[Federal Register Volume 87, Number 161 (Monday, August 22, 2022)]
[Proposed Rules]
[Pages 51550-51581]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-16853]



[[Page 51549]]

Vol. 87

Monday,

No. 161

August 22, 2022

Part III





Department of Transportation





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Office of the Secretary





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14 CFR Parts 259, 260, and 399





Airline Ticket Refunds and Consumer Protections; Proposed Rule

  Federal Register / Vol. 87, No. 161 / Monday, August 22, 2022 / 
Proposed Rules  

[[Page 51550]]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Parts 259, 260, 399

[Docket No. DOT-OST-2022-0089]
RIN No. 2105-AF04


Airline Ticket Refunds and Consumer Protections

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

ACTION: Notice of Proposed Rulemaking (NPRM).

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SUMMARY: The U.S. Department of Transportation (Department or DOT) is 
proposing to codify its longstanding interpretation that it is an 
unfair business practice for a U.S. air carrier, a foreign air carrier, 
or a ticket agent to refuse to provide requested refunds to consumers 
when a carrier has cancelled or made a significant change to a 
scheduled flight to, from, or within the United States, and consumers 
found the alternative transportation offered by the carrier or the 
ticket agent to be unacceptable. The Department is also proposing to 
require that U.S. and foreign air carriers and ticket agents provide 
non-expiring travel vouchers or credits to consumers holding non-
refundable tickets for scheduled flights to, from, or within the United 
States who are unable to travel as scheduled in certain circumstances 
related to a serious communicable disease. Furthermore, the Department 
is proposing to require U.S. and foreign air carriers and ticket agents 
provide refunds, in lieu of non-expiring travel vouchers or credits, if 
the carrier or ticket agent received significant financial assistance 
from the government as a result of a public health emergency. The NPRM 
proposes to allow carriers and ticket agents to require consumers 
provide evidence to support their assertion of entitlement to a travel 
voucher, credit, or refund.

DATES: Comments should be filed by November 21, 2022. Late-filed 
comments will be considered to the extent practicable. Petitions for a 
hearing pursuant to 14 CFR 399.75(b)(1) must also be filed by November 
21, 2022.

ADDRESSES: You may file comments identified by the docket number DOT-
OST-2022-0089 by any of the following methods:
     Federal eRulemaking Portal: go to https://www.regulations.gov and follow the online instructions for submitting 
comments.
     Mail: Docket Management Facility, U.S. Department of 
Transportation, 1200 New Jersey Ave. SE, West Building Ground Floor, 
Room W12-140, Washington, DC 20590-0001.
     Hand Delivery or Courier: West Building Ground Floor, Room 
W12-140, 1200 New Jersey Ave. SE, Washington, DC, between 9 a.m. and 5 
p.m. ET, Monday through Friday, except Federal holidays.
     Fax: (202) 493-2251.
    Instructions: You must include the agency name and docket number 
DOT-OST-2022-0089 or the Regulatory Identification Number (RIN 2105-
AF04) for the rulemaking at the beginning of your comment. All comments 
received will be posted without change to https://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.). For information on 
DOT's compliance with the Privacy Act, please visit https://www.transportation.gov/privacy.
    Docket: For access to the docket to read background documents and 
comments received, go to https://www.regulations.gov or to the street 
address listed above. Follow the online instructions for accessing the 
docket.

FOR FURTHER INFORMATION CONTACT: Clereece Kroha or Blane Workie, Office 
of Aviation Consumer Protection, U.S. Department of Transportation, 
1200 New Jersey Ave. SE, Washington, DC 20590, 202-366-9342 (phone), 
[email protected] or [email protected] (email).

SUPPLEMENTARY INFORMATION:

I. Introduction

A. Purpose

    This NPRM is intended to ensure that travelers are treated fairly 
when airlines cancel flights to, from, or within the United States or 
make significant changes to the scheduled itineraries to, from, or 
within the United States that consumers purchased, which includes 
significant changes to the quality of the air travel specified in the 
itinerary. Currently, the Department's regulations at 14 CFR part 259 
require that airlines provide prompt refunds ``when ticket refunds are 
due.'' Further, the Department's regulations at 14 CFR part 399 require 
that ticket agents ``make proper refunds promptly when service cannot 
be performed as contracted.'' This NPRM proposes to clarify that when 
carriers cancel flights or make significant changes to flight 
itineraries and the contracted service was not provided, ticket refunds 
are due if consumers do not accept the alternative transportation 
offered by carriers or ticket agents. It also proposes to define 
``significant change of flight itinerary'' and ``cancelled flight'' to 
protect consumers and ensure consistency among carries and ticket 
agents with regard to when passengers are entitled to refunds.
    This NPRM is also designed to ensure consumers are treated fairly 
by limiting their financial losses on forgone air travel when: (1) they 
are restricted or prohibited from traveling by a governmental entity 
due to a serious communicable disease (e.g., as a result of a stay at 
home order, entry restriction, or border closure); (2) are advised by a 
medical professional or determine consistent with public health 
guidance issued by the Centers for Disease Control and Prevention 
(CDC), comparable agencies in other countries, or the World Health 
Organization (WHO) not to travel during a public health emergency to 
protect themselves from a serious communicable disease); or (3) are 
advised by a medical professional or determine consistent with public 
health guidance issued by CDC, comparable agencies in other countries, 
or WHO not to travel, irrespective of any declaration of a public 
health emergency, because they have or may have contracted a serious 
communicable disease and their condition would pose a threat to the 
health of others. Under the Department's current regulation, there is 
no requirement for an airline or a ticket agent to issue a refund or 
travel credit to a passenger holding a non-refundable ticket when the 
airline operated the flight and the passenger does not travel, 
regardless of the reason that the passenger does not travel. It is the 
Department's goal to protect consumers' financial interests when the 
disruptions to their travel plans were caused by public health concerns 
beyond their control. This financial protection would further 
incentivize individuals to postpone travel when they are advised by a 
medical professional or determine consistent with public health 
guidance not to travel because they have or may have a serious 
communicable disease that would pose a threat to others.

B. Statutory Authority

1. Unfair Practice
    DOT issues this NPRM pursuant to the authority set forth in 49 
U.S.C. 41712. This provision authorizes the Department to take action 
to address

[[Page 51551]]

unfair or deceptive practices or unfair methods of competition by air 
carriers, foreign air carriers, or ticket agents. On December 7, 2020, 
the Department issued a final rule that, among other things, requires 
the Department to provide its reasoning for concluding that a certain 
practice is unfair or deceptive to consumers when issuing aviation 
consumer protection rulemakings that are not specifically required by 
statute and are based on the Department's general authority to prohibit 
unfair or deceptive practices under section 41712. That final rule also 
adopted definitions for the terms ``unfair'' and ``deceptive.'' \1\ 
This NPRM is based on the unfair component of 49 U.S.C. 41712. Under 
the Department's final rule implementing section 41712, a practice is 
``unfair'' to consumers if it causes or is likely to cause substantial 
injury, which is not reasonably avoidable, and the harm is not 
outweighed by benefits to consumers or competition. Proof of intent is 
not necessary to establish unfairness.\2\
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    \1\ On February 2, 2022, the Department published a final rule 
title Procedures in Regulating Unfair or Deceptive Practices. See, 
87 FR 5655. This final rule, among other things, simplifies the 
hearing procedures set forth in 14 CFR 399.79 when the Department 
proposes a discretionary aviation consumer protection rulemaking 
declaring a practice to be unfair or deceptive. The procedures 
finalized by this rule do not change the requirement that the 
Department articulate the basis for concluding that a practice is 
unfair or deceptive to consumers when issuing discretionary aviation 
consumer protection rulemakings under the authority of 49 U.S.C. 
41712.
    \2\ See Final Rule, Defining Unfair or Deceptive Practices, 85 
FR 78707, Dec. 7, 2020.
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    Pursuant to its authority under section 41712, the Department in 
this NPRM proposes to require that airlines and ticket agents provide 
prompt ticket refunds to consumers for flights cancelled or 
significantly changed by carriers. The Department also proposes to 
require, under its authority in section 41712, in concert with 49 
U.S.C. 40101(a) and 41702, that carriers and ticket agents provide non-
expiring travel credits or vouchers, and--under certain circumstances--
refunds, to consumers who are restricted or prohibited from traveling 
by a governmental entity or are advised by a medical professional or 
determine consistent with public health guidance not to travel to 
protect themselves or others from a serious communicable disease. The 
Department's tentative basis for concluding that the practices this 
NPRM would prohibit are ``unfair'' is articulated in the paragraphs 
that follow.
    An airline's or ticket agent's practice of not providing a prompt 
refund to a ticketed passenger when the carrier cancels or 
significantly changes the passenger's flight and the passenger does not 
accept the alternative offered is ``unfair'' to consumers as it causes 
substantial harm to consumers, the harm is not reasonably avoidable, 
and the harm is not outweighed by benefits to consumers or competition. 
Consumers are substantially harmed when they pay money for a service 
that the airline does not provide, and the airline or ticket agent 
refuses to provide a refund or unduly delays issuance of the refund. 
According to the Department's data, the average cost for a domestic 
one-way ticket was $292 for calendar year 2020 and $307 for 2021.\3\ 
The Department does not publish data on the average cost of 
international airline tickets. According to Sabre Global Demand Data, 
however, the average one-way fare between the United States and a 
foreign point is $513 in 2020. It is not sufficient for carriers or 
ticket agents to only offer vouchers to passengers instead of the money 
paid for a service the airline did not provide. This is particularly 
true in certain situations, e.g., the consumer bought the airfare for a 
specific event and the cancelled flight or significantly changed flight 
itinerary prevents the consumer from attending or significantly impacts 
the consumer's ability to attend the event. Regardless of the reason, 
consumers may reasonably prefer and are entitled to refunds. The 
availability of a voucher does not sufficiently mitigate the 
substantial harm of failing to provide a prompt refund.
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    \3\ Bureau of Transportation Statistics, https://www.transtats.bts.gov/AverageFare/.
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    This harm is also not reasonably avoidable by consumers. Consumers 
are unable to avoid these injuries because cancellations or significant 
changes to their flights are outside of their control. An airline 
association has asserted that consumers who paid a lower fare for 
``non-refundable'' flights could have avoided the harm by paying a 
higher fare for fully refundable tickets.\4\ In DOT's view, however, 
the term ``non-refundable'' does not apply in cases where the airline 
cancels the flight or makes a significant change in the service 
provided. A reasonable consumer would not expect that he or she must 
pay more to purchase a refundable ticket in order to be able to recoup 
the ticket price when the airline fails to provide the service paid for 
through no action or fault of the consumer.
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    \4\ See, e.g., Airline Ticket Refunds, Presentation by Airlines 
for America to the Advisory Committee for Aviation Consumer 
Protection (ACPAC), Dec. 2, 2021, https://www.regulations.gov/document/DOT-OST-2018-0190-0030.
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    It is also the Department's view that the tangible and significant 
harm to consumers of not receiving a refund is not outweighed by 
countervailing benefits to consumers or competition. While the 
Department recognizes that a nonrefundable ticket allows consumers to 
pay a lower price for an airline ticket, the Department does not expect 
that this proposed requirement would result in airlines no longer 
offering a nonrefundable ticket category as the term nonrefundable has 
generally been understood not to apply in cases where the airline 
cancels the flight or makes a significant change in the service 
provided. Indeed, for decades, the Department's Office of Aviation 
Consumer Protection has made clear that it interpreted the prohibition 
against unfair practice to mean airlines cannot refuse to refund 
passengers holding non-refundable tickets when the carrier cancels or 
makes a significant change to a flight. This has not resulted in 
airlines no longer offering nonrefundable tickets to consumers.
    Similarly, it is an ``unfair practice'' by an airline or a ticket 
agent to not provide non-expiring travel credits or vouchers, and--
under certain circumstances--refunds, to consumers who are restricted 
or prohibited from traveling by a governmental entity due to a serious 
communicable disease (e.g., as a result of a stay at home order, entry 
restriction, or border closure) or are advised by a medical 
professional or determine consistent with public health guidance (e.g., 
CDC guidance) not to travel to protect themselves or others from a 
serious communicable disease. Consumers are substantially harmed when 
they pay money for a service that they are unable to use because they 
were directed or advised by governmental entities or medical 
professionals not to travel to protect themselves or others from a 
serious communicable disease, and the airline or ticket agent does not 
provide a non-expiring credit or voucher or a refund. This loss of the 
value of their tickets is a substantial harm that is not reasonably 
avoidable because the only way to avoid it is to disregard direction 
from governmental entities or medical professionals not to travel and 
risk inflicting serious health consequences on themselves or others. 
Consumers who decide to travel even if they are particularly vulnerable 
to contracting a serious communicable disease due to age or a health 
condition would be putting themselves at risk. Consumers who will lose 
the entire value of their tickets may choose to travel even when

[[Page 51552]]

they have been advised not to travel because they have or may have 
contracted a serious communicable disease, even though they would be 
risking harm to others to avoid financial loss. These types of actions 
by consumers are not in the public interest. The tangible and 
significant harm to consumers of losing the entire value of their 
ticket is not outweighed by potential countervailing benefits to 
consumers or competition. In response to restrictions and health 
concerns that limited consumers' ability to travel during the COVID-19 
pandemic in 2020, many airlines recognized the unfairness of retaining 
consumers' money when the consumer did not utilize the airlines' 
service and provided vouchers when consumers did not travel. However, 
complaints received by the Department show that numerous consumers were 
unable to use these vouchers before they expired during the pandemic. 
Further, the Department is aware of that some airlines and ticket 
agents did not provide vouchers or refunds to consumers who were unable 
to travel. Requiring airlines and ticket agents to provide non-expiring 
travel credits/vouchers or refunds provides consumers the opportunity 
to postpone travel and still retain some portion of the value of their 
ticket when they are advised by a medical professional or determine 
consistent with public health guidance (e.g., CDC guidance) not to 
travel because they have or may have a serious communicable disease.
2. Safe and Adequate Air Transportation
    49 U.S.C. 41702 states that an ``air carrier shall provide safe and 
adequate interstate air transportation.'' \5\ The Department's 
predecessor, the Civil Aeronautics Board (CAB), relied on section 
404(a) of the Federal Aviation Act of 1958 (subsequently codified as 49 
U.S.C. 41702 in Pub. L. 103-272), requiring air carriers ``to provide 
safe and adequate service, equipment and facilities,'' as authority to 
adopt its first regulation restricting smoking on air carrier 
flights.\6\ The Department relied on this same authority in issuing a 
2016 final rule prohibiting the use of e-cigarettes aboard aircraft (81 
FR 11415; Mar. 4, 2016). The Department explained in the 2016 final 
rule that the CAB found that ``nonsmoking passengers on aircraft may be 
assigned to a seat next to, or otherwise in close proximity to, persons 
who smoke and cannot escape this environment until the end of the 
flight.'' The Department noted that the CAB relied on its authority to 
provide for ``adequate'' service to address this issue in adopting the 
smoking ban. Id. at 11420-11421. With regard to e-cigarette use, the 
Department stated that, in addition to the direct effects of inhaling 
the aerosol from e-cigarettes, ``passengers may reasonably be concerned 
that they are inhaling unknown quantities of harmful chemicals, and 
that they will not be able to avoid the exposure for the duration of 
the flight.'' Id. at 11421. In prohibiting the use of e-cigarettes, the 
Department relied on its authority to ensure adequate service under 
section 41702. Id.
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    \5\ An ``air carrier'' is defined as ``a citizen of the United 
States undertaking by any means, directly or indirectly, to provide 
air transportation.'' ``Interstate air transportation'' is defined 
as ``the transportation of passengers or property by aircraft as a 
common carrier for compensation, or the transportation of mail by 
aircraft'' within the United States. 49 U.S.C. 40102(a)(2) and 
(a)(25).
    \6\ 38 FR 12207, May 10, 1973.
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    Similar to its prior actions related to smoking and the use of e-
cigarettes, the Department issues this NPRM pursuant to the authority 
provided in Sec.  41702 to ensure safe and adequate service. The 
Department proposes to require U.S. carriers to provide non-expiring 
travel vouchers or credits, or in certain circumstances refunds, to 
consumers holding non-refundable tickets for scheduled flights within 
the United States in circumstances where consumers are restricted or 
prohibited from traveling by a governmental entity due to concerns 
about a serious communicable disease or are advised by a medical 
professional or determine consistent with public health guidance not to 
travel to protect themselves or others from a serious communicable 
disease. The Department finds that passenger concerns about being 
seated next to, or in close proximity to, a passenger who may have a 
serious communicable disease justify the Department's use of its 
authority to ensure adequate service under section 41702. In line with 
the statute, this proposed requirement would promote safe and adequate 
air transportation by reducing incentives for individuals who have been 
advised against traveling because they have or may have a serious 
communicable disease to travel in an attempt to retain some portion of 
the value of their ticket. This proposal would also allow consumers who 
are particularly vulnerable to a serious communicable disease to avoid 
having to choose between forfeiting the value of a ticket or attempting 
to travel in spite of their vulnerability by allowing them to receive a 
travel credit and postpone travel during a public health emergency.
    Further, 49 U.S.C. 40101(a) directs the Department in carrying out 
aviation economic programs, including issuing regulations under 49 
U.S.C. 41702 and 41712, to consider certain enumerated factors as being 
in the public interest and consistent with public convenience and 
necessity. These factors include ``the availability of a variety of 
adequate, economic, efficient, and low-priced services without 
unreasonable discrimination or unfair or deceptive practices'' and 
``preventing unfair, deceptive, predatory, or anticompetitive practices 
in air transportation'', as well as ``assigning and maintaining safety 
as the highest priority in air commerce.'' Based on the forgoing 
discussion, the Department views this proposal as consistent with the 
statutory mandate of section 40101(a).

C. Unfair or Deceptive Practice Request for a Hearing

    For the reasons discussed in Section I.B.1., the Department 
tentatively concludes that the practices it proposes to prohibit in 
this NPRM are unfair and deceptive. Specifically, pursuant to its 
authority under section 41712, the Department in this NPRM proposes to 
require that airlines and ticket agents provide prompt ticket refunds 
to consumers for flights cancelled or significantly changed by carriers 
if a consumer does not accept alternative transportation offered by 
carriers or ticket agents. The Department also proposes to require, 
under its authority in section 41712, in concert with 49 U.S.C. 
40101(a) and 41702, that carriers and ticket agents provide non-
expiring travel credits or vouchers, and--under certain circumstances--
refunds, to consumers who are restricted or prohibited from traveling 
by a governmental entity or are advised against traveling to protect 
themselves or others from a serious communicable disease.
    Pursuant to the Department's regulations at 14 CFR 399.75(b)(1), 
any interested party may file a petition to hold a hearing on the 
proposed rule prior to the close of the comment period. As stated in 
the DATES section, petitions must therefore be received by November 21, 
2022.
    The Department's regulations 14 CFR 399.75(b)(2) provide that the 
Department will grant a petition if the petitioner makes a clear and 
convincing showing that granting the petition is in the public 
interest. Factors considered in determining whether a petition is in 
the public interest include ``(i) Whether the proposed rule depends on 
conclusions concerning one or more specific scientific, technical, 
economic, or other factual issues that are genuinely in dispute or that 
may not satisfy the requirements of the Information Quality

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Act; (ii) Whether the ordinary public comment process is unlikely to 
provide an adequate examination of the issues to permit a fully 
informed judgment; (iii) Whether the resolution of the disputed factual 
issues would likely have a material effect on the costs and benefits of 
the proposed rule; (iv) Whether the requested hearing would advance the 
consideration of the proposed rule and the General Counsel's ability to 
make the rulemaking determinations required by this section; and (v) 
Whether the hearing would unreasonably delay completion of the 
rulemaking.'' DOT must also provide an explanation of the basis for the 
decision on a petition. (14 CFR 399.75(b)(3)).

D. Summary of the Proposed Regulatory Provisions

    The Department is proposing to enhance its aviation consumer 
protection requirements applicable to refunds by amending the 
Department's regulations in 14 CFR parts 259, 260 and 399. On July 21, 
2021, the Department issued a Notice of Proposed Rulemaking titled 
``Refunding Fees for Delayed Checked Bags and Ancillary Services That 
Are Not Provided.'' \7\ That NPRM proposes, among other things, 
adopting a new part under Subchapter A of Title 14 of the Code of 
Federal Regulations, 14 CFR part 260,\8\ which would address refund 
requirements related to fees for significantly delayed checked bags and 
fees for ancillary services that are paid for but not provided.\9\ In 
addition to the July 2021 NPRM, this proposed action--Airline Ticket 
Refunds and Consumer Protections--would substantially increase the 
protections provided to consumers by adding sections to the proposed 
part 260, amending part 259, and amending part 399 as provided in the 
summary table below.
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    \7\ 86 FR 38420.
    \8\ On July 21, 2021, the Department issued a Notice of Proposed 
Rulemaking titled ``Refunding Fees for Delayed Checked Bags and 
Ancillary Services That Are Not Provided.'' See, 86 FR 38420. That 
NPRM proposes, among other things, adopting a new part under 
Subchapter A of Title 14 of the Code of Federal Regulations, 14 CFR 
part 260, which would address refund requirements related to fees 
for significantly delayed checked bags and fees for ancillary 
services that are not provided. The Department believes that this 
new proposed rule would be an appropriate vehicle to add the 
proposed ticket refund requirements. As such, in this NPRM, we are 
proposing to add sections to the proposed part 260 that addresses 
ticket refund requirements. The Department will review comments 
already submitted on baggage fee and other ancillary fee refunds in 
that rulemaking. Comments on part 260 submitted in response to this 
rulemaking should solely focus on proposals related to ticket 
refunds with one exception. This exception is the proposed 
regulatory text at 14 CFR 260.9, which would specify that a 
carrier's failure to ensure that its contract of carriage provisions 
is consistent with 14 CFR part 260 would be considered an unfair and 
deceptive practice.
    \9\ DOT is not making changes to the proposals from the July 21, 
2021 proposed rule in this NRPM. Accordingly, comments submitted in 
response to the 2021 NPRM regarding the refund requirements related 
to fees for significantly delayed checked bags and ancillary 
services need not be resubmitted.

