82_FR_7548 82 FR 7536 - Transparency of Airline Ancillary Service Fees

82 FR 7536 - Transparency of Airline Ancillary Service Fees

DEPARTMENT OF TRANSPORTATION
Office of the Secretary

Federal Register Volume 82, Issue 12 (January 19, 2017)

Page Range7536-7560
FR Document2017-00904

This SNPRM proposes to require air carriers, foreign air carriers, and ticket agents to clearly disclose to consumers at all points of sale customer-specific fee information, or itinerary-specific information if a customer elects not to provide customer-specific information, for a first checked bag, a second checked bag, and one carry-on bag wherever fare and schedule information is provided to consumers. This SNPRM further proposes to require each covered carrier to provide useable, current, and accurate (but not transactable) baggage fee information to all ticket agents that receive and distribute the carrier's fare and schedule information, including Global Distribution Systems and metasearch entities. On covered carrier and ticket agent Web sites, the SNPRM would require the baggage fee information to be disclosed at the first point in a search process where a fare is listed in connection with a specific flight itinerary, adjacent to the fare. The SNPRM would permit carriers and ticket agents to allow customers to opt-out of receiving the baggage fee information when using their Web sites.

Federal Register, Volume 82 Issue 12 (Thursday, January 19, 2017)
[Federal Register Volume 82, Number 12 (Thursday, January 19, 2017)]
[Proposed Rules]
[Pages 7536-7560]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-00904]



[[Page 7535]]

Vol. 82

Thursday,

No. 12

January 19, 2017

Part XVI





Department of Transportation





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14 CFR Part 399





Transparency of Airline Ancillary Service Fees; Proposed Rule

Federal Register / Vol. 82 , No. 12 / Thursday, January 19, 2017 / 
Proposed Rules

[[Page 7536]]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 399

[Docket No. DOT-OST-2017-0007]
RIN 2105-AE56


Transparency of Airline Ancillary Service Fees

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

ACTION: Supplemental Notice of Proposed Rulemaking (SNPRM).

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SUMMARY: This SNPRM proposes to require air carriers, foreign air 
carriers, and ticket agents to clearly disclose to consumers at all 
points of sale customer-specific fee information, or itinerary-specific 
information if a customer elects not to provide customer-specific 
information, for a first checked bag, a second checked bag, and one 
carry-on bag wherever fare and schedule information is provided to 
consumers. This SNPRM further proposes to require each covered carrier 
to provide useable, current, and accurate (but not transactable) 
baggage fee information to all ticket agents that receive and 
distribute the carrier's fare and schedule information, including 
Global Distribution Systems and metasearch entities. On covered carrier 
and ticket agent Web sites, the SNPRM would require the baggage fee 
information to be disclosed at the first point in a search process 
where a fare is listed in connection with a specific flight itinerary, 
adjacent to the fare. The SNPRM would permit carriers and ticket agents 
to allow customers to opt-out of receiving the baggage fee information 
when using their Web sites.

DATES: Comments must be received by March 20, 2017. Comments received 
after this date will be considered to the extent practicable.

ADDRESSES: You may file comments identified by the docket number DOT-
OST-2017-0007 by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and follow the online instructions for submitting 
comments.
     Mail: Docket Management Facility, U.S. Department of 
Transportation, 1200 New Jersey Ave. SE., Room W12-140, Washington, DC 
20590-0001.
     Hand Delivery or Courier: The Docket Management Facility 
is located on the West Building, Ground Floor, of the U.S. Department 
of Transportation,1200 New Jersey Ave. SE., Room W12-140, between 9 
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
     Fax: 202-493-2251.
    Instructions: You must include the agency name and the Docket 
Number DOT-OST-2017-0007 or the Regulatory Identification Number (RIN) 
for the rulemaking at the beginning of your comment. All comments 
received will be posted without change to http://www.regulations.gov, 
including any personal information provided.
    Privacy Act: Anyone is able to search the electronic form of all 
comments received in any of our dockets by the name of the individual 
submitting the comment (or signing the comment if submitted on behalf 
of an association, a business, a labor union, etc.). You may review 
DOT's complete Privacy Act statement in the Federal Register published 
on April 11, 2000 (65 FR 19477-78), or you may visit http://DocketsInfo.dot.gov.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov or to the street 
address listed above. Follow the online instructions for accessing the 
docket.

FOR FURTHER INFORMATION CONTACT: Kimberly Graber or Blane A. Workie, 
Office of the Assistant General Counsel for Aviation Enforcement and 
Proceedings, U.S. Department of Transportation, 1200 New Jersey Ave. 
SE., Washington, DC 20590, 202-366-9342 (phone), 
[email protected] or [email protected] (email).

SUPPLEMENTARY INFORMATION: 

Background

    The Notice of Proposed Rulemaking, titled Transparency of Airline 
Ancillary Service Fees and Other Consumer Protection Issues, Docket No. 
DOT-OST-2014-0056, 79 FR 29970, May 23, 2014 (Consumer Protection 
NPRM), contained a number of proposals to enhance consumer protections, 
including a proposal to require the disclosure of certain airline 
ancillary service fees. This proposed disclosure requirement was one of 
the more controversial provisions of the rulemaking and generated 
significant comments from consumers, airlines, ticket agents and other 
interested parties. In light of the comments on this issue, the 
Department is issuing this SNPRM, which focuses solely on the issue of 
transparency of certain ancillary service fees. The other issues in the 
2014 NPRM are being addressed separately. See RIN 2105-AE11, Enhancing 
Airline Passenger Protections III; and RIN 2105-AE57, Enhancing Airline 
Passenger Protections IV.
    In this SNPRM, the Department proposes to require disclosure at all 
points of sale of the customer-specific fees for first and second 
checked bag and carry-on bag but does not propose to require disclosure 
of the fee for advance seat assignment. In addition, the Department 
proposes to require carriers to provide certain baggage fee information 
to ticket agents so that both carriers and ticket agents would be able 
to provide customer-specific baggage fee information to consumers. We 
invite all interested parties to comment on the proposals set forth in 
this notice. Our final action will be based on comments and supporting 
evidence from the public filed in this docket, and on our own analysis 
and regulatory evaluation.

A. Need for Rulemaking and Legal Authority

    The NPRM: In the NPRM, the Department described the problem 
identified by consumers and consumer advocacy groups of the lack of 
transparency of ancillary service fees in air transportation pricing. 
That is, not being able to determine the true cost of travel due to the 
lack of information regarding certain ancillary service fees. This lack 
of transparency of fees for unbundled services (i.e., services that 
historically had been included in the air fare but for which many 
carriers now charge a separate fee is particularly notable when 
consumers are attempting to purchase air transportation through a 
ticket agent rather than directly from the carrier but it occurs at 
both ticket agent and airline outlets. Corporate travel agents have 
also complained about the lack of access to ancillary service fee 
information.
    Online travel agencies (OTAs), metasearch sites, ``traditional'' 
travel agencies, and travel management companies generally obtain most 
of their information regarding air transportation options indirectly 
through Global Distribution Systems (GDSs). GDSs essentially facilitate 
the purchase of tickets between airlines and consumers through third 
parties but do not have complete information regarding ancillary 
service fees. As a result, when researching air transportation options 
and making decisions on whether to purchase air transportation, 
consumers continue to have difficulty determining the total cost of 
travel because the fees for basic ancillary services are not available 
through all sales channels. Consumers also experience difficulty on 
carrier Web sites because fees are provided on lengthy static lists, 
and many ancillary service fees are listed as a range, so consumers do 
not necessarily know the

[[Page 7537]]

specific fees that apply to their travel when purchasing air 
transportation. With respect to baggage, the existing disclosure 
requirements mandate specific information if a carrier or a ticket 
agent has a Web site accessible for ticket purchases by the general 
public in the United States, but passengers must frequently review 
lengthy and complex charts to determine the exact baggage fees that 
apply to their air transportation particularly for interline or 
international itineraries.
    The Department's goal is to protect consumers from hidden and 
deceptive fees and enable them to determine the true cost of travel in 
an effective manner when they price shop for air transportation. The 
problem of hidden fees has been brought to our attention by consumer 
complaints, comments on the second Enhancing Airline Passenger 
Protections rulemaking, and comments to the docket for the Advisory 
Committee for Aviation Consumer Protection. We also note that members 
of Congress representing constituents have expressed support for full, 
more specific, disclosure of ancillary service fees.
    In the 2014 NPRM, we provided an overview of the airline 
distribution system based on information gathered from representatives 
of carriers, GDSs, consumer advocacy organizations, and trade 
associations, as well as other interested entities, including third-
party technology developers. We noted that approximately 50% of tickets 
are sold by airlines directly to consumers, and the remainder is sold 
through ticket agents. Further, in the United States, three GDSs 
(Sabre, Travelport and Amadeus) control the distribution of the airline 
product for the ticket agent channel and most airlines use the GDSs to 
distribute their products to ticket agents, including corporate travel 
agents that sell the higher revenue tickets. The NPRM noted that 
airlines state they have made some efforts to reduce their reliance on 
GDSs and transition to direct connections between airline reservation 
systems and ticket agent systems but contractual arrangements make that 
difficult. As stated in the NPRM, carriers and carrier associations 
have expressed concern that a Department requirement to distribute 
information through a GDS would reinforce the existing distribution 
patterns and stifle innovation. Some stakeholders have alleged that if 
existing distribution patterns are reinforced, carriers will no longer 
have sufficient incentive to invest in new distribution technologies, 
which might ultimately provide more information to the benefit of 
consumers. In connection with new distribution technologies, the 2014 
NPRM also mentioned that the International Air Transport Association 
(IATA) applied to the Department of Transportation for approval of its 
agreement establishing the framework for the IATA New Distribution 
Capability (NDC). That application was pending at the time of NPRM 
publication but has since been approved. NDC is essentially an XML-
based technical standard for use in airline distribution, including 
direct connect services, that has been developed by IATA in cooperation 
with air transportation stakeholders. The goal appears to be to change 
how airlines sell their products today by using the enhanced platform 
to quickly generate dynamic, personalized offers. For more information, 
see docket DOT-OST-2013-0048. The NDC standard is available to any 
party and has been implemented by some entities since the 2014 NPRM was 
published.
    Our discussion in the 2014 NPRM explained that although airlines 
generally distribute fare, schedule, and availability information 
through GDSs, they generally do not distribute ancillary service fee 
information in the same manner. The NPRM also outlined some of the 
technological and competitive concerns raised by air transportation 
industry stakeholders. We also noted that in contrast to airlines, GDSs 
assert that any transition to direct connect services will succeed or 
fail based on whether the services meet the needs of travel agencies 
and the consumers they serve, regardless of existing contracts. As 
noted in the NPRM, GDSs disputed the position that there is no need for 
a Department requirement, stating that airlines and ticket agents have 
not been able to come to agreements that would allow airlines to 
provide ancillary service fee information to ticket agents so they 
could in turn provide such information to consumers.
    The 2014 NPRM explained that our decision to initiate a rulemaking 
regarding distribution of ancillary service fee information rested on 
the conclusion that consumers are continuing to have difficulty finding 
ancillary service fee information, which limits consumers' ability to 
determine the true cost of travel. We also recognized in the NPRM that 
carriers and GDSs state they share our goal of transparency of 
ancillary service fee information. In the NPRM we made clear that the 
Department is working to find the most beneficial disclosure rule for 
consumers while avoiding any adverse impact on innovations in the air 
transportation marketplace, contract negotiations between carriers and 
their distribution partners, or a carrier's ability to set prices for 
its services in response to its own commercial strategy and market 
forces. As the NPRM stated, consumers need to be protected from hidden 
and deceptive fees that prevent them from effectively price shopping--
that is, determining while shopping and before purchasing, the total 
costs of air transportation. The NPRM explained that failing to 
disclose basic ancillary service fees in an accurate and up-to-date 
manner before a consumer purchases air transportation is an unfair and 
deceptive practice. We identified a number of questions regarding the 
need for rulemaking on which we requested comment, including questions 
regarding the difficulty consumers have finding fee information, what 
fee information consumers wanted to have prior to purchase, and whether 
either of the Department's proposals would make fees easier to find. We 
also explained the alternatives that we had considered.
    Comments: Consumer comments in this rulemaking overwhelmingly 
supported Department action on disclosure of ancillary service fees. 
Over 600 consumers commented on transparency issues generally, which 
for many consumers encompasses disclosure of ancillary service fees as 
well as the full airfare, including taxes and fees. Over 450 consumers 
clearly supported additional requirements relating to disclosure of 
ancillary service fees while fewer than ten commented in opposition to 
additional disclosure requirements. Consumer advocacy groups Travelers 
United and National Consumers League also commented in support of the 
need for a rulemaking, stating that airlines publish what are in effect 
partial prices and that the full cost of travel is masked at the 
initial purchase and only revealed in a secondary buying process. 
Consumers Union and the U.S. Public Interest Research Group (U.S. PIRG) 
also supported Department action in this area, stating that the 
Department should require disclosure at every point of sale, early in 
the purchasing process. They went on to state that too many U.S. 
carriers have made ancillary service fee information difficult or 
impossible to obtain until close to or at the point of actual purchase 
or, in some channels, not available at all. FlyersRights also supported 
the rulemaking on disclosure of ancillary service fees, stating that 
unbundling is rapidly making price shopping difficult to impossible for 
consumers. It further stated that baggage fee information often is 
buried on a carrier's Web site and can be confusing

[[Page 7538]]

and complex. To illustrate its point, FlyersRights identified one 
legacy carrier that charges up to nine different fees for baggage 
depending on weight, size, and number of bags.
    Open Allies, which described itself as a coalition of more than 400 
independent distributors and sellers of air travel, corporate travel 
departments, travel trade associations and consumer organizations, 
commented in favor of Department action in this area. According to Open 
Allies, the rule is needed because ancillary service fees are not 
accessible and that identifying total travel cost is complex, 
confusing, and needlessly time consuming. According to Open Allies, the 
market is not reacting quickly or completely enough to address the 
issue. Open Allies pointed to a survey it conducted of over 1,000 
adults in the United States, indicating that 55 percent of respondents 
said that they were surprised by additional fees after purchasing a 
ticket; 88 percent said that Department action is important; 81 percent 
believe that current airline practices are ``unfair and deceptive;'' 
and 47 percent said that it was hard to search and find the lowest 
price for travel.
    Open Allies argued that the Department should not rely on 
competition because fees are still hidden, despite existing Department 
requirements, which results in consumers making sub-optimal purchasing 
decisions. Open Allies relied on consumer comments in the docket, 
saying that they show that consumers feel deceived and confused and do 
not understand the true, full cost of travel. According to Open Allies, 
consumers generally give two key reasons for supporting increased 
disclosure of ancillary service fees: (1) It would allow them to 
compare prices across various airlines; and (2) it would prevent 
airlines from surprising them with fees after they have purchased their 
airfare. Open Allies commented that there are many benefits to enhanced 
disclosure of price information such as ancillary service fees, 
including that it lowers prices, enhances competition, and promotes 
informed buyers. According to Open Allies, airlines lack a commercial 
incentive to provide ancillary service fee information to the 
``neutral'' travel agency channel because airlines have an interest in 
not allowing ticket agents to show the full cost of travel at the 
shopping stage because if travel appears less expensive, consumers will 
be more likely to complete a purchase. Open Allies further pointed out 
that an airline is unlikely to voluntarily display ancillary service 
fees on a travel agent display because it would make the airline's 
fares appear more expensive when compared to the fares of other 
airlines that do not disclose ancillary service fee information.
    In support of its position, Open Allies cited a 2010 GAO Report and 
a follow-on 2014 report, describing the problem of ancillary service 
fee disclosure as a continuing problem. Open Allies pointed out that 
while some individual airlines and individual GDSs have announced 
agreements regarding distribution of certain ancillary service fees, 
those agreements are generally limited to premium seating on some of 
the individual airline's flights and do not provide all ticket agents 
access to that information. Therefore, consumers are still unable to 
discover all basic ancillary service fees when searching for flights. 
According to Open Allies, the Department has substantial evidence to 
support its rulemaking as well as ample authority under Sec.  41712 
(unfair or deceptive practices). Open Allies compared the Department's 
authority to that of the FTC and stated that analogous FTC precedent on 
unfair or deceptive practices establishes that the Department has the 
legal authority to proceed with this rulemaking.
    The three GDSs--Amadeus, Sabre, and Travelport--all supported the 
rulemaking, stating that consumers that use ticket agents to shop for 
air transportation do not have access to all ancillary service fee 
information. According to Sabre, for consumers to ``know the full price 
of travel before they are locked into a purchase'' the Department must 
act. The GDSs also stated that airlines will not share ancillary 
service fee information with ticket agents, except on a limited basis, 
unless the Department requires the information to be shared. Travelport 
stated that airlines are motivated to increase revenues by driving 
consumer costs up through ``obfuscation of the true cost of flying.'' 
Amadeus points to airline opposition to disclosure requirements, 
particularly opposition by U.S. airlines, as evidence that the market 
will not resolve the problem. Travel Technology Association (Travel 
Tech), a trade association for major OTAs, GDSs, and some entities 
operating metasearch engines focused on travel, also stated that a 
problem remains for consumers trying to uncover charges for additional 
services and stated that consumers must search to discover the true 
cost of their air travel.
    Several travel agents and travel agent associations also stated 
there is a need for Department action in this area. The American 
Society of Travel Agents (ASTA) joined in the comments of Open Allies 
and stated that the Department's proposals do not go far enough to 
address widespread confusion among consumers. A number of travel agents 
submitted comments stating that their customers could not calculate the 
true cost of airfare with certainty and that the travel agents 
themselves could not provide a quote with certainty because of the 
complexity of and variation in ancillary service fees charged from 
airline to airline. Those travel agents supported mandating that 
airlines disclose the costs of bag fees and seat assignments. The 
United States Tour Operators Association (USTOA) opposed being subject 
to disclosure regulations but commented that consumers have expressed 
strong support for early disclosure of information on ancillary service 
fees. USTOA pointed to a survey that shows that 45 percent of 
respondents reported difficulty in budgeting for air travel due to the 
proliferation of fees and difficulty in determining the costs of 
flying. Survey respondents also indicated that total cost of travel is 
very important to purchasing decisions. Corporate travel agents also 
commented that they were concerned about disclosure. Global Business 
Travel Association stated that there is a need for disclosure 
requirements because despite investing resources, acquiring 
technologies, and changing travel policies, its members are still 
facing challenges finding basic ancillary fee information for baggage 
and seat assignments. Business Travel Coalition (BTC) commented in 
support of requiring disclosure of fees, stating that airlines are 
``masking the all-in price of air travel.''
    Computer and Communications Industry Association (CCIA), advocating 
for metasearch entities, commented in favor of Department action to 
make sure consumers have the information needed to determine the full 
cost of travel. TripAdvisor and Skyscanner, which both operate flight 
search tools, also commented in favor of Department action requiring 
airlines to disclose ancillary service fee information to ensure 
transparency for the benefit of consumers. Of airline commenters, only 
Southwest supported the Department requiring greater fee disclosure, 
noting that consumers will ``be better able to arrive at the true cost 
of air transportation.'' Finally, several commenters, including ASTA, 
BTC, FlyersRights, and Travel Tech also noted that airlines are not 
subject to State and local consumer protection laws due to Federal 
preemption, and

[[Page 7539]]

therefore, only the Department can take action to protect consumers in 
this area.
    The Department also received many comments that opposed any further 
requirement pertaining to disclosure of ancillary service fees as 
specific charges. A4A (Airlines for America, the trade association of 
the larger U.S. airlines) argued that there is no need for any proposal 
regarding ancillary service fee information because the industry has 
already provided that information in response to existing Department 
regulatory requirements and market pressure and no consumer harm is 
occurring. A4A further argued that the Department does not have the 
authority to require airlines to disclose certain ancillary service 
fees in displays of fare search results because the failure to provide 
that information at the time fare information is presented to consumers 
does not amount to an unfair or deceptive practice. A4A also pointed 
out that on some occasions when discussing the ancillary service fee 
disclosure issue, the Department has described it in terms of the 
ability of consumers to engage in comparison shopping. A4A argued that 
the Department does not have regulatory authority to dictate the terms 
of carrier distribution or ancillary service fee disclosure to enhance 
comparison shopping.
    In addition to stating there is no need for any ancillary service 
fee proposals, A4A opposed any ancillary service fee disclosure 
requirement on competitive grounds, alleging that the rulemaking would 
effectively require airline distribution through GDSs, which would put 
airlines at a competitive disadvantage. According to A4A, the 
Department recognized the powerful market position of GDSs in a 2004 
rulemaking \1\ and still determined not to regulate those entities. A4A 
stated that GDSs still have significant market power and to be 
competitive most airlines have to distribute fare information through 
all three GDSs; meanwhile, GDSs prevent their client ticket agents from 
directly connecting to an airline. A4A stated that in contrast to 
fares, carriers are not dependent on GDSs for distribution of ancillary 
service information and this places airlines in a better position to 
negotiate with GDSs, to the benefit of consumers. For example, 
according to A4A, GDSs agreed to develop new distribution technologies 
as part of negotiations over ancillary services. A4A stated that the 
proposed regulation would strengthen the negotiating position of GDSs 
at the expense of the airlines if adopted.
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    \1\ Dep't of Transp., Computer Reservation System (CRS) 
Regulations, Final Rule, 69 FR 976, 996 (Jan. 7, 2004) (``CRS 
Rulemaking'')
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    Meanwhile, according to airline associations, the market is 
working. A4A commented that existing Department regulations combined 
with market forces have led to ``enhanced fee disclosure practices,'' 
and that carriers want to sell ancillary services, especially to 
business travelers who constitute a large segment of their repeat 
customers and revenue producers. A4A went on to explain that carriers 
are already incentivized to distribute information about ancillary 
products and fees and to facilitate the sale of ancillary services 
through multiple channels, including travel agencies, if they can do so 
on commercially reasonable terms. According to A4A, carriers and GDSs 
have already developed the ability (using the ATPCO filing system) to 
disclose information such as first and second checked bag fees to 
travel agents. A4A further noted that some airlines have made it 
possible for some agents to purchase certain ancillary services for 
consumers and some GDSs have developed mechanisms for ticket agents to 
buy services directly from carrier Web sites. A4A also pointed to tools 
on carrier Web sites that allow consumers to obtain customer-specific 
information through an airline Web site after providing information 
from the purchased ticket, and third-party Web sites that provide 
ancillary service fee information as the ``beneficial result of the 
existing environment.'' A4A also criticized Open Allies' reliance on 
survey results, stating that the survey was flawed for a number of 
methodological reasons and ``it should not be relied upon to arrive at 
conclusions concerning perceptions and attitudes about ancillary 
services held by people who fly on commercial airlines in the United 
States.'' According to A4A, GDSs are trying to obtain the commercial 
benefit of access to ancillary service fee information through 
regulation instead of through negotiations, even though negotiated 
agreements are possible. A4A also stated that GDSs have made 
concessions on pricing and technology through commercial agreements. 
A4A concluded that regulation will result in higher GDS fees which will 
in turn be passed on to consumers through higher ticket prices, to the 
detriment of the public.
    In supplemental comments, A4A stated that the three GDSs engaged in 
pilot projects to ``begin adapting to'' the NDC initiative and many 
airlines have invested in technology solutions. In addition, a variety 
of technology service companies are building solutions in the area. 
According to A4A, these marketplace developments prove that regulation 
is unneeded. A4A provided a number of examples of agreements between 
airlines and GDSs that it says show that carriers are sharing ancillary 
service fee information with GDSs. A4A went on to say that it is more 
and more common for carriers to sell bundled fares on their own sites, 
which A4A stated often results in discounts and is a consumer-friendly 
method of display. A4A further stated that mandating disclosures on the 
first page that displays fares interferes with airline efforts to 
differentiate their products and compete on service and price, as well 
as ``squandering'' the investment made by carriers on bundled pricing 
initiatives and technology to display those prices. A4A concluded in 
its supplemental comments that marketplace solutions that compel all 
parties to negotiate and use the most efficient data-sharing and latest 
technology will lead to time savings for consumers.
    IATA commented that the market has fundamentally changed since the 
Department first considered requiring carriers to disclose ancillary 
service fees and consumers now have ``more than ample'' access to 
information about ancillary services and fees prior to making purchase 
decisions. According to IATA, there is no lack of information about 
ancillary service fees causing harm to consumers. Further the 
Department has not demonstrated there is any unfair or deceptive 
practice that will be prevented by further regulating the disclosure of 
ancillary service fees, therefore, they argued, the Department does not 
have the authority to regulate in this area.
    IATA further argued that marketplace solutions are already making 
any rulemaking regarding ancillary service fees unnecessary as the 
rapid changes in distribution are working to the benefit of consumers 
and any Departmental intervention in this rapidly changing market will 
interfere and result in suboptimal solutions. IATA argued that airline 
Web sites already offer comprehensive and accurate information about 
ancillary services and fees. IATA acknowledged that airlines provide 
fee information as a range of fees in a static format but stated that 
this is not evidence of fraud or deception, merely ``evidence of the 
complexity of capturing the wide variety of factors that are considered 
when dynamically setting the price for a specific ancillary service for 
a specific customer.'' IATA went on to state that carriers are coming 
to agreements to provide ancillary service fee information to GDSs for 
distribution directly to agents rather

[[Page 7540]]

than through outdated fare filing systems. IATA also stated that the 
adoption of the NDC standard will provide transparency and efficiency. 
According to IATA, the Department should not intervene in distribution 
and should rely on the market to resolve any disclosure issues. Air 
Transport Association of Canada also opposed the Department rulemaking 
regarding disclosure of ancillary service fees, stating that the market 
is addressing the issue and the Department does not have the legal 
authority to intervene in the deregulated airline industry and dictate 
how airlines distribute their products and services.
    Several airlines also commented in opposition to the rulemaking. 
American Airlines joined in the comments of A4A and further stated that 
the Department's proposals do not address specific instances of 
demonstrated harm to consumers that cannot reasonably be avoided and 
the rulemaking is ``beyond the recognized limits of the Department's 
regulatory powers.'' American alleged that the Department based its 
reasoning on a need for comparison shopping, which American said is an 
unreasonable and inadequate basis for rulemaking. Frontier Airlines 
opposed any disclosure requirements, stating it ``believes that 
competitive market forces and the Department's existing regulations are 
more than adequate to inform and protect consumers.'' JetBlue also 
endorsed the comments of both A4A and IATA and stated that the 
Department should rely on market forces. According to JetBlue, the 
Department assumes a problem regarding consumers not knowing the true 
cost of travel and the NPRM does not provide a foundation for that 
assumption. United also endorsed the comments of A4A and stated that 
the market is already addressing many of the Department's concerns so 
the Department should refrain from issuing regulations regarding 
ancillary service fee disclosure. United further stated that the 
Department does not have evidence that supports the need for the 
proposed rulemaking. Spirit Airlines similarly opposed any rulemaking 
on disclosure of ancillary service fees, stating that it is not 
necessary and not in the public interest. According to Spirit, the 
Department should defer to the market place which is rapidly developing 
and ``progressively improving reasonable consumers' ability to 
determine the total cost of their travel before purchase.''
    Several foreign air carriers endorsed IATA's comments and opposed 
any Department regulation of disclosure of ancillary service fees. 
Aerov[iacute]as de M[eacute]xico, S.A. de C.V., (Aeromexico) and Air 
Transat endorsed the comments submitted by IATA regarding disclosure of 
ancillary service fees, and stated that the market is already 
addressing the issues raised by the Department. Further, any 
intervention by the Department will likely have a negative impact on 
consumers. In comments filed on behalf of the Avianca carrier group, 
Avianca endorsed IATA's comments, stating that the marketplace already 
is addressing the Department's concerns regarding disclosure of 
ancillary service fees, and any regulatory intervention likely will 
have a negative impact on both consumers and carriers. Air New Zealand 
supported the comments of IATA and stated that the current disclosure 
requirements are adequate to protect the consumer. 
Compa[ntilde][iacute]a Paname[ntilde]a de Aviaci[oacute]n, S.A. (Copa 
Airlines) opposed Department rules regarding ancillary service fee 
disclosure, stating such rules may have ``unintended adverse 
consequences that would significantly diminish any such benefits by 
making its implementation financially and technologically cumbersome 
for carriers.'' Qatar Airways (Qatar) also endorsed the comments of 
IATA and added that the market is working. Qatar went on to state that 
Department intervention will have a negative impact on consumers. 
Scandinavian Airlines System also endorsed IATA's comments and stated 
the rulemaking will have a negative impact on consumers. Virgin 
Atlantic Airways (Virgin Atlantic) commented that the market is 
evolving to meet customer preferences and the Department's current fee 
disclosure requirements are adequate. Further, requiring carriers to 
provide ancillary service fee information to ticket agents deprives 
carriers of their right to decide how to market their ancillary 
services and to distribute such information in a way that is most cost-
effective for them.
    The Arab Air Carriers Organization (AACO) commented that market 
developments since the Department began to address ancillary services 
in rulemakings have resulted in market action that is heading towards 
developing a data transmission standard that would make the flow of 
information between the airlines and agents more efficient. AACO went 
on to state that the Department should not specify how airlines display 
information. AACO also stated that a requirement to distribute through 
the GDSs would have a negative effect on future innovation in the 
distribution and display of ancillary services and fees as well as give 
GDSs the upper hand in contract negotiations with airlines.
    AAA, a leisure travel agent trade organization, commented that it 
supports transparency but specific mandates in this area may be 
premature at this time. AAA stated it was concerned about stifling 
innovation and wanted airlines to work with GDSs on agreements to 
distribute full ancillary fee information. Momondo Group, an online 
travel media and technology company that operates a flight search tool, 
commented that it supports transparency as its primary objective. 
However, it stated that it would be extremely costly to provide 
accurate information and avoid consumer confusion. It recommended that 
the Department conduct a more detailed examination of the problem 
before implementing a regulation that will impact a variety of 
entities, including operators of metasearch engines.
    DOT Response: The sheer number, length, and variety of comments on 
this issue, as well as the strongly held positions on all sides, 
illustrate the presence of a problem and the complexity of addressing 
it. Airlines and their associations stated that the Department has not 
demonstrated the harm to consumers that the Department's rulemaking is 
intended to address. For example, in support of its position that 
information is available and the market is providing solutions, A4A 
observed that some airline Web sites provide an option for consumers to 
identify themselves to determine fees for some ancillary services and 
potentially receive special offers after they have already purchased a 
ticket. Meanwhile, IATA noted that ``experienced travelers'' know that 
airlines charge bag fees and advance seat assignment fees and also know 
how to navigate multiple Web sites to obtain this information and that 
the Department should not impose costly regulations to benefit the 
relatively few travelers that care about this information but do not 
know how to locate it. In late-filed comments, Travel Tech noted that 
some airlines have begun to provide some information on ancillary 
services to ticket agents, but the progress has been far from 
universal.
    For the average consumer looking for the total cost of travel, he 
or she must frequently review a complex chart to determine his or her 
baggage fees particularly for interline itineraries and guess what an 
assigned seat fee might cost. We disagree with airlines and airline 
associations that these facts do not reflect consumer harm as we 
believe the additional time spent searching to find the total cost of 
travel and the additional funds spent on air transportation that might 
have been

[[Page 7541]]

avoided if the consumer had been able to determine the true cost of 
travel up front are the harms suffered by consumers when basic 
ancillary service fees are not adequately disclosed.
    The Department agrees with commenters that supported a need for 
rulemaking to allow consumers to have complete access to certain basic 
ancillary service fees in a manner that permits them to quickly and 
effectively determine their true cost of travel, although as explained 
further below, the Department has changed its view on what constitutes 
a basic ancillary service. Further, until all airlines and ticket 
agents are required to display certain basic ancillary service fees, 
and carriers are required to transmit fees for basic ancillary services 
to ticket agents, there is a strong incentive for carriers to obfuscate 
those fees. That is because if all competing carriers do not make 
similar disclosures, any airline that disclosed the cost of ancillary 
services, such as baggage fees, would appear to charge more for air 
transportation than the airlines that did not clearly provide fee 
information for those ancillary services. Therefore, even carriers that 
believe it is appropriate and consumer-friendly to provide the 
information in a clear fashion have a strong marketplace disincentive 
to disclose the cost of ancillary services. The Department notes that 
even the comments by airlines and airline associations that argued that 
the market is resolving the issue described the changes as ongoing and 
recognized that it will take time for airlines and ticket agents to 
come to agreement and implement new methods of disclosure. Although 
airline associations point to the number of agreements being reached 
between airlines and GDSs regarding GDS access to bundled fare packages 
that include an advance seat assignment, those agreements are bilateral 
agreements addressing limited services, primarily enhanced seating 
options, in limited markets and are not widely available to the general 
public.
    Meanwhile, airlines are capable of disclosing some ancillary 
service fees in search results on their own Web site search result 
displays today, yet choose not to do so. The Department is not 
persuaded by airline arguments that the complexity of factors 
considered when setting fees is a sufficient justification for leaving 
it to the airlines to decide how much disclosure to provide regarding 
basic ancillary service fees. To the contrary, any argument that fees 
are difficult to explain or quantify militates for greater disclosure 
requirements of fees for basic ancillary services intrinsic to air 
transportation. The mere fact that airlines are unbundling fares and 
have implemented ancillary service fee policies that even the airlines 
acknowledge are complex justifies efforts by the Department to ensure 
that consumers are able to discern the true cost of travel that 
includes basic ancillary service fees. Moreover, the existence of 
complex fee calculations that take into account a variety of factors 
does not explain why airlines do not provide better disclosure of 
baggage fee information that they already provide as a specific amount 
on a static list. Although there are complexities involved in 
displaying baggage fees, the comments demonstrate there is no technical 
impediment to displaying baggage fees with search results on carrier 
Web sites, yet that information is still not displayed.
    In support of its argument that the Department has not demonstrated 
a problem that it has authority to regulate, A4A provided two examples 
(from the NPRM and a docket record of an A4A meeting with Department 
staff) \2\ in which the Department referred to consumers' ability to 
``comparison shop'' as well as a reference in the NPRM to allowing 
consumers to ``price shop'' and a reference to complaints by business 
travel representatives regarding the difficulty of advising ``clients 
on the best and most cost effective flights.'' According to A4A, it is 
not within the Department's authority to require further disclosure of 
fees because we are taking the action to ensure consumers have the 
opportunity to comparison shop, which is not sufficient justification 
for the action. We acknowledge that the Department has at times used 
terms such as ``comparison shopping'' in connection with ancillary 
service fee disclosure. However, we disagree that the rationale of our 
proposed rule is to enhance consumers' ability to comparison shop. The 
Department's view is that consumers should be able to determine if the 
price provided is the total cost they will incur, whether purchasing 
through an airline or a ticket agent outlet, and our rulemaking is 
based on addressing that issue. The Department's position, as set forth 
in both the NPRM and the responses to A4A's questions, is that the 
proposals on ancillary service fees address the concerns regarding 
ensuring that consumers are aware of the total cost of travel.\3\ The 
Department's concern addressed by this rulemaking is that if airlines 
and ticket agents do not provide reasonable disclosure of ancillary 
service fees intrinsic to air transportation at the point that 
consumers are researching the total cost of travel and making a 
purchasing decision then consumers are not able to make an informed 
decision based on the true cost of air transportation. Although the 
disclosures mandated in the previous rulemaking improved consumer 
access to airline ancillary service fee information by requiring those 
fees to be displayed somewhere, airlines continue to disclose fees in a 
static format in complex charts that can be confusing to consumers. 
Further, in connection with complex itineraries, interline tickets, and 
even some code-share flights, consumers are still reporting confusion 
regarding the total cost of baggage fees. There is a close connection 
between comparison shopping to determine the best value and knowing the 
total or true cost of travel because consumers must know the total cost 
of travel to shop effectively for the best price. However, the concern 
we are proposing to address is whether consumers are able to ascertain 
the total cost of air transportation without confusion before they make 
a purchase, whether the consumer engages in comparison shopping or not. 
In this SNPRM, we are seeking comments on a requirement that specific 
ancillary service fee information be provided to consumers at the same 
time fare information is provided to help them determine the true cost 
of travel prior to purchase.
---------------------------------------------------------------------------

    \2\ See DOT-OST-2014-0056-0624, Summary of Proceedings, DOT 
Meeting with Airlines for America (A4A) (posted September 15, 2014).
    \3\ NPRM at 29975 and DOT Meeting with A4A, page 4, question 9.
---------------------------------------------------------------------------

B. The Definition of Basic Ancillary Service Fees

    The NPRM: The NPRM set forth the Department's view that certain 
basic services are intrinsic to air transportation and that carriers 
used to include them in the cost of air transportation before the 
advent of unbundled fares. We further noted that the cost of those 
services is important to consumers when they choose among air 
transportation options. The NPRM identified basic ancillary services as 
the first and second checked bag, one carry-on item and advance seat 
selection. The NPRM requested comment on whether the Department's list 
of basic ancillary services should be expanded. We also asked whether 
current disclosure requirements are sufficient and whether there is any 
need to adopt additional fee disclosure requirements for basic 
ancillary services.
    Comments: The comments reflected a diversity of views on this 
issue. Most consumer comments generally favored more transparency 
regarding fees and

