal fare that the first 

carrier received for its flight. The 

problem was exacerbated by the fact 

that most commuter airline flights at the 

time were on small turboprop and 

piston engine aircraft which were 

affected by weight limitations in high 

temperature/humidity conditions to a 

greater extent than jets and, therefore, 

might require bumping even when the 

carrier did not book beyond the seating 

capacity of the aircraft. 

Part 250 has tended to reduce 

passenger inconvenience and financial 

loss occasioned by overbooking without 

imposing heavy burdens on the airlines 

or significant costs on the traveling 

public. In focusing only on the 

treatment of passengers whose boarding 

is involuntarily denied, we have 

avoided regulating carriers’ reservations 

practices. Overall, it appears that the 

rule has served a useful purpose; 

however, in light of recommendations 

from various sources, including 

Congress and major airlines themselves, 

we are proposing to revise certain 

aspects of the rule that may be outdated. 

In view of the passage of time since the 

rule was last revised and changes in 

commercial air travel over that time, we 

are seeking comment on whether we 

should increase the compensation 

maximums and extend the rule to cover 

a broader range of aircraft, or whether 

we should adopt other more 

fundamental changes to the rule. The 

Department is also seeking comment on 

certain other changes of lesser impact 

that are under consideration. 

The Current Denied Boarding 

Compensation Rule 

The purpose of the Department’s 

denied boarding compensation rule is to 

balance the rights of passengers holding 

reservations with the desirability of 

allowing air carriers to minimize the 

adverse economic effects of ‘‘no-shows’’

(passengers with reservations who 

cancel or change their flights at the last 

minute). The rule sets up a two-part 

system. The first encourages passengers 

to voluntarily relinquish their 

confirmed reservations in exchange for 

compensation agreed to between the 

passenger and the airline. The second 

requires that, where there is an 

insufficient number of volunteers, 

passengers who are bumped 

involuntarily be given compensation in 

an amount specified in the rule. In 

addition, the Department requires 

carriers to give passengers notice of 

those procedures through signs and 

written notices provided with tickets 

and at airports, and to report the 

number of passengers denied boarding 

to the Department on a quarterly basis. 

The Civil Aeronautics Board (CAB) 

first required payments to bumped 

passengers 45 years ago. In Order No. E–

17914, dated January 8, 1962, the CAB 

conditioned its approval of ‘‘no-show 

penalties’’ for confirmed passengers on 

a requirement that bumped passengers 

be compensated. An oversales rule was 

adopted in 1967 as 14 CFR Part 250 

(ER–503, 32 FR 11939, August 18, 1967) 

and revised substantially in 1978 and 

1982 after comprehensive rulemaking 

proceedings (ER–1050, 43 FR 24277, 

June 5, 1978 and ER–1306, 47 FR 52980, 

November 24, 1982, respectively). The 

key features of the current requirements 

are as follows: 

(1) In the event of an oversold flight, 

the airline must first seek volunteers 

who are willing to relinquish their seats 

in return for compensation offered by 

the airline. 

(2) If there are not enough volunteers, 

the airline must use non-discriminatory 

procedures (‘‘boarding priorities’’) in 

deciding who is to be bumped 

involuntarily. 

(3) Most passengers who are 

involuntarily bumped are eligible for 

denied boarding compensation, with the 

amount depending on the price of each 

passenger’s ticket and the length of his 

or her delay. If the airline can arrange 

alternate transportation that is 

scheduled to arrive at the passenger’s 

destination within 2 hours of the 

planned arrival time of the oversold 

flight (4 hours on international flights), 

the compensation equals 100% of the 

passenger’s one-way fare to his or her 

next stopover or final destination, with 

a $200 maximum. If the airline cannot 

meet the 2 (or 4) hour deadline, the 

compensation rate doubles to 200% of 

the passenger’s one-way fare, with a 

$400 maximum. This compensation is 

in addition to the value of the 

passenger’s ticket, which the passenger 

can use for alternate transportation or 

have refunded if not used. 

(4) There are several exceptions to the 

compensation requirement. 

Compensation is not required if the 

passenger does not comply fully with 

the carrier’s contract of carriage or tariff 

provisions regarding ticketing, 

reconfirmation, check-in, and 

acceptability for transportation; if an 

aircraft of lesser capacity has been 

substituted for operational or safety 

reasons; if the passenger is offered 

accommodations in a section of the 

aircraft other than that specified on the 

ticket, at no extra charge (a passenger 

seated in a section for which a lower 

fare is charged is entitled to an 

appropriate refund); or if the carrier 

arranges comparable transportation, at 

no extra cost to the passenger, that is 

planned to arrive at the passenger’s next 

stopover or final destination not later 

than 1 hour after the planned arrival 

time of the passenger’s original flight. 

(5) A passenger who is denied 

boarding involuntarily may refuse to 

accept the denied boarding 

compensation specified in the rule and 

seek monetary or other compensation 

through negotiations with the carrier or 

by private legal action. 

(6) Carriers must post counter signs 

and include notices with tickets to alert 

travelers of their overbooking practices 

and the consumer protections of the 

rule. In addition, they must provide a 

detailed written notice explaining their 

oversales practices and boarding 

priority rules to each passenger 

involuntarily denied boarding, and to 

any other person requesting a copy. 


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1 It is important to note that the maximum 

involuntary denied boarding amounts set forth in 

Part 250 are amounts below which carriers cannot 

set their maximum compensation. Airlines have 

been and continue to be free, as a competitive tool, 

to set their maximum compensation levels at 

amounts greater than that provided in the 

Department’s rule. With the exception of JetBlue 

Airways, whose recently changed policy is 

described below, we are not aware of any carrier 

that has elected to do so. 

2This report tracks the denied boarding rate of air 

carriers that each account for at least 1% of 

domestic scheduled-service passenger revenues for 

the previous year. Consequently, the list of carriers 

whose performance is tracked in this report can 

change from year to year. 

(7) Every carrier must report, on a 

quarterly basis, data on the number of 

denied boardings on flights that are 

subject to Part 250. 

Discussion 

On July 10, 2007, the Department 

published an Advance Notice of 

Proposed Rulemaking (ANPRM) seeking 

comment on several issues associated 

with the oversales rule. We received 

over 1,280 comments in response to the 

ANPRM. About 20 of the comments 

were from organizations, with the rest 

from individuals. Most of the comments 

from the organizations, including those 

from air carriers and organizations 

representing air carriers, expressed the 

opinion that the rule serves a useful 

purpose and had benefited the industry 

and the public. Many of the individual 

comments did not express an opinion 

on the specific issues discussed in the 

ANPRM but rather urged that 

overbooking be banned, described their 

own negative air travel experiences, or 

commented on other issues (e.g., flight 

delays). 

In this Notice of Proposed 

Rulemaking we are not proposing to ban 

overbooking as many individual 

commenters urged. As indicated in the 

section above entitled ‘‘The Current 

Denied Boarding Compensation Rule,’’

air travelers receive some benefit from 

controlled overbooking. Overbooking 

makes possible a system of confirmed 

reservations that can almost always be 

honored. It allows airlines to fill more 

seats, reducing the pressure for higher 

fares, and makes it easier for people to 

obtain reservations on the flights of their 

choice. We are not aware of levels of 

consumer harm that require such a 

sweeping solution at this time, and 

banning overbooking is beyond the 

scope of our objectives in this 

proceeding. We believe that the 

additional oversale protections that we 

are proposing here will address the 

principal issues related to this 

regulation that require action by the 

Department. 

