Document ID: DOT-OST-2001-9325-1292
Agency: dot
Document Type: Notice
Title: Oversales and Denied Boarding Compensation (NPRM)
Posted Date: 2007-11-15T05:00Z

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 [INSERT DATE THAT IS SIXTY DAYS AFTER
PUBLICATION IN THE FEDERAL REGISTER.]  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   HYPERLINK
"http://www.regulations.gov"  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 9:00 a.m. and 5:00 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   HYPERLINK "http://www.regulations.gov" 
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   HYPERLINK
"http://DocketsInfo.dot.gov"  http://DocketsInfo.dot.gov .

Docket:  For access to the docket to read background documents or
comments received, go to   HYPERLINK "http://www.regulations.gov" 
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, D.C., 20590,
202-366-5952 (voice), 202-366-5944 (fax),   HYPERLINK
"mailto:tim.kelly@dot.gov"  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 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:

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.

If there are not enough volunteers, the airline must use
non-discriminatory procedures (‘boarding priorities’) in deciding
who is to be bumped involuntarily.

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.

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.

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.

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.

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. 
(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).  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 $400 in 1978 was
worth $128 as of February 2007 ($125 as of October 2007).  See the
Bureau of Labor Statistics Inflation Calculator at   HYPERLINK
"http://www.bls.gov/cpi/home.htm"  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.

― 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.

― 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 inventory-management 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.

ernational ― 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.

ts, 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, system-wide 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 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, 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 regional-carrier 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. 

ttle, 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 non-certificated
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
low-fare 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 US 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
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 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

r revenues ― currently 20 airlines (see 14 CFR 234).  For a current
list of these carriers, see the Department’s Air Travel Consumer
Report at   HYPERLINK "http://airconsumer.ost.dot.gov/reports/index.htm"
 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 ATCT-reported 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
“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 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 record keeping 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

14 CFR Part 250-[AMENDED]

   Air carriers, Consumer protection, Reporting and recordkeeping
requirements.

Authority: 49 U.S.C. chapters 401, 411, 413, 417.

For the reasons set forth in the preamble, we propose to amend 14 CFR
Part 250 as follows:

1.	The definition of “Carrier” contained in Section 250.1 would be
revised to read as follows:

	§250.1  Definitions.

	*	*	*	*	*

Carrier means (a) 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
(b) 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.

	*	*	*	*	*

The definition of “Large aircraft” contained in Section 250.1 would
be deleted.

Section 250.2 would be 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 (1) interstate air
transportation or (2) foreign air transportation with respect to nonstop
flight segments originating at a point within the United States.

Section 250.2b(b) would be revised by deleting the last sentence of that
subparagraph and adding as a first sentence to that subparagraph the
following:

§ 250.2b  Carriers to request volunteers for denied boarding.

	*	*	*	*	*

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.

Section 250.3(b) would be revised 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.

Section 250.5(a) would be 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.

	*	*	*	*	*

Section 250.9(b) would be 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.)

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

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  However, the passenger may decline the payment and seek to recover
damages in a court of law or in some other manner.

In the first sentence of section 250.10, the word “carrier” would be
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.”

Section 250.11(a) would be 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 ___ 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          DAY OF                 , 2007,  AT WASHINGTON D.C.

				__________________________

				Michael W. Reynolds

				Deputy Assistant Secretary for Aviation and International Affairs

 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.

 This 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.

 See www.raa.org.

 DOT Form 41, schedule T-100.

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