[Federal Register: June 10, 2005 (Volume 70, Number 111)]
[Notices]
[Page 33932-33937]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10jn05-113]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
Notice on Honoring Tickets of Insolvent Airlines Pursuant to the
Requirements of Section 145 of the Aviation and Transportation Security
Act
AGENCY: Office of the Secretary, Department of Transportation.
SUMMARY: The Department is publishing the following notice to provide
guidance to the aviation industry regarding the responsibility pursuant
to section 145 of the Aviation and Transportation Security Act of
certain air carriers to transport under certain conditions the ticketed
passengers of a carrier that has ceased operations on a particular
route or routes due to bankruptcy or insolvency.
FOR FURTHER INFORMATION CONTACT: Dayton Lehman, Jr., Deputy Assistant
General Counsel, or Jonathan Dols, Supervisory Trial Attorney, Office
of Aviation Enforcement and Proceedings (C-70), 400 7th Street, SW.,
Washington, DC 20590, (202) 366-9349.
Notice
This Notice provides further guidance for airlines and the
traveling public regarding the obligation of airlines under section 145
of the Aviation and Transportation Security Act, Pub. L. 107-71, 115
Stat. 645 (November 19, 2001) (``Act''), to transport passengers of
airlines that have ceased operations due to insolvency or bankruptcy.
In section 8404 of the Intelligence Reform and Terrorism Prevention Act
of 2004 (Pub. L. 108-458 (Dec. 17, 2004)), Congress recently renewed
the obligation of air carriers under section 145 to provide
transportation to passengers of airlines that have ceased operations
due to insolvency or bankruptcy. Prior to Congress's most recent
action, the Department had issued three notices providing guidance to
carriers and the public regarding section 145.\1\ The purpose of this
notice is to respond to the many inquiries from airlines and the public
regarding section 145 received since issuance of those notices, and to
provide notice that we have reconsidered our earlier estimates of the
direct costs to carriers of providing alternate transportation required
by section 145 and have accordingly decided that the maximum amount
that a carrier may charge a passenger accommodated under the law should
be greater than originally believed.
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\1\ Those notices were issued on August 8, 2002, (67 FR 53035,
Aug. 14, 2002) November 14, 2002, (67 FR 69805, Nov. 19, 2002) and
January 23, 2003 (68 FR 4266, Jan. 28, 2003).
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Section 145 requires, in essence, that airlines operating on the
same route as an insolvent carrier that has ceased operations transport
the ticketed passengers of the insolvent carrier ``to the extent
practicable.'' Our earlier notices set forth, among other things, our
view that, at a minimum, section 145 requires that passengers who hold
valid confirmed tickets, whether paper or electronic, on an insolvent
or bankrupt carrier that has ceased operations on a route be
transported on a space-available basis by other carriers that operate
on the route for which the passenger is ticketed. We also stated our
belief that Congress did not intend to prohibit carriers from
recovering from accommodated passengers the amounts associated with the
actual cost of providing such transportation. We indicated at that time
that we did not foresee those costs exceeding $25.00 each way, or
$50.00 on a roundtrip basis. However, we also made clear that we
recognized that such charges might be determined to be higher, since
the cost to a carrier of complying with section 145 could be affected
by a variety of factors, including the number of affected passengers,
the fuel costs to carriers in effect at the time of a cessation, and
the markets and itineraries involved.
Since the renewal of section 145 in December 2004, we have received
many inquiries from the airline and travel agent industries, the media,
and the public about various aspects of the law. These questions
involve, among other issues, the amount carriers may charge displaced
passengers seeking to be accommodated, as well as questions regarding
section 145's applicability to international flights, code shared
flights, passengers holding frequent flier tickets, and passengers
whose transportation involves charter flights. As a result of these and
other questions, including those raised on our own initiative, we have
reviewed section 145 and are issuing this further notice, which updates
and expands upon advice previously provided airlines and the public
about the provision. This guidance is being provided in an attached
question-and-answer format, which should assist readers in
understanding the many issues involved.
