Oversales 14 CFR Part 250 1 Overview Increased

Oversales 14 CFR Part 250 1

Overview Increased DBC rates (200%/400%) Increased DBC dollar limits ($650/$1, 300) Biannual CPI-based adjustment of DBC limits Definition of “alternate transportation” DBC for Zero-Fare tickets Refund of unused ancillary fees Disclosure (written and verbal)

New calculation - formula and caps Domestic air transportation: Arrival Delay Before Now 0 -1 hour No compensation 1 -2 hours 100% of one-way fare but no more than $400 200% of one-way fare but no more than $650 Over 2 hours 200% of one-way fare but no more than $800 400% of one-way fare but no more than $1, 300 3

New calculation - formula and caps International air transportation (U. S. –outbound only) Arrival Delay Before Now 0 -1 hour No compensation 1 - 4 hours 100% of one-way fare but no more than $400 200% of one-way fare but no more than $650 Over 4 hours 200% of one-way fare but no more than $800 400% of one-way fare but no more than $1, 300 4

How to Determine the “Base Fare” New definition for “FARE”: • The price paid for air transportation including all mandatory taxes and fees. • It does not include ancillary fees for optional services. 5

CPI-U Adjuster For the $650/$1, 300 DBC limits Every two years Based on the Consumer Price Index – All Urban Consumers (CPI-U), rounded to the nearest $25. 6

Alternate Transportation Affects the 1/2/4 hour rerouting formula. Moved from § 250. 9 (detailed passenger notice) to the Definitions section. 7

Alternate Transportation “Air Transportation with a confirmed reservation at no additional charge, operated by a carrier as defined below, or other transportation accepted and used by the passenger in the case of denied boarding. ” 8

Alternate Transportation Alternate transportation includes air transportation provided by a “carrier” : A certificated scheduled-service U. S. air carrier, A commuter carrier, or A scheduled-service foreign air carrier. * Passengers have no veto power if they were offered air transportation provided by a “carrier. ” 9

Alternate Transportation can also include: ● Air transportation provided by an entity other than a “carrier” (e. g. , air taxi) ● Other modes of transportation (e. g. , train, bus, taxi etc. ). But passengers have veto power (“accept and use”). 10

Zero Fare Ticket Definition: • A ticket acquired without a substantial monetary payment, e. g. , a ticket acquired using airline travel vouchers or frequent flyer miles; or • A consolidator ticket (obtained after a monetary payment) that does not show a fare amount on the ticket. Does NOT include free or reduced fare air transportation provided to airline employee/family. 11

Zero Fare Tickets Question and Answer ◦ Question: Are discounted or free travel vouchers earned by travel agents considered “zero fare tickets” for DBC purposes? ◦ Answer: No. Discounted or free travel vouchers earned by travel agents and other ticket agentse. g. , from the volume of their sales of the airline’s tickets-are deemed internal to the industry, similar to the free or discounted travel vouchers offered to airline employees. DBC not required. 12

Zero Fare Tickets Question and Answer ◦ Question: Are free promotional tickets given to the members of the public considered “zero fare tickets” for DBC purposes? ◦ Answer: Yes. Although the recipients of these free tickets do not pay anything in exchange for these tickets, carriers do gain publicity and establish goodwill from offering these tickets. In addition, recipients of the tickets may incur other expenses associated with the travel or the expectation of the travel. These passengers should be, and are, protected by the DBC rules. 13

Zero Fare Tickets Definition: A ticket acquired without a substantial monetary payment. ◦ “Zero” not to be construed literally. E. g. , a ticket with a processing fee may still qualify as a “zero fare ticket” if the monetary portion is not “substantial. ” 14

Substantial Monetary Payment e. g. , a passenger uses 50, 000 miles + $100 processing fee for a ticket with a market value of $500. ● It is still considered “zero fare ticket. ” e. g. , a passenger paid $400 for an economy class ticket and used 10, 000 miles to upgrade to business class. The monetary portion is substantial; therefore this is not a “zero fare ticket. ” When calculating DBC, the base fare is the $400. If the passenger did not receive the service paid for by the mileage, the carrier must credit the mileage back to the passenger’s account. 15

Base Fare for Zero Fare Tickets Base fare for zero fare ticket when calculating DBC amount: ◦ 250. 5(d): “the lowest cash, check, or credit card payment charged for a ticket in the same class of service on that flight. ” ◦ “class of service” is defined: in the same cabin class (First, Business, Economy) or in the same seating zone if carrier provides more than one seating product in the same cabin (Economy, Premium Economy) 16

