
[Federal Register Volume 78, Number 189 (Monday, September 30, 2013)]
[Proposed Rules]
[Pages 59880-59890]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-23142]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 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.
 
 ========================================================================
 

  Federal Register / Vol. 78, No. 189 / Monday, September 30, 2013 / 
Proposed Rules  

[[Page 59880]]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Parts 295 and 298

[Docket No. DOT-OST-2007-27057]
RIN 2105-AD66


Enhanced Consumer Protections for Charter Air Transportation

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

ACTION: Notice of Proposed Rulemaking (NPRM).

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SUMMARY: The U.S. Department of Transportation (Department) seeks 
comment on four new proposals to strengthen the legal protections 
provided to consumers of charter air transportation. First, this 
proposal would require air taxis and commuter air carriers that sell 
charter air transportation but rely on others to perform that air 
transportation to make certain consumer disclosures as recommended by 
the National Transportation Safety Board (NTSB). This proposal would 
also create a new class of indirect air carriers to be called ``air 
charter brokers'' to provide as principals single entity charter air 
transportation of passengers aboard large and small aircraft. In 
addition, this NPRM would codify the exemption authority granted to 
indirect air carriers to engage in the sale of air transportation 
related to air ambulance services. Finally, the NPRM would make clear 
and codify that certain air services performed under contract with the 
Federal Government are in common carriage.

DATES: Interested persons are invited to submit comments regarding this 
proposal. Comments must be received on or before November 29, 2013.

ADDRESSES: You may file comments identified by the docket number DOT-
OST-2007-27057 by any of the following methods:
    [cir] Federal Rulemaking Portal: go to http://www.regulations.gov 
and follow the online instructions for submitting comments.
    [cir] 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.
    [cir] 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.
    [cir] Fax: (202) 493-2251.
    Instructions: You must include the agency name and docket number 
DOT-OST-2007-27057 or the Regulatory Identification Number (RIN) for 
the rulemaking at the beginning of your comment. All comments received 
will be posted without change to http://www.regulations.gov, including 
any personal information provided.
    Privacy Act: Anyone is able to search the electronic form of all 
comments received in any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.) You may review DOT's 
complete Privacy Act statement in the Federal Register published on 
April 11, 2000 (65 FR 19477-78), or you may visit http://DocketsInfo.dot.gov.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov or to the street 
address listed above. Follow the online instructions for accessing the 
docket.

FOR FURTHER INFORMATION CONTACT: Jonathan Dols, Deputy Assistant 
General Counsel, Office of Aviation Enforcement and Proceedings, 
Department of Transportation, 1200 New Jersey Avenue SE., Room W98-312, 
Washington, DC 20590, (202) 366-9342, jonathan.dols@dot.gov. You may 
also contact Lisa Swafford-Brooks, Chief, Aviation Licensing and 
Compliance Branch, Office of Aviation Enforcement and Proceedings, 
Department of Transportation, 1200 New Jersey Avenue SE., Room W98-304, 
Washington, DC 20590, (202) 366-9342, lisa.swaffordbrooks@dot.gov.

SUPPLEMENTARY INFORMATION: The U.S. Department of Transportation (DOT) 
is issuing this notice of proposed rulemaking (NPRM) to improve the air 
travel environment for consumers of single entity charter air 
transportation based on its statutory authority to license entities 
engaging in air transportation, 49 U.S.C. 41101, and its statutory 
authority to prohibit unfair and deceptive practices in air 
transportation, 49 U.S.C. 41712. First, the Department is taking action 
to protect consumers by ensuring that consumers of single entity 
charter air transportation have adequate information about the operator 
of chartered aircraft and by enumerating certain prohibited unfair and 
deceptive practices by air taxis and commuter air carriers. Second, 
also to protect consumers, the Department is creating a new class of 
indirect air carriers called air charter brokers and establishing 
required disclosures and enumerating certain prohibited unfair and 
deceptive practices for this class. Third, the Department is codifying 
a 1983 Civil Aeronautics Board order granting exemption authority to 
indirect air carriers that provide air ambulance services. Fourth, the 
Department is clarifying that the contracting for air transportation 
with the Federal government under a GSA Schedule involves common 
carriage operations.

----------------------------------------------------------------------------------------------------------------
                           Subject                                               Proposed rule
----------------------------------------------------------------------------------------------------------------
1. NTSB Recommendation......................................  Requires air taxis and commuter air carriers that
                                                               sell charter air transportation, but rely on
                                                               others to perform that air transportation, to
                                                               make certain disclosures, including the name of
                                                               the direct air carrier operating the service and
                                                               any other name in which that direct air carrier
                                                               holds itself out to the public.
                                                              Enumerates certain prohibited unfair and deceptive
                                                               practices or unfair methods of competition by air
                                                               taxis registered with the Department and commuter
                                                               air carriers.

[[Page 59881]]

 
2. New Class of Indirect Air Carrier........................  Creates an ``air charter broker'' class of
                                                               indirect air carrier.
                                                              Requires air charter brokers to make certain
                                                               disclosures.
                                                              Enumerates certain prohibited unfair and deceptive
                                                               practices or unfair methods of competition by air
                                                               charter brokers.
3. Air Ambulance Services...................................  Codifies the exemption authority granted in 1983
                                                               to indirect air carriers that provide air
                                                               ambulance services.
4. Air Services Provided Under Contract with the Federal      Clarifies and codifies that certain air services
 Government.                                                   performed under contract with the Federal
                                                               government are in common carriage.
----------------------------------------------------------------------------------------------------------------

