BEFORE THE DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION PIPELINE HAZARDOUS MATERIALS SAFETY ADMINISTRATION WASHINGTON, D.C.

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1 BEFORE THE DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION PIPELINE HAZARDOUS MATERIALS SAFETY ADMINISTRATION WASHINGTON, D.C. ) In re ) ) REGULATION OF NOTICE TO PASSENGERS ) Docket No. OF HAZARDOUS MATERIALS ON AIRCRAFT ) ) ) PETITION OF THE AMERICAN SOCIETY OF TRAVEL AGENTS TO AMEND REGULATION Communications with respect to this document should be directed to: Paul M. Ruden, Esq. Senior Vice President Legal & Industry Affairs American Society of Travel Agents, Inc King Street Suite 200 Alexandria, VA pruden@asta.org March 25,

2 BEFORE THE DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION PIPELINE HAZARDOUS MATERIALS SAFETY ADMINISTRATION WASHINGTON, D.C. ) In re ) ) REGULATION OF NOTICE TO PASSENGERS ) Docket No. OF HAZARDOUS MATERIALS ON AIRCRAFT ) ) ) PETITION OF THE AMERICAN SOCIETY OF TRAVEL AGENTS TO AMEND REGULATION The American Society of Travel Agents, Inc. (ASTA) petitions the Federal Aviation Administration (FAA) and the Pipeline Hazardous Materials Safety Administration (PHMSA) to amend 49 CFR (b) (hereafter the Phone Notice Regulation ) by deleting the words or phone, or revising the text so that it means what the International Civil Aviation Organization (ICAO) intended it to mean, which is that it applies to Internet-enabled mobile phones only, rather than to all assisted (e.g. telephone, face-to-reservations, online chat, etc.) reservations. Failing that, the government should replace the Phone Notice Regulation with a disclosure requirement similar to the DOT regulation on baggage fee disclosure using e-ticket confirmations. See 14 CFR (c). As currently interpreted by FAA and PHMSA, the Phone Notice Regulation, when applied to assisted reservations, will impose a costly, redundant and unnecessary burden on the airline ticketing process

3 The relevant text of 49 CFR (b) states: (b) Ticket purchase. During the ticket purchase process, regardless if the process is completed remotely (e.g., via the Internet or phone) or when completed at the airport, with or without assistance from another person (e.g., automated check-in facility), the aircraft operator must ensure that information on the types of hazardous materials a passenger is forbidden to transport aboard an aircraft is provided to passengers. Information may be in text or in pictorial form and, effective January 1, 2015, must be such that the final ticket purchase cannot be completed until the passenger or a person acting on the passenger's behalf has indicated that it understands the restrictions on hazardous materials in baggage. [emphasis added] 1 While technically applicable only to airlines, the Phone Notice Regulation applies to all passengers carried and thus the airlines will have no choice but to impose the requirement on travel agents as well. Technically, the Phone Notice Regulation, other than the compulsory expression of understanding requirement, is effective now, but enforcement appears to have been suspended while the industry works with the FAA/PHMSA to develop guidelines for implementation of the Phone Notice Regulation. An Aviation Rulemaking Committee ( ARC ) was created and held public meetings for discussion of the issues. The ARC report was issued November 1, 2013, and proposed a formal Advisory Circular ( AC ) for issuance by the FAA. Comments on the proposed AC are due April 3, The ARC Recommendations did not, however, resolve the issues raised by the Phone Notice Regulation: The ARC discussed how the regulatory language could be improved in the future but did not incorporate these improvements in the draft AC. For purposes of this ARC, the regulations contained in 49 CFR were treated as static (i.e., will not change). Nonetheless, there are various issues highlighted in this report that make compliance difficult for air operators from a process and/or cost perspective. 3 1 The entire text of 49 CFR is set out in Appendix A to this Petition Fed. Reg , March 4, Passenger Notification of Hazardous Materials Regulations Aviation Rulemaking Committee (ARC) Membership Recommendations to the FAA Assistant Administrator of the Office of Security and Hazardous Materials Safety, November 1, 2013 ( ARC Recommendations ) at

