Document ID: DOT-OST-2016-0208-0007
Agency: dot
Document Type: Proposed Rule
Title: Refunding Baggage Fees for Delayed Checked Bags
Posted Date: 2016-10-31T04:00Z

[Federal Register Volume 81, Number 210 (Monday, October 31, 2016)]
[Proposed Rules]
[Pages 75347-75349]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26199]

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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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  Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / 
Proposed Rules  

[[Page 75347]]

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 259

[Docket No. DOT-OST-2016-0208]
RIN 2105-AE53

Refunding Baggage Fees for Delayed Checked Bags

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

ACTION: Advance notice of proposed rulemaking (ANPRM).

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SUMMARY: The Department of Transportation (DOT or Department) is 
soliciting public comment and feedback on various issues related to the 
requirement for airlines to refund checked baggage fees when they fail 
to deliver the bags in a timely manner, as provided by the FAA 
Extension, Safety, and Security Act of 2016.

DATES: Comments should be filed by November 30, 2016. Late-filed 
comments will be considered to the extent practicable.

ADDRESSES: You may file comments identified by the docket number DOT-
OST-2016-0208 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., Washington, DC, 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-2016-0208 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 and 
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: Clereece Kroha, Senior Trial Attorney, 
Office of the Assistant General Counsel for Aviation Enforcement and 
Proceedings, U.S. Department of Transportation, 1200 New Jersey Ave. 
SE., Washington, DC 20590, 202-366-9342 (phone), 202-366-7152 (fax), 
clereece.kroha@dot.gov (email).

SUPPLEMENTARY INFORMATION: The Department of Transportation (DOT or 
Department) is seeking comment on the appropriate means to implement a 
requirement in recent legislation for airlines to refund checked 
baggage fees when they fail to deliver the bags in a timely manner. 
Specifically, the Department seeks comment on how to define a baggage 
delay, and the appropriate method for providing the refund for delayed 
baggage.

Background

    On April 25, 2011, the Department of Transportation published its 
second Enhancing Airline Passenger Protections final rule that 
requires, among other things, that U.S. and foreign air carriers adopt 
and adhere to a customer service plan that addresses various consumer 
issues. See 76 FR 23110 (April 25, 2011). In the proposal preceding 
that final rule, the Department solicited comments on whether we should 
include as standards: (1) That carriers reimburse passengers the fee 
charged to transport a bag if that bag is lost or not timely delivered, 
and (2) the time when a bag should be considered not to have been 
timely delivered (e.g., delivered on same or earlier flight than the 
passenger, delivered within 2 hours of the passenger's arrival). After 
reviewing the comments received, we adopted in the final rule a 
customer service standard that requires carriers to reimburse 
passengers for any fee charged to transport a bag if the bag is lost. 
We decided to not require carriers to reimburse passengers for any fee 
charged to transport a bag that is not timely delivered. In making this 
determination, we stated that, as is the case with transporting 
passengers, while delay in receiving baggage may be inconvenient, once 
the carrier delivers a bag, the service has been performed. We 
clarified that although not required to refund baggage fees in the case 
of delayed delivery of a checked bag, carriers must comply with the 
Department's baggage liability rule, 14 CFR part 254, and applicable 
international agreements, to compensate passengers for direct or 
consequential damages resulting from the delay in delivering of 
luggage, up to the limits set by the rule and the agreements.
    Baggage fees, along with other ancillary fees, have become an 
increasingly important component of the airline industry's revenue 
structure. According to data from the Department's Bureau of 
Transportation Statistics (BTS), the top 13 U.S. carriers collectively 
generated over $3.8 billion in revenue in 2015 from baggage fees.\1\ 
While we have no doubt that airlines continue to invest in baggage 
handling infrastructure and technology to improve the efficiency and 
quality of their services, we also realize that baggage delays do occur 
and affect many consumers on a daily basis. Data from the Department's 
Air Travel Consumer Report demonstrate that, in 2015, the 13 largest 
U.S. carriers received close to 2 million mishandled baggage reports 
from passengers for their domestic scheduled flights.\2\ Although these 
mishandled baggage reports also include reports of lost, damaged, and 
pilfered