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           Subject                              Proposal
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Refunding Airline Tickets....  Amend 14 CFR parts 259, 260, and 399 to
                                require U.S. and foreign airlines and
                                ticket agents to provide prompt ticket
                                refunds for ``cancelled flights'' or
                                ``significant changes of flight
                                itinerary'' when consumers do not accept
                                alternative transportation.
Definition of Cancelled        Amend 14 CFR parts 260 and 399 to define
 Flight.                        cancelled flight as a flight that was
                                published in a carrier's Computer
                                Reservation System (CRS) at the time of
                                the ticket sale but was not operated by
                                the carrier.
Definition of Significant      Amend 14 CFR parts 260 and 399 to define
 Change of Flight Itinerary.    significant change of flight itinerary
                                as a change made by a carrier where:
                               (1) the passenger is scheduled to depart
                                from the origination airport three hours
                                or more (for domestic itineraries) or
                                six hours or more (for international
                                itineraries) earlier than the original
                                scheduled departure time;
                               (2) the passenger is scheduled to arrive
                                at the destination airport three hours
                                or more (for domestic itineraries) or
                                six hours or more (for international
                                itineraries) later than the original
                                scheduled arrival time;
                               (3) the passenger is scheduled to depart
                                from a different origination airport or
                                arrive at a different destination
                                airport;
                               (4) the passenger is scheduled to travel
                                on an itinerary with more connection
                                points than that of the original
                                itinerary;
                               (5) the passenger is downgraded to a
                                lower class of service; or
                               (6) the passenger is scheduled to travel
                                on a different type of aircraft with a
                                significant downgrade of the available
                                amenities and travel experiences.
Notification of Right to       Amend 14 CFR parts 259 and 399 to require
 Refund.                        U.S. and foreign airlines and ticket
                                agents inform consumers that they are
                                entitled to a refund if that is the case
                                before making an offer for travel
                                credits, vouchers, or other compensation
                                in lieu of refunds.
Providing Non-Expiring Travel  Amend 14 CFR parts 259 and 399 to require
 Credits or Vouchers.           U.S. and foreign airlines and ticket
                                agents issue non-expiring travel credits
                                or vouchers to:
                               (1) consumers who are restricted or
                                prohibited from traveling in relation to
                                a serious communicable disease (e.g.,
                                stay at home order, entry restriction,
                                border closure), irrespective of a
                                public health emergency being declared,
                                by a governmental entity, whether it be
                                a foreign government or Federal, State
                                or local government;
                               (2) consumers who are advised not to
                                travel during a public health emergency
                                by a medical professional or determine
                                not to travel consistent with public
                                health guidance issued by CDC,
                                comparable agencies in other countries,
                                or WHO to protect themselves from a
                                serious communicable disease; and
                               (3) consumers who are advised not to
                                travel, irrespective of a public health
                                emergency being declared, by a medical
                                professional or determine not to travel
                                consistent with public health guidance
                                issued by CDC, comparable agencies in
                                other countries, or WHO because they
                                have or may have contracted a serious
                                communicable disease and their condition
                                would pose a threat to the health of
                                others.
Providing Refunds if           Amend 14 CFR part 260 and 399 to require
 Receiving Significant          U.S. and foreign airlines and ticket
 Governmental Financial         agents that receive significant
 Assistance.                    governmental financial assistance after
                                the effective date of the final rule in
                                relation to a public health emergency to
                                issue refunds, in lieu of non-expiring
                                travel credits or vouchers, to:

[[Page 51554]]

 
                               (1) consumers who are restricted or
                                prohibited from traveling in relation to
                                a serious communicable disease (e.g.,
                                stay at home order, entry restriction,
                                border closure), during a public health
                                emergency, by a governmental entity,
                                whether it be a foreign government or
                                Federal, State or local government;
                               (2) consumers who are advised not to
                                travel during a public health emergency
                                by a medical professional or determine
                                not to travel consistent with public
                                health guidance issued by CDC,
                                comparable agencies in other countries,
                                or WHO to protect themselves from a
                                serious communicable disease; and
                               (3) consumers who are advised not to
                                travel during a public health emergency
                                by a medical professional or determine
                                not to travel consistent with public
                                health guidance issued by CDC,
                                comparable agencies in other countries,
                                or WHO because they have or may have
                                contracted a serious communicable
                                disease and their condition would pose a
                                threat to the health of others.
                               Eligible consumers must make a request
                                for a refund from the carrier or ticket
                                agent within 12 months of the date that
                                the Department has made a determination
                                that the carrier or the ticket agent
                                received significant financial
                                assistance.
Documentation................  Amend 14 CFR parts 259 and 399 to allow
                                U.S. and foreign airlines and ticket
                                agents to require consumers requesting a
                                refund or a non-expiring credit or
                                voucher for a non-refundable ticket when
                                the flight is still scheduled to be
                                operated without significant change to
                                provide, as appropriate:
                               (1) the applicable government order or
                                other document demonstrating how the
                                passenger's ability to travel is
                                restricted; and/or
                               (2) a written statement from a licensed
                                medical professional, attesting that it
                                is the medical professional's opinion,
                                based on current medical knowledge and
                                the passenger's health condition, that
                                the passenger's health would be
                                endangered if the passenger traveled or
                                the passenger would pose a direct threat
                                to the health of others if the passenger
                                traveled.
Service and Processing Fees..  Amend 14 CFR part 399 to allow ticket
                                agents to retain a service fee for
                                purchasing the ticket or processing a
                                refund or a non-expiring credit or
                                voucher, as long as the fee is on a per-
                                passenger basis and the existence and
                                amount of the fee is clearly and
                                prominently disclosed to consumers at
                                the time they purchased the airfare.
                               Amend 14 CFR parts 259 and 260 to allow
                                airlines to assess a fee for processing
                                a refund or a non-expiring credit or
                                voucher when the flight is still
                                scheduled to be operated without
                                significant change, as long as the fee
                                is on a per-passenger basis and the
                                existence and amount of the fee is
                                clearly and prominently disclosed to
                                consumers at the time they purchased the
                                airfare.
------------------------------------------------------------------------

II. Applicability

A. Airlines

(1) Covered Carrier
    The proposed rule in 14 CFR parts 259 and 260 applies to a 
certificated or commuter air carrier \10\ that operates scheduled 
passenger service to, within, and from the United States using aircraft 
of any size, and to a foreign carrier that operates scheduled passenger 
service to or from the United States using aircraft of any size. The 
Department's existing regulation at 14 CFR 259.5 requiring carriers to 
adopt and adhere to a customer service plan, which includes a 
commitment to provide prompt ticket refunds to passengers when a refund 
is due, applies to all scheduled flights of a certificated or commuter 
air carrier if the carrier operates passenger service using any 
aircraft originally designed to have a passenger capacity of 30 or more 
seats, and to all scheduled flights to and from the United States of a 
foreign carrier if the carrier operates passenger service to and from 
the United States using any aircraft originally designed to have a 
passenger capacity of 30 or more seats.\11\ As such, section 259.5 
presently does not cover U.S. and foreign carriers operating scheduled 
flights to, from, or within the United States, as applicable, solely 
using aircraft originally designed to have a passenger capacity of 
fewer than 30 seats. The Department considered the burden on smaller 
carriers of adopting and adhering to a comprehensive customer service 
plan, which extends to all aspects of customer service, and ultimately 
determined that exempting smaller carriers that do not operate aircraft 
larger than 30 seats would protect the vast majority of passengers 
using scheduled service without unduly burdening smaller carriers.
---------------------------------------------------------------------------

    \10\ A certificated air carrier is an air carrier holding a 
certificate issued under 49 U.S.C. 41102. A commuter air carrier is 
an air carrier as established by 14 CFR 298.3(b) that carries 
passengers on at least five round trips per week on at least one 
route between two or more points according to a published flight 
schedule, using small aircraft--i.e., aircraft originally designed 
with the capacity for up to 60 passenger seats. See 14 CFR 298.2. 
Commuter air carriers, along with air taxi operators, operating 
under 14 CFR part 298 are exempted from the certification 
requirements of 49 U.S.C. 41102.
    \11\ 14 CFR 259.2, 259.3, and 259.5(a).
---------------------------------------------------------------------------

    In this NRPM, the Department is proposing to revise section 
259.5(b)(5) by defining under what situations a ticket refund would be 
due and under what situations passengers cancelling a non-refundable 
ticket should receive a travel credit or voucher. The proposal would 
require all U.S. and foreign carriers operating scheduled services to, 
from, or within the United States to comply with the refund requirement 
when carriers cancel or make a significant change to a flight 
itinerary, and to provide non-expiring travel credits or vouchers, or 
in certain circumstances refunds, when a passenger is unable or advised 
not to travel due to a concern related to a serious communicable 
disease, regardless of the size of the aircraft they operate. Carriers 
that are otherwise not currently covered under section 295.5 to provide 
refunds when due because they operate only small aircraft would be 
required, under this proposal, to comply with the specific requirements 
on refunding and providing vouchers and credits.
    The Department has tentatively made the policy decision to include 
these smaller carriers in the refund and voucher issuance requirements 
as specified in section 259.5 for the following reasons. With respect 
to refund, these carriers are already covered in the Department's 
credit card

[[Page 51555]]

purchase refund regulation, 14 CFR part 374. The Department's proposal 
merely clarifies under what situations a refund is due and does not 
impose additional requirements on carriers. With respect to 
communicable disease related travel voucher, credit, and refund 
issuance, this proposal would impose new requirements on carriers, 
including these smaller carriers. The Department has determined that 
placing this burden on smaller carriers is appropriate because the 
financial harm and the serious potential health risks this proposal is 
intended to address and prevent affect consumers traveling on all 
airlines. The Department believes that the expansion of the 
applicability of this proposed regulation is particularly meaningful to 
many consumers traveling on smaller carriers who are from economically 
disadvantaged small communities. The Department seeks public comments 
on whether the proposed expansion of the regulation to include smaller 
carriers is reasonable, and what obstacles, if any, these smaller 
carriers may encounter to comply.
(2) Covered Flights and Consumers Protected
    The current refund requirement in part 259 applies to all scheduled 
flights of a covered U.S. carrier and all scheduled flights to and from 
the U.S. of a covered foreign carrier. While proposing to expand the 
scope of covered carriers for the refund and travel credit issuance 
requirements, DOT does not propose to expand the scope of covered 
flights or consumers protected. Nonetheless, the Department is 
interested in exploring whether clarification regarding the scope of 
the covered flights and consumers protected is appropriate. Any 
examination of the applicability of DOT's refund requirement for 
aviation consumers would not be complete without looking at Regulation 
Z, as codified in 12 CFR part 226 and 12 CFR part 1026,\12\ and the 
airline refund regulation in 14 CFR part 374, which implements the 
requirement of Regulation Z with respect to airlines. The applicability 
provision in 14 CFR 374 states that ``this part is applicable to all 
air carriers and foreign air carriers engaging in consumer credit 
transactions.'' \13\ In Supplement I to parts 226 and 1026, the issue 
of foreign applicability is addressed by explaining that ``Regulation Z 
applies to all persons (including branches of foreign banks and sellers 
located in the United States) that extend consumer credit to residents 
(including resident aliens) of any state. . .'' and that ``[i]f an 
account is located in the United States and credit is extended to a 
U.S. resident, the transaction is subject to the regulation.'' \14\ The 
Department's authority to prohibit unfair or deceptive practices in air 
transportation or sale of air transportation \15\ means that the 
Department's aviation consumer protection regulations, including the 
refund regulations in 14 CFR parts 259 and 374, cover flights to, 
within, and from the United States, irrespective of whether the 
consumer on those flights is or is not a resident of the United States. 
While Regulation Z focuses on whether consumers reside in the United 
States and whether the sellers (airlines or ticket agents) have a 
branch located in the United States that sells to consumers in the 
United States,\16\ the Department's airline refund regulations have 
focused on whether the flight subject to the refund request is a flight 
to, from, or within the United States, irrespective of whether the 
consumer requesting a refund is a resident of the United States. The 
Department seeks comments on whether the scope of the refund 
requirement under parts 259, 260, and 399 should be amended to make 
clear, consistent with the Department's statutory authority under 49 
U.S.C. 41712, that the consumers' place of residence is irrelevant to 
whether the consumer is entitled to a refund. The Department also seeks 
comment on whether the Department, as a matter of policy, should limit 
the applicability of the refund requirement to U.S. consumers (U.S. 
citizens and residents) on covered flights. Commenters should 
articulate the reason for their position regarding expansion or 
limitation, with a focus on whether such a provision would better 
protect U.S. consumers while not overly burdening airlines with matters 
that do not significantly impact U.S. consumers.
---------------------------------------------------------------------------

    \12\ The Department's refund regulation in 14 CFR part 374 
refers to both 12 CFR part 1026 and Regulation Z of the Board of 
Governors of the Federal Reserve, which is in 12 CFR part 226. See 
14 CFR 374.3(b).
    \13\ 14 CFR 374.2.
    \14\ See, 12 CFR Appendix Supplement I to Part 226--Official 
Interpretations. See also 12 CFR Appendix Supplement I to Part 
1026--Official Staff Interpretations.
    \15\ Air transportation means foreign air transportation, 
interstate air transportation, or the transportation of mail by 
aircraft. See 49 U.S.C. 40102 (a)(5).
    \16\ The Department would consider an airline that has a website 
that markets to U.S. consumers to be a branch located in the United 
States.
---------------------------------------------------------------------------

    The Department is also interested in comments regarding whether a 
limited expansion of the applicability is appropriate to cover certain 
flight segments between two foreign points. For example, should the 
Department's refund requirements in parts 259 and 260 cover segments 
between two foreign points marketed and operated by a foreign carrier 
as a part of an international itinerary to or from the United States? 
Should these proposed requirements only cover the foreign segment if it 
is marketed as a code-share flight under a U.S. carrier's code? For 
example, for a passenger traveling between New Delhi and New York via 
London, should the refund rule cover the cancellation or significant 
change of the New Delhi-London segment if both New Delhi-London and 
London-New York segments are sold on the same ticket under a U.S. 
carrier's code? Should the rule cover an interline itinerary on the 
same ticket but the New Delhi-London segment is under a foreign 
carrier's code and the London-New York segment is under a U.S. 
carrier's code?
    This proposed rulemaking, similar to the existing regulation in 14 
CFR 259.5 on refunds, would cover only scheduled flights. Public 
charter passengers oftentimes also face flight cancellations, itinerary 
changes, and travel plan interruptions related to communicable 
diseases. The Department's regulation on public charter operations, 14 
CFR part 380, has specific consumer protection requirements regarding 
flight cancellations by a public charter operator \17\ or by a direct 
air carrier \18\ and under what conditions a public charter participant 
(passenger) would be entitled to a refund,\19\ including the right to a 
refund due to a ``major change'' \20\ made by the public charter 
operator as defined in 14 CFR 380.33. Furthermore, the public charter 
regulation provides that a passenger would receive a full refund (less 
any applicable administrative fee of no more than $25) if the passenger 
wishes to cancel the booking, as long as that passenger provides a 
substitute passenger in his or her place.\21\ This requirement would 
potentially address the situation where the charter flight is operated 
but a passenger is unable or

[[Page 51556]]

unwilling to travel because of a concern related to a serious 
communicable disease. It is the Department's view that the regulatory 
framework protecting public charter passengers in the event of charter 
operator-initiated cancellation or changes or passenger-initiated 
changes due to a concern regarding communicable disease has been in 
place for many decades, which has been adequately addressing issues 
unique to public charter operations. The Department does not propose to 
amend the separate requirements regarding passenger refunds applicable 
to public charter operations.
---------------------------------------------------------------------------

    \17\ See, e.g., a public charter operator may not cancel the 
charter less than 10 days before the scheduled departure date, 
except for circumstances that make it physically impossible to 
perform the charter trip, 14 CFR 380.32(h).
    \18\ See, 14 CFR 380.43, a direct air carrier may not cancel any 
charter less than 10 days before the scheduled departure date, 
except for circumstances that make it physically impossible to 
perform the charter trip.
    \19\ See, e.g., If a charter is cancelled, a refund will be made 
to the participant within 14 days after the cancellation, 14 CFR 
380.32(k); any participant will receive a full refund less an 
administrative fee upon providing a substitute participant within 14 
days, 14 CFR 380.32(m)(2) and 380.32(n).
    \20\ 14 CFR 380.32(r).
    \21\ 14 CFR 380.32(m)(2).
---------------------------------------------------------------------------

B. Ticket Agents

    The proposed rule, similar to the existing rule on refunds in 14 
CFR 399.80(l), applies to ticket agents of any size. A ``ticket agent'' 
is defined in 49 U.S.C. 40102(a)(45) to mean a person (except an air 
carrier, a foreign air 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. ``Air transportation'' is also a 
defined term by statute, which essentially encompasses flights to, 
from, or within the United States.\22\ In this NPRM, the Department 
proposes that the refund and travel voucher or credit issuance 
requirements apply to retail ticket agents selling tickets directly to 
consumers for scheduled passenger service to, from, or within the 
United States. The Department is limiting the proposed applicability to 
scheduled service as it believes that there are other adequate consumer 
protection mechanisms already in place to protect consumers who 
purchase public charter air transportation (14 CFR part 380) and single 
entity charter air transportation (14 CFR part 295) from ticket agents. 
Similar to the scope of covered flights and protected consumers for 
airline refunds, the Department is interested to know whether it is 
adequate to require ticket agents to provide refunds and travel credits 
or vouchers, as appropriate, for flights to, from, or within the United 
States regardless of whether the seller has a location in the U.S. 
through which the transaction occurred and regardless of whether the 
consumer is a U.S. resident, or whether the Department should focus on 
refund requests for U.S. based transactions by U.S. residents. The 
Department also seeks comments on whether the rule should cover tickets 
for flights to, within, or from the United States sold by a ticket 
agent from a foreign location, and to what extent regulating such 
transactions would benefit U.S. consumers.
---------------------------------------------------------------------------

    \22\ 49 U.S.C. 40102(a)(5). ``Air transportation'' means foreign 
air transportation, interstate air transportation, or the 
transportation of mail by aircraft.
---------------------------------------------------------------------------

III. Refunding Airfare for Cancelled or Significantly Changed Flights

A. Background

    The Department has the authority to prohibit unfair or deceptive 
practices by airlines and ticket agents in air transportation or the 
sale of air transportation under 49 U.S.C. 41712. For well over 20 
years, the Department's Office of Aviation Consumer Protection has 
informed airlines operating flights to, within, and from the United 
States that a refusal to refund passengers when an airline cancels or 
significantly changes a flight and passengers do not accept alternative 
transportation would be an unfair business practice in violation of 
section 41712, regardless of whether the passenger has purchased a non-
refundable ticket. In a letter to U.S. carriers issued in 1996, the 
Office of Aviation Enforcement and Proceedings (now the Office of 
Aviation Consumer Protection) reminded carriers that a refusal to 
refund or an application of penalties to non-refundable tickets would 
be considered grossly unfair and a violation of section 41712 in 
situations where the change of flight time or travel date was 
necessitated by carrier action or ``an act of god'', e.g., where the 
carrier cancels a flight for weather or mechanical reasons. The letter 
also explained that any contract of carriage or tariff provision 
mandating such a result would also be grossly unfair and a violation of 
section 41712.\23\
---------------------------------------------------------------------------

    \23\ See, Industry Letter to U.S. Air Carriers, July 15, 1996, 
https://www.transportation.gov/sites/dot.gov/files/docs/19960715_2.pdf.
---------------------------------------------------------------------------

    The Office of Aviation Consumer Protection's longstanding view that 
it is an unfair practice in violation of section 41712 for airlines to 
refuse refunds or impose monetary penalties on passengers holding 
nonrefundable tickets when the carrier cancels a flight or makes a 
significant change to a flight itinerary remained the same even when 
air travel was disrupted on a large scale. For example, following the 
aftermath of the terrorist attacks on September 11, 2001, the 
Department's Office of Aviation Consumer Protection issued a letter 
\24\ to major U.S. airlines and U.S., international, and regional 
airline associations, reminding them of airlines' responsibility to 
provide refunds upon request to passengers who wish to cancel their 
trip as a result of a flight cancellation or significant schedule 
change made by the carriers. Recognizing the dramatic impact of the 
terrorist attacks on airline personnel and schedules, the deluge of 
refund requests that airlines received, and the added time needed to 
process them, the Office of Aviation Consumer Protection nonetheless 
stated that it expected carriers to dedicate the appropriate resources 
necessary to process refunds in a timely manner.
---------------------------------------------------------------------------

    \24\ See, Email to Major Airlines and Aviation Associations, 
September 25, 2001, https://www.transportation.gov/sites/dot.gov/files/docs/20010925_0.pdf.
---------------------------------------------------------------------------

    The Department reiterated this interpretation of 49 U.S.C. 41712 in 
a 2011 final rule. The Department's aviation consumer protection 
regulation in 14 CFR 259.5(b)(5), adopted in 2011, requires covered 
U.S. and foreign air carriers to adopt and adhere to a customer service 
plan, which must include, among other things, a commitment that 
carriers will provide prompt refunds to consumers when ticket refunds 
are due. Although the rule text does not specify under what situations 
a ticket refund would be due, in the preamble of the 2011 final rule 
implementing this requirement, the Department discussed extensively 
circumstances under which a refund, including a refund of non-
refundable tickets, should be provided. These circumstances include 
flight cancellations or significant flight delays where consumers 
choose to not travel because of these disruptions. The Department 
stated:

    We reject some carriers' and carrier associations' assertions 
that carriers are not required to refund a passenger's fare when a 
flight is cancelled if the carrier can accommodate the passenger 
with other transportation options after the cancellation. We find it 
to be manifestly unfair for a carrier to fail to provide the 
transportation contracted for and then to refuse to provide a refund 
if the passenger finds the offered rerouting unacceptable (e.g., 
greatly delayed or otherwise inconvenient) and he or she no longer 
wishes to travel. Since at least the time of an Industry Letter of 
July 15, 1996 . . ., the Department's Aviation Enforcement Office 
has advised carriers that refusing to refund a non-refundable fare 
when a flight is [cancelled] and the passenger wishes to cancel is a 
violation of 49 U.S.C. 41712 (unfair or deceptive practices) and 
would subject a carrier to enforcement action.\25\
---------------------------------------------------------------------------

    \25\ See, Final Rule, Enhancing Airline Passenger Protections, 
76 FR 23110, at 23129, April 25, 2011. see also id. (the Office 
``continue[s] to believe that there are circumstances in which 
passengers would be due a refund, including a refund of non-
refundable tickets and optional fees associated with those tickets, 
due to a significant flight delay'').