4 The ARC process and the recommended AC cannot, therefore, be expected to resolve the problems created by the introduction of the Phone Notice Regulation. In this petition we will explain the burdens this rule will entail and why safety will not be impaired by removing the phone notice requirement. We begin with some history to show that the process by which the rule was adopted was flawed and that the Phone Notice Regulation is not required in order to harmonize ticketing practices in the United States with the rest of the world. I. INTRODUCTION ASTA, headquartered in Alexandria, VA, with over 8,000 members in all fifty states and 170 countries, was established in 1931 and is the world s leading professional travel trade organization. ASTA s voting membership is comprised of retail travel agents, including traditional brick-and-mortar leisure agencies, Travel Management Companies (TMCs), Online Travel Agents (OTAs), as well as individual home-based travel agents and many others engaged in various aspects of retail and wholesale distribution of transportation services. ASTA is widely recognized as a responsible representative of the interests of travel agents and consumers and has participated in a multitude of proceedings before federal and state agencies. In particular, ASTA has long been a regular participant in Department of Transportation consumer protection proceedings, including the Enhancing Airline Passenger Protections rulemakings #1, #2 and #3, the Oversales and Denied Boarding Compensation docket, antitrust issues and many others. A representative of ASTA was also a member of the 2008 National Task Force to Develop Model Contingency Plans to Deal with Lengthy Airline On-Board Ground Delays (the Tarmac Delay - 4 -

5 task force). An ASTA representative was an active participant in the hazardous materials notification ARC during Travel agents, both online and traditional brick and mortar agencies, are responsible for the sale of the majority of airline tickets in the U.S. In 2013, online and traditional travel agents processed $86 billion of total air sales, including million air transactions. 4 The vast majority (98 percent) of travel agency businesses are small under Small Business Administration (SBA) standards. 5 Travel agencies fulfill a range of needs for the traveling public. They save consumers money and time by facilitating effective comparison shopping and decision-making as to how best to spend their travel dollars. Travel agencies also help government and corporate organizations manage employee travel spending, reduce costs and negotiate savings that would otherwise be missed. On a macroeconomic level, the activities of travel agents produce a more competitive and efficient marketplace that optimizes consumer welfare while improving the communication of consumer value preferences to the producers of travel services such as airlines. Travel safety is of the utmost importance to travel agencies and their customers. The agency business, along with many others, was devastated by the collapse of travel demand following the September 11, 2011 attacks. The rebuilding process has been long. Many agencies were driven out of the business permanently as a result. ASTA and its members are acutely aware of the primacy that safety considerations must have in national transportation policy and support reasonable and achievable practices that will add to traveler safety Bureau of Labor Statistics, U.S. Census Bureau and Airlines Reporting Corporation data

6 This recognition does not mean, however, that every conceivable tactic is appropriate. Consideration must also be given to the question whether the problem at hand warrants the tactical solution being proposed or whether the safety gains are marginal and the costs of implementation are so great as to lead to a misallocation of resources. The latter more accurately characterizes the Phone Notice Regulation in (b). On its face the Phone Notice Regulation contains a number of dubious concepts. The obvious and most important is the inclusion of the phone transaction, which has expanded to include all assisted reservations, within the ambit of the disclosure requirement. The ARC explicitly found that the phone element was not justified by a need to harmonize U.S. practices with the rest of the world: The ICAO TI [technical instructions] does not contain an explicit requirement to obtain an indication of understanding from the passenger when the ticket purchase process is conducted via telephone. 6 The Phone Notice Regulation also states that the hazmat information may be in text or in pictorial form, strongly implying that it was not intended to apply to assisted telephone purchases with a live person, but rather was intended to apply to non-assisted Internet-enabled mobile phone transactions, which is how the rest of the world has applied 49 CFR (b). Finally, there is the concept that the indication of understanding may be obtained from a person acting on the passenger s behalf. But the purpose of the rule is plainly to try to influence the behavior of the traveler, not the person making a reservation on the traveler s behalf. The language as written allows for the possibility (high probability, we believe) that an assistant, an in-house travel department employee or a group leader would be the party receiving the hazmat information and indicating understanding, with no assurance whatsoever that the information 6 ARC Recommendation at

