49 CFR Section 41738 Fitness of Air Carriers

§ 41737

TITLE 49—TRANSPORTATION

§ 41737. Compensation guidelines, limitations,
and claims
(a) COMPENSATION GUIDELINES.—(1) The Secretary of Transportation shall prescribe guidelines governing the rate of compensation payable under this subchapter. The guidelines shall
be used to determine the reasonable amount of
compensation required to ensure the continuation of air service or air transportation under
this subchapter. The guidelines shall—
(A) provide for a reduction in compensation
when an air carrier does not provide service or
transportation agreed to be provided;
(B) consider amounts needed by an air carrier to promote public use of the service or
transportation for which compensation is
being paid; and
(C) include expense elements based on representative costs of air carriers providing
scheduled air transportation of passengers,
property, and mail on aircraft of the type the
Secretary decides is appropriate for providing
the service or transportation for which compensation is being provided.
(2) Promotional amounts described in paragraph (1)(B) of this subsection shall be a special,
segregated element of the compensation provided to a carrier under this subchapter.
(b) REQUIRED FINDING.—The Secretary may
pay compensation to an air carrier for providing
air service or air transportation under this subchapter only if the Secretary finds the carrier is
able to provide the service or transportation in
a reliable way.
(c) CLAIMS.—Not later than 15 days after receiving a written claim from an air carrier for
compensation under this subchapter, the Secretary shall—
(1) pay or deny the United States Government’s share of a claim; and
(2) if denying the claim, notify the carrier of
the denial and the reasons for the denial.
(d) AUTHORITY TO MAKE AGREEMENTS AND
INCUR OBLIGATIONS.—(1) The Secretary may
make agreements and incur obligations from the
Airport and Airway Trust Fund established
under section 9502 of the Internal Revenue Code
of 1986 (26 U.S.C. 9502) to pay compensation
under this subchapter. An agreement by the Secretary under this subsection is a contractual obligation of the Government to pay the Government’s share of the compensation.
(2) Not more than $38,600,000 is available to the
Secretary out of the Fund for each of the fiscal
years ending September 30, 1993–1998, to incur
obligations under this section. Amounts made
available under this section remain available
until expended.
(e) ADJUSTMENTS TO ACCOUNT FOR SIGNIFICANTLY INCREASED COSTS.—
(1) IN GENERAL.—If the Secretary determines
that air carriers are experiencing significantly
increased costs in providing air service or air
transportation for which compensation is
being paid under this subchapter, the Secretary may increase the rates of compensation
payable under this subchapter without regard
to any agreement or requirement relating to
the renegotiation of contracts or any notice
requirement under section 41734.

Page 828

(2) READJUSTMENT IF COSTS SUBSEQUENTLY
DECLINE.—If an adjustment is made under
paragraph (1), and total unit costs subsequently decrease to at least the total unit cost
reflected in the compensation rate, then the
Secretary may reverse the adjustment previously made under paragraph (1) without regard to any agreement or requirement relating to the renegotiation of contracts or any
notice requirement under section 41734.
(3) SIGNIFICANTLY INCREASED COSTS DEFINED.—In this subsection, the term ‘‘significantly increased costs’’ means a total unit
cost increase (but not increases in individual
unit costs) of 10 percent or more in relation to
the total unit cost reflected in the compensation rate, based on the carrier’s internal audit
of its financial statements if such cost increase is incurred for a period of at least 2 consecutive months.
(Pub. L. 103–272, § 1(e), July 5, 1994, 108 Stat. 1151;
Pub. L. 108–176, title IV, § 402(a), Dec. 12, 2003, 117
Stat. 2543.)
HISTORICAL AND REVISION NOTES
Revised
Section

Source (U.S. Code)

41737(a) ......

49 App.:1389(f).

41737(b) ......
41737(c) ......
41737(d) ......

49 App.:1389(e)(2).
49 App.:1389(g).
49 App.:1389(l).

Source (Statutes at Large)
Aug. 23, 1958, Pub. L. 85–726,
72 Stat. 731, § 419(e)(2)–(g);
added Oct. 24, 1978, Pub. L.
95–504, § 33(a), 92 Stat. 1732;
Dec. 8, 1983, Pub. L. 98–213,
§ 10, 97 Stat. 1461; Oct. 4,
1984, Pub. L. 98–443, § 9(r),
98 Stat. 1708; restated Dec.
30, 1987, Pub. L. 100–223,
§ 202(a)(1), (2), (b)(1), 101
Stat. 1507, 1515.
Aug. 23, 1958, Pub. L. 85–726,
72 Stat. 731, § 419(l); added
Nov. 5, 1990, Pub. L.
101–508,
§ 9113(b)(1),
104
Stat. 1388–363.