[[Page 7542]]

some identify categories of fee information about which they would like 
more information--and they would like it early in the process of 
selecting a fare. In addition to consumer comments stating they want 
more information about all the fees airlines charge, a few comments 
identified specific fees. The fees consumer commenters most commonly 
identified were baggage, seat assignments, and change or cancellation 
fees, and a few mentioned advance boarding fees. The comments of 
consumer advocacy organizations Consumers Union, U.S. PIRG, Travelers 
United, and NCL expressed support for greater disclosure of all 
ancillary service fees, going beyond the baggage and seat assignment 
fees specified in the NPRM. Travelers United and NCL contended that the 
Department should require airlines to release airfares and all 
ancillary fee data for any entity to use as it wishes. BTC stated that 
boarding fees and change or cancellation fees should be included, as 
well as bundles that include a basic ancillary service. Similarly, BCD 
Travel USA LLC (BCD), a corporate travel management company, also 
commented that advance boarding fees and bundles that include a basic 
ancillary service should be included. In addition to specified baggage 
and seat assignment fees, Travel Tech and Open Allies both commented 
that advance boarding, change, and cancellation fees are ``basic'' and 
further stated that any ancillary service ``package'' that includes a 
basic ancillary service should be disclosed. Open Allies stated that 
these services are all critical to booking decisions. Sabre agreed with 
the Open Allies comment on this issue. Amadeus also stated the 
Department should expand the definition to include boarding fees and 
change and cancellation fees as well as bundles that include basic 
ancillary services. TripAdvisor stated that limiting the list of fees 
that must be disclosed to ``basic'' fees is a mistake because carriers 
may unbundle some other ``essential'' service and absent another 
lengthy Department rulemaking, the information would not be disclosed 
to consumers. Southwest commented on baggage fees, stating that they 
are unique because transporting passenger baggage is intrinsic to air 
transportation.
    On the other hand, several commenters opposed defining basic 
ancillary services as intrinsic to air transportation or including seat 
assignment fees as a basic ancillary service. USTOA commented that the 
Department should not include a requirement that seat assignment fees 
be disclosed in an itinerary specific manner because sellers of package 
tours may not have access to seat assignments at the time the package 
is sold or, since seats are inventory-controlled, the cost is likely to 
change before a consumer is able to purchase them on an airline Web 
site. Spirit asserted that any advance seat assignment fee disclosure 
should be eliminated because all airlines provide a seat with the cost 
of air transportation so disclosing an advance seat assignment fee at 
the beginning of a booking process may induce someone to purchase it 
when there is no need to do so. A4A, AACO, and United commented that 
advance seat assignments have not been traditionally provided to 
consumers as part of the price of air transportation. Comments by A4A 
and United noted that fare purchases guarantee a seat in a particular 
cabin, such as first class or economy, but not a particular seat 
number. In addition, historically seats often were not assigned until 
30 days before a flight or at the gate on the day of flight. A4A and 
United further noted that Southwest does not provide seat assignments 
at all.
    ATPCO and Farelogix did not comment on whether baggage or seat 
assignment fees are intrinsic to air transportation, but rather on the 
difficulty of disclosing the information. ATPCO stated that it can 
already support the proposed requirement to disclose first and second 
checked bag fees, which is also supported by A4A's comments indicating 
that airlines have provided itinerary-specific checked baggage fees to 
ATPCO for distribution to other industry participants. ATPCO also 
stated that the industry is working to address disclosure of carry-on 
baggage and seat assignment fees. However, given the complex pricing 
structure for seats, and the variation in carry-on baggage allowances 
depending on the aircraft, disclosure of this information is a complex 
undertaking that will take significant time to achieve. Farelogix 
stated that the industry is working towards distribution of seat 
assignment fees but that due to dynamic pricing of seats, and the need 
to determine availability at the time the price is displayed, it is not 
currently practicable to display dynamic seat assignment fees at the 
shopping stage. According to Farelogix, a requirement by the Department 
to provide seat assignment fees at the shopping stage would effectively 
force industry participants to provide static fees. Such a requirement 
would redirect industry efforts to implementing a static system rather 
than continuing to work toward modernizing distribution systems and 
ultimately would not be in the interests of consumers.
    DOT Response: We take note of the comments focused on technical 
issues and stating that due to technological limitations, the 
Department should not require disclosure of such fees. However, we note 
that many of the comments pointed to the progress in technology and in 
commercial agreements. That progress is allowing GDSs to provide 
advance seat assignment information to ticket agents and allowing 
ticket agents that sell to consumers to provide that information to 
consumers and transact those fees. It appears from the comments that 
the ability to display dynamic seat assignment fees and sell such 
services is progressing rapidly and with sufficient implementation 
time, such fees could be disclosed. In addition, we are unpersuaded by 
the argument that seat assignment fees are dynamic and therefore should 
not be considered a basic ancillary service fee. The dynamic and 
changing nature of seat assignment fees tends to support a requirement 
that such fees be not only disclosed but transactable. However, we are 
convinced by carrier arguments that advance seat assignments were not 
universally provided to consumers as part of the price of air 
transportation even before the unbundling of fares. As noted by A4A and 
United, fare purchases always did and still do guarantee a seat in a 
particular cabin, such as first class or economy, but not a particular 
seat number. In addition, we acknowledge seats often were not assigned 
until a few weeks before the flight or even on the day of flight. Now, 
in an era of unbundled fares, some carriers offer few advance seat 
assignments for free but those carriers assign a seat without charge on 
or close to the day of travel. In addition, at least one U.S. carrier, 
Southwest, does not provide seat assignments at all. Meanwhile, we note 
that it would be a violation of the full fare rule and an unfair and 
deceptive practice if a carrier required a consumer to pay an 
additional fee beyond airfare to obtain any seat at all. Carriers must 
provide a seat in the class of service that was sold to the consumer 
regardless of whether a seat is assigned in advance or not. 
Accordingly, we have tentatively concluded that advance seat 
assignments should not be considered intrinsic to air transportation. 
In addition, although we appreciate that advance boarding options and 
related fees are important to many consumers that would like to 
purchase that service, it is not a service that historically has

[[Page 7543]]

been included in the cost of air transportation.
    Turning to change and cancellation fees, we are aware that such 
fees are important information and in fact are significant restrictions 
that must be disclosed to consumers because it would be an unfair and 
deceptive practice not to disclose such fees. Further, carriers are 
required to provide direct notice with the ticket (14 CFR 253.7) of 
terms such as restrictions on refunds, and information regarding 
cancellation fees in their customer service commitments. We encourage 
carriers to make change and cancellation fee information as transparent 
and clear to consumers as possible. We also solicit comment on whether 
the Department should require airlines and ticket agents, prior to an 
online transaction being completed, to provide consumers a link to the 
airline Web sites where the change and cancellation information is 
available or if an agent prefers to its own site that displays 
airlines' change and cancellation information. However,, we are not 
convinced that change and cancellation fees are a cost that is 
intrinsic to air transportation and must be disclosed at the same point 
that itinerary information is disclosed. Like seat assignments, many 
consumers avail themselves of air transportation without making changes 
or canceling reservations.
    Regarding bundled fares that include the fees that the Department 
initially considered basic ancillary service fees (e.g., advance seat 
assignment or certain baggage fees), our position is that consumers 
need to be able to ascertain the true cost of travel including basic 
ancillary service fees so to the extent that a carrier wanted to 
provide a bundled fare in addition to an unbundled fare and basic 
ancillary service fees, a carrier would be free to do so. However, if 
the carrier is disclosing basic ancillary service fees at the same 
point fare information is disclosed, then under this proposal 
additional options such as bundled fares are not something a carrier 
would have to disclose to ensure the consumer was aware of the true 
cost of travel.
    With regard to baggage fees, the comments did not offer any reason 
to change our view that a carry-on bag and first and second checked bag 
were traditionally included in the cost of transportation. We remain of 
the view that a carry-on bag and first and second checked bag are 
intrinsic to air transportation and it is reasonable to require 
carriers and ticket agents to disclose those baggage fees to consumers 
at the same point that fare and schedule information is disclosed. 
Therefore our revised proposal in this SNPRM includes a requirement 
that carriers disclose to ticket agents the fees for one carry-on item 
and a first and second checked bag. The proposal would also require 
ticket agents and carriers to provide those fees to consumers whenever 
fare and schedule information is provided as described in Section F 
below. We seek comment on the revised proposal.
    Although we have tentatively concluded that only certain baggage 
fees should be included in our disclosure requirement, we note that 
some members of Congress have expressed the view that in addition to 
baggage fees, advance seat assignment fees, change and cancellation 
fees, priority boarding fees, and ticket fees should all be disclosed 
where fares are displayed. See, for example, HR 636 (as passed in the 
Senate in April 2016). In the event future similar legislation is 
enacted to require the Department to address whether advance seat 
assignment fees, change and cancellation fees, priority boarding fees, 
and ticket fees should all be disclosed where fares are displayed, we 
seek comment on such a disclosure requirement. What are possible 
benefits to consumers from a requirement to disclose baggage fees, 
advance seat assignment fees, change and cancellation fees, priority 
boarding fees, and ticket fees along with fares? What are the costs and 
potential challenges to implementing such a requirement? Comments that 
are most useful provide information regarding the reasons why 
additional disclosures should be required or should not be required. In 
addition, comments describing specific costs and benefits would be 
helpful.

C. Disclosure by Carriers to Ticket Agents of Fees for Basic Ancillary 
Services

    The NPRM: The NPRM put forth two co-proposals. Under both 
proposals, each carrier would have been required to distribute its 
basic ancillary service fee information to certain ticket agents that 
the carrier permits to distribute its fare, schedule, and availability 
information. Under the first proposal, option A, carriers would have 
been required to distribute the information to all ticket agents, 
including GDSs, that the carrier provides fare, schedule, and 
availability information for distribution. Under the second proposal, 
option B, carriers would not have been required to distribute ancillary 
service fee information to GDSs or other intermediaries that do not 
sell the carrier's tickets directly to consumers. The option B proposal 
included an assumption that GDSs and similar intermediaries would not 
be subject to any direct consumer notification requirements. This means 
that, in addition to GDSs and similar business-to-business 
intermediaries, entities that operate flight search tools but do not 
transact sales to consumers would not have been subject to direct 
consumer notification requirements. Neither proposal required carriers 
to distribute ancillary service fee information to any GDS or other 
ticket agent to whom the carrier does not choose to distribute its 
fare, schedule, and availability information. In connection with 
transactability, neither of the proposals required transactability (the 
ability for ticket agents to sell/transact an airline ancillary service 
to consumers). The options proposed merely required carriers to provide 
``usable, current and accurate'' information on fees for basic 
ancillary services to all ticket agents so this information may be 
disclosed to consumers wherever fare, schedule, and availability 
information is provided.
    Under both of the proposals, U.S. and foreign air carriers would 
have been required to distribute to certain ticket agents the standard 
fees for basic ancillary services. However, carriers would not have 
been required to provide information to ticket agents about individual 
customers, such as their frequent flyer status, though these factors 
may impact the fee for an ancillary service. Under both proposals, 
specific charges, not a range of fees, would have to have been 
disclosed to consumers for basic ancillary service fees. Neither of the 
Department's alternative proposals dictated the method that carriers 
must use to distribute the information, rather, the NPRM cautioned that 
carriers would have to be mindful that whatever distribution method is 
used would have to provide usable, accurate, and current information so 
the information would be accessible in real-time. Further, ticket 
agents would have had to work in good faith with carriers to come to 
agreement on the method used to transmit the ancillary service fee 
information.
    Comments: In response to the NPRM, many commenters suggested that 
the Department go further than either option A or option B in terms of 
disclosure by carriers to ticket agents. For example, Open Allies, 
Travelers United, NCL, CCIA, TripAdvisor, and Skyscanner recommended 
that the Department require airlines to share all flight content 
information with any interested entity. According to CCIA, that would 
provide consumers with accurate ancillary fee information in the most 
direct manner with the least

[[Page 7544]]

regulatory cost. TripAdvisor commented that the Department should 
require airlines to make all flight-specific information, including 
fares and fees, available to all information providers, because open 
exchange of information is the best way to protect consumers. 
Skyscanner also argued that transparency for consumers can only be 
achieved if the Department requires airlines to disclose fee 
information to all entities involved in the travel booking process, 
including metasearch sites. TripAdvisor further commented that if the 
Department chooses from the proposed options, it should adopt option A, 
requiring disclosure of basic ancillary service fees to all entities 
with which the carrier shares fare information, as that is the 
practical and efficient way for ticket agents to receive and display 
the fee information and comply with Department requirements. Meanwhile, 
to the extent the Department adopts one of the two proposed options, 
Travelers United and NCL supported option A. According to Travelers 
United and NCL, option B is not feasible because the existing air 
travel distribution system relies on GDSs, the current marketplace 
would be extremely limited by exclusion of GDSs, and there is no 
alternative distribution network currently in place.
    Open Allies also supported option A. According to Open Allies, 
option B, which would not require distribution to GDSs, discriminates 
against ticket agents and is not a good solution. Open Allies stated 
that agents and airlines need GDS involvement for the potential 
benefits of the regulation to be put into place in a workable manner 
and that including GDSs is the lowest cost, most efficient way of 
achieving the Department's disclosure goal. The organization also 
argued that there is no valid reason to exclude intermediaries from 
disclosure requirements when to do so will make fee dissemination more 
challenging and costly.
    Travel Tech also commented in support of option A, stating that it 
is the only option that will achieve the Department's goals. According 
to Travel Tech, 90 percent of ARC-approved ticket agents use GDSs and, 
although that may change over time, as a practical matter, many ticket 
agents currently rely on GDSs for data today. It is an efficient way 
for ticket agents to receive fee information, is currently in use for 
many charges that airlines already impose, and will facilitate display 
of the information. According to Travel Tech, option B raises a 
``nightmare'' prospect for many travel agents, including OTAs, of not 
being able to rely on their established data source. Travel Tech noted 
the Department's desire to minimize government interference and 
encourage innovation but stated that not requiring disclosure to GDSs 
will be a disservice to consumers. Travel Tech stated that it is not a 
new concept and analogizes to existing Department requirements, such as 
the requirement that carriers provide GDSs code-share and change-of-
gauge information when providing flight information to GDSs. Travel 
Tech went on to state that GDSs are technically capable of displaying 
ancillary services and fees as carriers want them displayed. Meanwhile, 
carriers can continue to develop alternative distribution arrangements 
for future use while allowing ticket agents to provide the disclosure 
to consumers as contemplated by the Department.
    Sabre, in support of option A, stated that its services make 
sharing price information accurate and efficient as well as cost 
effective for ticket agents. Sabre further stated that if travel agents 
that rely on GDSs were forced to use an alternative, they would incur 
costs that would ultimately be passed on to consumers. Travelport 
commented in support of option A, noting the Department's statement 
that 50 percent of tickets are sold via a travel agent and virtually 
all of those agents rely on a GDS as an efficient data conduit. Amadeus 
offered similar reasons in support of option A, noting that ticket 
agents already rely on GDSs as an efficient source of data. Amadeus 
also pointed out that many travel agents are small businesses that rely 
on GDSs for airline data and if data were not provided through GDSs, 
they would not have a financially feasible way to obtain and distribute 
the information. Such agencies could not afford or manage the technical 
complexity of, for example, direct connects with multiple airlines, to 
obtain and disclose ancillary service fee information.
    ASTA and several travel agents also commented that GDSs have the 
technology to allow travel agents to book ancillary services. ASTA also 
noted that travel agents rely on GDSs for a variety of business 
functions in addition to booking, and accordingly ASTA stated that 
option A, excluding GDSs, would harm travel agents. ASTA also stated 
that option B does not provide sufficient protection for consumers. 
Therefore, according to ASTA, the Department should not adopt either 
option A or B and instead should require transactability.
    Corporate travel agents American Express Global Business Travel, 
Carlson Wagonlit Travel (CWT), and BCD supported option A. CWT 
commented that ticket agents cannot provide ancillary service fee 
information unless the information is first provided by carriers to 
ticket agents via GDSs; otherwise, ticket agents would be required to 
obtain the information from each carrier. BCD commented that ticket 
agents must have access to information about ancillary services through 
GDSs, the ``normal and customary distribution channels'' that are time-
tested and functional. Without the requirement that GDSs have the 
information, BCD stated it will incur material costs in obtaining the 
ancillary service information from every airline and will not be able 
to ensure it has accurate and complete information. Travelers United 
and NCL supported option A as the best of the options proposed. BTC 
supported option A, commenting that there is no usable, workable 
mechanism for airlines to distribute ancillary service fee information 
to tens of thousands of individual travel agents, most of whom already 
rely on GDSs. Skyscanner noted that if the Department chooses option B 
over option A, consumers who conduct searches on metasearch Web sites 
that do not sell the ticket will not receive the same ancillary fee 
information that is disclosed on traditional travel agent or carrier 
Web sites.
    A4A opposed the disclosure requirement on the grounds that it will 
place airlines at a disadvantage to GDSs in contract negotiations and 
also opposed it on technology grounds. A4A argued that GDSs have 
historically been in a stronger negotiating position than airlines and 
that GDSs were only willing to develop new technologies for accessing 
and distributing airline fare and flight information because the GDSs 
did not have contract provisions requiring airlines to provide 
ancillary services information. The ancillary services information, in 
addition to motivating GDS investments in technology, enabled airlines 
to negotiate lower GDSs booking fees. According to A4A, GDS concessions 
on pricing and technology resulted because airlines did not have the 
obligation to provide the ancillary service fee information to GDSs, 
and if the Department requires airlines to provide such information, it 
will restore GDSs to a stronger negotiating position over airlines. A4A 
stated this will be the case whether the Department adopts option A, 
expressly requiring airlines to provide the information to GDSs, or 
option B, requiring airlines to give the information to GDSs as a 
practical matter. A4A also objected to the proposal on the grounds that 
distribution channels would all have to offer the same functionality 
and not

[[Page 7545]]

every channel has the more developed functionality needed to distribute 
dynamic fees. The effect would be to impose a system of static fees, 
according to A4A. AACO also commented that a requirement to distribute 
ancillary service fee information through GDSs would essentially 
require carriers to distribute static fees to ticket agents instead of 
the dynamic fees currently available on carrier Web sites. This would 
force airlines to use static fees on their Web sites for the sake of 
consistency and would limit innovation and could lead to higher charges 
for consumers. IATA also opposed the disclosure requirement, arguing 
that the changing marketplace is making information more readily 
available to consumers because airlines are motivated to disclose the 
information and consumers are used to unbundled fares and know how to 
search and find such information. IATA stated that airline Web sites 
offer consumers and ticket agents comprehensive and accurate ancillary 
service fee information. However, according to IATA, a Department rule 
mandating disclosure will harm consumers, because it could shift 
current marketplace momentum from implementing new internet-based 
technologies that offer dynamic solutions back to inferior solutions 
offered on legacy infrastructure.
    Most airline comments objected to any ancillary service fee 
disclosure requirement, with several indicating that any Department 
involvement would unduly influence contract negotiations and 
distribution innovations. In contrast to ticket agents and their 
representatives, some carriers stated that any requirement to 
distribute fees will effectively require them to distribute to GDSs, 
which would unfairly disadvantage them in negotiations with GDSs as 
well as lock them into a distribution model that relies on static fees, 
which will create obstacles to innovation. However, some commented that 
to the extent that the Department adopts one of the proposals, some 
carriers supported Option B, requiring disclosure of ancillary service 
fee information to ticket agents that sell transportation only, 
excluding GDSs and other intermediaries. For example, Delta stated that 
the Department should refrain from any regulation of airline 
distribution channels, but option B would have less impact on 
negotiations between carriers and GDSs. United commented that option B 
would better allow for development of alternative systems for airlines 
to provide information directly to travel agents. United also notes 
that ATPCO (relied on by GDSs) does not have the technological 
capability to process constantly changing ancillary service prices, 
which makes this issue more complex than addressing baggage fees. Like 
AACO, Delta and United seem to indicate that a requirement to 
distribute ancillary service fee information through GDSs would 
essentially require carriers to distribute static fees to ticket 
agents.
    China Eastern stated that option B would present fewer technical 
and development hurdles. Spirit commented that option B is less 
intrusive and that a requirement to distribute ancillary service fee 
information to all travel intermediaries as described in option A may 
cause Spirit to withdraw from one or more GDSs altogether due to 
increased distribution costs. Insel, a Caribbean carrier, commented 
that consumers must be informed of the total cost associated with their 
travel; however, requiring disclosure through GDSs would increase 
airlines' costs, and those costs would likely be passed on to 
consumers. Virgin Atlantic is concerned about the burden of ensuring 
ticket agents that have Virgin Atlantic's fare, schedule, and 
availability information also have ancillary service fee information 
and stated that if a carrier has shared information with ATPCO or a 
direct connect, that should be sufficient.
    DOT Response: We have carefully considered the comments regarding 
whether to require carriers to distribute ancillary service fee 
information to all ticket agents that a carrier provides with its fare, 
schedule, and availability information, including GDSs, or only to 
require carriers to distribute the information to those ticket agents 
that sell its tickets. We recognize that both options potentially 
impact relationships among commercial entities and we do not take 
Department involvement in carrier distribution channels lightly. We 
recognize that airlines have concerns that being required to provide 
certain ancillary fee information to GDSs will put airlines at a 
disadvantage when negotiating contract terms with GDSs. We also 
understand that airlines have concerns about being required to rely on 
GDS infrastructure and GDS ability to market dynamic fees as carriers 
do on their own Web sites. However, airline complaints about the 
technical deficits of GDSs appear to be focused on dynamic fees. 
Airlines already rely on the GDSs to distribute baggage fee information 
and carriers do not provide a strong argument against using GDSs to 
distribute this information. Meanwhile, ATPCO notes that there are some 
technical issues to be worked out to distribute information on fees for 
carry-on items but ATPCO is already working with certain carriers and 
ticket agents, including GDSs, to distribute and even transact checked 
bag fees. Further, the proposals in the 2014 NPRM reflect our view that 
basic ancillary fee information should be shared with all consumers at 
all outlets. IATA acknowledges that more work needs to be done by the 
industry in that area. We agree with the comments of Skyscanner that 
our consumer protection goals would be undermined if we did not require 
disclosure to intermediaries in arranging for air transportation, such 
as metasearch entities that operate flight search tools, as those 
entities would not necessarily have basic ancillary service fee 
information to provide to consumers. Regarding the ability of GDSs to 
distribute the information, all three GDSs serving the U.S. market 
assert they have the technical ability to distribute baggage fee 
information. In addition, we find persuasive some ticket agent comments 
that they rely on receiving information through the GDS channel, that 
alternative distribution methods would be practically disruptive and 
technically difficult if not impossible to implement, and would cause 
them to incur significant costs. We recognize that with either option 
some time would be needed to develop the process for disclosure, 
particularly in connection with carry-on bags, as ATPCO noted. The 
proposed implementation period is discussed below in section G.
    In connection with the requirement that the distribution method 
used would have to provide usable, accurate, and current ancillary 
service fee information so the information would be accessible in real-
time, some entities comment that the 2014 NPRM does not define with 
sufficient specificity what constitutes usable, accurate, and current. 
Farelogix commented that distribution through GDSs would effectively 
halt or limit dynamic pricing because according to Farelogix, GDSs are 
only able to provide static pricing. However, the comments opposing use 
of GDSs to transmit fee information were focused on the technical 
limitations of GDSs in the area of dynamic fees (which GDSs dispute); 
there were no comments indicating that any entity thought that baggage 
fee information transmitted through GDSs would not be usable, accurate, 
and current. A4A's comment indicates that the fee information for 
checked baggage is already available in the GDS systems via ATPCO 
filings. We note that the proposed requirement to provide

[[Page 7546]]

information to GDSs only applies if the carrier is using the GDSs to 
distribute its fare, and schedule information. We do not believe such a 
requirement would be unduly burdensome on carriers as it appears that 
the primary objection of carriers from a technical standpoint relates 
to limited availability services subject to dynamic pricing, such as 
seat assignment fees, and seat assignment fee information is no longer 
included in the proposed requirement. In response to some comments that 
by imposing disclosure requirements on checked baggage fees the 
Department would be effectively prohibiting carriers from offering 
discounts through dynamic pricing, we disagree. Carriers are free under 
Department rules to offer discounts, whether though dynamic pricing or 
other methods, if the pricing is properly disclosed. \4\ Further, some 
carriers are already working with GDSs to offer premium seats, so we 
are not convinced that they could not do the same with baggage fees. 
The remaining objection, being placed in a disadvantageous position in 
contract discussions, would be addressed by a prohibition on unilateral 
contract provisions related to distribution, as discussed more fully 
below.
---------------------------------------------------------------------------

    \4\ In response to A4A's comment that the requirement to 
distribute static baggage fees through GDSs to comply with previous 
rule has prevented airlines from offering dynamic baggage fee 
pricing, we note that is the result of airline pricing decisions and 
GDS contract restrictions and not a Department requirement. Airlines 
are free to offer static or dynamic fees under Department rules, as 
long as the prices are properly disclosed.
---------------------------------------------------------------------------

    After carefully considering all of the comments submitted, the 
Department has decided to propose requiring carriers to provide 
information on fees for one carry-on item and first and second checked 
bag to all ticket agents to which it provides fare and schedule 
information, including GDSs and other intermediaries in the air 
transportation marketplace. This option provides for wide distribution 
with the least disruption to existing business models and the shortest 
implementation time. We acknowledge that almost any distribution and 
disclosure requirement will involve Department intervention into 
business and contractual arrangements. However, the Department is 
counter-balancing these concerns by including in its proposal a 
prohibition on unilateral cost increases by GDSs on airlines as 
discussed in Section E. When the proposed requirement to provide 
information to GDSs is considered in conjunction with the Department's 
proposed restriction on certain contract provisions, we believe the 
Department's regulatory involvement in business arrangements is minimal 
and justifiable.
    We note that in this SNPRM we are proposing to require carriers to 
provide certain ancillary service fee information to all ticket agents 
to which it provides fare and schedule information. This would ensure 
consumers receive key baggage fee information at the same time that 
they are identifying flight options so that they have enough 
information to determine the true cost of travel. We believe that 
furnishing availability information to ticket agents should not be a 
determining factor in whether the agent receives the ancillary service 
fee information in question. Requiring carriers to provide required 
ancillary service fee information to all ticket agents to which they 
provide fare and schedule information should ensure that all relevant 
ticket agents are provided with the ancillary service fee information 
without imposing an overly broad requirement. We seek comment on the 
substance of the proposal and whether the description of ticket agents 
that should receive basic ancillary service fee information is 
sufficiently broad.

D. Transactability

    The NPRM: In the NPRM, the Department requested comment on the 
issue of requiring that basic ancillary services be made transactable 
(i.e., to require that airlines permit online travel agencies to sell 
these ancillary services). The Department recognized that 
transactability is a very important business issue for both carriers 
and ticket agents and noted that we want to avoid causing a negative 
impact on innovation or unnecessarily intruding into business and 
commercial arrangements. We further noted that carriers and 
stakeholders have assured the Department that they share our goal of 
transparency and assume that the various stakeholders would negotiate 
regarding the ability of ticket agents to sell a carrier's ancillary 
services and the price at which those services would be sold. However, 
we left open the possibility of requiring transactability and requested 
comments on the issue.
    Comments: Consumer advocacy organizations' comments generally 
favored transactability. Consumers Union and U.S. PIRG stated that 
ancillary services should be transactable through ticket agents or, at 
a minimum, customer-specific quotes with ancillary service fees should 
be provided and guaranteed to be available once the ticket has been 
purchased. Travelers United and NCL commented that the Department 
should not concern itself with how the data is used but rather should 
require airlines to release all ancillary service data and let market 
innovations determine how it is provided to consumers. Open Allies 
commented that the Department should require airlines to provide basic 
ancillary service fee information to ticket agents in a format that 
allows ticket agents not only to disclose the information to consumers 
but also to sell the services.
    Open Allies stated it believes that the lack of transactability is 
unlikely to be resolved by carriers absent a rule. The organization 
commented that ticket agents should be able to sell services because 
consumers support transactability. It pointed to a survey it conducted 
which showed 72 percent of survey respondents believe transparency 
includes transactability. Open Allies also noted that requiring 
transactability would save time and be more efficient for consumers. If 
transactability is not required, it contended, consumers will have to 
go to airline Web sites to find and purchase a service found on a 
ticket agent Web site and, unless fees are unchangeable, the service 
may no longer be available, or available at the quoted price, at that 
time. According to Open Allies, airlines are the only entities that 
``disaggregate'' pricing and as a consequence the Department should 
regulate ``pricing transparency'' which is only possible with 
transactability. Open Allies disagreed with the carrier position that 
GDSs have greater bargaining power than airlines in contract 
negotiations, noting the reduced GDS fees airlines have negotiated 
since GDS deregulation. Open Allies also said the decreased number of 
legacy carriers in the United States has increased airline negotiating 
power. The organization argued that transactibility is necessary 
because, if the Department relied on requiring the carriers to lock in 
prices for ancillary services at the time consumers purchased tickets, 
it would be difficult to enforce and costly and time consuming to 
develop systems that would enable fees to be locked for individual 
consumers. Meanwhile, consumers would still face the inconvenience of 
having to go to airline sites to purchase the ancillary service, which 
would increase their transaction costs.
    Several travel agents filed similar comments favoring 
transactability, stating that disclosure alone is not sufficient. 
According to those travel agents, add-on fees are complex and change 
from airline to airline, preventing travel agents from providing 
completely accurate quotes to customers. Although requiring

[[Page 7547]]

disclosure of the cost of bags and seat assignments would help, 
according to these commenters, consumers would still be surprised 
because the price of services may go up before they buy them. They also 
stated that GDSs have the ability to provide transactabilty and 
airlines would benefit from increased sales of ancillary services, 
creating a ``win-win'' for the entire value chain. ASTA commented that 
the only option the Department should consider is transactability. 
According to ASTA, airlines, U.S. airlines in particular, have proven 
unresponsive to market influences to sell ancillary services through 
ticket agents and without requiring transactability. ASTA asserted that 
the Department will effectively be forcing agents to send customers to 
a competitor if it does not require transactability.
    Travel Tech commented in support of transactability, stating that 
the existing GDS infrastructure already permits transaction of various 
airline service fees, such as baggage, in some cases, and also allows 
seat assignments for certain carriers' inventory. According to Travel 
Tech, the only question is whether airlines will allow ticket agents to 
transact the services once the airline makes the information available 
through GDSs. Travel Tech also commented that consumers should be able 
to purchase ancillary services at their preferred outlet to avoid the 
increased search and transaction costs of not having ancillary services 
available for purchase through ticket agents.
    Amadeus, Sabre and Travelport also commented that consumers using 
ticket agent outlets experience increased transaction time without 
transactability. They stated that they are ready to implement 
transactability and point to their own technological developments and 
existing agreements with carriers on distribution of ancillary 
services. Sabre provided information regarding 23 carriers for which it 
both displays and transacts at least one ancillary service. Travelport 
stated ancillary services can be transacted using older technology but 
that it has introduced a new platform to allow airlines to 
differentiate their products from competing airlines. Amadeus stated 
that requiring transactability is the only way the Department can meet 
the goal of transparency. Amadeus commented that disclosure without 
transactability will confuse consumers. Amadeus stated that it already 
has a product that will enable transactability and that 58 airlines are 
already using this product, but concludes that the Department cannot 
rely on the market to move towards transactability because the factors 
that have inhibited widespread implementation are still present, 
particularly in the case of U.S. airlines.
    Orbitz stated it is a member of Travel Tech and commented to 
elaborate on Travel Tech's comments. Orbitz stated that if the 
Department imposes disclosure requirements on ticket agents without 
transactability, consumers will only be more confused. Orbitz pointed 
to the static nature of some fees and dynamic nature of others, which 
will increase the confusion. Meanwhile, according to Orbitz, the 
Department should not assume that airlines will negotiate to allow 
ticket agents to transact ancillary services. The outcome of the rule 
may be that ticket agents that compete with airlines and offer 
consumers choices that they might not otherwise have been aware of, are 
left with an inferior product and asymmetrical disclosure requirements 
that disadvantage ticket agents and lead to consumer harm.
    Corporate travel agents also supported transactability. BCD 
commented that the Department should require transactability through 
GDSs and if the information is not transactable, corporate travel 
agents should not be required to disclose those ancillary service fees. 
BCD stated customers will be frustrated if it is not able to book the 
services that it has just disclosed to its customers. BCD also stated 
its customers depend on having all of the costs of travel tracked 
through its systems so if it cannot book all services the customer 
wants, its travel cost data will not be accurate. CWT commented that to 
provide consumer benefit, the Department must require that ancillary 
services be transactable through GDSs or agents will be unduly burdened 
and the existing distribution system will be undermined. BTC commented 
that for consumers transparency and transactability are ``interlocked'' 
and without transactability, the booking process for consumers and 
travel agents involves multiple steps and is more confusing and time 
consuming as a result. BTC also commented on the risk of increased 
costs or lost opportunities to purchase certain ancillary services if 
they are not purchased at the time the ticket is purchased. 
International Airline Passengers Association also commented in favor of 
transactability and supported BTC's comments.
    A4A opposed transactability, reiterating its view that there is no 
consumer harm to address. A4A also identifies practical considerations, 
including that some carriers do not allow for payment of baggage fees 
at time of ticketing even when travel is purchased directly from the 
carrier and many consumers do not know at time of ticketing whether or 
how many bags the consumer will want transported. Several carrier 
comments reflect agreement with the Department's tentative decision not 
to require transactability, including those of Delta and United. 
Frontier also opposed transactability, stating that it would increase 
airline costs which would in turn be passed on to consumers. Virgin 
Atlantic opposed a transactability requirement because it would 
undermine carrier ability to control its distribution scope and costs 
and essentially mandates the commercial relationship between a carrier 
and its agents solely to the benefit of agents.
    DOT Response: We have carefully considered all of the comments 
supporting and opposing transactability. We note that the Department 
has already prohibited post-purchase price increases on transporting 
baggage. The Department's Enforcement Office has also indicated that it 
intends to pursue enforcement action against carriers that increase 
fees for baggage not provided with the ticket but traditionally 
included in the price of the ticket (i.e., carry-on bag, 1st and 2nd 
checked bag). Therefore, the Department's existing rule regarding 
baggage fee price increases has already addressed the concern that 
ticket agents will provide consumers information on baggage fees that 
will be inaccurate or the price will increase before the consumer has 
the opportunity to purchase baggage transportation services. Regarding 
seat assignment fees, since the Department has tentatively concluded 
that advance seat assignments are not truly intrinsic to air 
transportation, and consequently determined not to propose a 
requirement that ticket agents disclose fees for seat assignments, 
consumers will not be presented with seat assignment options that they 
cannot purchase immediately. This means consumers will not be confused 
by being presented a seat assignment that they cannot obtain, or risk 
being unable to purchase their chosen option at the advertised price.
    We recognize that requiring airlines to make both baggage and seat 
assignments transactable services through ticket agents would 
potentially increase consumer satisfaction and decrease transaction 
costs of time spent on shopping and booking when using ticket agent Web 
sites to book travel. We are also aware of the importance of 
transactability as a business matter to ticket agents that must provide 
the services consumers want and expect or risk losing business. We 
recognize that comments by some stakeholders,

[[Page 7548]]

including ticket agents and consumer advocacy groups, indicate that 
airlines are not motivated to enter into agreements to allow 
transactability. In addition, we recognize that many consumers do not 
purchase baggage transportation at the same time they purchase travel, 
so there may be limited incentive for either ticket agents or carriers 
to negotiate agreements on transactability in this area. However, we 
are encouraged by the progress reported to date by both carriers and 
ticket agents in reaching some agreements that permit ticket agents to 
sell select carrier ancillary services. We also note that both ticket 
agents and airlines have stated that airlines have a strong incentive 
to make airline ancillary services more widely available to consumers 
in order to sell more of those services. Accordingly, we believe that 
carriers and ticket agents may be able to reach agreements to transact 
various ancillary services if there is sufficient benefit to all 
commercial entities in the transaction. We also recognize that 
corporate travel agents have additional concerns specific to their 
business model regarding customer frustration with a travel agent's 
inability to transact certain services as well as business concerns 
regarding tracking costs for corporate travel clients. However, we feel 
the benefits of having the information available for consumers 
outweighs any frustration caused by the inability to purchase through a 
ticket agent, particularly since the only fees that must be disclosed 
under the current rulemaking are baggage fees, which are not permitted 
to be increased. Regarding tracking the costs of travel for business 
purposes, the same problem exists if a consumer does not decide to 
check a bag until the date of travel and pays at the airport. At least 
under the disclosure requirement, corporate travel agents can include 
the amount of bag fees that potentially may be incurred in a travel 
record for purposes of record keeping. Ultimately we believe there are 
even greater incentives for both carriers and ticket agents to come to 
agreements regarding transacting ancillary services in the corporate 
travel arena than in connection with leisure travel.
    Finally, in connection with technical issues related to 
transactability, we note that some stakeholders alleged that a 
requirement to distribute ancillary service fees through GDSs would 
essentially require carriers to distribute static fees to ticket agents 
instead of the dynamic fees currently available on carrier Web sites. 
ATPCO's comments support that view to some extent based on its 
description of the current capability for entities to transact checked 
bag fees using ATPCO codes and the complexity of carry on and seat 
assignment fees, which would require more development by ATPCO. 
However, we also note that GDSs comment that they have been developing 
technology solutions and the technology already exists for ancillary 
services to be transactable through GDSs. Meanwhile, although carriers 
object to undue intrusion into their businesses, they also point to 
agreements carriers have reached on transacting ancillary services to 
support the position that the market is solving the disclosure problem. 
This leads us to conclude that technical obstacles to transactability 
are not insurmountable and would not require disclosure of only static 
baggage fees. Meanwhile, we remain of the view that the Department 
should limit its intervention concerning commercial negotiations in 
this area at this time and continue to rely on market forces to a large 
extent. Therefore, we are proposing a revised disclosure option that we 
believe offers the maximum consumer disclosure benefit while stopping 
short of requiring transactability. At this time, the Department is 
relying on competition and market forces but will continue to monitor 
the issue. If the Department identifies evidence of consumer harm 
resulting from a lack of transactability and a market failure 
preventing resolution of the problem, we will revisit the issue in a 
future rulemaking. At this time, however, we are not proposing a 
transactability requirement.

