Parts 212 and 380

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been determined that this final rule does
not have any effect on the quality of the
environment.
Federalism Implications
The Department has analyzed this
rule under the principles and criteria
contained in Executive Order 12612
(‘‘Federalism’’) and has determined that
the rule does not have a substantial
effect on the States, on the relationship
between the national government and
the States, or on the distribution of
power and responsibilities among the
various levels of government. Thus, in
accordance with Executive Order 12612,
the rule does not have sufficient
federalism implications to warrant the
preparation of a federalism assessment.
Unfunded Mandates Reform Act
This rule does not impose any
unfunded mandates on State, local, or
tribal governments as defined by the
Unfunded Mandates Reform Act of 1995
(2 U.S.C. 1532–1538).
Summary of Cost/Benefits
Our analysis of the impact of changes
made in the Public Charter rule clearly
indicates that the changes are beneficial.
Elimination of the 10-day waiting
period after filing a prospectus will save
the cost of a waiver request. We are also
deleting the requirement to file a brief
(mini) prospectus by direct air carriers
conducting foreign-originating flights
for foreign charter operators. And
finally, we are consolidating three
largely repetitive rules applicable to
direct air carriers conducting charter
flights.
In order to estimate the cost savings
to industry from not requesting a waiver
of the 10-day waiting period, we
reviewed our 1996 record of filings. We
approved nearly 800 prospectus filings
during the year, most of which included
a filing fee of $39 and an additional $39
for a waiver request. Of the total fees
received, $62,400, nearly half would be
saved under the new rule. In addition,
we received between 700 and 800
waiver requests for amendments to
Public Charter prospectuses, changing
or eliminating flights. Eliminating filing
fees for such amendments should
provide an additional cost saving to
charter operators of approximately
$50,000. Cost savings in time and effort
for those filing prospectuses under the
new rule will be minimal since the
filings and the amendments must still
be provided.
In considering the cost savings to
airlines conducting foreign originating
flights for foreign tour operators we note
that many foreign air carriers retain the
services of U.S. law firms to provide

these documents. Since most foreign air
carriers are exempt from out filing fees
because of reciprocity agreements with
the U.S., the cost savings to the air
carriers will be the expense of retaining
a law firm to produce and file
information heretofore required by
Public Charter regulations.
Finally, rewrite of the four principal
parts of the Code of Federal Regulations
that address passenger air charter
operations provides a more condensed
and useable reference for the charter
industry and for those desiring to
engage in Public Charters. Consolidating
Parts 207 and 208 into a revised Part
212 has eliminated duplicative wording
while retaining these two parts with
only an applicability statement to avoid
confusion since a number of Department
orders now in effect require adherence
to the requirements. These and other
benefits of this Final Rule which can not
be quantified such as eliminating
certain waiver requirements, allowing
charter operators to accept credit card
payments and including current
practices concerning amendments to
filings, simplifies the process for
applications and does so without
compromising consumer protection.
List of Subjects in 14 CFR Parts 207,
208, 212, 380
Air Carriers, Air Transportation,
Charter Flights, Reporting and
recordkeeping requirements, Surety
bonds.
1. Part 207 is revised to read as
follows:
PART 207—CHARTER TRIPS BY U.S.
SCHEDULED AIR CARRIERS
Sec.
207.1 Applicability.
207.2 Terms of service.
Authority: 49 U.S.C. 40101, 40102, 40109,
40113, 41101, 41102, 41103, 41301, 41504,
41702, 41708, 41712, 46101.

PART 208—CHARTER TRIPS BY U.S.
CHARTER AIR CARRIERS
Sec.
208.1 Applicability.
208.2 Terms of service.
Authority: 49 U.S.C. 40101, 40102, 40109,
40113, 41101, 41102, 41103, 41301, 41504,
41702, 41708, 41712, 46101.
§ 208.1

§ 208.2

Applicability.