The issues that were presented in the 

ANPRM and a summary of the 

comments appear below. 

The Maximum Amount of Denied 

Boarding Compensation 

It has been over 20 years since the 

rule was last revised, and the existing 

$200 and $400 limits on the amount of 

required denied boarding compensation 

for passengers involuntarily denied 

boarding have not been raised since 

1978. The Department has received 

recommendations from various sources 

that it reexamine its oversales rule and, 

in particular, the maximum amounts of 

compensation set forth in the rule. In 

this regard, in a sense-of-the-Senate 

amendment to the Department of 

Transportation and Related Agencies 

Appropriations Act of 2000, Public Law 

106–69, the Senate noted its sense that 

the Department should amend its 

denied boarding rule to double the 

applicable compensation amounts. 

Legislation has also been introduced in 

Congress to require the Department to 

review the rule’s maximum amounts of 

compensation. (See S. 319, reported in 

the Senate April 26, 2001.) In addition, 

in his February 12, 2000, Final Report 

on Airline Customer Service 

Commitments, the Department’s 

Inspector General (IG) recommended, 

among other things, that the airlines 

petition the Department to increase the 

amount of denied boarding 

compensation payable to involuntarily 

bumped passengers. In response thereto, 

and citing the length of time since the 

maximum amounts of denied boarding 

compensation were last revised, the Air 

Transport Association (the trade 

association of the larger U.S. airlines) 

filed a petition with the Department on 

April 3, 2001, requesting that a 

rulemaking be instituted to examine 

those amounts.1 (Docket DOT–OST–01–

9325). Most recently, the IG on 

November 20, 2006, issued his ‘‘Report 

on the Follow-up Review Performed of 

U.S. Airlines in Implementing Selected 

Provisions of the Airline Customer 

Service Commitment’’ in which the IG 

recommended that we determine 

whether the maximum denied boarding 

compensation (DBC) amount needs to be 

increased and whether the oversales 

rule needs to be extended to cover 

aircraft with 31 through 60 seats. 

The CAB’s decision in 1978 to double 

the maximum amount of denied 

boarding compensation to $400 was 

based on its determination that the 

previous maximum was inadequate to 

redress the inconvenience to bumped 

passengers and that the increase would 

provide a greater incentive to carriers to 

reduce the number of persons 

involuntarily bumped from their flights. 

Following promulgation of the 

amendment to the rule in 1978 requiring 

the solicitation of volunteers and 

doubling the compensation maximum, 

the overall industry rate of involuntary 

denied boardings per 10,000 

enplanements in fact declined for many 

years. Until 2007, the rate for the past 

decade has been slightly below the level 

of involuntary bumping reported 10 

years ago. In this regard, 55,828 

passengers were involuntarily bumped 

from their flights in 2006 on the 19 

largest U.S. airlines (carriers whose 

denied boarding rate is tracked in the 

Department’s monthly Air Travel 

Consumer Report 2). Additional 

passengers were bumped by other 

airlines, whose denied boarding rate is 

not tracked in this report but whose 

bumped passengers are subject to the 

maximum compensation rates in the 

DOT rule. The annual rate of 

involuntary denied boardings per 

10,000 enplanements in 2006 for the 

carriers tracked in the report is the 

highest since 2000, and that trend 

continues in the rate for 2007 to date. 

Involuntary denied boarding rates from 

the Air Travel Consumer Report for the 

past ten years and 2007 to date appear 

below: 

Year 

Invol. DB’s 

per 10,000 

passengers 

1997 .......................................... 1.06 

1998 .......................................... 0.87 

1999 .......................................... 0.88 

2000 .......................................... 1.04 

2001 .......................................... 0.82 

2002 .......................................... 0.72 

2003 .......................................... 0.86 

2004 .......................................... 0.86 

2005 .......................................... 0.89 

2006 .......................................... 1.01 

2007 through 3rd quarter ......... 1.21 

(The table above has been updated from 

the one published in the ANPRM to include 

data for 2007 to date.) 

Likely contributing to this upward 

trend is the fact that flights are fuller: 

from 1978 to 2006 the system-wide load 

factor (percentage of seats filled) for U.S. 

airlines increased from 61.5% to 79.2%, 

with most of this increase taking place 

since 1994. The most-recently reported 

monthly load factors have hovered in 

the mid-80% range. 

With respect to the denied boarding 

compensation limits, inflation has 

eroded the $200 and $400 limits that 

were established in 1978. Using the 

Consumer Price Index for All Urban 

Consumers (CPI–U, the basis for the 

inflation adjustor in the Department’s 

domestic baggage liability rule, 14 CFR 

254.6), the July 2007 ANPRM noted that 


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$400 in 1978 was worth $128 as of 

February 2007 ($125 as of October 

2007). See the Bureau of Labor Statistics 

Inflation Calculator at http:// 

www.bls.gov/cpi/home.htm. Stated 

another way, in order to have the same 

purchasing power today as in 1978, 

$400 would have needed to be $1,248 in 

February 2007 and $1,279 as of October 

2007. 

At the same time, however, air fares 

have not risen to the same extent as the 

CPI–U. While historical comparisons of 

air fares are problematic, one frequentlyused index for changes in air fares is 

passenger yield. Yield is passenger 

revenue divided by revenue passenger 

miles—the revenue collected by airlines 

for carrying one passenger for one mile. 

According to the Air Transport 

Association, system-wide nominal yield 

(i.e., not adjusted for inflation) for all 

reporting U.S. air carriers was 8.29 cents 

per revenue passenger mile in 1978 and 

12.00 cents per revenue passenger mile 

in 2005 (latest available data at the time 

of the ANPRM)—an increase of 44.8%. 

The figure for 2006, which became 

available after the ANPRM was 

published, is 12.69 cents, an increase of 

53.1% from the 1978 figure. 

Applying the CPI-U calculation to the 

current $200 and $400 DBC limits that 

were established in 1978 would produce 

updated limits of $624 and $1,248 

respectively at the time of the ANPRM. 

However, the ANPRM noted that 

applying the 44.8% increase in 

passenger yield through 2005 to the 

current $200 and $400 limits would 

produce updated limits of $290 and 

$580 respectively ($306 and $612 if the 

2006 yield figure is used). It is 

important to note that the $200 and 

$400 figures in Part 250 are merely 

limits on the amount of denied boarding 

compensation; the actual compensation 

rate is 100% or 200% of the passenger’s 

fare (depending on how long he or she 

was delayed by the bumping). In the 

ANPRM, the Department requested 

comment on whether the maximums in 

the rule should be increased so that that 

a higher percentage of denied boarding 

compensation payments are not 

‘‘capped’’ by the limits. 

Consequently, in the ANPRM we 

sought comment on five options with 

respect to the limits on the amount of 

denied boarding compensation, as well 

as any other suggested changes: 

(1) Increase the $200/$400 limits to 

approximately $624 and $1,248 

respectively, based on the increase in 

the CPI as described above; 

(2) Increase the $200/$400 limits to 

approximately $290 and $580 

respectively, based on the increase in 

passenger yield as described above; 

(3) Double the maximum amounts of 

denied boarding compensation from 

$200 to $400 and from $400 to $800; 

(4) Eliminate the limits on 

compensation altogether, while 

retaining the 100% and 200% 

calculations; 

(5) Take no action, i.e. leave the 

current $200/$400 limits in place. 