A. NTSB Recommendation

    As a result of an aircraft accident that involved, among other 
issues, questions regarding the identity of the operator of the 
aircraft, on August 4, 2006, the National Transportation Safety Board 
(NTSB) recommended that the Department require the following 
information be disclosed to customers and passengers at the time an air 
charter contract is arranged and anytime thereafter if such information 
changes: (1) The name of the company in operational control of the 
aircraft during flight; (2) any other ``doing business as'' names 
contained in the Operations Specifications of the carrier in 
operational control during the flight; (3) the name of the aircraft 
owner; and (4) the names of all brokers involved in arranging the 
flight (available at http://www.ntsb.gov/Recs/letters/2006/A06_43.pdf). In response, on January 26, 2007, the Department issued an 
Advance Notice of Proposed Rulemaking (ANPRM) seeking comment from 
interested parties on the recommendations of the NTSB. We received 23 
comments on this rulemaking.
    Of the 18 comments that touched on the disclosure requirements 
proposed in the ANPRM, 14 supported requiring disclosure of the entity 
in operational control of the aircraft during the flight and seven of 
those comments further supported requiring disclosure of associated 
``doing business as'' names. Only one comment supported disclosing the 
name of the aircraft owner, and that comment suggested that such 
disclosure should be made only ``upon request'' of the person or entity 
contracting for air transportation. According to the commenters, owners 
do not affect the safety of the flight, members of the public might get 
a false sense of security based on the reputation of the owner of the 
aircraft, and owners would be less likely to make aircraft available 
for charter should they not be entitled to privacy. In addition, most 
commenters opposed the disclosure of the aircraft owner and all brokers 
involved in arranging the flight, if different from the entity in 
operational control of the aircraft, primarily on the basis that these 
entities do not affect the safety of the flight. Four comments objected 
to any disclosures.
    Of the 23 comments, 13 addressed the form in which the disclosures 
would be made. Of these, five indicated that verbal notice would be 
sufficient, four indicated that written notice should be required, two 
indicated that the adequacy of verbal notice would be dependent on the 
specific situation, and two indicated that an ``express communication'' 
would be sufficient. ``Express communication'' was not defined.
    Aside from the accident that resulted in the recommendation to the 
Department from the NTSB regarding notice to consumers of the name of 
the operator of an on-demand charter flight, the Department is aware 
that on-demand charter operators often ``broker'' or ``sub-service'' a 
contract for air transportation to another carrier when they are unable 
to perform the service themselves. There are various reasons why this 
may occur. For example, a suitable aircraft may be available when the 
contract for the air service is made with the customer, but may not be 
available due to mechanical or other reasons at the planned departure 
time. In other cases, the carrier may not operate the type of aircraft 
best suited or requested for the flight, but in order not to lose a 
valued customer or new business, the carrier accepts the contract 
knowing it will have to find another carrier to operate the flight.
    It has been the longstanding policy of the Department in other 
contexts that it is an unfair and deceptive practice and unfair method 
of competition for an air carrier or a ticket agent to hold out or sell 
air transportation on one carrier when the service will be performed by 
another carrier. (See 14 CFR Part 257, requiring notice of the 
operating carrier involving scheduled code-share and long-term wet 
lease operations; see also 14 CFR 380.30 and 380.32, requiring that 
public charter participants be told the name of the direct carrier 
operating the charter flight.)
    Consumers deserve to be protected in situations in which direct air 
carriers enter into contracts for air transportation, either (1) 
intending from the outset to ``broker'' or ``sub-service'' that 
contract to be operated by another direct air carrier, or (2) 
subsequent to entering into the contract, out of necessity, needing to 
broker or sub-service that contract to be operated by another direct 
air carrier, regardless of the reason for such action. Accordingly, the 
Department is proposing to amend 14 CFR Part 298 to prohibit air taxis 
and commuter air carriers from soliciting or executing contracts for 
single entity charter air transportation to be performed by another 
carrier without first providing clear and conspicuous written 
disclosure to the person or entity that contracts for that air 
transportation of: (1) The corporate name of the direct air carrier in 
operational control of the aircraft on which the air transportation is 
to be performed and any other names in which that carrier holds itself 
out to the public; (2) the capacity in which the air taxi is acting in 
contracting for the air transportation; (3) the existence of any 
corporate or pre-existing business relationship with the direct air 
carrier that will be in operational control of the aircraft on which 
the air transportation is to be performed; (4) the make and model of 
the aircraft to be used for the air transportation (e.g., Learjet 60 
XR); (5) the total cost of the air transportation, including any 
carrier-imposed fees or government-imposed taxes and fees; and (6) the 
existence of any fees and their amounts, if known, including fuel, 
landing fees, and aircraft parking or hangar fees, charged by third 
parties for which the charterer will be responsible for paying 
directly. If the carrier that is to operate the flight changes after a 
contract is arranged, this NPRM would require that a written notice be 
provided to the charterer within a reasonable time after the carrier 
that contracted with the charter customer learns of the change. A 
``reasonable'' time would be enough time for the consumer to make an 
informed decision as to whether he or she wants to accept the change. 
For

[[Page 59882]]

example, should the carrier to operate the flight change one week 
before the flight date, the Department would find it ``reasonable'' for 
notice to be given within 24 hours of the carrier becoming aware of the 
change. On the other hand, the Department would not find it 
``reasonable'' for notice to be given less than two hours before 
departure in such a circumstance, since that would not give the 
consumer time to make an informed decision as to whether to accept the 
change. At that point, the consumer would already be fully prepared for 
the flight and may in fact already be en route to the airport. The 
Department asks for comments on whether it should set a specific time 
limit, e.g., 24 hours, for such notice to be provided. Moreover, we are 
proposing that the charter customer be entitled to a full refund, at 
his or her option, if reasonable notice is not given as described 
above. We are not proposing to require carriers to obtain confirmation 
from the charter customer of receipt of the notice; however, we ask for 
comment on whether we should require such confirmation and, if so, what 
type of confirmation would be appropriate in any given situation, 
including oral contracts.
    We are also proposing to enumerate certain prohibited unfair and 
deceptive practices or unfair methods of competition by air taxis 
registered and commuter air carriers. We request comment on whether any 
of these practices should not be enumerated in the final rule.
    We wish to make clear that nothing in this proposal is intended to 
authorize a direct air carrier to hold out service as a direct air 
carrier on a specific aircraft, or type of aircraft, that it is not 
authorized to operate by Department and the Federal Aviation 
Administration (FAA). This includes holding out large aircraft services 
when one has authority to operate only small aircraft and holding out 
scheduled services when one has authority to operate only on-demand 
services. Such actions always have been, and remain, a violation of the 
direct air carrier's authority and an unfair and deceptive practice and 
unfair method of transportation. We invite all interested persons to 
comment on the issues raised in this notice. Our final action will be 
based on the comments and supporting evidence filed in this docket and 
on our own analysis.

B. New Class of Indirect Air Carriers

    Air charter brokers are persons or companies that do not currently 
hold DOT economic authority to function either as an indirect air 
carrier or as a direct air carrier, but that arrange air transportation 
services for prospective charter customers (charterers) to be provided 
by direct air carriers. Under current law, since brokers have no 
authority to hold out air transportation in their own right as a direct 
or an indirect air carrier, to comply with existing law they must act 
as the agent of a charterer or the agent of a carrier. Of course, they 
may also act as a true ``middle-person'' and simply facilitate a 
contract directly between the charterer and carrier, but such 
arrangements are, in the Department's experience, the exception rather 
than the rule. The typical air charter broker operating lawfully today 
is, under applicable law, a ``ticket agent.'' A ticket agent is defined 
in 49 U.S.C. 40102(a)(45) as ``a person (except an air carrier, a 
foreign carrier, or an employee of an air carrier or foreign air 
carrier) that as a principal or agent sells, offers for sale, 
negotiates for, or holds itself out as selling, providing, or arranging 
for air transportation.''
    The increased market for business aviation-related air charters, 
primarily using small aircraft, along with the growth of the Internet, 
has, in turn, created a significant growth in the number and role of 
air charter brokers. In today's business aviation market, air charter 
brokers increasingly play a role in marketing air transportation 
services to be operated by direct air carriers and in providing 
charterers with convenient access to thousands of direct air carriers 
and a wide range of aircraft. Air charter brokers also often provide 
charterers with various ancillary services that are not provided by 
most direct air carriers, such as ground transportation, catering 
special meals, and general concierge services. The Department has 
responded to the proliferation of air charter brokers, as described 
more fully below, by conducting considerable industry outreach to make 
clear to air charter brokers that they may not mislead the public about 
their status. In addition, the Department has taken enforcement action 
against a number of air charter brokers found to have engaged in unfair 
and deceptive practices and unfair methods of competition.
    In order to engage directly or indirectly in air transportation of 
passengers, a citizen of the United States is required to hold economic 
authority from the Department pursuant to 49 U.S.C. 41101, or an 
exemption from that statutory requirement, such as those provided by 14 
CFR Part 298 for direct air carriers operating small aircraft, by 14 
CFR Part 296 for indirect air carriers that hold out and sell air 
freight services, and by 14 CFR Part 380 for indirect air carriers that 
hold out and sell public charter passenger flights. Similarly, persons 
or entities that are not U.S. citizens are required to hold economic 
authority under 49 U.S.C. 41301, or an exemption from that statutory 
requirement, such as those provided by 14 CFR Part 294 to Canadian 
charter carriers to operate small aircraft, by 14 CFR Part 297 to 
foreign indirect air carriers to engage in indirect air carriage of 
cargo, and by 14 CFR Part 380 to foreign indirect air carriers to hold 
out and sell public charter passenger flights. Indirect air carriers 
must use direct air carriers that meet the economic licensing 
requirements of the Department and the appropriate safety certification 
requirements of the FAA or, if appropriate, a foreign government 
authority.
    The Department, and its predecessor, the Civil Aeronautics Board 
(CAB), have long sought to permit the marketplace to govern the sale of 
air transportation, provided appropriate consumer protections are in 
place. To this end, the Department has authorized various classes of 
indirect air carriers to engage in air transportation. For example, as 
described above, in 1977, the Department authorized air freight 
forwarders by exemption to engage in indirect air carriage of cargo, 
provided that foreign air freight forwarders first register with the 
Department and that both U.S. and foreign freight forwarders give 
consumers certain important notices, including whether they are acting 
in their individual capacity or as the agent of an airline. (14 CFR 
Parts 296 and 297.) In 1980, with regard to passenger air 
transportation, the CAB implemented 14 CFR Part 380 to authorize a 
class of indirect air carrier called public charter operators to engage 
in charter air transportation on a per-seat basis. Unlike direct air 
carriers, public charter operators are not required to undergo fitness 
determinations examining their financial fitness, managerial 
competence, and compliance disposition. However, public charter 
operators must instead comply with strict requirements set forth in 
Part 380 designed to ensure an adequate level of protection for 
consumers and their funds. In this regard, for example, public charter 
operators may not hold out or sell charter flights without first having 
a contract with a direct air carrier to perform those flights; they 
must have in place comprehensive financial security measures to protect 
passenger deposits; they must adhere to certain contract conditions 
governing important