Questions regarding this notice may be addressed in writing to
Dayton Lehman, Deputy Assistant General Counsel, or Jonathan Dols,
Supervisory Trial Attorney, Office of Aviation Enforcement and
Proceedings, 400 7th St., SW., Washington, DC 20590, or they may be
contacted by telephone at (202) 366-9342 or by e-mail at
dayton.lehman@dot.gov or jonathan.dols@dot.gov, respectively.
Dated: June 1, 2005.
Karan Bhatia,
Assistant Secretary for Aviation and International Affairs.
Attachment to June 1, 2005, Section 145 Notice--Department of
Transportation Guidance Regarding Section 145 of the Aviation and
Transportation Security Act
In section 8404 of the Intelligence Reform and Terrorism Prevention
Act of 2004 (Pub. L. 108-458 (Dec. 17, 2004)), Congress renewed the
obligation of air carriers under section 145 of the Aviation and
Transportation Security Act (Pub. L. 107-71, 115 Stat. 645 (Nov. 19,
2001) (``Act'')) to provide transportation to passengers of airlines
that have ceased operations due to insolvency or bankruptcy. As
amended, section 145 states in pertinent part:
(a) * * * Each air carrier that provides scheduled air
transportation on a route shall provide, to the extent practicable,
air transportation to passengers ticketed for air transportation on
that route by any other air carrier that suspends, interrupts, or
discontinues air passenger service on the route by reason of
insolvency or bankruptcy of the other air carrier.
(b) * * * An air carrier is not required to provide air
transportation under subsection (a) to a passenger unless that
passenger makes alternative arrangements with the air carrier for
such transportation within 60 days after the date on which that
passenger's air transportation was suspended, interrupted, or
discontinued (without regard to the originally scheduled travel date
on the ticket).
(c) * * * This section does not apply to air transportation the
suspension, interruption, or discontinuance of which occurs after
November 19, 2005.
Questions and Answers
Question 1: What is the basic requirement of section 145?
Answer 1: At a minimum, section 145 requires that passengers
holding valid confirmed tickets, whether paper or electronic, on an
insolvent or bankrupt
[[Page 33933]]
carrier that has ceased operations on a route by reason of that
insolvency or bankruptcy be transported on a space-available basis by
other carriers who operate on the route for which the passenger is
ticketed.
Question 2: If a U.S. air carrier that has not yet filed for
bankruptcy discontinues operating on a route for reasons of
``insolvency,'' must other air carriers operating on that route provide
transportation to passengers ticketed by the insolvent air carrier?
Answer 2: Yes.
Question 3: What constitutes ``insolvency'' for purposes of section
145?
Answer 3: Insolvency is generally the inability to pay one's debts
as they become due. This would probably occur with or after a
bankruptcy filing, but such a filing need not necessarily occur to
trigger section 145 obligations.
Question 4: Does the law apply to passengers of foreign air
carriers that cease operations on international routes to or from the
United States due to bankruptcy or insolvency?
Answer 4: No. The law only applies to passengers ticketed on U.S.
air carriers that cease operations.
Question 5: Do foreign air carriers have any obligation under the
law to accommodate passengers ticketed by U.S. carriers that have
ceased operations on an international route due to bankruptcy or
insolvency?
Answer 5: No. The obligation applies only to U.S. air carriers.
Question 6: Does the law provide relief for passengers who have
purchased transportation on a charter flight?
Answer 6: No. We do not believe it was the intent of Congress to
include charter transportation within the coverage of section 145.
Although the language of section 145 does not, on its face, exclude
charter passengers from its protections, the obligation to transport
passengers extends only to scheduled carriers, not charter carriers,
either direct or indirect. We do not believe Congress would have
intended to provide protection for charter passengers without also
providing a commensurate obligation on charter carriers, both direct
and indirect, to accommodate the passengers of other carriers that
might cease operations on a route.
In addition, there are many different types of charters that do not
readily lend themselves to the type of protection we believe Congress
intended under section 145, including single entity charters that might
involve a company transporting its employees or a sports team, as well
as on-demand air taxi charters. Moreover, some charters, such as public
charters, which may be sold by charter operators that do not operate
their own aircraft, and single entity charters are already subject to
required financial protections in the form of surety bonds or letters
of credit and/or escrow accounts for passenger funds.