It is important to note that none of 

these proposals would necessarily 

require carriers to offer more 

compensation to the great majority of 

passengers affected by overbooking 

because most such situations are 

handled through voluntary 

compensation, typically at the departure 

gate. Nor would they affect the 

significant proportion of involuntarily 

bumped passengers—possibly the 

majority—with fares low enough that 

the formula for involuntary denied 

boarding compensation would not reach 

the proposed new limits. Finally, even 

with respect to involuntarily bumped 

passengers whose denied boarding 

compensation might increase with 

higher maximums, many such 

passengers accept a voucher for future 

travel on that airline (usually in a face 

amount greater than the legally required 

denied boarding compensation) in lieu 

of a check. Carriers make such offers 

because vouchers do not have the same 

value as cash compensation given high 

rates of non-use and inventorymanagement restrictions. 

Comments 

The vast majority of the comments in 

the docket are from individuals (as 

opposed to organizations). On the issue 

of the denied boarding compensation 

monetary limits, 79 of these individual 

commenters favored option #1—

increase these limits to approximately 

$624 and $1,248 based on the increase 

in the CPI. 20 of the individual 

commenters were in favor of option #3, 

doubling the current limits to $400 and 

$800. Another 146 individual 

commenters expressed the opinion that 

the current limits should be increased 

but did not cite a specific amount. Two 

individual commenters favored an 

increase in the limits based on the 

increase in passenger yield (air fares), 

and three said that the limits should be 

eliminated (option #4). None of the 

individual comments indicated that the 

Department should take no action 

(option #5). 

In its comments, the Air Transport 

Association (which represents the larger 

U.S. airlines) presented arguments it 

said justify the practice of overbooking 

and keeping compensation level as they 

now are. ATA noted that on most 

oversold flights there are enough 

volunteers and consequently no 

involuntary denied boardings. The 

organization stated that the real cost of 

air fares (i.e., adjusted for inflation) has 

fallen since the denied boarding 

compensation limits were last adjusted. 

According to ATA, the current caps are 

likely to exceed the required 

compensation levels (i.e., 100% or 

200% of the bumped passenger’s fare) in 

the large majority of cases. ATA believes 

that no adjustment in the compensation 

caps is warranted at this time, but if 

there is an adjustment, it should be 

based on the change in yield (air fares) 

because, the association asserted, 

denied boarding compensation amounts 

have always been tied to the passenger’s 

fare. 

The International Air Transport 

Association, which represents 

international airlines worldwide, 

supported ATA’s position that there 

should be no change in the limits. The 

Regional Airline Association shared this 

view as well. Like ATA, RAA went on 

to say that if the Department does adjust 

the limits it should do so based on the 

air fare/yield index rather than the CPI 

because denied boarding compensation 

has always been tied to airline ticket 

prices. The Association of Asia Pacific 

Airlines supported an increase in the 

caps based on the fare/yield index, for 

the same reasons cited by ATA and 

RAA. 

The National Air Carrier Association 

commented that no change in the 

compensation limits is necessary. If the 

Department were to make a change, this 

organization said that it would 

reluctantly support an increase based on 

fares/yields (option #2) or eliminating 

the caps altogether (option #4). NACA 

noted that adopting option #4 would 

remove the need for periodic 

adjustments in the caps, which was 

another issue on which the ANPRM had 

sought comment. 

The American Society of Travel 

Agents states that adjusting the 

compensation limits based on the CPI is 

workable but acknowledges a 

disconnect between air fares and the 

CPI. Consequently, ASTA favors 

doubling the current limits, to strike a 

balance between the CPI and yield 

options and because of the simplicity of 

this approach. 

The Airports Council International—

North America also favors doubling the 

caps, to $400 and $800. ACI–NA was 

concerned that the CPI option would set 

a limit that is inappropriately high 

while a limit based on air fares would 

capture only passengers with an 

‘‘average’’ fare. 

Qantas Airways and Qatar Airways 

supports an increase on the caps that is 


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based on fares/yields. Air Pacific, 

JetBlue Airways, and Air Tahiti Nui 

oppose any increase, with the latter 

carrier emphasizing the industry’s costs 

and slim profits. JetBlue, which notes 

that it does not intentionally oversell 

flights, points out that when it must 

unexpectedly deny boarding 

involuntarily, it pays the passenger 

$1,000—considerably more than the 

current regulatory formulas and limits 

and more than most of the proposed 

limits. JetBlue urges the Department to 

allow carrier competition to govern 

denied boarding compensation limits in 

this manner. 

The International Airline Passengers 

Association advocates option #3, 

doubling the current limits. Like other 

commenters, it submits that air fares are 

not generally tied to inflation. 

The Air Crash Victims Families Group 

advocated increasing the compensation 

limits ‘‘to the standard/value existing at 

the time the Regulation is put into 

force’’ without specifying a 

methodology for the update. This group 

also urged the Department to ban 

overbooking with respect to prepaid 

tickets, harmonize its rule with the 

oversales rule of the European 

Community, mandate uniform boarding 

priorities for all carriers, and eliminate 

the exception to compensation for 

passengers bumped as a result of 

substitution of aircraft of lesser capacity. 

The Coalition for an Airline 

Passengers Bill of Rights suggests that 

the Department mandate denied 

boarding compensation in a flat amount 

of $1,000 regardless of the passenger’s 

fare or the length of his/her delay—

essentially the JetBlue policy. 

As indicated earlier, in 2006 over 

55,000 passengers were denied boarding 

involuntarily by the 19 carriers that 

were tracked at that time in the 

Department’s Air Travel Consumer 

Report (i.e., the 17 largest U.S. air 

carriers and two voluntarily reporting 

carriers). We assume that an increase in 

the regulatory maximums would result 

in an increase in amounts paid to such 

passengers but we requested comment 

on the likely financial impact, including 

both the direct impact (increased cash 

compensation), and the indirect impact 

resulting from either lower overbooking 

rates or higher voluntary compensation 

levels. Although we received useful 

general comments, commenters 

provided very little data supporting the 

conclusion that any of the increases in 

denied boarding compensation on 

which we requested comment would 

have a significant financial impact on 

any segment of the industry. 

Response to Comments 

The Department has decided to 

propose to amend its oversales rule to 

double the limits on involuntary denied 

boarding compensation from $200 to 

$400 for passengers who are rerouted 

within two hours (four hours 

internationally) and from $400 to $800 

for passengers who are not rerouted 

within these timeframes. As many 

commenters pointed out, there is a 

significant air-fare component to the 

denied boarding compensation formula 

(100%/200% of the bumped passenger’s 

fare), and air fares have risen less than 

the CPI. As indicated above, systemwide nominal yield (not adjusted for 

inflation) for all reporting U.S. air 

carriers, which is a frequently used 

index for changes in air fares, was 8.29 

cents per revenue passenger mile in 

1978 and 12.69 cents per revenue 

passenger mile in 2006, an increase of 

53.1%. Nonetheless, we will not 

propose the ‘‘fares/yield’’ option from 

the ANPRM as the sole method for 

updating the compensation caps. 