In subsection (a)(1), before clause (A), the word ‘‘prescribe’’ is substituted for ‘‘establish’’ to eliminate an
executed word. The words ‘‘air service or air transportation under this subchapter’’ are substituted for ‘‘air
service under this section’’ for consistency with the
source provisions restated in sections 41733, 41735, and
41736 of the revised title. In clause (C), the words ‘‘the
service or transportation for which compensation is
being provided’’ are substituted for ‘‘such service’’ for
clarity.
In subsection (a)(2), the words ‘‘compensation provided to a carrier under this subchapter’’ are substituted for ‘‘required compensation’’ for clarity.
In subsection (b), the words ‘‘air service or air transportation’’ are substituted for ‘‘air service’’ for consistency with the source provisions restated in sections
41733, 41735, and 41736 of the revised title.
In subsection (d)(2), the reference to fiscal year 1992
is omitted as obsolete.
AMENDMENTS
2003—Subsec. (e). Pub. L. 108–176 added subsec. (e).
EFFECTIVE DATE OF 2003 AMENDMENT
Pub. L. 108–176, title IV, § 402(b), Dec. 12, 2003,
2543, provided that: ‘‘The amendment made
section (a) [amending this section] shall take
days after the date of enactment of this Act
2003].’’

117 Stat.
by subeffect 30
[Dec. 12,

§ 41738. Fitness of air carriers
Notwithstanding section 40109(a) and (c)–(h) of
this title, an air carrier may provide air service

Page 829

§ 41741

TITLE 49—TRANSPORTATION

to an eligible place or air transportation to a
place designated under section 41736 of this title
only when the Secretary of Transportation decides that—
(1) the carrier is fit, willing, and able to perform the service or transportation; and
(2) aircraft used to provide the service or
transportation, and operations related to the
service or transportation, conform to the safety standards prescribed by the Administrator
of the Federal Aviation Administration.

(Pub. L. 103–272, § 1(e), July 5, 1994, 108 Stat. 1152;
Pub. L. 108–176, title IV, § 403, Dec. 12, 2003, 117
Stat. 2543.)
HISTORICAL AND REVISION NOTES
Revised
Section

Source (U.S. Code)

41740 ..........

49 App.:1389(j).

(Pub. L. 103–272, § 1(e), July 5, 1994, 108 Stat.
1152.)
HISTORICAL AND REVISION NOTES
Revised
Section
41738 ..........

Source (U.S. Code)
49 App.:1389(e)(1).

Source (Statutes at Large)
Aug. 23, 1958, Pub. L. 85–726,
72 Stat. 731, § 419(e)(1);
added Oct. 24, 1978, Pub. L.
95–504, § 33(a), 92 Stat. 1732;
Dec. 8, 1983, Pub. L. 98–213,
§ 10, 97 Stat. 1461; Oct. 4,
1984, Pub. L. 98–443, § 9(r),
98 Stat. 1708; restated Dec.
30, 1987, Pub. L. 100–223,
§ 202(a)(1), (2), (b)(1), 101
Stat. 1507, 1515.

In this section, before clause (1), the words ‘‘air
transportation to a place’’ are substituted for ‘‘service
to a point’’ for consistency with the source provisions
restated in sections 41733, 41735, and 41736 of the revised
title. In clauses (1) and (2), the words ‘‘service or transportation’’ are substituted for ‘‘such service’’ for consistency with the source provisions restated in sections
41733, 41735, and 41736 of the revised title.

§ 41739. Air carrier obligations
If at least 2 air carriers make an agreement to
operate under or use a single carrier designator
code to provide air transportation, the carrier
whose code is being used shares responsibility
with the other carriers for the quality of transportation provided the public under the code by
the other carriers.

The words ‘‘air service or air transportation’’ are substituted for ‘‘air service’’, and the words ‘‘the service or
transportation’’ are substituted for ‘‘service’’, for consistency with the source provisions restated in sections
41733, 41735, and 41736 of the revised title.
AMENDMENTS
2003—Pub. L. 108–176 inserted
fares,’’ after ‘‘joint proposals’’.