We note that our Aviation Enforcement Office has in one instance
advised carriers and the public of its opinion that section 145 applied
to the cessation of service of a charter airline that sold
transportation directly to the public. That situation involved
Southeast Airlines, which ceased service on November 30, 2004. We do
not expect our decision here to affect any of Southeast's passengers,
whose transportation was interrupted more than 60 days ago, a period of
time beyond section 145's coverage. (See section 145(b).)
Question 7: Once in bankruptcy, must an air carrier cease all
operations before section 145 obligations are triggered or are section
145 obligations triggered by the cessation of operations only on a
particular route or certain routes by an insolvent or bankrupt air
carrier?
Answer 7: The plain language of the statute covers cessation on a
route-by-route basis. However, we would expect that a carrier that
ceases operations on only one or several routes would itself take steps
to ensure that its ticketed passengers are transported over other
routings or receive a full refund, at the passenger's choice. Moreover,
if the carrier continues to hold out for sale service between the
points involved, i.e., in the market, the carrier would not be deemed
to have ceased operations on ``that route.'' See Answer to Question 10
below.
Question 8: Because section 145 obligations are triggered by the
cessation of service on one or more routes, rather than requiring a
system-wide cessation of operations, are section 145 obligations
triggered when a bankrupt air carrier simply reduces the number of
flights it offers on a given route but does not cease all service on
that route?
Answer 8: No.
Question 9: How does one determine whether a suspension,
interruption, or discontinuation of service on a route is the result of
bankruptcy or insolvency or of some other event not triggering section
145 obligations, such as a seasonal suspension of service or a contract
dispute?
Answer 9: This will depend on the facts of each case.
Question 10: Section 145 refers to carriers that provide scheduled
air transportation on the ``route'' for which a passenger is ticketed.
What constitutes a ``route''?
Answer 10: Section 145 states simply that an air carrier that
provides transportation on ``a route'' where service is discontinued by
another air carrier due to bankruptcy or insolvency shall provide
transportation on ``that route'' to passengers ticketed by the bankrupt
air carrier. Since section 145 clearly is intended to help ensure that
consumers' expectations are preserved and that they reach their
destinations if reasonably practicable, the Department believes that
Congress did not intend to limit the section 145 obligations to those
carriers operating between the two points on a non-stop basis. Indeed,
the service for which the passenger seeks alternate transportation may
itself not have been non-stop service. On the other hand, travel on
nearly every major carrier can be constructed between most pairs of
points, provided one were willing to take a circuitous routing
potentially involving numerous connections. We think this kind of
substitute service was not what Congress intended. A carrier will be
deemed to be providing transportation on ``that route'' if it holds out
service between the two points to the public through its website or GDS
services, regardless of the circuity involved.
For example, Carrier A discontinues service between Chicago's
O'Hare Airport (ORD) and Philadelphia (PHL) due to bankruptcy. Carrier
B does not offer non-stop service ORD-PHL, but does offer for sale
service from ORD to PHL via Pittsburgh (PIT). Under section 145,
Carrier B must provide ``to the extent practicable'' transportation
ORD-PIT-PHL to passengers ticketed by Carrier A between ORD and PHL. As
a counter example, Carrier A discontinues service between San Diego
(SAN) and Baltimore-Washington International Airport (BWI) due to
bankruptcy. Carrier B does not offer for sale any service between SAN
and BWI, but a person could travel on Carrier B between SAN and BWI if
he or she were willing to combine flights that operated SAN-Albuquerque
(ABQ)-Houston (HOU)-Birmingham (BHM)-BWI. Under section 145, Carrier B
does not have to provide transportation to passengers ticketed by
Carrier A between SAN and BWI, since it does not hold out service in
the SAN-BWI market.
Question 11: Under section 145, must an air carrier that offers
only connecting or ``backhaul'' service on a route, transport
passengers ticketed by a bankrupt air carrier on that route?