Denied boarding compensation is 

intended in part to compensate for the 

passenger’s inconvenience, lost time, 

and lost opportunities. The value of 

these considerations is linked to general 

inflation as well as to the cost of air 

fares. Therefore, the arguments of the 

carrier organizations about the decline 

in real (i.e., inflation-adjusted) air fares 

during that period are somewhat off the 

mark, because consumers live with 

some of the consequences of denied 

boarding in today’s dollars, not 1978 

dollars. As we indicated in the ANPRM, 

30 years of inflation have also taken 

their toll on the value of the existing 

limits. As noted above, $400 in 1978 is 

worth $128 today, based on the change 

in the CPI–U. Therefore, we propose to 

base part of an increase in the 

compensation caps on the CPI–U. 

By proposing to double the existing 

limits we would blend these two 

approaches. The proposed limits fall 

between the higher figures that would 

be produced by the CPI option and the 

lower numbers that would result from 

the ‘‘fares/yield’’ option. We seek 

comment on this proposal, including 

any comments and justifications that 

were not already provided in response 

to the ANPRM about alternative 

amounts or methodologies. 

Periodic Adjustment of the Limits 

In the ANPRM we also requested 

comment on whether we should amend 

the rule to include a provision for 

periodic adjustments to the denied 

boarding compensation maximums, as 

is required by our baggage liability rule 

(14 CFR part 254). As in the case of the 

baggage rule, we stated that the 

Department could review the CPI–U 

every two years, and adjust the 

maximum amounts accordingly. The 

new maximum DBC amounts could be 

rounded to the nearest $50, for 

simplicity. We suggested that any 

increase could be announced by 

publishing a notice in the Federal 

Register rather than first publishing a 

proposed rule to effectuate an increase. 

We requested comment on this 

approach. 

Comments 

All 34 of the individuals who 

commented on this issue believed that 

the compensation limits should be 

adjusted on a regular basis. 

Many of the comments from 

organizations noted that denied 

boarding compensation is based on the 

bumped passenger’s air fare and that air 

fares have risen more slowly than the 

CPI–U. RAA in particular stated that CPI 

can and often does move in the reverse 

direction of airline ‘‘yields’’ (average 

fares). ATA opposed any periodic 

adjustment in the compensation caps. 

ASTA supports periodic adjustment 

based on the CPI as described in the 

ANPRM. The Association of Asia Pacific 

Airlines opposes adding an adjustment 

mechanism to the rule and recommends 

amending the caps only when 

necessary. The Air Crash Victims 

Families Group and the Coalition for an 

Airline Passengers Bill of Rights support 

regular CPI-based adjustment of the 

caps. The International Airline 

Passengers Association states that the 

caps ‘‘should be tied to a periodic 

review process to enable adjustments if 

necessary.’’

Response to Comments 

If the rule is adopted as proposed, we 

plan to institute a procedure of 

reviewing the compensation caps every 

two years. As part of this review, the 

Department would determine if the 

compensation caps should be adjusted 

based on both the CPI and the change 

in fare yields as we did in proposing the 

doubling of the caps to $400 and $800 

in this NPRM (see above). We are, 

however, not proposing the approach 

described in the ANPRM of the periodic 

adjustment in the compensation caps 

being automatic (no additional comment 

period provided). Instead, we plan to 

institute a de novo rulemaking each 

time we seek to adjust the DBC 

maximum amount to allow the public 

an opportunity to provide input to the 

Department as to whether there are any 

reasons (not anticipated at the time of 

this rulemaking) not to increase the DBC 


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3See www.raa.org. 4 DOT Form 41, schedule T–100. 

maximum amounts based on DOT’s 

analysis. We seek comment on the 

advantages or disadvantages of the 

Department continually adjusting the 

denied boarding compensation 

maximum amounts through notice and 

comment rulemaking. Also, commenters 

who think that the proposed two-year 

period for considering adjustments to 

the compensation caps is not 

appropriate, or believe the frequency 

should be more or less than two years, 

should explain why and suggest 

alternate approaches. 

The Small-Aircraft Exclusion 

The oversales rule originally issued 

by the CAB did not contain an exclusion 

for small aircraft. In 1981 that agency 

amended Part 250 to exclude operations 

with aircraft seating 60 or fewer 

passengers. The CAB determined that 

without this exclusion the denied 

boarding rule imposed a proportionately 

greater financial and operational burden 

on these small-aircraft operators than on 

carriers operating larger aircraft. In 

addition, because of the lower revenues 

generated by these small aircraft, the 

financial burden of denied boarding 

compensation placed certificated 

carriers operating aircraft with 60 or 

fewer seats at a competitive 

disadvantage relative to commuter 

carriers (non-certificated) operating 

similar equipment and on similar routes 

which were not subject to Part 250. The 

number of flights that was excluded by 

the amendment was small and most 

such flights were operated by small 

carriers that operated small aircraft 

exclusively. Thus, Part 250 currently 

applies to certificated U.S. carriers and 

foreign carriers holding a permit, or 

exemption authority, issued by the 

Department, only with respect to 

operations performed with aircraft 

seating more than 60 passengers. 

While largely exempt from the denied 

boarding rule, the regional airline 

industry has experienced tremendous 

growth. According to the Regional 

Airline Association 3, passenger 

enplanements on regional carriers have 

increased more than 100% since 1995, 

and regional airlines now carry one out 

of every five domestic air travelers in 

the United States. RAA states that 

revenue passenger miles on regional 

carriers have increased 40-fold since 

1978 and increased 17 percent from 

2004 to 2005 alone. Regional jets have 

fueled much of the recent growth. 

According to RAA, from 1989 to 2004 

the number of turbofan aircraft (regional 

jets) in the regional-airline fleet 

increased from 54 to 1,628 and regional 

jets now make up 59% of the regionalcarrier fleet. Although many regional 

jets have more than 60 passenger seats 

and thus are subject to Part 250, the 

ubiquitous 50-seat and smaller regional 

jet models have driven much of the 

growth of the regional-carrier sector. 

Moreover, most regional jets are 

operated by regional carriers affiliated 

with a major carrier via a code-share 

agreement and/or an equity stake in the 

regional carrier. RAA asserts that 99% 

of regional airline passengers traveled 

on code-sharing regional airlines in 

2005. 