    In the 2011 final rule, the Department also stated that while the 
Department views it as manifestly unfair for carriers

[[Page 51557]]

to refuse to provide prompt refunds when consumers choose to not travel 
and to not accept alternative transportation following a cancelled or 
significantly delayed flight, the Department was persuaded by industry 
commenters that it should not adopt a strict standard of what 
constitutes a significant delay for the purpose of determining whether 
a refund of the airfare is due. In deciding not to adopt a strict 
standard, the Department explained that the definition of a significant 
delay depends on a wide variety of factors such as the length of the 
delay, length of the flight, and the passenger's circumstances. The 
Department declared that its Office of Aviation Consumer Protection 
would continue to monitor how carriers apply their non-refundability 
provision in the event of a significant change in scheduled departure 
or arrival time and would determine based on the facts and 
circumstances of the delay whether a failure to provide a refund in 
response to such a delay is an unfair and deceptive practice.
    More recently, in April and May 2020, the Office of Aviation 
Consumer Protection issued two notices reminding airlines and ticket 
agents that their obligation to refund passengers for cancelled or 
significantly changed flights remains unchanged even given the impact 
of the COVID-19 pandemic.\26\ The May 2020 notice also acknowledged 
that neither the term ``significant change'' nor ``cancellation'' is 
defined in regulation or statute. It noted that, based on the Office of 
Aviation Consumer Protection's review of the refund policies and 
practices of U.S. and foreign air carriers, airlines define 
``significant change'' and ``cancellation'' differently when fulfilling 
their obligation to provide refunds. Because ``cancellation'' and 
``significant change'' are not defined in the context of ticket 
refunds, the Office of Aviation Consumer Protection stated that 
airlines may develop reasonable interpretations of those terms.
---------------------------------------------------------------------------

    \26\ See ``Frequently Asked Questions Regarding Airline Ticket 
Refunds Given the Unprecedented Impact of the COVID-19 Public Health 
Emergency on Air Travel'' (May 12, 2020) (``May 12, 2020 Enforcement 
Notice''), available at https://www.transportation.gov/airconsumer/FAQ_refunds_may_12_2020; ``Enforcement Notice Regarding Refunds by 
Carriers Given the Unprecedented Impact of the COVID-19 Public 
Health Emergency on Air Travel'' (April 3, 2020) (``April 3, 2020 
Enforcement Notice''), available at https://www.transportation.gov/airconsumer/enforcement_notice_refunds_apr_3_2020.
---------------------------------------------------------------------------

    Similar to the refund requirement on airlines in section 259.5, the 
Department's aviation consumer protection regulation requires ticket 
agents to provide prompt refunds when the services paid for by 
consumers cannot be provided as contracted. Specifically, 14 CFR 
399.80(l) declares it an unfair or deceptive practice by a ticket agent 
of any size to fail or refuse to make proper refunds promptly when 
service cannot be performed as contracted or representing that such 
refunds are obtainable only at some other point, thus depriving persons 
of the immediate use of the money to arrange other transportation, or 
forcing them to suffer unnecessary inconveniences and delays or 
requiring them to accept transportation at higher cost, or under less 
desirable circumstances, or on less desirable aircraft than that 
represented at the time of sale. This provision, originally adopted by 
the Civil Aeronautics Board, has not been amended since at least 1960s. 
The regulation in section 399.80(l) also does not specify what 
situations would constitute ``service [that] cannot be performed as 
contracted,'' which would impose refund obligations on ticket agents.
    With respect to the timeliness of a refund when it is due, carriers 
and ticket agents are subject to the credit refund requirements of 
Regulation Z as discussed earlier. The Department's regulation, 14 CFR 
part 374, implements Regulation Z with respect to airlines. These 
regulations establish that, with respect to refund requests involving 
airline tickets purchased with a credit card, the airline must transmit 
a credit statement for a passenger refund to the credit card issuer 
within seven business days of receipt of full documentation for the 
refund requested. Further, the Department's regulation in 14 CFR part 
259 requires airlines to provide refunds involving airline tickets 
purchased with cash or check within 20 days after receiving a complete 
refund request.
    These time frames for refunding consumers have been challenging for 
airlines and ticket agents when air travel was disrupted in a large 
scale. For example, in the early months of the COVID-19 pandemic, 
airlines responded to travel restrictions imposed by various 
governments and the rapidly reduced consumer demand by cancelling 
significant amounts of flights and making drastic adjustments to the 
schedules of the flights that were still operating. These cancellations 
and schedule changes by airlines, in conjunction with cancellation 
requests by many consumers who had already booked travel but decided 
that they no longer wished to travel during a pandemic, led to an 
unprecedented number of refund requests, which airlines had difficulty 
processing in a timely manner. In addition, many airlines were facing 
cashflow difficulties, which resulted in them initially being reluctant 
to process refund requests. Similar to the airlines' situation, ticket 
agents also faced a drastic increase in refund requests from consumers. 
In addition to facing the similar cashflow difficulties arising from 
the large numbers of refund requests, ticket agents' cashflow situation 
may have been more challenging because they were not the ultimate 
recipients of the consumer funds originally used to purchase the 
ticket. Consumers complained that many ticket agents only offered 
travel credits or simply passed the requests on to airlines, failing to 
provide a refund.
    Since March 2020 when the COVID-19 public health emergency was 
declared in the United States, the Department's Office of Aviation 
Consumer Protection has received a significant number of consumer 
complaints regarding airlines and ticket agents refusing to provide a 
refund or delaying processing of refunds when their flights were 
cancelled or significantly changed due to the impact of the public 
health emergency.\27\ Consumers, many holding non-refundable tickets, 
allege that after flight cancellations or changes that affected their 
travel were made by airlines, instead of providing refunds, they were 
offered travel vouchers or credits for future use. Consumers often 
mention the financial difficulties they are already suffering from the 
effect of the pandemic, which are exacerbated by the inability to 
receive timely refunds of their airfares. In addition, consumers assert 
that the airline vouchers or credits are not useful to them due to the 
lack of available flights or their inability or unwillingness to travel 
overall because of government restrictions and health concerns.
---------------------------------------------------------------------------

    \27\ See, Report to the White House Competition Council: U.S. 
Department of Transportation's Investigatory, Enforcement and Other 
Activities Addressing Lack of Timely Airline Ticket Refunds 
Associated With the COVID-19 Pandemic, September 9, 2021, https://www.transportation.gov/individuals/aviation-consumer-protection/dot-report-airline-ticket-refunds. From January 1, 2020 to June 30, 
2021, the Department received a total of 105,327 complaints 
concerning refunds. In comparison, from July 1, 2018 to December 31, 
2019, the Department received a total of 2,264 complaints concerning 
refunds. This change represents an increase of 4,552%.
---------------------------------------------------------------------------

    Despite the Office of Aviation Consumer Protection's efforts to 
ensure airlines' and ticket agents' compliance with their refund 
obligations, the significant delays in providing refunds led the Office 
of Aviation Consumer Protection to pursue enforcement action

[[Page 51558]]

in appropriate instances. The Department's existing regulations 
pertaining to refunds have exacerbated this challenge and made it more 
difficult to monitor compliance and enforce requirements. This is 
because the existing refund requirement provides that airlines have an 
obligation to provide prompt refunds when refunds are due, but the 
Department's longstanding position on refunding airfare due to 
cancellations and significant delays is not codified in rule text. 
Also, the terms ``cancelled flight'' and ``significant change of flight 
itinerary'' are not defined in regulation, which has resulted in 
inconsistency among carriers on when passengers are entitled to 
refunds.
    The Aviation Consumer Protection Advisory Committee (ACPAC) has 
also considered the issue of refund requirements applicable to airlines 
and ticket agents.\28\ In a December 2, 2021 public meeting, the ACPAC 
examined the Department's current airline ticket refund regulations and 
enforcement activities, and received presentations from representatives 
of the airline industry, consumer rights advocacy groups, State 
consumer protection agencies, and ticket agents.\29\ Focusing on the 
massive airline cancellations and changes during the COVID-19 pandemic, 
consumer rights advocates shared the frustration many consumers felt 
regarding not receiving timely refunds after airlines cancelled or made 
significant changes to their flights. They also expressed concern about 
airline internal policies that are not transparent or consistent in how 
delays and cancellations are defined and how lack of clarity or 
consistency affected passengers' refund eligibility. Airline 
representatives described the challenges airlines faced handling the 
massive volume of refund requests during the COVID-19 pandemic. They 
expressed support for the Department's effort to codify its 
longstanding policy regarding refunds but emphasized the long history 
of airlines' compliance with the existing regulation and advocated 
against prescriptive regulations establishing a hard time limit for 
significant changes that trigger a refund. Representatives of ticket 
agents expressed understanding of consumer frustration when requesting 
refunds through ticket agents but emphasized the ticket agents' role in 
acting as intermediaries between consumers and airlines in the process. 
They opined that in most refund cases ticket agents have no role in 
determining refund eligibility nor are they the appropriate source of 
refund issuance. Ticket agent representatives stated that they support 
the Department's effort to clarify ``significant change'' that triggers 
a refund requirement.
---------------------------------------------------------------------------

    \28\ The ACPAC is a statutorily required committee most recently 
extended to 2023 by the FAA Reauthorization Act of 2018. The ACPAC 
evaluates current aviation consumer protection programs. It also 
provides recommendations to the Secretary for improving and 
establishing additional consumer protection programs that may be 
needed.
    \29\ See, Advisory Committee for Aviation Consumer Protection 
(ACACP) Docket: https://www.regulations.gov/docket/DOT-OST-2018-0190.
---------------------------------------------------------------------------

    This NPRM proposes to clarify that airlines and ticket agents have 
an obligation to promptly refund consumers' airfares when airlines 
cancel or significantly change flight schedules or the quality of their 
services by including such language in the rule text. This rulemaking 
would also ensure the consistency of consumer protections and industry 
compliance across the board by defining the terms ``significant change 
of flight itinerary' and ``cancelled flight.'' The Department has 
reconsidered the rationale it stated in the 2011 final rule for not 
adopting a stricter standard that defines a ``significant change,'' and 
believes that the benefit of maintaining a performance-based standard, 
namely, the flexibility for airlines to determine the type of flight 
schedule changes that warrants a refund, does not justify the negative 
impact of such a standard on consumers. Indeed, the airline industry's 
and ticket agents' overall reactions to refund requests during the 
initial period of the COVID-19 pandemic, including refusal to issue 
refunds for cancelled or significantly changed flights and 
retroactively revising refund policies to apply more stringent criteria 
for refund eligibility, have shown that it is difficult and at times 
impossible to enforce the current standard by monitoring how carriers 
apply their non-refundability provisions in the event of a significant 
change and determining, on a case by case basis, whether a failure to 
provide a refund in response to such an itinerary change is an unfair 
or deceptive practice.

B. Proposals

    In this NRPM, the Department is proposing to specifically require 
airlines and ticket agents to promptly refund airline ticket purchase 
prices if a passenger's flight itinerary is cancelled or significantly 
changed by an airline. We further propose to define ``cancelled 
flight'' and ``significant change of a flight itinerary'' that would 
result in a consumer being entitled to a refund. In the Department's 
view, by holding out in its Computer Reservation System (CRS) to the 
public a flight itinerary with specific characteristics, including 
origin and destination airport, scheduled departure and arrival dates 
and times, and other features material to a consumer, the carrier is 
making an offer of a specific service. The consumer, having accepted 
that specific offer by purchasing a ticket for a specific flight 
itinerary, is acting reasonably in expecting to be provided the service 
that was purchased. Thus, the carrier would be obliged to provide the 
flight as promised or provide a refund if unable to provide that 
specific flight and the consumer finds the alternative transportation 
offered by the carrier to be unacceptable. The carrier's failure to do 
so would be an unfair practice. Similarly, a ticket agent selling a 
ticket for the flight listed by the carrier is offering a specific 
service and is similarly engaging in an unfair practice if it does not 
provide a refund or assist the consumer in obtaining a refund from the 
carrier. This is because the harm to consumers is substantial and 
unavoidable when they do not receive the air transportation service 
that they purchased and, as discussed above, no countervailing benefit 
that outweighs the harm has been provided.
(1) Defining ``Cancelled Flight''
    Although the Department interprets its aviation consumer protection 
regulation to require airlines and ticket agents to issue a refund for 
flights that are cancelled by airlines, the regulation does not define 
``cancelled flight'' for the purpose of issuing a ticket refund.\30\ 
The Department proposes to define a cancelled flight to mean a covered 
flight that was listed in the carrier's CRS at the time the ticket was 
sold to a consumer but was not operated by the carrier. Under this 
proposed definition, the reason that the flight was not operated (e.g., 
mechanical, weather, air traffic control) would not matter. Also, the 
removal of a flight from a carrier's CRS after a consumer has purchased 
a ticket on that flight would not negate the obligation to provide a 
refund. For example, a flight would be considered a ``cancelled 
flight'' for the purpose of ticket refunds even if it was removed from 
the carrier's CRS six months before the passenger's scheduled 
departure, if the passenger had purchased the flight eight months prior 
to the scheduled departure.
---------------------------------------------------------------------------

    \30\ For reporting purposes, a cancelled flight is defined as 
``a flight operation that was not operated but was listed in a 
carrier's computer reservation system within seven calendar days of 
the scheduled departure.'' See 14 CFR 234.2.

---------------------------------------------------------------------------

[[Page 51559]]

(2) Defining ``Significant Change of Flight Itinerary''
    The NPRM proposes to require that airlines and ticket agents 
provide prompt refunds when an airline makes a ``significant change of 
flight itinerary'' and the passenger does not accept the alternative 
transportation offered and requests a refund. This proposal would cover 
any significant changes made by a carrier after the consumer purchased 
the ticket, including significant changes to an alternative flight 
accepted by the passenger after the initial flight was cancelled. In 
proposing a definition of a significant change of flight itinerary, the 
Department focused on what change, from a consumer's perspective, would 
materially alter the value of the airline ticket as compared to the 
original ticket. Based on this principle, the Department has 
tentatively determined that, at a minimum, changes that affect 
departure and/or arrival times, departure or arrival airport, a change 
in the type of aircraft that causes a significant downgrade in the air 
travel experience or amenities available onboard the flight, as well as 
the number of connections in the itinerary, would be significant to 
consumers. As such, the NPRM proposes to define a ``significant change 
of flight itinerary'' as a change to a flight itinerary made by a 
marketing or operating carrier that involves one of the following:
     A revised departure time that is scheduled to depart from 
the passenger's origination airport three hours or more earlier than 
the original scheduled departure time for a domestic flight itinerary, 
and six hours or more earlier for an international flight itinerary, 
regardless of the final arrival time;
     A revised arrival time that is scheduled to arrive at the 
passenger's final destination three hours or more later than the 
original scheduled arrival time for a domestic flight itinerary, and 
six hours or more later for an international flight itinerary, 
regardless of the initial departure time;
     A change in the original departing airport or the final 
arrival airport;
     An increase in the number of connecting points;
     A downgrade of the class of service; or
     A change in the type of aircraft that causes a significant 
downgrade of the available amenities and travel experience.
    The Department seeks general comments regarding whether this 
approach is reasonable and fair to passengers while not imposing undue 
burden on carriers and ticket agents. The Department further seeks 
suggestions on any other changes to flight itineraries that airlines 
may make that should also be considered a ``significant change of 
flight itinerary.'' The Department also seeks comments on whether there 
are any operational concerns from airlines and ticket agents when 
implementing these proposed definitions into their refund policies that 
should be taken into consideration.
i. Early Departure and Late Arrival
    When booking an air travel itinerary, aside from cost, the 
departure and arrival times are two of the major considerations for 
most passengers. Consequentially, a major change in the departure or 
arrival time is likely to cause significant disruptions to the 
passenger's travel and planned activities before and after the air 
travel. To define the extent of early departure or delayed arrival that 
should be considered as ``significant changes,'' the Department 
considered three options.
    The first option, which we are proposing in this NPRM, is a set 
timeline of three hours applicable to domestic itineraries and another 
set timeline of six hours applicable to international itineraries that 
would constitute a significant departure and arrival change. Under the 
NPRM, airlines and ticket agents would be free to apply a shorter time 
period to constitute a significant departure or arrival change but 
would not be able to increase it beyond three hours for domestic 
flights and six hours for international flights. The Department 
considers this approach to be the most straightforward, clearly defined 
standard that would be easily understood by airlines and consumers. A 
bright line standard such as this would also make it easier for 
carriers and ticket agents to train personnel on how to respond to 
refund requests and would streamline and possibly expedite the refund 
review and issuance process. The Department proposes different 
timeframes for domestic itineraries and international itineraries, 
recognizing that many international itineraries involve long-haul 
flights for which carriers should be afforded more leeway before a 
change of departure or arrival time becomes grounds for a refund. 
However, the Department also recognizes that the proposed standard 
would allow international flights with shorter flight durations (e.g., 
flights between Miami and Nassau) a much longer window of early 
departure or late arrival before a refund becomes due than some 
domestic flights with longer durations (e.g., flights between New York 
and Honolulu). The Department seeks comments on whether, despite these 
variations, the standards drawn between domestic and international 
itineraries are reasonable for most refund requests and, if not, how 
the standards should be revised.
    In applying the proposed standard to a refund request, airlines and 
ticket agents would consider the departure time of the first flight 
segment and the final arrival time of the last flight segment to 
determine whether a refund is due. In other words, an early departure 
of a connecting flight or a late arrival of a flight that is not the 
final flight, even exceeding the proposed timeframe, may not 
necessarily result in a passenger being entitled to a refund. For 
example, in a situation where a passenger is traveling from New York to 
Los Angeles via Denver, with a layover of 5 hours at Denver, if the 
passenger's first flight from New York to Denver was delayed and it 
resulted in an arrival delay of 3.5 hours into Denver, but the 
passenger was able to catch the flight from Denver to Los Angeles and 
experienced no delay in arriving at the final destination, there is no 
requirement for a refund despite the 3.5-hour arrival delay into 
Denver. Conversely, in the same example, if the passenger's flight from 
New York to Denver operated on time but the flight from Denver to Los 
Angeles has a change that results in a departure time of 3.5 hours 
earlier, and the passenger was able to catch that flight and arrived in 
Los Angles in time, that 3.5 hour early departure in Denver would not 
be a ``significant change of flight itinerary'' for the purpose of 
receiving a refund.
    Another issue the Department wishes to clarify in application of 
the proposed standard is that the international standard of 6 hours 
would apply to the initial flight segment's departure and final flight 
segment's arrival even if that flight segment is a domestic flight, as 
long as the domestic segment is on the same ticket as the international 
segment(s). To illustrate this, assume a passenger is traveling from 
Chicago to London with Boston as the connecting point, and all flight 
segments are on the same ticket. Under the proposal, if the departure 
time of the flight from Chicago to Boston is changed to an earlier 
time, the early departure must exceed six hours for the passenger to be 
eligible for a refund. On the reverse route, when the passenger is 
traveling from London, stopping at Boston and then continuing to 
Chicago, the late arrival of the flight from Boston to Chicago must 
exceed six hours before the passenger would be eligible for a refund. 
This would not be the case if the two flight segments are on separate

[[Page 51560]]

tickets, and in that situation, each ticket would be treated as a 
separate itinerary, one domestic and one international. The Department 
welcomes comments on applying this proposed standard, particularly any 
operational challenges that could occur.
    The second option the Department considered is the option of not 
defining the timeframes of early departure and late arrival. Under this 
approach, the Department would continue to use the word ``significant'' 
to describe the amount of time lapse that would justify a refund. The 
Department recognizes that the level of disruption and inconvenience to 
passengers caused by early departure or late arrival may differ 
depending on many factors, including each affected passenger's 
individual situations. However, determining refund eligibility based on 
these individualized factors is not the most efficient way to address 
refund issues. The Department is focused on striking a balance between 
considering all relevant factors on the one hand, and ensuring the 
efficiency, consistency, and certainty of its regulation on the other 
hand. In that regard, although this second option retains all the 
flexibility the current regulation affords the industry, the Department 
has concerns that this option of leaving the determination of refund-
qualifying flight schedule time changes to individual airlines is not 
the best way to achieve this balance and may not be in the public 
interest. Complaints submitted to the Department's Office of Aviation 
Consumer Protection show that under the current regulation, airlines' 
policies differ in the amount of schedule time change required for a 
passenger to qualify for a refund. This causes consumer confusion and 
creates challenges for the Department in enforcing its consumer 
protection regulation. The Department seeks comments on whether 
continuing to provide airlines the flexibility to define significant 
change is a better option than the proposed approach (option 1) of 
defining a significant departure or arrival change to mean beyond three 
hours for domestic flights and six hours for international flights. 
Which option would better ensure consumers are treated fairly? 
Proponents of this approach are invited to articulate how to improve 
consistency across the industry when applying this standard to reduce 
compliance cost and consumer confusion.
    A third approach considered by the Department is to define 
significant departure and arrival through adoption of a tiered 
structure based on objective factors that would be most likely to 
impact the level of consumer inconvenience and harm caused by the 
flight itinerary time change. For illustration purposes only, below is 
an example of a tiered standard based on the factor of total travel 
time as originally scheduled. As the original travel time (including 
total flight duration and layover time) is an objective pre-determined 
factor, the presumption is that the longer the original scheduled total 
travel time is, the more tolerant a consumer is to an itinerary change 
involving early departure or late arrival.

------------------------------------------------------------------------
 Original scheduled total travel
time (measured from the schedule   Projected arrival
   departure time of the first      delay or early
 flight segment to the scheduled     departure as           Result
 arrival time of the last flight      offered to
            segment)                   passenger
------------------------------------------------------------------------
3 hours or less.................  2 hours or less...  Refund Not
                                                       Required.
                                  More than 2 hours.  Refund Due.
3-6 hours.......................  3 hours or less...  Refund Not
                                                       Required.
                                  More than 3 hours.  Refund Due.
6-10 hours......................  4 hours or less...  Refund Not
                                                       Required.
                                  More than 4 hours.  Refund Due.
More than 10 hours..............  5 hours or less...  Refund Not
                                                       Required.
                                  More than 5 hours.  Refund Due.
------------------------------------------------------------------------

    An obvious negative aspect of this very specific standard is that 
it is more difficult for carriers to implement and for consumers to 
understand. This table also does not distinguish single-segment flight 
itineraries from multi-segment flight itineraries with connections. For 
itineraries with multiple segments, when factoring in the layover time, 
should the layover time be weighed the same as the actual flight 
duration time? For example, for refund purposes, should a multi-segment 
itinerary with a total travel time of 9 hours (6-hour total flight 
duration time and 3-hour layover time) be treated the same as a single-
segment itinerary with a total travel time/flight duration of 9 hours? 
From the industry perspective, is adopting this type of tiered standard 
practical? What are the obstacles to implementing this? From the 
consumer perspective, does this type of tiered standard better reflect 
the inconvenience and disruption caused by a flight schedule change? 
Besides the total scheduled travel time, is there any other objective 
benchmark that should be considered as the basis of calculating whether 
a refund is due? For all commenters, if the idea of this table is 
workable, are the numbers proposed in the first two columns reasonable 
and practical?
ii. Change of Origination or Destination Airport
    Besides departure and arrival times, most consumers are also 
concerned about origin and destination airports when booking a flight 
itinerary. In the event that a carrier-initiated change results in a 
passenger departing from or arriving at a different airport, it is 
likely that additional time and cost would be incurred by the passenger 
because consumers normally travel from and to airports that are most 
convenient to them. As such, the Department views that such a change in 
most cases would significantly reduce the value of the passenger's 
original ticket and, therefore, a refund would be due if the passenger 
no longer wishes to travel because of this change. The NPRM's proposal 
focuses on the change of the origination or destination airports and 
does not propose to require a refund if a carrier changes the 
connecting airport(s), as long as the change of connecting airport(s) 
does not cause early departure from the origination airport or delay in 
arriving into the final destination beyond the proposed hours. The 
Department invites comments on whether the change of origination or 
destination airports should entitle passengers to a refund and whether 
the change of connecting airports should also be included in this 
category. In this regard, we are especially interested to know the 
public's view on refund eligibility related to the change of a 
connection airport when the original booking included an extended 
period of layover time (e.g., over 12 hours). The Department's concern 
is that in these

[[Page 51561]]

situations, passengers are more likely to choose a particular 
connection airport in the original booking for a particular purpose 
such as conducting business, visiting family, friends, or tourist sites 
at that location. Changing that layover point to another airport may 
materially affect the value of the trip to passengers. We also seek 
comment on whether further refining refund eligibility based on the 
length of layover time at the original connection airport is overly 
burdensome for carriers to implement.
iii. Increase of the Number of Connection Points
    Although the NRPM does not propose to include the change of any 
connection airport as a ``significant change,'' the Department believes 
that adding to the number of connection points in an itinerary would 
significantly affect the value of a ticket because the more connection 
points, the more likely passengers are going to experience flight 
irregularities, complications, and disruptions, as well as mishandled 
checked baggage. Further, certain passengers such as families with 
young children may have a strong preference for non-stop flights 
because of the convenience and pay more for such flights. In fact, 
comparing airfares between two given points, itineraries with fewer 
connection points are generally priced higher than itineraries with 
more connection points. Under this proposal, a carrier changing a non-
stop itinerary to a one-connection itinerary, or changing a one-stop 
itinerary to a two-stop itinerary, even if the change would not add to 
the total travel time or cause early departure or late arrival, would 
qualify as a ``significant change'' for which the passenger would be 
entitled to a refund upon request. The Department believes that this is 
a reasonable ground for refund eligibility because in those situations, 
passengers likely paid a higher fare for an itinerary with fewer 
connection points or no connection and, as the result of the carrier's 
change, received service of less value. On the reverse side, if the 
change of the itinerary results in a decrease in the number of 
connections, then no refund is required.
iv. Downgrade in the Class of Service
    Another ground for refund eligibility proposed in this NPRM is a 
carrier-initiated downgrade in the class of service. Under the 
Department's oversales regulation, when a passenger on an oversold 
flight is offered accommodation or is seated in a section of the 
aircraft for which a lower fare is charged, the passenger is not 
entitled to denied boarding compensation but is entitled to an 
appropriate refund for the fare difference.\31\ Here, the Department is 
proposing that when a passenger is downgraded to a lower class of 
service, either on the originally booked flight or on an alternative 
flight offered by the carrier, and the passenger declines the 
downgrade, a refund of the entire unused ticket price must be offered. 
The proposal is not limited to situations where the entire flight or 
the class of service the passenger was initially booked on was 
oversold. Downgrade of a passenger could occur for other reasons such 
as weight and balance or change of aircraft. It is the Department's 
view that a downgrade in the class of service significantly changes the 
passenger's ticket value and travel experience and is a reasonable 
ground for a refund. The Department seeks comments on whether a 
downgrade in the class of service should be considered a ``significant 
change of flight itinerary'' based on which a refund would be due, or 
whether the Department should require airlines to provide a refund of 
only the ticket price difference, and not mandate that carrier provide 
a full refund if the passenger does not accept the downgrade, similar 
to the existing oversales regulation.
---------------------------------------------------------------------------