Revised
Section
41739 ..........

49 App.:1389(i).

Source (Statutes at Large)
Aug. 23, 1958, Pub. L. 85–726,
72 Stat. 731, § 419(i); added
Oct. 24, 1978, Pub. L.
95–504, § 33(a), 92 Stat. 1732;
Dec. 8, 1983, Pub. L. 98–213,
§ 10, 97 Stat. 1461; Oct. 4,
1984, Pub. L. 98–443, § 9(r),
98 Stat. 1708; restated Dec.
30, 1987, Pub. L. 100–223,
§ 202(a)(1), (2), (b)(1), 101
Stat. 1507, 1516.

The words ‘‘quality of transportation’’ are substituted for ‘‘quality of service’’ for clarity and consistency in this section.

§ 41740. Joint proposals
The Secretary of Transportation shall encourage the submission of joint proposals, including
joint fares, by 2 or more air carriers for providing air service or air transportation under this
subchapter through arrangements that maximize the service or transportation to and from
major destinations beyond the hub.

joint

EFFECTIVE DATE OF 2003 AMENDMENT

§ 41741. Insurance
The Secretary of Transportation may pay an
air carrier compensation under this subchapter
only when the carrier files with the Secretary
an insurance policy or self-insurance plan approved by the Secretary. The policy or plan
must be sufficient to pay for bodily injury to, or
death of, an individual, or for loss of or damage
to property of others, resulting from the operation of aircraft, but not more than the amount
of the policy or plan limits.
(Pub. L. 103–272, § 1(e), July 5, 1994, 108 Stat.
1152.)
HISTORICAL AND REVISION NOTES
Revised
Section
41741 ..........

Source (U.S. Code)

‘‘, including

Amendment by Pub. L. 108–176 applicable only to fiscal years beginning after Sept. 30, 2003, except as otherwise specifically provided, see section 3 of Pub. L.
108–176, set out as a note under section 106 of this title.

(Pub. L. 103–272, § 1(e), July 5, 1994, 108 Stat.
1152.)
HISTORICAL AND REVISION NOTES

Source (Statutes at Large)
Aug. 23, 1958, Pub. L. 85–726,
72 Stat. 731, § 419(j); added
Oct. 24, 1978, Pub. L.
95–504, § 33(a), 92 Stat. 1732;
Dec. 8, 1983, Pub. L. 98–213,
§ 10, 97 Stat. 1461; Oct. 4,
1984, Pub. L. 98–443, § 9(r),
98 Stat. 1708; restated Dec.
30, 1987, Pub. L. 100–223,
§ 202(a)(1), (2), (b)(1), 101
Stat. 1507, 1516.

Source (U.S. Code)
49 App.:1389(h).

Source (Statutes at Large)
Aug. 23, 1958, Pub. L. 85–726,
72 Stat. 731, § 419(h); added
Oct. 24, 1978, Pub. L.
95–504, § 33(a), 92 Stat. 1732;
Dec. 8, 1983, Pub. L. 98–213,
§ 10, 97 Stat. 1461; Oct. 4,
1984, Pub. L. 98–443, § 9(r),
98 Stat. 1708; restated Dec.
30, 1987, Pub. L. 100–223,
§ 202(a)(1), (2), (b)(1), 101
Stat. 1507, 1516.

The words ‘‘The Secretary of Transportation may pay
. . . only when’’ are substituted for ‘‘An air carrier
shall not receive . . . unless’’ for clarity. The words
‘‘approved by the Secretary’’ are substituted for ‘‘complies with regulations or orders issued by the Secretary
governing the filing and approval’’ to eliminate unnecessary words. The words ‘‘The policy or plan must be
sufficient to pay . . . but not more than the amount of
the policy or plan limits’’ are substituted for ‘‘in the
amount prescribed by the Secretary which are conditioned to pay, within the amount of such insurance,
amounts’’ because of the restatement. The words ‘‘for
which such air carrier may become liable’’ are omitted
as unnecessary. The word ‘‘individual’’ is substituted
for ‘‘person’’ because it is more precise. The word ‘‘operation’’ is substituted for ‘‘operation or maintenance’’
because it is inclusive.