[[Page 75348]]

baggage in addition to delayed baggage, this figure suggests that the 
number of delayed baggage incidents is likely significant.\3\ Since the 
issuance of the 2011 final rule in which the Department decided not to 
require airlines to refund baggage fees for delayed bags, many 
consumers and consumer rights advocacy groups have voiced their opinion 
that airlines should be required to refund checked baggage fees if they 
fail to deliver bags on time.
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    \1\ Source: Baggage Fees by Airline 2015, Bureau of 
Transportation Statistics, Office of the Assistant Secretary for 
Research and Technology, updated on May 2, 2016. https://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/subject_areas/airline_information/baggage_fees/html/2015.html.
    \2\ Source: Air Travel Consumer Report, February 2016 Edition, 
Page 31. https://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/subject_areas/airline_information/baggage_fees/html/2015.html. The 
Department does not collect information on mishandled baggage for 
international flights.
    \3\ The mishandled baggage data as reported to the Department is 
based on the number of mishandled baggage reports received from 
passengers by the reporting carriers. Each report may involve more 
than one piece of mishandled baggage.
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    This matter has also caught the attention of the Congress. In 2016, 
both the Senate and the House of Representatives included in their 
Federal Aviation Administration reauthorization bills a provision to 
require the Department to issue a rule that mandates refunds of baggage 
fees for delayed bags.\4\ On July 15, 2016, the President signed into 
law the FAA Extension, Safety, and Security Act of 2016 (``FAA 
Extension Act'' or ``Act'') which includes a requirement for the 
Department to issue a rule mandating that airlines provide automated 
refunds to passengers for any fee charged to transport a bag if the bag 
is delayed.\5\
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    \4\ Sec. 3109, Federal Aviation Administration Reauthorization 
Act of 2016, S. 2658, 114th Cong. (2015-2016); Sec. 507, Aviation 
Innovation, Reform, and Reauthorization Act of 2016, H.R. 4441, 
114th Cong. (2015-2016).
    \5\ See, FAA Extension, Safety, and Security Act of 2016, Public 
Law 114-190, July 15, 2016.
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Defining a Baggage Delay