    \31\ See 14 CFR 250.6(c).
---------------------------------------------------------------------------

v. Aircraft Downgrade
    The change of aircraft is often required for operational reasons. 
For example, inbound flight delays or mechanical issues can lead to the 
use of substitute aircraft. While some aircraft substitutions result in 
significant changes in the passengers' travel experiences, most do not 
and would not result in affected passengers qualifying for a refund 
under this proposal. The Department considers a substitute aircraft of 
similar size that offers comparable amenities and does not 
substantially affect the passengers' overall travel experience to not 
be a ``significant change'' to the passenger's flight itinerary for 
refund purpose. The Department solicits comments on how to determine 
whether an aircraft downgrade is a significant change. Should the 
determination of whether an aircraft downgrade is a significant change 
be dependent on the person? For example, for a person who uses a 
wheelchair, a substituted aircraft having a smaller cargo compartment 
may mean that his or her battery-powered wheelchair cannot fit in the 
cargo compartment. On the other hand, a person without a disability may 
not be impacted by the substituted aircraft having a smaller cargo 
hold. Are there certain types of changes in amenities or air travel 
experience that should automatically be considered significant 
irrespective of the person? Should the Department's rule specify the 
types of change on the substitute aircraft that would result in 
passengers qualifying for a refund, or should the Department allow 
carriers to make this determination on a case-by-case basis? For 
passengers with disabilities, DOT proposes that the lack of certain 
disability accommodation features as the result of aircraft change, 
such as onboard wheelchair storage spaces and moveable armrests, which 
negatively impacts the particular passenger's travel experiences and 
access to services onboard, would be considered a ``significant 
change'' that entitles the passenger to a refund upon request.
(3) Airlines' Obligation To Provide Full Refunds (Including for 
Codeshare and Interline Flights)
    Under this NRPM, when ticket refunds are due, airlines would be 
required to provide a full refund equal to the ticket purchase price 
and including government-imposed taxes and fees and carrier-imposed 
fees and surcharges (such as fuel surcharges), minus the value of any 
air transportation that is already used by the passenger. Similar to 
calculating the amount of denied boarding compensation in an oversales 
situation, which is based on the passenger's one-way fare for the 
affected flight(s), airlines should rely on established industry 
practices and guidelines to calculate the value of any used portion of 
the air transportation when providing refunds.
    Additionally, consistent with the Department's longstanding view, 
it would be an unfair practice for airlines to charge a fee when 
issuing a refund of a ticket that is cancelled or significantly changed 
by the carrier. The Department is also proposing to require airlines to 
ensure that the terms or conditions in their contracts of carriage are 
consistent with the proposed regulation \32\--

[[Page 51562]]

specifically that passengers will not be charged a fee when they do not 
accept an alternative itinerary following a carrier-initiated 
cancellation or significant change to their original itinerary. The 
Department believes that it is important to ensure that passengers are 
provided accurate information regarding their rights to a refund.
---------------------------------------------------------------------------

    \32\ While 14 CFR part 260 would address refund requirements 
related not only to the ticket refunds that are the subject of this 
NPRM, but also the baggage and ancillary fee refunds proposed in the 
Department's July 2021 NPRM, we are proposing in this NPRM to add 
sections to the proposed part 260 that addresses only ticket refund 
requirements with one exception. This exception is the proposed 
regulatory text at 14 CFR 260.9, which would specify that a 
carrier's failure to ensure that its contract of carriage provisions 
is consistent with 14 CFR part 260 would be considered an unfair and 
deceptive practice. Comments on part 260 submitted in response to 
this rulemaking should solely focus on proposals related to ticket 
refunds aside from this one exception.
---------------------------------------------------------------------------

    The Department has also considered airlines' obligations to provide 
refunds in codeshare and interline situations. For itineraries issued 
under one carrier's designator code, the carrier under whose code the 
ticket was issued (marketing carrier) would be responsible for 
providing the refund, regardless of whether the marketing carrier is 
also the operating carrier of the affected flight(s) or whether the 
marketing carrier is the carrier that cancelled or made significant 
changes to the flight itinerary. For itineraries that contain flight 
segments sold under more than one carrier's code (interline 
itineraries), the Department would require that the carrier that sold 
the ticket and collected the money from consumers be responsible for 
providing the refund even though not all flight segments were sold 
under that carrier's code. This is because that carrier would already 
have the information on consumer payment instruments, which facilitates 
issuing the refunds. The Department believes that this approach 
benefits consumers by streamlining the process for them to obtain 
refunds and expects that, with minimum burden, carriers will be able to 
develop a system with their codeshare and interline partners to ensure 
that refunds are provided timely. The Department seeks comments on the 
costs associated with establishing such a system for interline and 
codeshare partners to process refunds according to this proposal and 
whether there are technical obstacles that should be considered.
(4) Ticket Agents' Obligation To Provide Refunds, Fees, and Disclosure
    The Department is proposing to require that ticket agents provide 
prompt refunds of airline ticket purchase prices or the air 
transportation portion of tour packages when an airline cancels or 
significantly changes a scheduled flight itinerary that the ticket 
agents sold directly to consumers, regardless of whether the ticket 
agent is in possession of the ticket purchase funds. Approximately 50% 
of tickets are sold by airlines directly to consumers, and the 
remainder are sold through ticket agents.\33\ According to the 
Department's September 2021 report to the White House Competition 
Council on DOT's activities addressing airline ticket refunds 
associated with the COVID-19 pandemic,\34\ approximately 17% of the 
105,327 refund complaints the Department received between January 1, 
2020 and June 30, 2021 are against travel agents and tour operators. 
The Department views this significant volume of refund complaints 
against ticket agents as an indicator that strengthening protections 
for consumers purchasing air transportation from ticket agents is 
needed.
---------------------------------------------------------------------------

    \33\ Transparency of Airline Ancillary Service Fees and Other 
Consumer Protection Issues, 79 FR 29970, 29975 (May 23, 3014).
    \34\ See, Report to White House, Supra, FN 16.
---------------------------------------------------------------------------

    According to representatives of ticket agents,\35\ typically, when 
a consumer purchases an airline ticket through a ticket agent, the 
airline is the ``merchant of record'' recorded on the credit or debit 
card transaction, meaning the airline name appears on the consumer's 
card statement and the airline, not the ticket agent, receives the 
money via an intermediary financial settlement service. Similarly, in 
the usual process when a carrier-initiated cancellation or significant 
change to a flight occurs and the passenger requests a refund from the 
ticket agent, the ticket agent generally initiates an automated refund 
but the money flows directly from the carrier to the consumers, not 
through the ticket agent. Also, according to ticket agent 
representatives, depending on the ticket agents and airlines involved 
and the terms and conditions applicable, in a small percent of 
transactions, airlines would remit the consumer funds back to ticket 
agents, who then remit the funds back to consumers. During the initial 
months of the COVID-19 pandemic, many airlines suspended the automated 
process and refunds requested for tickets sold through ticket agents 
had to be processed manually. Further, ticket agents have stated to the 
Department that in many cases, they are not able to provide refunds to 
passengers because the agents do not have possession of the consumer 
funds. Consumer complaints to the Department have illustrated the 
difficulty that consumers sometimes have in obtaining a refund for a 
ticket purchased through a ticket agent when the consumer does not have 
the means to determine whether the airline or ticket agent needs to 
take action to process the refund and which entity is in possession of 
the consumer's money.
---------------------------------------------------------------------------

    \35\ See, Presentation to the Advisory Committee On Aviation 
Consumer Protection (ACPAC) by Travel Technology Association--The 
Role of Online Ticket Agents in Airline Ticket Refund, Dec. 2, 2021, 
https://www.regulations.gov/document/DOT-OST-2018-0190-0034. The 
Department received similar input from ticket agent representatives 
during meetings with staff of the Office of Aviation Consumer 
Protection on February 9 and 23, 2022.
---------------------------------------------------------------------------

    As illustrated in the preceding paragraph, one of the major issues 
the Department recognized in reviewing COVID-19 related refund 
complaints against ticket agents is that ticket agents often claimed 
that they did not have the funds consumers paid for air transportation 
because the funds have already been remitted to airlines. In many 
complaints, consumers expressed great frustration as they were forced 
to go back and forth between the ticket agent and the airline in an 
effort to chase down their refunds. The Department has considered 
placing the obligation of refund on the entity that is in possession of 
the consumer funds at the time the refund request is made, but does not 
propose this approach because which entity is in possession of the 
funds would not necessarily be clear to the consumer because multiple 
entities may be involved in the transaction process. Such uncertainty 
would result in additional costs, delay, and confusion to consumers.
    To minimize consumers' burden, in this NPRM, the Department is 
proposing to revise the regulation prohibiting unfair or deceptive 
practices by ticket agents in 14 CFR 399.80 to require that retail 
ticket agents provide prompt refunds of the airfare or the air 
transportation portion of the cost of tour packages when an airline 
cancels or significantly changes a scheduled flight itinerary sold by a 
retail ticket agent, i.e., ticket agents that sell directly to 
consumers. This requirement would cover retail ticket agents of all 
sizes, conducting business online or via brick-and-mortar stores 
transact directly with consumers. This requirement would not cover 
wholesale ticket agents who purchase bulk seats and resell them to 
other ticket agents, as well as Global Distribution Systems because 
these entities do not transact directly with consumers.
    The proposed refund requirements for ticket agents applies to 
airfare or airfare-inclusive travel package transactions in which the 
ticket agents' identities are shown in the consumer's financial charge 
statements, such as debit or credit card charge statements, indicating 
that, from the consumer's perspective, the ticket agent is the ultimate 
recipient of the funds irrespective of whether the ticket agent is in 
possession of the consumer funds at the time of the refund request. 
Conversely, if, according to the financial statements provided to 
consumers, an airline is identified as the recipient of the consumer 
funds in a

[[Page 51563]]

transaction facilitated by a ticket agent, the airline would be under 
the obligation to provide the requested refunds without considering 
whether the airline is in possession of the consumer funds at the time 
of the refund request. The Department asks for public comments on 
whether it is reasonable to place the refund obligation on the entity 
that is the recipient of the funds as identified on the passenger's 
financial transaction record, without considering whether that entity 
is in possession of the consumer funds at the time the refund is 
requested. In relation to this question, the Department notes that, 
according to our understanding of the information provided by ticket 
agents, in most cases consumer funds move quickly through the 
intermediary entities so the entity that is the ultimate recipient of 
the funds would most likely be in possession of the funds when a refund 
request is made. To better assess the appropriate ways to place 
obligations on different parties, the Department is also interested in 
obtaining information regarding common practices and timelines for 
ticket agents to settle accounts with airlines.
    The Department notes that the proposed approach focusing on the 
ultimate recipient of consumer funds without considering which entity 
is in possession of the funds at the time the refund is requested draws 
a clearer line for consumers to determine who would be responsible for 
issuing refunds by looking at their financial transaction records. 
According to some ticket agents, in most cases airlines are the 
ultimate recipients of consumer funds and would be able to issue the 
refunds directly to consumers without further delay. What are the 
situations in which ticket agents' involvement is necessary for 
airlines to issue refunds? What are the situations in which airlines 
need to remit the funds back to ticket agents instead of consumers? In 
those situations where the involvement of ticket agents is required, 
how can the Department's regulation ensure that ticket agents use their 
best effort to facilitate the prompt issuance of the refunds by 
providing all the information necessary for refund issuance to airlines 
in a timely manner, and by remitting the funds returned from airlines 
back to consumers? When action by both ticket agents and airlines is 
required for a refund to be issued, holding both the airline and the 
ticket agent jointly responsible may avoid potential delays for the 
airline to return the funds to the ticket agent if that step is needed 
to complete the refund process, or avoid the potential delays for 
ticket agents to provide the information needed for airlines to issue 
refunds. Should the regulation place the burden of issuing refunds on 
both airlines, as the recipients of funds, and ticket agents, as the 
consumer-facing entity in those situations? The Department also seeks 
input on any innovative solutions that we may not have considered to 
ensure the consumer is not sent back and forth between the ticket agent 
and the airline trying to obtain airline ticket refunds.
    The Department acknowledges that for transactions in which a ticket 
agent would be responsible for issuing a refund if due, before issuing 
the refund, the ticket agent may need further information to verify 
whether a refund is due under the Department's regulation. In most 
situations where a refund is due because of airline cancellation or 
schedule changes (e.g., early departure, late arrival, changes of 
airports), there would be sufficient information, such as airlines' 
publications or notifications sent to consumers, to confirm refund 
eligibility without contacting airlines. However, there may be 
situations in which a ticket agent does not have the direct information 
to make such a determination and may need to contact the airline to 
verify. For example, if a consumer claims that there is a downgrade of 
the class of service on a flight and the consumer declined travel under 
the downgrade, the ticket agent may not have access to the consumer's 
booking record to confirm such a downgrade. Airlines receiving a 
request from a ticket agent about a refund request should use their 
best efforts to verify whether the consumer requesting a refund would 
be eligible for a refund. The Department seeks comment on whether 
ticket agent's obligation to provide a refund within 7 days for credit 
card payments and 20 days for cash and other payments should not start 
until the ticket agent receives refund eligibility confirmation from an 
airline when the agent is unable to independently confirm the 
passenger's refund eligibility. If a ticket agent's obligation does not 
start until the ticket agent receives confirmation from an airline, how 
can the Department ensure that the airline acts promptly and the 
passenger is refunded in a timely manner if entitled to a refund?
    Another issue the Department considered regarding refunds by ticket 
agents is the fee for booking travel or issuing a refund which ticket 
agents may charge and take out of the refunded portion before refunding 
the consumer. Many consumers filing complaints with the Department 
expressed dissatisfaction about ticket agents charging a fee for 
booking travel that the consumer ultimately did not take and/or 
charging a fee for the issuance of refunds. Another issue raised by 
consumers is the existence of the fees that the consumer was not aware 
of at the time of ticket purchase. Undisclosed fees would be considered 
a deceptive practice by the Department pursuant to 49 U.S.C. 41712 and 
14 CFR 399.79.\36\ Under this proposal, the Department clarifies that 
ticket agents are permitted to charge a service fee for booking travel 
or issuing refunds and to deduct those amounts from the refund provided 
to consumers, as long as the amount of the fee is on a per-passenger 
basis and the existence of the fee was clearly and prominently 
disclosed to consumers at the time they purchased the airfare. The 
Department is proposing to clarify that ticket agents are permitted to 
retain the service fee they charge for ticket issuance at the time of 
purchase in recognition that ticket agents are providing a service 
apart from airfare, such as specialized knowledge, access to limited 
availability fares, or tools to comparison shop across various airlines 
to find the best value for the consumer. Ticket agents have noted that 
regardless of whether the passenger ultimately travels, the fee for 
booking travel represents the cost of service already provided by 
ticket agents. The Department is proposing to clarify that ticket 
agents may charge a fee for processing refunds while airlines are not 
permitted to charge such a fee because unlike airlines, ticket agents 
do not initiate the cancellation or significant changes that result in 
a refund being due, nor do the ticket agents have any control over the 
cancellation or significant changes to a flight itinerary. The 
Department welcomes comments on whether it is reasonable to not permit 
airlines to charge a ticket purchase service fee or a refund processing 
fee for flights that the carrier cancelled or significantly

[[Page 51564]]

changed while allowing ticket agents to do so.
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    \36\ Pursuant to 14 CFR 399.79, a practice is ``deceptive,'' 
within the meaning of 49 U.S.C. 41712, to consumers if it is likely 
to mislead a consumer, acting reasonably under the circumstances, 
with respect to a material matter. A matter is material if it is 
likely to have affected the consumer's conduct or decision with 
respect to a product or service. A ticket agent's failure to 
disclose that the booking fee charged at the time of reservation is 
nonrefundable when the ticket refund is due would likely mislead a 
consumer to reasonably conclude that the entire money paid for the 
ticket is refundable when ticket refund is due. Similarly, a ticket 
agent's failure to disclose the existence and the amount of a fee 
for issuing a refund is likely to mislead a consumer to reasonably 
believe that no such a fee would apply when ticket refund is due. 
Failing to provide either disclosure would be an omission of 
material information that may affect the consumer's purchase 
decisions.
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(5) Forms of Refund
    In this NPRM, we propose to allow airlines and ticket agents to 
choose whether to refund passengers by returning the money in the 
original form of payment or by providing the refund in cash or a form 
of cash equivalent.\37\ Typically, airlines and ticket agents refund 
passengers in the original form of payment, i.e., whatever payment 
method (credit card, bank account) that the individual used to make the 
payment. Carriers may choose to continue to do so but also have the 
flexibility to refund passengers in cash, a check, a prepaid card, or 
an electronic transfer to the passenger's bank account or other digital 
payment methods such as PayPal or Venmo. The Department emphasizes that 
under this proposal, a carrier- or ticket agent-issued travel credit or 
voucher or a store gift card is not considered a cash equivalent form 
of payment because these forms of compensation are not widely accepted 
in commerce. Further, the Department considers that when a carrier or 
ticket agent issues a prepaid card, any maintenance or usage related 
fees should be prepaid into the card by the issuer in addition to the 
full amount of refund that is due.
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    \37\ The Department's existing interpretation of ``cash 
equivalent'' in the context of denied boarding compensation (DBC) 
payments provides that the only permissible cash equivalent a 
carrier may offer is a check. The Department has initiated a 
rulemaking to explore additional means of payments that should be 
considered as ``cash equivalent'' in light of the modernization of 
payment methods, such as a prepaid card or electronic funds 
transfer. See, Notice of Proposed Rulemaking, Modernizing Payment of 
Denied Boarding Compensation, 84 FR 11658, March 28, 2019. The 
Department plans to issue a final rule in 2022. Consistent with the 
Department's proposal in that NPRM, this NPRM also proposes that 
prepaid cards and electronic fund transfers, among other things, 
should be considered as ``cash equivalent'' for the purpose of 
refund issuance.
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    By expanding the scope of refund forms, the Department's proposal 
intends to provide consumers, carriers, and ticket agents more 
flexibility in issuing and receiving refunds. Consumers would have more 
flexibility to choose the form of refund payments offered by carriers 
that better suit their needs. For example, this proposal would be 
beneficial to consumers in situations where a credit card account used 
to pay for the ticket has been closed. Carriers and ticket agents also 
would benefit from the flexibility by saving costs from consolidation 
of refund forms and increasing efficiency. The Department is interested 
to know whether this proposal would be beneficial to consumers, 
carriers, and ticket agents as intended and whether there are any 
unintended negative impacts. Further, the Department's current refund 
timeframes (i.e., seven days for credit card purchases and 20 days for 
cash and other forms of purchases) are based on the form of payment 
used for the purchase. The Department is interested in comments on 
whether these timeframes are appropriate and should continue to apply 
regardless of the form of refund. For example, if a consumer purchased 
a ticket with a credit card and the carrier offers and the consumer 
accepts a refund by check, should the carrier have 7 or 20 days to 
issue the check?
(6) Option To Offer Travel Vouchers, Credits and Other Forms of 
Compensation for Cancelled or Significantly Changed Flights
    The Department proposes to allow airlines and ticket agents to 
offer but not require other compensation choices such as travel credits 
or vouchers and store gift cards in lieu of refunds. The Department 
recognizes that while a refund in cash or a cash equivalent form of 
payment would be preferred by many passengers, some passengers may have 
travel or purchase plans in the foreseeable future and would prefer to 
receive travel credits or vouchers or store gift cards, which airlines 
and ticket agents may offer, as an incentive, at a dollar value of 
greater than or equal to the refund amount. Allowing airlines and 
ticket agents this flexibility enables them to preserve cash and 
benefits consumers by allowing them more choices of compensation for 
interrupted travel plans. The goal is to ensure that passengers, at a 
minimum, have the choice of receiving cash or a cash equivalent refund, 
while allowing airlines, at their discretion, to offer other choices 
that may better suit the needs or preferences of some passengers.
    Under the Department's proposal, the option for carriers and ticket 
agents to offer compensation other than refund of cash or cash 
equivalent when a carrier cancels or makes a significant change to a 
flight itinerary must not be misleading with respect to the passengers' 
rights to receive a refund. Specifically, while carriers and ticket 
agents are free to offer these options, information provided by the 
carriers and ticket agents to the public must not lead consumers, 
acting reasonably under the circumstances, to believe that these 
options are their only choices and that they are not entitled to a 
refund. For example, when a carrier agent discusses the options 
consumers may have after the carrier cancels or significantly changes a 
flight, the agent's failure to clearly disclose that consumers have the 
option to receive a refund would be a misleading communication. 
Consistent with the prohibition against deceptive practices under 49 
U.S.C. 41712 and the Department's rule defining deceptive practices in 
14 CFR 399.79, it would be unlawful for carriers or ticket agents to 
provide misleading information to consumers affected by cancelled or 
significantly changed flight itineraries regarding their eligibility to 
a refund, a material matter that is likely to affect a consumer's 
conduct or decision with respect to a product or service.
    Furthermore, when airlines and ticket agents offer compensation 
other than refunds to consumers affected by cancelled or significantly 
changed flight itineraries, the Department's proposal would require 
airlines and ticket agents to clearly disclose any material 
restrictions, conditions, and limitations on the compensations they 
offer, so consumers can make informed choices about which compensations 
and refunds that would best suit their needs. These material 
restrictions, conditions, and limitations would include, among other 
things, the validity period, black-out dates, administrative fees, 
advance purchase requirements, and capacity restrictions applicable to 
travel credits or vouchers, and the validity period, administrative and 
maintenance fees, and purchase restrictions for gift cards.