[[Page 59883]]

provisions, such as flight changes or cancellations and refunds; and 
they must file with and have approved by the Department a prospectus 
covering each flight in their public charter program. In addition, in 
1983, the CAB authorized entities that arranged air ambulance services 
to operate as indirect air carriers to engage in the sale of air 
ambulance services provided that they used direct air carriers holding 
appropriate economic and safety authority. (Order 83-1-36, 99 C.A.B. 
801 (1983))
    The Department also has always believed that accurate, timely, and 
clearly presented information is essential so that consumers can make 
informed decisions about their flight choices. Therefore, the 
Department has had longstanding, comprehensive rules applicable to 
ticket agents, including air charter brokers, that prohibit them from, 
among other things: (1) Misleading the public into believing they are 
air carriers; (2) misleading the public about the qualifications of 
pilots or the safety record or certification of air carriers, aircraft, 
or crew; (3) misleading the public about the quality or kind of 
service, including the size or type of aircraft and route to be flown; 
and (4) selling air transportation without a binding commitment with a 
direct air carrier for that transportation. (14 CFR 399.80.)
    In October 2004, in response to the growth in the air charter 
broker industry and certain problems that accompanied that growth which 
had come to the Department's attention, including the unlawful holding 
out of air transportation by air charter brokers, the Department's 
Office of Aviation Enforcement and Proceedings (Enforcement Office) 
issued a notice providing guidance on the lawful role of air charter 
brokers in providing air transportation. http://airconsumer.ost.dot.gov/rules/BrokerNoticeFinal.pdf. That notice 
reminded air charter brokers that: (1) Without authority, they may not 
hold out air transportation in their own right or enter as principals 
into contracts with customers to provide air transportation; and (2) as 
ticket agents, they may not engage in various practices enumerated in 
14 CFR 399.80 as unfair and deceptive or unfair methods of competition, 
including creating the false impression that they are an air carrier. 
The Enforcement Office suggested in the guidance that each air charter 
broker should, in any advertisement of its services, clearly convey the 
fact that the broker is not a direct air carrier and that the air 
service advertised will be provided by a properly licensed direct air 
carrier. Although the guidance recognized the public benefits that 
could flow where air charter brokers were able to act as a principal in 
providing air transportation and invited air charter brokers to seek 
exemptions from existing Department regulations to offer such services, 
that offer has not proven useful, primarily due to the business model 
of today's air charter brokers, as described below. Moreover, despite 
this guidance and continued outreach efforts by Department staff 
through participation at industry seminars and conferences, as well as 
through more informal guidance, there have been many instances in which 
the Department has found it necessary to take enforcement action 
against air charter brokers for violations of the licensing 
requirements of 49 U.S.C. 41101 and the prohibition against engaging in 
unfair and deceptive practices and unfair methods of competition of 49 
U.S.C. 41712 and 14 CFR 399.80.
    Despite the growth in the marketplace for the services of air 
charter brokers, the regulations that now exist to authorize indirect 
air carriers to engage in passenger air transportation are not 
conducive to the industry served by air charter brokers. In this 
regard, air charter brokers, particularly those involved with business 
aviation-related air charters, have not been able to take advantage of 
the authorizations noted above for other indirect air carriers, a 
situation that may have stifled innovation and consumer benefits that 
normally flow from a more open, competitive marketplace. For example, 
Part 380 has been the only lawful means of offering indirect air 
transportation services for passengers other than those in need of air 
ambulance services, but it would be extremely difficult for an air 
charter broker to comply with that regulation for single entity 
business-related air charters. In particular, under Part 380 an air 
charter broker would need to file a prospectus with the Department 
detailing the charter program and could not vary from the schedule of 
flights filed without first filing an amendment. In addition, Part 380 
dictates the specific terms of the contract of carriage between the 
passenger and indirect air carrier, such as those involving 
advertising, delays, cancellations, and refunds, in order to protect 
passenger expectations. Part 380 also is designed to protect 
passengers' financial interests as well, through bonding and escrow 
requirements applicable to public charter operators as well as to the 
airlines that operate public charter flights.
    The business models of the on-demand air charter industry, 
including the services provided by the majority of air charter brokers 
that use the services of on-demand air carriers, do not easily fit into 
the requirements of Part 380. Customers are often businesses or high-
net worth individuals, and the flight itinerary is of the customer's 
choice and the customer can change it at any time, including en route. 
In addition, other important contract terms, such as aircraft type and 
charter price, are subject to negotiation. Moreover, unlike the vast 
majority of airlines operating flights for public charters, which must 
undergo a stringent fitness test and also escrow charter funds, the 
fitness and financial protections applicable to the small air carriers 
operating on-demand charter flights are minimal. In this regard, air 
taxi operators may operate ``small aircraft'' (those that as originally 
designed to have 60 passenger seats or fewer or a maximum payload 
capacity of 18,000 pounds or less) after filing a registration 
statement with the Department stating that they are a U.S. citizen and 
have requisite liability insurance and listing the aircraft that they 
operate. Under Part 298, air taxi operators must provide public notice 
of their policies on baggage liability and denied boarding 
compensation. (14 CFR 298.30.) Because of the nature of their business 
model and the nature and specific provisions of Part 380, air charter 
brokers cannot reasonably be expected to provide their services under 
Part 380 or an exemption from certain of its provisions. Accordingly, 
in recognition of the important public benefits in connection with air 
transportation that air charter brokers might provide, we are proposing 
to allow air charter brokers to operate as indirect air carriers, 
subject to appropriate consumer protection provisions.
    More specifically, we are proposing to create a class of indirect 
air carrier to be named ``air charter brokers'' that are permitted as 
principals in their own right to engage in single entity charter air 
transportation aboard large and small aircraft pursuant to exemptions 
from certain provisions of Subtitle VII of Title 49 of the United 
States Code (Transportation) and to establish rules for the provision 
of indirect air transportation of passengers by air charter brokers.
    The Department also seeks comment on the last clause in the 
proposed definition of a ``single entity charter'' that would allow 
individuals who self-aggregate to form a single entity, despite the 
fact that they may be bearing a portion of the cost of the charter. If 
the

[[Page 59884]]