E. Contract Provisions Among Carriers, GDSs, and Other Ticket Agents

    The NPRM: In the NPRM, we noted that if we adopted a provision 
requiring carriers to disclose ancillary service fee information to 
ticket agents and ticket agents to disclose it to consumers, it would 
be unlawful to provide fare information that did not include the fees 
for basic ancillary services. Accordingly, we stated that to the extent 
that carriers have existing contractual relationships with ticket 
agents acting as intermediaries, such as GDSs, to distribute fare 
information, those ticket agents acting as intermediaries would be 
prohibited from imposing charges for the distribution of required 
ancillary service fee information. We also noted that we would expect 
GDSs to work in good faith with carriers and other ticket agents that 
are able to agree on alternative distribution methods that do not 
include the GDSs to allow integration of information obtained through 
other sources and information obtained through GDSs.
    Comments: Travel Tech commented that the ban on GDSs charging 
additional fees should only apply to existing contracts and that the 
language of the rule should be changed to clarify this. Travel Tech 
also argued that if a requirement for carriers to provide basic 
ancillary fee information only to ticket agents that sell a carrier's 
tickets directly to consumers is adopted, it should be changed to make 
it clear that the contract limitation only applies to those ticket 
agents. Travel Tech also argued that carriers should be required to 
provide the same fees for ancillary services that carriers display on 
their own sites and not higher service fees, otherwise ticket agents 
would effectively be prohibited from negotiating with carriers 
regarding the ancillary service fees the ticket agent must disclose and 
ticket agents that display fees to consumers would be limited in the 
fees they could display to consumers. Amadeus commented that the 
Department should clarify that the prohibition against imposing 
additional charges on carriers for distributing ancillary service fee 
information expires at the termination of an existing contract. Amadeus 
also argued that, during the existing contract period, the carrier 
should provide the same fee information to the GDSs that is available 
on the carrier's Web site. In contrast, Travelport opposed the 
contractual provision and stated it is confusing and that the 
Department should not interfere with contractual negotiations.
    Open Allies commented that it is acceptable to ban the imposition 
of additional charges on carriers, but only for the length of the 
existing contract. Open Allies also argued that carriers should be 
required to provide the same fees for ancillary services, not higher 
fees, to ticket agents during the term of the existing contracts. ASTA 
opposed the contract provision, stating that it is outside the scope of 
Department authority. It also asserted that, as the provision is 
drafted, it is unclear about which ticket agents are covered. According 
to ASTA, most travel agents receive airline flight information through 
GDSs and their contracts with airlines are through the Airlines 
Reporting Corporation (ARC) and can be unilaterally amended by the 
airlines but not travel agents. Further, as a practical matter, travel 
agents are not in a position to unilaterally impose charges on 
airlines. ASTA commented that it would be inappropriate for the 
Department to prohibit travel agents from imposing charges on 
consumers, but it appears the Department meant to only cover ticket 
agents acting as

[[Page 7549]]

intermediaries and prevent charges to carriers. However, according to 
ASTA, that is not clear from the proposed rule text. AACO commented 
that even if the Department prohibited GDSs from imposing an explicit 
fee in connection with the requirement to disclose certain ancillary 
service fee information, GDSs could still introduce adjustments in 
other service charges to compensate for the requirement.
    DOT Response: The Department has considered the comments regarding 
a contract provision prohibiting ticket agent intermediaries from 
imposing additional charges on carriers in connection with distributing 
ancillary service fee information along with fare information. We 
recognize that some ticket agents oppose any Department involvement in 
contractual arrangements between private entities, and we are similarly 
reluctant to insert the Department into such arrangements. However, 
since the Department is proposing to impose a new legal requirement on 
carriers and the ticket agents that distribute carrier fares and 
certain ancillary service fees, we believe it is appropriate to put in 
place a short term restriction on unilateral changes to contract 
arrangements.
    We recognize that distribution of ancillary service fees has been 
very controversial, in particular in GDS dealings with carriers, and in 
order to prevent business disputes from interfering with the 
implementation of a new Department requirement we have determined it is 
appropriate to implement a regulation with limited scope that covers 
only existing contracts that were negotiated based on a different 
regulatory background. The proposed restriction is only intended to 
cover contract provisions regarding charges imposed on airlines by 
ticket agent intermediaries for distributing certain ancillary fee 
information that the rule requires to be distributed along with fare 
information. The proposed restriction would only impact contracts for 
their current term at the time a final rule is issued in order to 
reflect the changed regulatory environment; future negotiations will 
enable all parties to negotiate based on the regulatory changes.
    We believe that in practice the proposed disclosure requirement 
will not require significant investment in new technology by GDSs since 
GDSs already have a significant amount of baggage information through 
ATPCO filings. Accordingly, we would expect GDSs to work with carriers 
in good faith and not attempt to circumvent the restriction on 
additional charges by adding charges in other areas to evade the 
restriction. To the extent that a GDS engaged in such tactics, the 
Department would consider it a violation of the provision preventing 
such charges. The restriction only limits unilateral imposition of new 
charges on airlines by intermediary ticket agents. It is not intended 
to prevent good faith negotiations to revise existing contracts or to 
carry over to any new contracts negotiated after issuance of this final 
rule. We agree with some commenters that the rule text should be 
clarified to make clear it covers only existing contracts and have made 
the appropriate changes in the proposed rule text. We have also revised 
the proposed rule text in connection with ASTA's comment that the 
provision could be read to apply to travel agents that do not receive 
information directly from carriers. We do not intend for the proposed 
restriction to cover such contracts.
    In connection with comments that carriers should be required to 
provide the same fees for ancillary services that carriers display on 
their own sites and not higher service fees, we have decided not to 
propose such a restriction. It is not the Department's position that 
the same ancillary service fees must be charged at all outlets, merely 
that consumers should be informed of the basic ancillary service fees 
so they can determine the true cost of air transportation and make an 
informed decision before making a purchase. Therefore, we tentatively 
believe it is appropriate to leave it to carriers and ticket agents to 
determine the ancillary service fees that will be charged through 
ticket agents. Although we recognize that this means a carrier would 
not be prohibited from implementing different fees for baggage, 
depending on the outlet from which the consumer chooses to purchase air 
transportation, as a practical matter, we believe it would be 
challenging for carriers to implement varying charges in the current 
technological environment. Therefore, under the proposed provision, 
carriers and ticket agents will have the opportunity to come to 
agreement on this issue as new contracts are negotiated and new 
commercial and technological arrangements are put in place.

F. Customer-Specific or Itinerary-Specific Fee Information

    The NPRM: The NPRM recognized that requiring carriers to disclose 
basic ancillary service fee information to ticket agents is not helpful 
to consumers if it is not displayed to them. Further, to address the 
issue of consumer difficulty in finding basic ancillary service fee 
information, the information must be displayed by both carriers and 
ticket agents in specific amounts, not a range of fees. The NPRM 
proposed to require carriers to provide customer-specific information 
if a consumer provides identifying information and itinerary-specific 
information if identifying information is not provided. The NPRM 
further proposed to require ticket agents to provide itinerary-specific 
information. In the NPRM, we stated that ``customer-specific'' refers 
to variations in fees that depend on, for example, the passenger type 
(e.g., military), frequent flyer status, method of payment, geography, 
travel dates, cabin (e.g., first class, economy), ticketed fare (e.g., 
full fare ticket -Y class). By contrast, ``itinerary-specific'' fee 
information does not include variations in fees that depend on the 
attributes of the passengers such as the passenger type (e.g., 
military), frequent flyer status, or method of payment. For itinerary-
specific information, the NPRM proposed that both carriers and ticket 
agents would be required to take into account variations in fees that 
are related to the itinerary such as travel dates, geography, ticketed 
fare and cabin.
    In addition to providing itinerary-specific fees for a first 
checked bag, a second checked bag, a carry-on bag and an advance seat 
assignment, when displaying itinerary-specific information, the NPRM 
stated that ticket agents would also be required to clearly and 
prominently disclose that these fees may be reduced or waived based on 
the passenger's frequent flyer status, method of payment or other 
characteristic. In either case, whether customer or itinerary-specific 
fee information is displayed, both airlines and ticket agents that have 
Web sites marketed towards U.S. consumers would have to disclose, or at 
a minimum display by a link or rollover, the fees for these basic 
ancillary services on the first page on which a fare is displayed in 
response to a search for a specific flight itinerary.
    During the comment period, an important clarification was made 
regarding the NPRM. A4A pointed out that the NPRM stated ``Carriers 
would, of course, be required to provide ticket agents the fee rules 
for particular passenger types (e.g. military, frequent flyers, or 
credit card holders)'' Notice at 29977. A4A observed that this is 
customer-specific information that ticket agents would not need to meet 
the requirement to provide ``itinerary specific'' fee information. In 
response to the A4A inquiry, Department staff confirmed that the NPRM 
statement was

[[Page 7550]]

an error.\5\ Nevertheless, as the NPRM stated, ticket agents may come 
to agreements with airlines that would enable the ticket agent to 
provide customer-specific ancillary service fee information.
---------------------------------------------------------------------------

    \5\ See DOT-OST-2014-0056-0624, Summary of Proceedings, DOT 
Meeting with Airlines for America (A4A) (posted September 15, 2014).
---------------------------------------------------------------------------

    Comments: We received extensive comments supporting greater 
disclosure. Of consumers favoring greater disclosure, several also 
comment in favor of a standardized display of some kind, whether a 
table or other format. In connection with innovative alternatives and 
solutions not considered, Travelers United and NCL commented that 
better display of information is needed but do not argue for or against 
the display requirements proposed, supporting instead a requirement 
that all data be made available so market innovation can improve how 
the information is provided to consumers. Open Allies supported greater 
disclosure of ancillary service fees and stated that the Department 
should require airlines to provide ticket agents information to provide 
customer-specific, transactable, quotes. Open Allies argued that if the 
Department does not require carriers to provide enough information for 
ticket agents to display customer-specific quotes, consumers will not 
have enough information in the ticket agent channel and may choose 
flight options that are more costly than the option they would have 
chosen if the ticket agent displayed more information. Travel Tech 
supported a disclosure requirement that is the same for carriers and 
ticket agents and stated the Department should require carriers to 
provide customer-specific quotes so that carriers and ticket agents are 
on equal footing. Amadeus generally supported the proposed display 
requirements for itinerary-specific fees and stated that the Department 
should also require carriers to provide customer-specific fee 
information to ticket agents so that ticket agents may provide 
customer-specific fee quotes when the ticket agent has sufficient 
information about the passenger. Amadeus argued that the Department 
should ensure that consumers dealing with the indirect ticket agent 
channel have access to the same ancillary fee data that is available 
from the airline channel.
    Southwest Airlines also supported a requirement to disclose 
ancillary service fees, stating that consumers are not necessarily able 
to determine the true cost of their own travel because they do not know 
how much bag fees will be for a particular flight option and as a 
result sometimes choose flights that they otherwise would not have 
chosen. Southwest also stated that requiring display of baggage fees 
will put downward pressure on those fees. Global Business Travel 
Association commented in favor of the proposed disclosure requirements, 
commenting that the Department should require both airlines and ticket 
agents to display certain ancillary service fees on the first page of 
search results.
    However, many commenters opposed proposed display requirements 
which would result in carriers providing customer-specific information 
to consumers that identified their customer category while ticket 
agents would only be required to provide itinerary-specific 
information. ASTA pointed out that if the Department adopts display 
requirements as proposed in the NPRM, carriers would be subject to 
different disclosure requirements to the extent that a consumer 
provides identity information to a carrier, which according to ASTA 
discriminates against and disadvantages ticket agents and defeats the 
stated regulatory intent. Orbitz also opposed proposed display 
requirements, stating that providing more information at the start of 
the booking process will overwhelm and confuse consumers. Further, 
according to BCD, display requirements will impose additional 
compliance costs on travel management companies like BCD without 
providing an opportunity to recoup those costs by offering enhanced 
services, and those costs will be passed on to BCD clients. CWT also 
argued that the Department should consider the differences between 
corporate and leisure travelers and stated that only those fees that 
can be booked in advance should have to be disclosed, and they should 
also be transactable or the requirement undermines the distribution 
system. Instead, CWT supported leaving the existing disclosure 
requirements unchanged.
    Many airlines and airline associations also opposed new display 
requirements. A4A commented that the proposal is not needed as the 
Department has already implemented fee disclosure requirements, 
including requirements for disclosures on carrier and ticket agent Web 
sites and in e-ticket confirmations. A4A argued that the Department 
should rely on market pressures to encourage carriers to provide any 
further disclosures to consumers regarding ancillary service fee 
information. According to A4A, there is no evidence of consumer injury 
to support additional display requirements, and the consumer comments 
and complaints regarding fees that the Department relies on are not 
specific enough to justify new display rules. In addition, A4A stated 
that a requirement that airlines and ticket agents provide itinerary-
specific display results that are not based on the identity of the 
customer will provide inaccurate information to consumers that may be 
eligible for ancillary service fee discounts based on factors such as 
frequent flyer membership or method of payment. Air New Zealand and 
Copa commented on the increased costs that airlines will incur to 
ensure that ticket agents have additional and correct information to 
provide to consumers.
    Google, Inc. (Google), Hipmunk, Inc. (Hipmunk), Kayak Software 
Corporation (Kayak), Skyscanner Limited (Skyscanner), Travelzoo, Inc. 
(Travelzoo), and TripAdvisor LLC (TripAdvisor), referring to themselves 
as the ``Metasearch Providers,'' filed joint comments summarizing their 
``consensus views on the nature of the services they provide and the 
Department's jurisdiction.'' The Metasearch Providers argued that they 
have a different role from other ticket agents and should not be 
subject to display requirements because it is unnecessary and could 
hamper a consumer's search and discourage overall innovation. The 
Metasearch Providers stated that display of baggage and seat assignment 
fees is not necessarily useful to consumers that are just exploring 
travel options. They also stated that disclosure requirements would 
impose significant costs for programming and may discourage entities 
operating flight search tools from displaying prices at all. CCIA 
commented that display requirements should not apply to entities 
operating metasearch tools because those entities have strong 
incentives to provide their users with accurate information and a 
requirement to show particular information for every flight search 
would dampen innovation in the flight search exploration process. 
According to CCIA, the Department should require airlines to provide 
dynamic ancillary fee data without imposing any ``rigid'' display 
requirements, particularly on metasearch entities. Finally, both 
TripAdvisor and Skyscanner argued that requirements to disclose 
information to consumers should not apply to them and instead it should 
be left to the metasearch entities to determine the best method of 
disclosure to consumers.
    DOT Response: After reviewing the comments and considering the 
options, the Department has determined that it would be more 
transparent and better serve consumers to have a uniform,

[[Page 7551]]

more specific, display requirement for consumers. Currently, the burden 
is on the consumer to research the airline's fees and policies to try 
to determine which baggage fees may apply to the consumer's air travel. 
However, we think it is reasonable for consumers to be able to obtain 
fee information that applies to specific categories of customers. We do 
not want to interfere with business agreements or impose additional 
complexity on airlines and ticket agents by requiring airlines to 
provide personal information regarding their customers to ticket 
agents. Therefore, we have not proposed to require carriers or ticket 
agents to provide information that is specific to individuals. Instead, 
this SNPRM would propose to require carriers to provide the fees for 
specific categories of customers to ticket agents. It would also 
require carriers and ticket agents to modify their Web pages to allow 
consumers the option to indicate any factors that may impact the fees 
that the consumer might pay to transport baggage. As some of the 
comments suggested, we agree that it should be optional for consumers 
to provide the information. Some consumers might prefer to search for 
flight options without providing that information. Other consumers 
might be searching for multiple passengers, each of whom might fall 
into a different customer category, in which case the consumer might 
need to search flight options more than once to determine what baggage 
fees applied to each passenger's air travel. However, we believe 
consumers should have those options rather than having only the option 
to review multiple static lists to try to determine which baggage fees 
apply. In the Department's view, the burden of identifying specific 
baggage fees more appropriately falls on the carrier and ticket agent 
rather than the consumer. Accordingly, we believe consumers should have 
the option to provide information to obtain more specific fee 
information if the consumer chooses to do so.
    We seek comment on whether the proposal in this SNPRM covers the 
appropriate categories of consumers that may be eligible for 
specialized baggage fees and should be included in the proposal. In the 
2014 NPRM, we identified the following categories: Military, credit 
card holders (method of payment), and frequent flyer members. We have 
included those same categories in this SNPRM. We seek comment on 
whether those categories of consumers are sufficient to provide most 
consumers with specific baggage fee information. In the alternative, 
should the Department include any additional customer categories in the 
requirement? We also seek comment on whether the Department should 
include in the requirement a general obligation to disclose that 
baggage fees may be reduced or waived based on other consumer 
characteristics to be specified by the carrier. In other words, if 
there are additional categories of consumers that may be eligible for 
specialized baggage fees on a particular airline but it is not a 
general category across airlines and is not identified in this 
rulemaking, should the airline be required to provide additional notice 
to consumers?
    Regarding method of payment, we are aware that there are many 
credit cards that may provide consumers with the benefit of free or 
reduced baggage fees. Should we identify specific credit cards that 
must be included in the list of options that consumers may select or 
simply require that all carrier-affiliated cards offering baggage fee 
benefits be included as options for consumers?
    Regarding frequent flyer programs, we recognize that there is 
variation in each carrier's program, for example, different levels of 
membership with different benefits depending on the consumer's status. 
Should we specify the levels of membership and status for which 
information must be provided or is it sufficient to state that each 
carrier should identify the levels of membership and provide relevant 
benefit information for all levels of membership (i.e., information on 
benefits pertaining to baggage fees) to all ticket agents?
    In addition, there are also carrier-alliance programs that confer 
their own benefits. Should we require airlines to provide information 
regarding carrier-alliance programs as well? If so, would it be 
necessary for each carrier to identify the levels of membership and 
provide relevant benefit information for all levels of membership 
(i.e., information on benefits pertaining to baggage fees) to all 
ticket agents?

G. Web Site and Mobile Application Displays; Consumer Opt-Out; and 
Implementation Period

    The NPRM: The 2014 NPRM made clear that to comply with the proposed 
ancillary service fee disclosure requirement, airlines and agents would 
have to modify their Web sites to display the basic ancillary service 
fees adjacent to the fare information on the first page that displays a 
requested itinerary with fare. The NPRM asked for comment about several 
aspects of the proposed disclosure options, including whether ancillary 
service fee information should be displayed only upon a consumer's 
request or always provided on the first page of search results and 
whether disclosure of basic ancillary service fee information should be 
required on limited availability sites, such as corporate travel Web 
sites. Both proposals would have required that carriers and ticket 
agents that have Web sites marketed towards U.S. consumers must 
disclose, or at a minimum display by a link or rollover, the fees for 
basic ancillary services on the first page on which a fare is displayed 
in response to a search for a specific flight itinerary. The NPRM made 
clear that to comply with the proposed disclosure requirement, airlines 
and agents would have to modify their Web sites to display these basic 
ancillary service fees adjacent to the fare information on the first 
page that displays a requested itinerary with fare. The NPRM also 
sought comment on whether the Department should require carriers and 
agents to provide information on standard fees for baggage or require a 
variety of baggage fees to be displayed, and if a variety of fees for 
each service, how such fees should be arranged in displays. We also 
asked for information on the technological feasibility and cost of 
requiring this information to be displayed. Finally, the NPRM also 
requested comment on whether we should leave the existing requirements 
on baggage disclosure in place instead of adopting either of the 
proposals. We also encouraged interested parties to provide comments 
regarding any innovative alternatives or solutions that the Department 
may not have considered but that would address the lack of disclosure 
of ancillary service fees in all sales channels.
    Comments: We received extensive comments in connection with these 
issues. In addition to consumer comments generally supporting greater 
disclosure, some consumers comment in support of specific display 
requirements, including over 20 supporting display of fees on the first 
page displaying fares and six supporting display later in the search 
process but before purchase. Several consumers also commented in favor 
of a standardized display of some kind, whether a table or other 
format. Consumer advocacy groups Consumers Union and U.S. PIRG 
supported a requirement to display ancillary service fee information 
automatically alongside the fares on the first page of search results 
displayed to consumers. They further commented that to the extent all 
ancillary service fee information is provided (i.e., beyond

[[Page 7552]]

baggage fees) and this would crowd the page, then a link should be 
provided along with clear and conspicuous notice that other fees may 
apply. In connection with innovative alternatives and solutions not 
considered, Travelers United and NCL commented that better display of 
information is needed but they do not argue for or against the display 
requirements proposed, supporting instead a requirement that all data 
be made available so market innovation can improve how the information 
is provided to consumers. In connection with how ancillary service fee 
information should be displayed, Open Allies urged the Department to 
allow carriers and ticket agents flexibility in how information is 
disclosed and expresses concern that too much information on a screen 
will make it hard for consumers to comprehend. Open Allies supported 
the proposal to permit the use of links or rollovers provided that a 
prominent notice adjacent to the advertised fare makes clear that 
ancillary service fees are disclosed via a link or rollover. Regarding 
an opt-out option, Open Allies stated it ``doubts that most consumers 
would select the opt-out option,'' but agreed providing that 
flexibility makes sense. Travel Tech supported a disclosure requirement 
that is the same for carriers and ticket agents. In connection with how 
the information is displayed, Travel Tech urged the Department to allow 
flexibility, including the use of links or roll-overs. It also urged 
the Department to extend that flexibility to mobile displays. Regarding 
opt-out, Travel Tech supported allowing the option of an opt-out that 
is not pre-selected and includes notice that ancillary service fees may 
apply. According to Amadeus, display of ancillary service fee 
information does not need to be provided on the first screen, it only 
needs to be provided before a booking decision is made.
    Orbitz opposed proposed display requirements, stating that 
providing more information at the start of the booking process will 
overwhelm and confuse consumers. Orbitz also commented that any display 
standard adopted will quickly become obsolete or hinder innovation as 
technology changes. Orbitz also opposed imposing display requirements 
on mobile platforms as it would be difficult to implement and would 
impair the user experience. In connection with corporate travel sites, 
Orbitz opposed any display requirements, noting that display content is 
typically negotiated by the businesses involved. BCD also opposed 
display requirements on corporate travel agent sites, arguing that if 
it is not able to transact ancillary service fees, it should not be 
required to display such fees. According to BCD, display requirements 
will impose additional compliance costs on BCD without providing an 
opportunity to recoup those costs by offering enhanced services and 
those costs will be passed on to BCD clients. CWT also argued that the 
Department should consider the differences between corporate and 
leisure travelers and stated that only those fees that can be booked in 
advance should have to be disclosed and they should also be 
transactable or the requirement undermines the distribution system. In 
connection with Section 399.85, CWT commented that it should not be 
changed.
    A4A argued that the proposed disclosure requirement will cause sub-
optimal displays, providing fee information that consumers may not be 
interested in and taking up screen space that could be used to provide 
additional flight options or other information. A4A noted that the fee 
information might vary for every segment of the itinerary and argues 
that the sheer volume of information displayed is likely to overwhelm 
rather than assist consumers. A4A also stated that the proposed display 
requirements are contrary to the current carrier trend to offer bundled 
pricing and differentiated seat products and limit carriers' ability to 
provide such offerings. In addition, A4A stated that a requirement that 
airlines and ticket agents provide itinerary-specific display results 
that are not based on the identity of the customer will provide 
inaccurate information to consumers that may be eligible for ancillary 
service fee discounts based on factors such as frequent flyer 
membership or method of payment. Regarding searches for multiple 
passengers, A4A stated the search results displayed might not reflect 
the discounts available to some members of the group. A4A also noted 
that if more information must be displayed, search results will likely 
take longer to display due to increased processing time.
    Regarding mobile applications, A4A commented that the problem of 
displacing information such as additional flight options on Web sites 
is particularly acute on mobile devices ``because first-screen space is 
limited and valuable,'' therefore the Department should not expand the 
display rules to mobile applications. Delta also opposed display 
requirements stating that it would have a negative impact on speed and 
performance of reservations systems and would be costly and time 
consuming to implement. United opposed a requirement to display basic 
ancillary service fees at the first point in a search process where a 
fare is listed, stating that it will waste time for consumers because 
search results will be slowed by additional processing time for the 
information, then consumers must review additional information they are 
not interested in or click on links or pop-ups to see the information. 
Meanwhile, fewer flight options will be displayed on each screen. 
United also argued that search results may display inaccurate 
information depending on whether the consumer is conducting an 
anonymous search but is entitled to reduced fees, or a consumer is 
searching for multiple passengers, and similar concerns.
    CCIA also commented that display of ancillary service fee 
information could result in screen clutter, which would be frustrating 
to users and that the proposed display requirements ``are not 
adequately designed to work on a mobile platform'' and may impede the 
consumer experience. TripAdvisor also commented that the Department 
should exempt mobile displays from display requirements or tailor 
requirements to a range of display sizes. Skyscanner commented that 
display of a large volume of information is unfeasible on a mobile 
device so, if implemented, displays would become less useful to users 
of mobile sites or mobile applications. Displays would be slower and 
include fewer options in a more cluttered presentation. USTOA opposed 
the proposed display requirements, stating that they will limit 
development of new business models, and questions how tour operators 
that sell bundled packages that may include airfare would comply with 
disclosure requirements.
DOT Response
Disclosure and Display Requirements
    We recognize that the comments reflect legitimate concerns about 
the fact that if more information must be displayed, more screen space 
is consumed and search results will likely take longer to display due 
to increased processing time. However, we also note that many of the 
comments on this issue focused on the amount of screen space and 
increased processing time required for the display of seat assignment 
fees, which are generally dynamically priced and therefore would 
require additional processing time. As noted earlier, we have decided 
not to include disclosure of seat assignment fees in this proposal. 
Regarding baggage fees, although displaying such fees may also require 
some additional processing time and

[[Page 7553]]

will use some additional screen space, it is a cost that carriers have 
chosen to state separately from airfare and is information that 
consumers and consumer advocates have repeatedly stated that consumers 
need in order to determine the true cost of travel.
    Nevertheless, we agree it is important to make the information as 
easy to provide and as useful to consumers as possible. Accordingly, we 
request comment on whether we should permit the baggage fee information 
to be displayed by links or roll-overs on all displays or on certain 
mobile displays.
    Regarding the comment by A4A and others that the fee information 
might vary for every segment of the itinerary and the volume of 
information displayed is likely to overwhelm rather than assist 
consumers, this concern does not apply to baggage fees since carriers 
must apply the baggage allowances and fees that apply at the beginning 
of a passenger's itinerary throughout his or her entire itinerary 
pursuant to 14 CFR 399.87.\6\
---------------------------------------------------------------------------

    \6\ We note that carriers always have the option of waiving a 
baggage fee or offering a lower baggage fee than advertised for any 
segment of an itinerary. As the Department's Office of Aviation 
Enforcement and Proceedings has stated regarding Section 399.87, it 
does not prevent a carrier from charging a lower fee as a courtesy. 
[Cite is FAQ 50]
---------------------------------------------------------------------------

    Some comments expressed concern that the Department's proposed 
display requirements are contrary to the current carrier trend to offer 
bundled pricing and customized pricing. The Department's consumer 
protection rules in this area are intended to protect consumers from 
being surprised by unexpected fees and to allow them to discern the 
true cost of air transportation before making a purchase. To the extent 
carriers or ticket agents choose to offer bundled fares that include 
baggage in addition to, or instead of, offering fares that do not 
include baggage fees, they would not be prohibited from doing so. Under 
this proposal the display of such fares would only be required to make 
clear that there is no additional baggage fee associated with that fare 
if that is the case.
    Regarding air-tour packages, we recognize that air transportation 
may be purchased in bulk by the seller of the tour package and the 
carrier may be unknown at the time of purchase which may make it 
difficult to provide specific baggage fee information. Accordingly, we 
have tentatively concluded not to require ticket agent sellers of air-
tour packages to provide disclosure of specific baggage fees in certain 
circumstances. Specifically, if air transportation is arranged at a 
later date and specific airline and baggage fee information is not 
known at the time of booking, ticket agents would not be required to 
display the baggage fee. However, when displaying such air-tour package 
prices, such ticket agent displays would be required to prominently 
disclose that baggage fees may apply if that is the case. In addition, 
ticket agents would be required to disclose in online displays and oral 
communications that baggage fees may apply and that those fees may be 
reduced or waived based on the passenger's frequent flyer status, 
method of payment or other consumer characteristic. This exception 
would not apply to air carriers or foreign air carriers selling air-
tour packages. We request comment on whether this exception for certain 
air-tour packages adequately addresses concerns of air-tour package 
sellers. We also request comment on whether such an exception 
adequately protects consumers.
Opt-Out
    Regarding the concern that consumers may not be interested in 
baggage fee information being displayed and it may take up screen space 
that could be used to provide additional flight options or other 
information, we recognize there may be reasons that consumers wish to 
opt-out of display of baggage fees, for example if the consumer will be 
traveling without checked baggage. We agree that it is reasonable to 
provide entities the flexibility to provide such an option. Most of the 
comments on this issue agreed that it was reasonable to provide an opt-
out option. In addition, if an entity anticipates that there will be a 
significant impact on the speed of search results or particular display 
options the entity provides, the option to provide an opt-out for 
baggage fees would address those concerns by providing carriers and 
ticket agents the option to provide consumers what may be a faster or 
more streamlined display of search results, if consumers choose such 
displays. We anticipate that basic baggage fee information will be 
useful to many, if not most, consumers, and that they will often choose 
displays that include such information. However, by providing an opt-
out option for baggage fee information, entities that display flight 
information would still have the flexibility to provide search results 
without that information if the consumer chooses a display option that 
does not include it. Accordingly, our proposal would permit carriers 
and ticket agents to provide various opt-out options. Opt-out options 
could include the choice to opt-out of seeing all baggage fee 
information that would otherwise be required to be displayed (first and 
second checked bag and carry-on bag) or to opt-out of seeing some of 
those fees. For example, a consumer might choose to see fees for carry-
on and first checked bag, but not second checked bag. Another option 
might be that a consumer could choose to see only carry-on bag. A third 
option could be to see first and second checked bag fees but not the 
carry-on bag fee. The opt-out options that may be provided would be up 
to the carrier or ticket agent and no opt-out would be required under 
the proposal.
    We seek comment on whether providing the flexibility to furnish a 
variety of opt-out options addresses some of the concerns of carriers 
and ticket agents regarding increased processing times and screen 
clutter. We also seek comment on whether providing opt-out options 
would adequately protect consumers.
Display of Search Results on Mobile Displays
    In connection with applicability to mobile applications (apps) and 
mobile Web sites, several commenters state that the Department should 
consider more limited requirements for mobile outlets because 
implementation of new rules in the mobile environment is technically 
more difficult and detailed disclosures may be difficult to incorporate 
and display, particularly considering the screen size of some mobile 
devices. We recognize some of the inherent limitations of displays 
designed for mobile outlets. Comments suggesting more limited 
disclosure requirements for mobile outlets focused on the complexity of 
potential disclosure requirements. The limitation of disclosure 
requirements to certain baggage fees will reduce the amount of screen 
space used for additional disclosures.
    In addition, some commenters stated concern that there would be 
technical difficulty in implementing increased disclosure requirements 
and increased processing time; however, we note that similar concerns 
apply to non-mobile internet displays. However, we have determined that 
the consumer benefit to having basic ancillary service fee information 
outweighs the potentially increased processing times. As some 
commenters noted, consumers in increasing numbers are using apps to 
book travel. Therefore, we believe it is important that the same 
consumer protections apply to apps as to other outlets directed to 
consumers. Accordingly, we have tentatively concluded that the 
disclosure requirements should be the same on apps as on Web sites or 
mobile Web

[[Page 7554]]

sites. We request comment on whether allowing disclosure via links or 
pop-ups would simplify the disclosure process and reduce technical 
issues and speed processing times for mobile outlets.
    We also note that the FTC has provided guidance regarding internet 
disclosures (See .com Disclosures: How to Make Effective Disclosures in 
Digital Advertising, available at https://www.ftc.gov/system/files/documents/plain-language/bus41-dot-com-disclosures-information-about-online-advertising.pdf). The FTC's guidance notes that using 
hyperlinks, rollovers, or pop-ups for price and certain other 
disclosures may be less effective. Consistent with DOT's position in 
this SNPRM, the guide states that ``consumers should not have to click 
on hyperlinks to understand the full amount they will pay.'' The guide 
therefore suggests that fee or cost information should be disclosed 
adjacent to the price claim, unless the information is very complex. 
Similarly, the guide notes that rollovers or mouseovers ``may not work 
on mobile devices that have no cursor to hover over a link.'' Finally, 
the guide cautions that pop-ups may be blocked by software or otherwise 
ignored by consumers.
    Accordingly, we request that commenters provide any consumer 
research or data that indicates whether hyperlinked or other 
disclosures not adjacent to the fare on a mobile site would or would 
not be effective.
Implementation Period
    In connection with the time to implement rule, the Department is 
tentatively of the view that a six month implementation period to 
display consumer-specific fee information for a first checked bag, a 
second checked bag and a carry-on bag to consumers whenever fare and 
schedule information is provided would be appropriate and should 
provide enough time for both carriers and ticket agents to update Web 
sites and apps. We recognize that in order to make technical changes 
and accommodate new information, individual ticket agents will need to 
know in detail how the information will be distributed from carriers to 
the ticket agent and have the information from carriers well before the 
display deadline. We anticipate carriers will work in good faith with 
ticket agents, including GDSs and other ticket agent intermediaries, to 
ensure that the distribution method and details are worked out well in 
advance of the display deadline. In this regard, we have tentatively 
concluded that carriers should ensure ticket agents have the 
information no later than three months before the display deadline. We 
note many of the comments state that a lengthy implementation period 
will be necessary to implement any disclosure requirement and some 
suggested several years. However, many of the reasons presented for the 
multi-year implementation period had to do with the complexity of 
disclosing multiple dynamic fees. Since the Department is limiting the 
requirement to disclosure of one carry-on item and a first and second 
checked bag, the Department believes a six month implementation period 
is appropriate.
    We request comment on whether this proposed implementation period 
is too lengthy or too short. If the proposed implementation period is 
either too lengthy or too short, how long of an implementation period 
would be appropriate?

H. Revised Baggage Fee Disclosure Requirements and 14 CFR 399.85(b) and 
(c)

    This proposed rule, if adopted, would require carriers and ticket 
agents to provide customer-specific baggage fee information for one 
carry-on item and a first and second checked bag if they provide fare 
information. We are tentatively of the view that there would no longer 
be a need for a requirement that airlines and ticket agents provide a 
general statement on the first screen on which the agent or carrier 
offers a fare quotation for a specific itinerary that additional 
airline fees for baggage may. We are proposing in this SNPRM to remove 
the requirement under 14 CFR 399.85(b) that displays of fare quotations 
must include a statement that fees for baggage may apply and where 
consumers can see these baggage fees. The requirement to provide the 
more general statement that baggage fees may apply would be limited to 
certain ticket agent displays related to air tour packages that are 
unable to provide customer-specific baggage fee information.
    In addition to eliminating rule text under 14 CFR 399.85(b), we are 
considering eliminating the requirement in 14 CFR 399.85(c) regarding 
disclosure of bag fee information on e-ticket confirmations as it may 
be of limited use.
    We seek comment on whether eliminating 14 CFR 399.85(b) would be 
appropriate if the proposed requirement to display customer-specific 
baggage fee information is adopted. We also seek comment on whether we 
should consider keeping the existing requirement 14 CFR 399.85(b) with 
revisions to reflect the proposed changes. If the 14 CFR 399.85(b) 
disclosure requirement should be kept but modified, what changes would 
be appropriate?
    Regarding 14 CFR 399.85(c), we request comment on whether the 
proposed revision would be appropriate and adequately inform consumers 
of the applicable baggage fees if the proposed requirement to display 
more specific baggage fee information is adopted. If not, what changes 
or additions would better ensure that consumers are provided with the 
specific baggage fee information that will be required if the proposal 
is adopted?

Regulatory Analyses and Notices

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

    This action has been determined to be significant under Executive 
Order 12866 and the Department of Transportation's Regulatory Policies 
and Procedures. It has been reviewed by the Office of Management and 
Budget under that Executive Order. This section contains a summary of 
costs and benefits associated with this SNPRM. More detail on the 
economic impact of this proposed rule can be found in the Regulatory 
Impact Analysis (RIA), which is available in the docket. Due to the 
lack of key pieces of data, the Department was unable to quantify the 
costs and the benefits of the rule proposed in this SNPRM.
    Under this SNPRM, the Department is proposing that all ticket 
agents and airlines that provide fare and schedule information to 
consumers while doing business in the United States be required to 
provide fee information to consumers for first and second checked bag, 
and one carry-on item adjacent to the fare. The information would 
include the necessary fee information to allow the display of these 
fees as either the standard fees charged by the carriers, or, at the 
consumer's choice, as the customer-specific charge if the consumer 
elects to provide his or her customer category information including, 
but not limited to, military/veteran status, frequently flier category, 
and method of payment. Airlines can potentially establish a large 
number of customer-specific factors that impact the fee that a consumer 
would pay for a carry-on and first and second checked bag. We solicit 
comment on whether the Department should limit the categories that have 
to be displayed on a ticket agent's Web site to the most commonly used 
categories. If the Department adopts such a limitation, how should

[[Page 7555]]

the most commonly used categories be determined?
    Carriers would be required to transmit this baggage fee information 
to all ticket agents to which they provide fare and schedule 
information, including GDSs and other intermediaries in the air 
transportation marketplace. Ticket agents and carriers would be 
required to be compliant with the rule within six months of its final 
publication date.
    Ticket agents would be allowed to design the presentation of these 
fees as best suits them as long as they are available at the time when 
fares are first presented. This fee information must be customer-
specific, i.e. specific to the individual and his/her any unique 
circumstances, unless the passenger opts out.
Costs of the SNPRM
1. Direct Costs to Carriers
    Carriers would incur costs related to preparing and transmitting 
ancillary service fee information to OTAs and GDSs. These costs would 
include the one-time set up costs to develop internal systems/processes 
to distribute the baggage fee information. These set-up costs would 
include upfront planning time to develop procedures to collect and 
distribute the necessary data, as well as any potential IT and software 
development costs to transmit data which is not already being 
transmitted to GDSs and ticket agents via ATPCO or NDC.
    Carriers would also incur some incremental ongoing costs to manage 
and transmit data relating to any changes in baggage fees defined as 
basic ancillary service fees by this rulemaking. Carriers might also 
incur some additional costs for system updates to any new IT systems or 
programs incorporated for the purposes of complying with this rule. For 
this analysis, only the ongoing costs which would not have occurred 
except for the rulemaking are considered.
    Carriers can present the information in a format of their choosing, 
including allowing consumers to opt out of viewing the information, or 
choosing only some of it, if that is their preference. The Department 
is requesting further comments on this specific issue with this SNPRM.
    Multiple commenters to the 2014 NPRM provided information on likely 
costs to carriers of the proposed requirement for basic ancillary 
service fee information, though most of these costs comments were 
directed at the possible inclusions of requiring transactability for 
these fees as well as their display (i.e., that consumers would be able 
to pay for these ancillary services on the OTAs and GDSs), an 
alternative which was considered by the Department but not adopted for 
this SNPRM.
    One mainline carrier (Delta) commented that the proposed rule as 
described in the NPRM would require the redesign of carrier 
distribution systems to provide ancillary fees at the first point of 
search. Delta estimates it would take 12 months and cost $1 million 
redesign its systems.
    An economic consultant (who submitted comments with the carrier 
trade association, A4A) argued that the costs to carriers to comply 
with the requirement for greater transparency as proposed in the NPRM 
would cost more than $3 million in the first year, and $7.2 million 
over 10 years. This commenter also argued that carriers would incur 
significant additional ongoing costs for managing estimates of the 
process of ``development and debugging programs and procedures that the 
carriers will have to create to report ancillary fee information.'' The 
commenter noted that carriers typically employ one full time employee 
to monitor and debug the baggage fee information reporting to ATPCO. He 
also noted that carriers spend approximately $1 million to ``establish 
each link to a GDS''.
    ATPCO also commented that the costs to carriers of compliance with 
the requirement as proposed in the NPRM could be quite high, noting 
that ATPCO's efforts alone to comply with the simpler baggage fee 
information requirements of the 2011 consumer rule cost over $1 
million.
    The Department believes that the estimates from commenters to the 
2014 NPRM overstate the likely costs to carriers of this SNPRM for 
several reasons. While reviewing these comments, the Department noted 
that much of the comments were directed to the challenges and 
additional costs of transferring information for advance seat 
assignment, which is dynamic information, changing frequently as 
carriers manage their loads. The cost for the transmittal of real-time 
advance seat assignment information to ticket agents would thus be 
significantly more than the transmittal of baggage fee information, 
which changes much less frequently. Additionally, the Department notes 
that several carriers are already in agreement to start providing that 
information to GDSs; and some carriers are moving to IATA's NDC which 
will allow for easier customization of flight and pricing options to 
consumers and at a lower cost to carriers (once they have incorporated 
NDC into their systems). And while the Department agrees that there 
will be ongoing costs to maintain and transmit data required by the 
rule, the Department does not believe that the SNPRM, if adopted as 
proposed, would generate the need for an additional full-time staff 
equivalent for each carrier, on average, to monitor and debug ancillary 
fee data shared with travel agents, given the current pace of 
technological improvements in all reporting systems, the pace at which 
carriers are adopting NDC, and the staff resources already committed to 
monitoring data transmittals.
    Given the existing questions and comments to the 2014 NPRM, the 
Department does not believe that it has enough information to 
confidently quantify the total cost to carriers of complying with the 
proposed rule. The Department believes that the costs of compliance are 
likely to be less than $1 million per carrier, but is nevertheless 
seeking additional information on the likely costs to carriers of the 
requirement as specified in this SNPRM.
2. Direct Costs to Ticket Agents
    Ticket agents would incur costs related to accepting ancillary 
service fee information from GDSs and carriers and posting that 
information on their Web site engines, and of communicating the 
additional fee information to consumers during reservation phone calls. 
The most significant cost to ticket agents is likely to be the one-time 
cost to reprogram their Web site search engines to provide the 
necessary baggage information.
    Larger ticket agents and OTAs are likely to have in-house 
capability to reprogram their Web sites accordingly, but small tickets 
agents probably will not. As the US Tour Operators Association (USTOA) 
noted in its comment to the 2014 NPRM, many tour operators are unlikely 
to have in-house web programmers and would likely need to hire 
consultants and contractors to bring their Web sites into compliance.
    Ticket agents that market and sell online to consumers already have 
systems in place to receive flight and cost information from carriers 
and GDSs, but it is unclear whether these systems have the capacity to 
receive and process all the necessary information to comply with the 
proposed rule. Several commenters to the NPRM argued that the RIA for 
the 2014 NPRM underestimates the costs to ticket agents to update their 
systems to comply with the rule. The Department is seeking comments on 
this specific issue with this SNPRM.