IV. Providing Travel Vouchers or Credits to Passengers Who Are Unable 
or Choose Not To Travel Due to Concerns Related to a Serious 
Communicable Disease; Refund Requirement for Airlines and Ticket Agents 
Accepting Significant Government Financial Assistance Related to a 
Public Health Emergency

A. Background

    Since the enactment of the Airline Deregulation Act of 1978 that 
liberalized the airlines' ability to set ticket prices based on, among 
many other factors, market demands, airlines have developed many 
innovative ways to price air travel products tailored to different 
consumer needs. The concept of ``booking classes'' encompasses 
categories of tickets that are priced differently based on the levels 
of flexibility a consumer has to change or cancel the tickets. Tickets 
in the booking class labeled ``non-refundable'' generally would be 
priced the lowest with the most restrictive conditions applicable to 
consumer-initiated changes to the booking. Airlines' terms and 
conditions for non-refundable tickets often specify that the passenger

[[Page 51565]]

would not be eligible to receive any form of compensation, including 
refunds, credits, or vouchers, should the passenger choose not to 
travel. As a goodwill or customer service gesture, many airlines 
sometimes provide travel credits or vouchers, after evaluating the 
situation on a case-by-case basis, to passengers who changed their 
travel plans due to unexpected events, such as medical or family 
emergencies, including passengers who have contracted a serious 
communicable disease and decided to not travel to protect the health of 
others. Passengers accepting these credits or vouchers then would have 
the flexibility to reschedule their travel for a later date but may at 
times be subject to a rebooking fee.
    Approximately 20% of the refund complaints that the Department 
received from January 1, 2020 to June 30, 2021, involved instances in 
which passengers with non-refundable tickets chose to not travel 
because of considerations related to the COVID-19 pandemic.\38\ Given 
the impact the pandemic has had on passengers' travel plans, most 
airlines that fly to, within, and from the United States have offered 
travel credits or vouchers, despite the lack of a regulatory mandate, 
in situations where a passenger states that he or she was unable to 
travel or advised not to travel due to COVID-19 related reasons. 
However, consumers have complained to the Department that the airline 
vouchers and credits that they received have inadequate validity 
periods considering the trajectory and duration of the pandemic. Some 
complainants informed the Department that they experienced great 
difficulties in receiving and redeeming travel vouchers issued by or 
through ticket agents. Others have expressed frustration that the 
vouchers are limited to booking future travel with the same routing as 
their original bookings. Consumers believe these types of restrictions 
significantly reduce the value of the credits or vouchers. Many 
consumers have also asked that refunds be provided to them instead of 
vouchers and credits. Consumer organizations and certain members of 
Congress \39\ have urged airlines to provide non-expiring credits or 
refunds in situations where the consumer does not travel due to COVID-
related reasons.
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    \38\ See, Report to the White House Competition Council, p. 11.
    \39\ See, https://www.markey.senate.gov/imo/media/doc/flights_credits_all_airlines_combined.pdf.
---------------------------------------------------------------------------

    During the December 2021 ACPAC public meeting, participants also 
discussed the issue of airline ticket refundability when consumers 
cancel flights due to public health concerns or government 
restrictions.\40\ With the COVID-19 pandemic as a background, consumer 
advocates stated that consumers should not be denied refunds when they 
are unable to travel due to government restriction, health concerns, 
and cancelled events. Airline representatives focused on the public 
benefits of having and maintaining the nonrefundable fare product in 
the marketplace and cautioned that overregulation in this area may 
result in the elimination of that lower-priced fare product.
---------------------------------------------------------------------------

    \40\ See, Advisory Committee for Aviation Consumer Protection 
(ACACP) Docket: https://www.regulations.gov/docket/DOT-OST-2018-0190.
---------------------------------------------------------------------------

    The Department is of the view that a regulation is needed to ensure 
consumers are consistently treated fairly when they are unable or 
advised not to travel due to reasonable concerns related to a serious 
communicable disease. The Department considers a consumer who does not 
travel because he or she has contracted a serious communicable disease 
or has been advised by a medical professional or determines consistent 
with public health guidance not to travel because he or she is likely 
to have contracted such a disease to be acting reasonably. Consumers 
would also be acting reasonably if they do not travel, during a public 
health emergency, to protect themselves from a serious communicable 
disease based on restrictions, advisories, and guidance issued by CDC, 
comparable agencies in other countries or WHO. Also, a consumer may be 
unable to travel in relation to a serious communicable disease because 
of restrictions imposed by a governmental entity (e.g., stay at home 
order, border closure).
    This NPRM proposes to mandate that airlines and ticket agents 
provide credits or vouchers under certain circumstances and specifies 
the form and nature of these credits or vouchers. It also proposes that 
U.S. and foreign air carriers and ticket agents provide refunds during 
a future public health emergency, in lieu of travel vouchers or 
credits, to consumers if the carrier or ticket agent receives 
significant government financial assistance, as determined by the 
Department, regarding the public health emergency. The Department 
believes that a regulation defining the baseline of accommodations to 
non-refundable ticket holders and identifying the specific 
circumstances that would give rise to the need to accommodate 
passengers when they cancel or postpone their travel would greatly 
enhance consumer protection. Without such requirements, airlines and 
ticket agents may have different interpretations of what types of event 
would be sufficient to justify a deviation from the non-refundable 
terms of a ticket. Such application of interpretations may result in 
not only increased consumer confusion and frustration, but also 
increased administrative cost to airlines and ticket agents for 
handling customer service requests and complaints from consumers with 
different perspectives.
    Aside from enhanced protection of consumers' financial interests, 
the Department believes that a regulation providing protection to non-
refundable ticket holders who are unable to travel by air due to 
reasonable concerns related to a serious communicable disease is needed 
to promote and maintain a safe and adequate aviation transportation 
system. 49 U.S.C. 41702 requires U.S. carriers to provide safe and 
adequate interstate air transportation and 49 U.S.C. 40101(a) directs 
the Department in carrying out aviation economic programs such as 
regulations under 49 U.S.C. 41702 and 41712 to consider certain 
enumerated factors as being in the public interest. These factors 
include ``the availability of a variety of adequate, economic, 
efficient, and low-priced services without unreasonable discrimination 
or unfair or deceptive practices'' and ``preventing unfair, deceptive, 
predatory, or anticompetitive practices in air transportation,'' as 
well as ``assigning and maintaining safety as the highest priority in 
air commerce.'' Large scale public health emergencies such as the 
COVID-19 pandemic often lead to a significant loss of human life and 
profoundly impact how people live and behave. This includes a general 
reluctance to travel during a pandemic, particularly among certain 
sectors of the population, such as the elderly, individuals with 
certain health conditions that may place them at greater risk of 
serious illness if they contract the disease, or those who are their 
caregivers. These consumers face heightened risks when traveling during 
a pandemic because of the potentially more severe consequences of them 
contracting the communicable disease. Nevertheless, some may take risks 
and travel if they have expended funds on airline tickets that they are 
unable to recoup. Similarly, individuals who have contracted a serious 
communicable disease such as COVID-19 or have been advised by a medical 
professional or determine consistent with guidance

[[Page 51566]]

issued by a public health authority not to travel because they are 
likely to have such a disease may travel, rather than self-quarantine 
as may be suggested by government-issued advisories, if they are unable 
to recoup the cost of their ticket. This NPRM would protect passengers' 
financial interests in airline tickets that they purchased when they 
are unable or choose not to travel due to reasonable concerns about a 
serious communicable disease, which would encourage them to postpone 
travel and avoid potential harm to themselves and others in the 
aviation system. The Department seeks comments on whether requiring 
airlines and ticket agents to issue travel credits or vouchers to non-
refundable ticket holders in these situations and refunds when entities 
receive government assistance is an appropriate way for the Department 
to promote safe and adequate air transportation.
Proposals
(1) Travel Credits or Vouchers to Passengers Who Are Restricted or 
Prohibited From Traveling by a Governmental Entity in Relation to a 
Serious Communicable Disease Whether or Not There Is a Public Health 
Emergency
    Under this NRPM, airlines and ticket agents would be required to 
provide non-expiring travel credits or vouchers, instead of refunds 
except under limited circumstances as described in paragraph (10) of 
this section, to a non-refundable ticket holder who is restricted or 
prohibited from traveling by a governmental entity for reasons related 
to a serious communicable disease. A consumer may be restricted or 
prohibited from travel by air through directives such as government 
issued ``stay at home'' orders or ``shelter in place'' orders. 
Governments may also institute border closure or entry restrictions for 
certain types of passengers. The governments imposing these 
restrictions may be a foreign government or the U.S. government at the 
Federal, State, or local level. The Department believes that it is 
fundamentally unfair to allow airlines and ticket agents to enforce the 
non-refundability of tickets on consumers under these types of 
circumstances, which are out of the consumers' control.
    Under this proposal, consumers would be entitled to a non-expiring 
voucher or credit if, after the consumers purchased airline tickets, a 
government order was issued to prohibit a passenger from leaving the 
place of origination or entering into the place of transition or 
destination or if the government order renders the passenger's travel 
meaningless. For example, if a passenger plans to travel to a vacation 
destination and stay for a week but after the passenger purchased his 
or her ticket the government of the destination city imposes a seven-
day quarantine requirement for all arriving passengers, the purpose of 
this passenger's travel would be rendered meaningless. In these types 
of situations, we are proposing that the passenger be entitled to 
cancel the travel and receive a travel credit or voucher. On the other 
hand, passengers would not be entitled to a travel credit or voucher if 
they simply failed to exercise due diligence to ensure that all 
conditions for travel imposed by the governments of the departure, 
transit, or arrival locations are met. For instance, a passenger who 
failed to obtain a negative test result for a communicable disease 
within 48-hour of departure if required by the government of 
destination would not be eligible for a travel credit or voucher under 
this proposal. Further, the Department's proposal would only cover 
government-issued travel restrictions or prohibitions in relation to a 
serious communicable disease. This NPRM does not address passengers 
subject to border closure or entry restriction for reasons not related 
to a serious communicable disease, such as security reasons. The 
Department expects that many instances would be analyzed on a case-by-
case basis to determine whether a passenger would be eligible to 
receive a travel credit or voucher under this proposal. We welcome 
comments on whether the proposed requirement for a non-expiring voucher 
or credit strikes the right balance given that the travel restrictions 
are out of the airlines' and ticket agents' control and the 
differential economic impact of a refund mandate versus a travel credit 
or voucher on airlines and ticket agents in these circumstances.
(2) Travel Credits or Vouchers to Passengers Who Are Advised or 
Determine Consistent With Public Health Guidance Not To Travel To 
Protect Themselves From a Serious Communicable Disease During a Public 
Health Emergency
    The NRPM proposes that, when there is a public health emergency, 
airlines and ticket agents must provide non-expiring travel credits or 
vouchers to non-refundable ticket holders who are advised by a medical 
professional or determine consistent with public health guidance issued 
by the CDC, comparable agencies, or WHO not to travel by air to protect 
themselves from a serious communicable disease. Under this NPRM, for 
airlines to incur this obligation, the non-refundable ticket holder 
must have booked the ticket before the beginning of the public health 
emergency and the travel date must be during the public health 
emergency.
    The NPRM further clarifies that a ``public health emergency,'' as 
used in this proposed regulation, is defined in the U.S. Department of 
Health and Human Services (HHS) regulation addressing measures taken by 
CDC to quarantine or otherwise prevent the spread of communicable 
diseases, 42 CFR 70.1.\41\ The Department believes that adopting HHS's 
definition of public health emergency is appropriate here to capture 
large-scale outbreaks of a serious communicable disease that would 
significantly impact air travel on a regional, national, or global 
basis, during which the Department's regulation is warranted to ensure 
a basic level of protection for air travelers affected by the events.
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    \41\ At the time of the publication of this NPRM, the definition 
for ``Public health emergency'' in 42 CFR 70.1 is: (1) Any 
communicable disease event as determined by the Director with either 
documented or significant potential for regional, national, or 
international communicable disease spread or that is highly likely 
to cause death or serious illness if not properly controlled; or (2) 
Any communicable disease event described in a declaration by the 
Secretary pursuant to 319(a) of the Public Health Service Act (42 
U.S.C. 247d (a)); or (3) Any communicable disease event the 
occurrence of which is notified to the World Health Organization, in 
accordance with Articles 6 and 7 of the International Health 
Regulations, as one that may constitute a Public Health Emergency of 
International Concern; or (4) Any communicable disease event the 
occurrence of which is determined by the Director-General of the 
World Health Organization, in accordance with Article 12 of the 
International Health Regulations, to constitute a Public Health 
Emergency of International Concern; or (5) Any communicable disease 
event for which the Director-General of the World Health 
Organization, in accordance with Articles 15 or 16 of the 
International Health Regulations, has issued temporary or standing 
recommendations for purposes of preventing or promptly detecting the 
occurrence or reoccurrence of the communicable disease.
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    This NPRM is intended to extend broad protection to consumers 
scheduled to travel by air to, within, and from the United States 
during a public health emergency and are advised by a medical 
professional or determine consistent with public health guidance issued 
by CDC, comparable agencies in other countries, or WHO not to travel 
due to a health condition that makes the traveler particularly 
vulnerable to the disease. In recognition of the significant economic 
impact of public health emergencies, the Department is proposing to 
require airlines and ticket agents to provide non-expiring vouchers and 
credits (and refunds under the limited circumstances

[[Page 51567]]

as described in paragraph (10) of this section) to these passengers. 
The Department believes that this strikes the right balance between 
protecting consumers on the one hand and preserving and ensuring a 
healthy air transportation industry on the other. The Department notes 
that although the proposed requirement may result in a large amount of 
credits and vouchers owed to consumers on carriers' accounting records, 
it would not result in an immediate reduction of the carriers' 
revenues. The Department believes that the proposal, which would 
mandate non-expiring credits and vouchers for consumers to use in the 
future instead of refunds, would enable airlines and agents to better 
manage their liquidity and reduce the risk of bankruptcies.
    The Department welcomes comments regarding whether it is reasonable 
to mandate that airlines and tickets agents issue non-expiring travel 
credits and vouchers to passengers who have purchased their airline 
tickets before the declaration of a public health emergency and are 
advised not to travel during a public health emergency to protect 
themselves from a serious communicable disease. As stated earlier, 
during the COVID-19 pandemic, many airlines have voluntarily provided 
vouchers to consumers who were unable or chose not to travel because of 
health concerns related to the pandemic. These vouchers, however, were 
valid only for specified time periods and had other conditions and 
restrictions associated with them. We are interested in comments 
related to obstacles airlines and ticket agents may face when 
voluntarily providing travel credits and vouchers to consumers who 
could not or chose not to travel during the pandemic. Also, we solicit 
comment on whether airlines and ticket agents should be required to 
provide consumers more flexibility on the use of vouchers by allowing 
the use of vouchers by travelers other than the traveler named in the 
original ticket or use for travel on different interline partners. We 
are also interested in feedback regarding any difficulties that 
consumers may have experienced in redeeming credits and vouchers issued 
to them and what the Department should consider in the proposed 
regulation to address or resolve these difficulties. With respect to 
the scope of qualified consumers, the Department's proposal would be 
limited to consumers who have purchased their tickets before the public 
health emergency. The Department recognizes that this limitation would 
not extend the proposed enhanced financial protection to consumers who 
purchase tickets during a public health emergency but later find out 
that their condition or situation has changed such that it results in a 
reluctance or inability to travel. For example, a consumer may have 
developed a new health condition after having purchased the ticket 
during a public health emergency and the new health condition makes the 
consumer more susceptible to the serious communicable disease. Another 
example is if the airline reduces the safety measures in place to 
protect consumers from contracting this serious communicable disease. 
The Department seeks comments on whether the proposed travel credit/
voucher issuance requirement should cover these consumers or if it 
would be preferable to have a bright line rule that the protections are 
limited to those consumers who purchased their airline tickets before 
the declaration of a public health emergency.
(3) Travel Credits or Vouchers to Passengers, Who Are Advised or 
Determine Consistent With Public Health Authority Guidance Not To 
Travel Irrespective of a Public Health Emergency, Because the Passenger 
Has or May Have a Serious Communicable Disease and Would Pose a Direct 
Threat to Health of Others
    Beyond widespread infections of a communicable disease that lead to 
a ``public health emergency'' declaration by relevant governing 
entities, this NPRM also addresses incidents of passengers who are 
advised not to travel because they have or may have contracted a 
serious communicable disease and, to protect the health of others, the 
passengers do not take their scheduled flight. These incidents may 
occur regardless of whether there is a public health emergency. The 
NPRM proposes to require airlines and ticket agents to provide non-
expiring vouchers and credits, instead of refunds, in these types of 
incidents, unless the incidents occur during a public health emergency 
and the airline or ticket agent has received significant financial 
assistance from their home country as described in paragraph (10) of 
this section. However, the Department seeks comment on other 
alternatives.
    It is the Department's understanding that airlines in general would 
allow and prefer that a passenger with a serious communicable disease 
in the contagious stage not travel, and airlines would likely grant an 
exception from the tickets' non-refundability to allow the passenger to 
reschedule travel. In fact, if a passenger carrying a serious 
communicable disease wants to travel, airlines would likely take steps 
to ensure that the health of others in the flight is protected. Such 
steps include conducting an assessment regarding whether the passenger 
would pose a direct threat to the health of others, requesting medical 
documentation, taking precautions to prevent the transmission of the 
disease in the cabin while transporting the passenger, or if 
appropriate, denying boarding. In the event that a passenger who has a 
serious communicable disease wishes to postpone travel, the Department 
believes that it would be in the interest of carriers, passengers and 
the public at large for the travel to be postponed. This would protect 
the health of the public and prevent the further transmission of a 
serious communicable disease. The Department notes that this proposal 
only intends to cover passengers who have or are likely to have 
contracted a serious communicable disease, as determined by current 
medical knowledge (e.g., directives issued by public health authorities 
such as CDC) or a medical professional treating the consumer.
    This proposal defines a serious communicable disease to mean a 
communicable disease as defined in 42 CFR 70.1 that has serious 
consequences and can be easily transmitted by casual contact in an 
aircraft cabin environment. The analysis of whether a communicable 
disease is ``serious'' under this NPRM is similar to the analysis of 
``direct threat'' under the Department's disability regulation.\42\ 
Under that regulation and this proposal, carriers would consider the 
significance of the consequences of a communicable disease and the 
degree to which it can be readily transmitted by casual contact in an 
aircraft cabin environment. Communicable diseases that are readily 
transmissible but do not result in significant health consequences 
(such as the common cold) or those carrying significant health 
consequences but are not readily transmissible (such as AIDS) are not 
``serious'' communicable diseases for the purpose of this proposal. 
Conversely, the SARS-CoV-2 virus that causes the COVID-19 infection 
would be considered a ``serious'' communicable disease because it is 
readily transmissible in the aircraft cabin and would likely cause 
significant health consequences in many people. The Department solicits 
comment on its definition of a serious communicable disease. Is it 
sufficiently clear to the regulated entities and the public as to which 
types of

[[Page 51568]]

communicable diseases would and would not be considered serious? Is 
there a better way to define serious communicable disease?
---------------------------------------------------------------------------

    \42\ See 14 CFR 382.21(b)(2).
---------------------------------------------------------------------------

    The Department, although not a public health agency, believes that 
using economic tools as incentives to discourage passengers who would 
pose a risk to the health of others from traveling is consistent with 
its mission of ensuring that the air transportation system is safe for 
the public. The Department notes that requests from passengers who are 
advised by a medical professional or determine consistent with public 
health guidance not to travel because they have or may have a serious 
communicable disease infection should be infrequent and place little 
burden on the airlines outside of the context of public health 
emergencies. The Department solicits comment on the potential for abuse 
if it adopts, at the final rule stage, its proposal that whether or not 
there is a public health emergency airlines provide credits or vouchers 
to individuals who have been advised by a medical professional or 
determine consistent with public health guidance not to travel because 
they have or may have a serious contagious disease. The proposed rule 
would allow airlines to require such persons to provide documentation 
from a medical professional and/or guidance issued by CDC, comparable 
agencies, or WHO that the consumer should not travel by commercial air 
transportation. The Department seeks comment on whether this is 
sufficient to prevent abuse.
    Are there concerns about individuals falsely stating that they have 
serious communicable disease? If so, how should the Department address 
these concerns? Are there ways to distinguish between consumers who, 
after considering public health advisories or medical professional 
opinions, genuinely determine that they may have contracted a serious 
communicable disease, and consumers who want to take advantage of the 
ability to claim vouchers or credits without a real suspicion of having 
contracted a serious communicable disease? Should the requirement for 
airlines to provide a credit or voucher only be triggered if the 
consumer has instructed by a medical professional or public health 
authority that he or she must quarantine or isolate and therefore 
cannot fly as opposed to consumers who are advised or determine 
consistent with public health guidance that they have or may have 
contracted a serious communicable disease?
    In addition, should the Department consider alternatives to 
requiring airlines to offer vouchers or credits to consumers who have 
been advised by a medical professional or determine consistent with 
public health guidance not to travel because they have or may have 
contracted a serious communicable disease? If so, are there other 
actions airlines could take to protect consumers from the harm of 
losing the value of their tickets? For example, would an airline waiver 
of change fees be sufficient protection? Given the COVID-19 pandemic, 
many airlines have suspended change fees for most of their tickets 
allowing passengers to adjust travel schedules for any reason without 
contacting the airline. Some airlines have also created an economy 
class of tickets that allow for full refunds when the passenger cancels 
before departure under most circumstances. Should the Department 
require airlines to allow consumers to change their tickets without 
charging a fee instead of providing them non-expiring vouchers or 
credits? If so, should such a requirement apply to all classes of 
tickets, regardless of airline change fee policies? In addition, should 
the Department place additional requirements on airlines, such as 
allowing consumers to change the ticket multiple times or to keep the 
ticket open so that the consumer could select the new flight at a later 
date? The Department welcomes comments on its proposal as well as 
suggestions on alternative methods to protect consumers who are advised 
by a medical professional or determine consistent with public health 
guidance not to travel because they have or may have a serious 
communicable disease.
(4) Supporting Documentation To Be Provided to Airlines or Ticket 
Agents
    The Department is cognizant of the airline industry's longstanding 
ticket pricing practice that applies restrictions and fewer 
flexibilities to less expensive ticket categories. While proposing a 
regulation to ensure that passengers who have legitimate reasons to 
postpone travel are accommodated, the Department believes that it is 
reasonable for airlines and ticket agents to implement safeguards to 
prevent abuse. Under this proposal, airlines and ticket agents would 
have the option to assess the validity of passengers' reasons to 
postpone travel before issuing travel vouchers, credits, or refunds to 
them.
    To determine whether a passenger's ability or willingness to travel 
is impacted due to government restrictions related to a public health 
emergency, this proposal allows airlines and ticket agents to require 
passengers to present materials to demonstrate that government 
requirements are restricting their air travel. These requirements could 
include a quarantine isolation order or a border closure notice or 
entry restriction issued by a government. A local stay at home order 
that restricts local travel may also be a reasonable ground if it 
impacts the passenger's entry or exit of the local vicinity through air 
travel. To the extent that a passenger is asserting an inability or 
unwillingness to travel to protect himself or herself or others from a 
serious communicable disease, airlines and ticket agents would be 
permitted to request that the passenger provide a current written 
statement from a licensed medical professional attesting that it is the 
medical professional's opinion, based on current medical knowledge and 
the passenger's health condition, that the passenger should not travel 
by commercial air transportation. A general ``fear'' that a passenger 
may have about traveling when there is a public health emergency 
declared would not be sufficient to entitle that passenger to a travel 
credit or voucher.
    The Department seeks comments on the adequacy of types of 
information that the Department would allow airlines and ticket agents 
to seek from passengers requesting a travel credit or voucher for 
future travel. If a public health emergency has been declared and the 
reason that the passenger is seeking to postpone travel is related to 
risk to his or her health, should the Department specify that the 
medical documentation explain the reason that the passenger is more 
susceptible than others to contracting a serious communicable disease 
during air travel? What, if any, privacy concerns are there with 
allowing airlines and ticket agents to seek information from passengers 
related to their health? What are possible ways to resolve these 
concerns? Are there ways to reduce or prevent unscrupulous passengers 
from falsely claiming that they have a serious communicable disease 
that prevents them from traveling without airlines and ticket agents 
requesting documentation from passengers about their health? If CDC, 
WHO or other comparable entities recognize certain groups as being more 
vulnerable to contracting a serious communicable disease, then would it 
be sufficient for the medical documentation to affirm that the 
passenger belongs in one of these groups? For example, in a travel 
advisory published by the WHO regarding COVID-19,\43\ WHO advises

[[Page 51569]]

that any person in high-risk groups--including those over the age of 
60, those with chronic illnesses, and those with underlying health 
conditions, should consider postponing travel to areas where COVID-19 
is widespread. Although technically members of this vulnerable group 
may still travel, the potential serious health risk from contracting 
the disease through travel is a material concern that could affect the 
person's willingness to travel.
---------------------------------------------------------------------------

    \43\ https://www.who.int/news-room/q-a-detail/coronavirus-disease-covid-19-travel-advice-for-the-general-public.
---------------------------------------------------------------------------

