13860 Federal Register / Vol. 66, No. 46 / Thursday, March 8, 2001 / Proposed Rules

(e) For Model 412CF helicopters:

(1) Within 100 hours TIS or 90 days after

the effective date of this AD, whichever

occurs first, remove the two existing

retention nuts retaining the bellcranks, P/N

212–011–705–001, and install retention nuts,

P/N MS14145L6 or MS17826–6, in

accordance with paragraphs (1) through (5) of

the Accomplishment Instructions in Bell

Helicopter Textron, Inc. ASB 412CF–00–10,

Revision A, September 13, 2000 (412CF

ASB). A used nut may not be installed.

(2) At intervals not to exceed 100 hours TIS

after accomplishing paragraph (e)(1) of this

AD, inspect the retention nuts and CPC

coating in accordance with paragraph (6) of

the Accomplishment Instructions in the

412CF ASB. Reapply the CPC coating if

deficiencies are found in the coverage and

protection of the area. Replace any retention

nut with any corrosion, mechanical damage,

a crack, or looseness with an airworthy new

nut before further flight.

(f) An alternative method of compliance or

adjustment of the compliance time that

provides an acceptable level of safety may be

used if approved by the Manager, Rotorcraft

Certification Office, Rotorcraft Directorate,

FAA. Operators shall submit their requests

through an FAA Principal Maintenance

Inspector, who may concur or comment and

then send it to the Manager, Rotorcraft

Certification Office.

Note 2: Information concerning the

existence of approved alternative methods of

compliance with this AD, if any, may be

obtained from the Rotorcraft Certification

Office.

(g) Special flight permits may be issued in

accordance with sections 21.197 and 21.199

of the Federal Aviation Regulations (14 CFR

21.197 and 21.199) to operate the helicopter

to a location where the requirements of this

AD can be accomplished.

Issued in Fort Worth, Texas, on February

28, 2001.

Eric Bries,

Acting Manager, Rotorcraft Directorate,

Aircraft Certification Service.

[FR Doc. 01–5658 Filed 3–7–01; 8:45 am]

BILLING CODE 4910–13–U

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 255

[Docket No. OST–2001–9054]

RIN 2105–AC75

Extension of Computer Reservations

Systems (CRS) Regulations

AGENCY: Office of the Secretary,

Department of Transportation.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Department is proposing

to revise its rules governing airline

computer reservations systems (CRSs)

by changing the rules’ expiration date

from March 31, 2001, to March 31, 2002.

If the expiration date is not changed, the

rules will terminate on March 31, 2001.

The proposed extension of the current

rules will keep them in effect while the

Department carries out its

reexamination of the need for CRS

regulations. The Department has

tentatively concluded that the current

rules should be maintained because

they appear to be necessary for

promoting airline competition and

helping to ensure that consumers and

their travel agents can obtain complete

and accurate information on airline

services. The rules were previously

extended from December 31, 1997, to

March 31, 1999, then to March 31, 2000,

and then to March 31, 2001.

DATES: Comments must be submitted on

or before March 19, 2001. Late filed

comments will be considered to the

extent possible.

ADDRESSES: To make sure your

comments and related material are not

entered more than once in the docket,

please submit them (marked with

docket number OST–2001–9054) by

only one of the following means:

(1) By mail to the Docket Management

Facility, US Department of

Transportation, room PL–401, 400

Seventh Street SW., Washington, DC

20590–0001.

(2) By hand delivery to room PL–401

on the Plaza level of the Nassif Building,

400 Seventh Street SW., Washington,

DC, between 9 a.m. and 5 p.m., Monday

through Friday, except Federal holidays.

The telephone number is 202–366–

9329.

(3) Electronically through the Web

Site for the Docket Management System

at http://dms.dot.gov. Comments must

be filed in Docket OST–2001–9054.

FOR FURTHER INFORMATION CONTACT:

Thomas Ray, Office of the General

Counsel, 400 Seventh St. SW.,

Washington, DC 20590, (202) 366–4731.