[[Page 7556]]

    At least three commenters noted that there could be significant 
ongoing compliance costs for ticket agents and tour operators to 
provide baggage fee information as per the proposed requirement, 
primarily in terms of longer times during reservation phone calls. The 
Department acknowledges that there may be additional time at the 
beginning of a call as ticket agents discuss baggage fees earlier in 
the reservation process but notes that such earlier discussion of 
baggage fees may also limit the likelihood of increased call time at 
the end of the call as some consumers are surprised by additional 
baggage fees and may revisit their flight searches.
    Ticket agents would also incur some ongoing costs to refresh the 
required baggage fee information when it changes. The Department does 
not expect that these costs would be significant, since the systems to 
transmit the data are already in place and the programming to display 
the required baggage fee has already occurred. In addition, these fees 
need only be updated when changed.
    We believe that the cost impacts of the proposal in this SNPRM 
would differ significantly from the costs which would have been 
incurred under the 2014 NPRM, since the current proposed rule no longer 
includes advance seat assignment in the basic ancillary service fees to 
be covered. Thus, the Department is seeking additional information on 
the potential costs of this SNPRM on ticket agents.
3. Other Cost Issues--Additional Costs to GDSs and/or ATPCO
    It is unclear if GDSs would incur additional costs to process the 
information required by this SNPRM. For this analysis, the relevant 
incremental costs to the GDSs would be those costs of efforts/
improvements which they would otherwise not have incurred, but for this 
rulemaking. Costs for efforts of GDSs to collect and transmit the 
needed baggage fee information to ticket agents that were already 
planned or which would occur in the future for reasons other than this 
rule (such as responding to market forces) are not considered to be due 
to the rule. According to some of the comments received, GDSs are 
already improving the capacity of their systems to manage more 
ancillary service fee information.
    Comments to 2014 NPRM regarding costs to GDSs to comply with it 
were somewhat inconsistent. At least two comments (one for from a 
carrier and another carrier trade association supported study) claimed 
that GDSs would incur significant costs. Yet one GDS (Sabre) commented 
that it already has the capability to comply with the requirements 
proposed in the 2014 NPRM (although it noted that ticket agents do not 
already have the needed systems in place). The Department thus expects 
that this SNPRM, if adopted as proposed, would not have significant 
costs to GDSs.
    ATPCO could also potentially incur additional costs to process the 
required information, due solely to this rulemaking, although this is 
also very uncertain. In its comments to the NPRM, ATPCO stated that it 
already has the capacity to meet the proposed 2014 NPRM requirements. 
The Department also expects that the SNPRM would not entail significant 
costs for ATPCO.
Costs to Consumers of Additional Time Waiting for Search Results
    Several commenters to the 2014 NPRM, including A4A, Delta, and 
IATA, argued that the Department's analysis should take into account 
potential costs to consumers from additional time spent waiting for the 
research results to load, given additional processing time required to 
display more ancillary fees. These commenters specifically cited the 
likely increased time needed to access real time information for up-to-
date seat assignment fee information. A study prepared for A4A by Dr. 
Daniel L. Rubinfeld estimated the additional wait times to consumers 
would cost approximately $805 million per year, based on the assumption 
that the proposed rule would add approximately 20-40 seconds to each 
itinerary search (drawn from a survey by A4A of its members). Elsewhere 
in its submittal, A4A estimates that the additional processing time for 
the proposed ancillary service fee information would cost approximately 
$139 million a year from an estimated loss of 5.5 million hours per 
year for online ticket agents alone.
    The Department notes that most of the costs relating to additional 
processing times and added wait times for consumers raised by 
commenters focus on the additional time and cost for transmitting 
advance seat assignment information, which, as noted above, is dynamic 
and thus more complicated and expensive to keep up-to-date. Since the 
SNPRM does not include advance seat assignment, the needed time to 
process and display the required fee information should be much less 
than what was estimated by commenters in response to the 2014 NPRM.
    Additionally, to provide more flexibility to ticket agents, this 
SNPRM would permit ticket agents to provide consumers the opportunity 
to opt-out of receiving the baggage fee information for carry-on and 
first and second checked baggage, if so desired. If ticket agents do 
choose to incorporate such an opt-out feature, additional time for 
processing and displaying information on baggage fees which the 
consumer does not want to see should be significantly reduced. The cost 
of waiting for baggage fee information, which the consumer does want to 
see, should be off-set by the value to the consumer of getting that 
information (hence the choice made to receive it). The Department 
acknowledges that some portion of consumers may misjudge/underestimate 
the amount of time it would take to receive all the baggage 
information, especially in the beginning period after implementation 
and that, therefore, there will be some additional wait time and costs 
to consumers but that this cost will decrease over time.
    Since the SNPRM does not include seat assignment fees in the basic 
ancillary fee data that must be communicated, the Department believes 
that there would not be significant additional wait time for consumers. 
Nevertheless, the Department is seeking additional comment on this 
issue.
Benefits of the SNPRM
1. Time Saving Benefits to Consumers
    Both consumers who purchase directly from carrier Web sites and 
those who use travel agents would benefit. A significant number of 
leisure travelers book online via online travel agencies, use 
metasearch engines, or even use their businesses travel management 
company. But since OTA Web sites do not currently have customer 
category-specific bag fees, these consumers must check multiple airline 
Web sites in order to get an accurate estimate of the flight costs 
including the fees for basic ancillary services related to carry-on and 
first and second checked bags. While information on baggage fees is 
already required to be available from travel agents, it is often 
available through links, which requires significant time and effort 
from the consumer to determine the actual fee that must be paid. The 
consumer must click the link or links to get the baggage information 
for the itinerary being considered and recalculate their cost. Not all 
consumers purchasing tickets via an OTA would experience a time 
savings, as not all consumers are concerned with baggage fees. For some 
consumers the additional cost for baggage will not factor into their 
choice of a flight, and as such these consumers

[[Page 7557]]

wouldn't search for baggage fees and thus would not benefit from the 
requirements proposed in this SNPRM. Additionally, in some markets 
there is only one (or perhaps two) carriers that offer flights at the 
preferred time or at a fare which the consumer would consider; these 
consumers also would not benefit. But the Department believes that many 
consumers seek out at least some baggage information, which would 
result in the time savings for those individuals.
    Meanwhile, a little more than a fourth of airline passengers 
purchase tickets directly from carrier Web sites (PhoCusWright 
estimates this figure at 23%).\7\ While these consumers have the most 
direct access to ancillary service fees, many carrier Web sites also do 
not include basic ancillary service fees when first quoting an 
itinerary fare. Thus, some consumers must access multiple Web pages to 
reach the information they need to calculate a cost to them which 
includes posted fare plus the fees for carry-on and first and second 
checked bags. Since the SNPRM would require that basic ancillary 
service fee information be consolidated in one place on carrier fare 
displays, some portion of consumers purchasing tickets on carrier Web 
sites would spend less time searching for the desired fee information.
---------------------------------------------------------------------------

    \7\ PhoCusWright (2011) ``U.S. Online Travel Overview.''
---------------------------------------------------------------------------

    Not all consumers purchasing from carrier Web sites would benefit. 
Consumers who purchase from a carrier Web site are more likely as a 
group to be aware of the carrier's baggage fees and policies. Many of 
these consumers are going directly to the carrier Web site because that 
carrier is one of the few or the only one to offer flights at the 
desired time and to the desired destination, or because the consumer is 
a member of the carrier's affinity program. Nevertheless, some portion 
of those consumers who purchase tickets on a carrier Web site do check 
to see what the baggage fees would be for their desired itinerary, and 
these consumers would save time under this SNPRM.
    Together, the time savings may be quite significant. The Department 
does not yet have the information to confidently estimate the value of 
this benefit so it is seeking additional comment on it.
2. Better Informed Consumer Purchasing Decisions
    The increased transparency in ancillary service fee information 
would also lead to some portion of consumers making more informed 
purchasing choices: (1) Those who learn of the baggage fees for a 
flight they intend to purchase but do so near the end of the purchasing 
process, and (2) those who remain unaware of the baggage fee 
information until after they make a purchase. Both of these consumer 
groups may end up making purchasing decisions they otherwise would not 
have made had they been aware of the associated baggage fees when first 
reviewing search results.
    Research has shown that when consumers first see a price which is 
lower than the final price they must pay (whether due to delayed 
display of taxes, fees, shipping and handling, etc.) they often end up 
paying more than if the first price they see is the final, total price 
(including taxes, fees, and/or shipping and handling). Studies and 
experiments have demonstrated that partitioned pricing (the separating 
of a price into its components) and the timing for when different 
pieces of pricing information (such as taxes) are revealed in a 
purchasing situation can lead to increases in consumer demand.\8\
---------------------------------------------------------------------------

    \8\ Deborah Shenck, ``Exploiting the Salience Boas in Designing 
Taxes,'' (New York University Law and Economics Working Papers, 
Paper 233, 2010) has an informative and extensive review of past 
work in this area. See also Morwitz, Vicki, Greenleaf, Eric, Shalev, 
Edith and Johnson, Eric J., The Price Does Not Include Additional 
Taxes, Fees, and Surcharges: A Review of Research on Partitioned 
Pricing (February 26, 2009). Available at SSRN: http://ssrn.com/abstract=1350004. Note, though that some studies have found that 
partitioned pricing can also lead to negative brand recognition and 
may hurt sales in the future, if the fees are perceived to be 
excessive and within the seller's ability to control. This differs 
somewhat from the situation here, since the separate portions of the 
price are taxes imposed by state, local and federal governments (as 
opposed to shipping fees, etc.).
---------------------------------------------------------------------------

    If revealing full prices later in the purchasing process leads to 
more purchases than if the full price had been seen immediately, (at 
least some) consumers are purchasing at a price higher than they 
otherwise would have. These ``sub-optimal'' choices lead to what 
economists call a ``dead-weight loss.''
    In other research conducted in market situations in which one group 
of consumers knows more about products and/or prices than others, some 
economists have proposed a ``tourists and natives'' framework, in which 
consumers are divided into two groups--those with access to more 
information about lower prices/better quality (the natives) and those 
with very limited information who will often pay more (the tourists). 
(Some researchers have called these two groups ``savvy'' and 
``unsavvy'' travelers.) This framework has two price-equilibriums; the 
``tourist'' one is higher than the one for ``natives.'' With respect to 
this SNPRM, one could consider the consumers who are well informed 
regarding fees for ancillary services (i.e. aware of itinerary-specific 
baggage fees) in contrast to other travelers (perhaps those who rarely 
travel) who are not aware of variance in carry-on and checked baggage 
fees. The result is that the latter group would end up, on average, 
paying more.
    While both of these theoretical constructs are useful in 
understanding how and why some consumers may be making sub-optimal air 
travel purchasing decisions, the Department does not have enough 
information to quantify or monetize this benefit.
3. Benefits to Businesses Employees That Travel
    Many businesses are also concerned with the ancillary fees 
associated with baggage. Travel can be a significant expense for many 
companies and ancillary service fees can substantially increase trip 
costs.
    Many business travelers book flights via travel management 
companies that seek the best flight at the best price for the traveler, 
given his or her parameters. But much of the information needed to 
ensure that each traveler gets the best full price taking into account 
base fare, mileage club memberships, specific credit cards used and any 
other potential discounts are not often readily available. Travel 
managers have complained that not all baggage fee information needed to 
ensure that business travel is booked according to company policy is 
readily accessible and readily incorporated into internal reservation 
tracking or accounting programs. The information must be manually 
entered, often based on receipts or information provided by the 
travelers themselves. Thus, many businesses either pay more than they 
needed to for a particular flight or must have employees spend time 
seeking out the appropriate fee information in order to make the best 
choice. The increased effort results in higher company travel costs.
    These costs associated with searching for baggage fee information 
have been identified repeatedly to the Department by travel management 
company representatives and raised at meetings of the Advisory 
Committee for Aviation Consumer Protection. In addition, several 
commenters, including trade associations, a GDS and at least one 
advocacy group, noted that benefits to business travelers of this 
requirement could be significant.
    While there is much interest in the industry on the impact of 
unbundling

[[Page 7558]]

and ancillary service fees on the costs of business travel, the 
Department did not find adequate data on this impact to estimate the 
benefits of this requirement for these business travelers, but notes 
that they may be significant for some entities.
4. Benefits to Ticket Agents
    While there is concern about the added costs of this provision to 
ticket agents in terms of additional programming expenditures and staff 
time to communicate the added baggage fee information, there is also 
the possibility that ticket agents may experience some benefits of the 
SNPRM. At least one commenter raised the point that ticket agents would 
be able to access ancillary service fee information more quickly in 
response to consumer requests, and could conclude some transactions 
with consumers more quickly. The Department agrees that ticket agents 
may benefit from the rule in this manner but is unable to estimate by 
how much.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an 
agency to review regulations to assess their impact on small entities 
unless the agency determines that a rule is not expected to have a 
significant economic impact on a substantial number of small entities. 
The rule proposed in this SNPRM would have some impact on a significant 
number of small entities, as discussed in the Initial Regulatory 
Flexibility Analysis.
    For purposes of rules promulgated by the Department regarding 
aviation economic and consumer matters, an airline is a small entity 
for purposes of the Regulatory Flexibility Act if it provides air 
transportation only with aircraft having 60 or fewer seats and no more 
than 18,000 pounds payload capacity.\9\ The Small Business 
Administration (SBA) size standard for small business for both travel 
agents and tour operators is $20.5 million in average annual receipts 
(SBA does not have a size standard for ticket agents as defined by the 
Department; travel agents and tour operators are the most applicable 
categories for which such data was found).
---------------------------------------------------------------------------

    \9\ See 14 CFR Chapter 11. Note that the Small Business 
Administration definition of small carriers is not used.
---------------------------------------------------------------------------

    A significant number of small entities would be impacted by this 
SNPRM. Due to the relative lack of key pieces of data, the Department 
was unable to quantify the costs of the proposed rule to small (or 
large) entities, but notes that some small entities may incur 
substantial costs. The primary costs of the rule arise from 
programming, data management and other related costs to carriers and 
ticket agents to transmit or display the required baggage information. 
The Department is seeking additional information on the potential costs 
and benefits of the requirements proposed in the SNPRM.

C. Executive Order 13132 (Federalism)

    This SNPRM has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13132 (``Federalism''). The 
notice does not contain 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.

D. Executive Order 13084

    This SNPRM has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13084 (``Consultation and 
Coordination with Indian Tribal Governments''). The SNPRM would not 
significantly or uniquely affect the communities of the Indian tribal 
governments or impose substantial direct compliance costs on them, the 
funding and consultation requirements of Executive Order 13084 do not 
apply.

E. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.) 
requires that the Department consider the impact of paperwork and other 
information collection burdens imposed on the public and, under the 
provisions of PRA section 3507(d), obtain approval from the Office of 
Management and Budget (OMB) for each collection of information it 
conducts, sponsors, or requires through regulations. DOT has determined 
that the proposals included in this SNPRM would impose new information 
collection requirements on the affected entities. Accordingly, we are 
seeking comment on the impact of the requirements proposed in this 
SNPRM.
    The first collection of information proposed here is a requirement 
that air carriers and foreign air carriers provide useable, current, 
and accurate fee information for a first checked bag, a second checked 
bag, and one carry-on bag to all ticket agents that receive and 
distribute the air carrier's or foreign carrier's fare and schedule 
information. The second information collection is a requirement that 
air carriers, foreign air carriers, and ticket agents that provide an 
air carrier's or foreign carrier's fare and schedule information to 
consumers in the United States receive the information from carriers 
and disclose the air carrier's or foreign air carrier's fees for a 
first checked bag, a second checked bag, and one carry-on bag.
    For each of these information collections, the title, a description 
of the respondents, and an estimate of the annual recordkeeping and 
periodic reporting burden are set forth below:
    1. Requirement that air carriers and foreign air carriers provide 
certain baggage fee information to all ticket agents that receive and 
distribute the carrier's fare and schedule information.
    Respondents: Air carriers and foreign air carriers that provide 
fare and schedule information to ticket agents and charge baggage fees 
for a carry-on bag, first checked bag, or second checked bag. We 
estimate that approximately 206 carriers will be impacted by this 
requirement.
    Estimated Annual Burden on Respondents: Approximately 8 hours per 
respondent. Note that 8 hours is the basis used for computing the costs 
of providing baggage fee information, but since airlines already share 
this information with each other to facilitate code-share and interline 
ticketing, it likely overestimates the actual amount of additional time 
that most carriers will have to spend to meet the requirement.
    Estimated Total Annual Burden: 1,648 hours for all respondents.
    Frequency: Once information is provided, new or additional 
information only needs to be provided when baggage fee information 
changes; varies by airline but for most carriers is infrequent and will 
likely be less than annually.
    2. Requirement that air carriers, foreign air carriers, and ticket 
agents that provide carrier fare and schedule information to consumers 
in the United States disclose carrier's fees for a first checked bag, a 
second checked bag, and one carry-on bag.
    Respondents: Air carriers, foreign air carriers, and ticket agents 
that provide carrier fare and schedule information to consumers in the 
United States. We estimate that as many as 206 air carriers and foreign 
air carriers and as many as 600 ticket agents may be impacted by this 
requirement.
    Our estimate is based on the following information and assumptions: 
Ticket

[[Page 7559]]

agents includes online travel agencies (OTAs), brick-and-mortar travel 
agencies, corporate travel agencies, and tour operators that market 
airline tickets. As described in the Regulatory Impact Analysis 
accompanying this SNPRM, there may be approximately 9,500 travel 
agencies and over 2,500 tour operators in the United States, although 
not all of those entities market air transportation online to consumers 
in the United States. In addition, most ticket agents rely on GDSs to 
create online fare and schedule displays. GDSs and entities that create 
or develop and maintain their own online fare and schedule displays, 
such as many of the impacted airlines and the largest travel agents, 
will incur some planning, development, and programming costs to 
reprogram their systems to provide online displays of fare and schedule 
information that includes baggage fee information on their Web sites. 
Therefore we estimate that about five percent of United States ticket 
agents, including GDSs and large travel agencies, or as many as 600 
ticket agents, will be impacted by this requirement. Many smaller 
carriers also rely on GDSs to create online fare and schedule displays 
so our estimate of 206 impacted carriers may be overstated.
    Estimated Annual Burden on Respondents: Approximately 80 hours per 
respondent. Our estimate is based on the following information and 
assumptions: The primary costs to respondents for the disclosure 
requirement would arise from programming, data management, Web site 
modification and other related costs to carriers and ticket agents to 
display the required baggage information. Revising Web site displays in 
this manner would likely be similar to the revisions that carriers and 
ticket agents needed to make to their Web sites to comply with the 
requirement to include all taxes and fees in fare displays in 
connection with the Enhanced Airline Passenger Protections II 
rulemaking. Our estimate of those costs was 80 hours per respondent as 
discussed in the Regulatory Impact Analysis prepared in connection with 
the Enhanced Airline Passenger Protections II rulemaking (2011) (see 
page 59, https://www.regulations.gov/document?D=DOT-OST-2010-0140-2046.)
    Estimated Total Annual Burden: Approximately 64,480 hours for all 
respondents (based on an assumption of 16,480 hours for carriers and 
48,000 hours for ticket agents).
    Frequency: Once information is incorporated into Web site displays, 
the displays would not need to be revised. It would likely be a one-
time cost.

F. Unfunded Mandates Reform Act

    The Department has determined that the requirements of Title II of 
the Unfunded Mandates Reform Act of 1995 do not apply to this SNPRM.

G. National Environmental Policy Act

    The Department has analyzed the environmental impacts of this SNPRM 
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, Oct. 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. In analyzing the applicability of a categorical exclusion, the 
agency must also consider whether extraordinary circumstances are 
present that would warrant the preparation of an EA or EIS. Id. 
Paragraph 3.c.6.i of DOT Order 5610.1C categorically excludes 
``[a]ctions relating to consumer protection, including regulations.'' 
The purpose of this rulemaking is to enhance protections for air 
travelers and to improve the air travel environment. The Department 
does not anticipate any environmental impacts, and there are no 
extraordinary circumstances present in connection with this rulemaking.

    Issued this 9th day of January 2017 in Washington, DC.
Anthony R. Foxx,
Secretary of Transportation.

List of Subjects

14 CFR Part 399

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

PART 399--[AMENDED]

0
1. The authority citation for part 399 is revised to read as follows:

    Authority:  49 U.S.C. 40101 et seq.

0
2. Section 399.85 is amended by removing paragraph (b).


Sec.  399.85  Notice of baggage fees and other fees.

* * * * *
    (b) Removed.
* * * * *
0
3. A new section 399.90 is added to read as follows:


Sec.  399.90  Transparency in airline pricing, including ancillary 
service fees.

    (a) The purpose of this section is to ensure that air carriers, 
foreign air carriers and ticket agents doing business in the United 
States clearly disclose to consumers at all points of sale the fees for 
a first checked bag, a second checked bag, and one carry-on bag 
wherever fare and schedule information is provided to consumers that 
may be purchasing or considering purchasing air transportation. Nothing 
in this section should be read to require that these ancillary services 
must be transactable (e.g., purchasable online or at other points of 
sale).
    (b) Each air carrier and foreign air carrier shall provide useable, 
current, and accurate information for fees for a first checked bag, a 
second checked bag, and one carry-on bag to all ticket agents that 
receive and distribute the air carrier's or foreign carrier's fare and 
schedule information. The information should be sufficient to allow 
ticket agents to express fees as itinerary-specific or customer-
specific charges. ``Customer-specific'' refers to variations in fees 
that depend on, for example, the passenger type (e.g., military), 
frequent flyer status, method of payment, geography, travel dates, 
cabin (e.g., first class, economy), ticketed fare (e.g., full fare 
ticket--Y class), etc.
    (c) Each air carrier, foreign air carrier or ticket agent that 
provides an air carrier's or foreign carrier's fare and schedule 
information to consumers in the United States must disclose the air 
carrier's or foreign air carrier's fees for a first checked bag, a 
second checked bag, and one carry-on bag.
    (i) The fee information disclosed to a consumer for these ancillary 
services must be expressed as customer-specific charges as provided in 
subpart (b) if the consumer elects to provide his or her customer 
category information to the carrier or ticket agent, such as frequent 
flyer type, payment method, or military status.
    (ii) If the consumer conducting a search does not opt out of 
receiving baggage fee information but elects not to provide his or her 
customer category information to the carrier or ticket agent, and 
conducts an ``anonymous'' search, the fee information disclosed to 
consumers for these ancillary services must be expressed as itinerary-
specific charges. ``Itinerary-specific'' refers to variations in fees 
that depend on, for example, geography, travel dates, cabin (e.g., 
first class, economy), and ticketed fare class (e.g., full fare 
ticket--Y class).

[[Page 7560]]

    (iii) This provision does not apply to air-tour packages advertised 
or sold online by ticket agents if the air transportation component is 
not finalized and the carrier providing air transportation is not known 
at the time of booking. However, the agent must clearly and prominently 
disclose on the first screen in which the agent or carrier offers a 
fare quotation for a specific itinerary selected by a consumer that 
additional airline fees for baggage may apply and where consumers can 
see these baggage fees unless no baggage fees will apply. An agent may 
refer consumers to carrier Web sites where specific baggage fee 
information may be obtained or to its own site if it displays carriers' 
baggage fees. In online displays and oral communications, prior to 
purchase, each ticket agent must disclose that baggage fees may apply 
if that is the case and that those fees may be reduced or waived based 
on the passenger's frequent flyer status, method of payment or other 
consumer characteristic.
    (d) If a U.S. or foreign air carrier or ticket agent has a Web site 
marketed to U.S. consumers where it advertises or sells air 
transportation, the carrier and ticket agent must disclose the fees for 
a first checked bag, a second checked bag and one carry-on bag as 
specified in paragraph (c) at the first point in a search process where 
a fare is listed in connection with a specific flight itinerary, 
adjacent to the fare. When providing customer-specific fee information, 
if more than one baggage fee may be responsive to the search 
parameters, e.g., fee for a particular frequent flyer status and fee 
for a particular method of payment, the lowest cost option must be 
identified and displayed. Carriers and ticket agents may permit a 
consumer to opt out of being provided search results with the fees for 
a first checked bag, a second checked bag or one carry-on bag, or any 
single baggage fee (e.g., second checked bag) or any combination of 
baggage fees (e.g., carry-on and second checked bag) but the opt-out 
option must not be pre-selected and must make clear which fee or fees 
will not be displayed.
    (e) In any oral communication with a prospective consumer and in 
any telephone calls placed from the United States, an air carrier, 
foreign air carrier or ticket agent must inform a consumer, upon 
request, of the fees for a first checked bag, a second checked bag and 
one carry-on bag as specified in paragraph (c).
    (f) Ticket agents with an existing contractual agreement at the 
time this rule becomes effective with an air carrier or foreign air 
carrier to act as an intermediary for the distribution of that 
carrier's fare and schedule information to other ticket agents shall 
not charge separate or additional fees for the distribution of the 
ancillary service fee information described in paragraph (b). Nothing 
in this paragraph should be read as invalidating any provision in an 
existing contract among these parties with respect to compensation.
    (g) It is an unfair and deceptive practice in violation of 49 
U.S.C. 41712 for an air carrier or foreign air carrier to fail to 
provide the fees for a first checked bag, a second checked bag and one 
carry-on bag as described in paragraph (b) to those ticket agents to 
which the carrier provides its fare and schedule information or for a 
U.S. carrier, foreign carrier, or ticket agent to fail to provide the 
fees for a first checked bag, a second checked bag and one carry-on bag 
to consumers as described in paragraph (c) and (d).

[FR Doc. 2017-00904 Filed 1-18-17; 8:45 am]
 BILLING CODE 4910-9X-P



                                                      7536                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      DEPARTMENT OF TRANSPORTATION                            and 5 p.m., Monday through Friday,                        In this SNPRM, the Department
                                                                                                              except Federal holidays.                               proposes to require disclosure at all
                                                      Office of the Secretary                                   • Fax: 202–493–2251.                                 points of sale of the customer-specific
                                                                                                                Instructions: You must include the                   fees for first and second checked bag
                                                      14 CFR Part 399                                         agency name and the Docket Number                      and carry-on bag but does not propose
                                                      [Docket No. DOT–OST–2017–0007]                          DOT–OST–2017–0007 or the Regulatory                    to require disclosure of the fee for
                                                                                                              Identification Number (RIN) for the                    advance seat assignment. In addition,
                                                      RIN 2105–AE56                                           rulemaking at the beginning of your                    the Department proposes to require
                                                                                                              comment. All comments received will                    carriers to provide certain baggage fee
                                                      Transparency of Airline Ancillary                       be posted without change to http://                    information to ticket agents so that both
                                                      Service Fees                                            www.regulations.gov, including any                     carriers and ticket agents would be able
                                                      AGENCY:  Office of the Secretary (OST),                 personal information provided.                         to provide customer-specific baggage fee
                                                      Department of Transportation (DOT).                       Privacy Act: Anyone is able to search                information to consumers. We invite all
                                                      ACTION: Supplemental Notice of                          the electronic form of all comments                    interested parties to comment on the
                                                      Proposed Rulemaking (SNPRM).                            received in any of our dockets by the                  proposals set forth in this notice. Our
                                                                                                              name of the individual submitting the                  final action will be based on comments
                                                      SUMMARY:    This SNPRM proposes to                      comment (or signing the comment if                     and supporting evidence from the
                                                      require air carriers, foreign air carriers,             submitted on behalf of an association, a               public filed in this docket, and on our
                                                      and ticket agents to clearly disclose to                business, a labor union, etc.). You may                own analysis and regulatory evaluation.
                                                      consumers at all points of sale                         review DOT’s complete Privacy Act                      A. Need for Rulemaking and Legal
                                                      customer-specific fee information, or                   statement in the Federal Register                      Authority
                                                      itinerary-specific information if a                     published on April 11, 2000 (65 FR
                                                      customer elects not to provide                          19477–78), or you may visit http://                       The NPRM: In the NPRM, the
                                                      customer-specific information, for a first              DocketsInfo.dot.gov.                                   Department described the problem
                                                      checked bag, a second checked bag, and                    Docket: For access to the docket to                  identified by consumers and consumer
                                                      one carry-on bag wherever fare and                      read background documents or                           advocacy groups of the lack of
                                                      schedule information is provided to                     comments received, go to http://                       transparency of ancillary service fees in
                                                      consumers. This SNPRM further                           www.regulations.gov or to the street                   air transportation pricing. That is, not
                                                      proposes to require each covered carrier                address listed above. Follow the online                being able to determine the true cost of
                                                                                                              instructions for accessing the docket.                 travel due to the lack of information
                                                      to provide useable, current, and
                                                                                                                                                                     regarding certain ancillary service fees.
                                                      accurate (but not transactable) baggage                 FOR FURTHER INFORMATION CONTACT:
                                                                                                                                                                     This lack of transparency of fees for
                                                      fee information to all ticket agents that               Kimberly Graber or Blane A. Workie,                    unbundled services (i.e., services that
                                                      receive and distribute the carrier’s fare               Office of the Assistant General Counsel                historically had been included in the air
                                                      and schedule information, including                     for Aviation Enforcement and                           fare but for which many carriers now
                                                      Global Distribution Systems and                         Proceedings, U.S. Department of                        charge a separate fee is particularly
                                                      metasearch entities. On covered carrier                 Transportation, 1200 New Jersey Ave.                   notable when consumers are attempting
                                                      and ticket agent Web sites, the SNPRM                   SE., Washington, DC 20590, 202–366–                    to purchase air transportation through a
                                                      would require the baggage fee                           9342 (phone), kimberly.graber@dot.gov                  ticket agent rather than directly from the
                                                      information to be disclosed at the first                or blane.workie@dot.gov (email).                       carrier but it occurs at both ticket agent
                                                      point in a search process where a fare                  SUPPLEMENTARY INFORMATION:                             and airline outlets. Corporate travel
                                                      is listed in connection with a specific                                                                        agents have also complained about the
                                                      flight itinerary, adjacent to the fare. The             Background
                                                                                                                                                                     lack of access to ancillary service fee
                                                      SNPRM would permit carriers and                            The Notice of Proposed Rulemaking,                  information.
                                                      ticket agents to allow customers to opt-                titled Transparency of Airline Ancillary                  Online travel agencies (OTAs),
                                                      out of receiving the baggage fee                        Service Fees and Other Consumer                        metasearch sites, ‘‘traditional’’ travel
                                                      information when using their Web sites.                 Protection Issues, Docket No. DOT–                     agencies, and travel management
                                                      DATES: Comments must be received by                     OST–2014–0056, 79 FR 29970, May 23,                    companies generally obtain most of
                                                      March 20, 2017. Comments received                       2014 (Consumer Protection NPRM),                       their information regarding air
                                                      after this date will be considered to the               contained a number of proposals to                     transportation options indirectly
                                                      extent practicable.                                     enhance consumer protections,                          through Global Distribution Systems
                                                      ADDRESSES: You may file comments                        including a proposal to require the                    (GDSs). GDSs essentially facilitate the
                                                      identified by the docket number DOT–                    disclosure of certain airline ancillary                purchase of tickets between airlines and
                                                      OST–2017–0007 by any of the following                   service fees. This proposed disclosure                 consumers through third parties but do
                                                      methods:                                                requirement was one of the more                        not have complete information
                                                         • Federal eRulemaking Portal: Go to                  controversial provisions of the                        regarding ancillary service fees. As a
                                                      http://www.regulations.gov and follow                   rulemaking and generated significant                   result, when researching air
                                                      the online instructions for submitting                  comments from consumers, airlines,                     transportation options and making
                                                      comments.                                               ticket agents and other interested                     decisions on whether to purchase air
                                                         • Mail: Docket Management Facility,                  parties. In light of the comments on this              transportation, consumers continue to
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                      U.S. Department of Transportation, 1200                 issue, the Department is issuing this                  have difficulty determining the total
                                                      New Jersey Ave. SE., Room W12–140,                      SNPRM, which focuses solely on the                     cost of travel because the fees for basic
                                                      Washington, DC 20590–0001.                              issue of transparency of certain ancillary             ancillary services are not available
                                                         • Hand Delivery or Courier: The                      service fees. The other issues in the                  through all sales channels. Consumers
                                                      Docket Management Facility is located                   2014 NPRM are being addressed                          also experience difficulty on carrier
                                                      on the West Building, Ground Floor, of                  separately. See RIN 2105–AE11,                         Web sites because fees are provided on
                                                      the U.S. Department of                                  Enhancing Airline Passenger Protections                lengthy static lists, and many ancillary
                                                      Transportation,1200 New Jersey Ave.                     III; and RIN 2105–AE57, Enhancing                      service fees are listed as a range, so
                                                      SE., Room W12–140, between 9 a.m.                       Airline Passenger Protections IV.                      consumers do not necessarily know the


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                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                             7537

                                                      specific fees that apply to their travel                distribution technologies, the 2014                    negotiations between carriers and their
                                                      when purchasing air transportation.                     NPRM also mentioned that the                           distribution partners, or a carrier’s
                                                      With respect to baggage, the existing                   International Air Transport Association                ability to set prices for its services in
                                                      disclosure requirements mandate                         (IATA) applied to the Department of                    response to its own commercial strategy
                                                      specific information if a carrier or a                  Transportation for approval of its                     and market forces. As the NPRM stated,
                                                      ticket agent has a Web site accessible for              agreement establishing the framework                   consumers need to be protected from
                                                      ticket purchases by the general public in               for the IATA New Distribution                          hidden and deceptive fees that prevent
                                                      the United States, but passengers must                  Capability (NDC). That application was                 them from effectively price shopping—
                                                      frequently review lengthy and complex                   pending at the time of NPRM                            that is, determining while shopping and
                                                      charts to determine the exact baggage                   publication but has since been                         before purchasing, the total costs of air
                                                      fees that apply to their air transportation             approved. NDC is essentially an XML-                   transportation. The NPRM explained
                                                      particularly for interline or international             based technical standard for use in                    that failing to disclose basic ancillary
                                                      itineraries.                                            airline distribution, including direct                 service fees in an accurate and up-to-
                                                         The Department’s goal is to protect                  connect services, that has been                        date manner before a consumer
                                                      consumers from hidden and deceptive                     developed by IATA in cooperation with                  purchases air transportation is an unfair
                                                      fees and enable them to determine the                   air transportation stakeholders. The goal              and deceptive practice. We identified a
                                                      true cost of travel in an effective manner              appears to be to change how airlines sell              number of questions regarding the need
                                                      when they price shop for air                            their products today by using the                      for rulemaking on which we requested
                                                      transportation. The problem of hidden                   enhanced platform to quickly generate                  comment, including questions regarding
                                                      fees has been brought to our attention by               dynamic, personalized offers. For more                 the difficulty consumers have finding
                                                      consumer complaints, comments on the                    information, see docket DOT–OST–                       fee information, what fee information
                                                      second Enhancing Airline Passenger                      2013–0048. The NDC standard is                         consumers wanted to have prior to
                                                      Protections rulemaking, and comments                    available to any party and has been                    purchase, and whether either of the
                                                      to the docket for the Advisory                          implemented by some entities since the                 Department’s proposals would make
                                                      Committee for Aviation Consumer                         2014 NPRM was published.                               fees easier to find. We also explained
                                                      Protection. We also note that members                      Our discussion in the 2014 NPRM                     the alternatives that we had considered.
                                                      of Congress representing constituents                   explained that although airlines
                                                                                                                                                                        Comments: Consumer comments in
                                                      have expressed support for full, more                   generally distribute fare, schedule, and
                                                                                                                                                                     this rulemaking overwhelmingly
                                                      specific, disclosure of ancillary service               availability information through GDSs,
                                                      fees.                                                   they generally do not distribute                       supported Department action on
                                                         In the 2014 NPRM, we provided an                     ancillary service fee information in the               disclosure of ancillary service fees. Over
                                                      overview of the airline distribution                    same manner. The NPRM also outlined                    600 consumers commented on
                                                      system based on information gathered                    some of the technological and                          transparency issues generally, which for
                                                      from representatives of carriers, GDSs,                 competitive concerns raised by air                     many consumers encompasses
                                                      consumer advocacy organizations, and                    transportation industry stakeholders.                  disclosure of ancillary service fees as
                                                      trade associations, as well as other                    We also noted that in contrast to                      well as the full airfare, including taxes
                                                      interested entities, including third-party              airlines, GDSs assert that any transition              and fees. Over 450 consumers clearly
                                                      technology developers. We noted that                    to direct connect services will succeed                supported additional requirements
                                                      approximately 50% of tickets are sold                   or fail based on whether the services                  relating to disclosure of ancillary service
                                                      by airlines directly to consumers, and                  meet the needs of travel agencies and                  fees while fewer than ten commented in
                                                      the remainder is sold through ticket                    the consumers they serve, regardless of                opposition to additional disclosure
                                                      agents. Further, in the United States,                  existing contracts. As noted in the                    requirements. Consumer advocacy
                                                      three GDSs (Sabre, Travelport and                       NPRM, GDSs disputed the position that                  groups Travelers United and National
                                                      Amadeus) control the distribution of the                there is no need for a Department                      Consumers League also commented in
                                                      airline product for the ticket agent                    requirement, stating that airlines and                 support of the need for a rulemaking,
                                                      channel and most airlines use the GDSs                  ticket agents have not been able to come               stating that airlines publish what are in
                                                      to distribute their products to ticket                  to agreements that would allow airlines                effect partial prices and that the full cost
                                                      agents, including corporate travel agents               to provide ancillary service fee                       of travel is masked at the initial
                                                      that sell the higher revenue tickets. The               information to ticket agents so they                   purchase and only revealed in a
                                                      NPRM noted that airlines state they                     could in turn provide such information                 secondary buying process. Consumers
                                                      have made some efforts to reduce their                  to consumers.                                          Union and the U.S. Public Interest
                                                      reliance on GDSs and transition to                         The 2014 NPRM explained that our                    Research Group (U.S. PIRG) also
                                                      direct connections between airline                      decision to initiate a rulemaking                      supported Department action in this
                                                      reservation systems and ticket agent                    regarding distribution of ancillary                    area, stating that the Department should
                                                      systems but contractual arrangements                    service fee information rested on the                  require disclosure at every point of sale,
                                                      make that difficult. As stated in the                   conclusion that consumers are                          early in the purchasing process. They
                                                      NPRM, carriers and carrier associations                 continuing to have difficulty finding                  went on to state that too many U.S.
                                                      have expressed concern that a                           ancillary service fee information, which               carriers have made ancillary service fee
                                                      Department requirement to distribute                    limits consumers’ ability to determine                 information difficult or impossible to
                                                      information through a GDS would                         the true cost of travel. We also                       obtain until close to or at the point of
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                                                      reinforce the existing distribution                     recognized in the NPRM that carriers                   actual purchase or, in some channels,
                                                      patterns and stifle innovation. Some                    and GDSs state they share our goal of                  not available at all. FlyersRights also
                                                      stakeholders have alleged that if existing              transparency of ancillary service fee                  supported the rulemaking on disclosure
                                                      distribution patterns are reinforced,                   information. In the NPRM we made                       of ancillary service fees, stating that
                                                      carriers will no longer have sufficient                 clear that the Department is working to                unbundling is rapidly making price
                                                      incentive to invest in new distribution                 find the most beneficial disclosure rule               shopping difficult to impossible for
                                                      technologies, which might ultimately                    for consumers while avoiding any                       consumers. It further stated that baggage
                                                      provide more information to the benefit                 adverse impact on innovations in the air               fee information often is buried on a
                                                      of consumers. In connection with new                    transportation marketplace, contract                   carrier’s Web site and can be confusing