    The Department seeks comments regarding whether it is reasonable to 
require airlines and ticket agents to consider and accept a broad scope 
of ``travel restrictions, advisories, and guidance'' issued by CDC, 
comparable agencies in other countries, and WHO, to support a 
consumer's assertion that it is not safe for them to travel. Are 
``advisories and guidance'' too broad and vague for consideration? For 
example, CDC's current travel advisory system includes three categories 
applicable to different countries in the world: Warning Level 3--Avoid 
all non-essential Travel; Warning Level 2--Practice enhanced 
precautions; and Warning Level 1--Practice usual precautions. In this 
example, which Warning Level(s) should be considered as a reasonable 
level of restriction with respect to allowing non-refundable ticket 
holders to receive a travel credit?
    The Department notes that there are two categories of evidentiary 
documentation airlines and ticket agents are permitted to request as a 
condition for issuing the travel credits or vouchers under this 
proposal--one is government-issued travel restrictions, guidance, 
advisories applicable to the public or sectors of the public or 
quarantine orders/isolation advisories applicable to the individual 
passenger; the other is a written statement by a licensed medical 
professional issued to the individual passenger. The Department notes 
that, depending on the reason based on which a passenger is seeking to 
postpone travel, not all passengers should be required to provide both 
categories of documentation. For example, a passenger seeking to 
postpone travel due to a compromised immune system may be required to 
provide both the government advisory applicable to travelers with a 
compromised immune system and a written statement by the passenger's 
doctor attesting that the passenger has a compromised immune system. On 
the other hand, a passenger seeking to postpone travel due to the 
destination country's entry restriction should not be required to 
provide any medical documentation. We expect airlines and ticket agents 
to use reasonable judgment to determine what type(s) of documentation 
is necessary and reasonable to request. We ask whether the proposal 
that medical documentation be dated within 30 days of the initial 
departure date is reasonable and appropriate.
    Finally, the Department recognizes that many passengers who sought 
to defer travel during the COVID-19 pandemic may not fall under one of 
the referenced categories. These are passengers who do not have a 
health condition themselves but are the caregivers of persons with a 
health condition, either through family relationship or employment. The 
Department seeks comments on whether this category of passengers should 
be included in the protection proposed in this NPRM, and if so, what 
are the documentation carriers and ticket agents may request, that are 
credible and reasonable. Further, the Department seeks comments on 
whether this proposal should also cover both passengers who would have 
difficulty traveling alone and their travel companions if only one of 
them qualifies for a voucher or refund. For example, if a qualified 
passenger is traveling with a minor, should the airline also be 
required to provide a voucher or refund to the minor even if the minor 
would not otherwise qualify?
(5) Entities Responsible for Issuing Travel Credits or Vouchers
    Some of the complaints filed with the Department against ticket 
agents regarding the issuance of credits and vouchers indicate that 
they were issued by airlines through the ticket agents, and other were 
issued by the ticket agents. Some of the airline vouchers would limit 
the redemptions to bookings with the same ticket agents while others 
did not have such a restriction. As with issuing refunds for flights 
cancelled or significantly changed by airlines, for passengers who 
booked air travel with ticket agents requesting a travel credit due to 
public health concerns, the Department's proposal would place the 
obligation of issuing the credits or vouchers on the entity that 
``sold'' the tickets (i.e., identified in the consumer's ticket 
purchase financial statement). However, the Department is open to 
suggestions on whether the entity obligated to issue credits or 
vouchers should be determined based on other criteria that provide 
consumers more certainty in receiving the credits and more flexibility 
in redeeming the credits. Specifically, should airlines be solely 
responsible for issuing credits or vouchers because they are the direct 
providers of the air transportation paid for by consumers and the 
ultimate recipients of the consumer funds? If so, how can the 
Department best ensure that the credits and vouchers are issued 
appropriately and promptly by the airline when the airline is not a 
principal in the original transaction? What role and responsibility 
should be placed on ticket agents to facilitate the issuance of credits 
or vouchers by airlines when the ticket agents are the principals of 
the initial transactions? In addition to answers to these specific 
questions, the Department also seeks general information on the 
transactions between airlines and ticket agents that would have an 
impact on determination regarding how travel credits and vouchers are 
issued for non-refundable ticket holders who could not or choose not to 
travel due to public health concerns.
(6) Validity Period for Travel Credits or Vouchers
    The Department is proposing to require that airlines and ticket 
agents provide non-expiring credits or vouchers for future travel to 
qualifying consumers. The Department has received numerous complaints 
from customers concerned that the airline vouchers or travel credits 
provided to them would expire before they are able to use them. These 
consumers pointed out that given the uncertainty regarding how the 
COVID-19 pandemic would progress, government travel restrictions in 
place, and specific health concerns related to flying during the 
pandemic, they do not expect to travel by air within the validity 
periods of the credits or vouchers. The validity periods for credits 
and vouchers generally range from 90 days to two years. The two-year 
validity period is a result of extensions to the initial validity 
periods by certain airlines and ticket agents as the pandemic has 
continued far longer than originally anticipated.
    Based in part on the concerns expressed in these complaints, the 
Department has tentatively decided that the unpredictability of a 
serious communicable disease justifies a proposed requirement for 
airlines and ticket agents to provide credits or vouchers for future 
travel that do not have an expiration date. These non-expiring vouchers 
or credits would be provided to consumers who purchase tickets but are 
restricted or prohibited from traveling by a governmental entity (e.g., 
as a result of a stay at home order, quarantine period, entry 
restriction, or border closure) due to concerns of a serious 
communicable disease; are unable or advised not to travel during a

[[Page 51570]]

public health emergency to protect themselves from a serious 
communicable disease consistent with restrictions, advisories and 
guidance issued by CDC, comparable agencies in other countries, or WHO; 
or are unable or advised not to travel because they have contracted a 
serious communicable disease and their condition would pose a threat to 
the health of others. A non-expiring voucher or credit would provide 
consumers greater flexibility and assurance that the vouchers or 
credits would be available when they are ready to travel.
    The Department welcomes comments on whether an indefinite validity 
period for credits or vouchers issued under this proposal is 
reasonable, and if not, the reason that it is unreasonable and what a 
reasonable minimum validity period should be. For example, when there 
is not a public health emergency, for travel credits or vouchers issued 
to passengers who have been advised by a medical professional or 
determine consistent with public health guidance not to travel because 
they have or may have such a disease, is a validity period of one year 
sufficient to ensure that passengers have ample opportunities to use 
the credits or vouchers? For travel credits or vouchers issued due to a 
public health emergency, should the Department require that they be 
valid for one year, or for the duration of the public health emergency, 
whichever gives the longer validity period? Commenters are encouraged 
to provide information on what challenges airlines and ticket agents 
may face when accommodating the redemptions of travel credits and 
vouchers that have no expiration dates.
(7) Service Fee by Ticket Agents and Airlines for Processing Credits 
and Vouchers; Disclosure
    Similar to the proposal regarding ticket agents' issuance of 
airfare refunds when refunds are due, the Department is proposing to 
allow airlines and ticket agents to charge a processing fee for the 
issuance of credits or vouchers to non-refundable ticket holders when 
consumers' travel plans are affected by concerns related to a serious 
communicable disease, as proposed in section 259.5(b)(6). The 
Department is of the tentative view that ticket agents and airlines 
should be allowed to impose a processing fee if the fee is on a per 
passenger basis and appropriate disclosures were made to the consumer 
prior to the consumer purchasing the airline ticket because neither the 
airline or ticket agent initiated the change that is resulting in the 
need for a credit or voucher. To ensure transparency and fair treatment 
of consumers, the existence of the fee must be clearly and 
conspicuously disclosed to consumers at the time of ticket sale. The 
Department welcomes comments on whether it is reasonable to permit 
airlines and ticket agents to charge a processing fee for the issuance 
of travel credits or vouchers. If airlines and ticket agents should be 
permitted to charge a fee, what type and manner of disclosure would be 
sufficient to avoid consumer confusion for fees applicable for these 
specific circumstances?
(8) Value of Credits and Vouchers; Disclosure of Reasonable Conditions, 
Limitations, and Restrictions on the Use of Credit or Voucher
    The NPRM proposes that the travel credits or vouchers issued to 
qualified consumers be ``a value equal to or greater than the fare 
(including government-imposed taxes and fees and carrier-imposed fees 
and surcharges).'' The Department is also proposing that the credits or 
vouchers include any prepayment of unused ancillary services such as 
baggage fees or seat selection fees. The rationale for including the 
fees for ancillary services in the credit or voucher given to consumers 
is that those services have not been provided by the carrier.\44\ On 
the other hand, under this proposal if the required disclosures have 
been provided before the consumer purchased the airline ticket, ticket 
agents would be allowed to deduct, from the credit or voucher given to 
consumers their service charge, if any, for issuing the original ticket 
because that service has already been provided. DOT further believes 
the fee deduction is appropriate because the consumer's flight is 
operating as scheduled and neither the airline or ticket agent 
initiated or had control over the change that is resulting in a credit 
or voucher being provided. We invite comments on whether allowing 
ticket agents to retain the fees collected for service already provided 
is reasonable and appropriate.
---------------------------------------------------------------------------

    \44\ The Department's rulemaking on Refunding Fees for Delayed 
Checked Bags and Ancillary Services That Are Not Provided proposes 
that airlines must refund any ancillary service fees when the 
service was not provided. See, supra, FN 7.
---------------------------------------------------------------------------

    In addition to proposing that the value of the travel credit or 
voucher be equal to or greater than the airfare, the Department is 
considering whether airlines should be required to offer an option to 
consumers in which consumers may choose to receive the travel credit or 
voucher redeemable for the same itinerary as the original ticket, 
regardless of what the ticket cost is at the time of redemption. The 
Department believes some consumers may benefit from and prefer this 
option if they plan to travel on the same itinerary in the future, 
without worrying about price increases. As airfare fluctuates depending 
on, among many other factors, travel date, some of the redeemed tickets 
may be priced less than the original purchase price of the ticket. In 
those situations, airlines would benefit from offering this option.
    Also, the Department proposes to require airlines and ticket agents 
provide full disclosure of any material restrictions, limitations, or 
conditions on the use of the credits and vouchers. The Department also 
proposes to prohibit conditions, limitations, and restrictions imposed 
on the credits and vouchers that are unreasonable and would materially 
reduce the value of the credits and vouchers to consumers as compared 
to the original purchase prices of the airline tickets. For example, 
under the proposal, a credit or voucher that would severely restrict 
bookings with respect to travel date, time, or routes would be 
unreasonable. Similarly, a restriction that a voucher can only be used 
on one booking and that any residual value would be void afterwards 
would be considered unreasonable. Further, imposing a rebooking fee or 
a change fee that reduces the value of the voucher or credit applicable 
to the new ticket would be considered unreasonable. However, as noted 
earlier, this NPRM would allow a carrier to retain a service fee for 
processing the travel voucher or credit, as long as the fee is on a 
per-passenger basis and the existence and amount of the fee is clearly 
and prominently disclosed to consumers at the time they purchased the 
airfare. To ensure that consumers have access to the full value of the 
credits or vouchers, the Department also proposes that carriers may not 
restrict the redemption of the credits or vouchers by providing that 
the value of the credits or vouchers may only cover the base fare of 
the new bookings and would not cover any taxes, fees, or surcharges 
imposed by the government or the carrier. The Department seeks comments 
on whether regulating the terms and conditions of the credits or 
voucher in this specific context is reasonable and what other steps the 
Department should consider to ensure that passengers receiving credits 
and vouchers for future travel are adequately protected.
    In addition to these proposals that intend to ensure consumers 
receive accurate information regarding their rights to the full value 
of travel credits or vouchers, the Department is interested in 
addressing some

[[Page 51571]]

consumers' concern that they may not be able to use the travel credit 
or voucher due to their age, health condition, or other reasons. The 
Department is seeking comments on whether it should require that the 
travel credit or voucher be transferrable at the consumers' discretion. 
Adding transferability to the travel credit or voucher would ensure 
that eligible consumers who spent money on tickets they no longer need 
would not completely lose the value of the tickets. If adopted, should 
airlines be required to allow multiple transfers? The Department also 
seeks comments on whether a regulation is necessary to specifically 
require that carriers and ticket agents ensure that relevant provisions 
in their contracts with consumers are consistent with the Department's 
regulation on issuing travel credits and vouchers if adopted, similar 
to the one proposed in 14 CFR 260.9 regarding refunds.
(9) Airline Cancelling or Significantly Changing Flights After 
Passenger Cancellation
    Under this NPRM, the protections provided to passengers who 
purchase a non-refundable ticket on a flight to, within, or from the 
United States and elect to cancel their travel due to government 
restrictions or health concerns differ from the protections provided to 
passengers who purchase a non-refundable ticket on a flight to, within, 
or from the United States that is cancelled or significantly changed by 
the airline. An airline cancelling flights or significantly changing 
flight itineraries would entitle passengers to a refund. A passenger 
cancelling or postponing travel, despite the flights still operating 
without a significant change, due to government restrictions or 
reasonable concerns of a serious communicable disease would entitle the 
passenger to a travel credit or voucher for future travel, except for 
limited circumstances where passenger would be entitled to a refund 
because of significant government assistance provided to the airline or 
ticket agent. The Department is of the tentative view that if an 
airline cancels or makes a significant change to a flight after a 
passenger has already requested to cancel his or her a travel itinerary 
and received a credit or voucher, then the airline or ticket agent 
should not be required to replace that voucher with a refund. This is 
because at the time the passenger requested a cancellation of the 
ticket, the airline was still planning to operate the flight(s) on the 
itinerary. The Department believes it is overly burdensome and costly 
for airlines to apply refund eligibility to itineraries that have 
already been cancelled pursuant to passengers' requests prior to the 
airline's decision to cancel or significantly change the flight. That 
said, the Department would caution that its Office of Aviation Consumer 
Protection has the authority to investigate whether an airline or a 
ticket agent has engaged in an unfair or deceptive practice when it 
fails to inform a passenger making a request to cancel the itinerary 
that the passenger is eligible for a refund, if the airline or ticket 
agents knows or should have known at the time that a flight has been 
cancelled or significantly changed.
(10) Airlines and Ticket Agents Receiving Significant Government 
Financial Assistance Related to a Public Health Emergency
    The impact of a public health emergency on the aviation industry 
can be severe. Indeed, the COVID-19 pandemic has led to international 
flight restrictions, local ``stay at home'' and ``shelter in place'' 
orders, and reduced demand for flying, which resulted in a drastic 
decrease in the number of flights operated and significant financial 
loss for airlines and ticket agents. To ameliorate these negative 
consequences, various governments have provided financial support for 
airlines and other participants in the aviation industry within their 
jurisdiction. They have done so through various types of measures, 
including grants and loans, to sustain the industry through these 
difficult times and protect airline jobs.
    Consumers, consumer advocacy groups,\45\ and certain members of 
Congress \46\ have urged airlines receiving government financial 
assistances to provide refunds instead of vouchers or credits to 
consumers who decided not to travel due to COVID related reasons. They 
assert that it is fundamentally unfair for airlines to be supported by 
government funds and refuse to provide refunds to consumers who were 
not able to travel due to the COVID-19 pandemic. Similarly, in a letter 
to Congress, the National Association of Attorney Generals urged 
Congress to consider and enact laws to require carriers that receive 
Federal financial relief to provide full refunds to customers who 
voluntarily cancel their flight reservations for reasons related to 
COVID-19.\47\ Although consumer advocacy organizations and others have 
urged the Department to mandate that airlines that received government 
funds related to the COVID-19 pandemic refund consumers for flights 
that consumers were unable to take due to government restrictions or 
advisories related to COVID, the Department is not proposing to do so. 
The Department does not have the authority to promulgate retroactive 
rules unless that power is expressly authorized by Congress.\48\ 
However, pursuant to the Department's authority as described in Section 
I.B. of this proposed rule, the Department is proposing moving forward 
to require U.S. and foreign airlines to issue refunds instead of travel 
credits or vouchers to qualified passengers holding non-refundable 
tickets for flights that operated without a significant change if the 
airlines receive a significant amount of government financial 
assistance related to that public health emergency. The Department 
seeks comment on how to handle the refund/voucher issuance situation 
when there is more than one airline on the ticket and not all airlines 
receive significant government financial assistance. To the extent that 
a ticket agent sold the ticket to a consumer, as identified by the 
consumer's financial charge statement, the Department seeks comment on 
whether the airline receiving government assistance should be required 
to provide a refund in lieu of the travel credit or voucher.
---------------------------------------------------------------------------

    \45\ See, e.g., Airlines: Give Us Refunds, Not Vouchers, 
petition by Consumer Reports, https://action.consumerreports.org/20200420_finance_airlinerefundpetition. Consumer Reports, Letter to 
Sect. Buttigieg, https://advocacy.consumerreports.org/wp-content/uploads/2021/11/CR-letter-to-Sec-Buttigieg-consumer-complaints-11-18-21-FINAL-2.pdf.
    \46\ See, e.g., Senator Edward J, Markey and Richard Blumenthal 
press release, https://www.markey.senate.gov/news/press-releases/senators-markey-and-blumenthal-blast-airlines-inadequate-response-to-their-request-to-eliminate-expiration-dates-for-all-pandemic-related-flight-credits.
    \47\ See, National Association of Attorney Generals (NAAG) press 
release, https://www.naag.org/policy-letter/attorneys-general-call-for-new-consumer-protections-to-protect-airline-industry-customers/.
    \48\ The Supreme Court, in Bowen v. Georgetown University 
Hospital, 488 U.S. 204 (1988), said the Administrative Procedure Act 
is very clear in defining ``rule'' to mean an agency statement of 
future effect. The Court stated that agencies do not have the power 
to promulgate retroactive rules unless that power is expressly 
authorized by Congress.
---------------------------------------------------------------------------

    In determining the scope of ``government financial assistance'' 
that would impose a requirement to provide refunds to qualified 
passengers holding non-refundable tickets for flights that operated 
without a significant change, the Department referenced the definitions 
for the terms ``Federal award'' and ``Federal financial assistance'' in 
the Office of Management and Budget's regulation on Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards, 2 CFR part 200. The

[[Page 51572]]

regulation in 2 CFR 200.1 defines these terms to include a broad range 
of financial instruments provided by the Federal government to non-
Federal entities. These instruments include direct cash contributions 
such as grants and direct appropriations, cash contributions or 
insurance related to loans, loan guarantees, interested subsidies, and 
non-cash contributions.
    Upon consideration, DOT proposes to adopt a definition for 
``government financial assistance'' in the context of requiring 
airlines and ticket agents to provide refunds in lieu of travel credits 
or vouchers to qualified passengers affected by a public health 
emergency to include cash contributions provided by a government entity 
and accepted by a carrier or a ticket agent selling air transportation 
to U.S. consumers, even if the carrier or the ticket agent is expected 
to provide shares or options of shares of ownership in exchange for the 
cash. The Department's proposal would exclude financial assistance in 
the forms of government issued, subsidized, or guaranteed loans and 
non-cash contributions by a government entity. The proposed definition 
would cover not only financial assistance provided by the Federal 
government of the United States to U.S. air carriers and ticket agents 
based in the United States, but also financial assistance provided by a 
foreign central government to a foreign airline or a ticket agent 
selling air transportation to U.S. consumers. The Department's proposal 
would require airlines and ticket agents to provide refunds in lieu of 
travel credits or vouchers to qualified passengers affected by a public 
health emergency only if the future financial assistance is 
significant. The Department believes that this approach focuses on the 
net benefits airlines and ticket agents receive from the government's 
direct cash assistance and ensures that some of the benefits they 
receive would be passed on to consumers, who also suffer from financial 
losses due to the same event for which airlines and ticket agents are 
receiving government assistance. The Department seeks comments on 
whether significant government financial assistance in the form of tax 
relief or loan forgiveness is similar enough to direct cash 
contribution such that the Department's proposal on refunds should 
include entities receiving these types of financial assistance.
    The Department is cognizant that in many cases, government 
financial assistance is granted with a specific purpose. For example, 
in the United States, in recognizing the financial difficulties the 
airline industry faced due to the COVID-19 pandemic, Congress passed 
several statutes in 2020 and 2021 that granted payments to passenger 
air carriers, cargo air carriers, and certain contractors, which must 
be exclusively used for the continuation of payment of employee wages, 
salaries, and benefits. The Department is not proposing to require 
airlines or ticket agents to use the specific financial assistances 
provided by their government as the sources of consumer refunds. 
Instead, the Department is proposing that the requirement for airlines 
and ticket agents to provide cash refunds to qualified passengers 
holding non-refundable tickets for flights that operated without a 
significant change would not start until an airline or ticket agent 
receives significant government assistance. This approach recognizes 
that airlines and ticket agents would have an increased financial 
ability to issue cash refunds at that time.
    The Department's proposal is contingent upon airlines' and ticket 
agents' receipt of a ``significant'' amount of government financial 
assistance. The NPRM does not propose a specific threshold to determine 
whether the government assistance is ``significant'' as the impact of 
each public health emergency on the airline industry may differ from 
time to time. Rather, the Department proposes to consider relevant 
factors, on a case-by-case basis, to determine what amount of 
government financial assistance provided to an airline would be 
considered ``significant'' and therefore trigger the refund requirement 
in the proposed 14 CFR 260.7. The factors that the Department believes 
are relevant include: the size of the entity (annual enplanements for 
airlines, annual revenue, the number of employees), year-over-year 
comparison of traffic and revenue before and after the public health 
emergency is declared, and the amount of government financial 
assistance accepted in relation to the entity's annual revenue. For 
foreign carriers, the Department may also consider their enplanements 
to and from the United States in addition to the total enplanements. 
The Department notes that taking these factors into consideration, 
government financial assistance accepted by numerous U.S. and foreign 
carriers during the COVID-19 pandemic, including financial assistance 
provided under the CARES Act, could be considered ``significant.'' The 
Department seeks comments on whether these considerations are 
reasonable to determine what amount of government assistance would be 
significant enough to trigger the refund requirement. In addition, the 
Department seeks comment on what other considerations are relevant that 
are not mentioned here. Should the Department adopt the same amount of 
government financial assistance as the benchmark for each public health 
emergency, which would apply to all entities, or should the amounts 
differ based on the entity's sizes and other considerations? Should 
there be a different threshold or a different set of considerations for 
ticket agents?
    Regarding the procedure of determining the amount of government 
financial assistance that would be considered ``significant'' for the 
purpose of airline refunds, the Department seeks comment on a process 
in which, upon the occurrence of a public health emergency and the 
provision of government financial assistance to the industry, the 
Department would apply the relevant factors and seek public comments on 
what it tentatively views as being ``significant'' financial assistance 
that would trigger the refund requirement. This notice and comment 
process would ensure the public's views are fully considered before 
there is a determination as to what is significant using the factors 
set forth in this rulemaking. It would also ensure that consumers know 
when they would be entitled to a refund instead of a non-expiring 
voucher or credit.
    The Department emphasizes that to be eligible for a refund under 
this proposal, a passenger must be otherwise eligible for a non-
expiring travel credit or voucher under the proposed provisions in 14 
CFR 259.5(b)(6) or 14 CFR 399.80(o)(1)(A), and must have made a refund 
request from the carrier or ticket agent within 12 months of the date 
that a determination has been made that the carrier or ticket agent 
received significant government financial assistance in relation to the 
public health emergency at issue. Under this proposal, passengers who 
have already accepted non-expiring travel credits or vouchers but have 
not redeemed them would be able to seek a refund after the airline or 
the ticket agent receives the government financial assistance. The 
Department believes that limiting the refund obligation to 12 months 
would add certainty to airlines with respect to financial and 
operational planning, and would also give eligible consumers ample time 
to seek refunds. The Department seeks comment on the proposed refund 
eligibility timeframe.
    Because this refund requirement for passenger-initiated 
cancellations is triggered by significant government financial 
assistance provided to carriers

[[Page 51573]]

and ticket agents in relation to a public health emergency, when there 
is no public health emergency declared, passengers who have or are 
likely to have contracted a serious communicable disease that poses a 
direct threat to the health of others or those who are restricted from 
traveling by a government order in relation to a serious communicable 
disease and want to cancel their non-refundable tickets would not be 
eligible for a refund but would be entitled to a non-expiring travel 
credit or voucher under this proposal.
    As with the proposal to require issuance of travel credits and 
vouchers to passengers holding non-refundable tickets, airlines and 
ticket agents under the proposed obligation to issue a refund because 
of their acceptance of significant government financial assistance 
would be allowed to require proof from passengers to demonstrate that 
they are unable or advised not to travel consistent with a government 
restriction, advisory, or guidance related to a public health 
emergency, and if appropriate, provide medical documentation. Carriers 
and ticket agents that have previously received required documentation 
from passengers for issuing travel credits or vouchers may not require 
documentation again when the passenger wants to exchange the unused 
credit or voucher for a refund. Carriers and ticket agents under the 
proposed obligation to issue a refund in these situations would be 
permitted to offer travel credits of the same or higher dollar value or 
other compensations, as long as passengers are informed of their 
eligibility for a refund.
    The Department notes again that the proposal to require airlines 
and ticket agents to issue refunds in lieu of travel credits or 
vouchers because airlines and ticket agents receive significant 
government financial assistance related to a public health emergency, 
if adopted in a final rule, would not apply retroactively. In other 
words, if the Department adopts this proposal, airlines and ticket 
agents that have already accepted government financial assistance 
during the COVID-19 pandemic, would not be required to provide refunds 
to eligible consumers on the basis of that assistance even if the 
financial assistance would otherwise be deemed ``significant.''
v. Effective Date
    We propose that any final rule we adopt take effect 90 days after 
the publication in the Federal Register. We believe this would allow 
sufficient time for carriers and ticket agents to comply with the 
various proposed requirements should they be finalized. We invite 
comments on whether 90 days is the appropriate interval for 
implementation of the proposed requirements if adopted in final.