Department were to accept the definition as it is currently proposed, 
would it be necessary to change to the definition of single entity 
charter in 14 CFR Part 212?
    Under this proposal, air charter brokers would, in essence, self-
identify. In other words, there would be no formal licensing process or 
registration, as is the case currently with indirect air carriers 
engaging in air transportation in connection with air ambulance 
services and U.S. air freight forwarders engaging in the indirect air 
carriage of cargo. (Nothing in this proposal would apply to persons or 
entities that, as an employee or bona fide agent of an air carrier, 
hold out, sell, or undertake to arrange air transportation, or as a 
bona fide agent of a charterer, arrange for air transportation for that 
charterer.) Commenters who do not want the Department to allow air 
charter brokers to self-identify should propose an alternative and 
provide information regarding the costs to the government to administer 
and to air charter brokers to comply with their proposed alternative.
    While the Department proposes a system of self-identification for 
all air charter brokers, we ask whether the Department should adopt a 
registration system applicable only to non-U.S. citizen air charter 
brokers, similar to that in place for foreign air freight forwarders, 
so that the Department can ensure that a grant of such authority to 
non-U.S. citizens is in the public interest, including consideration of 
whether there is effective reciprocity in the treatment of U.S. air 
charter brokers in other countries? Regardless of whether a 
registration system for non-U.S. air charter brokers is adopted, we are 
tentatively of the opinion that requiring certain disclosures by all 
air charter brokers to protect charter customers is in the public 
interest. In this regard, we propose to require that an air charter 
broker disclose clearly and conspicuously in any solicitation materials 
its status and the fact that it is not a direct air carrier and will 
use an authorized direct air carrier to provide the transportation it 
offers. We also propose to require that a charterer be informed in 
writing, prior to purchasing the air transportation, of the following: 
(1) The corporate name of the direct air carrier in operational control 
of the aircraft on which the air transportation is to be performed and 
any other names in which that carrier holds itself out to the public; 
(2) the capacity in which the air charter broker is acting in 
contracting for the air transportation, i.e., as an indirect air 
carrier, as an agent of the charterer, or as an agent of the direct air 
carrier that will be in operational control of the flight; (3) the 
existence of any corporate or business relationships with a particular 
direct air carrier(s) that may or will be used for the air 
transportation; (4) the make and model of the aircraft to be used for 
the transportation (e.g., Learjet 60 XR); (5) the total cost of the air 
transportation paid to the air charter broker, including any air 
charter broker or carrier-imposed fees, or government-imposed taxes and 
fees; (6) the existence of any fees and their amounts, if known, 
including fuel, landing fees, and aircraft parking or hangar fees, 
charged by third parties for which the charterer will be responsible 
for paying directly; and (7) the existence or absence of liability 
insurance held by the air charter broker covering the charterer and 
passengers and property on the charter flight, and the monetary limits 
of any such insurance. We ask for comment on whether there is 
additional information that should be provided to charterers or whether 
any of the aforementioned information is not essential and need not be 
provided charterers. For example, we are disposed to conclude, as we 
have in other contexts, that consumers deserve to know the direct air 
carrier on which they will be travelling before committing to a charter 
flight. (See 14 CFR Parts 257 and 380)
    Under this NPRM, if any of the seven items listed above that we are 
proposing that air charter brokers disclose in writing to charter 
customers prior to purchase changes subsequent to the contract being 
formed, the air charter broker would be required to provide this new 
information to the consumer within a reasonable time of such 
information changing. A ``reasonable'' time would be enough time for 
the charterer to make an informed decision as to whether he or she 
wants to accept the change. For example, should the carrier to operate 
the flight change one week before the flight date, the Department would 
find it ``reasonable'' for notice to be given within 24 hours of the 
carrier becoming aware of the change. On the other hand, the Department 
would not find it ``reasonable'' for notice to be given two hours 
before departure in such a circumstance, since that would not give the 
charter customer time to make an informed decision as to whether to 
accept the change. At that point, the charterer would already be fully 
prepared for the flight and may in fact already be en route to the 
airport. The Department asks for comments on whether it should set at 
specific time limit, e.g., 24 hours, for such notice to be provided.
    If reasonable notice is not provided, the consumer would have the 
option of receiving a full refund if he/she no longer wished to take 
the flight because of the change. We are not proposing to require air 
charter brokers obtain confirmation from the charterer of receipt of 
the notice; however, we ask for comment on whether we should require 
such confirmation and, if so, what type of confirmation would be 
appropriate in any given situation, including oral contracts.
    With regard to the proposed requirement to provide written notice 
of the total cost of the air transportation prior to purchase, we 
recognize that, as is customary in the on-demand charter industry, the 
ultimate price of the air transportation normally borne by the 
charterer, including the amount of government taxes and fees applicable 
to that price, may be dependent on factors whose cost is not known at 
the time a contract is signed, such as the cost of fuel at the time of 
travel, aircraft wait time, or aircraft repositioning costs. We propose 
that, in such an event, the requirement to disclose the ``total'' cost 
in writing prior to purchase would be considered met so long as the air 
charter broker conspicuously identifies and discloses the existence of 
all items that may impact the total cost, including the range of fees 
associated for each item, as well as any factors which would cause the 
fees to be in the high or low range. The fare advertising requirements 
in 14 CFR 399.84 would not apply. We ask for comment on this approach.
    In addition, the Department asks for comment on its proposal to 
subject air charter brokers to 14 CFR Part 374, which implements 
statutes and regulations governing credit transactions, including those 
requiring credit card refunds within seven business days of receiving 
complete documentation. The Department's longstanding policy on cash 
refunds, which recently was codified with regard to scheduled airlines, 
requires cash refunds within 20 days of receipt of full documentation 
of such a request. Should the Department impose similar cash refund 
requirements in this rule for air charter brokers? If not, what 
distinguishes the business of air charter brokers that supports their 
not being required to comply with such refund requirements?
    We are also proposing to enumerate certain prohibited unfair and 
deceptive practices or unfair methods of competition by air charter 
brokers. We request comment on whether any of these practices should 
not be enumerated in the final rule.
    We are also considering imposing a requirement on air charter 
brokers to retain certain records for the purpose of

[[Page 59885]]

determining regulatory compliance. If so, what specific records should 
the Department require air charter brokers to retain?

C. Air Ambulance Services

    Entities that arrange air ambulance services as indirect air 
carriers have been authorized through a blanket exemption granted in 
1983 by the Civil Aeronautics Board to engage in the sale of air 
transportation in connection with air ambulance services. Order 83-1-
36, 99 C.A.B. 801 (1983). The only condition placed to date upon this 
class of indirect air carrier has been that they use direct air 
carriers holding appropriate Federal economic and safety authority for 
such operations.
    Over the years, the Department's Aviation Enforcement Office has 
received informal complaints, primarily from companies involved in the 
air ambulance industry, regarding the conduct of other individual air 
ambulance indirect air carriers. Those complaints generally have 
alleged that an indirect air carrier has misled the public about the 
nature of its operations, such as inducing the public to believe that 
it operates aircraft when it does not. Such conduct violates the 
licensing requirements of 49 U.S.C. 41101 and therefore the exemption 
authority of Order 83-1-36 and constitutes an unfair and deceptive 
practice and unfair method of competition in violation of 49 U.S.C. 
41712. The Department has provided guidance about the role of indirect 
air carriers providing air ambulance services and has found it 
necessary to take enforcement action against a number of air ambulance 
indirect carriers for engaging in the unlawful practices noted above. 
Similar enforcement action has been taken based on information 
uncovered during investigations undertaken by the Enforcement Office on 
its own initiative.
    The fundamental nature of these violations stems from the failure 
of air ambulance indirect air carriers to provide the public 
information about the nature of their operations in a clear and 
conspicuous manner. Consumers of the services of air ambulance indirect 
air carriers deserve no less protection than persons using the services 
of the air charter brokers. As such, we are proposing to require that 
indirect air carriers that provide air transportation in connection 
with air ambulance services ensure appropriate protections for 
consumers of those services similar to those proposed for air charter 
brokers.
    Specifically, we propose to codify the blanket exemption authority 
granted air ambulance indirect air carriers by Order 83-1-36 under the 
new Part 295. Under the proposed rule, the provisions prohibiting 
unfair and deceptive practices and enumerating specific prohibited 
practices in section 295.50 would apply to air ambulance indirect air 
carriers, e.g., misrepresentations that the air charter broker is a 
direct air carrier. However, air ambulance indirect air carriers would 
be excluded from the disclosure requirements of section 295.24, e.g., 
the corporate name of the direct air carrier in operational control of 
the aircraft. We invite comment on this proposal in general, as well as 
on whether any of the specific provisions of proposed section 295.24 
should apply to indirect air carriers engaged in air ambulance 
services. Commenters opposed to including air ambulance indirect air 
carries under proposed Part 295 should be specific as to why the rule 
or any specific provision contained in the rule, such as the disclosure 
requirements in section 295.24, should not apply. For example, are 
there certain types of air ambulance indirect air carriers for which 
the complying with the disclosure requirements would not be feasible or 
reasonable given the nature of their operations, e.g., emergency 
medical evacuations.