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                                                      7538                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      and complex. To illustrate its point,                   service fees on a travel agent display                 (ASTA) joined in the comments of Open
                                                      FlyersRights identified one legacy                      because it would make the airline’s fares              Allies and stated that the Department’s
                                                      carrier that charges up to nine different               appear more expensive when compared                    proposals do not go far enough to
                                                      fees for baggage depending on weight,                   to the fares of other airlines that do not             address widespread confusion among
                                                      size, and number of bags.                               disclose ancillary service fee                         consumers. A number of travel agents
                                                         Open Allies, which described itself as               information.                                           submitted comments stating that their
                                                      a coalition of more than 400                               In support of its position, Open Allies             customers could not calculate the true
                                                      independent distributors and sellers of                 cited a 2010 GAO Report and a follow-                  cost of airfare with certainty and that
                                                      air travel, corporate travel departments,               on 2014 report, describing the problem                 the travel agents themselves could not
                                                      travel trade associations and consumer                  of ancillary service fee disclosure as a               provide a quote with certainty because
                                                      organizations, commented in favor of                    continuing problem. Open Allies                        of the complexity of and variation in
                                                      Department action in this area.                         pointed out that while some individual                 ancillary service fees charged from
                                                      According to Open Allies, the rule is                   airlines and individual GDSs have                      airline to airline. Those travel agents
                                                      needed because ancillary service fees                   announced agreements regarding
                                                                                                                                                                     supported mandating that airlines
                                                      are not accessible and that identifying                 distribution of certain ancillary service
                                                                                                                                                                     disclose the costs of bag fees and seat
                                                      total travel cost is complex, confusing,                fees, those agreements are generally
                                                                                                                                                                     assignments. The United States Tour
                                                      and needlessly time consuming.                          limited to premium seating on some of
                                                      According to Open Allies, the market is                 the individual airline’s flights and do                Operators Association (USTOA)
                                                      not reacting quickly or completely                      not provide all ticket agents access to                opposed being subject to disclosure
                                                      enough to address the issue. Open                       that information. Therefore, consumers                 regulations but commented that
                                                      Allies pointed to a survey it conducted                 are still unable to discover all basic                 consumers have expressed strong
                                                      of over 1,000 adults in the United                      ancillary service fees when searching for              support for early disclosure of
                                                      States, indicating that 55 percent of                   flights. According to Open Allies, the                 information on ancillary service fees.
                                                      respondents said that they were                         Department has substantial evidence to                 USTOA pointed to a survey that shows
                                                      surprised by additional fees after                      support its rulemaking as well as ample                that 45 percent of respondents reported
                                                      purchasing a ticket; 88 percent said that               authority under § 41712 (unfair or                     difficulty in budgeting for air travel due
                                                      Department action is important; 81                      deceptive practices). Open Allies                      to the proliferation of fees and difficulty
                                                      percent believe that current airline                    compared the Department’s authority to                 in determining the costs of flying.
                                                      practices are ‘‘unfair and deceptive;’’                 that of the FTC and stated that                        Survey respondents also indicated that
                                                      and 47 percent said that it was hard to                 analogous FTC precedent on unfair or                   total cost of travel is very important to
                                                      search and find the lowest price for                    deceptive practices establishes that the               purchasing decisions. Corporate travel
                                                      travel.                                                 Department has the legal authority to                  agents also commented that they were
                                                         Open Allies argued that the                          proceed with this rulemaking.                          concerned about disclosure. Global
                                                      Department should not rely on                              The three GDSs—Amadeus, Sabre,                      Business Travel Association stated that
                                                      competition because fees are still                      and Travelport—all supported the                       there is a need for disclosure
                                                      hidden, despite existing Department                     rulemaking, stating that consumers that                requirements because despite investing
                                                      requirements, which results in                          use ticket agents to shop for air                      resources, acquiring technologies, and
                                                      consumers making sub-optimal                            transportation do not have access to all               changing travel policies, its members
                                                      purchasing decisions. Open Allies                       ancillary service fee information.                     are still facing challenges finding basic
                                                      relied on consumer comments in the                      According to Sabre, for consumers to                   ancillary fee information for baggage
                                                      docket, saying that they show that                      ‘‘know the full price of travel before                 and seat assignments. Business Travel
                                                      consumers feel deceived and confused                    they are locked into a purchase’’ the                  Coalition (BTC) commented in support
                                                      and do not understand the true, full cost               Department must act. The GDSs also                     of requiring disclosure of fees, stating
                                                      of travel. According to Open Allies,                    stated that airlines will not share                    that airlines are ‘‘masking the all-in
                                                      consumers generally give two key                        ancillary service fee information with                 price of air travel.’’
                                                      reasons for supporting increased                        ticket agents, except on a limited basis,
                                                      disclosure of ancillary service fees: (1) It            unless the Department requires the                        Computer and Communications
                                                      would allow them to compare prices                      information to be shared. Travelport                   Industry Association (CCIA), advocating
                                                      across various airlines; and (2) it would               stated that airlines are motivated to                  for metasearch entities, commented in
                                                      prevent airlines from surprising them                   increase revenues by driving consumer                  favor of Department action to make sure
                                                      with fees after they have purchased                     costs up through ‘‘obfuscation of the                  consumers have the information needed
                                                      their airfare. Open Allies commented                    true cost of flying.’’ Amadeus points to               to determine the full cost of travel.
                                                      that there are many benefits to enhanced                airline opposition to disclosure                       TripAdvisor and Skyscanner, which
                                                      disclosure of price information such as                 requirements, particularly opposition by               both operate flight search tools, also
                                                      ancillary service fees, including that it               U.S. airlines, as evidence that the                    commented in favor of Department
                                                      lowers prices, enhances competition,                    market will not resolve the problem.                   action requiring airlines to disclose
                                                      and promotes informed buyers.                           Travel Technology Association (Travel                  ancillary service fee information to
                                                      According to Open Allies, airlines lack                 Tech), a trade association for major                   ensure transparency for the benefit of
                                                      a commercial incentive to provide                       OTAs, GDSs, and some entities                          consumers. Of airline commenters, only
                                                      ancillary service fee information to the                operating metasearch engines focused                   Southwest supported the Department
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                                                      ‘‘neutral’’ travel agency channel because               on travel, also stated that a problem                  requiring greater fee disclosure, noting
                                                      airlines have an interest in not allowing               remains for consumers trying to uncover                that consumers will ‘‘be better able to
                                                      ticket agents to show the full cost of                  charges for additional services and                    arrive at the true cost of air
                                                      travel at the shopping stage because if                 stated that consumers must search to                   transportation.’’ Finally, several
                                                      travel appears less expensive,                          discover the true cost of their air travel.            commenters, including ASTA, BTC,
                                                      consumers will be more likely to                           Several travel agents and travel agent              FlyersRights, and Travel Tech also
                                                      complete a purchase. Open Allies                        associations also stated there is a need               noted that airlines are not subject to
                                                      further pointed out that an airline is                  for Department action in this area. The                State and local consumer protection
                                                      unlikely to voluntarily display ancillary               American Society of Travel Agents                      laws due to Federal preemption, and


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                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                             7539

                                                      therefore, only the Department can take                 the negotiating position of GDSs at the                marketplace developments prove that
                                                      action to protect consumers in this area.               expense of the airlines if adopted.                    regulation is unneeded. A4A provided a
                                                         The Department also received many                       Meanwhile, according to airline                     number of examples of agreements
                                                      comments that opposed any further                       associations, the market is working.                   between airlines and GDSs that it says
                                                      requirement pertaining to disclosure of                 A4A commented that existing                            show that carriers are sharing ancillary
                                                      ancillary service fees as specific charges.             Department regulations combined with                   service fee information with GDSs. A4A
                                                      A4A (Airlines for America, the trade                    market forces have led to ‘‘enhanced fee               went on to say that it is more and more
                                                      association of the larger U.S. airlines)                disclosure practices,’’ and that carriers              common for carriers to sell bundled
                                                      argued that there is no need for any                    want to sell ancillary services,                       fares on their own sites, which A4A
                                                      proposal regarding ancillary service fee                especially to business travelers who                   stated often results in discounts and is
                                                      information because the industry has                    constitute a large segment of their repeat             a consumer-friendly method of display.
                                                      already provided that information in                    customers and revenue producers. A4A                   A4A further stated that mandating
                                                      response to existing Department                         went on to explain that carriers are                   disclosures on the first page that
                                                      regulatory requirements and market                      already incentivized to distribute                     displays fares interferes with airline
                                                      pressure and no consumer harm is                        information about ancillary products                   efforts to differentiate their products
                                                      occurring. A4A further argued that the                  and fees and to facilitate the sale of                 and compete on service and price, as
                                                      Department does not have the authority                  ancillary services through multiple                    well as ‘‘squandering’’ the investment
                                                      to require airlines to disclose certain                 channels, including travel agencies, if                made by carriers on bundled pricing
                                                      ancillary service fees in displays of fare              they can do so on commercially                         initiatives and technology to display
                                                      search results because the failure to                   reasonable terms. According to A4A,                    those prices. A4A concluded in its
                                                      provide that information at the time fare               carriers and GDSs have already                         supplemental comments that
                                                      information is presented to consumers                   developed the ability (using the ATPCO                 marketplace solutions that compel all
                                                      does not amount to an unfair or                         filing system) to disclose information                 parties to negotiate and use the most
                                                      deceptive practice. A4A also pointed                    such as first and second checked bag                   efficient data-sharing and latest
                                                      out that on some occasions when                         fees to travel agents. A4A further noted               technology will lead to time savings for
                                                      discussing the ancillary service fee                    that some airlines have made it possible               consumers.
                                                      disclosure issue, the Department has                    for some agents to purchase certain                       IATA commented that the market has
                                                      described it in terms of the ability of                 ancillary services for consumers and                   fundamentally changed since the
                                                      consumers to engage in comparison                       some GDSs have developed mechanisms                    Department first considered requiring
                                                      shopping. A4A argued that the                           for ticket agents to buy services directly             carriers to disclose ancillary service fees
                                                      Department does not have regulatory                     from carrier Web sites. A4A also                       and consumers now have ‘‘more than
                                                      authority to dictate the terms of carrier               pointed to tools on carrier Web sites that             ample’’ access to information about
                                                      distribution or ancillary service fee                   allow consumers to obtain customer-                    ancillary services and fees prior to
                                                      disclosure to enhance comparison                        specific information through an airline                making purchase decisions. According
                                                      shopping.                                               Web site after providing information                   to IATA, there is no lack of information
                                                         In addition to stating there is no need              from the purchased ticket, and third-                  about ancillary service fees causing
                                                      for any ancillary service fee proposals,                party Web sites that provide ancillary                 harm to consumers. Further the
                                                      A4A opposed any ancillary service fee                   service fee information as the                         Department has not demonstrated there
                                                      disclosure requirement on competitive                   ‘‘beneficial result of the existing                    is any unfair or deceptive practice that
                                                      grounds, alleging that the rulemaking                   environment.’’ A4A also criticized Open                will be prevented by further regulating
                                                      would effectively require airline                       Allies’ reliance on survey results, stating            the disclosure of ancillary service fees,
                                                      distribution through GDSs, which                        that the survey was flawed for a number                therefore, they argued, the Department
                                                      would put airlines at a competitive                     of methodological reasons and ‘‘it                     does not have the authority to regulate
                                                      disadvantage. According to A4A, the                     should not be relied upon to arrive at                 in this area.
                                                      Department recognized the powerful                      conclusions concerning perceptions and                    IATA further argued that marketplace
                                                      market position of GDSs in a 2004                       attitudes about ancillary services held                solutions are already making any
                                                      rulemaking 1 and still determined not to                by people who fly on commercial                        rulemaking regarding ancillary service
                                                      regulate those entities. A4A stated that                airlines in the United States.’’                       fees unnecessary as the rapid changes in
                                                      GDSs still have significant market                      According to A4A, GDSs are trying to                   distribution are working to the benefit of
                                                      power and to be competitive most                        obtain the commercial benefit of access                consumers and any Departmental
                                                      airlines have to distribute fare                        to ancillary service fee information                   intervention in this rapidly changing
                                                      information through all three GDSs;                     through regulation instead of through                  market will interfere and result in
                                                      meanwhile, GDSs prevent their client                    negotiations, even though negotiated                   suboptimal solutions. IATA argued that
                                                      ticket agents from directly connecting to               agreements are possible. A4A also stated               airline Web sites already offer
                                                      an airline. A4A stated that in contrast to              that GDSs have made concessions on                     comprehensive and accurate
                                                      fares, carriers are not dependent on                    pricing and technology through                         information about ancillary services and
                                                      GDSs for distribution of ancillary                      commercial agreements. A4A concluded                   fees. IATA acknowledged that airlines
                                                      service information and this places                     that regulation will result in higher GDS              provide fee information as a range of
                                                      airlines in a better position to negotiate              fees which will in turn be passed on to                fees in a static format but stated that this
                                                                                                              consumers through higher ticket prices,                is not evidence of fraud or deception,
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                                                      with GDSs, to the benefit of consumers.
                                                      For example, according to A4A, GDSs                     to the detriment of the public.                        merely ‘‘evidence of the complexity of
                                                      agreed to develop new distribution                         In supplemental comments, A4A                       capturing the wide variety of factors that
                                                      technologies as part of negotiations over               stated that the three GDSs engaged in                  are considered when dynamically
                                                      ancillary services. A4A stated that the                 pilot projects to ‘‘begin adapting to’’ the            setting the price for a specific ancillary
                                                      proposed regulation would strengthen                    NDC initiative and many airlines have                  service for a specific customer.’’ IATA
                                                                                                              invested in technology solutions. In                   went on to state that carriers are coming
                                                         1 Dep’t of Transp., Computer Reservation System      addition, a variety of technology service              to agreements to provide ancillary
                                                      (CRS) Regulations, Final Rule, 69 FR 976, 996 (Jan.     companies are building solutions in the                service fee information to GDSs for
                                                      7, 2004) (‘‘CRS Rulemaking’’)                           area. According to A4A, these                          distribution directly to agents rather


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                                                      7540                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      than through outdated fare filing                       Air Transat endorsed the comments                         AAA, a leisure travel agent trade
                                                      systems. IATA also stated that the                      submitted by IATA regarding disclosure                 organization, commented that it
                                                      adoption of the NDC standard will                       of ancillary service fees, and stated that             supports transparency but specific
                                                      provide transparency and efficiency.                    the market is already addressing the                   mandates in this area may be premature
                                                      According to IATA, the Department                       issues raised by the Department.                       at this time. AAA stated it was
                                                      should not intervene in distribution and                Further, any intervention by the                       concerned about stifling innovation and
                                                      should rely on the market to resolve any                Department will likely have a negative                 wanted airlines to work with GDSs on
                                                      disclosure issues. Air Transport                        impact on consumers. In comments                       agreements to distribute full ancillary
                                                      Association of Canada also opposed the                  filed on behalf of the Avianca carrier                 fee information. Momondo Group, an
                                                      Department rulemaking regarding                         group, Avianca endorsed IATA’s                         online travel media and technology
                                                      disclosure of ancillary service fees,                   comments, stating that the marketplace                 company that operates a flight search
                                                      stating that the market is addressing the               already is addressing the Department’s                 tool, commented that it supports
                                                      issue and the Department does not have                  concerns regarding disclosure of                       transparency as its primary objective.
                                                      the legal authority to intervene in the                 ancillary service fees, and any                        However, it stated that it would be
                                                      deregulated airline industry and dictate                regulatory intervention likely will have               extremely costly to provide accurate
                                                      how airlines distribute their products                  a negative impact on both consumers                    information and avoid consumer
                                                      and services.                                           and carriers. Air New Zealand                          confusion. It recommended that the
                                                         Several airlines also commented in                   supported the comments of IATA and                     Department conduct a more detailed
                                                      opposition to the rulemaking. American                  stated that the current disclosure                     examination of the problem before
                                                      Airlines joined in the comments of A4A                  requirements are adequate to protect the               implementing a regulation that will
                                                      and further stated that the Department’s                consumer. Compañı́a Panameña de                      impact a variety of entities, including
                                                      proposals do not address specific                       Aviación, S.A. (Copa Airlines) opposed                operators of metasearch engines.
                                                      instances of demonstrated harm to                       Department rules regarding ancillary                      DOT Response: The sheer number,
                                                      consumers that cannot reasonably be                     service fee disclosure, stating such rules             length, and variety of comments on this
                                                      avoided and the rulemaking is ‘‘beyond                  may have ‘‘unintended adverse                          issue, as well as the strongly held
                                                      the recognized limits of the                            consequences that would significantly                  positions on all sides, illustrate the
                                                      Department’s regulatory powers.’’                       diminish any such benefits by making                   presence of a problem and the
                                                      American alleged that the Department                    its implementation financially and                     complexity of addressing it. Airlines
                                                      based its reasoning on a need for                       technologically cumbersome for                         and their associations stated that the
                                                      comparison shopping, which American                     carriers.’’ Qatar Airways (Qatar) also                 Department has not demonstrated the
                                                      said is an unreasonable and inadequate                  endorsed the comments of IATA and                      harm to consumers that the
                                                      basis for rulemaking. Frontier Airlines                 added that the market is working. Qatar                Department’s rulemaking is intended to
                                                      opposed any disclosure requirements,                    went on to state that Department                       address. For example, in support of its
                                                      stating it ‘‘believes that competitive                  intervention will have a negative impact               position that information is available
                                                      market forces and the Department’s                      on consumers. Scandinavian Airlines                    and the market is providing solutions,
                                                      existing regulations are more than                      System also endorsed IATA’s comments                   A4A observed that some airline Web
                                                      adequate to inform and protect                          and stated the rulemaking will have a                  sites provide an option for consumers to
                                                      consumers.’’ JetBlue also endorsed the                  negative impact on consumers. Virgin                   identify themselves to determine fees
                                                      comments of both A4A and IATA and                                                                              for some ancillary services and
                                                                                                              Atlantic Airways (Virgin Atlantic)
                                                      stated that the Department should rely                                                                         potentially receive special offers after
                                                                                                              commented that the market is evolving
                                                      on market forces. According to JetBlue,                                                                        they have already purchased a ticket.
                                                                                                              to meet customer preferences and the
                                                      the Department assumes a problem                                                                               Meanwhile, IATA noted that
                                                                                                              Department’s current fee disclosure
                                                      regarding consumers not knowing the                                                                            ‘‘experienced travelers’’ know that
                                                                                                              requirements are adequate. Further,
                                                      true cost of travel and the NPRM does                                                                          airlines charge bag fees and advance
                                                                                                              requiring carriers to provide ancillary
                                                      not provide a foundation for that                                                                              seat assignment fees and also know how
                                                                                                              service fee information to ticket agents
                                                      assumption. United also endorsed the                                                                           to navigate multiple Web sites to obtain
                                                                                                              deprives carriers of their right to decide
                                                      comments of A4A and stated that the                                                                            this information and that the
                                                                                                              how to market their ancillary services
                                                      market is already addressing many of                                                                           Department should not impose costly
                                                                                                              and to distribute such information in a                regulations to benefit the relatively few
                                                      the Department’s concerns so the
                                                      Department should refrain from issuing                  way that is most cost-effective for them.              travelers that care about this
                                                      regulations regarding ancillary service                    The Arab Air Carriers Organization                  information but do not know how to
                                                      fee disclosure. United further stated that              (AACO) commented that market                           locate it. In late-filed comments, Travel
                                                      the Department does not have evidence                   developments since the Department                      Tech noted that some airlines have
                                                      that supports the need for the proposed                 began to address ancillary services in                 begun to provide some information on
                                                      rulemaking. Spirit Airlines similarly                   rulemakings have resulted in market                    ancillary services to ticket agents, but
                                                      opposed any rulemaking on disclosure                    action that is heading towards                         the progress has been far from universal.
                                                      of ancillary service fees, stating that it              developing a data transmission standard                   For the average consumer looking for
                                                      is not necessary and not in the public                  that would make the flow of information                the total cost of travel, he or she must
                                                      interest. According to Spirit, the                      between the airlines and agents more                   frequently review a complex chart to
                                                      Department should defer to the market                   efficient. AACO went on to state that the              determine his or her baggage fees
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                                                      place which is rapidly developing and                   Department should not specify how                      particularly for interline itineraries and
                                                      ‘‘progressively improving reasonable                    airlines display information. AACO also                guess what an assigned seat fee might
                                                      consumers’ ability to determine the total               stated that a requirement to distribute                cost. We disagree with airlines and
                                                      cost of their travel before purchase.’’                 through the GDSs would have a negative                 airline associations that these facts do
                                                         Several foreign air carriers endorsed                effect on future innovation in the                     not reflect consumer harm as we believe
                                                      IATA’s comments and opposed any                         distribution and display of ancillary                  the additional time spent searching to
                                                      Department regulation of disclosure of                  services and fees as well as give GDSs                 find the total cost of travel and the
                                                      ancillary service fees. Aerovı́as de                    the upper hand in contract negotiations                additional funds spent on air
                                                      México, S.A. de C.V., (Aeromexico) and                 with airlines.                                         transportation that might have been


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                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                             7541

                                                      avoided if the consumer had been able                   airlines are unbundling fares and have                 that if airlines and ticket agents do not
                                                      to determine the true cost of travel up                 implemented ancillary service fee                      provide reasonable disclosure of
                                                      front are the harms suffered by                         policies that even the airlines                        ancillary service fees intrinsic to air
                                                      consumers when basic ancillary service                  acknowledge are complex justifies                      transportation at the point that
                                                      fees are not adequately disclosed.                      efforts by the Department to ensure that               consumers are researching the total cost
                                                         The Department agrees with                           consumers are able to discern the true                 of travel and making a purchasing
                                                      commenters that supported a need for                    cost of travel that includes basic                     decision then consumers are not able to
                                                      rulemaking to allow consumers to have                   ancillary service fees. Moreover, the                  make an informed decision based on the
                                                      complete access to certain basic                        existence of complex fee calculations                  true cost of air transportation. Although
                                                      ancillary service fees in a manner that                 that take into account a variety of factors            the disclosures mandated in the
                                                      permits them to quickly and effectively                 does not explain why airlines do not                   previous rulemaking improved
                                                      determine their true cost of travel,                    provide better disclosure of baggage fee               consumer access to airline ancillary
                                                      although as explained further below, the                information that they already provide as               service fee information by requiring
                                                      Department has changed its view on                      a specific amount on a static list.                    those fees to be displayed somewhere,
                                                      what constitutes a basic ancillary                      Although there are complexities                        airlines continue to disclose fees in a
                                                      service. Further, until all airlines and                involved in displaying baggage fees, the               static format in complex charts that can
                                                      ticket agents are required to display                   comments demonstrate there is no                       be confusing to consumers. Further, in
                                                      certain basic ancillary service fees, and               technical impediment to displaying                     connection with complex itineraries,
                                                      carriers are required to transmit fees for              baggage fees with search results on                    interline tickets, and even some code-
                                                      basic ancillary services to ticket agents,              carrier Web sites, yet that information is             share flights, consumers are still
                                                      there is a strong incentive for carriers to             still not displayed.                                   reporting confusion regarding the total
                                                      obfuscate those fees. That is because if                   In support of its argument that the                 cost of baggage fees. There is a close
                                                      all competing carriers do not make                      Department has not demonstrated a                      connection between comparison
                                                      similar disclosures, any airline that                   problem that it has authority to regulate,             shopping to determine the best value
                                                      disclosed the cost of ancillary services,               A4A provided two examples (from the                    and knowing the total or true cost of
                                                      such as baggage fees, would appear to                   NPRM and a docket record of an A4A                     travel because consumers must know
                                                      charge more for air transportation than                 meeting with Department staff) 2 in                    the total cost of travel to shop effectively
                                                      the airlines that did not clearly provide               which the Department referred to                       for the best price. However, the concern
                                                      fee information for those ancillary                     consumers’ ability to ‘‘comparison                     we are proposing to address is whether
                                                      services. Therefore, even carriers that                 shop’’ as well as a reference in the                   consumers are able to ascertain the total
                                                      believe it is appropriate and consumer-                 NPRM to allowing consumers to ‘‘price                  cost of air transportation without
                                                      friendly to provide the information in a                shop’’ and a reference to complaints by                confusion before they make a purchase,
                                                      clear fashion have a strong marketplace                 business travel representatives regarding              whether the consumer engages in
                                                      disincentive to disclose the cost of                    the difficulty of advising ‘‘clients on the            comparison shopping or not. In this
                                                      ancillary services. The Department                      best and most cost effective flights.’’                SNPRM, we are seeking comments on a
                                                      notes that even the comments by                         According to A4A, it is not within the                 requirement that specific ancillary
                                                      airlines and airline associations that                  Department’s authority to require                      service fee information be provided to
                                                      argued that the market is resolving the                 further disclosure of fees because we are              consumers at the same time fare
                                                      issue described the changes as ongoing                  taking the action to ensure consumers                  information is provided to help them
                                                      and recognized that it will take time for                                                                      determine the true cost of travel prior to
                                                                                                              have the opportunity to comparison
                                                      airlines and ticket agents to come to                                                                          purchase.
                                                                                                              shop, which is not sufficient
                                                      agreement and implement new methods
                                                                                                              justification for the action. We                       B. The Definition of Basic Ancillary
                                                      of disclosure. Although airline
                                                                                                              acknowledge that the Department has at                 Service Fees
                                                      associations point to the number of
                                                                                                              times used terms such as ‘‘comparison                     The NPRM: The NPRM set forth the
                                                      agreements being reached between
                                                                                                              shopping’’ in connection with ancillary                Department’s view that certain basic
                                                      airlines and GDSs regarding GDS access
                                                                                                              service fee disclosure. However, we                    services are intrinsic to air
                                                      to bundled fare packages that include an
                                                                                                              disagree that the rationale of our                     transportation and that carriers used to
                                                      advance seat assignment, those
                                                                                                              proposed rule is to enhance consumers’                 include them in the cost of air
                                                      agreements are bilateral agreements
                                                      addressing limited services, primarily                  ability to comparison shop. The                        transportation before the advent of
                                                      enhanced seating options, in limited                    Department’s view is that consumers                    unbundled fares. We further noted that
                                                      markets and are not widely available to                 should be able to determine if the price               the cost of those services is important to
                                                      the general public.                                     provided is the total cost they will                   consumers when they choose among air
                                                         Meanwhile, airlines are capable of                   incur, whether purchasing through an                   transportation options. The NPRM
                                                      disclosing some ancillary service fees in               airline or a ticket agent outlet, and our              identified basic ancillary services as the
                                                      search results on their own Web site                    rulemaking is based on addressing that                 first and second checked bag, one carry-
                                                      search result displays today, yet choose                issue. The Department’s position, as set               on item and advance seat selection. The
                                                      not to do so. The Department is not                     forth in both the NPRM and the                         NPRM requested comment on whether
                                                      persuaded by airline arguments that the                 responses to A4A’s questions, is that the              the Department’s list of basic ancillary
                                                      complexity of factors considered when                   proposals on ancillary service fees                    services should be expanded. We also
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                                                      setting fees is a sufficient justification              address the concerns regarding ensuring                asked whether current disclosure
                                                      for leaving it to the airlines to decide                that consumers are aware of the total                  requirements are sufficient and whether
                                                      how much disclosure to provide                          cost of travel.3 The Department’s                      there is any need to adopt additional fee
                                                      regarding basic ancillary service fees. To              concern addressed by this rulemaking is                disclosure requirements for basic
                                                      the contrary, any argument that fees are                                                                       ancillary services.
                                                                                                                2 See DOT–OST–2014–0056–0624, Summary of
                                                      difficult to explain or quantify militates                                                                        Comments: The comments reflected a
                                                                                                              Proceedings, DOT Meeting with Airlines for
                                                      for greater disclosure requirements of                  America (A4A) (posted September 15, 2014).             diversity of views on this issue. Most
                                                      fees for basic ancillary services intrinsic               3 NPRM at 29975 and DOT Meeting with A4A,            consumer comments generally favored
                                                      to air transportation. The mere fact that               page 4, question 9.                                    more transparency regarding fees and


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                                                      7542                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      some identify categories of fee                         disclosed in an itinerary specific                     ultimately would not be in the interests
                                                      information about which they would                      manner because sellers of package tours                of consumers.
                                                      like more information—and they would                    may not have access to seat assignments                   DOT Response: We take note of the
                                                      like it early in the process of selecting               at the time the package is sold or, since              comments focused on technical issues
                                                      a fare. In addition to consumer                         seats are inventory-controlled, the cost               and stating that due to technological
                                                      comments stating they want more                         is likely to change before a consumer is               limitations, the Department should not
                                                      information about all the fees airlines                 able to purchase them on an airline Web                require disclosure of such fees.
                                                      charge, a few comments identified                       site. Spirit asserted that any advance                 However, we note that many of the
                                                      specific fees. The fees consumer                        seat assignment fee disclosure should be               comments pointed to the progress in
                                                      commenters most commonly identified                     eliminated because all airlines provide                technology and in commercial
                                                      were baggage, seat assignments, and                     a seat with the cost of air transportation             agreements. That progress is allowing
                                                      change or cancellation fees, and a few                  so disclosing an advance seat                          GDSs to provide advance seat
                                                      mentioned advance boarding fees. The                    assignment fee at the beginning of a                   assignment information to ticket agents
                                                      comments of consumer advocacy                           booking process may induce someone to                  and allowing ticket agents that sell to
                                                      organizations Consumers Union, U.S.                     purchase it when there is no need to do                consumers to provide that information
                                                      PIRG, Travelers United, and NCL                         so. A4A, AACO, and United commented                    to consumers and transact those fees. It
                                                      expressed support for greater disclosure                that advance seat assignments have not                 appears from the comments that the
                                                      of all ancillary service fees, going                    been traditionally provided to                         ability to display dynamic seat
                                                      beyond the baggage and seat assignment                  consumers as part of the price of air                  assignment fees and sell such services is
                                                      fees specified in the NPRM. Travelers                   transportation. Comments by A4A and                    progressing rapidly and with sufficient
                                                      United and NCL contended that the                       United noted that fare purchases                       implementation time, such fees could be
                                                      Department should require airlines to                   guarantee a seat in a particular cabin,                disclosed. In addition, we are
                                                      release airfares and all ancillary fee data             such as first class or economy, but not                unpersuaded by the argument that seat
                                                      for any entity to use as it wishes. BTC                 a particular seat number. In addition,                 assignment fees are dynamic and
                                                      stated that boarding fees and change or                 historically seats often were not                      therefore should not be considered a
                                                      cancellation fees should be included, as                assigned until 30 days before a flight or              basic ancillary service fee. The dynamic
                                                      well as bundles that include a basic                    at the gate on the day of flight. A4A and              and changing nature of seat assignment
                                                      ancillary service. Similarly, BCD Travel                United further noted that Southwest                    fees tends to support a requirement that
                                                      USA LLC (BCD), a corporate travel                       does not provide seat assignments at all.              such fees be not only disclosed but
                                                      management company, also commented                         ATPCO and Farelogix did not                         transactable. However, we are
                                                      that advance boarding fees and bundles                  comment on whether baggage or seat                     convinced by carrier arguments that
                                                      that include a basic ancillary service                  assignment fees are intrinsic to air                   advance seat assignments were not
                                                      should be included. In addition to                      transportation, but rather on the                      universally provided to consumers as
                                                      specified baggage and seat assignment                   difficulty of disclosing the information.              part of the price of air transportation
                                                      fees, Travel Tech and Open Allies both                  ATPCO stated that it can already                       even before the unbundling of fares. As
                                                      commented that advance boarding,                        support the proposed requirement to                    noted by A4A and United, fare
                                                      change, and cancellation fees are                       disclose first and second checked bag                  purchases always did and still do
                                                      ‘‘basic’’ and further stated that any                   fees, which is also supported by A4A’s                 guarantee a seat in a particular cabin,
                                                      ancillary service ‘‘package’’ that                      comments indicating that airlines have                 such as first class or economy, but not
                                                      includes a basic ancillary service should               provided itinerary-specific checked                    a particular seat number. In addition,
                                                      be disclosed. Open Allies stated that                   baggage fees to ATPCO for distribution                 we acknowledge seats often were not
                                                      these services are all critical to booking              to other industry participants. ATPCO                  assigned until a few weeks before the
                                                      decisions. Sabre agreed with the Open                   also stated that the industry is working               flight or even on the day of flight. Now,
                                                      Allies comment on this issue. Amadeus                   to address disclosure of carry-on                      in an era of unbundled fares, some
                                                      also stated the Department should                       baggage and seat assignment fees.                      carriers offer few advance seat
                                                      expand the definition to include                        However, given the complex pricing                     assignments for free but those carriers
                                                      boarding fees and change and                            structure for seats, and the variation in              assign a seat without charge on or close
                                                      cancellation fees as well as bundles that               carry-on baggage allowances depending                  to the day of travel. In addition, at least
                                                      include basic ancillary services.                       on the aircraft, disclosure of this                    one U.S. carrier, Southwest, does not
                                                      TripAdvisor stated that limiting the list               information is a complex undertaking                   provide seat assignments at all.
                                                      of fees that must be disclosed to ‘‘basic’’             that will take significant time to                     Meanwhile, we note that it would be a
                                                      fees is a mistake because carriers may                  achieve. Farelogix stated that the                     violation of the full fare rule and an
                                                      unbundle some other ‘‘essential’’ service               industry is working towards distribution               unfair and deceptive practice if a carrier
                                                      and absent another lengthy Department                   of seat assignment fees but that due to                required a consumer to pay an
                                                      rulemaking, the information would not                   dynamic pricing of seats, and the need                 additional fee beyond airfare to obtain
                                                      be disclosed to consumers. Southwest                    to determine availability at the time the              any seat at all. Carriers must provide a
                                                      commented on baggage fees, stating that                 price is displayed, it is not currently                seat in the class of service that was sold
                                                      they are unique because transporting                    practicable to display dynamic seat                    to the consumer regardless of whether a
                                                      passenger baggage is intrinsic to air                   assignment fees at the shopping stage.                 seat is assigned in advance or not.
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                                                      transportation.                                         According to Farelogix, a requirement                  Accordingly, we have tentatively
                                                         On the other hand, several                           by the Department to provide seat                      concluded that advance seat
                                                      commenters opposed defining basic                       assignment fees at the shopping stage                  assignments should not be considered
                                                      ancillary services as intrinsic to air                  would effectively force industry                       intrinsic to air transportation. In
                                                      transportation or including seat                        participants to provide static fees. Such              addition, although we appreciate that
                                                      assignment fees as a basic ancillary                    a requirement would redirect industry                  advance boarding options and related
                                                      service. USTOA commented that the                       efforts to implementing a static system                fees are important to many consumers
                                                      Department should not include a                         rather than continuing to work toward                  that would like to purchase that service,
                                                      requirement that seat assignment fees be                modernizing distribution systems and                   it is not a service that historically has


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                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                            7543

                                                      been included in the cost of air                        and schedule information is disclosed.                 assumption that GDSs and similar
                                                      transportation.                                         Therefore our revised proposal in this                 intermediaries would not be subject to
                                                         Turning to change and cancellation                   SNPRM includes a requirement that                      any direct consumer notification
                                                      fees, we are aware that such fees are                   carriers disclose to ticket agents the fees            requirements. This means that, in
                                                      important information and in fact are                   for one carry-on item and a first and                  addition to GDSs and similar business-
                                                      significant restrictions that must be                   second checked bag. The proposal                       to-business intermediaries, entities that
                                                      disclosed to consumers because it                       would also require ticket agents and                   operate flight search tools but do not
                                                      would be an unfair and deceptive                        carriers to provide those fees to                      transact sales to consumers would not
                                                      practice not to disclose such fees.                     consumers whenever fare and schedule                   have been subject to direct consumer
                                                      Further, carriers are required to provide               information is provided as described in                notification requirements. Neither
                                                      direct notice with the ticket (14 CFR                   Section F below. We seek comment on                    proposal required carriers to distribute
                                                      253.7) of terms such as restrictions on                 the revised proposal.                                  ancillary service fee information to any
                                                      refunds, and information regarding                        Although we have tentatively                         GDS or other ticket agent to whom the
                                                      cancellation fees in their customer                     concluded that only certain baggage fees               carrier does not choose to distribute its
                                                      service commitments. We encourage                       should be included in our disclosure                   fare, schedule, and availability
                                                      carriers to make change and                             requirement, we note that some                         information. In connection with
                                                      cancellation fee information as                         members of Congress have expressed                     transactability, neither of the proposals
                                                      transparent and clear to consumers as                   the view that in addition to baggage                   required transactability (the ability for
                                                      possible. We also solicit comment on                    fees, advance seat assignment fees,                    ticket agents to sell/transact an airline
                                                      whether the Department should require                   change and cancellation fees, priority                 ancillary service to consumers). The
                                                      airlines and ticket agents, prior to an                 boarding fees, and ticket fees should all              options proposed merely required
                                                      online transaction being completed, to                  be disclosed where fares are displayed.                carriers to provide ‘‘usable, current and
                                                      provide consumers a link to the airline                 See, for example, HR 636 (as passed in                 accurate’’ information on fees for basic
                                                      Web sites where the change and                          the Senate in April 2016). In the event                ancillary services to all ticket agents so
                                                      cancellation information is available or                future similar legislation is enacted to               this information may be disclosed to
                                                      if an agent prefers to its own site that                require the Department to address                      consumers wherever fare, schedule, and
                                                      displays airlines’ change and                           whether advance seat assignment fees,                  availability information is provided.
                                                      cancellation information. However,, we                  change and cancellation fees, priority                    Under both of the proposals, U.S. and
                                                      are not convinced that change and                       boarding fees, and ticket fees should all              foreign air carriers would have been
                                                      cancellation fees are a cost that is                    be disclosed where fares are displayed,                required to distribute to certain ticket
                                                      intrinsic to air transportation and must                we seek comment on such a disclosure                   agents the standard fees for basic
                                                      be disclosed at the same point that                     requirement. What are possible benefits                ancillary services. However, carriers
                                                      itinerary information is disclosed. Like                to consumers from a requirement to                     would not have been required to
                                                      seat assignments, many consumers avail                  disclose baggage fees, advance seat                    provide information to ticket agents
                                                      themselves of air transportation without                assignment fees, change and                            about individual customers, such as
                                                      making changes or canceling                             cancellation fees, priority boarding fees,             their frequent flyer status, though these
                                                      reservations.                                           and ticket fees along with fares? What                 factors may impact the fee for an
                                                         Regarding bundled fares that include                 are the costs and potential challenges to              ancillary service. Under both proposals,
                                                      the fees that the Department initially                  implementing such a requirement?                       specific charges, not a range of fees,
                                                      considered basic ancillary service fees                 Comments that are most useful provide                  would have to have been disclosed to
                                                      (e.g., advance seat assignment or certain               information regarding the reasons why                  consumers for basic ancillary service
                                                      baggage fees), our position is that                     additional disclosures should be                       fees. Neither of the Department’s
                                                      consumers need to be able to ascertain                  required or should not be required. In                 alternative proposals dictated the
                                                      the true cost of travel including basic                 addition, comments describing specific                 method that carriers must use to
                                                      ancillary service fees so to the extent                 costs and benefits would be helpful.                   distribute the information, rather, the
                                                      that a carrier wanted to provide a                                                                             NPRM cautioned that carriers would
                                                      bundled fare in addition to an                          C. Disclosure by Carriers to Ticket
                                                                                                                                                                     have to be mindful that whatever
                                                      unbundled fare and basic ancillary                      Agents of Fees for Basic Ancillary
                                                                                                                                                                     distribution method is used would have
                                                      service fees, a carrier would be free to                Services
                                                                                                                                                                     to provide usable, accurate, and current
                                                      do so. However, if the carrier is                          The NPRM: The NPRM put forth two                    information so the information would
                                                      disclosing basic ancillary service fees at              co-proposals. Under both proposals,                    be accessible in real-time. Further, ticket
                                                      the same point fare information is                      each carrier would have been required                  agents would have had to work in good
                                                      disclosed, then under this proposal                     to distribute its basic ancillary service              faith with carriers to come to agreement
                                                      additional options such as bundled fares                fee information to certain ticket agents               on the method used to transmit the
                                                      are not something a carrier would have                  that the carrier permits to distribute its             ancillary service fee information.
                                                      to disclose to ensure the consumer was                  fare, schedule, and availability                          Comments: In response to the NPRM,
                                                      aware of the true cost of travel.                       information. Under the first proposal,                 many commenters suggested that the
                                                         With regard to baggage fees, the                     option A, carriers would have been                     Department go further than either
                                                      comments did not offer any reason to                    required to distribute the information to              option A or option B in terms of
                                                      change our view that a carry-on bag and                 all ticket agents, including GDSs, that                disclosure by carriers to ticket agents.
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                                                      first and second checked bag were                       the carrier provides fare, schedule, and               For example, Open Allies, Travelers
                                                      traditionally included in the cost of                   availability information for distribution.             United, NCL, CCIA, TripAdvisor, and
                                                      transportation. We remain of the view                   Under the second proposal, option B,                   Skyscanner recommended that the
                                                      that a carry-on bag and first and second                carriers would not have been required to               Department require airlines to share all
                                                      checked bag are intrinsic to air                        distribute ancillary service fee                       flight content information with any
                                                      transportation and it is reasonable to                  information to GDSs or other                           interested entity. According to CCIA,
                                                      require carriers and ticket agents to                   intermediaries that do not sell the                    that would provide consumers with
                                                      disclose those baggage fees to                          carrier’s tickets directly to consumers.               accurate ancillary fee information in the
                                                      consumers at the same point that fare                   The option B proposal included an                      most direct manner with the least