Regulatory Analyses and Notices

A. Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures and Executive Order 13563 (Improving 
Regulation and Regulatory Review)

    Executive Order 12866 (``Regulatory Planning and Review''), 
supplemented by Executive Order 13563 (``Improving Regulation and 
Regulatory Review''), directs Federal agencies to propose or adopt a 
regulation only after making a reasoned determination that the benefits 
of the intended regulation justifies its costs. The Office of 
Management and Budget has determined that this proposed rule is a 
significant regulatory action under Executive Order 12866 and requires 
an assessment of potential benefits and costs. Accordingly, the 
Department has prepared a regulatory impact analysis for the proposed 
rule, summarized in this section and available in the docket. Due to a 
lack of usable data to specify a baseline and evaluate impacts, the 
analysis is mostly qualitative.
    The proposed rule would clarify the requirement that carriers and 
ticket agents give prompt refunds when a carrier cancels flights or 
makes significant itinerary changes, including changes that affect the 
schedule or quality of service. It would create industry-wide 
definitions for ``cancelled flight'' and ``significant change of flight 
itinerary'' and define ``prompt'' as within 7 days of a refund request 
for credit card purchases and 20 days for purchases by other forms of 
payment.
    The proposed rule would also require airlines and ticket agents to 
give non-expiring travel credits or vouchers to passengers who do not 
travel to protect themselves or others from serious communicable 
diseases during a public health emergency and passengers who do not 
travel due to government restrictions related to a serious communicable 
disease. Airlines and ticket agents could require documentation showing 
that the decision was consistent with travel restrictions and guidance 
issued by health authorities or medical professionals. For passenger 
cancellation requests made during a public health emergency, airlines 
and ticket agents would be required to issue cash or cash equivalent 
refunds rather than credits or vouchers if they received significant 
government financial assistance during the public health emergency, 
although the rule does not define ``significant financial assistance.'' 
The issue of significance would be considered in a subsequent and 
separate administrative process.
    Table I summarizes the expected economic impacts of the proposed 
rule. The expected net benefits of the proposed rule depend on the 
probability that a future state of the world involves a public health 
emergency. In the case of no public emergency, the proposed rule will 
have only modest impacts, but could result in a decrease in transaction 
costs associated with processing and obtaining compensation for 
cancellations and significant itinerary changes. Net benefits would be 
positive by roughly the amount of this reduction in transaction costs. 
With a public health emergency, however, net benefits are likely to be 
negative. While benefits are uncertain, we do not expect that the 
proposed rule would measurably decrease the spread of serious 
communicable disease for several reasons. These reasons include that 
the incremental incentive from a non-expiring travel credit relative to 
baseline industry practices is limited and unlikely to outweigh 
restrictions imposed by public health authorities or individuals' own 
risk preferences in the decision to postpone travel. In addition, 
during a public health emergency, the proposed rule is likely to 
increase transaction and documentation costs. The increase in 
transaction costs is mainly due to uncertainty in the definition of 
significant government assistance and the requirement creating 
additional administrative burdens for receiving government funds. The 
proposed rule could also lead to other societal costs depending on 
whether it affects industry acceptance of government assistance, but 
these impacts are uncertain.
    In terms of distributional effects, we do not expect significant 
changes in the absence of a public health emergency. The needed changes 
to existing airline policies are small, and passengers would only 
rarely need to use the protections related to serious communicable 
diseases. With a public health emergency, the number of refunds to 
passengers is expected to increase, and fewer passengers are likely to 
forfeit travel credits for trips they cancel due to public health 
concerns. Thus, while transfers to passengers would largely remain 
unchanged without a public health emergency, they would increase during 
a health emergency.

[[Page 51574]]



               Table I--Summary of Annual Economic Impacts
                             [2021 Dollars]
------------------------------------------------------------------------
                                    Baseline 1: no    Baseline 2: during
                                     public health      a public health
                                       emergency           emergency
------------------------------------------------------------------------
Benefits:
  Reduction in cases of serious   De minimis........  Uncertain.
   contagious disease.
Costs:
  Documentation.................  De minimis........  $55.5 million
                                                       (based on example
                                                       discussed in
                                                       regulatory impact
                                                       analysis).
  Transaction costs.............  Decrease..........  Increase.
  Foregone social benefits of     n/a...............  Uncertain.
   government programs.
Transfers:
  Refunds (transfer from          De minimis........  Increase.
   taxpayers to passengers).
  Redeemed travel credits         De minimis........  Increase.
   (transfer from airlines to
   passengers).
------------------------------------------------------------------------

    Certain regulatory alternatives would reduce transaction costs due 
to the proposed rule. For example, removing the refund requirement when 
an airline or ticket agent receives significant government financial 
assistance would eliminate potential transaction costs due to 
ambiguities and would not risk other social costs. Another alternative 
that could reduce costs would be not allowing airlines to request 
documentation from passengers to demonstrate that they are canceling 
travel due to a government order restricting travel or to protect 
themselves and others from serious contagious diseases. Airlines would 
not be able to distinguish these cancellations from other passenger-
initiated cancellations, however, and passengers would have an 
incentive to overuse these protections.
    A third regulatory alternative, which would reduce transaction 
costs and eliminate documentation costs, would be limiting the scope of 
the proposed rule to adding the new definitions for carrier-initiated 
``cancelled flight'' and ``significant change of flight itinerary.'' 
This alternative would not grant additional protections to passengers 
who purchase non-refundable tickets but are unable or choose not to 
travel due to conditions related to a public health emergency or 
contracting a serious communicable disease.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (RFA) (5 U.S.C. 601 et seq.) 
requires Federal agencies to review regulations and 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. This proposed rule would have some impact on air 
carriers and ticket agents that qualify as small entities. To assess 
the impact of this proposed rule, the Department has prepared an 
initial regulatory flexibility analysis (IRFA), summarized in this 
section and available at regulations.gov under Docket No. DOT-OST-2022-
0089.
    A description of the reasons why DOT is considering this action, as 
well as the objectives of the proposed rule, is provided in Sections I-
IV of the preamble of this NPRM. The legal basis for the proposed rule 
is also set forth in Section I of the preamble.
Description and Estimate of the Number of Small Entities to Which the 
Proposed Rule Would Apply
    An air carrier is a small entity if it provides air transportation 
exclusively with small aircraft, defined as any aircraft originally 
designed to have a maximum passenger capacity of 60 seats or less or a 
maximum payload capacity of 18,000 pounds or less, as described in 14 
CFR 399.73. In 2020, 28 air carriers meeting these criteria reported 
passenger traffic data to the Bureau of Transportation Statistics. A 
ticket agent is a small entity if it has total annual revenues below 
$22 million (see https://www.sba.gov/document/support--table-size-standards, NAICS Codes 561510). This amount excludes funds received in 
trust for an unaffiliated third party, such as bookings or sales 
subject to commissions, but includes commissions received. Based on 
data from the 2017 Economic Census, which groups firms by NAICS code 
and revenue size, 7,827 ticket agents had revenues less than the $25 
million threshold in the census. Because this number is higher than the 
$22 million NAICS threshold, this number may overestimate the number of 
ticket agents who meet the SBA definition of a small business.
Description of Projected Reporting, Recordkeeping and Other Compliance 
Requirements
    The proposed rule could have potentially significant impacts on 
some number of small entities, depending upon whether a public health 
emergency has been declared. Most potential impacts are due to the 
proposed requirement that airlines and ticket agent give eligible 
consumers refunds rather than non-expiring travel vouchers or credits 
when they receive significant government financial assistance during a 
public health emergency. Other costs are due to the need to process 
documentation when passengers cancel travel because they are restricted 
or prohibited from travel by a government order or to protect 
themselves and others from serious contagious diseases consistent with 
travel restrictions and guidance issued by health authorities.
    In the baseline case where no public health emergency occurs, the 
impact of this proposed rule is expected to be minimal because it is 
normal business practice for airlines and ticket agents to provide 
refunds under the conditions required by this rule. In the baseline 
case where a public health emergency occurs, the proposed rule has the 
potential to have significant impacts on small entities.
    The number of passengers who would not travel for public health 
reasons is difficult to predict, but a hypothetical example illustrates 
the potential economic costs associated with the documentation 
requirements of the rule for small air carriers. In 2020, small air 
carriers in the United States made 1.14 million passenger trips.\49\ If 
passengers needed to restrict travel for 5% of the trips and provide 
airlines with documentation, passengers would submit approximately 
57,000 forms. We assume that a customer service representative working 
for an airline or ticket agent would need an average of 5 minutes 
(0.083 hours) to review

[[Page 51575]]

documentation and request additional documentation if needed, for a 
total of approximately 4,750 hours. Using median wage data from the 
Bureau of Labor Statistics as of May 2020 for customer service 
representatives, we use an estimate of $26.84 ($18.51 median hourly 
wage times a multiplier of 1.45 to account for benefit costs).\50\ The 
total estimated annual cost of the forms would be approximately 
$127,500, or about $4,500 per carrier on average. Some of these costs, 
or additional costs, could be borne by small ticket agents.
---------------------------------------------------------------------------

    \49\ Bureau of Transportation Statistics. 2021. ``Full Year 2020 
and December 2020 US Airline Traffic Data.'' https://www.bts.gov/newsroom/full-year-2020-and-december-2020-us-airline-traffic-data.
    \50\ Bureau of Labor Statistics. 2022. ``Occupational Employment 
and Wages, May 2020: 43-4051 Customer Service Representatives.'' 
https://www.bls.gov/oes/current/oes434051.htm.
---------------------------------------------------------------------------

    In addition, if airline or ticket agents receive significant 
government financial assistance during a public health emergency, then 
they would need to issue cash refunds rather than non-expiring travel 
vouchers or credits. Tying the cash refund requirement to the receipt 
of government assistance adds costs to accepting that assistance.
Relevant Federal Rules Which May Duplicate, Overlap or Conflict With 
the Proposed Rule
    The Department did not identify any Federal rules that may 
duplicate, overlap, or conflict with this proposed rule, which sets 
forth the circumstances under which airlines must provide travel 
credits, vouchers, or refunds related to a serious communicable disease 
or carrier-initiated flight cancellations or significant changes.
Description of Significant Alternatives Considered
    The Department analyzed two alternatives that would potentially 
reduce impacts on small businesses. One alternative is removing the 
cash refund requirement as a condition of accepting significant 
government assistance. The Department has tentatively concluded, 
however, that as a policy matter, airlines receiving significant 
government assistances should go beyond issuing travel credits and 
vouchers to consumers whose ability or willingness to travel is 
significantly impacted by a public health emergency.
    A second alternative is to limit the scope of the rule to 
specifying definitions for ``significant change in itinerary'' and 
``cancellation.'' The Department has tentatively concluded, however, 
that removing this portion of the rule would undermine the Department's 
goal to protect consumers' financial interests when the disruptions to 
their travel plans were caused by public health concerns beyond their 
control. The Department also believes that protecting consumers' 
financial interests would further incentivize persons not to travel if 
they have or may have a serious communicable disease.

D. Executive Order 13132 (Federalism)

    This NPRM has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13132 (``Federalism''). This 
notice does not propose any provision 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. States are already preempted from regulating in this area by the 
Airline Deregulation Act, 49 U.S.C. 41713. Therefore, the consultation 
and funding requirements of Executive Order 13132 do not apply.

E. Executive Order 13175

    This NPRM has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13175 (``Consultation and 
Coordination with Indian Tribal Governments''). Because none of the 
options on which the Department is 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 13175 do not apply.

F. Paperwork Reduction Act

    This NPRM proposes a new collection 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. 3501 et 
seq.). The proposed rulemaking would allow airlines and ticket agents 
to require passengers wishing to cancel a flight itinerary that is 
still operated to provide documentation demonstrating that that they 
are restricted or prohibited from travel by a government order related 
to a serious communicable disease, or that they are unable or choose 
not to travel to protect themselves or other from a serious 
communicable disease, consistent with restrictions, advisories, or 
guidance by relevant health authorities or health professionals. For 
this information collection, a description of the respondents and an 
estimate of the annual recordkeeping and periodic reporting burden are 
set forth below:
Requirement To Prepare and Submit to Airlines Documentations 
Demonstrating a Passenger is Unable or Advised Not To Travel Due to 
Government Restrictions or Concerns Related to a Serious Communicable 
Disease
    Respondents: Passengers restricted from travel due to a government 
order related to a serious communicable disease, passengers advised by 
a medical professional or determine consistent with public health 
guidance issued by CDC, comparable agencies in other countries, or WHO 
not to travel by air because they have or may have contracted a serious 
communicable disease such that their travel would pose a threat to the 
health of others, and passengers advised by a medical professional or 
determine consistent with public health guidance issued by CDC, 
comparable agencies in other countries, or WHO not to travel to protect 
themselves from a serious communicable disease during a public health 
emergency.
    Number of Respondents: The number of respondents would vary greatly 
depending on whether there is a public health emergency and the 
magnitude of that public health emergency. When there is a public 
health emergency with a similar magnitude of the COVID-19 pandemic, the 
number of respondents could potentially be very high. The Department's 
data shows that in 2020, U.S. airlines enplaned 558 million fewer 
passengers in domestic air transportation than in 2019.\51\ If 1% of 
this reduction was due to passengers are unable or are advised to not 
travel for a qualifying reason and were required by airlines and ticket 
agents to submit documentation, there would be 5.58 million 
respondents.
---------------------------------------------------------------------------

    \51\ Bureau of Transportation Statistics. 2021. ``Full Year 2020 
and December 2020 US Airline Traffic Data.'' https://www.bts.gov/newsroom/full-year-2020-and-december-2020-us-airline-traffic-data.
---------------------------------------------------------------------------

    Estimated Annual Burden on Respondents: We estimate that each 
respondent would need 30 minutes (0.5 hours) to obtain a documentation 
from a medical professional per response, per year. We also estimate 
that a customer service representative working for an airline or a 
ticket agent would need an average of 5 minutes (0.083 hours) to review 
the documentation and request additional documentation if needed. 
Passengers would spend a total of approximately 2.8 million hours per 
year (0.5 hours x 5.58 million passengers) to obtain the documentation. 
Airline and ticket agent customer service representatives would spend 
approximately 460,000 hours

[[Page 51576]]

(0.083 hours x 5.58 million forms) per year to review the 
documentation.
    To calculate the hourly value of time spent on the documentation, 
we used median wage data from the Bureau of Labor Statistics as of May 
2020. Respondents would obtain, present, and submit the documentation 
on their own time without pay and we estimate the value of this 
uncompensated activity using a post-tax wage estimate of $15.42 per 
hour ($20.17 median hourly wage for all occupations minus a 17% 
estimated tax rate). For customer service representatives, we use an 
estimate of $26.84 per hour ($18.51 median hourly wage times a wage 
multiplier of 1.45). In this scenario, the total annual estimated 
documentation costs of the forms would be approximately $55.5 million 
(Table II).

                            Table II--Example Annual Cost Estimate for Documentation
----------------------------------------------------------------------------------------------------------------
                                                                                                     Estimated
              Group                    Forms      Hours per form    Total hours     Hourly time        costs
                                                                                       value        (millions)
----------------------------------------------------------------------------------------------------------------
People restricting travel.......       5,580,000             0.5       2,790,000          $15.42           $43.0
Customer service representatives       5,580,000           0.083         463,410           26.84            12.4
                                 -------------------------------------------------------------------------------
    Total.......................  ..............  ..............       3,253,410  ..............            55.5
----------------------------------------------------------------------------------------------------------------

    The Department invites interested persons to submit comments on any 
aspect of this information collection, including the following: (1) The 
necessity and utility of the information collection, (2) the accuracy 
of the estimate of the burden, (3) ways to enhance the quality, 
utility, and clarity of the information to be collected, and (4) ways 
to minimize the burden of collection without reducing the quality of 
the collected information. Comments submitted on these issues will be 
summarized or otherwise included in the request for OMB approval of 
these information collections.

G. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (UMRA) requires, at 2 
U.S.C. 1532, that agencies prepare an assessment of anticipated costs 
and benefits before issuing any rule that may result in the expenditure 
by State, local, and tribal governments, in the aggregate, or by the 
private section, of $100 million or more (adjusted annually for 
inflation) in any one year. As described elsewhere in the preamble, 
this proposed rule would have no such effect on State, local, and 
tribal governments or on the private sector. Therefore, the Department 
has determined that no assessment is required pursuant to UMRA.

H. National Environmental Policy Act

    The Department has analyzed the environmental impacts of this 
proposed action pursuant to the National Environmental Policy Act of 
1969 (NEPA) (42 U.S.C. 4321 et seq.) and has determined that it is 
categorically excluded pursuant to DOT Order 5610.1C, Procedures for 
Considering Environmental Impacts (44 FR 56420, October 1, 1979). 
Categorical exclusions are actions identified in an agency's NEPA 
implementing procedures that do not normally have a significant impact 
on the environment and therefore do not require either an environmental 
assessment (EA) or environmental impact statement (EIS). See 40 CFR 
1508.4. Paragraph 4.c.6.i of DOT Order 5610.1C categorically excludes 
``[a]ctions relating to consumer protection, including regulations.'' 
This proposal relates consumer protection. The Department does not 
anticipate any environmental impacts, and there are no extraordinary 
circumstances present in connection with this rulemaking.

    Signed August 2, 2022, in Washington, DC.
Peter Paul Montgomery Buttigieg,
Secretary of Transportation.

List of Subjects

14 CFR Part 259

    Air Carriers, Consumer Protection, Reporting and Recordkeeping 
Requirements.

14 CFR Part 260

    Air Carriers, Consumer Protection.

14 CFR Part 399

    Administrative practice and procedure, Air carriers, Air rates and 
fares, Air taxis, Consumer protection, Small businesses.

    For the reasons set forth in the preamble, the Department proposes 
to amend title 14 CFR Chapter II as follows:

PART 259--ENHANCED PROTECTIONS FOR AIRLINE PASSENGERS [AMENDED]

0
1. The authority citation for 14 CFR Part 259 is revised to read as 
follows:

    Authority: 49 U.S.C. 40101(a), 40113(a), 41702, 41708, 41712, 
and 42301.

0
2. Amend Sec.  259.5 by revising paragraphs (a) and (b)(5), 
redesignating paragraphs (b)(6) through (12) as paragraphs (b)(7) 
through (13), and adding new paragraph (b)(6) to read as follows:


Sec.  259.5  Customer Service Plan.

    (a) Adoption of Plan by Covered Carrier and Requirements for Other 
Carriers.
    (1) Each covered carrier shall adopt a Customer Service Plan 
applicable to its scheduled flights, as specified in paragraphs (b)(1) 
through (13) of this section and adhere to the plan's terms.
    (2) Each certificated or commuter air carrier or foreign air 
carrier that operates scheduled passenger flights to, within, or from 
the United States solely using aircraft originally designed to have a 
passenger capacity of fewer than 30 seats shall comply with paragraphs 
(b)(5) and (6) of this section.
    (b) * * *
* * * * *
    (5) Where ticket refunds or ancillary service fee refunds are due 
pursuant to 14 CFR part 260, providing prompt refunds, within 7 days of 
a refund request as required by 14 CFR 374.3 for credit card purchases, 
and within 20 days after receiving a refund request for cash or check 
or other forms of purchases. Carriers may choose to provide the refunds 
in the original form of payment (i.e., money is returned to an 
individual using whatever payment method the individual used to make 
the original payment, such as a check, a credit card, a debit card, 
cash, or airline miles), or in another form of payment that is cash 
equivalent as defined in 14 CFR 260.2. Carriers may offer travel 
credits, vouchers, or other compensation in lieu of refunds, but 
carriers first must inform consumers that they are entitled to a 
refund. Carriers must clearly disclose any material restrictions, 
conditions, or limitations on these compensations they offer, so 
consumers can make informed choices about the refund or other

[[Page 51577]]

compensation that would best suit their needs.
* * * * *
    (6) Providing non-expiring travel credits or vouchers, upon 
request, to a consumer holding a non-refundable ticket as set forth in 
paragraphs (b)(6)(i)(A) through (i)(C) of this section and subject to 
paragraphs (6)(b)(ii) through (v) of this section.
    (i) In circumstances when:
    (A) Regardless of whether there is a public health emergency as 
defined in 42 CFR 70.1, the consumer is unable to travel because of a 
U.S. (Federal, State or local) or foreign government restriction or 
prohibition (e.g., stay at home order, entry restriction, or border 
closure) in relation to a serious communicable disease that is issued 
after the ticket purchase.
    (B) There is a public health emergency as defined in 42 CFR 70.1, 
the consumer purchased the airline ticket before the public health 
emergency was declared, the consumer is scheduled to travel during the 
public health emergency, and the consumer is advised by a medical 
professional or determines consistent with public health guidance 
issued by the U.S. Centers for Disease Control and Prevention (CDC), 
comparable agencies in other countries, or the World Health 
Organization (WHO) not to travel by air to protect himself or herself 
from a serious communicable disease as defined in 14 CFR 260.2.
    (C) Regardless of whether there is a public health emergency as 
defined in 42 CFR 70.1, the consumer is advised by a medical 
professional or determines consistent with public health guidance 
issued by CDC, comparable agencies in other countries, or WHO not to 
travel by air because the consumer has or may have contracted a serious 
communicable disease as defined in 14 CFR 260.2, and the consumer's 
condition is such that traveling on a commercial flight would pose a 
direct threat to the health of others.
    (ii) As a condition for issuing the non-expiring travel credits or 
vouchers in paragraph (b)(6)(i) of this section, carriers may require, 
as appropriate, the following documentation dated within 30 days of the 
initial departure date of the affected flight(s):
    (A) For any consumer claiming an inability to travel due to a 
government restriction or prohibition in relation to a serious 
communicable disease, carriers may require the consumer to provide the 
applicable government order or other document demonstrating how the 
requirement restricts the consumer's ability to travel;
    (B) For any consumer stating that he or she is not traveling during 
a public health emergency because the consumer has been advised by a 
medical professional or determines consistent with public health 
guidance issued by CDC, comparable agencies in other countries, or WHO 
not to travel by air to protect himself or herself from a serious 
communicable disease as described in paragraph (b)(6)(i)(B) of this 
section, carriers may require the consumer to provide the applicable 
guidance issued by CDC, comparable agencies in other countries, or WHO, 
and/or a written statement from a licensed medical professional, 
attesting that it is the medical professional's opinion, based on 
current medical knowledge and the consumer's health condition, that the 
consumer should not travel by commercial air transportation to protect 
his or her health; and
    (C) Regardless of whether there is a public health emergency, for 
any consumer stating that he or she has been advised by a medical 
professional or determines consistent with public health guidance 
issued by CDC, comparable agencies in other countries, or WHO not to 
travel by air because he has or may have contracted a serious 
communicable disease that poses a direct threat to the health of others 
as described in paragraph (b)(6)(i)(C) of this section, carriers may 
require the consumer to provide the applicable guidance issued by CDC, 
comparable agencies in other countries, or the WHO, and/or a written 
statement from a licensed medical professional, attesting that it is 
the medical professional's opinion, based on current medical knowledge 
and the consumer's health condition, that the consumer should not 
travel by commercial air transportation to protect the health of 
others.
    (iii) A carrier may retain a service fee for processing the travel 
voucher or credit, as long as the fee is on a per-passenger basis and 
the existence and amount of the fee is clearly and prominently 
disclosed to consumers at the time they purchased the airfare.
    (iv) A carrier must promptly issue the non-expiring travel credits 
or vouchers with a value equal to or greater than the fare (including 
government-imposed taxes and fees and carrier-imposed fees and 
surcharges and prepaid ancillary service fees not utilized by the 
consumer).
    (v) A carrier may not impose unreasonable restrictions, conditions, 
or limitations on the travel credits or vouchers, including conditions 
that severely restricts booking with respect to travel date, time, or 
route; a limitation that only allows redemption in one booking and 
renders any residual value void; or a limitation that only allows the 
value of the credits or vouchers to apply to the base fare of a new 
booking. A carrier must clearly disclose any material restrictions, 
limitations, or conditions on the use of the credits and vouchers, 
including but not limited to administrative fees for redemption, 
advance purchase or capacity restrictions, and blackout dates.
* * * * *
0
3. Add Part 260 to read as follows:

PART 260--REFUNDS FOR AIRLINE FARE AND ANCILLARY FEES

Sec.
260.1 Purpose.
260.2 Definitions.
260.3 Applicability.
260.4 Refunding fees for ancillary services that consumers paid for 
but that were not provided.
260.5 Refunding fees for significantly delayed or lost bags.
260.6 Refunding fare for flights cancelled or significantly changed 
by carriers.
260.7 Refunding fare for flights that consumers choose not to take 
due to public health concerns or restrictions.
260.8 Providing prompt refunds.
260.9 Contract of carriage provisions related to refunds.
260.10 DOT Determination of Significant Government Financial 
Assistance

    Authority: 49 U.S.C. 40101(a), 41702, and 41712.