7 would be passed to the traveler for consideration when packing (often months later) for the flight. This ill-considered collection of mandates is poorly calculated to give notice to the person, and at the time, when it will have impact on flight safety. And, as the airlines noted in the ARC, every additional second of talk time during a passenger transactions adds significant costs. 7 II. SUMMARY OF POSITION Section 49 CFR (b) is not based on any demonstrated need of consumers and will have a significant adverse impact on the travel agency industry. Since the Phone Notice Regulation was not accompanied by either effective outreach to impacted parties or by the costbenefit analyses required of high-economic-impact regulations, the FAA should rescind the Phone Notice Regulation, conduct and publish for comment Regulatory Flexibility Act costbenefit analyses as a proper basis for considering whether a regulation on this subject is actually required and, if so, what the content of the regulation should be. If, after such analyses, it is found essential to expand the scope of the hazmat notifications, the rule should be amended to remove the phone requirement and replace it with the use of the E-ticket confirmation document that the Department of Transportation has already determined is a viable means of giving notice of baggage charges. See 14 CFR (c). 7 ARC Recommendations at

8 III. THE EXISTING PHONE NOTICE REGULATION WAS NOT PROPERLY ADOPTED AND IS NOT ENTITLED TO DEFERENCE. The current version of 49 CFR (b) is not entitled to deference by virtue of the fact that it was created through a full rulemaking process or that it has sat on the books for a period of time. The immediately prior text of the rule required notices of hazardous materials restrictions to be provided at air carrier locations where they would be seen by air travelers. The current version adds the requirement that ticketing must be inhibited until each passenger is informed and affirmatively expresses an understanding of the hazmat restrictions. The current regulation has been challenged by the airlines Council on Safe Transportation of Hazardous Articles ( COSTHA ), 8 but COSTHA s call for revision by rulemaking appears to have been ignored. While the recently adopted recommendations of the ARC have much merit, they do not repair the basic flaws in the regulation that is driving this process. As will be seen in detail below, the financial impact of this new requirement on travel agents and on airline booking agents will be extensive, in addition to predictable disruptions of the booking process. Normally, it would be expected that the travel distribution industry, travel agency representatives and airlines alike, would have reacted strongly to the prospect of adoption of such a rule. But they didn t, and the reasons are clear. The Advance Notice of Proposed Rulemaking that initiated the current version of (b) did not even mention the potential for the Phone Notice Regulation. See 74 Fed. Reg , October 21, The ANPRM issued at about the same time that ICAO was changing 8 Letter from Thomas W. Ferguson, DGSA, Sr. Technical Consultant for COSTHA to Mr. Charles Betts, Director of Hazmat Standards at the FAA, dated July 31, For convenience of the parties, a copy of the letter is attached to this Petition as Exhibit B

9 its Technical Instructions. 9 PHMSA s subsequent proposal to amend the notice requirements was based, as near as the record reveals, on the idea of catching-up with the airlines use of new technologies to sell tickets and to align U.S. notice requirements with ICAO s international standards. This is where the trail goes cold. The use of telephones to complete ticket sales is manifestly not the new technology for which a catch-up rule was necessary. Moreover, the ICAO Technical Instructions, and the process leading to changes in them, are not realistically available to the public 10 as fees are required to obtain them, assuming, unrealistically, that the public had notice that changes were even being considered. More troubling still is the fact that the ICAO Technical Instruction changes do not apply to telephone contacts regarding ticket purchases but only to passenger check-in by phone, as noted by COSTHA s July 31, 2013 letter to the FAA 11 : Electronic Check-In and Ticket Purchase (DGP/22-WP/23) A proposal to strengthen the requirements for the provision of information to passengers in respect of dangerous goods in baggage was discussed. It was suggested that use of the Internet to purchase tickets, to check in, and the use of automated check-in machines at the airport or by telephone made traditional methods of providing information to passengers obsolete. It is implausible to construe that paragraph as evincing an intention, and effectively communicating it, to inject into the ticket purchase process a revolutionary idea (inhibiting ticket 9 See Report of the 22 nd Meeting of the Dangerous Goods Panel, October 5-16, 2009, ICAO Document DGP/22- WP/ Internet research indicates that the ICAO Technical Instructions can only be purchased for charges of $ See COSTHA letter at