D. Air Services Performed Under Contract With the Federal Government

    This NPRM also addresses air charter broker issues relating to 
contracts with the Federal government. On November 25, 2009, CSI 
Aviation Services, Inc., an aviation broker providing services to the 
Federal government, filed an application for an exemption to permit it 
to act as a principal in contracts with Federal government agencies. On 
April 14, 2010, the Department issued a final order exempting CSI and 
other similarly situated air charter brokers from the requirements of 
49 U.S.C. 41101 and applicable Department regulations to the extent 
necessary for such air charter brokers to engage in domestic and 
foreign indirect air transportation of persons, property, and mail 
pursuant to contracts with Federal government agencies arranged under 
the General Services Administration (``GSA'') Schedule Special Item 
Number (``SIN'') 599-5, Air Charter Services-Brokers. (Order 2010-4-7, 
Issued April 13, 2010.) The Department noted that the rulemaking at 
issue here was being developed, but decided that it was not in the 
public interest to prohibit air charter brokers from engaging in 
indirect air transportation under contract with the U.S. Government via 
the GSA Schedule pending completion of a broader rulemaking proceeding. 
That exemption authority was subsequently extended in March 2011 for 
another year. (Department Order 2011-3-8, issued March 3, 2011.)
    Then, on April 1, 2011, the United States Court of Appeals for the 
District of Columbia Circuit (D.C. Circuit) issued its opinion in CSI 
Aviation Services, Inc., v. U.S. Dept. of Transportation, a case 
involving an air charter broker's challenge to a warning letter from 
the Department's Office of Aviation Enforcement and Proceedings 
(Enforcement Office). The Enforcement Office warned the air charter 
broker that, in its opinion, the air charter broker was unlawfully 
holding out air transportation by being on a General Service 
Administration's schedule listing companies as available to contract as 
principals with Federal government agencies to provide air 
transportation when it held no economic authority to do so. The court 
found, among other things, that the Department failed adequately to 
explain its interpretation of the statutory definition for ``air 
transportation,'' and, in particular, why it considered CSI's 
arrangement with GSA to constitute ``common carriage.'' Although the 
court preliminarily determined that CSI's operation under the GSA 
schedule arrangement involving only government entities did not appear 
to be ``common carriage,'' it left open the possibility that the 
Department may ``reasonably conclude otherwise in the future after 
demonstrating a more adequate understanding of the statute.'' (CSI 
Aviation Services, Inc., No. 09-1307, slip op. at 14 (D.C. Cir. April 
1, 2011)). We appreciate the Court's advice and take this opportunity 
to clarify any misunderstanding regarding the matter and to codify, 
through this rulemaking, the long-standing position of various courts, 
as followed by the Department and the Civil Aeronautics Board before it 
and as supported by Congressional intent, that contracting for air 
transportation with the Federal government, with limited exceptions not 
applicable to our action here, involves common carriage operations.
    As early as 1925, the U.S. Supreme Court held that transportation 
provided to a Federal government agency amounted to common carriage. 
St. Louis, B. & M. RY. CO. v. United States, 268 U.S. 169, at 173 (Apr. 
27, 1925.) (``[i]n respect to furnishing transportation, a railroad 
ordinarily bears to the government the same relation that it does to a 
private person using its facilities.''). Other Federal courts have made 
clear that transportation provided under contract with the government 
is no less common carriage than that provided private

[[Page 59886]]

parties. U.S.A.C. Transport, Inc., v. United States, 203 F.2d 878, at 
879 (10th Cir. 1953), citing United States v. Schupper Motor Lines, 
Inc., 77 F. Supp. 737 (1948). Thus, transportation provided for or on 
behalf of the government, as opposed to transportation provided by the 
government, amounts to common carriage.
    The fact that transportation provided for a government entity 
amounts to common carriage is also seen in the longstanding policies 
and regulations of the Department and the CAB before it. In this 
regard, 14 CFR Part 212 provides non-safety related rules applicable to 
U.S. and foreign direct air carriers operating passenger or cargo 
charter flights in air transportation. ``Air transportation'' includes 
the transportation of passengers by air as a ``common carrier'' between 
places in different states or between a place in the United States and 
a place outside the United States. (49 U.S.C. 40102(a)(5), (a)(23), and 
(a)(25)) In the context of aviation, a ``common carrier'' is a person 
or other entity that, for compensation or hire, holds out or provides 
to the public transportation by air between two points. (Woolsey v. 
NTSB, 993 F.2d 516, 522-23 (5th Cir. 1993)) Section 212.4(b)(2) of the 
Department's regulations, 14 CFR 212.4(b)(2), specifically authorizes 
certificated and foreign air carriers to conduct single entity charters 
pursuant to contracts with the Department of Defense (DOD). The 
substantive requirements of section 212.4(b)(2) were originally 
established in 1966 when the CAB revised its economic regulations to 
set forth the terms, conditions, and limitations for the conduct of 
``certificated supplemental air transportation,'' which was defined, in 
essence, to mean charter trips in air transportation pursuant to a 
certificate of public convenience and necessity. In the final rule, the 
CAB defined the term ``charter flight'' to include ``[a]ir 
transportation of persons and/or property pursuant to contracts with 
the Department of Defense where the entire capacity of one or more 
aircraft has been engaged by the Department.'' 31 FR 4771, March 22, 
1966. Clearly the CAB and the Department, as well as the DOD, 
considered contracts with that agency to amount to common carriage 
operations to be regulated by the Department to the extent necessary.
    Support for this conclusion is also found in the Department's 
regulations at 14 CFR Parts 241 and 298 that require reporting of 
operations in air transportation and foreign air transportation by 
airlines. There is a special category in Part 241 for reporting of 
``Nonscheduled Military Passenger/Cargo'' and ``Nonscheduled Military 
Cargo'' operations by large certificated air carriers (14 CFR Part 241, 
Sec. 19-4) and the Department requires certificated air carriers, as 
well as air taxi and commuter air carriers to report, in these special 
categories, domestic and international military operations. (14 CFR 
Part 241, Sec 19-6 and 14 CFR 298.70, respectively) It is axiomatic 
that only flights in common carriage and therefore under the 
Department's jurisdiction are subject to its reporting requirements.
    Support for the conclusion that contracts with the Federal 
government for air transportation constitute common carriage is also 
found in Congressional action. In this regard, the ``Fly America Act'' 
requires that U.S. government agencies shall ensure that government 
financed air transportation is provided by ``an air carrier holding a 
certificate under 49 U.S.C. 41102.'' (49 U.S.C. 40118) The original 
text of the statute when it first became law in 1975 states that 
Federal agencies shall ``procure, contract for, or otherwise obtain'' 
air transportation provided by ``air carriers holding certificates 
under section 401 of the [Federal Aviation Act] to the extent 
authorized by such certificates or by regulations or exemption of the 
Civil Aeronautics Board . . .'' International Air Transportation Fair 
Competitive Practices Act of 1974 (Pub. L. 93-624, Jan. 3, 1975). 
Although the text of the statute has been substantially amended since 
1975, it has retained the essential requirement that government funded 
air transportation must be provided by a certificated ``air carrier,'' 
which is a statutorily defined term--``a citizen of the United States 
undertaking by any means, directly or indirectly, to provide air 
transportation'' (49 U.S.C. 40102(a)(2))--applicable only in the 
context of common carriage. Congress clearly envisioned that contracts 
with the government for air transportation are in common carriage. Had 
it thought otherwise, Congress could have used a broader term in the 
Fly America Act in place of ``air carrier,'' such as ``aircraft 
operated by a U.S. citizen,'' which would have covered both common 
carriage and private carriage, yet still achieve the main purpose of 
the Fly America Act. Congress chose not to do so, indicating that it 
was mindful of the difference between common carriage, requiring 
adherence to economic licensing requirements and the highest level of 
safety, and private carriage, which has no economic licensing 
requirements and is not required to meet the same higher safety 
standards required of common carriers.
    We are therefore taking this opportunity to reemphasize the 
Department's longstanding determination that contracts with the Federal 
government arranged under the GSA Schedule involving government 
entities are in fact in ``common carriage'' and subject to the 
Department's jurisdiction and to codify that such contracts arranged by 
air charter brokers also involve common carriage by including such a 
provision in our proposed rule on air charter brokers. In addition, in 
keeping with Congressional intent that government financed air 
transportation be provided by an air carrier holding a certificate 
under 49 U.S.C. 41102 or an exemption from that provision, we are 
proposing to require that all contracts for air transportation with 
government entities arranged by air charter brokers through the GSA 
Schedule must comply with the Fly America requirements of 49 U.S.C. 
40118. Failure to comply with this requirement would be cause to revoke 
an air charter broker's authority on public interest grounds.