Sec.  260.1   Purpose.

    The purpose of this part is to ensure that carriers refund 
consumers for: (1) ancillary services related to air travel that 
consumers paid for but were not provided; (2) fees to transport checked 
bags that are lost or significantly delayed; (3) a consumer's fare for 
a cancelled flight or a significant change of flight itinerary where 
the consumer does not accept the alternative transportation, airline 
voucher or credit, or other compensations offered by the carrier; and 
(4) a consumer's fare in lieu of the travel credit or voucher specified 
in section 259.5(b)(6)(i)(A) through (C) of this title, if the carrier 
received significant financial assistance from a government entity as a 
result of a public health emergency.


Sec.  260.2  Definitions.

    As used in this part:
    Air carrier means a citizen of the United States undertaking by any 
means, directly or indirectly, to provide air transportation.
    Ancillary service means any service related to air travel provided 
by a covered carrier, for a fee, beyond passenger air transportation. 
Such service includes, but is not limited to,

[[Page 51578]]

checked or carry-on baggage, advance seat selection, access to in-
flight entertainment program, in-flight beverages, snacks and meals, 
pillows and blankets, and seat upgrades.
    Cancelled flight means a covered flight that was published in the 
carrier's Computer Reservation System at the time of the ticket sale 
but was not operated by the carrier.
    Cash equivalent means a form of payment that can be used like cash, 
including but not limited to a check, a prepaid card, funds transferred 
to the passenger's bank account, funds provided through digital payment 
methods (e.g., PayPal, Venmo), or a gift card that is widely accepted 
in commerce. Carriers are prohibited from requiring consumers to bear 
the burden for maintenance or usage fees related to cash equivalent 
payment.
    Checked bag means a bag or an item other than a bag that was 
provided to a carrier by or on behalf of a passenger, for 
transportation in the cargo compartment of a scheduled passenger 
flight. A checked bag includes a gate-checked bag and a valet bag.
    Covered carrier means an air carrier or a foreign air carrier 
operating to, from or within the United States, conducting scheduled 
passenger service.
    Covered flight means a scheduled flight operated or marketed by a 
covered carrier to, from, or within the United States.
    Government financial assistance means a cash contribution a covered 
carrier receives directly or indirectly from a government entity 
including instances where the carrier is expected to provide shares or 
options of share of ownership in exchange for the cash. It does not 
include financial assistance in the form of government issued, 
subsidized, or guaranteed loans and non-cash contributions by a 
government entity.
    Foreign air carrier means a person, not a citizen of the United 
States, undertaking by any means, directly or indirectly, to provide 
foreign air transportation.
    Serious communicable disease means a communicable disease as 
defined in 42 CFR 70.1 that has serious consequences and can be easily 
transmitted by casual contact in an aircraft cabin environment. For 
example, the common cold is readily transmissible in an aircraft cabin 
environment but does not have severe health consequence. AIDS has 
serious health consequences but is not readily transmissible in an 
aircraft cabin environment. Both the common cold and AIDS would not be 
considered serious communicable diseases. SARS is readily transmissible 
in an aircraft cabin environment and has severe health consequences. 
SARS would be considered a serious communicable disease.
    Significant change of flight itinerary means a change to a covered 
flight itinerary made by a covered carrier where: (1) the consumer is 
scheduled to depart from the origination airport three hours or more 
for domestic itineraries and six hours or more for international 
itineraries earlier than the original scheduled departure time; (2) the 
consumer is scheduled to arrive at the destination airport three hours 
or more for domestic itineraries or six hours or more for international 
itineraries later than the original scheduled arrival time; (3) the 
consumer is scheduled to depart from a different origination airport or 
arrive at a different destination airport; (4) the consumer is 
scheduled to travel on an itinerary with more connection points than 
that of the original itinerary; (5) the consumer is downgraded to a 
lower class of service; or (6) the passenger is scheduled to travel on 
a different type of aircraft with a significant downgrade of the 
available amenities and travel experiences.
    Significantly delayed checked bag means a checked bag that is not 
delivered to the consumer or the consumer's agent within 12 hours of 
the last flight segment's arrival for domestic itineraries and within 
25 hours of the last flight segment's arrival for international 
itineraries, including itineraries that include both international 
flight segment(s) and domestic flight segment(s).
    Significant government financial assistance means government 
financial assistance that the Department has determined through a 
public process to be significant.


Sec.  260.3  Applicability.

    This part applies to all covered carriers that collect fares or 
fees, including checked baggage fees, for ancillary services to be 
provided on or in relation to a covered flight.


Sec.  260.4   Refunding fees for ancillary services that consumers paid 
for but that were not provided.

    A covered carrier shall promptly provide a refund to a consumer for 
any fees it collected from the consumer for ancillary services related 
to air travel if the service was not provided, including fees for 
services on the consumer's scheduled flight, on a subsequent 
replacement flight if there has been a rescheduling by the carrier, or 
on a flight not taken by the consumer due to oversales or a flight that 
is not operated by the carrier. If a ticket agent collected the 
ancillary fee, the carrier that is scheduled to operate the flight, or 
for multiple-carrier itineraries, the carrier scheduled to operate the 
last segment of the consumer's itinerary is responsible for providing a 
refund.


Sec.  260.5   Refunding fees for significantly delayed or lost bags.

    Upon receiving a notification pursuant to paragraph (b) of this 
section from a consumer, a covered carrier that collected a checked 
baggage fee from the consumer or, if a ticket agent collected the 
checked baggage fee from the passenger, the covered carrier that is 
scheduled to operate the flight or the covered carrier that is 
scheduled to operate the last segment of the consumer's itinerary if 
multiple-carrier itineraries, shall promptly provide a refund to the 
consumer of any fee charged for transporting a significantly delayed 
checked bag.
    (a) Determining the length of delay. (1) For the purpose of 
determining whether a refund of the baggage fee is due, the 12-hour 
deadline for domestic itineraries and the 25-hour deadline for 
international itineraries is calculated from the time when a passenger 
was given the opportunity to deplane from the aircraft at the 
passenger's final destination; or, if the final travel segment was on 
alternate ground transportation, a comparable time when the passenger 
disembarks from the ground transportation.
    (2) For the purpose of determining whether a refund of the baggage 
fee is due, a delayed bag is considered to have been delivered to a 
passenger or a passenger's agent if:
    (i) The bag has been transported to a location, other than the 
destination airport, based on agreement by the passenger and the 
carrier, whether or not the passenger is present to take possession of 
the bag;
    (ii) The bag has arrived at its intended final destination airport 
and is available for pick up, and the carrier has provided notice to 
the passenger or the passenger's agent (e.g., via push notice through a 
mobile application, email, or text message) that the bag has arrived at 
that airport and is ready for pick up; or
    (iii) The bag has arrived at the intended final destination airport 
and the carrier has provided notice to the passenger or the passenger's 
agent (e.g. via push notice through a mobile application, email, or 
text message) that the bag has arrived at that airport and will be 
delivered to a location that the passenger and carrier have agreed on.
    (b) Notification of carrier by passenger about lost or 
significantly delayed bag.

[[Page 51579]]

A covered carrier's obligation to provide a prompt refund for a lost 
bag or a significantly delayed bag does not begin until passengers 
provide notification of the lost or significantly delayed bag. If the 
entity that collected the baggage fee is the same entity that received 
a mishandled baggage report from the passenger, the filing of the 
mishandled baggage report constitutes a notification from the passenger 
for the purpose of receiving a refund, if due, for the baggage fee. In 
all other situations, passengers must inform the carrier that collected 
the baggage fee of the lost or delayed bag; or, if a ticket agent 
collected the bag fee, passengers must inform the carrier that operated 
the last flight segment about the lost or delayed bag for the purpose 
of receiving a refund for the baggage fee for a significantly delayed 
bag.


Sec.  260.6  Refunding fare for flights cancelled or significantly 
changed by carriers.

    A covered carrier shall promptly provide a refund, as described in 
section 259.5 of this title, for the fare it collected from a passenger 
for any cancelled flight or for any flight with a significant change of 
flight itinerary where the passenger chooses not to accept the 
alternative transportation, voucher or credit, or other compensation 
offered by the carrier.


Sec.  260.7  Refunding fare for flights that consumer choose not to 
take due to public health concerns or restrictions.

    (a) When there is a declaration of a public health emergency as 
defined in 42 CFR 70.1 and DOT has published a determination pursuant 
to section 260.10 that the covered carrier received significant 
government financial assistance as a result of the public health 
emergency, the covered carrier shall promptly provide a requested 
refund for the fare it collected from a passenger meeting the criteria 
of section 259.5(b)(6)(i)(A) through (b)(6)(i)(C) of this title, in the 
manner consistent with 14 CFR 259.5 and subject to paragraphs (b) 
through (d) of this section, in lieu of the non-expiring travel credits 
or vouchers specified in section 259.5(b)(6) of this title.
    (b) To receive the refunds, passengers shall make a request for a 
refund from the covered carrier within 12 months of the date that DOT 
published a determination pursuant to section 260.10 that the carrier 
received significant financial assistance. Passengers are also entitled 
to a refund if they have already received travel credits or vouchers 
under 14 CFR 259.5(b)(6)(i)(A) or 259.5(b)(6)(i)(B) prior to the date 
that DOT published a determination pursuant to section 260.10 that the 
carrier received significant government financial assistance and the 
passengers have not redeemed those credits or vouchers. Passengers must 
also have notified the carrier of their preference of a refund in lieu 
of the credit or voucher within 12 months of the date that DOT 
published the determination that the carrier received significant 
financial assistance in relation to the public health emergency 
applicable to the customer's refund request.
    (c) As a condition for issuing the refunds under this section, 
carriers may require, as appropriate, any passenger requesting a refund 
provide documentations specified in 14 CFR 259.5(b)(6)(ii), if such 
documentation has not already been provided to carriers when the 
passenger requested non-expiring travel credits or vouchers.
    (d) A carrier may retain a service fee for issuing the refund, as 
long as the fee is on a per-passenger basis and the existence and 
amount of the fee is clearly and prominently disclosed to consumers at 
the time they purchased the airfare.


Sec.  260.8   Providing prompt refunds.

    When a refund of a fare or a fee for an ancillary service, 
including a fee for lost or significantly delayed checked baggage, is 
due pursuant to this part, the refund must be issued promptly 
consistent with the requirement of 14 CFR 259.5(b)(5).


Sec.  260.9  Contract of carriage provisions related to refunds.

    A carrier's failure to ensure that its contract of carriage 
provisions are consistent with carriers' obligations as specified by 
this part will be considered an unfair and deceptive practice within 
the meaning of 49 U.S.C. 41712 subject to enforcement action by the 
Department.


Sec.  260.10  DOT Determination of Significant Government Financial 
Assistance.

    The Department will determine whether government financial 
assistance provided after [Effective date of the final rule] as a 
result of a public health emergency is significant through the public 
process described in this section.
    (a) The Department will consider relevant factors in determining 
whether government financial assistance is significant, including:
    (i) The size of the entity (annual enplanement for airlines, annual 
revenue, the number of employees);
    (ii) Year-over-year comparison of traffic and revenue before and 
after the public health emergency is declared;
    (iii) The amount of government financial assistance accepted in 
relation to the entity's annual revenue; and
    (iv) For foreign carriers, enplanements to and from the United 
States in addition to total enplanements.
    (b) The Department will publish for comment in the Federal Register 
a proposed determination of whether the government financial assistance 
is significant, taking into consideration the factors in paragraph (a) 
of this section.
    (c) The Department will publish a final determination in the 
Federal Register of whether the government financial assistance is 
significant, taking into consideration the factors in paragraph (a) of 
this section and public comments received on the proposed determination 
described in paragraph (b) of this section.

PART 399--STATEMENTS OF GENERAL POLICY [AMENDED]

0
4. The authority citation for Part 399 continues to read as follows:

    Authority: 49 U.S.C. 41712, 40113(a). 5. Amend Sec.  399.80 by 
revising the introductory text paragraph, paragraph (l) and adding 
paragraph (o) to read as follows:


Sec.  399.80  Unfair and deceptive practices of ticket agents.

    It is the policy of the Department to regard as an unfair or 
deceptive practice or unfair method of competition the practices 
enumerated in paragraphs (a) through (o) of this section by a ticket 
agent of any size and the practice enumerated in paragraph (s) of this 
section by a ticket agent that sells air transportation online and is 
not considered a small business under the Small Business 
Administration's size standards set forth in 13 CFR 121.201:
* * * * *
    (l) Failing or refusing to make a prompt refund to a passenger for 
the fare that a ticket agent sold to the passenger for any cancelled 
flight or for any flight with a significant change of flight itinerary 
and the passenger chooses not to accept the alternative transportation, 
voucher or credit, or other compensations offered by the carrier or the 
ticket agent. A prompt refund is one that is made within 7 days of 
receiving a refund request as required by 12 CFR part 1026 for credit 
card purchases, and within 20 days after receiving a refund request for 
cash or check or other forms of purchases. Ticket agents may choose to 
provide the refunds in the original form of payment (i.e., money is 
returned to individual using whatever payment method the individual 
used to make the original payment, such as a check, a credit card,

[[Page 51580]]

a debit card, cash, or airline miles), or in another form of payment 
that is cash equivalent. A ticket agent may retain a service fee for 
purchasing the ticket or processing the refund, as long as the fee is 
on a per passenger basis and the existence and amount of the fee is 
clearly and prominently disclosed to consumers at the time they 
purchased the airfare. Ticket agents may offer travel credits, 
vouchers, or other compensation in lieu of refunds, but they first must 
inform consumers that consumers are entitled to a refund if that is the 
case. Ticket agents must clearly disclose any material restrictions, 
conditions, and limitations on these compensations they offer, so 
consumers can make informed choices about the refund or other 
compensation that would best suit their needs.
    For purposes of this paragraph, the following definitions apply:
    (1) Cancelled flight means a flight that was published in a 
carrier's Computer Reservation System at the time of the ticket sale 
but was not operated by the carrier.
    (2) Cash equivalent means a form of payment that can be used like 
cash, including but not limited to a check, a prepaid card, funds 
transferred to the passenger's bank account, funds provided through 
digital payment methods (e.g., PayPal, Venmo), or a gift card that is 
widely accepted in commerce. Ticket agents are prohibited from 
requiring consumers to bear the burden for maintenance or usage fees 
related to cash equivalent payment.
    (3) Covered flight means a scheduled flight to, from, or within the 
United States.
    (4) A significant change of flight itinerary means a change to a 
flight itinerary consisting covered flight(s) made by a U.S. or foreign 
carrier where: (i) the passenger is scheduled to depart from the 
origination airport three hours or more for domestic itineraries and 
six hours or more for international itineraries earlier than the 
original scheduled departure time; (ii) the passenger is scheduled to 
arrive at the destination airport three hours or more for domestic 
itineraries or six hours or more for international itineraries later 
than the original scheduled arrival time; (iii) the passenger is 
scheduled to depart from a different origination airport or arrive at a 
different destination airport; (iv) the passenger is scheduled to 
travel on an itinerary with more connection points than that of the 
original itinerary; (v) the passenger is downgraded to a lower class of 
service; or (vi) the passenger is scheduled to travel on a different 
type of aircraft with a significant downgrade of the available 
amenities and travel experiences.
* * * * *
    (o) Failing to provide non-expiring travel credits or vouchers, 
upon request, to a passenger holding a non-refundable ticket in 
scheduled air transportation to, from, or within the United States sold 
by the ticket agents as set forth in paragraphs (o)(1)(A) through 
(o)(1)(C) of this section and subject to paragraphs (o)(2) through (5) 
of this section, or failing to provide refunds, in lieu of providing 
travel credits or vouchers specified in paragraphs (o)(1)(A) through 
(o)(1)(C) of this section, to a passenger holding a non-refundable 
ticket in scheduled air transportation to, from, or within the United 
States sold by the ticket agents as set forth in paragraph (o)(1)(D) of 
this section and subject to paragraphs (o)(2) through(4) of this 
section.
    (1) In circumstances where:
    (A) Regardless of whether there is a public health emergency as 
defined in 42 CFR 70.1, if the passenger is unable to travel because of 
a U.S. (Federal, State or local) or foreign government restriction or 
prohibition (e.g., stay at home order, an entry restriction, border 
closure) in relation to a serious communicable disease that is issued 
after the ticket purchase.
    (B) There is a public health emergency as defined in 42 CFR 70.1, 
if the consumer purchased the airline ticket before the public health 
emergency was declared, the consumer is scheduled to travel during the 
public health emergency, and the consumer is advised by a medical 
professional or determines consistent with public health guidance 
issued by the U.S. Centers for Disease Control and Prevention (CDC), 
comparable agencies in other countries, or the World Health 
Organization (WHO) not to travel by air to protect the consumer from a 
serious communicable disease as defined in 14 CFR 260.2); and
    (C) Regardless of whether there is a public health emergency as 
defined in 42 CFR 70.1, if the consumer is advised by a medical 
professional or determines consistent with public health guidance 
issued by CDC, comparable agencies in other countries, or WHO not to 
travel by air because the consumer has or may have contracted a serious 
communicable disease as defined in 14 CFR 260.2 and the consumer's 
condition is such that traveling in commercial flights would pose a 
direct threat to the health of others.
    (D) There is a public health emergency as defined in 42 CFR 70.1 
and the Department has made a determination pursuant to 49 CFR 260.10 
that the ticket agent has received significant government financial 
assistance after [Effective date of the final rule] as a result of the 
public health emergency, if the consumer is eligible for travel credits 
or vouchers pursuant to paragraphs (o)(1)(A) through (o)(1)(C) of this 
section. Such passengers must have made a request for a refund from the 
ticket agent pursuant to this paragraph within 12 months of the date 
that the Department has made a determination pursuant to 49 CFR 260.10 
that the ticket agent received significant financial assistance. Ticket 
agents must also provide a refund to passengers who have already 
received travel credits or vouchers under this section prior to the 
date that DOE made a determination pursuant to 49 CFR 260.10 that the 
ticket agent received significant government financial assistance if 
the passengers have not redeemed those credits or vouchers, and have 
notified the ticket agent of their preference of a refund in lieu of 
the voucher within 12 months of the date that the Department made a 
determination pursuant to 49 CFR 260.10 that the ticket agent received 
significant financial assistance in relation to the public health 
emergency applicable to the customer's refund request.
    For purpose of this paragraph, government financial assistance 
means a cash contribution a ticket agent receives directly or 
indirectly from a government entity, including instances where the 
ticket agent is expected to provide shares or options of shares of 
ownership in exchange for the cash. It does not include financial 
assistance in the form of government issued, subsidized, or guaranteed 
loans and non-cash contributions by a government entity; and
    For purposes of this paragraph, significant government financial 
assistance means government financial assistance that the Department 
has determined through a public process to be significant.
    (2) As a condition for issuing the non-expiring travel credits or 
vouchers in paragraphs (o)(1)(A) through (o)(1)(C) of this section or 
refunds in paragraph (o)(1)(D) of this section, ticket agents may 
require, as appropriate, the following documentation dated within 30 
days of the initial departure date of the affected flight(s):
    (A) For any passenger claiming an inability to travel due to a 
government restriction or prohibition in relation to a serious 
communicable disease, ticket agents may require the passenger to 
provide the applicable government

[[Page 51581]]

order or other document demonstrating how the requirement restricts the 
passenger's ability to travel.
    (B) For any passenger stating that the passenger is not traveling 
during a public health emergency because the passenger has been advised 
by a medical professional or determines consistent with public health 
guidance issued by CDC, comparable agencies in other countries, or WHO 
not to travel by air to protect himself or herself from a serious 
communicable disease as described in paragraph (o)(1)(B) of this 
section, ticket agents may require the passenger to provide the 
applicable guidance issued by CDC, comparable agencies in other 
countries, or WHO, and/or a written statement from a licensed medical 
professional, attesting that it is the medical professional's opinion, 
based on current medical knowledge and the passenger's health 
condition, that the passenger should not travel by commercial air 
transportation to protect the passenger's health; and
    (C) Regardless of public health emergency, for any passenger 
stating that the passenger has been advised by a medical professional 
or determines consistent with public health guidance issued by CDC, 
comparable agencies in other countries, or WHO not to travel by air 
because the passenger has or may have contracted a serious communicable 
disease that poses a direct threat to the health of others as described 
in paragraph (o)(1)(C) of this section, ticket agents may require the 
passenger to provide the applicable guidance issued by CDC, comparable 
agencies in other countries, or WHO, and/or a written statement from a 
licensed medical professional, attesting that it is the medical 
professional's opinion, based on current medical knowledge and the 
passenger's health condition, that the passenger should not travel by 
commercial air transportation to protect the health of others.
    (3) A ticket agent must promptly issue non-expiring travel credits 
or vouchers with a value equal to or greater than the fare (including 
government-imposed taxes and fees and carrier-imposed fees and 
surcharges) and prepaid ancillary service fees for which the service is 
not provided to the consumer.
    (4) When issuing travel credits or vouchers pursuant to paragraphs 
(o)(1)(A) through (o)(1)(C) or issuing refunds pursuant to paragraph 
(o)(1)(D) of this section, a ticket agent may retain any service fee 
for issuing the ticket or charge a service fee for processing a voucher 
or credit or a refund, as long as the fee is on a per passenger basis 
and the existence and amount of the fee is clearly and prominently 
disclosed to consumers at the time they purchased the airfare.
    (5) A ticket agent may not impose unreasonable restrictions, 
conditions, or limitations on the travel credits or vouchers issued 
pursuant to paragraphs (o)(1)(A) through (o)(1)(C) of this section that 
impact its value, including conditions that severely restricts booking 
with respect to travel date, time, or route; a limitation that only 
allows redemption in one booking and renders any residual value void; 
or a limitation that only allows the value of the credits or vouchers 
to apply to the base fare of a new booking. A ticket agent must clearly 
disclose any material restrictions, limitations, or conditions on the 
use of the credits and vouchers, including but not limited to 
administrative fees for redemption, advance purchase or capacity 
restrictions, and blackout dates.

[FR Doc. 2022-16853 Filed 8-19-22; 8:45 am]
BILLING CODE 4910-9X-P