10 purchase in the absence of a travel agent confirmation that a notice has been orally given and an expression of understanding orally returned). To our knowledge, no other explanation of the genesis of the Phone Notice Regulation exists. ICAO never consulted the travel distribution industry about adding the Phone Notice Regulation and, from the record available to us, never consulted with the U.S. airline industry. Eventually, the proposal for the Phone Notice Regulation was buried in a 68-page NPRM. 75 Fed. Reg , August 24, The explanation of the proposal was misleading at best: PHMSA is proposing to require operators to provide certain information to passengers regarding what hazardous materials they may check-in or carry-on a flight. Effective January 1, 2011, this information is to be provided at points of ticket sale and, effective January 1, 2013, at automated or remote passenger check-in. Consistent with the ICAO TI, if adopted these amendments will require a passenger to acknowledge limitations before a ticket purchase and automated or remote check-in can be finalized. PHMSA believes these amendments only clarify existing regulatory requirements in that have not been updated due to changing technologies used by air carriers to either sell tickets (Internet) or check-in passengers (automated kiosks). Additionally, these amendments provide air carriers greater flexibility in how the information they are required to provide passengers on hazardous materials is disseminated to them. 12 The 2010 version of reads in pertinent part as follows: Notification at air passenger facilities of hazardous materials restrictions. Each person who engages in for-hire air transportation of passengers shall display notices of the requirements applicable to the carriage of hazardous materials aboard aircraft, and the penalties for failure to comply with those requirements. Each notice must be legible, and be prominently displayed so it can be seen by passengers in locations where the aircraft operator issues tickets, checks baggage, and maintains aircraft boarding areas Fed. Reg (emphasis added). Note that the first proposed effective date for what would become the Phone Notice Regulation was barely over four months from the date of the formal proposal for such a rule CFR (2010), emphasis added

11 That regulation only required posting of signs at sites where the airline issued tickets, checked bags or boarded aircraft. Nothing in this language intimated that an effort to clarify would impose upon the entire travel agency distribution system an obligation to convey complex skull-and-crossbones type warnings to every ticket purchaser, let alone to inhibit ticketing if the traveler does not somehow signify and the travel agent does not somehow record the traveler s acknowledgement of the warning and his understanding of it. The Regulatory Flexibility Act ( RFA ) analysis in the NPRM did not separately address the Phone Notice Regulation, and no cost-impact analysis or balancing of costs against benefits was specifically conducted. The relevant RFA text in the NPRM states:. This proposed rule facilitates the transportation of hazardous materials in international commerce by providing consistency with international standards. This proposed rule applies to offerors and carriers of hazardous materials, some of whom are small entities, such as chemical manufacturers, users and suppliers, packaging manufacturers, distributors and training companies.the majority of amendments in this proposed rule should result in cost savings and ease the regulatory compliance burden for shippers engaged in domestic and international commerce, including trans-border shipments within North America. Many companies will realize economic benefits as a result of these amendments. Additionally, the changes effected by this final rule will relieve U.S. companies, including small entities competing in foreign markets, from the burden of complying with a dual system of regulations. Therefore, I certify that these amendments will not, if promulgated, have a significant economic impact on a substantial number of small entities. This proposed rule has been developed in accordance with Executive Order ( Proper Consideration of Small Entities in Agency Rulemaking ) and DOT s procedures and policies to promote compliance with the Regulatory Flexibility Act to ensure that potential impacts of draft rules on small entities are properly considered. 14 Travel agencies are not mentioned in the RFA analysis because they obviously were not considered Fed. Reg

12 The final rule then simply repeats the language of the certification from the NPRM. See 76 CFR 3340 (2011). The entire issue thus went unnoticed by U.S. airlines and distribution community. These omissions infected the process to such a degree that the Phone Notice Regulation was adopted based on general findings that it was not a significant rule and that it would not have a significant economic impact on a substantial number of small businesses. The ultimate conclusion was that the costs to the regulated community would be inconsequential. These decisional flaws led to an over-extension of (b) beyond the stated rational for the Phone Notice Regulation. The current rule actually lacks a rationale harmonization with ICAO cannot suffice because the target of harmonization, an ICAO rule mandating a Phone Notice Regulation, does not exist. And there is no factual or economic analysis to support such a rule independent of what ICAO may or may not believe is needed. In any case there is an exception in the international harmonization requirement for overriding public interest, 15 which is clearly implicated here. The rule adds yet another layer of warnings from travel sellers to their customers on top of the existing code-share rules 16 and the new insecticide spraying warnings imposed by the 2012 FAA Reauthorization Act, 17 while ignoring the cost impact of the disclosure requirements on travel agencies, of which 98 percent are small businesses under Small Business Administration criteria. Air travel has more warnings than a pack of cigarettes. For the reasons set out below, the application of the regulation as now written will impose an enormous burden on the travel agency distribution system, without Fed Reg CFR sec FAA Modernization and Reform Act of 2012 (Act, P.L , Feb. 14, 2012)