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                                                      7544                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      regulatory cost. TripAdvisor commented                  noted the Department’s desire to                       ancillary service fee information unless
                                                      that the Department should require                      minimize government interference and                   the information is first provided by
                                                      airlines to make all flight-specific                    encourage innovation but stated that not               carriers to ticket agents via GDSs;
                                                      information, including fares and fees,                  requiring disclosure to GDSs will be a                 otherwise, ticket agents would be
                                                      available to all information providers,                 disservice to consumers. Travel Tech                   required to obtain the information from
                                                      because open exchange of information is                 stated that it is not a new concept and                each carrier. BCD commented that ticket
                                                      the best way to protect consumers.                      analogizes to existing Department                      agents must have access to information
                                                      Skyscanner also argued that                             requirements, such as the requirement                  about ancillary services through GDSs,
                                                      transparency for consumers can only be                  that carriers provide GDSs code-share                  the ‘‘normal and customary distribution
                                                      achieved if the Department requires                     and change-of-gauge information when                   channels’’ that are time-tested and
                                                      airlines to disclose fee information to all             providing flight information to GDSs.                  functional. Without the requirement
                                                      entities involved in the travel booking                 Travel Tech went on to state that GDSs                 that GDSs have the information, BCD
                                                      process, including metasearch sites.                    are technically capable of displaying                  stated it will incur material costs in
                                                      TripAdvisor further commented that if                   ancillary services and fees as carriers                obtaining the ancillary service
                                                      the Department chooses from the                         want them displayed. Meanwhile,                        information from every airline and will
                                                      proposed options, it should adopt                       carriers can continue to develop                       not be able to ensure it has accurate and
                                                      option A, requiring disclosure of basic                 alternative distribution arrangements for              complete information. Travelers United
                                                      ancillary service fees to all entities with             future use while allowing ticket agents                and NCL supported option A as the best
                                                      which the carrier shares fare                           to provide the disclosure to consumers                 of the options proposed. BTC supported
                                                      information, as that is the practical and               as contemplated by the Department.                     option A, commenting that there is no
                                                      efficient way for ticket agents to receive                 Sabre, in support of option A, stated               usable, workable mechanism for airlines
                                                      and display the fee information and                     that its services make sharing price                   to distribute ancillary service fee
                                                      comply with Department requirements.                    information accurate and efficient as                  information to tens of thousands of
                                                      Meanwhile, to the extent the                            well as cost effective for ticket agents.              individual travel agents, most of whom
                                                      Department adopts one of the two                        Sabre further stated that if travel agents             already rely on GDSs. Skyscanner noted
                                                      proposed options, Travelers United and                  that rely on GDSs were forced to use an                that if the Department chooses option B
                                                      NCL supported option A. According to                    alternative, they would incur costs that               over option A, consumers who conduct
                                                      Travelers United and NCL, option B is                   would ultimately be passed on to                       searches on metasearch Web sites that
                                                      not feasible because the existing air                   consumers. Travelport commented in                     do not sell the ticket will not receive the
                                                      travel distribution system relies on                    support of option A, noting the                        same ancillary fee information that is
                                                      GDSs, the current marketplace would be                  Department’s statement that 50 percent                 disclosed on traditional travel agent or
                                                      extremely limited by exclusion of GDSs,                 of tickets are sold via a travel agent and             carrier Web sites.
                                                      and there is no alternative distribution                virtually all of those agents rely on a
                                                                                                              GDS as an efficient data conduit.                        A4A opposed the disclosure
                                                      network currently in place.
                                                         Open Allies also supported option A.                 Amadeus offered similar reasons in                     requirement on the grounds that it will
                                                      According to Open Allies, option B,                     support of option A, noting that ticket                place airlines at a disadvantage to GDSs
                                                      which would not require distribution to                 agents already rely on GDSs as an                      in contract negotiations and also
                                                      GDSs, discriminates against ticket                      efficient source of data. Amadeus also                 opposed it on technology grounds. A4A
                                                      agents and is not a good solution. Open                 pointed out that many travel agents are                argued that GDSs have historically been
                                                      Allies stated that agents and airlines                  small businesses that rely on GDSs for                 in a stronger negotiating position than
                                                      need GDS involvement for the potential                  airline data and if data were not                      airlines and that GDSs were only willing
                                                      benefits of the regulation to be put into               provided through GDSs, they would not                  to develop new technologies for
                                                      place in a workable manner and that                     have a financially feasible way to obtain              accessing and distributing airline fare
                                                      including GDSs is the lowest cost, most                 and distribute the information. Such                   and flight information because the GDSs
                                                      efficient way of achieving the                          agencies could not afford or manage the                did not have contract provisions
                                                      Department’s disclosure goal. The                       technical complexity of, for example,                  requiring airlines to provide ancillary
                                                      organization also argued that there is no               direct connects with multiple airlines,                services information. The ancillary
                                                      valid reason to exclude intermediaries                  to obtain and disclose ancillary service               services information, in addition to
                                                      from disclosure requirements when to                    fee information.                                       motivating GDS investments in
                                                      do so will make fee dissemination more                     ASTA and several travel agents also                 technology, enabled airlines to negotiate
                                                      challenging and costly.                                 commented that GDSs have the                           lower GDSs booking fees. According to
                                                         Travel Tech also commented in                        technology to allow travel agents to                   A4A, GDS concessions on pricing and
                                                      support of option A, stating that it is the             book ancillary services. ASTA also                     technology resulted because airlines did
                                                      only option that will achieve the                       noted that travel agents rely on GDSs for              not have the obligation to provide the
                                                      Department’s goals. According to Travel                 a variety of business functions in                     ancillary service fee information to
                                                      Tech, 90 percent of ARC-approved                        addition to booking, and accordingly                   GDSs, and if the Department requires
                                                      ticket agents use GDSs and, although                    ASTA stated that option A, excluding                   airlines to provide such information, it
                                                      that may change over time, as a practical               GDSs, would harm travel agents. ASTA                   will restore GDSs to a stronger
                                                      matter, many ticket agents currently rely               also stated that option B does not                     negotiating position over airlines. A4A
                                                      on GDSs for data today. It is an efficient              provide sufficient protection for                      stated this will be the case whether the
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                                                      way for ticket agents to receive fee                    consumers. Therefore, according to                     Department adopts option A, expressly
                                                      information, is currently in use for                    ASTA, the Department should not adopt                  requiring airlines to provide the
                                                      many charges that airlines already                      either option A or B and instead should                information to GDSs, or option B,
                                                      impose, and will facilitate display of the              require transactability.                               requiring airlines to give the
                                                      information. According to Travel Tech,                     Corporate travel agents American                    information to GDSs as a practical
                                                      option B raises a ‘‘nightmare’’ prospect                Express Global Business Travel, Carlson                matter. A4A also objected to the
                                                      for many travel agents, including OTAs,                 Wagonlit Travel (CWT), and BCD                         proposal on the grounds that
                                                      of not being able to rely on their                      supported option A. CWT commented                      distribution channels would all have to
                                                      established data source. Travel Tech                    that ticket agents cannot provide                      offer the same functionality and not


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                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                           7545

                                                      every channel has the more developed                    United also notes that ATPCO (relied on                technical issues to be worked out to
                                                      functionality needed to distribute                      by GDSs) does not have the                             distribute information on fees for carry-
                                                      dynamic fees. The effect would be to                    technological capability to process                    on items but ATPCO is already working
                                                      impose a system of static fees, according               constantly changing ancillary service                  with certain carriers and ticket agents,
                                                      to A4A. AACO also commented that a                      prices, which makes this issue more                    including GDSs, to distribute and even
                                                      requirement to distribute ancillary                     complex than addressing baggage fees.                  transact checked bag fees. Further, the
                                                      service fee information through GDSs                    Like AACO, Delta and United seem to                    proposals in the 2014 NPRM reflect our
                                                      would essentially require carriers to                   indicate that a requirement to distribute              view that basic ancillary fee information
                                                      distribute static fees to ticket agents                 ancillary service fee information                      should be shared with all consumers at
                                                      instead of the dynamic fees currently                   through GDSs would essentially require                 all outlets. IATA acknowledges that
                                                      available on carrier Web sites. This                    carriers to distribute static fees to ticket           more work needs to be done by the
                                                      would force airlines to use static fees on              agents.                                                industry in that area. We agree with the
                                                      their Web sites for the sake of                            China Eastern stated that option B                  comments of Skyscanner that our
                                                      consistency and would limit innovation                  would present fewer technical and                      consumer protection goals would be
                                                      and could lead to higher charges for                    development hurdles. Spirit commented                  undermined if we did not require
                                                      consumers. IATA also opposed the                        that option B is less intrusive and that               disclosure to intermediaries in arranging
                                                      disclosure requirement, arguing that the                a requirement to distribute ancillary                  for air transportation, such as
                                                      changing marketplace is making                          service fee information to all travel                  metasearch entities that operate flight
                                                      information more readily available to                   intermediaries as described in option A                search tools, as those entities would not
                                                      consumers because airlines are                          may cause Spirit to withdraw from one                  necessarily have basic ancillary service
                                                      motivated to disclose the information                   or more GDSs altogether due to                         fee information to provide to
                                                      and consumers are used to unbundled                     increased distribution costs. Insel, a                 consumers. Regarding the ability of
                                                      fares and know how to search and find                   Caribbean carrier, commented that                      GDSs to distribute the information, all
                                                      such information. IATA stated that                      consumers must be informed of the total                three GDSs serving the U.S. market
                                                      airline Web sites offer consumers and                   cost associated with their travel;                     assert they have the technical ability to
                                                      ticket agents comprehensive and                         however, requiring disclosure through                  distribute baggage fee information. In
                                                      accurate ancillary service fee                          GDSs would increase airlines’ costs, and               addition, we find persuasive some ticket
                                                      information. However, according to                      those costs would likely be passed on to               agent comments that they rely on
                                                      IATA, a Department rule mandating                       consumers. Virgin Atlantic is concerned                receiving information through the GDS
                                                      disclosure will harm consumers,                         about the burden of ensuring ticket                    channel, that alternative distribution
                                                      because it could shift current                          agents that have Virgin Atlantic’s fare,               methods would be practically disruptive
                                                      marketplace momentum from                               schedule, and availability information                 and technically difficult if not
                                                      implementing new internet-based                         also have ancillary service fee                        impossible to implement, and would
                                                      technologies that offer dynamic                         information and stated that if a carrier               cause them to incur significant costs.
                                                      solutions back to inferior solutions                    has shared information with ATPCO or                   We recognize that with either option
                                                      offered on legacy infrastructure.                       a direct connect, that should be                       some time would be needed to develop
                                                                                                              sufficient.                                            the process for disclosure, particularly
                                                         Most airline comments objected to                       DOT Response: We have carefully
                                                      any ancillary service fee disclosure                                                                           in connection with carry-on bags, as
                                                                                                              considered the comments regarding
                                                      requirement, with several indicating                                                                           ATPCO noted. The proposed
                                                                                                              whether to require carriers to distribute
                                                      that any Department involvement would                                                                          implementation period is discussed
                                                                                                              ancillary service fee information to all
                                                      unduly influence contract negotiations                                                                         below in section G.
                                                                                                              ticket agents that a carrier provides with
                                                      and distribution innovations. In contrast               its fare, schedule, and availability                      In connection with the requirement
                                                      to ticket agents and their                              information, including GDSs, or only to                that the distribution method used would
                                                      representatives, some carriers stated that              require carriers to distribute the                     have to provide usable, accurate, and
                                                      any requirement to distribute fees will                 information to those ticket agents that                current ancillary service fee information
                                                      effectively require them to distribute to               sell its tickets. We recognize that both               so the information would be accessible
                                                      GDSs, which would unfairly                              options potentially impact relationships               in real-time, some entities comment that
                                                      disadvantage them in negotiations with                  among commercial entities and we do                    the 2014 NPRM does not define with
                                                      GDSs as well as lock them into a                        not take Department involvement in                     sufficient specificity what constitutes
                                                      distribution model that relies on static                carrier distribution channels lightly. We              usable, accurate, and current. Farelogix
                                                      fees, which will create obstacles to                    recognize that airlines have concerns                  commented that distribution through
                                                      innovation. However, some commented                     that being required to provide certain                 GDSs would effectively halt or limit
                                                      that to the extent that the Department                  ancillary fee information to GDSs will                 dynamic pricing because according to
                                                      adopts one of the proposals, some                       put airlines at a disadvantage when                    Farelogix, GDSs are only able to provide
                                                      carriers supported Option B, requiring                  negotiating contract terms with GDSs.                  static pricing. However, the comments
                                                      disclosure of ancillary service fee                     We also understand that airlines have                  opposing use of GDSs to transmit fee
                                                      information to ticket agents that sell                  concerns about being required to rely on               information were focused on the
                                                      transportation only, excluding GDSs                     GDS infrastructure and GDS ability to                  technical limitations of GDSs in the area
                                                      and other intermediaries. For example,                  market dynamic fees as carriers do on                  of dynamic fees (which GDSs dispute);
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                                                      Delta stated that the Department should                 their own Web sites. However, airline                  there were no comments indicating that
                                                      refrain from any regulation of airline                  complaints about the technical deficits                any entity thought that baggage fee
                                                      distribution channels, but option B                     of GDSs appear to be focused on                        information transmitted through GDSs
                                                      would have less impact on negotiations                  dynamic fees. Airlines already rely on                 would not be usable, accurate, and
                                                      between carriers and GDSs. United                       the GDSs to distribute baggage fee                     current. A4A’s comment indicates that
                                                      commented that option B would better                    information and carriers do not provide                the fee information for checked baggage
                                                      allow for development of alternative                    a strong argument against using GDSs to                is already available in the GDS systems
                                                      systems for airlines to provide                         distribute this information. Meanwhile,                via ATPCO filings. We note that the
                                                      information directly to travel agents.                  ATPCO notes that there are some                        proposed requirement to provide


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                                                      7546                    Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      information to GDSs only applies if the                   regulatory involvement in business                    should require airlines to release all
                                                      carrier is using the GDSs to distribute its               arrangements is minimal and justifiable.              ancillary service data and let market
                                                      fare, and schedule information. We do                        We note that in this SNPRM we are                  innovations determine how it is
                                                      not believe such a requirement would                      proposing to require carriers to provide              provided to consumers. Open Allies
                                                      be unduly burdensome on carriers as it                    certain ancillary service fee information             commented that the Department should
                                                      appears that the primary objection of                     to all ticket agents to which it provides             require airlines to provide basic
                                                      carriers from a technical standpoint                      fare and schedule information. This                   ancillary service fee information to
                                                      relates to limited availability services                  would ensure consumers receive key                    ticket agents in a format that allows
                                                      subject to dynamic pricing, such as seat                  baggage fee information at the same time              ticket agents not only to disclose the
                                                      assignment fees, and seat assignment fee                  that they are identifying flight options              information to consumers but also to
                                                      information is no longer included in the                  so that they have enough information to               sell the services.
                                                      proposed requirement. In response to                      determine the true cost of travel. We                    Open Allies stated it believes that the
                                                      some comments that by imposing                            believe that furnishing availability                  lack of transactability is unlikely to be
                                                      disclosure requirements on checked                        information to ticket agents should not               resolved by carriers absent a rule. The
                                                      baggage fees the Department would be                      be a determining factor in whether the                organization commented that ticket
                                                      effectively prohibiting carriers from                     agent receives the ancillary service fee              agents should be able to sell services
                                                      offering discounts through dynamic                        information in question. Requiring                    because consumers support
                                                      pricing, we disagree. Carriers are free                   carriers to provide required ancillary                transactability. It pointed to a survey it
                                                      under Department rules to offer                           service fee information to all ticket                 conducted which showed 72 percent of
                                                                                                                agents to which they provide fare and                 survey respondents believe
                                                      discounts, whether though dynamic
                                                                                                                schedule information should ensure that               transparency includes transactability.
                                                      pricing or other methods, if the pricing
                                                                                                                all relevant ticket agents are provided               Open Allies also noted that requiring
                                                      is properly disclosed. 4 Further, some
                                                                                                                with the ancillary service fee                        transactability would save time and be
                                                      carriers are already working with GDSs
                                                                                                                information without imposing an overly                more efficient for consumers. If
                                                      to offer premium seats, so we are not
                                                                                                                broad requirement. We seek comment                    transactability is not required, it
                                                      convinced that they could not do the                      on the substance of the proposal and                  contended, consumers will have to go to
                                                      same with baggage fees. The remaining                     whether the description of ticket agents              airline Web sites to find and purchase
                                                      objection, being placed in a                              that should receive basic ancillary                   a service found on a ticket agent Web
                                                      disadvantageous position in contract                      service fee information is sufficiently               site and, unless fees are unchangeable,
                                                      discussions, would be addressed by a                      broad.                                                the service may no longer be available,
                                                      prohibition on unilateral contract                                                                              or available at the quoted price, at that
                                                      provisions related to distribution, as                    D. Transactability
                                                                                                                                                                      time. According to Open Allies, airlines
                                                      discussed more fully below.                                  The NPRM: In the NPRM, the                         are the only entities that ‘‘disaggregate’’
                                                         After carefully considering all of the                 Department requested comment on the                   pricing and as a consequence the
                                                      comments submitted, the Department                        issue of requiring that basic ancillary               Department should regulate ‘‘pricing
                                                      has decided to propose requiring                          services be made transactable (i.e., to               transparency’’ which is only possible
                                                      carriers to provide information on fees                   require that airlines permit online travel            with transactability. Open Allies
                                                      for one carry-on item and first and                       agencies to sell these ancillary services).           disagreed with the carrier position that
                                                      second checked bag to all ticket agents                   The Department recognized that                        GDSs have greater bargaining power
                                                      to which it provides fare and schedule                    transactability is a very important                   than airlines in contract negotiations,
                                                      information, including GDSs and other                     business issue for both carriers and                  noting the reduced GDS fees airlines
                                                      intermediaries in the air transportation                  ticket agents and noted that we want to               have negotiated since GDS deregulation.
                                                      marketplace. This option provides for                     avoid causing a negative impact on                    Open Allies also said the decreased
                                                      wide distribution with the least                          innovation or unnecessarily intruding                 number of legacy carriers in the United
                                                      disruption to existing business models                    into business and commercial                          States has increased airline negotiating
                                                      and the shortest implementation time.                     arrangements. We further noted that                   power. The organization argued that
                                                      We acknowledge that almost any                            carriers and stakeholders have assured                transactibility is necessary because, if
                                                      distribution and disclosure requirement                   the Department that they share our goal               the Department relied on requiring the
                                                      will involve Department intervention                      of transparency and assume that the                   carriers to lock in prices for ancillary
                                                      into business and contractual                             various stakeholders would negotiate                  services at the time consumers
                                                      arrangements. However, the Department                     regarding the ability of ticket agents to             purchased tickets, it would be difficult
                                                      is counter-balancing these concerns by                    sell a carrier’s ancillary services and the           to enforce and costly and time
                                                      including in its proposal a prohibition                   price at which those services would be                consuming to develop systems that
                                                      on unilateral cost increases by GDSs on                   sold. However, we left open the                       would enable fees to be locked for
                                                      airlines as discussed in Section E. When                  possibility of requiring transactability              individual consumers. Meanwhile,
                                                      the proposed requirement to provide                       and requested comments on the issue.                  consumers would still face the
                                                                                                                   Comments: Consumer advocacy                        inconvenience of having to go to airline
                                                      information to GDSs is considered in
                                                                                                                organizations’ comments generally                     sites to purchase the ancillary service,
                                                      conjunction with the Department’s
                                                                                                                favored transactability. Consumers                    which would increase their transaction
                                                      proposed restriction on certain contract
                                                                                                                Union and U.S. PIRG stated that                       costs.
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                                                      provisions, we believe the Department’s
                                                                                                                ancillary services should be transactable                Several travel agents filed similar
                                                        4 In response to A4A’s comment that the
                                                                                                                through ticket agents or, at a minimum,               comments favoring transactability,
                                                      requirement to distribute static baggage fees through
                                                                                                                customer-specific quotes with ancillary               stating that disclosure alone is not
                                                      GDSs to comply with previous rule has prevented           service fees should be provided and                   sufficient. According to those travel
                                                      airlines from offering dynamic baggage fee pricing,       guaranteed to be available once the                   agents, add-on fees are complex and
                                                      we note that is the result of airline pricing decisions   ticket has been purchased. Travelers                  change from airline to airline,
                                                      and GDS contract restrictions and not a Department
                                                      requirement. Airlines are free to offer static or
                                                                                                                United and NCL commented that the                     preventing travel agents from providing
                                                      dynamic fees under Department rules, as long as the       Department should not concern itself                  completely accurate quotes to
                                                      prices are properly disclosed.                            with how the data is used but rather                  customers. Although requiring


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                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                           7547

                                                      disclosure of the cost of bags and seat                 factors that have inhibited widespread                 many consumers do not know at time of
                                                      assignments would help, according to                    implementation are still present,                      ticketing whether or how many bags the
                                                      these commenters, consumers would                       particularly in the case of U.S. airlines.             consumer will want transported. Several
                                                      still be surprised because the price of                    Orbitz stated it is a member of Travel              carrier comments reflect agreement with
                                                      services may go up before they buy                      Tech and commented to elaborate on                     the Department’s tentative decision not
                                                      them. They also stated that GDSs have                   Travel Tech’s comments. Orbitz stated                  to require transactability, including
                                                      the ability to provide transactabilty and               that if the Department imposes                         those of Delta and United. Frontier also
                                                      airlines would benefit from increased                   disclosure requirements on ticket agents               opposed transactability, stating that it
                                                      sales of ancillary services, creating a                 without transactability, consumers will                would increase airline costs which
                                                      ‘‘win-win’’ for the entire value chain.                 only be more confused. Orbitz pointed                  would in turn be passed on to
                                                      ASTA commented that the only option                     to the static nature of some fees and                  consumers. Virgin Atlantic opposed a
                                                      the Department should consider is                       dynamic nature of others, which will                   transactability requirement because it
                                                      transactability. According to ASTA,                     increase the confusion. Meanwhile,                     would undermine carrier ability to
                                                      airlines, U.S. airlines in particular, have             according to Orbitz, the Department                    control its distribution scope and costs
                                                      proven unresponsive to market                           should not assume that airlines will                   and essentially mandates the
                                                      influences to sell ancillary services                   negotiate to allow ticket agents to                    commercial relationship between a
                                                      through ticket agents and without                       transact ancillary services. The outcome               carrier and its agents solely to the
                                                      requiring transactability. ASTA asserted                of the rule may be that ticket agents that             benefit of agents.
                                                      that the Department will effectively be                 compete with airlines and offer                           DOT Response: We have carefully
                                                      forcing agents to send customers to a                   consumers choices that they might not                  considered all of the comments
                                                      competitor if it does not require                       otherwise have been aware of, are left                 supporting and opposing transactability.
                                                      transactability.                                        with an inferior product and                           We note that the Department has
                                                         Travel Tech commented in support of                  asymmetrical disclosure requirements                   already prohibited post-purchase price
                                                      transactability, stating that the existing              that disadvantage ticket agents and lead               increases on transporting baggage. The
                                                      GDS infrastructure already permits                      to consumer harm.                                      Department’s Enforcement Office has
                                                      transaction of various airline service                     Corporate travel agents also supported              also indicated that it intends to pursue
                                                      fees, such as baggage, in some cases, and               transactability. BCD commented that the                enforcement action against carriers that
                                                      also allows seat assignments for certain                Department should require                              increase fees for baggage not provided
                                                      carriers’ inventory. According to Travel                transactability through GDSs and if the                with the ticket but traditionally
                                                      Tech, the only question is whether                      information is not transactable,                       included in the price of the ticket (i.e.,
                                                      airlines will allow ticket agents to                    corporate travel agents should not be                  carry-on bag, 1st and 2nd checked bag).
                                                      transact the services once the airline                  required to disclose those ancillary                   Therefore, the Department’s existing
                                                      makes the information available through                 service fees. BCD stated customers will                rule regarding baggage fee price
                                                      GDSs. Travel Tech also commented that                   be frustrated if it is not able to book the            increases has already addressed the
                                                      consumers should be able to purchase                    services that it has just disclosed to its             concern that ticket agents will provide
                                                      ancillary services at their preferred                   customers. BCD also stated its                         consumers information on baggage fees
                                                      outlet to avoid the increased search and                customers depend on having all of the                  that will be inaccurate or the price will
                                                      transaction costs of not having ancillary               costs of travel tracked through its                    increase before the consumer has the
                                                      services available for purchase through                 systems so if it cannot book all services              opportunity to purchase baggage
                                                      ticket agents.                                          the customer wants, its travel cost data               transportation services. Regarding seat
                                                         Amadeus, Sabre and Travelport also                   will not be accurate. CWT commented                    assignment fees, since the Department
                                                      commented that consumers using ticket                   that to provide consumer benefit, the                  has tentatively concluded that advance
                                                      agent outlets experience increased                      Department must require that ancillary                 seat assignments are not truly intrinsic
                                                      transaction time without transactability.               services be transactable through GDSs or               to air transportation, and consequently
                                                      They stated that they are ready to                      agents will be unduly burdened and the                 determined not to propose a
                                                      implement transactability and point to                  existing distribution system will be                   requirement that ticket agents disclose
                                                      their own technological developments                    undermined. BTC commented that for                     fees for seat assignments, consumers
                                                      and existing agreements with carriers on                consumers transparency and                             will not be presented with seat
                                                      distribution of ancillary services. Sabre               transactability are ‘‘interlocked’’ and                assignment options that they cannot
                                                      provided information regarding 23                       without transactability, the booking                   purchase immediately. This means
                                                      carriers for which it both displays and                 process for consumers and travel agents                consumers will not be confused by
                                                      transacts at least one ancillary service.               involves multiple steps and is more                    being presented a seat assignment that
                                                      Travelport stated ancillary services can                confusing and time consuming as a                      they cannot obtain, or risk being unable
                                                      be transacted using older technology but                result. BTC also commented on the risk                 to purchase their chosen option at the
                                                      that it has introduced a new platform to                of increased costs or lost opportunities               advertised price.
                                                      allow airlines to differentiate their                   to purchase certain ancillary services if                 We recognize that requiring airlines to
                                                      products from competing airlines.                       they are not purchased at the time the                 make both baggage and seat assignments
                                                      Amadeus stated that requiring                           ticket is purchased. International                     transactable services through ticket
                                                      transactability is the only way the                     Airline Passengers Association also                    agents would potentially increase
                                                      Department can meet the goal of                         commented in favor of transactability                  consumer satisfaction and decrease
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                                                      transparency. Amadeus commented that                    and supported BTC’s comments.                          transaction costs of time spent on
                                                      disclosure without transactability will                    A4A opposed transactability,                        shopping and booking when using ticket
                                                      confuse consumers. Amadeus stated                       reiterating its view that there is no                  agent Web sites to book travel. We are
                                                      that it already has a product that will                 consumer harm to address. A4A also                     also aware of the importance of
                                                      enable transactability and that 58                      identifies practical considerations,                   transactability as a business matter to
                                                      airlines are already using this product,                including that some carriers do not                    ticket agents that must provide the
                                                      but concludes that the Department                       allow for payment of baggage fees at                   services consumers want and expect or
                                                      cannot rely on the market to move                       time of ticketing even when travel is                  risk losing business. We recognize that
                                                      towards transactability because the                     purchased directly from the carrier and                comments by some stakeholders,


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                                                      7548                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      including ticket agents and consumer                    capability for entities to transact                       Comments: Travel Tech commented
                                                      advocacy groups, indicate that airlines                 checked bag fees using ATPCO codes                     that the ban on GDSs charging
                                                      are not motivated to enter into                         and the complexity of carry on and seat                additional fees should only apply to
                                                      agreements to allow transactability. In                 assignment fees, which would require                   existing contracts and that the language
                                                      addition, we recognize that many                        more development by ATPCO.                             of the rule should be changed to clarify
                                                      consumers do not purchase baggage                       However, we also note that GDSs                        this. Travel Tech also argued that if a
                                                      transportation at the same time they                    comment that they have been                            requirement for carriers to provide basic
                                                      purchase travel, so there may be limited                developing technology solutions and the                ancillary fee information only to ticket
                                                      incentive for either ticket agents or                   technology already exists for ancillary                agents that sell a carrier’s tickets
                                                      carriers to negotiate agreements on                     services to be transactable through                    directly to consumers is adopted, it
                                                      transactability in this area. However, we               GDSs. Meanwhile, although carriers                     should be changed to make it clear that
                                                      are encouraged by the progress reported                 object to undue intrusion into their                   the contract limitation only applies to
                                                      to date by both carriers and ticket agents              businesses, they also point to                         those ticket agents. Travel Tech also
                                                      in reaching some agreements that permit                 agreements carriers have reached on                    argued that carriers should be required
                                                      ticket agents to sell select carrier                    transacting ancillary services to support              to provide the same fees for ancillary
                                                      ancillary services. We also note that                   the position that the market is solving                services that carriers display on their
                                                      both ticket agents and airlines have                    the disclosure problem. This leads us to               own sites and not higher service fees,
                                                      stated that airlines have a strong                      conclude that technical obstacles to                   otherwise ticket agents would
                                                      incentive to make airline ancillary                     transactability are not insurmountable                 effectively be prohibited from
                                                      services more widely available to                       and would not require disclosure of                    negotiating with carriers regarding the
                                                      consumers in order to sell more of those                only static baggage fees. Meanwhile, we                ancillary service fees the ticket agent
                                                      services. Accordingly, we believe that                  remain of the view that the Department                 must disclose and ticket agents that
                                                      carriers and ticket agents may be able to               should limit its intervention concerning               display fees to consumers would be
                                                      reach agreements to transact various                    commercial negotiations in this area at                limited in the fees they could display to
                                                      ancillary services if there is sufficient               this time and continue to rely on market               consumers. Amadeus commented that
                                                      benefit to all commercial entities in the               forces to a large extent. Therefore, we                the Department should clarify that the
                                                      transaction. We also recognize that                     are proposing a revised disclosure                     prohibition against imposing additional
                                                      corporate travel agents have additional                 option that we believe offers the                      charges on carriers for distributing
                                                      concerns specific to their business                     maximum consumer disclosure benefit                    ancillary service fee information expires
                                                      model regarding customer frustration                    while stopping short of requiring                      at the termination of an existing
                                                      with a travel agent’s inability to transact             transactability. At this time, the                     contract. Amadeus also argued that,
                                                      certain services as well as business                    Department is relying on competition                   during the existing contract period, the
                                                      concerns regarding tracking costs for                   and market forces but will continue to                 carrier should provide the same fee
                                                      corporate travel clients. However, we                   monitor the issue. If the Department                   information to the GDSs that is available
                                                      feel the benefits of having the                         identifies evidence of consumer harm                   on the carrier’s Web site. In contrast,
                                                      information available for consumers                     resulting from a lack of transactability               Travelport opposed the contractual
                                                      outweighs any frustration caused by the                 and a market failure preventing                        provision and stated it is confusing and
                                                      inability to purchase through a ticket                  resolution of the problem, we will                     that the Department should not interfere
                                                      agent, particularly since the only fees                 revisit the issue in a future rulemaking.              with contractual negotiations.
                                                      that must be disclosed under the current                At this time, however, we are not
                                                                                                              proposing a transactability requirement.                  Open Allies commented that it is
                                                      rulemaking are baggage fees, which are                                                                         acceptable to ban the imposition of
                                                      not permitted to be increased. Regarding                E. Contract Provisions Among Carriers,                 additional charges on carriers, but only
                                                      tracking the costs of travel for business               GDSs, and Other Ticket Agents                          for the length of the existing contract.
                                                      purposes, the same problem exists if a                     The NPRM: In the NPRM, we noted                     Open Allies also argued that carriers
                                                      consumer does not decide to check a                     that if we adopted a provision requiring               should be required to provide the same
                                                      bag until the date of travel and pays at                carriers to disclose ancillary service fee             fees for ancillary services, not higher
                                                      the airport. At least under the disclosure              information to ticket agents and ticket                fees, to ticket agents during the term of
                                                      requirement, corporate travel agents can                agents to disclose it to consumers, it                 the existing contracts. ASTA opposed
                                                      include the amount of bag fees that                     would be unlawful to provide fare                      the contract provision, stating that it is
                                                      potentially may be incurred in a travel                 information that did not include the fees              outside the scope of Department
                                                      record for purposes of record keeping.                  for basic ancillary services. Accordingly,             authority. It also asserted that, as the
                                                      Ultimately we believe there are even                    we stated that to the extent that carriers             provision is drafted, it is unclear about
                                                      greater incentives for both carriers and                have existing contractual relationships                which ticket agents are covered.
                                                      ticket agents to come to agreements                     with ticket agents acting as                           According to ASTA, most travel agents
                                                      regarding transacting ancillary services                intermediaries, such as GDSs, to                       receive airline flight information
                                                      in the corporate travel arena than in                   distribute fare information, those ticket              through GDSs and their contracts with
                                                      connection with leisure travel.                         agents acting as intermediaries would be               airlines are through the Airlines
                                                         Finally, in connection with technical                prohibited from imposing charges for                   Reporting Corporation (ARC) and can be
                                                      issues related to transactability, we note              the distribution of required ancillary                 unilaterally amended by the airlines but
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                                                      that some stakeholders alleged that a                   service fee information. We also noted                 not travel agents. Further, as a practical
                                                      requirement to distribute ancillary                     that we would expect GDSs to work in                   matter, travel agents are not in a
                                                      service fees through GDSs would                         good faith with carriers and other ticket              position to unilaterally impose charges
                                                      essentially require carriers to distribute              agents that are able to agree on                       on airlines. ASTA commented that it
                                                      static fees to ticket agents instead of the             alternative distribution methods that do               would be inappropriate for the
                                                      dynamic fees currently available on                     not include the GDSs to allow                          Department to prohibit travel agents
                                                      carrier Web sites. ATPCO’s comments                     integration of information obtained                    from imposing charges on consumers,
                                                      support that view to some extent based                  through other sources and information                  but it appears the Department meant to
                                                      on its description of the current                       obtained through GDSs.                                 only cover ticket agents acting as


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                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                            7549