Calculating DBC for Zero Fare Tickets May not be practical to determine at the airport the lowest revenue fare on that flight; This hinders passenger’s ability to choose at the airport between cash/check DBC and travel voucher. Carriers have up to 24 hours to send a DBC check to the passenger (* Enforcement Policy permits a check to be mailed on the next business day if the was bumped on a Friday or the day before a holiday. ) Carriers are free to offer a voucher option and to require the passenger to return the check if he/she chooses the voucher. 17

Refund of Unused Ancillary Fees New requirement regarding ancillary fees – 14 CFR 250. 5(f): A carrier must refund any ancillary fees for optional services paid by a passenger who does not receive the service(s) because he/she was voluntarily or involuntarily denied boarding. 18

Refund of Unused Ancillary Fees Example 1: ◦ A passenger paid ancillary fees for more legroom and for checked baggage. If the bumped passenger was put on another flight operated by the same airline and his/her baggage was transported without additional charge, the carrier does not need to refund the baggage fee; If the passenger did not get extra legroom on the alternate flight, the legroom fee must be refunded. 19

Refund of Unused Ancillary Fees Example 2: ◦ Passenger paid Alpha Air $25 for one piece of checked baggage. Passenger was “bumped” from that flight and was rerouted on Beta Airways. Beta’s baggage fees are different from Alpha’s: If Beta Airways does not charge for the checked baggage, or charges less than $25, Alpha Air must refund the difference; If Beta Airways charges more than $25 for the checked baggage, and if Alpha does not cover the additional charge, the passenger would be entitled to the maximum DBC, i. e. , 400% of one-way fare up to $1, 300. (See “Alternate Transportation” – “no additional charge”) 20

Disclosure Requirements Two disclosure requirements: 1. Material restrictions on travel voucher; 2. When verbally offering travel voucher as involuntary DBC, must verbally advise the involuntarily bumped passenger of: ● material restrictions (summary) ● right to cash/check 21

Disclosure Requirements “Material restrictions” on free or reduced rate air transportation (voucher) Must be disclosed whenever such voucher is offered to a passenger. Including volunteer candidates (250. 2 b(c)) and involuntary D. B. ’s who are offered the voucher as DBC (250. 5(c)). Material restrictions must be disclosed before the passenger decides to give up his/her seat (volunteer candidates) or accept a voucher instead of a check (involuntary D. B. ). 22

Disclosure Requirements “Material restrictions”: all restrictions and conditions that might reasonably be expected to affect a passenger’s decisionmaking; Some examples: • blackout dates • administrative fees • capacity limits • flight choice restrictions • non-transferability 23

Disclosure Requirements • Only a “summary” of all material restrictions is required. • “Personal presentation” to each passenger not necessary. • Example statement given in the preamble: “the vouchers are not transferable, are subject to certain blackout dates and service charges and will expire after two years…. ” • Verbal disclosure of material restriction is required if carrier verbally offers the voucher. ○ Discrepancies re voluntary vs. involuntary will be clarified. 24

Disclosure Requirements Carrier must verbally offer cash/check DBC option if carrier verbally offers voucher option to involuntarily “bumped” passengers. Remember, if carrier verbally offers a voucher to passengers involuntarily denied boarding, carrier must verbally state three things: Cash/check option Voucher option, and Material restrictions on vouchers. Carrier does not have to make a verbal offer at all. 25

Just want to let you know that you are eligible to get some vouchers. The rest of the details you can read for yourself… For involuntarily bumped passengers, verbally offering a travel voucher but not offering cash/check option is a violation.

Revised Written Statement Under 14 CFR 250. 9 Ø Substantially revised to reflect the changes to the rule and to better explain the procedures. ØNew statement must be printed and ready to be handed out on the effective date of the rule. Ø Continuing to hand out the old statement after that date is a violation. 27

Effective Date Passengers denied boarding on/after August 23, 2011 Ticket purchase date is irrelevant 28

Recap: Key Changes DBC percentage rates and limits are up DBC limits will be reviewed every two years Ancillary fees are not included when calculating DBC Unused ancillary fees must be refunded

Recap: Key Changes (cont. ) Holders of FFB, consolidator and free promotional tickets get DBC “ID” tickets (passes) remain exempt from DBC New verbal disclosure re travel vouchers