    Section 2305 of the FAA Extension Act provides that the Department 
shall issue a final rule within one year of the enactment of the Act 
that requires U.S. and foreign carriers to promptly provide an 
automated refund for any ancillary fees paid by the passenger for 
checked baggage if the carriers fail to deliver the bag to passengers 
within 12 hours of arrival for domestic flights and within 15 hours of 
arrival for international flights, if the passenger notifies the 
carrier about the delayed or lost baggage. The Act also allows the 
Department to extend these timeframes to up to 18 hours for domestic 
flights and up to 30 hours for international flights, if the Department 
determines that the 12-hour or 15-hour standards are not feasible and 
would adversely affect consumers in certain cases.
    Each delayed bag affects an individual passenger's travel 
experience, resulting in inconvenience and other harms. The Department 
is seeking comments from all stakeholders in order to determine how to 
implement section 2305 of the Act so the mandated regulation would best 
achieve Congress' and the Department's goal of mitigating the 
inconvenience and harm to consumers caused by delayed baggage.
    DOT is seeking comment to help it determine the appropriate length 
of delay within the statutory parameters that would trigger the refund 
requirement. As stated above, the Act provides that a refund should be 
issued to passengers if the carrier fails to deliver the checked 
baggage to the passenger not later than 12 hours after the arrival of a 
domestic flight, or not later than 15 hours after the arrival of an 
international flight. The Act also authorizes the Department to extend 
these timeframes to up to 18 hours for domestic flights and 30 hours 
for international flights if the Secretary determines that the 12-hour 
or 15-hour standards are infeasible and would ``adversely affect 
consumers in certain cases.'' The Department invites public input on 
the 12 and 15 hour standards prescribed in the Act as well as any other 
standards within the statutory parameters, which are for domestic 
flights between 12 and 18 hours after the flight's arrival and for 
international flights between 15 and 30 hours after the flight's 
arrival. The Department seeks comment on why a particular length of 
time within this timeframe would be more appropriate than other times.
    The Department also seeks comment on how the rule should deal with 
a passenger itinerary that consists of an international flight 
connecting to a domestic flight. Is there a reason that this itinerary 
should be considered an international flight within the meaning of the 
statute, or does the final domestic flight cause the passenger to be 
treated as domestic for purposes of the statute and rule? Is there a 
reason to distinguish between a standard interline (i.e., multiple-
carrier) connection on a single ticket and a connection constructed by 
the passenger using two tickets (e.g., where the carriers do not 
interline with each other)?
    We solicit comments on the ways in which standard industry practice 
for baggage interlining and mishandled baggage may affect the mandated 
rule. For example, the last carrier on an interline itinerary is 
generally responsible for handling a mishandled-baggage report to 
conclusion, but on a baggage delay on an interline trip this will 
generally not be the carrier to whom the passenger paid the baggage 
fee.
    In addition to situations, such as interline, in which there are 
multiple entities involved in the transportation of bags, there are 
also situations in which there are multiple entities involved in the 
transactions of bag fees. Specifically, although not a common practice 
among most carriers, there are instances in which a carrier authorizes 
a ticket agent, by contractual agreement, to collect baggage fees from 
the ticket agent's customers on behalf of the carrier. To the extent an 
entity other than the carrier is involved in collecting baggage fees, 
we seek comments on who should be held responsible to refund the bag 
fees for delayed bags. Should we hold both entities responsible? Based 
on the structure of the agreement between the two entities, and common 
business practice, what is the best way to ensure that bag fees are 
refunded in a timely manner and to avoid passengers being sent back and 
forth between two entities to determine which entity is responsible?
    As the statute gives the Department some flexibility to modify the 
length of delay taking into consideration feasibility and any negative 
impact on consumers, we construe the statute's use of the phrase ``in 
certain cases'' to mean that Congress intends to provide the Department 
the flexibility to differentiate the length of delay that triggers a 
refund based on certain circumstances, if appropriate, instead of 
applying one standard to all domestic flights, and another standard to 
all international flights, if the Department determines this is 
appropriate. In that regard, in addition to domestic versus 
international flights, is there a reason that the rule should establish 
a secondary set of criteria, such as the flight duration and/or the 
frequency of service in question? Is the frequency of the operation by 
the transporting carrier or all carriers that operate on the same route 
relevant to defining the delay? Since some international flights are 
short haul flights (e.g., trans-border flights), and some domestic 
flights can last for over 10 hours (e.g., New York to Honolulu), should 
we instead tier the delay standard based on the length of the 
passenger's flight(s)?
    DOT is also seeking comment on how to determine when the clock 
stops running for purposes of measuring the delay. The Act provides 
that the 12 hour and 15 hour clock stops when the carrier ``delivers 
the checked baggage to the passenger.'' Sometimes, a passenger may stay 
at the arrival airport and wait for the delayed baggage if the delay is 
likely to be within a few hours. However, when the delay goes beyond a 
certain point, the industry's common practice is to deliver the bags to 
the passenger's residence or a designated location requested by the 
passenger. In

[[Page 75349]]

some cases, the passengers may choose to receive notice when their bags 
arrive and pick up the bags at the carrier's baggage office at the 
destination airport. How should we determine that the bags have been 
``delivered'' to the passenger and therefore stop the clock from 
running in each of these situations?
    DOT seeks comment on the number of bags that are delayed annually 
based on the 12 and 18 hour and 15 and 30 hour statutory timeframes, 
and lost bags. The Department receives information on the number of 
mishandled-baggage reports filed by passengers, but we do not have data 
on how many of these are delayed bags, and how many are lost. 
Information on the number of delayed and lost bags that would be 
affected by this rulemaking would help the Department to better 
estimate the impact this rule would have on consumers and airlines.