                                                      intermediaries and prevent charges to                   the restriction. To the extent that a GDS              service fee information, the information
                                                      carriers. However, according to ASTA,                   engaged in such tactics, the Department                must be displayed by both carriers and
                                                      that is not clear from the proposed rule                would consider it a violation of the                   ticket agents in specific amounts, not a
                                                      text. AACO commented that even if the                   provision preventing such charges. The                 range of fees. The NPRM proposed to
                                                      Department prohibited GDSs from                         restriction only limits unilateral                     require carriers to provide customer-
                                                      imposing an explicit fee in connection                  imposition of new charges on airlines by               specific information if a consumer
                                                      with the requirement to disclose certain                intermediary ticket agents. It is not                  provides identifying information and
                                                      ancillary service fee information, GDSs                 intended to prevent good faith                         itinerary-specific information if
                                                      could still introduce adjustments in                    negotiations to revise existing contracts              identifying information is not provided.
                                                      other service charges to compensate for                 or to carry over to any new contracts                  The NPRM further proposed to require
                                                      the requirement.                                        negotiated after issuance of this final                ticket agents to provide itinerary-
                                                         DOT Response: The Department has                     rule. We agree with some commenters                    specific information. In the NPRM, we
                                                      considered the comments regarding a                     that the rule text should be clarified to              stated that ‘‘customer-specific’’ refers to
                                                      contract provision prohibiting ticket                   make clear it covers only existing                     variations in fees that depend on, for
                                                      agent intermediaries from imposing                      contracts and have made the                            example, the passenger type (e.g.,
                                                      additional charges on carriers in                       appropriate changes in the proposed                    military), frequent flyer status, method
                                                      connection with distributing ancillary                  rule text. We have also revised the                    of payment, geography, travel dates,
                                                      service fee information along with fare                 proposed rule text in connection with                  cabin (e.g., first class, economy),
                                                      information. We recognize that some                     ASTA’s comment that the provision                      ticketed fare (e.g., full fare ticket -Y
                                                      ticket agents oppose any Department                     could be read to apply to travel agents                class). By contrast, ‘‘itinerary-specific’’
                                                      involvement in contractual                              that do not receive information directly               fee information does not include
                                                      arrangements between private entities,                  from carriers. We do not intend for the                variations in fees that depend on the
                                                      and we are similarly reluctant to insert                proposed restriction to cover such                     attributes of the passengers such as the
                                                      the Department into such arrangements.                  contracts.                                             passenger type (e.g., military), frequent
                                                      However, since the Department is                           In connection with comments that                    flyer status, or method of payment. For
                                                      proposing to impose a new legal                         carriers should be required to provide                 itinerary-specific information, the
                                                      requirement on carriers and the ticket                  the same fees for ancillary services that              NPRM proposed that both carriers and
                                                      agents that distribute carrier fares and                carriers display on their own sites and                ticket agents would be required to take
                                                      certain ancillary service fees, we believe              not higher service fees, we have decided               into account variations in fees that are
                                                      it is appropriate to put in place a short               not to propose such a restriction. It is               related to the itinerary such as travel
                                                      term restriction on unilateral changes to               not the Department’s position that the                 dates, geography, ticketed fare and
                                                      contract arrangements.                                  same ancillary service fees must be                    cabin.
                                                         We recognize that distribution of                    charged at all outlets, merely that                       In addition to providing itinerary-
                                                      ancillary service fees has been very                    consumers should be informed of the                    specific fees for a first checked bag, a
                                                      controversial, in particular in GDS                     basic ancillary service fees so they can               second checked bag, a carry-on bag and
                                                      dealings with carriers, and in order to                 determine the true cost of air                         an advance seat assignment, when
                                                      prevent business disputes from                          transportation and make an informed                    displaying itinerary-specific
                                                      interfering with the implementation of a                decision before making a purchase.                     information, the NPRM stated that ticket
                                                      new Department requirement we have                      Therefore, we tentatively believe it is                agents would also be required to clearly
                                                      determined it is appropriate to                         appropriate to leave it to carriers and                and prominently disclose that these fees
                                                      implement a regulation with limited                     ticket agents to determine the ancillary               may be reduced or waived based on the
                                                      scope that covers only existing contracts               service fees that will be charged through              passenger’s frequent flyer status,
                                                      that were negotiated based on a different               ticket agents. Although we recognize                   method of payment or other
                                                      regulatory background. The proposed                     that this means a carrier would not be                 characteristic. In either case, whether
                                                      restriction is only intended to cover                   prohibited from implementing different                 customer or itinerary-specific fee
                                                      contract provisions regarding charges                   fees for baggage, depending on the                     information is displayed, both airlines
                                                      imposed on airlines by ticket agent                     outlet from which the consumer chooses                 and ticket agents that have Web sites
                                                      intermediaries for distributing certain                 to purchase air transportation, as a                   marketed towards U.S. consumers
                                                      ancillary fee information that the rule                 practical matter, we believe it would be               would have to disclose, or at a
                                                      requires to be distributed along with                   challenging for carriers to implement                  minimum display by a link or rollover,
                                                      fare information. The proposed                          varying charges in the current                         the fees for these basic ancillary services
                                                      restriction would only impact contracts                 technological environment. Therefore,                  on the first page on which a fare is
                                                      for their current term at the time a final              under the proposed provision, carriers                 displayed in response to a search for a
                                                      rule is issued in order to reflect the                  and ticket agents will have the                        specific flight itinerary.
                                                      changed regulatory environment; future                  opportunity to come to agreement on                       During the comment period, an
                                                      negotiations will enable all parties to                 this issue as new contracts are                        important clarification was made
                                                      negotiate based on the regulatory                       negotiated and new commercial and                      regarding the NPRM. A4A pointed out
                                                      changes.                                                technological arrangements are put in                  that the NPRM stated ‘‘Carriers would,
                                                         We believe that in practice the                      place.                                                 of course, be required to provide ticket
                                                      proposed disclosure requirement will                                                                           agents the fee rules for particular
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                                                      not require significant investment in                   F. Customer-Specific or Itinerary-                     passenger types (e.g. military, frequent
                                                      new technology by GDSs since GDSs                       Specific Fee Information                               flyers, or credit card holders)’’ Notice at
                                                      already have a significant amount of                       The NPRM: The NPRM recognized                       29977. A4A observed that this is
                                                      baggage information through ATPCO                       that requiring carriers to disclose basic              customer-specific information that
                                                      filings. Accordingly, we would expect                   ancillary service fee information to                   ticket agents would not need to meet the
                                                      GDSs to work with carriers in good faith                ticket agents is not helpful to consumers              requirement to provide ‘‘itinerary
                                                      and not attempt to circumvent the                       if it is not displayed to them. Further,               specific’’ fee information. In response to
                                                      restriction on additional charges by                    to address the issue of consumer                       the A4A inquiry, Department staff
                                                      adding charges in other areas to evade                  difficulty in finding basic ancillary                  confirmed that the NPRM statement was


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                                                      7550                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      an error.5 Nevertheless, as the NPRM                    sometimes choose flights that they                     comments and complaints regarding
                                                      stated, ticket agents may come to                       otherwise would not have chosen.                       fees that the Department relies on are
                                                      agreements with airlines that would                     Southwest also stated that requiring                   not specific enough to justify new
                                                      enable the ticket agent to provide                      display of baggage fees will put                       display rules. In addition, A4A stated
                                                      customer-specific ancillary service fee                 downward pressure on those fees.                       that a requirement that airlines and
                                                      information.                                            Global Business Travel Association                     ticket agents provide itinerary-specific
                                                         Comments: We received extensive                      commented in favor of the proposed                     display results that are not based on the
                                                      comments supporting greater disclosure.                 disclosure requirements, commenting                    identity of the customer will provide
                                                      Of consumers favoring greater                           that the Department should require both                inaccurate information to consumers
                                                      disclosure, several also comment in                     airlines and ticket agents to display                  that may be eligible for ancillary service
                                                      favor of a standardized display of some                 certain ancillary service fees on the first            fee discounts based on factors such as
                                                      kind, whether a table or other format. In               page of search results.                                frequent flyer membership or method of
                                                      connection with innovative alternatives                    However, many commenters opposed                    payment. Air New Zealand and Copa
                                                      and solutions not considered, Travelers                 proposed display requirements which                    commented on the increased costs that
                                                      United and NCL commented that better                    would result in carriers providing                     airlines will incur to ensure that ticket
                                                      display of information is needed but do                 customer-specific information to                       agents have additional and correct
                                                      not argue for or against the display                    consumers that identified their                        information to provide to consumers.
                                                      requirements proposed, supporting                       customer category while ticket agents                     Google, Inc. (Google), Hipmunk, Inc.
                                                      instead a requirement that all data be                  would only be required to provide                      (Hipmunk), Kayak Software Corporation
                                                      made available so market innovation                     itinerary-specific information. ASTA                   (Kayak), Skyscanner Limited
                                                      can improve how the information is                      pointed out that if the Department                     (Skyscanner), Travelzoo, Inc.
                                                      provided to consumers. Open Allies                      adopts display requirements as                         (Travelzoo), and TripAdvisor LLC
                                                      supported greater disclosure of ancillary               proposed in the NPRM, carriers would                   (TripAdvisor), referring to themselves as
                                                      service fees and stated that the                        be subject to different disclosure                     the ‘‘Metasearch Providers,’’ filed joint
                                                      Department should require airlines to                   requirements to the extent that a                      comments summarizing their
                                                      provide ticket agents information to                    consumer provides identity information                 ‘‘consensus views on the nature of the
                                                      provide customer-specific, transactable,                to a carrier, which according to ASTA                  services they provide and the
                                                      quotes. Open Allies argued that if the                  discriminates against and disadvantages                Department’s jurisdiction.’’ The
                                                      Department does not require carriers to                 ticket agents and defeats the stated                   Metasearch Providers argued that they
                                                      provide enough information for ticket                   regulatory intent. Orbitz also opposed                 have a different role from other ticket
                                                      agents to display customer-specific                     proposed display requirements, stating                 agents and should not be subject to
                                                      quotes, consumers will not have enough                  that providing more information at the                 display requirements because it is
                                                      information in the ticket agent channel                 start of the booking process will                      unnecessary and could hamper a
                                                      and may choose flight options that are                  overwhelm and confuse consumers.                       consumer’s search and discourage
                                                      more costly than the option they would                  Further, according to BCD, display                     overall innovation. The Metasearch
                                                      have chosen if the ticket agent displayed               requirements will impose additional                    Providers stated that display of baggage
                                                      more information. Travel Tech                           compliance costs on travel management                  and seat assignment fees is not
                                                      supported a disclosure requirement that                 companies like BCD without providing                   necessarily useful to consumers that are
                                                      is the same for carriers and ticket agents              an opportunity to recoup those costs by                just exploring travel options. They also
                                                      and stated the Department should                        offering enhanced services, and those                  stated that disclosure requirements
                                                      require carriers to provide customer-                   costs will be passed on to BCD clients.                would impose significant costs for
                                                      specific quotes so that carriers and                    CWT also argued that the Department                    programming and may discourage
                                                      ticket agents are on equal footing.                     should consider the differences between                entities operating flight search tools
                                                      Amadeus generally supported the                         corporate and leisure travelers and                    from displaying prices at all. CCIA
                                                      proposed display requirements for                       stated that only those fees that can be                commented that display requirements
                                                      itinerary-specific fees and stated that the             booked in advance should have to be                    should not apply to entities operating
                                                      Department should also require carriers                 disclosed, and they should also be                     metasearch tools because those entities
                                                      to provide customer-specific fee                        transactable or the requirement                        have strong incentives to provide their
                                                      information to ticket agents so that                    undermines the distribution system.                    users with accurate information and a
                                                      ticket agents may provide customer-                     Instead, CWT supported leaving the                     requirement to show particular
                                                      specific fee quotes when the ticket agent               existing disclosure requirements                       information for every flight search
                                                      has sufficient information about the                    unchanged.                                             would dampen innovation in the flight
                                                      passenger. Amadeus argued that the                         Many airlines and airline associations              search exploration process. According
                                                      Department should ensure that                           also opposed new display requirements.                 to CCIA, the Department should require
                                                      consumers dealing with the indirect                     A4A commented that the proposal is not                 airlines to provide dynamic ancillary fee
                                                      ticket agent channel have access to the                 needed as the Department has already                   data without imposing any ‘‘rigid’’
                                                      same ancillary fee data that is available               implemented fee disclosure                             display requirements, particularly on
                                                      from the airline channel.                               requirements, including requirements                   metasearch entities. Finally, both
                                                         Southwest Airlines also supported a                  for disclosures on carrier and ticket                  TripAdvisor and Skyscanner argued that
                                                                                                              agent Web sites and in e-ticket                        requirements to disclose information to
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                                                      requirement to disclose ancillary service
                                                      fees, stating that consumers are not                    confirmations. A4A argued that the                     consumers should not apply to them
                                                      necessarily able to determine the true                  Department should rely on market                       and instead it should be left to the
                                                      cost of their own travel because they do                pressures to encourage carriers to                     metasearch entities to determine the
                                                      not know how much bag fees will be for                  provide any further disclosures to                     best method of disclosure to consumers.
                                                      a particular flight option and as a result              consumers regarding ancillary service                     DOT Response: After reviewing the
                                                                                                              fee information. According to A4A,                     comments and considering the options,
                                                        5 See DOT–OST–2014–0056–0624, Summary of              there is no evidence of consumer injury                the Department has determined that it
                                                      Proceedings, DOT Meeting with Airlines for              to support additional display                          would be more transparent and better
                                                      America (A4A) (posted September 15, 2014).              requirements, and the consumer                         serve consumers to have a uniform,


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                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                             7551

                                                      more specific, display requirement for                  information. In the alternative, should                whether ancillary service fee
                                                      consumers. Currently, the burden is on                  the Department include any additional                  information should be displayed only
                                                      the consumer to research the airline’s                  customer categories in the requirement?                upon a consumer’s request or always
                                                      fees and policies to try to determine                   We also seek comment on whether the                    provided on the first page of search
                                                      which baggage fees may apply to the                     Department should include in the                       results and whether disclosure of basic
                                                      consumer’s air travel. However, we                      requirement a general obligation to                    ancillary service fee information should
                                                      think it is reasonable for consumers to                 disclose that baggage fees may be                      be required on limited availability sites,
                                                      be able to obtain fee information that                  reduced or waived based on other                       such as corporate travel Web sites. Both
                                                      applies to specific categories of                       consumer characteristics to be specified               proposals would have required that
                                                      customers. We do not want to interfere                  by the carrier. In other words, if there               carriers and ticket agents that have Web
                                                      with business agreements or impose                      are additional categories of consumers                 sites marketed towards U.S. consumers
                                                      additional complexity on airlines and                   that may be eligible for specialized                   must disclose, or at a minimum display
                                                      ticket agents by requiring airlines to                  baggage fees on a particular airline but               by a link or rollover, the fees for basic
                                                      provide personal information regarding                  it is not a general category across                    ancillary services on the first page on
                                                      their customers to ticket agents.                       airlines and is not identified in this                 which a fare is displayed in response to
                                                      Therefore, we have not proposed to                      rulemaking, should the airline be                      a search for a specific flight itinerary.
                                                      require carriers or ticket agents to                    required to provide additional notice to               The NPRM made clear that to comply
                                                      provide information that is specific to                 consumers?                                             with the proposed disclosure
                                                      individuals. Instead, this SNPRM would                     Regarding method of payment, we are                 requirement, airlines and agents would
                                                      propose to require carriers to provide                  aware that there are many credit cards                 have to modify their Web sites to
                                                      the fees for specific categories of                     that may provide consumers with the                    display these basic ancillary service fees
                                                      customers to ticket agents. It would also               benefit of free or reduced baggage fees.               adjacent to the fare information on the
                                                      require carriers and ticket agents to                   Should we identify specific credit cards               first page that displays a requested
                                                      modify their Web pages to allow                         that must be included in the list of                   itinerary with fare. The NPRM also
                                                      consumers the option to indicate any                    options that consumers may select or                   sought comment on whether the
                                                      factors that may impact the fees that the               simply require that all carrier-affiliated             Department should require carriers and
                                                      consumer might pay to transport                         cards offering baggage fee benefits be                 agents to provide information on
                                                      baggage. As some of the comments                        included as options for consumers?                     standard fees for baggage or require a
                                                      suggested, we agree that it should be                      Regarding frequent flyer programs, we               variety of baggage fees to be displayed,
                                                      optional for consumers to provide the                   recognize that there is variation in each              and if a variety of fees for each service,
                                                      information. Some consumers might                       carrier’s program, for example, different              how such fees should be arranged in
                                                                                                              levels of membership with different                    displays. We also asked for information
                                                      prefer to search for flight options
                                                                                                              benefits depending on the consumer’s
                                                      without providing that information.                                                                            on the technological feasibility and cost
                                                                                                              status. Should we specify the levels of
                                                      Other consumers might be searching for                                                                         of requiring this information to be
                                                                                                              membership and status for which
                                                      multiple passengers, each of whom                                                                              displayed. Finally, the NPRM also
                                                                                                              information must be provided or is it
                                                      might fall into a different customer                                                                           requested comment on whether we
                                                                                                              sufficient to state that each carrier
                                                      category, in which case the consumer                                                                           should leave the existing requirements
                                                                                                              should identify the levels of
                                                      might need to search flight options more                                                                       on baggage disclosure in place instead
                                                                                                              membership and provide relevant
                                                      than once to determine what baggage                                                                            of adopting either of the proposals. We
                                                                                                              benefit information for all levels of
                                                      fees applied to each passenger’s air                                                                           also encouraged interested parties to
                                                                                                              membership (i.e., information on
                                                      travel. However, we believe consumers                                                                          provide comments regarding any
                                                                                                              benefits pertaining to baggage fees) to all
                                                      should have those options rather than                                                                          innovative alternatives or solutions that
                                                                                                              ticket agents?
                                                      having only the option to review                           In addition, there are also carrier-                the Department may not have
                                                      multiple static lists to try to determine               alliance programs that confer their own                considered but that would address the
                                                      which baggage fees apply. In the                        benefits. Should we require airlines to                lack of disclosure of ancillary service
                                                      Department’s view, the burden of                        provide information regarding carrier-                 fees in all sales channels.
                                                      identifying specific baggage fees more                  alliance programs as well? If so, would                   Comments: We received extensive
                                                      appropriately falls on the carrier and                  it be necessary for each carrier to                    comments in connection with these
                                                      ticket agent rather than the consumer.                  identify the levels of membership and                  issues. In addition to consumer
                                                      Accordingly, we believe consumers                       provide relevant benefit information for               comments generally supporting greater
                                                      should have the option to provide                       all levels of membership (i.e.,                        disclosure, some consumers comment in
                                                      information to obtain more specific fee                 information on benefits pertaining to                  support of specific display
                                                      information if the consumer chooses to                  baggage fees) to all ticket agents?                    requirements, including over 20
                                                      do so.                                                                                                         supporting display of fees on the first
                                                         We seek comment on whether the                       G. Web Site and Mobile Application                     page displaying fares and six supporting
                                                      proposal in this SNPRM covers the                       Displays; Consumer Opt-Out; and                        display later in the search process but
                                                      appropriate categories of consumers that                Implementation Period                                  before purchase. Several consumers also
                                                      may be eligible for specialized baggage                    The NPRM: The 2014 NPRM made                        commented in favor of a standardized
                                                      fees and should be included in the                      clear that to comply with the proposed                 display of some kind, whether a table or
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                                                      proposal. In the 2014 NPRM, we                          ancillary service fee disclosure                       other format. Consumer advocacy
                                                      identified the following categories:                    requirement, airlines and agents would                 groups Consumers Union and U.S. PIRG
                                                      Military, credit card holders (method of                have to modify their Web sites to                      supported a requirement to display
                                                      payment), and frequent flyer members.                   display the basic ancillary service fees               ancillary service fee information
                                                      We have included those same categories                  adjacent to the fare information on the                automatically alongside the fares on the
                                                      in this SNPRM. We seek comment on                       first page that displays a requested                   first page of search results displayed to
                                                      whether those categories of consumers                   itinerary with fare. The NPRM asked for                consumers. They further commented
                                                      are sufficient to provide most                          comment about several aspects of the                   that to the extent all ancillary service fee
                                                      consumers with specific baggage fee                     proposed disclosure options, including                 information is provided (i.e., beyond


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                                                      7552                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      baggage fees) and this would crowd the                  corporate travel agent sites, arguing that             consuming to implement. United
                                                      page, then a link should be provided                    if it is not able to transact ancillary                opposed a requirement to display basic
                                                      along with clear and conspicuous notice                 service fees, it should not be required to             ancillary service fees at the first point in
                                                      that other fees may apply. In connection                display such fees. According to BCD,                   a search process where a fare is listed,
                                                      with innovative alternatives and                        display requirements will impose                       stating that it will waste time for
                                                      solutions not considered, Travelers                     additional compliance costs on BCD                     consumers because search results will
                                                      United and NCL commented that better                    without providing an opportunity to                    be slowed by additional processing time
                                                      display of information is needed but                    recoup those costs by offering enhanced                for the information, then consumers
                                                      they do not argue for or against the                    services and those costs will be passed                must review additional information they
                                                      display requirements proposed,                          on to BCD clients. CWT also argued that                are not interested in or click on links or
                                                      supporting instead a requirement that                   the Department should consider the                     pop-ups to see the information.
                                                      all data be made available so market                    differences between corporate and                      Meanwhile, fewer flight options will be
                                                      innovation can improve how the                          leisure travelers and stated that only                 displayed on each screen. United also
                                                      information is provided to consumers.                   those fees that can be booked in advance               argued that search results may display
                                                      In connection with how ancillary                        should have to be disclosed and they                   inaccurate information depending on
                                                      service fee information should be                       should also be transactable or the                     whether the consumer is conducting an
                                                      displayed, Open Allies urged the                        requirement undermines the                             anonymous search but is entitled to
                                                      Department to allow carriers and ticket                 distribution system. In connection with                reduced fees, or a consumer is searching
                                                      agents flexibility in how information is                Section 399.85, CWT commented that it                  for multiple passengers, and similar
                                                      disclosed and expresses concern that                    should not be changed.                                 concerns.
                                                      too much information on a screen will                      A4A argued that the proposed                           CCIA also commented that display of
                                                      make it hard for consumers to                           disclosure requirement will cause sub-                 ancillary service fee information could
                                                      comprehend. Open Allies supported the                   optimal displays, providing fee                        result in screen clutter, which would be
                                                      proposal to permit the use of links or                  information that consumers may not be                  frustrating to users and that the
                                                      rollovers provided that a prominent                     interested in and taking up screen space               proposed display requirements ‘‘are not
                                                      notice adjacent to the advertised fare                  that could be used to provide additional               adequately designed to work on a
                                                      makes clear that ancillary service fees                 flight options or other information. A4A               mobile platform’’ and may impede the
                                                      are disclosed via a link or rollover.                   noted that the fee information might                   consumer experience. TripAdvisor also
                                                      Regarding an opt-out option, Open                       vary for every segment of the itinerary                commented that the Department should
                                                      Allies stated it ‘‘doubts that most                     and argues that the sheer volume of                    exempt mobile displays from display
                                                      consumers would select the opt-out                      information displayed is likely to                     requirements or tailor requirements to a
                                                      option,’’ but agreed providing that                     overwhelm rather than assist                           range of display sizes. Skyscanner
                                                      flexibility makes sense. Travel Tech                    consumers. A4A also stated that the                    commented that display of a large
                                                      supported a disclosure requirement that                 proposed display requirements are                      volume of information is unfeasible on
                                                      is the same for carriers and ticket agents.             contrary to the current carrier trend to               a mobile device so, if implemented,
                                                      In connection with how the information                  offer bundled pricing and differentiated               displays would become less useful to
                                                      is displayed, Travel Tech urged the                     seat products and limit carriers’ ability              users of mobile sites or mobile
                                                      Department to allow flexibility,                        to provide such offerings. In addition,                applications. Displays would be slower
                                                                                                              A4A stated that a requirement that                     and include fewer options in a more
                                                      including the use of links or roll-overs.
                                                                                                              airlines and ticket agents provide                     cluttered presentation. USTOA opposed
                                                      It also urged the Department to extend
                                                                                                              itinerary-specific display results that are            the proposed display requirements,
                                                      that flexibility to mobile displays.
                                                                                                              not based on the identity of the                       stating that they will limit development
                                                      Regarding opt-out, Travel Tech
                                                                                                              customer will provide inaccurate                       of new business models, and questions
                                                      supported allowing the option of an opt-
                                                                                                              information to consumers that may be                   how tour operators that sell bundled
                                                      out that is not pre-selected and includes
                                                                                                              eligible for ancillary service fee
                                                      notice that ancillary service fees may                                                                         packages that may include airfare would
                                                                                                              discounts based on factors such as
                                                      apply. According to Amadeus, display                                                                           comply with disclosure requirements.
                                                                                                              frequent flyer membership or method of
                                                      of ancillary service fee information does                                                                      DOT Response
                                                                                                              payment. Regarding searches for
                                                      not need to be provided on the first                    multiple passengers, A4A stated the
                                                      screen, it only needs to be provided                                                                           Disclosure and Display Requirements
                                                                                                              search results displayed might not
                                                      before a booking decision is made.                      reflect the discounts available to some                  We recognize that the comments
                                                         Orbitz opposed proposed display                      members of the group. A4A also noted                   reflect legitimate concerns about the fact
                                                      requirements, stating that providing                    that if more information must be                       that if more information must be
                                                      more information at the start of the                    displayed, search results will likely take             displayed, more screen space is
                                                      booking process will overwhelm and                      longer to display due to increased                     consumed and search results will likely
                                                      confuse consumers. Orbitz also                          processing time.                                       take longer to display due to increased
                                                      commented that any display standard                        Regarding mobile applications, A4A                  processing time. However, we also note
                                                      adopted will quickly become obsolete or                 commented that the problem of                          that many of the comments on this issue
                                                      hinder innovation as technology                         displacing information such as                         focused on the amount of screen space
                                                      changes. Orbitz also opposed imposing                   additional flight options on Web sites is              and increased processing time required
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                                                      display requirements on mobile                          particularly acute on mobile devices                   for the display of seat assignment fees,
                                                      platforms as it would be difficult to                   ‘‘because first-screen space is limited                which are generally dynamically priced
                                                      implement and would impair the user                     and valuable,’’ therefore the Department               and therefore would require additional
                                                      experience. In connection with                          should not expand the display rules to                 processing time. As noted earlier, we
                                                      corporate travel sites, Orbitz opposed                  mobile applications. Delta also opposed                have decided not to include disclosure
                                                      any display requirements, noting that                   display requirements stating that it                   of seat assignment fees in this proposal.
                                                      display content is typically negotiated                 would have a negative impact on speed                  Regarding baggage fees, although
                                                      by the businesses involved. BCD also                    and performance of reservations systems                displaying such fees may also require
                                                      opposed display requirements on                         and would be costly and time                           some additional processing time and


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                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                          7553

                                                      will use some additional screen space,                  information is not known at the time of                (first and second checked bag and carry-
                                                      it is a cost that carriers have chosen to               booking, ticket agents would not be                    on bag) or to opt-out of seeing some of
                                                      state separately from airfare and is                    required to display the baggage fee.                   those fees. For example, a consumer
                                                      information that consumers and                          However, when displaying such air-tour                 might choose to see fees for carry-on
                                                      consumer advocates have repeatedly                      package prices, such ticket agent                      and first checked bag, but not second
                                                      stated that consumers need in order to                  displays would be required to                          checked bag. Another option might be
                                                      determine the true cost of travel.                      prominently disclose that baggage fees                 that a consumer could choose to see
                                                         Nevertheless, we agree it is important               may apply if that is the case. In                      only carry-on bag. A third option could
                                                      to make the information as easy to                      addition, ticket agents would be                       be to see first and second checked bag
                                                      provide and as useful to consumers as                   required to disclose in online displays                fees but not the carry-on bag fee. The
                                                      possible. Accordingly, we request                       and oral communications that baggage                   opt-out options that may be provided
                                                      comment on whether we should permit                     fees may apply and that those fees may                 would be up to the carrier or ticket
                                                      the baggage fee information to be                       be reduced or waived based on the                      agent and no opt-out would be required
                                                      displayed by links or roll-overs on all                 passenger’s frequent flyer status,                     under the proposal.
                                                      displays or on certain mobile displays.                 method of payment or other consumer                       We seek comment on whether
                                                         Regarding the comment by A4A and                     characteristic. This exception would not               providing the flexibility to furnish a
                                                      others that the fee information might                   apply to air carriers or foreign air                   variety of opt-out options addresses
                                                      vary for every segment of the itinerary                 carriers selling air-tour packages. We                 some of the concerns of carriers and
                                                      and the volume of information                           request comment on whether this                        ticket agents regarding increased
                                                      displayed is likely to overwhelm rather                 exception for certain air-tour packages                processing times and screen clutter. We
                                                      than assist consumers, this concern does                adequately addresses concerns of air-                  also seek comment on whether
                                                      not apply to baggage fees since carriers                tour package sellers. We also request                  providing opt-out options would
                                                      must apply the baggage allowances and                   comment on whether such an exception                   adequately protect consumers.
                                                      fees that apply at the beginning of a                   adequately protects consumers.
                                                      passenger’s itinerary throughout his or                                                                        Display of Search Results on Mobile
                                                      her entire itinerary pursuant to 14 CFR                 Opt-Out                                                Displays
                                                      399.87.6                                                   Regarding the concern that consumers                  In connection with applicability to
                                                         Some comments expressed concern                      may not be interested in baggage fee                   mobile applications (apps) and mobile
                                                      that the Department’s proposed display                  information being displayed and it may                 Web sites, several commenters state that
                                                      requirements are contrary to the current                take up screen space that could be used                the Department should consider more
                                                      carrier trend to offer bundled pricing                  to provide additional flight options or                limited requirements for mobile outlets
                                                      and customized pricing. The                             other information, we recognize there                  because implementation of new rules in
                                                      Department’s consumer protection rules                  may be reasons that consumers wish to                  the mobile environment is technically
                                                      in this area are intended to protect                    opt-out of display of baggage fees, for                more difficult and detailed disclosures
                                                      consumers from being surprised by                       example if the consumer will be                        may be difficult to incorporate and
                                                      unexpected fees and to allow them to                    traveling without checked baggage. We                  display, particularly considering the
                                                      discern the true cost of air                            agree that it is reasonable to provide                 screen size of some mobile devices. We
                                                      transportation before making a                          entities the flexibility to provide such               recognize some of the inherent
                                                      purchase. To the extent carriers or ticket              an option. Most of the comments on this                limitations of displays designed for
                                                      agents choose to offer bundled fares that               issue agreed that it was reasonable to                 mobile outlets. Comments suggesting
                                                      include baggage in addition to, or                      provide an opt-out option. In addition,                more limited disclosure requirements
                                                      instead of, offering fares that do not                  if an entity anticipates that there will be            for mobile outlets focused on the
                                                      include baggage fees, they would not be                 a significant impact on the speed of                   complexity of potential disclosure
                                                      prohibited from doing so. Under this                    search results or particular display                   requirements. The limitation of
                                                      proposal the display of such fares would                options the entity provides, the option                disclosure requirements to certain
                                                      only be required to make clear that there               to provide an opt-out for baggage fees                 baggage fees will reduce the amount of
                                                      is no additional baggage fee associated                 would address those concerns by                        screen space used for additional
                                                      with that fare if that is the case.                     providing carriers and ticket agents the               disclosures.
                                                         Regarding air-tour packages, we                      option to provide consumers what may                     In addition, some commenters stated
                                                      recognize that air transportation may be                be a faster or more streamlined display                concern that there would be technical
                                                      purchased in bulk by the seller of the                  of search results, if consumers choose                 difficulty in implementing increased
                                                      tour package and the carrier may be                     such displays. We anticipate that basic                disclosure requirements and increased
                                                      unknown at the time of purchase which                   baggage fee information will be useful to              processing time; however, we note that
                                                      may make it difficult to provide specific               many, if not most, consumers, and that                 similar concerns apply to non-mobile
                                                      baggage fee information. Accordingly,                   they will often choose displays that                   internet displays. However, we have
                                                      we have tentatively concluded not to                    include such information. However, by                  determined that the consumer benefit to
                                                      require ticket agent sellers of air-tour                providing an opt-out option for baggage                having basic ancillary service fee
                                                      packages to provide disclosure of                       fee information, entities that display                 information outweighs the potentially
                                                      specific baggage fees in certain                        flight information would still have the                increased processing times. As some
                                                                                                              flexibility to provide search results                  commenters noted, consumers in
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                                                      circumstances. Specifically, if air
                                                      transportation is arranged at a later date              without that information if the                        increasing numbers are using apps to
                                                      and specific airline and baggage fee                    consumer chooses a display option that                 book travel. Therefore, we believe it is
                                                                                                              does not include it. Accordingly, our                  important that the same consumer
                                                         6 We note that carriers always have the option of    proposal would permit carriers and                     protections apply to apps as to other
                                                      waiving a baggage fee or offering a lower baggage       ticket agents to provide various opt-out               outlets directed to consumers.
                                                      fee than advertised for any segment of an itinerary.    options. Opt-out options could include                 Accordingly, we have tentatively
                                                      As the Department’s Office of Aviation Enforcement
                                                      and Proceedings has stated regarding Section
                                                                                                              the choice to opt-out of seeing all                    concluded that the disclosure
                                                      399.87, it does not prevent a carrier from charging     baggage fee information that would                     requirements should be the same on
                                                      a lower fee as a courtesy. [Cite is FAQ 50]             otherwise be required to be displayed                  apps as on Web sites or mobile Web


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                                                      7554                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      sites. We request comment on whether                    information no later than three months                 changes. If the 14 CFR 399.85(b)
                                                      allowing disclosure via links or pop-ups                before the display deadline. We note                   disclosure requirement should be kept
                                                      would simplify the disclosure process                   many of the comments state that a                      but modified, what changes would be
                                                      and reduce technical issues and speed                   lengthy implementation period will be                  appropriate?
                                                      processing times for mobile outlets.                    necessary to implement any disclosure                    Regarding 14 CFR 399.85(c), we
                                                         We also note that the FTC has                        requirement and some suggested several                 request comment on whether the
                                                      provided guidance regarding internet                    years. However, many of the reasons                    proposed revision would be appropriate
                                                      disclosures (See .com Disclosures: How                  presented for the multi-year                           and adequately inform consumers of the
                                                      to Make Effective Disclosures in Digital                implementation period had to do with                   applicable baggage fees if the proposed
                                                      Advertising, available at https://                      the complexity of disclosing multiple                  requirement to display more specific
                                                      www.ftc.gov/system/files/documents/                     dynamic fees. Since the Department is                  baggage fee information is adopted. If
                                                      plain-language/bus41-dot-com-                           limiting the requirement to disclosure of              not, what changes or additions would
                                                      disclosures-information-about-online-                   one carry-on item and a first and second               better ensure that consumers are
                                                      advertising.pdf). The FTC’s guidance                    checked bag, the Department believes a                 provided with the specific baggage fee
                                                      notes that using hyperlinks, rollovers, or              six month implementation period is                     information that will be required if the
                                                      pop-ups for price and certain other                     appropriate.                                           proposal is adopted?
                                                      disclosures may be less effective.                        We request comment on whether this
                                                      Consistent with DOT’s position in this                  proposed implementation period is too                  Regulatory Analyses and Notices
                                                      SNPRM, the guide states that                            lengthy or too short. If the proposed
                                                                                                                                                                     A. Executive Order 12866 (Regulatory
                                                      ‘‘consumers should not have to click on                 implementation period is either too
                                                                                                                                                                     Planning and Review) and DOT
                                                      hyperlinks to understand the full                       lengthy or too short, how long of an
                                                                                                                                                                     Regulatory Policies and Procedures
                                                      amount they will pay.’’ The guide                       implementation period would be
                                                      therefore suggests that fee or cost                     appropriate?                                              This action has been determined to be
                                                      information should be disclosed                                                                                significant under Executive Order 12866
                                                                                                              H. Revised Baggage Fee Disclosure
                                                      adjacent to the price claim, unless the                                                                        and the Department of Transportation’s
                                                                                                              Requirements and 14 CFR 399.85(b) and
                                                      information is very complex. Similarly,                                                                        Regulatory Policies and Procedures. It
                                                                                                              (c)
                                                      the guide notes that rollovers or                                                                              has been reviewed by the Office of
                                                      mouseovers ‘‘may not work on mobile                        This proposed rule, if adopted, would               Management and Budget under that
                                                      devices that have no cursor to hover                    require carriers and ticket agents to
                                                                                                                                                                     Executive Order. This section contains a
                                                      over a link.’’ Finally, the guide cautions              provide customer-specific baggage fee
                                                                                                                                                                     summary of costs and benefits
                                                      that pop-ups may be blocked by                          information for one carry-on item and a
                                                                                                                                                                     associated with this SNPRM. More
                                                      software or otherwise ignored by                        first and second checked bag if they
                                                                                                                                                                     detail on the economic impact of this
                                                      consumers.                                              provide fare information. We are
                                                                                                                                                                     proposed rule can be found in the
                                                         Accordingly, we request that                         tentatively of the view that there would
                                                                                                                                                                     Regulatory Impact Analysis (RIA),
                                                      commenters provide any consumer                         no longer be a need for a requirement
                                                                                                                                                                     which is available in the docket. Due to
                                                      research or data that indicates whether                 that airlines and ticket agents provide a
                                                                                                                                                                     the lack of key pieces of data, the
                                                      hyperlinked or other disclosures not                    general statement on the first screen on
                                                                                                                                                                     Department was unable to quantify the
                                                      adjacent to the fare on a mobile site                   which the agent or carrier offers a fare
                                                                                                              quotation for a specific itinerary that                costs and the benefits of the rule
                                                      would or would not be effective.
                                                                                                              additional airline fees for baggage may.               proposed in this SNPRM.
                                                      Implementation Period                                   We are proposing in this SNPRM to                         Under this SNPRM, the Department is
                                                         In connection with the time to                       remove the requirement under 14 CFR                    proposing that all ticket agents and
                                                      implement rule, the Department is                       399.85(b) that displays of fare                        airlines that provide fare and schedule
                                                      tentatively of the view that a six month                quotations must include a statement                    information to consumers while doing
                                                      implementation period to display                        that fees for baggage may apply and                    business in the United States be
                                                      consumer-specific fee information for a                 where consumers can see these baggage                  required to provide fee information to
                                                      first checked bag, a second checked bag                 fees. The requirement to provide the                   consumers for first and second checked
                                                      and a carry-on bag to consumers                         more general statement that baggage fees               bag, and one carry-on item adjacent to
                                                      whenever fare and schedule information                  may apply would be limited to certain                  the fare. The information would include
                                                      is provided would be appropriate and                    ticket agent displays related to air tour              the necessary fee information to allow
                                                      should provide enough time for both                     packages that are unable to provide                    the display of these fees as either the
                                                      carriers and ticket agents to update Web                customer-specific baggage fee                          standard fees charged by the carriers, or,
                                                      sites and apps. We recognize that in                    information.                                           at the consumer’s choice, as the
                                                      order to make technical changes and                        In addition to eliminating rule text                customer-specific charge if the
                                                      accommodate new information,                            under 14 CFR 399.85(b), we are                         consumer elects to provide his or her
                                                      individual ticket agents will need to                   considering eliminating the requirement                customer category information
                                                      know in detail how the information will                 in 14 CFR 399.85(c) regarding disclosure               including, but not limited to, military/
                                                      be distributed from carriers to the ticket              of bag fee information on e-ticket                     veteran status, frequently flier category,
                                                      agent and have the information from                     confirmations as it may be of limited                  and method of payment. Airlines can
                                                      carriers well before the display                        use.                                                   potentially establish a large number of
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                                                      deadline. We anticipate carriers will                      We seek comment on whether                          customer-specific factors that impact the
                                                      work in good faith with ticket agents,                  eliminating 14 CFR 399.85(b) would be                  fee that a consumer would pay for a
                                                      including GDSs and other ticket agent                   appropriate if the proposed requirement                carry-on and first and second checked
                                                      intermediaries, to ensure that the                      to display customer-specific baggage fee               bag. We solicit comment on whether the
                                                      distribution method and details are                     information is adopted. We also seek                   Department should limit the categories
                                                      worked out well in advance of the                       comment on whether we should                           that have to be displayed on a ticket
                                                      display deadline. In this regard, we have               consider keeping the existing                          agent’s Web site to the most commonly
                                                      tentatively concluded that carriers                     requirement 14 CFR 399.85(b) with                      used categories. If the Department
                                                      should ensure ticket agents have the                    revisions to reflect the proposed                      adopts such a limitation, how should


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                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                           7555