Answer 11: Yes, under section 145, if an air carrier does not hold
out or operate direct service between two
[[Page 33934]]
cities, but holds out for sale connecting service between them, it must
provide alternate transportation under section 145 to passengers
ticketed by another air carrier that has discontinued its service on
that route, regardless of whether the alternate transportation involves
a backhaul. (See Question and Answer 10 above.)
Question 12: Under section 145, must an air carrier operating
scheduled service on a route to one airport serving a city provide
transportation to passengers ticketed by a bankrupt air carrier on a
route to a different airport serving the same city?
Answer 12: Yes, provided that the airports are considered alternate
airports for the city and the carrier from which the passenger is
seeking accommodation holds out for sale service to the alternate
airport. For example, Carrier A discontinues service between Los
Angeles International Airport (LAX) and JFK International Airport (JFK)
due to bankruptcy. Carrier B, which offers service only between (LAX)
and Newark International Airport (EWR), must provide transportation
from LAX to EWR to a passenger ticketed by Carrier A between LAX and
JFK, since JFK and EWR are considered alternate airports serving New
York City and Carrier B holds out for sale service between LAX and EWR,
one of the alternate airports. We recognize that the question of
whether a particular airport is considered an ``alternate airport'' may
need to be determined on a case-by-case basis. Carriers should note,
however, that since a primary purpose of section 145 is to assist
consumers in obtaining acceptable alternate transportation and our
interpretation of that provision requires transportation only on a
stand-by, space-available basis, we expect carriers to take a liberal
approach if this issue arises.
A carrier that serves only a portion of a passenger's itinerary and
does not operate to the destination city for which the passenger is
ticketed would not be obligated under section 145 to transport the
passenger to another point from which the passenger might hope to
obtain accommodations to his or her ultimate destination. For example,
if the passenger of an insolvent or bankrupt carrier holds a ticket
from Chicago to Phoenix, a carrier that does not offer service to
Phoenix but does offer service to Denver is not obligated under section
145 to provide the passenger transportation to Denver in hopes that he
or she can then find further transportation to Phoenix. This same
result would hold if the passenger was originally ticketed from Chicago
to Phoenix through Denver.
Question 13: What charge can a carrier assess for accommodating a
passenger holding a ticket on a carrier that has ceased operations?
Answer 13: In our first three guidance documents, we stated that we
did not believe that Congress intended to prohibit carriers from
recovering from accommodated passengers the amounts associated with the
actual cost of providing such transportation. We pointed out that
examples of such costs include the cost of rewriting tickets, providing
additional onboard meals, and the incremental fuel cost attributable to
transporting an additional passenger. Based on that methodology, we
found that a reasonable estimate of such costs at that time would not
exceed $25 each way, regardless of the number of segments involved.
Significantly, we noted that the costs of complying with section 145
may be affected by a variety of factors, including the number of
passengers, the current fuel costs to carriers, and the markets and
itineraries involved. We made no attempt at that time specifically to
consider such factors, but indicated our willingness to do so in the
future. It has been more than two years since our last notice was
issued. Several carriers have requested that we reexamine this cost
issue, asserting that increased costs, including that of fuel, the
proven need to increase staffing to handle last-minute influxes of
stand-by passengers after another carrier ceases operations, and the
need to cover certain air transportation taxes, justify the Department
permitting an increase in the maximum amount a carrier can charge to
recover its additional expenses for providing alternate transportation
under section 145. They have asked that we increase the maximum
permissible amounts to $50 each way for domestic travel and travel to
or from foreign points in North and Central America and the Caribbean
and $125 each way for other international travel.
We have reexamined this cost issue and conclude that an increase in
permissible maximum rebooking charges, including any necessary taxes
and fees, to an amount of $50 each way is reasonable. Although we
invite carriers to provide further comments, we do not at this time
have sufficient information to justify increasing the maximum
permissible amount for long-haul international travel to the maximum of
$125 as requested by certain carriers. However, as described below,
some governments may impose substantial taxes and fees on passengers
that are collected by carriers in the price of a ticket and turned over
to the government only upon travel by the passenger. Where a carrier
ceases operations without having paid such amounts on behalf of the
passenger, the carrier providing alternate transportation may be
required to pay the tax. Under such circumstances, the $50 maximum
stated above may be increased by the amount a foreign government
directly assesses a carrier providing alternate transportation under
section 145.