13 accomplishing much in the way of notice to travelers about hazardous materials in their luggage. It therefore needs to be revisited. IV. THE PROBLEM THAT THE RULE PURPORTS TO SOLVE HAS NOT BEEN SHOWN TO EXIST. We think that, since the September 11, 2011 terrorist attacks, travelers whose behavior may reasonably be expected to be affected by a regulation already understand that that the disclosable items in the rule, including explosives, compressed gases, flammable liquids and solids, oxidizers, poisons, corrosives and radioactive materials, are forbidden on airplanes. Prominent display of these restrictions has been required since 1980 in a manner assuring that they can be seen by passengers in locations where the aircraft operator issues tickets, checks baggage, and maintains aircraf tboarding areas. To conclude that more notices are required, implies that the long history of notices given thus far has failed to achieve its intended goal, but no analysis has been presented to the industry to make the case that consumers are not sufficiently aware that explosives, compressed gases, flammable liquids and solids, oxidizers, poisons, corrosives and radioactive materials are not allowed on planes. If there is in fact a material safety risk to aircraft arising from travelers bringing such items on aircraft in their luggage, there should be robust data available to support such a finding. If air travelers are in fact continuing to pack forbidden items in luggage or to hand carrry them on flights despite security screening, the conclusion seems to be inescapable that the entire long-standing notice/mandatory check-off during check-in process has failed to achieve ots intended purpose. If so, forcing travel agents to add their disclosures and obtain acknowledgement will provide little incremental benefit and some other approach should be considered

14 V. THE ANALYSIS PURPORTING TO SUPPORT THE RULE FAILS TO IDENTIFY THE FINANCIAL IMPACT OF THE RULE ON TRAVEL AGENCIES Measuring the economic impact of 49 CFR (b) on travel agencies would consider three scenarios, none of which was evaluated when the rule was adopted: (1) Initial agent training costs and programming cost to provide disclosure, collect consent and record consent; (2) Ongoing disclosure and consent collection costs reading the script, recording consent and answering consumer questions about the requested information; and, (3) Opportunity costs. (1) Initial Agent Training costs and Programming Costs for Disclosure, Consent Collection and Recordation Before travel agencies can begin to provide disclosure and collect consent as required in 49 CFR (b), it will be necessary for them to develop procedures, training programs and redesign systems to prompt individual agents to read the required disclosure and record the traveler s acknowledgement. It will also be essential that each agency train its agents on their responsibilities as well as how to handle the myriad questions that may arise when consumers ask questions about the disclosure. In a 2007 study of 127 ASTA Premium members, which include firms ranging from a start-up to the largest travel agencies in the world and everything in between, regarding agency costs for preparing for the Transportation Security Administration s (TSA) Secure Flight initiative, which is similar in scope to the Phone Notice Regulation, we have insight into the magnitude of these costs

15 The ASTA Premium Survey responses showed an average estimated training cost of more than $3,100 per agency, with responses ranging from $100 to $20,000, as would be expected from a range of businesses running from the very smallest to some of the largest. While there may be economies of scale here, in that, once created, training materials can be disseminated to any size group electronically with little incremental costs; it is also true that corporate practices in larger firms may entail more elaborate training. We therefore concluded that $3,000 was a fair representation of the average training cost that agencies would incur to comply with Secure Flight collection requirements. There is no reason to believe that the costs of compliance with the Phone Notice Regulation would be substantially different or that the average cost has declined since Since every firm will have to comply, regardless of size, the training cost should be applied to the 7,218 airline accredited travel agency firms in business at the end of 2013 to estimate the total initial training cost at $21,654,000 for the industry. There also will be costs associated with modifying systems to prompt reservations agents with all telephone and face-to-face reservations to provide disclosure and record consent. Most travel agencies rely on electronic scripts to guide agents through the reservation process. These scripts are software programs that overlay the core booking system provided by the Global Distribution Systems. These dynamic interfaces prompt the travel agent to provide specific information to the client based on the type of reservation. Travel agents will be required to reprogram these scripts to prompt for disclosure and to obtain and record consent as a consequence of this regulation. We have provided no estimate of this burden, although it is certain to be substantial because, among other things, it must try to account for the diverse traveler reactions that will be inspired by the initial disclosures