DOT statistics demonstrate the growth 

in traffic on flights operated by aircraft 

with 31 through 60 seats. The ANPRM 

provided statistics through the fourth 

quarter of 2005, but information for 

2006 has subsequently become 

available. From the fourth quarter of 

2002 (earliest available consistent data) 

to 4Q 2006 the number of flights using 

aircraft with 31 through 60 seats 

increased by 13.5% while the number of 

flights using aircraft with more than 60 

seats rose only 3.4%. The number of 

passengers carried on flights using 

aircraft with 31 through 60 seats 

increased by 34.9% from 4Q 2002 

through 4Q 2006, while the number of 

passengers carried on flights using 

aircraft with more than 60 seats rose by 

only 12.1% during that period.4

The increased use of jet aircraft in the 

30-to-60 seat sector accompanied by the 

increase in the ‘‘branding’’ of those 

operations with the codes and livery of 

major carriers has blurred the 

distinction between small-aircraft and 

large-aircraft service in the minds of 

many passengers. There would seem to 

be little, if any, difference to a consumer 

bumped from a small aircraft or a large 

aircraft—the effect is the same. The 

Department therefore sought comment 

on whether we should extend the 

consumer protections of Part 250 to 

these flights (including flights of noncertificated commuter air carriers) and 

thus scale back the small-aircraft 

exception that was added to the rule in 

1981. Specifically, the Department 

requested comment on whether it 

should reduce the seating-capacity 

exception for small aircraft from ‘‘60 

seats or less’’ to ‘‘less than 30 seats’’ and 

add commuter carriers to the list of 

carriers to which Part 250 applies. Since 

the Department is aware that many 

regional carriers already voluntarily 

provide DBC to passengers bumped 

from their 30-to-60-seat aircraft, 

commenters were specifically asked to 

include in their comments data 

regarding oversales and denied boarding 

compensation in operations with 

aircraft having 30 through 60 seats by 

both certificated and non-certificated 

carriers, to the extent it is available. 

Comments 

All 155 individuals who commented 

on this issue advocated extending the 

rule to aircraft with 30 through 60 seats. 

A couple of these commenters said it 

should only be extended to aircraft that 

operate flights in the name of a major 

carrier. More than half of the 155 

individual commenters on this issue 

said that the rule should also apply to 

aircraft with fewer than 30 seats. 

Among the organizations that 

commented, ATA urges the Department 

not to change the current exception for 

aircraft with 60 or fewer seats. It asserts 

that these aircraft not only are more 

susceptible than larger airplanes to 

unpredictable operational constraints, 

but that these aircraft often operate at 

smaller airports where shorter runways 

can limit capacity on hot days. RAA 

echoed the latter comment and also 

quoted from the preamble to the Civil 

Aeronautics Board’s 1981 oversales 

exemption for aircraft with 60 or fewer 

seats that acknowledged that these 

aircraft were ‘‘assuming an increasingly 

significant role in the national air 

transportation system’’ but concluded 

that the denied boarding compensation 

levels in the regulation would be a 

disproportionate penalty relative to the 

typical short-haul fare. RAA also noted 

the costs of complying with the same 

FAA rules as operators of larger aircraft 

and the disproportionate cost impact of 

suggested per-aircraft user fees. 

The Air Carrier Association of 

America (which represents certain lowfare airlines), the American Society of 

Travel Agents, the Association of Asia 

Pacific Airlines and JetBlue Airways are 

in favor of extending the oversales rule 

to operations using aircraft with 30 

through 60 seats for the reasons 

described in the ANPRM. JetBlue notes 

that even large aircraft are susceptible to 

load limits based on heat and altitude, 

and it asserts that 57% of the flights 

operated in August 2007 for American, 

Continental, Delta, Northwest, United 

and U.S. Airways were on regional jets. 

[Some of those regional jets no doubt 

have more than 60 seats and thus are 

already subject to the oversales rule, but 

many are not.] ACAA provided data 

showing that regional jets account for 

half or nearly half of all departures at 

most hub airports. It notes that regional 

jets with more than 60 seats are subject 

to the rule while those with 60 or fewer 

seats are not. 

Peninsula Airways urges the 

Department not to extend the rule to 


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commuter operations solely within the 

state of Alaska, or in the alternative to 

expand the rule only to regional jets, 

e.g., by extending the regulation to 

aircraft with 35 or more seats rather 

than 30 or more, thereby continuing to 

exempt the vast majority of propeller 

aircraft. Hawaii Island Air 

recommended that the rule only be 

extended to 30-through-60 seat aircraft 

operated by a carrier that also operates 

large aircraft. 

Response to Comments 

For the reasons described in the 

ANPRM, we are proposing to extend the 

applicability of the oversales rule to 

flights using aircraft with 30 or more 

seats. Since the time that the CAB 

exempted this sector of the industry 

from the rule in 1981, the vast majority 

of operations at this level have become 

affiliated and integrated with the 

‘‘brand’’ of a major carrier. A higher 

percentage of these flights than was the 

case in 1981 are operated with larger 

aircraft in this under-60 seat exempted 

range (to a large extent regional jets), 

and are affected by weather constraints 

less frequently than aircraft with less 

than 30 seats. In recent times, aircraft 

with 30 through 60 seats have been 

substituted for larger airplanes on 

numerous routes. The vast majority of 

the traffic that would be covered by this 

initiative is carried by airlines that are 

owned by or affiliated with a major 

carrier or its parent company. Moreover, 

a significant amount, if not most, of the 

service on such flights is provided 

under a ‘‘fee-for-service’’ arrangement, 

where a major carrier dictates the 

market, the schedule, and the price of 

the flight, and the tickets may not even 

be sold under the regional carrier’s code 

so that the passenger’s contract of 

carriage covering the transportation is 

solely with the major carrier. In such 

circumstances, the flights are for all 

legal and practicable purposes flights of 

the major carrier, not the regional 

airline, in which case the major carrier 

is responsible for providing denied 

boarding compensation on the flights of 

the smaller carrier. While we are 

sensitive to the operational challenges 

faced by operators of aircraft with 30 

through 60 seats, we now believe that 

consumers who purchase transportation 

in this aircraft class are entitled to the 

protections of the oversales rule. 

Because this is a proposal, however, we 

invite additional comment on the issue 

of the seating capacity of the aircraft to 

which the rule should apply. 

Boarding Priorities and Notice to 

Volunteers 

Boarding priority rules determine the 

order in which various categories of 

passengers will be involuntarily 

bumped when a flight is oversold. Part 

250 states that boarding priority rules 

must not provide any undue or 

unreasonable preference. The IG in his 

2000 report identified possible 

ambiguities in the Department’s 

requirements regarding boarding 

priority rules, and he recommended that 

we provide examples of what we 

consider to be an undue or unreasonable 

preference. The IG was also concerned 

that the amounts of compensation 

provided passengers who are 

involuntarily bumped was in some 

cases less than the face value of 

vouchers given to passengers who 

volunteer to give up their seats. He 

therefore recommended, in addition to 

raising the maximum compensation 

amounts for involuntarily bumped 

passengers, as discussed above, that we 

require carriers to disclose orally to 

passengers, at the time the airline makes 

an offer to volunteers, what the airline 

is obligated to pay passengers who are 

involuntarily bumped. 

Our boarding priority requirement 

was designed to give carriers the 

maximum flexibility to set their own 

procedures at the gate, while affording 

consumers protection against unfair and 

unreasonable practices. Thus, the rule 

(1) requires that airlines establish their 

own boarding priority rules and criteria 

for oversale situations consistent with 

Part 250’s requirement to minimize 

involuntary bumpings and (2) states that 

those boarding priority rules and criteria 

‘‘shall not make, give, or cause any 

undue or unreasonable preference or 

advantage to any particular person or 

subject any particular person to any 

unjust or unreasonable prejudice or 

disadvantage in any respect 

whatsoever.’’ (14 CFR 250.3(a)) 

Although we are not aware of any 

problems resulting from this rule as 

written, we agree that guidance 

regarding this provision would be useful 

to the industry and public alike. 