The cost of rebooking a particular passenger can vary substantially
depending upon the particular circumstances involved. For example, at
airports with relatively low traffic volumes, where existing
alternatives can readily accommodate a small number of new passengers,
the cost of doing so would be modest. On the other hand, at high
traffic volume airports, particularly during the first few days
following cessation of service by a major service provider at that
airport, other carriers would likely have to significantly and quickly
increase personnel resources in order to efficiently accommodate a
surge of new passengers, resulting in considerable additional costs.
These costs may be due to the need to set up new systems to verify such
customers' existing ticket information and handle their stand-by
status, which may require the issuance of paper tickets, a privilege
for which many carriers today charge their own passengers $20 or
perhaps more. These increased costs may affect carriers regardless of
their size and can be even more pronounced where the carrier obligated
to provide alternate transportation does not itself have a large
presence at an airport involved. Such a situation will require
extraordinary steps by a carrier to meet its section 145 obligation in
handling the influx of passengers seeking to travel on a stand-by
basis, particularly since such passengers require personal attention
and handling, unlike a carrier's regular customers, who are likely to
be traveling on an e-ticket and checking in over the Internet or at an
unstaffed kiosk. For example, Delta Airlines was required to
temporarily reassign ticket agents to its Las Vegas station from other
stations after Vanguard, a much smaller carrier but one that had a
relatively large presence at Las Vegas, ceased operations. Vanguard's
passengers swamped the counters of Delta and other carriers seeking
assistance pursuant to the requirements of section 145. Since the vast
majority of passengers' itineraries will involve one or more high
traffic volume airports and in light of the substantial expenses that
may occur, we conclude that the increased maximum
[[Page 33935]]
rebooking fees of $50 discussed above are reasonable.
With regard to long-haul international routes, in their request for
an increase in the maximum charge that may be assessed for
accommodating a passenger under section 145, several carriers pointed
to the higher costs associated with such routes due to increased
expenses for fuel, meals, security, and ground handling. While this may
be the case, we do not at this time have sufficient information to
believe that an increase in the maximum charge to $125 is justified.
However, we understand that, in certain markets, carriers may collect
as part of their ticket prices departure fees that must be paid to the
foreign government upon departure of the passenger. Those fees may
become the responsibility of the carrier providing alternate
transportation under section 145 and in such cases it is reasonable for
that fee to be charged the accommodated passenger in addition to the
$50 charge. As we have in the past, we invite any airline or person who
believes that our estimates of the amount necessary to cover the direct
costs of accommodating ticketed passengers on a space available basis
are inaccurate to provide written comments and evidence of costs in
support of their position.
Finally, while we are permitting the higher ceiling on fees that
have been proposed, we are not mandating that any fee be charged and
certainly not mandating that the ceiling fee be charged.
Question 14: If a carrier declares bankruptcy and then, after
section 145 expires under its sunset clause, suspends service on a
particular route, does the law apply?
Answer 14: Not if the law remains sunsetted. If, however, the law
was not in effect at the time of the cessation but is later renewed,
one must look to the language renewing the provision to determine if
Congress intended that it not apply to cessations that have already
occurred. In the absence of language to the contrary in the renewal
provision, the obligation to transport qualifying passengers resumes at
the time that the law goes back into effect, subject to the 60-day
provision in section 145(b), without regard to when the insolvent or
bankrupt carrier ceased operations.
Question 15: Does the 60-day period in which a passenger must make
alternative arrangements start on the date of the bankruptcy filing or
does it run from the date of the ``suspension, interruption, or
discontinuance'' of service on a particular route?
Answer 15: The 60-day period runs from the date of the
``suspension, interruption, or discontinuance'' of service on a
particular route. For example, if Carrier A declares bankruptcy on
August 1, but continues operating its SFO-LAX service until September
1, at which time it suspends its service due to the bankruptcy,
passengers ticketed by Carrier A on this route would have until October
30 to make alternative arrangements.