Regulatory Analysis and Notices

A. Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures

    This action has been determined not to be significant under 
Executive Order 12866 and the Department of Transportation's Regulatory 
Policies and Procedures. It has not been reviewed by the Office of 
Management and Budget under that Executive Order. The Regulatory 
Evaluation finds that the benefits for the proposed rule exceed its 
costs. The passenger benefits from the proposed requirements are not 
possible to quantify. The value of this rulemaking would be the 
increased transparency for both the public and competitors in this 
market. There is also value in the timely and accurate production of 
information to aid in consumer decision-making, but this also cannot be 
quantified. The baseline or midrange estimate of costs incurred by air 
charter brokers and carriers over a 20-year period at a 7 percent 
discount rate is $1.256 million. More detail on the estimates can be 
found in the preliminary Regulatory Impact Analysis associated with 
this proposed rule.

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

[[Page 59887]]

regulation that 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. It does not propose any regulation that imposes substantial 
direct compliance costs on State and local governments. It does not 
propose any regulation that preempts state law, because States are 
already preempted from regulating in this area under the Airline 
Deregulation Act, 49 U.S.C. 41713. 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 or impose 
substantial direct compliance costs on them, the funding and 
consultation requirements of Executive Order 13084 do not apply.

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA) was 
enacted by Congress to ensure that small entities are not unnecessarily 
and disproportionately burdened by government regulations. It requires 
that agencies review regulations that may have a significant economic 
impact on a substantial number of small entities, and if possible to 
fit regulatory and informational requirements to the scale of the 
entities subject to regulation. However, if it is determined that a 
rule is not expected to have a significant economic impact on a 
substantial number of small entities, section 605(b) of the RFA 
provides that the head of the agency may so certify and a regulatory 
flexibility analysis is not required. The certification must include a 
statement providing the factual basis for this determination, and the 
reasoning should be clear.
    Our analysis identified a total of 2,121 small direct air carriers 
(i.e., U.S. air carriers that provide air transportation exclusively 
with aircraft that seat no more than 60 passengers) that could 
potentially be affected by the requirements of this NPRM. In addition, 
we are treating all the indirect air carriers (i.e., air charter 
brokers including those that provide air ambulance services) as small 
entities. The criteria for identifying small business entities are 
provided by the Small Business Administration in its publication, Table 
of Small Business Size Standards Matched to North American Industry 
Classification System Codes. These size standards are customarily based 
on an entity's gross receipts or its employment. There is no North 
American Industry Classification System (NAICS) code for air charter 
brokers. Industries that are similar to air charter brokers are 
Nonscheduled chartered passenger air transportation (NAICS code 
481211), Travel agencies (NAICS code 561510) and All other travel 
arrangements and reservations services (NAICS code 561599). It is 
important to note that firms in NAICS code 481211 provide 
transportation services, while air charter brokers do not. If air 
charter brokers were treated as analogous to these firms, all air 
charter brokers would be small entities.
    The Department believes that the cost impact of this rulemaking on 
air taxis is de minimis, since the only requirement in this NPRM that 
would mandate affirmative action on their part is a disclosure 
requirement.
    With regard to air charter brokers, there are three requirements 
that would apply to them. Two of these requirements involve disclosure. 
First, in their solicitations and advertising materials, the NPRM would 
require air charter brokers to disclose certain information in writing 
to consumers. Second, before entering into contracts for a flight or 
series of flights, the NPRM would require air charter brokers to 
disclose certain additional information. The third, the NPRM would 
mandate that air charter brokers make prompt refunds of monies paid for 
single entity charter air transportation when such refunds are due.
    The Department does not consider this cost to be significant, 
especially since a sizeable part of the air charter broker industry 
already makes such disclosures as part of current business practice. As 
a result, the Department certifies that the proposed rule would not 
have a significant economic impact on a substantial number of small 
entities. The Department requests comments from affected entities on 
this finding and determination.

E. Paperwork Reduction Act

    This NPRM does not propose any new collections of information that 
would require approval by the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 49 U.S.C. 
Sec.  3501 et seq.).

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 295

    Air charter brokers.

14 CFR Part 298

    Exemptions for air taxi and commuter air carrier operations.

    Issued this 11th day of September, 2013 at Washington, DC, under 
authority delegated in 49 CFR part 1.27.
Kathryn B. Thomson,
Acting General Counsel.
    Accordingly, 14 CFR chapter II is proposed to be amended as 
follows:

0
1. A new Part 295 is added to read as follows:

PART 295--AIR CHARTER BROKERS

Sec.
Subpart A--General
295.1 Purpose.
295.3 Applicability.
295.5 Definitions.
Subpart B--Exemption Authority
295.10 Grant of economic authority; exemption from the Statute.
295.12 Suspension or revocation of exemption authority.
295.17 Contract with government entities.
Subpart C--Consumer Protection
295.20 Use of duly authorized direct air carriers.
295.22 Misrepresentations.
295.24 Disclosures.
295.26 Refunds.
Subpart D--Violations
295.50 Unfair and deceptive practices and unfair methods of 
competition.
295.52 Enforcement.

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

Subpart A--General


Sec.  295.1  Purpose.

    This part creates a new class of indirect air carrier--air charter 
brokers--to provide indirect air transportation of passengers on single 
entity charters aboard large and small aircraft by granting exemptions 
to such air charter brokers from certain provisions of Subtitle VII of 
Title 49 of the United States Code (Transportation), and establishes 
rules, including consumer protection provisions, for the provision of 
such air transportation by air charter brokers.