16 There are other costs that travel agents will incur. Online Travel Agents (OTAs) and Travel Management Companies (TMCs) are highly reliant on online reservation systems. These travel agencies will incur costs related to reprogramming systems to electronically disclose the hazmat regulations and to record customer acknowledgement. In TSA s Regulatory Evaluation of its Secure Flight rule, it determined that the reprogramming costs to travel agencies of their electronic profiles to be $9,000 per agency. TSA noted that agencies with sales over $2 million would likely be most impacted by this cost burden. Using this same approach, we anticipate the financial impact of upgrading systems to be $10.9 million. This amount is based on the 1,212 travel agency firms with air ticket sales over $2 million in business in (2) Ongoing disclosure and consent collection costs reading the script, recording consent and answering consumer questions In TSA s draft regulatory evaluation examining the economic burden of the thenproposed Secure Flight rule on the travel agency industry, the initial analysis concluded that the rule would impose an incremental time for telephone reservations of 25 seconds 18 per reservation, the time travel agents would need to ask for and obtain required Secure Flight information. We estimate that FAA s disclosure and acknowledgement rule would require travel agents to spend at least 50 seconds at normal rates of speech to read 49 CFR (a) (1) and (2), as identified in the following script: your ticket: Agent: Federal rules requires that I read the following script to you before you purchase (1) Federal law forbids the carriage of hazardous materials aboard aircraft in your luggage or on your person. A violation can result in five years imprisonment and penalties of 18 Regulatory Evaluation Final Rule Secure Flight, 49 CFR 1560, October 17, 2008 at

17 $250,000 or more (49 U.S.C. 5124). Hazardous materials include explosives, compressed gases, flammable liquids and solids, oxidizers, poisons, corrosives and radioactive materials. Examples: Paints, lighter fluid, fireworks, tear gases, oxygen bottles, and radio-pharmaceuticals. (2) There are special exceptions for small quantities (up to 70 ounces total) of medicinal and toilet articles carried in your luggage and certain smoking materials carried on your person. For further information contact your airline representative. In addition, the agent would need another 10 seconds to ask for and receive verbal acknowledgement for the consumer, as indentified in the following script: Agent: Do you understand these restrictions on hazardous materials in baggage? Customer: Yes Agent: (types answer in PNR to record response): Thank you. Of course, it is easy to see how a total of 50 seconds could quickly expand to more time, especially the first time that a consumer hears the disclosure. 19 There will no doubt be customers that will have questions that the travel agent may or may not have the answers to. We recognize that the proposed AC shortens the minimum statement by the agent to a single question, which requires about 10 seconds to speak. 20 ASTA is deeply appreciative of the FAA s decision to convene the ARC and to hear the concerns of the industry about the application of the regulation assisted phone interactions. The single question will, however, elicit questions from many travelers, expanding the time required to get to the affirmative 19 Many frequent travelers will hear the scripted message every time they travel. Some of them will surely reply with I ve been told this before what has changed since the last time I was told? followed by the agent s reassurance that nothing has changed. 20 Passenger Notification of Hazardous Regulations Aviation Rulemaking Committee (ARC) Membership RECOMMENDATIONS to the FAA for an Advisory Circular (AC) effective January 1, 2015, at

18 acknowledgement stage of the process, without which a ticket may not be issued under the current rule. For analysis purposes, we have used 25, rather than the 50, seconds per reservation as the basis for a simple economic impact analysis, accounting roughly for the use of the shorter statement but also for the likelihood of follow-up discussion with many travelers. This is the same time used in TSA s Secure Flight Regulatory and Economic Analysis. When TSA calculated the cost of 25 seconds per reservation, the economic impact to travel agents in 2008 was estimated to be approximately $20 million, or over $232 million over ten years. This was based on a fully loaded wage rate for travel agents and million travel agent reservations. To determine the economic impact of the verbal disclosure of the Phone Notice Regulation, we have calculated the fully loaded hourly travel agent wage rate at $36.61 based on 2012 data from the Bureau of Labor Statistics (BLS). 21 We have also calculated that traditional travel agencies processed million air transactions. Based on an average time of 25 seconds per ticket, we calculate that this rule will impose an estimated economic burden of $26,008,354 a year on traditional travel agents, which is a significant economic burden on an industry that is overwhelmingly small businesses Based on the average Full-Time Travel Agents Employed at Travel Agencies annual wage of $50,630 ($24.34 per hour) for NAICS code , multiplied by 1.5 for the fully loaded rate, which includes all benefits and overhead (rent, computers, telephones, etc.). The latest BLS data is available for 2012 only. 22 According to the Airlines Reporting Corporation (ARC), travel agencies processed $86.2 billion in air ticket sales and million transactions in Traditional travel agency sales accounted for $61.8 billion in air. At an average ticket price of $604, non-otas accounted for million transactions. We understand we are comparing 2013 data with 2012 in some instances, but data availability limitations make this unavoidable. 23 ASTA 2012 Member Profile. The calculation is Transactions times seconds/transaction, divided by 60 and divided by60 again, then multiply the result times the hourly rate