Method for Refunding Delayed Baggage

    The Department is also seeking comment on the appropriate method 
for providing a refund for delayed baggage. The Department's credit 
card refund regulation, 14 CFR part 374, implements the Consumer Credit 
Protection Act and Regulation Z of the Board of Governors of the 
Federal Reserve System, 15 U.S.C. 1601-1693r and 12 CFR part 226 
(Regulation Z) with respect to air carriers and foreign air carriers. 
It states that when refunds are due on purchases with a credit card, a 
carrier must transmit a credit statement to the credit card issuer 
within seven business days of receipt of full documentation for the 
refund requested. In addition, the Department requires that, with 
respect to purchases with forms of payment other than credit cards, an 
airline must provide a refund within 20 days of receipt of full 
documentation of such a request. See 14 CFR 259.5(b)(5). The Department 
applies these refund standards to all refunds that are due to 
consumers, including airfare refunds and ancillary fee refunds. In 
order to receive a refund under Regulation Z, a consumer must request 
the refund from the carrier and provide all necessary supporting 
documents. In contrast, the Act states that carriers should ``promptly 
provide an automated refund'' to an eligible passenger when the 
carriers fail to meet the applicable time limit in delivering the 
checked bag, and the passenger has notified the carrier of the lost or 
delayed checked baggage. Under the Act, an ``automated refund'' should 
be issued to passengers as long as the delay has met the threshold 
timeframe and the passenger has notified the carrier about the delayed 
or lost bag. In that regard, we view the delayed baggage fee refund 
provision in the FAA Extension Act differently from Regulation Z in 
that the Act only requires a passenger to notify the carrier that a bag 
is delayed or lost, and there is not a requirement for the passenger to 
request a refund for the baggage fee. We emphasize that since the Act's 
automated refund requirement covers all bags that are delayed for more 
than a set number of hours, it will also cover ``lost bags,'' refunding 
fees charged for which is already required by 14 CFR 259.5(b)(3).\6\ As 
such, both bags delayed for more than the set number of hours and bags 
that are considered ``lost'' would be eligible for an automated refund.
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    \6\ We have not defined ``lost'' for purposes of 14 CFR 
259.5(b)(3) mandating a refund of the baggage fee for lost bags. 
Instead, in a Frequently Asked Questions document issued by the 
Department's Office of Aviation Enforcement and Proceedings, that 
office states that if a carrier unreasonably refuses to consider a 
bag to be lost after it has been missing for a considerable period 
of time, it could be subject to enforcement action for violating the 
statutory prohibition against unfair and deceptive practices. See, 
Answers to Frequently Asked Questions Concerning the Enforcement of 
the Second Final Rule on Enhancing Airline Passenger Protections 
(EAPP #2), last updated May 8, 2015, https://www.transportation.gov/sites/dot.gov/files/docs/EAPP_2_FAQ_2_0.pdf.
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    The Department seeks comment on whether prescribing a specific 
mechanism for the carriers to use to provide the statutorily required 
automated refund would negatively or positively impact carriers and 
consumers. What procedures would be necessary on interline itineraries, 
for which the carrier to whom the passenger reports the delayed bag at 
his or her destination or stopover is not the carrier to whom the 
passenger had paid the baggage fee? In addition to soliciting comment 
on all of the issues and concerns identified above, we also welcome and 
any other information relevant to this issue. This specifically 
includes comments and data on the cost impact on new-entrant carriers 
(many of whom do not have interline agreements) of the time standard 
developed in this proceeding, and the cost impact on regional airlines.

    Issued this 18th day of October, 2016, in Washington, DC.
Anthony R. Foxx,
Secretary of Transportation.
[FR Doc. 2016-26199 Filed 10-28-16; 8:45 am]
 BILLING CODE 4910-9X-P