Question 16: Since section 145 provides a passenger 60 days in
which to make alternate arrangements, does this mean that a carrier is
obligated to offer standby transportation (1) on any date on which
space may be available and on which the passenger desires to travel, so
long as the passenger seeks such arrangements within the 60 day period,
or (2) on the first date, including the passenger's original date of
travel, on which space is available, or (3) only on the date the
passenger was originally ticketed?
Answer 16: Although Congress was not clear on this issue, in our
initial notice dated August 2, 2002, we stated that section 145
required at a minimum that a carrier is required to transport a
passenger on a space-available basis on the date of travel shown on the
ticket. There is some support for this interpretation, since section
145(a) applies the law's protections to ``ticketed'' passengers (on a
specified route) and the 60-day provision in section 145(b) states that
a passenger must make alternate arrangements ``for such
transportation'' within that time frame. A strict view of the alternate
transportation required to be provided as a passenger is ``ticketed''
would limit the alternate transportation to the precise date for which
the passenger was originally ticketed. This could, however, produce a
harsh result not intended by Congress given the consumer-oriented
nature of the provision, such as could occur when a passenger is
scheduled to travel on the day a carrier ceases operations and would
therefore have no time to make alternate arrangement for travel that
day with another carrier, or when flights of the carrier that is
required to provide alternate transportation are totally booked on a
particular day. On the other hand, we do not believe the provision
should be read so broadly as to permit the passenger to select any
travel date in the future, regardless of his or her original ticketed
travel date.
We believe, therefore, that Congressional intent to assist
consumers to the extent practicable is satisfied where consumers are
permitted to travel on the date ticketed, or as soon thereafter as
space is available, and that consumers whose ticketed date of travel is
within 72 hours of the date of a cessation of operations of the carrier
on which they are ticketed should be given a reasonable period of time
after the cessation, not to exceed one week, in which to make such
alternate arrangements.
Question 17: Must the carrier subject to a section 145 obligation
provide a passenger seeking accommodation under section 145 a confirmed
reservation on a flight, or can the carrier place the passenger on a
``standby'' list?
Answer 17: The carrier may place the passenger on a standby list.
Question 18: Assuming that the transportation provided under
section 145 is on a standby basis and that a carrier does not normally
create reservation records for standby passengers, how can an air
carrier determine if a passenger had in fact made alternative
arrangements with it within the 60-day window? If an air carrier cannot
make such a determination, can it refuse to transport such a passenger?
For example, Carrier A goes bankrupt and ceases all service on July 1.
Jane Doe, who was ticketed by Carrier A on a flight scheduled for
November 1, makes alternative arrangements with Carrier B on July 2 for
a flight on Carrier B scheduled for November 1. Jane Doe subsequently
presents herself as a standby passenger to Carrier B on November 1, but
Carrier B has no record that Doe made the requisite alternative
arrangements within the 60-day window since it did not create a
reservation record when Jane Doe contacted it on July 2.
Answer 18: While the burden is in the first instance on a passenger
to prove that he or she was ticketed for travel on the carrier that has
ceased operations and has complied with the 60-day provision, after the
passenger has done so, the burden of proof shifts to the carrier that
is requested to provide alternate transportation if the carrier asserts
that it has no obligation to transport the passenger on a space-
available basis. Thus, while we do not proposed to prescribe how
carriers are to meet that burden of proof, a carrier may not refuse
transportation under the 60-day provision if a properly ticketed
passenger asserts that he or she complied with that requirement and was
promised alternate transportation on a particular day, and the carrier
has no evidence to the contrary merely because the carrier elected not
to institute some method of monitoring requests for alternate
transportation required under section 145.
Question 19: Under section 145, can an air carrier refuse to
transport an otherwise qualified passenger ticketed
[[Page 33936]]
by a bankrupt air carrier on the basis that the passenger was issued an
``e-ticket'' for the bankrupt carrier's flight?
Answer 19: No. However, the carrier can request reasonable proof
that the passenger purchased a ticket. As stated in our prior notices,
reasonable proof of purchase could be receipts and printed itineraries.