Electronic Access: You can view and

download this document by going to the

webpage of the Department’s Docket

Management System (http://

dms.dot.gov/). On that page, click on

‘‘search.’’ On the next page, type in the

last four digits of the docket number

shown on the first page of this

document. Then click on ‘‘search.’’ An

electronic copy of this document also

may be downloaded by using a

computer, modem, and suitable

communications software from the

Government Printing Office’s Electronic

Bulletin Board Service at (202) 512–

1661. Internet users may reach the

Office of the Federal Register’s home

page at: http://www.nara.gov/fedreg and

the Government Printing Office’s

database at: http://www.access.gpo.gov/

nara/ index.html.

SUPPLEMENTARY INFORMATION: In 1992

the Department adopted its rules

governing CRS operations, 14 CFR Part

255, because almost all airlines

operating in the United States relied on

the CRSs in marketing their airline

services. 57 FR 43780 (September 22,

1992). We determined that the rules

were necessary to ensure that each of

the airlines and airline affiliates that

then owned and controlled the systems

did not use the systems to unfairly

prejudice the competitive position of

other airlines or to provide misleading

or inaccurate information to travel

agents and their customers. Travel

agents depended on CRSs to provide

airline information and make bookings

for their customers, and almost all

airlines received most of their bookings

from travel agencies. CRS rules were

necessary for these reasons. Our rules as

revised will expire on March 31, 2001,

unless we readopt them or extend the

expiration date. 64 FR 15127 (March 30,

1999). We began a proceeding to

determine whether the rules are

necessary and should be readopted and,

if so, whether they should be modified,

by issuing an advance notice of

proposed rulemaking. 62 FR 47606

(September 10, 1997). We are proposing

here to extend the rules’ expiration date

to March 31, 2002, so that they will

remain in force while we complete our

reexamination of the rules.

We have set a ten-day comment

period so that we can publish a final

decision on this proposal before the

rules’ current expiration date. Our

advance notice of proposed rulemaking

and our supplemental advance notice of

proposed rulemaking have given

interested persons an opportunity to

comment on whether the rules should

be maintained.

The CRS Business

Four firms provide CRS services in

the United States. Three of them are

owned in whole or part by one or more

U.S. or foreign airlines, and the two

systems with little or no airline

ownership are marketed by one or more

U.S. airlines. A CRS provides

information on airline services and

other travel services sold through the

system to its users. While most system

users are travel agents (both traditional

agencies and on-line agencies),

consumers using Internet reservations

services and corporate travel

departments also use systems. Someone

using a CRS can investigate what airline

seats and fares are available and can

book a seat on each airline that

Federal Register / Vol. 66, No. 46 / Thursday, March 8, 2001 / Proposed Rules 13861

‘‘participates’’ in the system, that is, that

makes its services saleable through the

CRS. Travel agents access a CRS through

computer terminals.

The systems obtain most of their

revenues from the fees paid by airlines

and other travel suppliers participating

in a system when a system user books

travel services through the system or

changes an existing booking (these fees

are called ‘‘booking fees’’). Many, but

not all, travel agencies subscribing to a

system also pay fees. Since the systems

compete for subscribers, market forces

discipline subscriber fees, and some

travel agencies can obtain CRS

equipment and services at little or no

charge.

Regulatory Background

The Civil Aeronautics Board (‘‘the

Board’’), the agency formerly

responsible for the economic regulation

of the airline industry, initially adopted

CRS rules because the systems had

become essential for airline distribution

in the early 1980s due to the travel

agents’ reliance on the systems for

investigating and booking airline

services. 49 FR 32540 (August 15, 1984).

At that time each system operating in

the United States, with one minor

exception, was owned by a single

airline, and each owner airline used its

system to prejudice competing airlines

and to give consumers biased or

incomplete information in order to

obtain more bookings. The Board found

that regulations were essential to keep

the systems from substantially injuring

airline competition and from misleading

consumers. In adopting its regulations

the Board primarily relied on its

authority under section 411 of the

Federal Aviation Act, later recodified as

49 U.S.C. 41712, to prevent unfair

methods of competition and unfair and

deceptive practices in air transportation

and the sale of airline transportation.

The Board’s rules were affirmed on

review. United Air Lines v. CAB, 766

F.2d 1107 (7th Cir. 1985).