19 The total cost of the Phone Notice Regulation is, so far, the sum of $ 32,554,000 for initial training and programming and $26,008,354 for disclosure and confirmation costs, or a total direct cost of $58,562,354. (3) Opportunity costs of travel agents While we have attempted to quantify the direct economic impact of the FAA s regulation on the travel agency industry, some consideration should also be given to the opportunity costs of travel agents who are forced to comply with a hugely expensive unfunded mandate like 49 CFR (b). This cost is the lost opportunity to invest those funds in new technologies and marketing efforts going forward. The $260 million over ten years (assuming constant wages) is an enormous cost to an industry with historically very low profit margins and which has suffered, just like the airlines, from the impacts of the terrorist attacks in 2001 and the resultant new obstacles placed in the path of travelers. As technology has evolved, the travel space has become the role model for both industry disruption and for rapid adaptive innovation. Much of what is new in distribution technology, including search and automated ordering, has been proved out in travel. Mobile technology, for example, is widely predicted to be the next big disruptor to which firms must quickly accommodate or perish. Smaller firms, such as predominate in the retail travel space, are particularly at risk in this environment and need every available resource to keep up with change. Small travel agencies are the last remaining vestige of expert personal counseling for tens of millions of consumers and are working hard to adapt. Their efforts will be undermined, and consumers of their services will face losses of economic welfare, if additional unnecessary economic obstacles are placed in their path

20 VI. THE PROPOSED ADVISORY CIRCULAR DOES NOT RESOLVE THE PROBLEMS CREATED BY THE EXTENSION OF THE PHONE NOTICE REGULATION TO ALL ASSISTED PHONE TICKETING TRANSACTIONS. One of the principal problems with the AC is that it does not account for frequent travelers. The ARC recommended that consideration be given to an opt-out program for members of airline frequent flyer programs combined with an annual indication of understanding of the hazmat rules. How this regime would work is unclear, but it certainly would add costs that were not accounted for in the adoption of the Phone Notice Regulation and that are not calculated in the ARC s recommendation. Thus, if nothing is done to change the status quo, frequent travelers will receive the Phone Notice every time they book a trip, potentially dozens of times a year. The AC does not appear to address the problem of third parties who book flights for others. There is simply no realistic way to assure that the traveler, presumptively the person who will pack the luggage, will be reminded of the hazmat rules by the person who made the booking. But this creates a gap in the effectiveness of this type of notice that raises further the question whether the regulation is reasonably calculated to achieve its stated purpose. ASTA s proposed alternative to the Phone Notice Regulation, to which we will now turn, solves this problem efficiently and with full regard for the beneficial intended effects of regulating this subject. VII. A SUBSTANTIALLY LESS COSTLY ALTERNATIVE TO THE PHONE NOTICE REGULATION IS AVAILABLE. In April 2011, the Department of Transportation adopted 14 CFR (c) as follows: (c) On all e-ticket confirmations for air transportation within, to or from the United States, including the summary page at the completion of an online purchase and a post-purchase confirmation, a U.S. carrier, a foreign air carrier, an agent of either, or a ticket agent that advertises or sells air

