Summary of DOT’s “Enhancing Airline Passenger Protections III” Final Rule, effective December 5, 2016
November 10, 2016
I. Introduction
On November 3, 2016, DOT published a Final Rule entitled “Enhancing Airline Passenger Protections III,” more commonly known as EAPP III. The rule becomes effective December 5, 2016 and aims to improve protections for air travelers. The Final Rule was significantly narrower than originally proposed in the Notice of Proposed Rulemaking (NPRM). DOT delayed issuing rules on some of the more controversial topics originally proposed in the NPRM such as fee disclosures for ancillary services. According to the Department, it will issue a Supplemental Notice of Proposed Rulemaking (SNPRM) to seek additional information on the disclosure of fees for basic ancillary services to consumers at all points of sale and the remaining topics discussed in the 2014 NPRM (e.g., customer service commitments by large ticket agents, prohibition on post-purchase price increases for ancillary services) will be addressed in another final rule that the Department plans to issue at a later date.
II. Transparency in Display of Code-Share Operations as Required by 49 U.S.C. § 41712(C)
EAPP III amends the Department’s existing code-share disclosure regulation to codify the statutory requirement that carriers and ticket agents must disclose any code-share arrangements on their websites, requiring disclosure on the first display presented in response to a search of a requested itinerary for each itinerary involving a code-share operation, in a manner that is easily visible to a viewer. The Department’s code-share disclosure regulations are designed so that consumers are aware of the identity of the airline physically operating their flight in code-share and wet-lease arrangements.
The Final Rule adopts a simplified format for display of code-share disclosures via mobile websites and apps by permitting disclosure of the corporate name of the operating carrier. It also enhances code-share disclosure in oral communication by requiring that the disclosure be provided at the first time the flight is offered by a carrier or ticket agent or that the flight is inquired about by a consumer, and further changes certain terminology to match language used in recent Department regulations. The Department clarified that the requirement for disclosure covers any ticket agent “doing business in the U.S.,” including entities marketing to U.S. customers via the internet even if the entity does not have a physical presence in the United States. This extends to tickets booked for air transportation to/from/within the United States. DOT indicated that it will determine whether an entity is marketing to U.S. consumers by examining a variety of factors including whether prices are displayed in U.S. dollars, whether the seller particularly advertises flights involving the United States, and other factors.
III. Data Reporting for Domestic Code-Share Partner Operations
EAPP III aims to address the “inadequate scope of current data collection, the most significant area being that a marketing carrier’s flights operated by code-share partners are not included in the reported data.” DOT estimated that current data collection methodologies only account for 38%-55% of all domestic scheduled flights that are branded with the marketing carriers’ codes. Many domestic scheduled flights in the United States are operated by regional partners of mainline carriers. According to the DOT, the result is that data the Department publishes, which the public relies on for viewing certain statistics, does not account for nearly half of certain airlines’ scheduled flights.
In order to address this shortcoming, EAPP III requires reporting carriers to separately report the following data for domestic scheduled flights operated by code-share partners: on-time performance, mishandled baggage, and oversales. In addition, it allows a simplified data report for on-time performance of code-share flights if the operating carrier of the flights is a reporting carrier itself. This rule only affects U.S. carriers.
IV. Additional Reporting Carriers for Service Quality Data
EAPP III changes the pool of reporting carriers required to submit statistics regarding on-time performance, mishandled baggage, and oversales. The new final rule changes and expands the pool of reporting requirements from any carriers that account for at least 1% of domestic scheduled passenger revenue to any carrier that accounts for at least 0.5% of domestic scheduled passenger revenue. It also mandates reporting of data for scheduled flights to and from all large, medium, small, and non-hub U.S. airports. This change responds to a recommendation made by the GAO in a 2011 report and will mostly affect regional carriers such as Envoy and Shuttle America. This rule only affects U.S. carriers.
V. Prohibition of Undisclosed Bias
EAPP III prohibits undisclosed biasing by carriers and ticket agents in any online displays of the fare, schedule or availability information of multiple carriers. The rule only applies to undisclosed display bias by ticket agents or carriers, and does not apply if an individual applies on-line settings such as a filter. An example of biasing by ticket agents or carriers would be a system that presents flight options that favor or disfavor individual carriers. Similar to the code-share disclosure rule discussed in Section II, supra, the undisclosed bias rule will apply if the display is marketed to U.S. consumers or to ticket agents that market to U.S. consumers. The rule aims to avoid unintended consequences such as requiring providers to always display the lowest airfares when other factors might change the ultimate cost of the ticket (such as ancillary services); the rule merely requires that providers display information in an objective manner base on the search criteria selected by the user.
VI. Conclusion
EAPP III is effective December 5, 2016. If you have any questions please feel free to contact Evelyn D. Sahr (202-659-6622; esahr@eckertseamans.com).
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