The Board’s major rules required each

system to make participation available

to all airlines on non-discriminatory

terms, to offer at least one unbiased

display, and to make available to each

airline participant any marketing and

booking data from bookings for

domestic travel that it chose to generate

from its system. The rules also

prohibited certain CRS contract terms

that unreasonably limited the travel

agencies’ ability to switch systems or

use more than one system.

To ensure that the rules would be

reexamined, the Board’s rules contained

a sunset date, December 31, 1990. After

we assumed the Board’s responsibilities

for airline economic regulation, we

conducted such a reexamination. During

our reexamination we maintained the

rules by extending their expiration date.

55 FR 53149 (December 27, 1990); 56 FR

60915 (November 29, 1991); 57 FR

22643 (May 29, 1992).

Our reexamination caused us to

readopt the rules with several revisions

designed to strengthen them. 57 FR

43780 (September 22, 1992). We

determined that the rules were still

necessary. Market forces did not

discipline the price or level of service

offered participating airlines by the

systems. In addition, without rules CRS

owners could use their control of the

systems to prejudice airline

competition, and the systems could bias

their displays of airline services. 57 FR

at 43783–43787.

Like the Board’s rules, our rules

included a sunset date, December 31,

1997. 14 CFR 255.12; 57 FR at 43829–

43830 (September 22, 1992). To begin

our current reexamination of the rules,

we published an advance notice of

proposed rulemaking requesting

comments on whether we should

readopt the rules and, if so, whether

they should be changed. 62 FR 47606

(September 10, 1997). We then amended

the rules twice to further promote

competition. 62 FR 59784 (November 5,

1997); 62 FR 66272 (December 18,

1997). Last year we published a

supplemental advance notice of

proposed rulemaking that asked the

parties to update their comments in

light of recent developments and to

comment on whether any rules should

be adopted regulating the use of the

Internet in airline distribution. 65 FR

45551 (July 24, 2000).

We have also been conducting

informal studies of recent developments

in airline distribution and of the

proposed business plan and operational

strategy of Orbitz, a travel website being

developed by five major U.S. airlines.

Almost all of the parties responding to

our advance notice of proposed

rulemaking and supplemental advance

notice of proposed rulemaking urged us

to maintain CRS rules, although they

also argued that the rules required

changes, mostly changes that would

strengthen them. Few parties have

argued that we should eliminate the

rules or that the continued regulation of

the CRS business is unnecessary. An

extension of the current rules pending

completion of the current reexamination

of those rules would be consistent with

the positions taken by most of the

commenters.

Previous Extension of the Rules’ Sunset

Date

Because we could not complete our

reexamination of the rules by the

original sunset date, December 31, 1997,

we have amended the rules three times

to extend them, first to March 31, 1999,

then to March 31, 2000, and then to

March 31, 2001. 62 FR 66272 (December

18, 1997); 64 FR 15127 (March 30,

1999); and 65 FR 16808 (March 30,

2000). We concluded that these

extensions were necessary to prevent

the harm that would arise if the CRS

business were not regulated and that

extending the rules would not impose

substantial costs on the industry. The

only party that commented on the first

proposed extension—America West

Airlines—supported it, as did three

parties that commented on the second

proposed extension—Amadeus Global

Distribution System, America West, and

the Association of Asia-Pacific Airlines.

Worldspan’s comment on the second

proposed extension did not oppose the

extension. The parties that took a

position on the last proposed extension

—Delta, Amadeus, Worldspan, and the

American Society of Travel Agents —all

supported the proposal.

Our Proposed Extension of the CRS

Rules

We are again proposing to change the

expiration date for our CRS rules to

March 31, 2002, to keep the rules in

effect while we complete our

reexamination of the need for the rules

and their effectiveness. The time needed

to complete our overall reexamination

of our rules, including the need to give

parties an adequate opportunity to file

comments and reply comments in

response to our future notice of

proposed rulemaking, will require more

time than the few months remaining

before the current expiration date,

March 31, 2001. In addition, we wish to

complete our informal studies of airline

distribution developments before we

determine whether to propose

readopting the rules.