Question 20: Generally, an airline's contract of carriage states
that, in the event of a change of schedule (such as a cessation of
service in a market), the carrier's obligation is to reroute the
passenger at no additional cost (it could be on its own service or that
of another carrier) or, if the rerouting is unacceptable to the
passenger, provide a full refund. Many bankruptcies involve carriers
that continue to operate under Chapter 11 of the Bankruptcy Code and
are authorized by the bankruptcy court to continue to operate their
systems on a ``business-as-usual'' basis. In many or all such Chapter
11 cases, the bankrupt carrier petitions the court to permit refunds to
pre-petition passengers to cover situations where, absent the
bankruptcy, a refund would have been due. Do other air carriers have a
section 145 obligation if:
(a) A bankruptcy court permits the carrier to provide a
refund but the consumer does not want the refund and also does not want
to accept being rerouted on the bankrupt carrier?
(b) Whether or not the bankruptcy court permits a refund,
the bankrupt carrier is able to reroute passengers affected by a
cessation of service on certain other carriers at no additional charge
to the passenger in the way that the airline likely would have done
through its interline agreements in the absence of the bankruptcy?
Answer 20: Under either circumstance, if the bankrupt airline can
reroute the passenger to his or her destination on another of its own
flights or pursuant to an agreement with another carrier, the passenger
must accept this alternate arrangement, or a full refund, if
applicable. (See Question and Answer numbers 7 and 10 above.)
Question 21: Can a carrier that is obligated to provide alternate
transportation on a space-available basis under section 145 to
passengers of a carrier that has ceased operations offer those
passengers confirmed space at any price in lieu of the space-available
option? What if the passenger accepts the offer and learns while
checking in for the flight that standby seats are available?
Answer 21: A carrier may seek to accommodate passengers in such a
manner, provided it makes clear to the passenger that the offer of a
confirmed seat for the price set by the carrier is an alternative to
being provided a space-available seat under section 145 and acceptance
is the passenger's option. Where such an election is made by a
passenger after full and accurate disclosure of his or her options
under section 145, including (if known) the availability of stand-by
seats, the passenger cannot later demand a refund (under terms not
otherwise applicable to his or her ticket) and seek to travel under
section 145 if, for example, the passenger shows up for the reserved
flight and discovers stand-by seats will be available.
Questions 22 Through 28 Refer to Code Share Issues
Question 22: When considering the definition of a ``route,'' does a
carrier's obligation under section 145 to provide alternate
transportation apply only to routes on which it operates its own
aircraft or does it also apply to code share operations where another
carrier operates the aircraft?
Answer 22: The legislation does not address this issue and
accordingly we believe that the answer depends on whether it is
``practicable'' for the carrier to provide alternate transportation
under the code share arrangement. As stated in section 145, Congress
only required alternate transportation ``to the extent practicable.''
There are several circumstances that might make it impractical for a
carrier to provide transportation under section 145 on routes on which
it offers only code share service. For example, a carrier's code share
agreement may not give it access to the inventory of the carrier
operating the aircraft nor the authority to provide stand-by service.
By contrast, where the code share carrier does have access to the
inventory of the operating carrier and the ability to put passengers on
a standby list, it likely would be ``practicable'' to provide alternate
transportation. (It appears to the Department that this would be the
case in most, if not all, code share relationships between domestic
regional affiliates and major carriers.)
There may be circumstances specific to code share arrangements,
particularly in foreign markets, where an accommodating carrier's cost
for providing transportation on its code share partner's aircraft may
bear no relationship to the maximum direct costs specifically allocated
to providing the transportation to that passenger. In such
circumstances, the accommodating code sharing carrier may charge, in
addition to the $50.00 fee, whatever additional amount is necessary to
cover that specific direct transportation cost to the carrier to
transport that passenger. Should the passenger dispute the charge, the
carrier will have the burden of demonstrating that the additional
amount charged is justified.
Question 23 (Both U.S. air carriers): Carrier A and Carrier B, both
U.S. air carriers, have a code share agreement in which Carrier A
operates the flight. Carrier A ceases operations by reason of
bankruptcy or insolvency. What requirements exist, pursuant to section
145, with regard to passengers of Carrier A and Carrier B?