                                                      the most commonly used categories be                    be able to pay for these ancillary                     incorporated NDC into their systems).
                                                      determined?                                             services on the OTAs and GDSs), an                     And while the Department agrees that
                                                         Carriers would be required to transmit               alternative which was considered by the                there will be ongoing costs to maintain
                                                      this baggage fee information to all ticket              Department but not adopted for this                    and transmit data required by the rule,
                                                      agents to which they provide fare and                   SNPRM.                                                 the Department does not believe that the
                                                      schedule information, including GDSs                       One mainline carrier (Delta)                        SNPRM, if adopted as proposed, would
                                                      and other intermediaries in the air                     commented that the proposed rule as                    generate the need for an additional full-
                                                      transportation marketplace. Ticket                      described in the NPRM would require                    time staff equivalent for each carrier, on
                                                      agents and carriers would be required to                the redesign of carrier distribution                   average, to monitor and debug ancillary
                                                      be compliant with the rule within six                   systems to provide ancillary fees at the               fee data shared with travel agents, given
                                                      months of its final publication date.                   first point of search. Delta estimates it              the current pace of technological
                                                         Ticket agents would be allowed to                    would take 12 months and cost $1                       improvements in all reporting systems,
                                                      design the presentation of these fees as                million redesign its systems.                          the pace at which carriers are adopting
                                                      best suits them as long as they are                        An economic consultant (who                         NDC, and the staff resources already
                                                      available at the time when fares are first              submitted comments with the carrier                    committed to monitoring data
                                                      presented. This fee information must be                 trade association, A4A) argued that the                transmittals.
                                                      customer-specific, i.e. specific to the                 costs to carriers to comply with the                      Given the existing questions and
                                                      individual and his/her any unique                       requirement for greater transparency as                comments to the 2014 NPRM, the
                                                      circumstances, unless the passenger                     proposed in the NPRM would cost more                   Department does not believe that it has
                                                      opts out.                                               than $3 million in the first year, and                 enough information to confidently
                                                                                                              $7.2 million over 10 years. This                       quantify the total cost to carriers of
                                                      Costs of the SNPRM                                      commenter also argued that carriers                    complying with the proposed rule. The
                                                      1. Direct Costs to Carriers                             would incur significant additional                     Department believes that the costs of
                                                                                                              ongoing costs for managing estimates of                compliance are likely to be less than $1
                                                         Carriers would incur costs related to                the process of ‘‘development and
                                                      preparing and transmitting ancillary                                                                           million per carrier, but is nevertheless
                                                                                                              debugging programs and procedures
                                                      service fee information to OTAs and                                                                            seeking additional information on the
                                                                                                              that the carriers will have to create to
                                                      GDSs. These costs would include the                                                                            likely costs to carriers of the
                                                                                                              report ancillary fee information.’’ The
                                                      one-time set up costs to develop internal                                                                      requirement as specified in this SNPRM.
                                                                                                              commenter noted that carriers typically
                                                      systems/processes to distribute the                     employ one full time employee to                       2. Direct Costs to Ticket Agents
                                                      baggage fee information. These set-up                   monitor and debug the baggage fee
                                                      costs would include upfront planning                                                                              Ticket agents would incur costs
                                                                                                              information reporting to ATPCO. He
                                                      time to develop procedures to collect                                                                          related to accepting ancillary service fee
                                                                                                              also noted that carriers spend
                                                      and distribute the necessary data, as                                                                          information from GDSs and carriers and
                                                                                                              approximately $1 million to ‘‘establish
                                                      well as any potential IT and software                                                                          posting that information on their Web
                                                                                                              each link to a GDS’’.
                                                      development costs to transmit data                         ATPCO also commented that the costs                 site engines, and of communicating the
                                                      which is not already being transmitted                  to carriers of compliance with the                     additional fee information to consumers
                                                      to GDSs and ticket agents via ATPCO or                  requirement as proposed in the NPRM                    during reservation phone calls. The
                                                      NDC.                                                    could be quite high, noting that                       most significant cost to ticket agents is
                                                         Carriers would also incur some                       ATPCO’s efforts alone to comply with                   likely to be the one-time cost to
                                                      incremental ongoing costs to manage                     the simpler baggage fee information                    reprogram their Web site search engines
                                                      and transmit data relating to any                       requirements of the 2011 consumer rule                 to provide the necessary baggage
                                                      changes in baggage fees defined as basic                cost over $1 million.                                  information.
                                                      ancillary service fees by this                             The Department believes that the                       Larger ticket agents and OTAs are
                                                      rulemaking. Carriers might also incur                   estimates from commenters to the 2014                  likely to have in-house capability to
                                                      some additional costs for system                        NPRM overstate the likely costs to                     reprogram their Web sites accordingly,
                                                      updates to any new IT systems or                        carriers of this SNPRM for several                     but small tickets agents probably will
                                                      programs incorporated for the purposes                  reasons. While reviewing these                         not. As the US Tour Operators
                                                      of complying with this rule. For this                   comments, the Department noted that                    Association (USTOA) noted in its
                                                      analysis, only the ongoing costs which                  much of the comments were directed to                  comment to the 2014 NPRM, many tour
                                                      would not have occurred except for the                  the challenges and additional costs of                 operators are unlikely to have in-house
                                                      rulemaking are considered.                              transferring information for advance                   web programmers and would likely
                                                         Carriers can present the information                 seat assignment, which is dynamic                      need to hire consultants and contractors
                                                      in a format of their choosing, including                information, changing frequently as                    to bring their Web sites into compliance.
                                                      allowing consumers to opt out of                        carriers manage their loads. The cost for                 Ticket agents that market and sell
                                                      viewing the information, or choosing                    the transmittal of real-time advance seat              online to consumers already have
                                                      only some of it, if that is their                       assignment information to ticket agents                systems in place to receive flight and
                                                      preference. The Department is                           would thus be significantly more than                  cost information from carriers and
                                                      requesting further comments on this                     the transmittal of baggage fee                         GDSs, but it is unclear whether these
                                                      specific issue with this SNPRM.                         information, which changes much less                   systems have the capacity to receive and
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                                                         Multiple commenters to the 2014                      frequently. Additionally, the                          process all the necessary information to
                                                      NPRM provided information on likely                     Department notes that several carriers                 comply with the proposed rule. Several
                                                      costs to carriers of the proposed                       are already in agreement to start                      commenters to the NPRM argued that
                                                      requirement for basic ancillary service                 providing that information to GDSs; and                the RIA for the 2014 NPRM
                                                      fee information, though most of these                   some carriers are moving to IATA’s NDC                 underestimates the costs to ticket agents
                                                      costs comments were directed at the                     which will allow for easier                            to update their systems to comply with
                                                      possible inclusions of requiring                        customization of flight and pricing                    the rule. The Department is seeking
                                                      transactability for these fees as well as               options to consumers and at a lower                    comments on this specific issue with
                                                      their display (i.e., that consumers would               cost to carriers (once they have                       this SNPRM.


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                                                      7556                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                        At least three commenters noted that                  would incur significant costs. Yet one                 would permit ticket agents to provide
                                                      there could be significant ongoing                      GDS (Sabre) commented that it already                  consumers the opportunity to opt-out of
                                                      compliance costs for ticket agents and                  has the capability to comply with the                  receiving the baggage fee information for
                                                      tour operators to provide baggage fee                   requirements proposed in the 2014                      carry-on and first and second checked
                                                      information as per the proposed                         NPRM (although it noted that ticket                    baggage, if so desired. If ticket agents do
                                                      requirement, primarily in terms of                      agents do not already have the needed                  choose to incorporate such an opt-out
                                                      longer times during reservation phone                   systems in place). The Department thus                 feature, additional time for processing
                                                      calls. The Department acknowledges                      expects that this SNPRM, if adopted as                 and displaying information on baggage
                                                      that there may be additional time at the                proposed, would not have significant                   fees which the consumer does not want
                                                      beginning of a call as ticket agents                    costs to GDSs.                                         to see should be significantly reduced.
                                                      discuss baggage fees earlier in the                       ATPCO could also potentially incur                   The cost of waiting for baggage fee
                                                      reservation process but notes that such                 additional costs to process the required               information, which the consumer does
                                                      earlier discussion of baggage fees may                  information, due solely to this                        want to see, should be off-set by the
                                                      also limit the likelihood of increased                  rulemaking, although this is also very                 value to the consumer of getting that
                                                      call time at the end of the call as some                uncertain. In its comments to the                      information (hence the choice made to
                                                      consumers are surprised by additional                   NPRM, ATPCO stated that it already has                 receive it). The Department
                                                      baggage fees and may revisit their flight               the capacity to meet the proposed 2014                 acknowledges that some portion of
                                                      searches.                                               NPRM requirements. The Department                      consumers may misjudge/underestimate
                                                        Ticket agents would also incur some                   also expects that the SNPRM would not                  the amount of time it would take to
                                                      ongoing costs to refresh the required                   entail significant costs for ATPCO.                    receive all the baggage information,
                                                      baggage fee information when it                                                                                especially in the beginning period after
                                                                                                              Costs to Consumers of Additional Time
                                                      changes. The Department does not                                                                               implementation and that, therefore,
                                                                                                              Waiting for Search Results
                                                      expect that these costs would be                                                                               there will be some additional wait time
                                                      significant, since the systems to transmit                 Several commenters to the 2014
                                                                                                                                                                     and costs to consumers but that this cost
                                                      the data are already in place and the                   NPRM, including A4A, Delta, and
                                                                                                                                                                     will decrease over time.
                                                      programming to display the required                     IATA, argued that the Department’s                       Since the SNPRM does not include
                                                      baggage fee has already occurred. In                    analysis should take into account                      seat assignment fees in the basic
                                                      addition, these fees need only be                       potential costs to consumers from
                                                                                                                                                                     ancillary fee data that must be
                                                      updated when changed.                                   additional time spent waiting for the
                                                                                                                                                                     communicated, the Department believes
                                                        We believe that the cost impacts of                   research results to load, given additional
                                                                                                                                                                     that there would not be significant
                                                      the proposal in this SNPRM would                        processing time required to display
                                                                                                                                                                     additional wait time for consumers.
                                                      differ significantly from the costs which               more ancillary fees. These commenters
                                                                                                                                                                     Nevertheless, the Department is seeking
                                                      would have been incurred under the                      specifically cited the likely increased
                                                                                                                                                                     additional comment on this issue.
                                                      2014 NPRM, since the current proposed                   time needed to access real time
                                                      rule no longer includes advance seat                    information for up-to-date seat                        Benefits of the SNPRM
                                                      assignment in the basic ancillary service               assignment fee information. A study                    1. Time Saving Benefits to Consumers
                                                      fees to be covered. Thus, the                           prepared for A4A by Dr. Daniel L.
                                                      Department is seeking additional                        Rubinfeld estimated the additional wait                   Both consumers who purchase
                                                      information on the potential costs of                   times to consumers would cost                          directly from carrier Web sites and those
                                                      this SNPRM on ticket agents.                            approximately $805 million per year,                   who use travel agents would benefit. A
                                                                                                              based on the assumption that the                       significant number of leisure travelers
                                                      3. Other Cost Issues—Additional Costs                   proposed rule would add approximately                  book online via online travel agencies,
                                                      to GDSs and/or ATPCO                                    20–40 seconds to each itinerary search                 use metasearch engines, or even use
                                                         It is unclear if GDSs would incur                    (drawn from a survey by A4A of its                     their businesses travel management
                                                      additional costs to process the                         members). Elsewhere in its submittal,                  company. But since OTA Web sites do
                                                      information required by this SNPRM.                     A4A estimates that the additional                      not currently have customer category-
                                                      For this analysis, the relevant                         processing time for the proposed                       specific bag fees, these consumers must
                                                      incremental costs to the GDSs would be                  ancillary service fee information would                check multiple airline Web sites in
                                                      those costs of efforts/improvements                     cost approximately $139 million a year                 order to get an accurate estimate of the
                                                      which they would otherwise not have                     from an estimated loss of 5.5 million                  flight costs including the fees for basic
                                                      incurred, but for this rulemaking. Costs                hours per year for online ticket agents                ancillary services related to carry-on
                                                      for efforts of GDSs to collect and                      alone.                                                 and first and second checked bags.
                                                      transmit the needed baggage fee                            The Department notes that most of the               While information on baggage fees is
                                                      information to ticket agents that were                  costs relating to additional processing                already required to be available from
                                                      already planned or which would occur                    times and added wait times for                         travel agents, it is often available
                                                      in the future for reasons other than this               consumers raised by commenters focus                   through links, which requires
                                                      rule (such as responding to market                      on the additional time and cost for                    significant time and effort from the
                                                      forces) are not considered to be due to                 transmitting advance seat assignment                   consumer to determine the actual fee
                                                      the rule. According to some of the                      information, which, as noted above, is                 that must be paid. The consumer must
                                                      comments received, GDSs are already                     dynamic and thus more complicated                      click the link or links to get the baggage
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                                                      improving the capacity of their systems                 and expensive to keep up-to-date. Since                information for the itinerary being
                                                      to manage more ancillary service fee                    the SNPRM does not include advance                     considered and recalculate their cost.
                                                      information.                                            seat assignment, the needed time to                    Not all consumers purchasing tickets via
                                                         Comments to 2014 NPRM regarding                      process and display the required fee                   an OTA would experience a time
                                                      costs to GDSs to comply with it were                    information should be much less than                   savings, as not all consumers are
                                                      somewhat inconsistent. At least two                     what was estimated by commenters in                    concerned with baggage fees. For some
                                                      comments (one for from a carrier and                    response to the 2014 NPRM.                             consumers the additional cost for
                                                      another carrier trade association                          Additionally, to provide more                       baggage will not factor into their choice
                                                      supported study) claimed that GDSs                      flexibility to ticket agents, this SNPRM               of a flight, and as such these consumers


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                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                             7557

                                                      wouldn’t search for baggage fees and                    choices: (1) Those who learn of the                    for ‘‘natives.’’ With respect to this
                                                      thus would not benefit from the                         baggage fees for a flight they intend to               SNPRM, one could consider the
                                                      requirements proposed in this SNPRM.                    purchase but do so near the end of the                 consumers who are well informed
                                                      Additionally, in some markets there is                  purchasing process, and (2) those who                  regarding fees for ancillary services (i.e.
                                                      only one (or perhaps two) carriers that                 remain unaware of the baggage fee                      aware of itinerary-specific baggage fees)
                                                      offer flights at the preferred time or at               information until after they make a                    in contrast to other travelers (perhaps
                                                      a fare which the consumer would                         purchase. Both of these consumer                       those who rarely travel) who are not
                                                      consider; these consumers also would                    groups may end up making purchasing                    aware of variance in carry-on and
                                                      not benefit. But the Department believes                decisions they otherwise would not                     checked baggage fees. The result is that
                                                      that many consumers seek out at least                   have made had they been aware of the                   the latter group would end up, on
                                                      some baggage information, which would                   associated baggage fees when first                     average, paying more.
                                                      result in the time savings for those                    reviewing search results.                                While both of these theoretical
                                                      individuals.                                               Research has shown that when                        constructs are useful in understanding
                                                         Meanwhile, a little more than a fourth               consumers first see a price which is                   how and why some consumers may be
                                                      of airline passengers purchase tickets                  lower than the final price they must pay               making sub-optimal air travel
                                                      directly from carrier Web sites                         (whether due to delayed display of                     purchasing decisions, the Department
                                                      (PhoCusWright estimates this figure at                  taxes, fees, shipping and handling, etc.)              does not have enough information to
                                                      23%).7 While these consumers have the                   they often end up paying more than if                  quantify or monetize this benefit.
                                                      most direct access to ancillary service                 the first price they see is the final, total           3. Benefits to Businesses Employees
                                                      fees, many carrier Web sites also do not                price (including taxes, fees, and/or                   That Travel
                                                      include basic ancillary service fees                    shipping and handling). Studies and
                                                      when first quoting an itinerary fare.                   experiments have demonstrated that                        Many businesses are also concerned
                                                      Thus, some consumers must access                        partitioned pricing (the separating of a               with the ancillary fees associated with
                                                      multiple Web pages to reach the                         price into its components) and the                     baggage. Travel can be a significant
                                                      information they need to calculate a cost               timing for when different pieces of                    expense for many companies and
                                                      to them which includes posted fare plus                 pricing information (such as taxes) are                ancillary service fees can substantially
                                                      the fees for carry-on and first and                     revealed in a purchasing situation can                 increase trip costs.
                                                      second checked bags. Since the SNPRM                    lead to increases in consumer demand.8                    Many business travelers book flights
                                                      would require that basic ancillary                         If revealing full prices later in the               via travel management companies that
                                                      service fee information be consolidated                 purchasing process leads to more                       seek the best flight at the best price for
                                                      in one place on carrier fare displays,                  purchases than if the full price had been              the traveler, given his or her parameters.
                                                      some portion of consumers purchasing                    seen immediately, (at least some)                      But much of the information needed to
                                                      tickets on carrier Web sites would spend                consumers are purchasing at a price                    ensure that each traveler gets the best
                                                                                                              higher than they otherwise would have.                 full price taking into account base fare,
                                                      less time searching for the desired fee
                                                                                                              These ‘‘sub-optimal’’ choices lead to                  mileage club memberships, specific
                                                      information.
                                                         Not all consumers purchasing from                    what economists call a ‘‘dead-weight                   credit cards used and any other
                                                      carrier Web sites would benefit.                        loss.’’                                                potential discounts are not often readily
                                                      Consumers who purchase from a carrier                      In other research conducted in market               available. Travel managers have
                                                      Web site are more likely as a group to                  situations in which one group of                       complained that not all baggage fee
                                                      be aware of the carrier’s baggage fees                  consumers knows more about products                    information needed to ensure that
                                                      and policies. Many of these consumers                   and/or prices than others, some                        business travel is booked according to
                                                      are going directly to the carrier Web site              economists have proposed a ‘‘tourists                  company policy is readily accessible
                                                      because that carrier is one of the few or               and natives’’ framework, in which                      and readily incorporated into internal
                                                      the only one to offer flights at the                    consumers are divided into two                         reservation tracking or accounting
                                                      desired time and to the desired                         groups—those with access to more                       programs. The information must be
                                                      destination, or because the consumer is                 information about lower prices/better                  manually entered, often based on
                                                      a member of the carrier’s affinity                      quality (the natives) and those with very              receipts or information provided by the
                                                      program. Nevertheless, some portion of                  limited information who will often pay                 travelers themselves. Thus, many
                                                      those consumers who purchase tickets                    more (the tourists). (Some researchers                 businesses either pay more than they
                                                      on a carrier Web site do check to see                   have called these two groups ‘‘savvy’’                 needed to for a particular flight or must
                                                      what the baggage fees would be for their                and ‘‘unsavvy’’ travelers.) This                       have employees spend time seeking out
                                                      desired itinerary, and these consumers                  framework has two price-equilibriums;                  the appropriate fee information in order
                                                      would save time under this SNPRM.                       the ‘‘tourist’’ one is higher than the one             to make the best choice. The increased
                                                         Together, the time savings may be                                                                           effort results in higher company travel
                                                      quite significant. The Department does                     8 Deborah Shenck, ‘‘Exploiting the Salience Boas    costs.
                                                      not yet have the information to                         in Designing Taxes,’’ (New York University Law and        These costs associated with searching
                                                      confidently estimate the value of this
                                                                                                              Economics Working Papers, Paper 233, 2010) has an      for baggage fee information have been
                                                                                                              informative and extensive review of past work in       identified repeatedly to the Department
                                                      benefit so it is seeking additional                     this area. See also Morwitz, Vicki, Greenleaf, Eric,
                                                      comment on it.                                          Shalev, Edith and Johnson, Eric J., The Price Does     by travel management company
                                                                                                                                                                     representatives and raised at meetings of
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                                                                                                              Not Include Additional Taxes, Fees, and
                                                      2. Better Informed Consumer Purchasing                  Surcharges: A Review of Research on Partitioned        the Advisory Committee for Aviation
                                                      Decisions                                               Pricing (February 26, 2009). Available at SSRN:        Consumer Protection. In addition,
                                                                                                              http://ssrn.com/abstract=1350004. Note, though
                                                         The increased transparency in                        that some studies have found that partitioned          several commenters, including trade
                                                      ancillary service fee information would                 pricing can also lead to negative brand recognition    associations, a GDS and at least one
                                                      also lead to some portion of consumers                  and may hurt sales in the future, if the fees are      advocacy group, noted that benefits to
                                                                                                              perceived to be excessive and within the seller’s      business travelers of this requirement
                                                      making more informed purchasing                         ability to control. This differs somewhat from the
                                                                                                              situation here, since the separate portions of the     could be significant.
                                                       7 PhoCusWright (2011) ‘‘U.S. Online Travel             price are taxes imposed by state, local and federal       While there is much interest in the
                                                      Overview.’’                                             governments (as opposed to shipping fees, etc.).       industry on the impact of unbundling


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                                                      7558                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      and ancillary service fees on the costs of              small entities may incur substantial                   information for a first checked bag, a
                                                      business travel, the Department did not                 costs. The primary costs of the rule arise             second checked bag, and one carry-on
                                                      find adequate data on this impact to                    from programming, data management                      bag to all ticket agents that receive and
                                                      estimate the benefits of this requirement               and other related costs to carriers and                distribute the air carrier’s or foreign
                                                      for these business travelers, but notes                 ticket agents to transmit or display the               carrier’s fare and schedule information.
                                                      that they may be significant for some                   required baggage information. The                      The second information collection is a
                                                      entities.                                               Department is seeking additional                       requirement that air carriers, foreign air
                                                                                                              information on the potential costs and                 carriers, and ticket agents that provide
                                                      4. Benefits to Ticket Agents                            benefits of the requirements proposed in               an air carrier’s or foreign carrier’s fare
                                                         While there is concern about the                     the SNPRM.                                             and schedule information to consumers
                                                      added costs of this provision to ticket                                                                        in the United States receive the
                                                                                                              C. Executive Order 13132 (Federalism)
                                                      agents in terms of additional                                                                                  information from carriers and disclose
                                                      programming expenditures and staff                        This SNPRM has been analyzed in                      the air carrier’s or foreign air carrier’s
                                                      time to communicate the added baggage                   accordance with the principles and                     fees for a first checked bag, a second
                                                      fee information, there is also the                      criteria contained in Executive Order                  checked bag, and one carry-on bag.
                                                      possibility that ticket agents may                      13132 (‘‘Federalism’’). The notice does                   For each of these information
                                                      experience some benefits of the SNPRM.                  not contain any provision that (1) has                 collections, the title, a description of the
                                                      At least one commenter raised the point                 substantial direct effects on the States,              respondents, and an estimate of the
                                                      that ticket agents would be able to                     the relationship between the national                  annual recordkeeping and periodic
                                                      access ancillary service fee information                government and the States, or the                      reporting burden are set forth below:
                                                      more quickly in response to consumer                    distribution of power and                                 1. Requirement that air carriers and
                                                      requests, and could conclude some                       responsibilities among the various                     foreign air carriers provide certain
                                                      transactions with consumers more                        levels of government; (2) imposes                      baggage fee information to all ticket
                                                      quickly. The Department agrees that                     substantial direct compliance costs on                 agents that receive and distribute the
                                                      ticket agents may benefit from the rule                 State and local governments; or (3)                    carrier’s fare and schedule information.
                                                      in this manner but is unable to estimate                preempts State law. States are already                    Respondents: Air carriers and foreign
                                                      by how much.                                            preempted from regulating in this area                 air carriers that provide fare and
                                                                                                              by the Airline Deregulation Act, 49                    schedule information to ticket agents
                                                      B. Regulatory Flexibility Act                           U.S.C. 41713. Therefore, the                           and charge baggage fees for a carry-on
                                                         The Regulatory Flexibility Act (5                    consultation and funding requirements                  bag, first checked bag, or second
                                                      U.S.C. 601 et seq.) requires an agency to               of Executive Order 13132 do not apply.                 checked bag. We estimate that
                                                      review regulations to assess their impact                                                                      approximately 206 carriers will be
                                                                                                              D. Executive Order 13084
                                                      on small entities unless the agency                                                                            impacted by this requirement.
                                                      determines that a rule is not expected to                 This SNPRM has been analyzed in                         Estimated Annual Burden on
                                                      have a significant economic impact on                   accordance with the principles and                     Respondents: Approximately 8 hours
                                                      a substantial number of small entities.                 criteria contained in Executive Order                  per respondent. Note that 8 hours is the
                                                      The rule proposed in this SNPRM                         13084 (‘‘Consultation and Coordination                 basis used for computing the costs of
                                                      would have some impact on a                             with Indian Tribal Governments’’). The                 providing baggage fee information, but
                                                      significant number of small entities, as                SNPRM would not significantly or                       since airlines already share this
                                                      discussed in the Initial Regulatory                     uniquely affect the communities of the                 information with each other to facilitate
                                                      Flexibility Analysis.                                   Indian tribal governments or impose                    code-share and interline ticketing, it
                                                         For purposes of rules promulgated by                 substantial direct compliance costs on                 likely overestimates the actual amount
                                                      the Department regarding aviation                       them, the funding and consultation                     of additional time that most carriers will
                                                      economic and consumer matters, an                       requirements of Executive Order 13084                  have to spend to meet the requirement.
                                                      airline is a small entity for purposes of               do not apply.                                             Estimated Total Annual Burden:
                                                      the Regulatory Flexibility Act if it                    E. Paperwork Reduction Act                             1,648 hours for all respondents.
                                                      provides air transportation only with                                                                             Frequency: Once information is
                                                      aircraft having 60 or fewer seats and no                  The Paperwork Reduction Act of 1995                  provided, new or additional information
                                                      more than 18,000 pounds payload                         (PRA) (44 U.S.C. 3501 et seq.) requires                only needs to be provided when baggage
                                                      capacity.9 The Small Business                           that the Department consider the impact                fee information changes; varies by
                                                      Administration (SBA) size standard for                  of paperwork and other information                     airline but for most carriers is infrequent
                                                      small business for both travel agents and               collection burdens imposed on the                      and will likely be less than annually.
                                                      tour operators is $20.5 million in                      public and, under the provisions of PRA                   2. Requirement that air carriers,
                                                      average annual receipts (SBA does not                   section 3507(d), obtain approval from                  foreign air carriers, and ticket agents
                                                      have a size standard for ticket agents as               the Office of Management and Budget                    that provide carrier fare and schedule
                                                      defined by the Department; travel agents                (OMB) for each collection of                           information to consumers in the United
                                                      and tour operators are the most                         information it conducts, sponsors, or                  States disclose carrier’s fees for a first
                                                      applicable categories for which such                    requires through regulations. DOT has                  checked bag, a second checked bag, and
                                                      data was found).                                        determined that the proposals included                 one carry-on bag.
                                                                                                              in this SNPRM would impose new                            Respondents: Air carriers, foreign air
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                                                         A significant number of small entities
                                                      would be impacted by this SNPRM. Due                    information collection requirements on                 carriers, and ticket agents that provide
                                                      to the relative lack of key pieces of data,             the affected entities. Accordingly, we                 carrier fare and schedule information to
                                                      the Department was unable to quantify                   are seeking comment on the impact of                   consumers in the United States. We
                                                      the costs of the proposed rule to small                 the requirements proposed in this                      estimate that as many as 206 air carriers
                                                      (or large) entities, but notes that some                SNPRM.                                                 and foreign air carriers and as many as
                                                                                                                The first collection of information                  600 ticket agents may be impacted by
                                                         9 See 14 CFR Chapter 11. Note that the Small         proposed here is a requirement that air                this requirement.
                                                      Business Administration definition of small carriers    carriers and foreign air carriers provide                 Our estimate is based on the following
                                                      is not used.                                            useable, current, and accurate fee                     information and assumptions: Ticket


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                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                             7559

                                                      agents includes online travel agencies                  displays would not need to be revised.                 ■ 3. A new section 399.90 is added to
                                                      (OTAs), brick-and-mortar travel                         It would likely be a one-time cost.                    read as follows:
                                                      agencies, corporate travel agencies, and
                                                                                                              F. Unfunded Mandates Reform Act                        § 399.90 Transparency in airline pricing,
                                                      tour operators that market airline
                                                                                                                                                                     including ancillary service fees.
                                                      tickets. As described in the Regulatory                   The Department has determined that
                                                      Impact Analysis accompanying this                       the requirements of Title II of the                       (a) The purpose of this section is to
                                                      SNPRM, there may be approximately                       Unfunded Mandates Reform Act of 1995                   ensure that air carriers, foreign air
                                                      9,500 travel agencies and over 2,500                    do not apply to this SNPRM.                            carriers and ticket agents doing business
                                                      tour operators in the United States,                                                                           in the United States clearly disclose to
                                                                                                              G. National Environmental Policy Act                   consumers at all points of sale the fees
                                                      although not all of those entities market
                                                                                                                 The Department has analyzed the                     for a first checked bag, a second checked
                                                      air transportation online to consumers
                                                                                                              environmental impacts of this SNPRM                    bag, and one carry-on bag wherever fare
                                                      in the United States. In addition, most
                                                                                                              pursuant to the National Environmental                 and schedule information is provided to
                                                      ticket agents rely on GDSs to create
                                                                                                              Policy Act of 1969 (NEPA) (42 U.S.C.                   consumers that may be purchasing or
                                                      online fare and schedule displays. GDSs
                                                                                                              4321 et seq.) and has determined that it               considering purchasing air
                                                      and entities that create or develop and
                                                                                                              is categorically excluded pursuant to                  transportation. Nothing in this section
                                                      maintain their own online fare and
                                                                                                              DOT Order 5610.1C, Procedures for                      should be read to require that these
                                                      schedule displays, such as many of the
                                                                                                              Considering Environmental Impacts (44                  ancillary services must be transactable
                                                      impacted airlines and the largest travel
                                                                                                              FR 56420, Oct. 1, 1979). Categorical                   (e.g., purchasable online or at other
                                                      agents, will incur some planning,
                                                                                                              exclusions are actions identified in an                points of sale).
                                                      development, and programming costs to                                                                             (b) Each air carrier and foreign air
                                                      reprogram their systems to provide                      agency’s NEPA implementing
                                                                                                                                                                     carrier shall provide useable, current,
                                                      online displays of fare and schedule                    procedures that do not normally have a
                                                                                                                                                                     and accurate information for fees for a
                                                      information that includes baggage fee                   significant impact on the environment
                                                                                                                                                                     first checked bag, a second checked bag,
                                                      information on their Web sites.                         and therefore do not require either an
                                                                                                                                                                     and one carry-on bag to all ticket agents
                                                      Therefore we estimate that about five                   environmental assessment (EA) or
                                                                                                                                                                     that receive and distribute the air
                                                      percent of United States ticket agents,                 environmental impact statement (EIS).
                                                                                                                                                                     carrier’s or foreign carrier’s fare and
                                                      including GDSs and large travel                         See 40 CFR 1508.4. In analyzing the
                                                                                                                                                                     schedule information. The information
                                                      agencies, or as many as 600 ticket                      applicability of a categorical exclusion,
                                                                                                                                                                     should be sufficient to allow ticket
                                                      agents, will be impacted by this                        the agency must also consider whether
                                                                                                                                                                     agents to express fees as itinerary-
                                                      requirement. Many smaller carriers also                 extraordinary circumstances are present
                                                                                                                                                                     specific or customer-specific charges.
                                                      rely on GDSs to create online fare and                  that would warrant the preparation of
                                                                                                                                                                     ‘‘Customer-specific’’ refers to variations
                                                      schedule displays so our estimate of 206                an EA or EIS. Id. Paragraph 3.c.6.i of
                                                                                                                                                                     in fees that depend on, for example, the
                                                      impacted carriers may be overstated.                    DOT Order 5610.1C categorically
                                                                                                                                                                     passenger type (e.g., military), frequent
                                                         Estimated Annual Burden on                           excludes ‘‘[a]ctions relating to consumer
                                                                                                                                                                     flyer status, method of payment,
                                                      Respondents: Approximately 80 hours                     protection, including regulations.’’ The
                                                                                                                                                                     geography, travel dates, cabin (e.g., first
                                                      per respondent. Our estimate is based                   purpose of this rulemaking is to
                                                                                                                                                                     class, economy), ticketed fare (e.g., full
                                                      on the following information and                        enhance protections for air travelers and
                                                                                                                                                                     fare ticket—Y class), etc.
                                                      assumptions: The primary costs to                       to improve the air travel environment.                    (c) Each air carrier, foreign air carrier
                                                      respondents for the disclosure                          The Department does not anticipate any                 or ticket agent that provides an air
                                                      requirement would arise from                            environmental impacts, and there are no                carrier’s or foreign carrier’s fare and
                                                      programming, data management, Web                       extraordinary circumstances present in                 schedule information to consumers in
                                                      site modification and other related costs               connection with this rulemaking.                       the United States must disclose the air
                                                      to carriers and ticket agents to display                  Issued this 9th day of January 2017 in               carrier’s or foreign air carrier’s fees for
                                                      the required baggage information.                       Washington, DC.                                        a first checked bag, a second checked
                                                      Revising Web site displays in this                      Anthony R. Foxx,                                       bag, and one carry-on bag.
                                                      manner would likely be similar to the                   Secretary of Transportation.                              (i) The fee information disclosed to a
                                                      revisions that carriers and ticket agents                                                                      consumer for these ancillary services
                                                      needed to make to their Web sites to                    List of Subjects                                       must be expressed as customer-specific
                                                      comply with the requirement to include                  14 CFR Part 399                                        charges as provided in subpart (b) if the
                                                      all taxes and fees in fare displays in                                                                         consumer elects to provide his or her
                                                      connection with the Enhanced Airline                      Administrative practice and
                                                                                                                                                                     customer category information to the
                                                      Passenger Protections II rulemaking.                    procedure, Air carriers, Air rates and
                                                                                                                                                                     carrier or ticket agent, such as frequent
                                                      Our estimate of those costs was 80 hours                fares, Air taxis, Consumer protection,
                                                                                                                                                                     flyer type, payment method, or military
                                                      per respondent as discussed in the                      and Small businesses.
                                                                                                                                                                     status.
                                                      Regulatory Impact Analysis prepared in                                                                            (ii) If the consumer conducting a
                                                                                                              PART 399—[AMENDED]
                                                      connection with the Enhanced Airline                                                                           search does not opt out of receiving
                                                      Passenger Protections II rulemaking                     ■  1. The authority citation for part 399              baggage fee information but elects not to
                                                      (2011) (see page 59, https://                           is revised to read as follows:                         provide his or her customer category
                                                      www.regulations.gov/                                                                                           information to the carrier or ticket agent,
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                                                      document?D=DOT-OST-2010-0140-                               Authority: 49 U.S.C. 40101 et seq.
                                                                                                                                                                     and conducts an ‘‘anonymous’’ search,
                                                      2046.)                                                  ■ 2. Section 399.85 is amended by                      the fee information disclosed to
                                                         Estimated Total Annual Burden:                       removing paragraph (b).                                consumers for these ancillary services
                                                      Approximately 64,480 hours for all                                                                             must be expressed as itinerary-specific
                                                      respondents (based on an assumption of                  § 399.85    Notice of baggage fees and other           charges. ‘‘Itinerary-specific’’ refers to
                                                      16,480 hours for carriers and 48,000                    fees.
                                                                                                                                                                     variations in fees that depend on, for
                                                      hours for ticket agents).                               *     *   *    *             *                         example, geography, travel dates, cabin
                                                         Frequency: Once information is                         (b) Removed.                                         (e.g., first class, economy), and ticketed
                                                      incorporated into Web site displays, the                *     *   *    *             *                         fare class (e.g., full fare ticket—Y class).


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                                                      7560                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                         (iii) This provision does not apply to               first checked bag, a second checked bag                one carry-on bag as specified in
                                                      air-tour packages advertised or sold                    and one carry-on bag as specified in                   paragraph (c).
                                                      online by ticket agents if the air                      paragraph (c) at the first point in a                     (f) Ticket agents with an existing
                                                      transportation component is not                         search process where a fare is listed in               contractual agreement at the time this
                                                      finalized and the carrier providing air                 connection with a specific flight                      rule becomes effective with an air
                                                      transportation is not known at the time                 itinerary, adjacent to the fare. When                  carrier or foreign air carrier to act as an
                                                      of booking. However, the agent must                     providing customer-specific fee                        intermediary for the distribution of that
                                                      clearly and prominently disclose on the                 information, if more than one baggage                  carrier’s fare and schedule information
                                                      first screen in which the agent or carrier              fee may be responsive to the search                    to other ticket agents shall not charge
                                                      offers a fare quotation for a specific                  parameters, e.g., fee for a particular                 separate or additional fees for the
                                                      itinerary selected by a consumer that                   frequent flyer status and fee for a                    distribution of the ancillary service fee
                                                      additional airline fees for baggage may                 particular method of payment, the                      information described in paragraph (b).
                                                      apply and where consumers can see                                                                              Nothing in this paragraph should be
                                                                                                              lowest cost option must be identified
                                                      these baggage fees unless no baggage                                                                           read as invalidating any provision in an
                                                                                                              and displayed. Carriers and ticket agents
                                                      fees will apply. An agent may refer                                                                            existing contract among these parties
                                                                                                              may permit a consumer to opt out of
                                                      consumers to carrier Web sites where                                                                           with respect to compensation.
                                                      specific baggage fee information may be                 being provided search results with the                    (g) It is an unfair and deceptive
                                                      obtained or to its own site if it displays              fees for a first checked bag, a second                 practice in violation of 49 U.S.C. 41712
                                                      carriers’ baggage fees. In online displays              checked bag or one carry-on bag, or any                for an air carrier or foreign air carrier to
                                                      and oral communications, prior to                       single baggage fee (e.g., second checked               fail to provide the fees for a first
                                                      purchase, each ticket agent must                        bag) or any combination of baggage fees                checked bag, a second checked bag and
                                                      disclose that baggage fees may apply if                 (e.g., carry-on and second checked bag)                one carry-on bag as described in
                                                      that is the case and that those fees may                but the opt-out option must not be pre-                paragraph (b) to those ticket agents to
                                                      be reduced or waived based on the                       selected and must make clear which fee                 which the carrier provides its fare and
                                                      passenger’s frequent flyer status,                      or fees will not be displayed.                         schedule information or for a U.S.
                                                      method of payment or other consumer                        (e) In any oral communication with a                carrier, foreign carrier, or ticket agent to
                                                      characteristic.                                         prospective consumer and in any                        fail to provide the fees for a first
                                                         (d) If a U.S. or foreign air carrier or              telephone calls placed from the United                 checked bag, a second checked bag and
                                                      ticket agent has a Web site marketed to                 States, an air carrier, foreign air carrier            one carry-on bag to consumers as
                                                      U.S. consumers where it advertises or                   or ticket agent must inform a consumer,                described in paragraph (c) and (d).
                                                      sells air transportation, the carrier and               upon request, of the fees for a first                  [FR Doc. 2017–00904 Filed 1–18–17; 8:45 am]
                                                      ticket agent must disclose the fees for a               checked bag, a second checked bag and                  BILLING CODE 4910–9X–P
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Document Created: 2018-02-01 15:15:28
Document Modified: 2018-02-01 15:15:28
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionSupplemental Notice of Proposed Rulemaking (SNPRM).
DatesComments must be received by March 20, 2017. Comments received after this date will be considered to the extent practicable.
ContactKimberly Graber or Blane A. Workie, Office of the Assistant General Counsel for Aviation Enforcement and Proceedings, U.S. Department of Transportation, 1200 New Jersey Ave. SE., Washington, DC 20590, 202-366-9342 (phone), [email protected] or [email protected] (email).
FR Citation82 FR 7536 
RIN Number2105-AE56
CFR AssociatedAdministrative Practice and Procedure; Air Carriers; Air Rates and Fares; Air Taxis; Consumer Protection and Small Businesses

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