We are aware that the delay in

completing the rules’ reexamination is

unfortunate due to the importance of

adapting our rules on CRS operations to

current industry conditions and of

considering whether the rules should be

extended to the Internet, which is

becoming increasingly important in

airline distribution. We have had to

address other airline competition issues

that appeared to be more urgent. While

the current rules should be updated,

they do appear to address the most

serious potential competitive and

consumer protection issues created by

13862 Federal Register / Vol. 66, No. 46 / Thursday, March 8, 2001 / Proposed Rules

the use of computer reservations

systems in airline distribution.

We have taken steps to enable us to

move forward promptly on the rules’

reexamination. As noted, we issued a

supplemental notice last year asking the

parties to update their comments in

light of recent developments, including

the Internet’s growing importance in

airline distribution. We are also

completing our informal studies of

airline distribution.

A number of parties have requested

prompt action on certain additional CRS

regulations, such as rules limiting

airline booking fees and giving travel

agency subscribers additional rights to

cancel CRS contracts. See, e.g., the

petition filed by America West on

airline booking fees; the Emergency

Petition for Rulemaking filed by the

Association of Retail Travel Agents in

Docket OST–98–4775 on travel agency

contracts; and the petition filed by

Amadeus in Docket OST–99–5888 on

the tying of an airline’s corporate

discount fares with the agency’s use of

that airline’s CRS. As indicated, we are

also studying Orbitz, since we have

received a number of informal

complaints that its proposed plan of

operation would undermine the current

distribution system. We recognize that

the importance of some issues, such as

our review of Orbitz, may require us to

decide them before we complete our

overall reexamination of the rules.

We tentatively conclude that we

should amend the rules to change the

sunset date from March 31, 2001, to

March 31, 2002. This amendment would

preserve the status quo until we

determine which rules, if any, should be

adopted. Allowing the current rules to

expire would be disruptive, since the

systems, airlines, and travel agencies

have been conducting their operations

in the expectation that each system will

comply with the rules. Systems,

airlines, and travel agencies, moreover,

would be unreasonably burdened if the

rules were allowed to expire and we

later determined that those rules (or

similar rules) should be adopted, since

they could have changed their business

methods in the meantime.

Our principal reason for extending the

rules is the need to protect airline

competition and consumers against

unreasonable and unfair practices. Our

past examinations of the CRS business

and airline marketing convinced us that

CRSs were still essential for the

marketing of the services of almost all

airlines. 57 FR 43780, 43783–43784

(September 22, 1992). We found that

rules were needed because the airlines

depended on travel agencies as their

principal distribution arm, because

travel agencies relied on CRSs, because

most travel agency offices used only one

CRS, because creating alternatives for

CRSs and getting travel agencies to use

them had been difficult, and because

non-owner airlines were unable to cause

agencies to use a CRS that provided

airlines better or less expensive service

instead of another that provided poorer

or more expensive service. 57 FR at

43783–43784, 43831. If an airline did

not participate in a system used by a

travel agency, that agency was less

likely to book its customers on that

airline. Since marginal revenues are

important in the airline industry, an

airline could not afford to lose access to

a significant source of revenue. An

airline (or other firm) could not

practicably create a system that could

compete with the existing systems.

Almost all airlines therefore had to

participate in each CRS, and CRSs did

not need to compete for airline

participants. 57 FR at 43783–43784.

We believe that these findings are still

valid. Travel agencies still make most

airline bookings in the United States,

travel agencies still rely heavily on CRSs

to determine what airline services are

available and to make bookings, and few

travel agency offices make extensive use

of more than one CRS. That CRS

participation is essential for almost all

airlines is demonstrated by the decision

of the low-fare airlines to participate in

each system, even though several

initially believed that they could reduce

their costs while not forfeiting much

traffic by declining to participate in the

systems. 62 FR at 47608. The rapid

growth in the use of the Internet by

consumers may not reduce the

importance of the systems, for Internet

sites (except many airline sites)

typically use a system as their booking

engine.

We recognize, of course, that Sabre no

longer has any airline owner, due to

American’s spin-off of its Sabre stock,

and that airlines own less than a quarter

of Galileo’s stock. American and

Southwest market Sabre, however, and

United markets Galileo, so these two

systems each have significant airline

ties which could potentially lead to

deceptive or unfair competitive

practices if our rules expired. Whether

the rules should be readopted in light of

the changes in system ownership is, of

course, an issue that we will consider

carefully in our reexamination of the

rules. 65 FR at 45554, 45556.