21 transportation in the United States must include information regarding the passenger's free baggage allowance and/or the applicable fee for a carry-on bag and the first and second checked bag. Carriers must provide this information in text form in the e-ticket confirmation. Agents may provide this information in text form in the e-ticket confirmations or through a hyperlink to the specific location on airline websites or their own website where this information is displayed. The fee information provided for a carry-on bag and the first and second checked bag must be expressed as specific charges taking into account any factors (e.g., frequent flyer status, early purchase, and so forth) that affect those charges. While this regulation does not fully resolve the issue of notice of ancillary fee charges for consumers, it does represent a model for a rule on hazardous materials that would be at least as effective as the existing rule, and at a fraction of the cost. The use of e-ticket confirmations to give the hazmat warnings during the ticket purchase process creates at least as high a likelihood that the true target of the notice (the actual traveler) will receive it. Since the traveler will have to check-in either online or at the airport before going through security, this is the optimum occasion to get confirmation that the traveler received and understood the notice, using the same type of check-box that is now used for online transactions through airline websites. ASTA submits that if the government continues to believe that a hazmat notice is required with respect to assisted travelers in phone or face-to-face transactions, the most efficient and effective way to give that notice, all factors considered, is through an e-ticket type of notice analogous to 14 CFR (c) and we urge the Department to proceed down that path through a rulemaking that rescinds, or defers, the current regulation until that process can be completed. VIII. CONCLUSION The government should revisit the provision in 49 CFR (b) that will, on January 1, 2015, require ticket sellers to read and obtain buyers acknowledgement of the restrictions on hazardous materials in baggage. The economic impact of the rule on travel agencies will be

22 enormous. Under the Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.), the FAA must consider whether a proposed rule would have a significant economic impact on a substantial number of small entities, including small businesses. It has not done so. ASTA therefore asks that this rule be amended to rescind the new disclosure and consent requirements of 49 CFR (b) as they relate to assisted telephone interactions. If a new regulation in this subject area is deemed necessary, a rule should be adopted along the lines of the baggage fee notification scheme of 14 CFR (c). Respectfully Submitted, AMERICAN SOCIETY OF TRAVEL AGENTS, INC. By: Paul M. Ruden Senior Vice President Legal & Industry Affairs

23 APPPENDIX A TO PETITION OF THE AMERICAN SOCIETY OF TRAVEL AGENTS TO AMEND REGULATION Full text of 49 USC : Notification at air passenger facilities of hazardous materials restrictions. (a) Notices of requirements. Each person who engages in for-hire air transportation of passengers must display notices of the requirements applicable to the carriage of hazardous materials aboard aircraft, and the penalties for failure to comply with those requirements in accordance with this section. Each notice must be legible, and be prominently displayed so it can be seen by passengers in locations where the aircraft operator issues tickets, checks baggage, and maintains aircraft boarding areas. At a minimum, each notice must communicate the following information: (1) Federal law forbids the carriage of hazardous materials aboard aircraft in your luggage or on your person. A violation can result in five years' imprisonment and penalties of $250,000 or more (49 U.S.C. 5124). Hazardous materials include explosives, compressed gases, flammable liquids and solids, oxidizers, poisons, corrosives and radioactive materials. Examples: Paints, lighter fluid, fireworks, tear gases, oxygen bottles, and radio-pharmaceuticals. (2) There are special exceptions for small quantities (up to 70 ounces total) of medicinal and toilet articles carried in your luggage and certain smoking materials carried on your person. For further information contact your airline representative. (b) Ticket purchase. During the ticket purchase process, regardless if the process is completed remotely (e.g., via the Internet or phone) or when completed at the airport, with or without assistance from another person (e.g., automated check-in facility), the aircraft operator must ensure that information on the types of hazardous materials a passenger is forbidden to transport aboard an aircraft is provided to passengers. Information may be in text or in pictorial form and, effective January 1, 2015, must be such that the final ticket purchase cannot be completed until the passenger or a person acting on the passenger's behalf has indicated that it understands the restrictions on hazardous materials in baggage. (c) Check-in. Effective January 1, 2015, when the flight check-in process is conducted remotely (e.g., via the Internet or phone) or when completed at the airport, without assistance from another person (e.g., automated check-in kiosk), the aircraft operator must ensure that information on the types of hazardous materials a passenger is forbidden to transport aboard an aircraft is provided to passengers. Information may be in text or in pictorial form and should be such that the check in process cannot be completed until the passenger or a person acting on the passenger's behalf has indicated that it understands the restrictions on hazardous materials in baggage. (d) Signage. When the check in process is not conducted remotely (e.g., at the airport with the assistance of an airline representative), passenger notification of permitted and forbidden hazardous materials may be completed through signage (electronic or otherwise), provided it is legible and prominently displayed. [78 FR 65486, Oct. 31, 2013]

24 APPPENDIX B TO PETITION OF THE AMERICAN SOCIETY OF TRAVEL AGENTS TO AMEND REGULATION

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