Accordingly, in the ANPRM we 

requested comment on whether the 

Department should list in the rule, as 

examples of permissible boarding 

priority criteria, the following: 

• A passenger’s time of check in 

(first-come, first-served); 

• Whether a passenger has a seat 

assignment before reaching the 

departure gate for carriers that assign 

seats; 

• A passenger’s fare; 

• A passenger’s frequent flyer status; 

and 

• Special priorities for passengers 

with disabilities, within the meaning of 

14 CFR part 382, or for unaccompanied 

minors. 

We stated in the ANPRM that the five 

examples proposed here are illustrative 

only, and not exclusive. We did not 

intend by these examples to foreclose 

the use by carriers of other boarding 

priorities that do not give a passenger 

undue preference or unjustly prejudice 

any passenger. 

Accurately notifying passengers of 

their rights in an oversale situation is 

important, so that they can make an 

informed decision. Part 250 already 

contains requirements designed to 

accomplish that objective and to protect 

passengers from being involuntarily 

bumped if they have not been accorded 

adequate notice. Section 250.2b(b) 

prohibits a carrier from denying 

boarding involuntarily to any passenger 

who was earlier asked to volunteer 

without having been informed about the 

danger of being denied boarding 

involuntarily and the amount of 

compensation that would apply if that 

occurred. While this provision would 

appear to provide adequate incentive for 

airlines to provide complete notice to 

passengers who are asked to volunteer, 

and to protect those passengers not 

provided such notice, we see some 

merit in making this notice requirement 

more direct. Accordingly, we seek 

comment on whether we should amend 

section 250.2b to affirmatively require 

that, no later than the time a carrier asks 

a passenger to volunteer, it inform that 

person whether he or she is in danger 

of being involuntarily bumped and, if 

so, the compensation the carrier is 

obligated to pay. 

Comments 

There were only a handful of 

individual comments on the issue of 

boarding priorities; most of them 

favored the Department’s proposal. 

There was virtually no comment from 

individuals about the volunteer notice. 

Most of the commenters from the 

airline industry and IAPA stated that it 

is not necessary to list specific 

permissible boarding priorities. Some of 

the industry commenters said that they 

do not oppose this as long as it’s clear 

that the list is illustrative and does not 

restrict carriers from having other 

boarding priorities. (Boarding priorities 

must be disclosed in the written notice 

required by section 250.9 of the rule.) 

The Air Crash Victims Families Group 

urged the Department to mandate 

uniform boarding priorities for all 

carriers. The Coalition for an Airline 

Passenger Bill of Rights stated that 

carriers should be required to make 


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boarding priorities more widely 

available; it also urges the Department 

to prohibit boarding priorities that are 

based on the passenger’s fare. 

The industry commenters as a group 

opposed the proposal to provide 

additional notice to volunteers, stating 

that it was unduly restrictive. The 

consumer organizations did not 

comment on this issue. 

Response to Comments 

For the reasons articulated in the 

ANPRM and summarized above, and 

consistent with the recommendation of 

the IG, we propose to revise the rule to 

affirmatively require that, no later than 

the time a carrier asks a passenger to 

volunteer, it inform that person whether 

he or she is in danger of being 

involuntarily bumped and, if so, the 

compensation the carrier is obligated to 

pay, and to list the following examples 

of permissible boarding priority criteria: 

• A passenger’s time of check in 

(first-come, first-served); 

• Whether a passenger has a seat 

assignment before reaching the 

departure gate for carriers that assign 

seats; 

• A passenger’s fare; 

• A passenger’s frequent flyer status; 

and 

• Special priorities for passengers 

with disabilities, within the meaning of 

14 CFR part 382, or for unaccompanied 

minors. 

As we stated in the ANPRM, we 

propose that these five examples be 

illustrative only, and not exclusive. 

Reporting 

Section 250.10 of the current rule 

requires all carriers that are subject to 

Part 250 to file a quarterly report (Form 

251) on oversale activity. Due to staffing 

limitations, for many years the only 

carriers whose oversale data have been 

routinely reviewed, entered into an 

automated system, or published by the 

Department are the airlines that are 

subject to the on-time performance 

reporting requirement. Those are the 

U.S. carriers that each account for at 

least 1 percent of total domestic 

scheduled-service passenger revenues—

currently 20 airlines (see 14 CFR 234). 

For a current list of these carriers, see 

the Department’s Air Travel Consumer 

Report at http:// 

airconsumer.ost.dot.gov/reports/ 

index.htm. This report provides data for 

these airlines in four areas: On-time 

performance, baggage mishandling, 

oversales, and consumer complaints. 

The oversale data for that report are 

derived from the Form 251 reports 

mandated by Part 250. The data in the 

Form 251 reports filed by the other 

carriers is not keypunched, 

summarized, published, or routinely 

reviewed. 

In the ANPRM the Department 

requested comment on whether it 

should revise section 250.10 to relieve 

all carriers of this reporting requirement 

except for the airlines whose data is 

being used, i.e., U.S. carriers reporting 

on-time performance under Part 234. 

Those airlines account for the vast 

majority of domestic traffic and 

bumpings, so the Department will still 

receive adequate information and the 

public will continue to have access to 

published data for the same category of 

carriers as before. Such action would be 

consistent with the Paperwork 

Reduction Act and the Regulatory 

Flexibility Act. It would also result in 

consistent carrier reporting 

requirements for all four sections of the 

Air Travel Consumer Report. 

Comments 

Only four of the individual 

commenters expressed an opinion on 

this issue; all four of them favored the 

Department’s proposal. ATA and 

JetBlue believe that this reporting 

requirement should be retained. The 

other industry commenters supported 

the proposal to eliminate this 

requirement for all but the ATCTreported carriers. The consumer 

organizations did not weigh in on this 

issue. 

Response to Comments 

For the reasons articulated in the 

ANPRM and summarized above, we 

propose to revise the rule to relieve all 

carriers of this reporting requirement 

except for ‘‘reporting carriers’’ as 

defined in 14 CFR 234.2 and any carrier 

that voluntarily submits data pursuant 

to section 234.7 of that part. At the 

present time this is 20 airlines. 

Regulatory Notices 

A. Executive Order 12866 (Regulatory 

Planning and Review) and DOT 

Regulatory Policies and Procedures 

This action has been determined to be 

significant under Executive Order 12866 

and the Department of Transportation 

Regulatory Policies and Procedures. It 

has been reviewed by the Office of 

Management and Budget under that 

Order. A preliminary discussion of 

possible costs and benefits of the 

proposed rule is presented above and in 

the accompanying Regulatory 

Evaluation. The Regulatory Evaluation 

concluded that the benefits of the 

proposals appear to exceed the costs. A 

copy of the Regulatory Evaluation has 

been placed in the docket. 

B. Executive Order 13132 (Federalism) 

This Notice of Proposed Rulemaking 

has been analyzed in accordance with 

the principles and criteria contained in 

Executive Order 13132 (‘‘Federalism’’). 

This notice does not propose any 

regulation that: (1) Has substantial 

direct effects on the States, the 

relationship between the national 

government and the States, or the 

distribution of power and 

responsibilities among the various 

levels of government; (2) imposes 

substantial direct compliance costs on 

State and local governments; or (3) 

preempts state law. Therefore, the 

consultation and funding requirements 

of Executive Order 13132 do not apply. 