[[Page 59888]]

Sec.  295.3  Applicability.

    (a) This part applies to any person or entity acting as an air 
charter broker as defined in this part with respect to single entity 
charter air transportation that the air charter broker, as a principal 
in its own right, holds out, sells or undertakes to arrange aboard 
large and small aircraft. Except for the disclosure requirements found 
at 295.24, this part also applies to persons or entities authorized by 
Civil Aeronautics Board Order 83-1-36 to engage in air transportation 
as indirect air carriers in connection with air ambulance services and 
described in that order as air ambulance operators.
    (b) This part does not apply to a person or entity that, as an 
employee or as a bona fide agent of an air carrier, holds out, sells, 
or undertakes to arrange air transportation. This part does not apply 
to a person or entity acting as the bona fide agent of a charterer in 
arranging for air transportation for that charterer. This part does not 
authorize air charter brokers to hold out, sell, or undertake to 
arrange scheduled air transportation in their individual capacity or on 
behalf of air carriers.


Sec.  295.5  Definitions.

    For the purposes of this part:
    (a) Air transportation means interstate or foreign air 
transportation, as defined in 49 U.S.C. 40102(5), 40102(23), and 
40102(25).
    (b) Air charter broker means a person or entity that holds out, 
sells, or undertakes to arrange planeload, single entity passenger 
charter air transportation, other than as an employee or bona fide 
agent of an air carrier or a charterer, using a direct air carrier, or 
using another provider of air transportation.
    (c) Charterer means the person or entity that contracts with an air 
charter broker for the transportation of the passengers flown on a 
charter flight.
    (d) Charter air transportation means charter flights in air 
transportation and foreign air transportation authorized under Part A 
of Subtitle VII of Title 49 of the United States Code.
    (e) Direct air carrier means a U.S. or foreign air carrier that 
provides or offers to provide air transportation and that has control 
over the operational functions performed in providing that 
transportation.
    (f) Indirect air carrier means a person or entity that, as a 
principal, holds out, sells, or arranges air transportation and 
separately contracts with direct air carriers or other providers to 
perform such air transportation.
    (g) Single entity charter means a charter for the entire capacity 
of the aircraft, the cost of which is borne by the charterer and not 
directly or indirectly by individual passengers, except in cases in 
which individual passengers self-aggregate to form a single entity.
    (h) Statute means Subtitle VII of Title 49 of the United States 
Code (Transportation).
    (i) Large aircraft means any aircraft originally designed to have a 
maximum passenger capacity of more than 60 seats or a maximum payload 
capacity of more than 18,000 pounds.
    (j) Small aircraft means any aircraft originally designed to have a 
maximum passenger capacity of 60 seats or fewer or a maximum payload 
capacity of 18,000 pounds or less.

Subpart B--Exemption Authority


Sec.  295.10  Grant of economic authority; exemption from the statute.

    To the extent necessary to permit air charter brokers to hold out, 
sell, or undertake to arrange single entity charter air transportation, 
air charter brokers are exempted from the following provisions of 
Subtitle VII of Title 49 of the United States Code, except for the 
provisions noted below, only if and so long as they comply with the 
provisions and the conditions imposed by this part: Chapter 411, 
Chapter 413, Chapter 415, and Chapter 419. Air charter brokers are not 
exempt from the following provisions: Section 41310 (nondiscrimination) 
with respect to foreign air transportation.


Sec.  295.12  Suspension or revocation of exemption authority.

    The Department reserves the power to suspend or revoke the 
exemption authority of any air charter broker, without a hearing, if it 
finds that such action is necessary in the public interest or is 
otherwise necessary in order to protect the traveling public.


Sec.  295.17  Contracts with government entities.

    Contracts by air charter brokers with the Federal government 
arranged under the GSA Schedule for air transportation are in common 
carriage and must meet the requirements of 49 U.S.C. 40118.

Subpart C--Consumer Protection


Sec.  295.20  Use of duly authorized direct air carriers.

    Air charter brokers are not authorized under this part to hold out, 
sell, or otherwise arrange charter air transportation to be operated by 
a person or entity that does not hold the requisite form of economic 
authority from the Department and appropriate safety authority from the 
Federal Aviation Administration and/or, if applicable, a foreign safety 
authority. Air charter brokers are not authorized under this part to 
hold out air transportation to be performed by a direct air carrier 
that the direct air carrier would not in its own right be able to hold 
out.


Sec.  295.22  Prohibited unfair and deceptive practices and unfair 
methods of competition.

    An air charter broker or foreign air charter broker shall not 
engage in any unfair or deceptive practice or unfair method of 
competition.


Sec.  295.24  Disclosures.

    (a) All solicitation materials and advertisements, including 
Internet Web pages, published or caused to be published by air charter 
brokers shall clearly and conspicuously state that the air charter 
broker is an air charter broker, and that it is not a direct air 
carrier in operational control of aircraft, and that the air service 
advertised will be provided by a properly licensed direct air carrier.
    (b) Before entering into a contract for a specific flight or series 
of flights, air charter brokers must disclose the following information 
in writing to the charterer, which may be accomplished through 
electronic transmissions. If the transaction occurs orally, the 
following information must be disclosed orally, and again in any 
written correspondence, including correspondence confirming the 
purchased air transportation.
    (1) The corporate name of the direct air carrier in operational 
control of the aircraft on which the air transportation is to be 
performed and any other names in which that direct air carrier holds 
itself out to the public.
    (2) The capacity in which the air charter broker is acting in 
contracting for the air transportation, i.e., as an indirect air 
carrier, as an agent of the charterer, or as an agent of the direct air 
carrier that will be in operational control of the flight.
    (3) The existence of any corporate or business relationship between 
the air charter broker and the direct air carrier that will be used for 
the air transportation.
    (4) The make and model of the aircraft to be used for the 
transportation (e.g., Learjet 60 XR).
    (5) The total cost of the air transportation paid to the air 
charter broker, including any air charter broker or carrier-imposed 
fees, or government-imposed taxes and fees.
    (6) The existence of any fees and their amounts, if known, 
including fuel,

[[Page 59889]]

landing fees, and aircraft parking or hangar fees, charged by third 
parties for which the charterer will be responsible for paying 
directly.
    (7) The existence or absence of liability insurance held by the air 
charter broker covering the charterer and passengers and property on 
the charter flight, and the monetary limits of any such insurance.
    (c) If the information required to be disclosed in paragraph (b) of 
this section is not known at the time the contract is entered into, air 
charter brokers must provide the information in paragraph (b) of this 
section to the charterer within a reasonable time after such 
information becomes available.
    (d) If the information in paragraph (b) of this section is not 
provided to the charterer within a reasonable time after becoming 
available, air charter brokers must provide the charterer with the 
opportunity to cancel the contract for air transportation, including 
any services in connection with such contract, and receive a full 
refund of any monies paid for the charter air transportation and 
services.
    (e) In all circumstances, air charter brokers must disclose the 
information in paragraph (b) of this section to the charterer prior to 
the start of the air transportation.
    (f) If the information in paragraph (b) of this section changes 
after the air transportation covered by the contract has begun, air 
charter brokers must provide information regarding any such changes to 
the charterer within a reasonable time after such information becomes 
available.
    (g) If the changes in information described in paragraph (f) of 
this section are not provided to the charterer within a reasonable time 
after becoming available, air charter brokers must provide the 
charterer with the opportunity to cancel the remaining portion of the 
contract for air transportation, including any services paid in 
connection with such contract, and receive a full refund of any monies 
paid for the charter air transportation and services not yet provided.


Sec.  295.26  Refunds.