As noted above, most of the parties

that responded to the advance notice of

proposed rulemaking and the

supplemental advance notice of

proposed rulemaking stated that the

rules remained necessary, and most of

them urged us to strengthen them

further to protect airlines and travel

agencies against potential abuses by

system owners.

Thus, while our staff has not

completed its current study of the CRS

business and we have not issued a

notice of proposed rulemaking finding

that the rules should be readopted, we

tentatively find that our past findings on

the need for CRS rules are still valid, at

least for the purpose of a short-term

extension of the rules’ expiration date.

Maintaining the current rules will

protect airline competition and

consumers against the injuries that

would otherwise occur, given our earlier

findings on the market power of the

systems and each airline owner’s

potential interest in using its affiliated

CRS to prejudice the competitive

position of other airlines. Continuing

the rules in effect should not impose

significant costs on the systems and

their owners, since they have already

adjusted their operations to comply

with the rules and since the rules do not

impose costly burdens of a continuing

nature on the systems.

Finally, our obligation under section

1102(b) of the Federal Aviation Act,

recodified as 49 U.S.C. 40105(b), to act

consistently with the United States’

obligations under treaties and bilateral

air services agreements further supports

our continuation of the rules. Many of

those bilateral agreements assure the

airlines of each party a fair and equal

opportunity to compete. We have held

that the fair and equal opportunity to

compete includes, among other things, a

right to have an airline’s services fairly

displayed in CRSs. Our rules against

display bias and discriminatory

treatment help to provide foreign

airlines with a fair and equal

opportunity to compete in the United

States. 57 FR at 43791–43792. The

European Union, Canada, and Australia,

for example, have adopted rules

regulating CRS operations that help give

U.S. airlines a fair opportunity to sell

their services in the countries covered

by the rules.

Regulatory Process Matters

Regulatory Assessment

This rulemaking is a nonsignificant

regulatory action under section 3(f) of

Executive Order 12866 and has not been

reviewed by the Office of Management

and Budget under that order. The

proposal is also not significant under

the regulatory policies and procedures

of the Department of Transportation, 44

FR 11034.

Keeping the current rules in force

should not impose significant costs on

Federal Register / Vol. 66, No. 46 / Thursday, March 8, 2001 / Proposed Rules 13863

the systems. They have already taken all

the steps necessary to comply with the

rules’ requirements on displays and

functionality, and complying with those

rules on a continuing basis does not

impose a substantial burden on the

systems. Maintaining the rules will

benefit participating airlines, since

otherwise they could be subjected to

unreasonable terms for participation,

and will benefit consumers, who might

otherwise obtain incomplete or

inaccurate information on airline

services. The rules also contain

provisions that are designed to prevent

abuses in the systems’ competition with

each other for travel agency subscribers.

When we conducted our last major

CRS rulemaking, we included a

tentative economic analysis in our

notice of proposed rulemaking and

made that analysis final when we issued

our final rule. We believe that analysis

remains applicable to our proposal to

extend the rules’ expiration date. As a

result, no new regulatory impact

statement appears to be necessary.

However, we will consider comments

from any party on that analysis before

we make our proposal final.

This rule does not impose unfunded

mandates or requirements that will have

any impact on the quality of the human

environment.

Small Business Impact

The Regulatory Flexibility Act of

1980, 5 U.S.C. 601 et seq., was enacted

by Congress to ensure that small entities

are not unnecessarily and

disproportionately burdened by

government regulations. The act

requires agencies to review proposed

regulations that may have a significant

economic impact on a substantial

number of small entities. For purposes

of this rule, small entities include

smaller U.S. airlines and smaller travel

agencies. Our notice of proposed

rulemaking sets forth the reasons for our

proposed extension of the rules’

expiration date and the objectives and

legal basis for that proposed rule.

Furthermore, maintaining the current

rules will not modify the existing

regulation of small businesses. Our final

rule in our last major CRS rulemaking

contained a regulatory flexibility

analysis on the impact of the rules. As

a result of that analysis, we determined

that this regulation did not have a

significant economic impact on a

substantial number of small entities.