C. Executive Order 13084 

This notice has been analyzed in 

accordance with the principles and 

criteria contained in Executive Order 

13084 (‘‘Consultation and Coordination 

with Indian Tribal Governments’’). 

Because none of the options on which 

we are seeking comment would 

significantly or uniquely affect the 

communities of the Indian tribal 

governments and would not impose 

substantial direct compliance costs, the 

funding and consultation requirements 

of Executive Order 13084 do not apply. 

D. Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) requires an agency to 

review regulations to assess their impact 

on small entities unless the agency 

determines that a rule is not expected to 

have a significant economic impact on 

a substantial number of small entities. 

Certain elements of these proposed rules 

may impose new requirements on 

certain small air carriers, but the 

Department believes that the economic 

impact would not be significant. All air 

carriers have control over the extent to 

which the rule impacts them since they 

control their own overbooking rates. 

Carriers can mitigate the cost of denied 

boarding compensation by obtaining 

volunteers who are willing to give up 

their seat for less compensation than 

what the rule mandates for passengers 

who are bumped involuntarily, and by 

offering travel vouchers in lieu of cash 

compensation. 

The vast majority of the traffic that 

would be covered by the oversales rule 

for the first time as a result of the 

options on which we seek comment is 

carried by airlines that are owned by or 

affiliated with a major carrier or its 

parent company. Moreover, a significant 

amount, if not most, of the service on 

such flights is provided under a ‘‘feefor-service’’ arrangement, where a major 


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carrier dictates the market, the schedule, 

and the price of the flight, and the 

tickets may not even be sold under the 

regional carrier’s code so that the 

passenger’s contract of carriage covering 

the transportation is solely with the 

major carrier. In such circumstances, the 

flights are for all legal and practical 

purposes flights of the major carrier, not 

the regional airline, in which case the 

major carrier is responsible for 

providing denied boarding 

compensation on the flights of the 

smaller carrier. The monetary costs of 

most of these options result in a 

corresponding dollar-for-dollar 

monetary benefit for members of the 

public who are bumped from their 

confirmed flights and for small 

businesses that employ some of them. 

The options provide an economic 

incentive for carriers to use more 

efficient overbooking rates that result in 

fewer bumpings while still allowing the 

carriers to fill seats that would go 

unsold as the result of ‘‘no-show’’

passengers. It is worth noting that one 

of the options on which we are seeking 

comment relieves an existing reporting 

requirement for all but the largest 

carriers. For all these reasons, I certify 

that this rule, if adopted, would not 

have a significant economic impact on 

a substantial number of small entities. 

E. Paperwork Reduction Act 

The provisions that we are proposing 

impose no new information reporting or 

recordkeeping necessitating clearance 

by the Office of Management and 

Budget. They relieve a reporting 

requirement for many carriers that are 

currently subject to that requirement. 

One required handout that airlines 

distribute to bumped passengers would 

require minor revisions. 

F. Unfunded Mandates Reform Act 

The Department has determined that 

the requirements of Title II of the 

Unfunded Mandates Reform Act of 1995 

do not apply to this notice. 

List of Subjects in 14 CFR Part 250 

Air carriers, Consumer protection, 

Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, we propose to amend 14 CFR 

part 250 as follows: 

PART 250—[AMENDED] 

1. The authority citation for part 250 

continues to read as follows: 

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

413, 417. 

2. Section 250.1 is amended by 

removing the definition of ‘‘large 

aircraft’’ and revising the definition of 

‘‘Carrier’’ to read as follows: 

§ 250.1 Definitions. 

* * * * * 

Carrier means: 

(1) A direct air carrier, except a 

helicopter operator, holding a certificate 

issued by the Department pursuant to 49 

U.S.C. 41102 or that has been found fit 

to conduct commuter operations under 

49 U.S.C. 41738, authorizing the 

scheduled transportation of persons; or 

(2) A foreign route air carrier holding 

a permit issued pursuant to 49 U.S.C. 

41302, or an exemption from that 

provision, authorizing the scheduled 

foreign air transportation of persons. 

* * * * * 

3. Section 250.2 is revised to read as 

follows: 

§ 250.2 Applicability. 

This part applies to every carrier, as 

defined in § 250.1, with respect to flight 

segments using an aircraft that has a 

designed passenger capacity of 30 or 

more passenger seats, operating in 

interstate air transportation or foreign 

air transportation with respect to 

nonstop flight segments originating at a 

point within the United States. 

4. In § 250.2b paragraph (b) is 

amended by removing the last sentence 

and adding a new first sentence to read 

as follows: 

§ 250.2b Carriers to request volunteers for 

denied boarding. 

* * * * * 

(b) Every carrier shall advise each 

passenger solicited to volunteer for 

denied boarding, no later than the time 

the carrier solicits that passenger to 

volunteer, whether he or she is in 

danger of being involuntarily denied 

boarding and, if so, the compensation 

the carrier is obligated to pay if the 

passenger is involuntarily denied 

boarding. 

5. Section 250.3(b) is added to read as 

follows: 

§ 250.3 Boarding priority rules. 

* * * * * 

(b) The Department has determined 

that acceptable boarding priority factors 

may include, but are not limited to, the 

following: 

(1) A passenger’s time of check in; 

(2) Whether a passenger has a seat 

assignment before reaching the 

departure gate for carriers that assign 

seats; 

(3) The fare paid by a passenger; 

(4) A passenger’s frequent-flyer status; 

and 

(5) A passenger’s disability or status 

as an unaccompanied minor. 

6. Section 250.5(a) is revised to read 

as follows: 

§ 250.5 Amount of denied boarding 

compensation for passengers denied 

boarding involuntarily. 

(a) Subject to the exceptions provided 

in § 250.6, a carrier to whom this part 

applies as described in § 250.2 shall pay 

compensation to passengers denied 

boarding involuntarily from an oversold 

flight at the rate of 200 percent of the 

fare (including any surcharges and air 

transportation taxes) to the passenger’s 

next stopover, or if none, to the 

passenger’s final destination, with a 

maximum of $800. However, the 

compensation shall be one-half the 

amount described above, with a $400 

maximum, if the carrier arranges for 

comparable air transportation [see 

section 250.1], or other transportation 

used by the passenger that, at the time 

either such arrangement is made, is 

planned to arrive at the airport of the 

passenger’s next stopover, or if none, 

the airport of the passenger’s final 

destination, not later than 2 hours after 

the time the direct or connecting flight 

from which the passenger was denied 

boarding is planned to arrive in the case 

of interstate air transportation, or 4 

hours after such time in the case of 

foreign air transportation. 

* * * * * 

7. Section 250.9(b) is revised to read 

as follows: 

§ 250.9 Written explanation of denied 

boarding compensation and boarding 

priorities. 

* * * * * 

(b) The statement shall read as 

follows: 

Compensation for Denied Boarding 

If you have been denied a reserved seat on 

(name of air carrier), you are probably 

entitled to monetary compensation. This 

notice explains the airline’s obligation and 

the passenger’s rights in the case of an 

oversold flight, in accordance with 

regulations of the U.S. Department of 

Transportation. 