    Air charter brokers must make prompt refunds of all monies paid for 
charter air transportation when such transportation cannot be performed 
or when such refunds are otherwise due, as required by 14 CFR 374.3 and 
12 CFR Part 226 for credit card purchases, and within 20 days after 
receiving a complete refund request for cash and check purchases.

Subpart D--Violations


Sec.  295.50  Unfair and deceptive practices and unfair methods of 
competition.

    (a) Violations of this Part shall be considered to constitute 
unfair and deceptive practices and unfair methods of competition in 
violation of 49 U.S.C. 41712.
    (b) In addition to paragraph (a) of this section, the following 
enumerated practices, among others, by an air charter broker or foreign 
air charter broker are unfair or deceptive practices or unfair methods 
of competition in violation of 49 U.S.C. 41712:
    (1) Misrepresentations that may induce members of the public to 
reasonably believe that the air charter broker or foreign air charter 
broker is a direct air carrier.
    (2) Using or displaying or permitting or suffering to be used or 
displayed the name, trade name, slogan or any abbreviation thereof, of 
the air charter broker, in advertisements, on or in places of business, 
or on or in aircraft or any other place in connection with the name of 
an air carrier or with services in connection with air transportation, 
in such manner that it may mislead or confuse the traveling public with 
respect to the status of the air charter broker.
    (3) Misrepresentations as to the quality or kind of service, type 
or size of aircraft, time of departure or arrival, points served, route 
to be flown, stops to be made, or total trip-time from point of 
departure to destination.
    (4) Misrepresentations as to qualifications of pilots or safety 
record or certification of pilots, aircraft or air carriers.
    (5) Misrepresentations that passengers are directly insured when 
they are not so insured. For example, where the only insurance in force 
is that protecting the air carrier in event of liability.
    (6) Misrepresentations as to fares, charges, or special priorities 
for air transportation or services in connection therewith.
    (7) Misrepresentations as to membership or involvement with a 
particular organization that audits air charter brokers or direct air 
carriers, or that the air charter broker or any direct air carriers to 
be used for a particular flight meets a particular standard set by an 
auditing organization.
    (8) Representing that a contract for a specified direct air 
carrier, aircraft, space, flight, or time, has been arranged, without a 
binding commitment with a direct air carrier for the furnishing of such 
definite reservation or charter as represented.
    (9) Selling or contracting for air transportation while knowing or 
having reason to know or believe that such air transportation cannot be 
legally performed by the entity that is to operate for the air 
transportation.
    (10) Misrepresentations as to the requirements that must be met by 
charterers in order to qualify for charter flights.


Sec.  295.52  Enforcement.

    In case of any violation of any of the provisions of the Statute, 
or of this part, or any other rule, regulation, or order issued under 
the Statute, the violator may be subject to a proceeding under section 
46101 of the Statute before the Department, or sections 46106 through 
46108 of the Statute before a U.S. District Court, as the case may be, 
to compel compliance. The violator may also be subject to civil 
penalties under the provisions of section 46301 of the Statute, or 
other lawful sanctions, including revocation of the exemption authority 
granted in this part. In the case of a willful violation, the violator 
may be subject to criminal penalties under the provisions of section 
46316 of the Statute.

PART 298--[AMENDED]

0
2. The authority citation for 14 CFR Part 298 continues to read as 
follows:

    Authority: 49 U.S.C. 41102, 41708, and 41709.

0
3. A new Sec.  298.90 is added to read as follows:


Sec.  298.90  Disclosures.

    (a) Air taxi operators or commuter air carriers are prohibited from 
contracting with charterers for charter flights that will be operated 
by another direct air carrier without first clearly and conspicuously 
disclosing in writing to the charterer that the flight will be operated 
by another direct air carrier and providing the following disclosures 
to the charterer:
    (1) The corporate name of the direct air carrier in operational 
control of the aircraft on which the air transportation is to be 
performed, and any other names in which that direct air carrier holds 
itself out to the public.
    (2) The capacity in which the air taxi operator or commuter air 
carrier is acting in contracting for the air transportation, i.e., as a 
principal, as an agent of the charterer, or as an agent of the direct 
air carrier that will be in operational control of the flight.
    (3) The existence of any corporate or business relationship between 
the air taxi operator or commuter air carrier

[[Page 59890]]

and the direct air carrier that will be in operational control of the 
charter flight.
    (4) The make and model of the aircraft to be used for the 
transportation (e.g., Learjet 60 XR).
    (5) The total cost of the air transportation, including any 
carrier-imposed fees or government-imposed taxes and fees.
    (6) The existence of any fees and their amounts, if known, 
including fuel, landing fees, and aircraft parking or hangar fees 
charged by third-parties for which the charterer will be responsible 
for paying directly.
    (b) If the information required to be disclosed in paragraph (a) of 
this section is not known at the time the contract is entered into, air 
taxi operators or commuter air carriers must provide in writing the 
information in paragraph (a) of this section to the charterer within a 
reasonable time after such information becomes available.
    (c) If the information in paragraph (a) of this section is not 
provided to the charterer within a reasonable time after becoming 
available, air taxi operators or commuter air carriers must provide the 
charterer with the opportunity to cancel the contract for air 
transportation, including any services in connection with such 
contract, and receive a full refund of any monies paid for the charter 
air transportation and services.
    (d) In all circumstances, air taxi operators or commuter air 
carriers must disclose the information in paragraph (a) of this section 
to the charterer prior to the start of the air transportation.
    (e) If the information required to be disclosed in paragraph (a) of 
this section changes after the air transportation covered by the 
contract has begun, air taxi operators or commuter air carriers must 
provide information regarding any such changes to the charterer within 
a reasonable time after such information becomes available.
    (f) If the changes in information described in paragraph (e) of 
this section are not provided to the charterer within a reasonable time 
after becoming available, air taxi operators or commuter air carriers 
must provide the charterer with the opportunity to cancel the remaining 
portion of the contract for air transportation, including any services 
paid for in connection with such contract, and receive a full refund of 
any monies paid the charter air transportation and services not yet 
provided.
0
4. A new Sec.  298.100 is added to read as follows:


Sec.  298.100  Prohibited unfair and deceptive practices and unfair 
methods of competition.

    An air taxi or commuter air carrier subject to this part shall not 
engage in any unfair or deceptive practices or unfair method of 
competition in holding out, selling, or operating charter flights. The 
following enumerated practices, among others, by an air taxi or 
commuter air carrier are unfair or deceptive practices or unfair 
methods of competition:
    (a) Misrepresentations that may induce members of the public to 
reasonably believe that the air taxi or commuter air carrier will be, 
or is, in operational control of a flight when that is not the case.
    (b) Misrepresentations as to the quality or kind of service, type 
or size of aircraft, and points served.
    (c) Misrepresentations as to the quality or kind of service, type 
or size of aircraft, time of departure or arrival, points served, route 
to be flown, stops to be made, or total trip-time from point of 
departure to destination.
    (d) Misrepresentations that passengers are directly insured when 
they are not so insured. For example, where the only insurance in force 
is that protecting the air taxi or commuter air carrier in the event of 
liability.
    (e) Misrepresentations as to fares, charges, or special priorities 
for air transportation or services in connection therewith.
    (f) Representing that a contract for specified direct air carrier, 
aircraft, space, flight, or time, has been arranged, without a binding 
commitment with a direct air carrier for the furnishing of such 
definite reservation or charter as represented.
    (g) Selling or contracting for air transportation while knowing or 
having reason to know or believe that such air transportation cannot be 
legally performed by the entity that is to operate the air 
transportation.

[FR Doc. 2013-23142 Filed 9-27-13; 8:45 am]
BILLING CODE 4910-9X-P