Our analysis appears to be valid for our

proposed extension of the rules’

termination date. Accordingly, we adopt

that analysis as our tentative regulatory

flexibility statement and will consider

any comments filed on that analysis in

connection with this proposal.

The continuation of our existing CRS

rules will primarily affect two types of

small entities, smaller airlines and

travel agencies. To the extent that

airlines can operate more efficiently and

reduce their costs, the rules will also

affect all small entities that purchase

airline tickets, since airline fares may be

somewhat lower than they would

otherwise be, although the difference

may be small.

Continuing the rules will protect

smaller non-owner airlines from several

potential system practices that could

injure their ability to operate profitably

and compete successfully. No smaller

airline has a CRS ownership interest.

Market forces do not significantly

influence the systems’ treatment of

airline participants. As a result, if there

were no rules, the systems’ airline

owners could use them to prejudice the

competitive position of other airlines.

The rules provide important protection

to smaller airlines. For example, by

prohibiting systems from ranking and

editing displays of airline services on

the basis of carrier identity, they limit

the ability of each system to bias its

displays in favor of its owner airlines

and against other airlines. The rules also

prohibit charging participating airlines

discriminatory fees. The rules, on the

other hand, impose no significant costs

on smaller airlines.

The CRS rules affect the operations of

smaller travel agencies, primarily by

prohibiting certain CRS practices that

could unreasonably restrict the travel

agencies’ ability to use more than one

system or to switch systems. The rules

prohibit CRS contracts that have a term

longer than five years, give travel

agencies the right to use third-party

hardware and software, and prohibit

certain types of contract clauses, such as

minimum use and parity clauses, that

restrict an agency’s ability to use

multiple systems. By prohibiting

display bias based on carrier identity,

the rules also enable travel agencies to

obtain more useful displays of airline

services.

Our proposed rule contains no direct

reporting, record-keeping, or other

compliance requirements that would

affect small entities. There are no other

federal rules that duplicate, overlap, or

conflict with our proposed rules.

Interested persons may address our

tentative conclusions under the

Regulatory Flexibility Act in their

comments submitted in response to this

notice of proposed rulemaking.

I certify under section 605(b) of the

Regulatory Flexibility Act (5 U.S.C. et

seq.) that this regulation will not have

a significant economic impact on a

substantial number of small entities.

Paperwork Reduction Act

This proposal contains no collectionof-information requirements subject to

the Paperwork Reduction Act, Public

Law No. 96–511, 44 U.S.C. Chapter 35.

Federalism Assessment

This proposed rule has been reviewed

in accordance with the principles and

criteria contained in Executive Order

13132, dated August 4, 1999, and it has

been determined that this action does

not have a substantial direct effect on

the States, on the relationship between

the national government and the States,

or on the distribution of power and

responsibilities among the various

levels of government. This proposed

rule will not limit the policymaking

discretion of the States. Nothing in this

proposal would directly preempt any

State law or regulation. We are

proposing this amendment primarily

under the authority granted us by 49

U.S.C. 41712 to prevent unfair methods

of competition and unfair and deceptive

practices in the sale of air

transportation. We believe that the

policy set forth in this proposed rule is

consistent with the principles, criteria,

and requirements of the Federalism

Executive Order and the Department’s

governing statute. Comments on these

conclusions are welcomed and should

be submitted to the docket.

List of Subjects in 14 CFR Part 255

Air carriers, Antitrust, Consumer

protection, Reporting and recordkeeping

requirements, Travel agents.

Accordingly, the Department of

Transportation proposes to amend 14

CFR Part 255 as follows:

PART 255—[AMENDED]

1. The authority citation for Part 255

continues to read as follows:

Authority: 49 U.S.C. 40101, 40102, 40105,

40113, 41712.

2. Section 255.12 is revised to read as

follows:

§ 255.12 Termination.

The rules in this part terminate on

March 31, 2002.

Issued in Washington, DC on March 2,

2001, under authority delegated by 49 CFR

1.56a(h)2.

Susan McDermott,

Deputy Assistant Secretary for Aviation and

International Affairs.

[FR Doc. 01–5666 Filed 3–7–01; 8:45 am]

BILLING CODE 4910–62–P