Answer 23: Other U.S. air carriers have an obligation under section
145 to provide transportation to passengers ticketed for transportation
on Carrier A on its flight. Under section 145, no such obligation
exists for passengers ticketed for transportation on Carrier B, because
Carrier B was not the entity that ceased operations. Carrier B would,
however, have obligations to the passengers holding tickets for
transportation on it as set forth in its contract of carriage.
Question 24 (Both U.S. air carriers): Same as question 23, with
Carrier A operating the flight, but Carrier B ceases operations due to
bankruptcy.
Answer 24: Other U.S. air carriers, including Carrier A, have an
obligation under section 145 to provide transportation to passengers
ticketed for transportation on Carrier B. No such obligation attaches
to passengers ticketed for transportation on Carrier A, because it has
not ceased operations.
Question 25 (U.S. and Foreign air carriers): Carrier A, a U.S. air
carrier, and Carrier B, a foreign air carrier, have a code share
agreement in which U.S. Carrier A operates the flight. U.S. Carrier A
ceases operations by reason of bankruptcy or insolvency. What
requirements exist, pursuant to section 145, with regard to passengers
of U.S. Carrier A and Foreign Carrier B?
Answer 25: Other U.S. air carriers have an obligation under section
145 to provide transportation to a passenger ticketed for
transportation on a flight of U.S. Carrier A. No such obligation exists
with respect to passengers ticketed for transportation on Foreign
Carrier B, because section 145 applies only to passengers of a U.S. air
carrier that actually ceases operations due to bankruptcy or insolvency
and Carrier B is a foreign air carrier. Foreign carrier B has no
obligation under section 145 to passengers ticketed for transportation
on U.S. Carrier A.
Question 26 (U.S. and Foreign air carriers): Same as Question 25
except that Carrier B, the foreign air carrier, ceases operations due
to bankruptcy on
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a codeshare route on which U.S. Carrier A operates the flight.
Answer 26: Other U.S. air carriers, including U.S. Carrier A, have
no obligation under section 145 to provide alternate transportation to
passengers ticketed by Carrier B, because it is a foreign carrier. Our
interpretation here with respect to U.S. Carrier A is limited to its
obligation pursuant to section 145, however, and does not consider any
other obligation that it may have to carry the passengers of its code
share partner, Foreign Carrier B.
Question 27 (U.S. and Foreign air carriers): Carrier A, a U.S. air
carrier, and Carrier B, a foreign air carrier, have a code share
agreement in which Foreign Carrier B operates the flight. U.S. Carrier
A ceases operations by reason of bankruptcy or insolvency. What
requirements exist, pursuant to section 145, with regard to passengers
of U.S. Carrier A and Foreign Carrier B?
Answer 27: Other U.S. air carriers have an obligation under section
145 to provide transportation to passengers ticketed by U.S. Carrier A,
because it ceased operations on a route due to bankruptcy. Foreign
Carrier B has no obligation under section 145 to transport the
passengers of U.S. Carrier A, because section 145 applies only to U.S.
carriers. Our interpretation here is limited to Foreign Carrier B's
obligation pursuant to section 145, however, and does not consider any
other obligation that it may have to carry the passengers of its code
share partner, U.S. Carrier A.
Question 28 (U.S. and Foreign air carriers): Same as Question 27,
except that Foreign Carrier B ceases operations due to bankruptcy on a
code share route on which it operates the flight, leaving passengers
ticketed by U.S. Carrier A without lift.
Answer 28: Other U.S. air carriers have no obligation under section
145 to provide transportation to passengers ticketed by U.S. Carrier A,
because it has not ceased operations on a route due to insolvency or
bankruptcy and no obligation to transport passengers ticketed by
Foreign Carrier B, since it is a foreign carrier. Carrier A would,
however, have obligations to the passengers holding tickets for
transportation on it as set forth in its contract of carriage.
[FR Doc. 05-11537 Filed 6-9-05; 8:45 am]
BILLING CODE 4910-62-P