Volunteers and Boarding Priorities 

If a flight is oversold (more passengers hold 

confirmed reservations than there are seats 

available), no one may be denied boarding 

against his or her will until airline personnel 

first ask for volunteers who will give up their 

reservation willingly, in exchange for a 

payment of the airline’s choosing. If there are 

not enough volunteers, other passengers may 

be denied boarding involuntarily in 

accordance with the following boarding 

priority of (name of air carrier): (In this space 

the carrier inserts its boarding priority rules 

or a summary thereof, in a manner to be 

understandable to the average passenger.) 


rmajette on PROD1PC64 with PROPOSALS
65246 Federal Register / Vol. 72, No. 223 / Tuesday, November 20, 2007 / Proposed Rules 

Compensation for Involuntary Denied 

Boarding 

If you are denied boarding involuntarily, 

you are entitled to a payment of ‘‘denied 

boarding compensation’’ from the airline 

unless: (1) you have not fully complied with 

the airline’s ticketing, check-in and 

reconfirmation requirements, or you are not 

acceptable for transportation under the 

airline’s usual rules and practices; or (2) you 

are denied boarding because the flight is 

canceled; or (3) you are denied boarding 

because a smaller capacity aircraft was 

substituted for safety or operational reasons; 

or (4) you are offered accommodations in a 

section of the aircraft other than specified in 

your ticket, at no extra charge (a passenger 

seated in a section for which a lower fare is 

charged must be given an appropriate 

refund); or (5) the airline is able to place you 

on another flight or flights that are planned 

to reach your next stopover or final 

destination within one hour of the planned 

arrival time of your original flight. 

Amount of Denied Boarding Compensation 

Passengers who are eligible for denied 

boarding compensation must be offered a 

payment equal to their one-way fare to their 

destination (including connecting flights) or 

first stopover of four hours or longer, with a 

$400 maximum. However, if the airline 

cannot arrange ‘‘alternate transportation’’ (see 

below) for the passenger, the compensation is 

doubled ($800 maximum). The fare upon 

which the compensation is based shall 

include any surcharge and air transportation 

tax. 

‘‘Alternate transportation’’ is air 

transportation (by any airline licensed by 

DOT) or other transportation used by the 

passenger which, at the time the arrangement 

is made, is planned to arrive at the 

passenger’s next scheduled stopover of four 

hours or longer or, if none, the passenger’s 

final destination, no later than 2 hours (for 

flights between U.S. points, including 

territories and possessions) or 4 hours (for 

international flights) after the passenger’s 

originally scheduled arrival time. 

Method of Payment 

Except as provided below, the airline must 

give each passenger who qualified for 

involuntary denied boarding compensation a 

payment by cash or check for the amount 

specified above, on the day and at the place 

the involuntary denied boarding occurs. If 

the airline arranges alternate transportation 

for the passenger’s convenience that departs 

before the payment can be made, the 

payment shall be sent to the passenger within 

24 hours. The air carrier may offer free or 

discounted transportation in place of the 

cash payment. In that event, the carrier must 

disclose all material restrictions on the use of 

the free or discounted transportation before 

the passenger decides whether to accept the 

transportation in lieu of a cash or check 

payment. The passenger may insist on the 

cash/check payment or refuse all 

compensation and bring private legal action. 

Passenger’s Options 

Acceptance of the compensation may 

relieve (name of air carrier) from any further 

liability to the passenger caused by its failure 

to honor the confirmed reservation. However, 

the passenger may decline the payment and 

seek to recover damages in a court of law or 

in some other manner. 

* * * * * 

§ 250.10 [Amended] 

8. In the first sentence of § 250.10, the 

word ‘‘carrier’’ is replaced with the 

phrase ‘‘reporting carrier as defined in 

14 CFR 234.2 and any carrier that 

voluntarily submits data pursuant to 

section 234.7 of that part.’’

9. Section 250.11(a) is revised to read 

as follows: 

§ 250.11 Public disclosure of deliberate 

overbooking and boarding procedures. 

(a) Every carrier shall cause to be 

displayed continuously in a 

conspicuous public place at each desk, 

station and position in the United States 

which is in the charge of a person 

employed exclusively by it, or by it 

jointly with another person, or by any 

agent employed by such air carrier or 

foreign air carrier to sell tickets to 

passengers, a sign located so as to be 

clearly visible and clearly readable to 

the traveling public, which shall have 

printed thereon the following statement 

in boldface type at least one-fourth of an 

inch high: 

Notice—Overbooking of Flights 

Airline flights may be overbooked, 

and there is a slight chance that a seat 

will not be available on a flight for 

which a person has a confirmed 

reservation. If the flight is overbooked, 

no one will be denied a seat until airline 

personnel first ask for volunteers willing 

to give up their reservation in exchange 

for compensation of the airline’s 

choosing. If there are not enough 

volunteers, the airline will deny 

boarding to other persons in accordance 

with its particular boarding priority. 

With few exceptions, including failure 

to comply with the carrier’s check-in 

deadline (carrier shall insert either ‘‘of 

ll minutes prior to each flight 

segment’’ or ‘‘(which are available upon 

request from the air carrier)’’ here), 

persons denied boarding involuntarily 

are entitled to compensation. The 

complete rules for the payment of 

compensation and each airline’s 

boarding priorities are available at all 

airport ticket counters and boarding 

locations. Some airlines do not apply 

these consumer protections to travel 

from some foreign countries, although 

other consumer protections may be 

available. Check with your airline or 

your travel agent. 

* * * * * 

Issued this 15th day of November, 2007, at 

Washington, DC. 

Michael W. Reynolds, 

Deputy Assistant Secretary for Aviation and 

International Affairs. 

[FR Doc. 07–5761 Filed 11–15–07; 4:15 pm] 

BILLING CODE 4910–9X–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Parts 141 and 385 

[Docket No. RM07–18–000] 

Elimination of FERC Form No. 423 

November 2, 2007. 

AGENCY: Federal Energy Regulatory 

Commission, DOE. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: In this Notice of Proposed 

Rulemaking, the Federal Energy 

Regulatory Commission (Commission) is 

proposing to amend its regulations to 

eliminate the FERC Form No. 423, 

Monthly Report of Cost and Quality of 

Fuels for Electric Plants. The 

Commission’s infrequent use of the 

information no longer justifies the 

burden and cost of collecting it. 

Conversely, the Energy Information 

Administration has expressed a need for 

this information and, upon cessation of 

the Commission’s collection, proposes 

to collect the information, as part of its 

newly proposed EIA–923. 

DATES: Comment deadline: Comments 

are due December 20, 2007. 

ADDRESSES: You may submit comments 

identified by Docket No. RM07–18–000, 

by one of the following methods: 

• eFiling: From the Commission’s 

Web site: http://www.ferc.gov, follow 

the instructions for submitting 

comments electronically found by 

selecting eFiling under the Documents & 

Filing heading. 

• Mail: Commenters unable to file 

comments electronically must mail or 

hand deliver an original and 14 copies 

of their comments to the Federal Energy 

Regulatory Commission, Secretary of the 

Commission, 888 First Street, NE., 

Washington, DC 20426. 

Please refer to the Comment 

Procedures section for additional 

information. 

FOR FURTHER INFORMATION CONTACT: 

Lawrence Greenfield (Legal 

Information), Office of the General 

Counsel—Energy Markets, Federal 

Energy Regulatory Commission, 888 

First Street, NE., Washington, DC 20426, 


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