This part establishes the terms,
conditions, and limitations applicable to
charter air transportation conducted by
air carriers holding certificates under 49
U.S.C. 41102 authorizing the operation
of scheduled air transportation services.
§ 207.2

Terms of service.

Charter air transportation under this
part shall be performed in accordance
with the provisions of part 212 of this
chapter.
2. Part 208 revised to read as follows:

Terms of service.

Charter air transportation under this
part shall be performed in accordance
with the provisions of Part 212 of this
chapter.
3. Part 212 is revised to read as
follows:
PART 212—CHARTER RULES FOR
U.S. AND FOREIGN DIRECT AIR
CARRIERS
Sec.
212.1 Scope.
212.2 Definitions.
212.3 General provisions.
212.4 Authorized charter types.
212.5 Operation of affinity (pro rata)
charters.
212.6 Operation of gambling junket
charters.
212.7 Direct sales.
212.8 Protection of customers’ payments.
212.9 Prior authorization requirements.
212.10 Application for statement of
authorization.
212.11 Issuance of statement of
authorization.
212.12 Waiver.
Appendix A—Certificated or Foreign Air
Carrier’s Surety Bond Under part 212 of the
Regulations of the Department of
Transportation (14 CFR Part 212)
Appendix B—Certification of Compliance
Authority: 49 U.S.C. 40101, 40102, 40109,
40113, 41101, 41103, 41504, 41702, 41708,
41712, 46101.
§ 212.1

§ 207.1

Applicability.

This part establishes the terms,
conditions, and limitations applicable to
charter air transportation conducted by
air carriers holding certificates under 49
U.S.C. 41102 authorizing the operation
of charter air transportation services.

Scope.

This part applies to all charter flights,
and all other flights carrying charter
passengers or cargo, in interstate and/or
foreign air transportation by U.S.
certificated air carriers or in foreign air
transportation by foreign air carriers. It
does not apply to any flights performed
by a commuter air carrier, air taxi
operator, or certificated air carrier
operating ‘‘small aircraft’’ under part
298 of this chapter. Nothing in this part
gives authority to operate a type or level
of service not authorized by certificate,
foreign air carrier permit, or exemption,
except that a certificated air carrier

Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Rules and Regulations
authorized to conduct scheduled
operations may conduct charter flights,
in interstate and/or foreign air
transportation, without limitation as to
the points served.
§ 212.2

Definitions.

For the purposes of this part:
Affinity (pro rata) charter means a
charter arranged by an organization on
behalf of its membership, and which
meets the requirements of § 212.5.
Certificated air carrier means a U.S.
direct air carrier holding a certificate
issued under 49 U.S.C. 41102.
Charter flight means a flight operated
under the terms of a charter contract
between a direct air carrier and its
charterer or lessee. It does not include
scheduled interstate air transportation,
scheduled foreign air transportation, or
nonscheduled cargo foreign air
transportation, sold on an individually
ticketed or individually waybilled basis.
Charter operator means:
(1) A ‘‘Public Charter operator’’ as
defined in § 380.2 of this chapter, or
(2) An ‘‘Overseas Military Personnel
Charter operator’’ as defined in § 372.2
of this chapter.
Direct air carrier means a certificated
or foreign air carrier that directly
engages in the operation of aircraft
under a certificate, permit, or exemption
issued by the Department.
Fifth freedom charter means a charter
flight carrying traffic that originates and
terminates in countries other than the
carrier’s home country, regardless of
whether the flight operates via the home
country.
Foreign air carrier means a direct air
carrier which is not a citizen of the
United States as defined in 49 U.S.C.
40102(a) that holds a foreign air carrier
permit issued under 49 U.S.C. 41302 or
an exemption issued under 49 U.S.C.
40109 authorizing direct foreign air
transportation.
Fourth freedom charter means a
charter flight carrying traffic that
terminates in the carrier’s home country
having originated in another country.
Gambling junket charter means a
charter arranged by a casino, hotel,
cruise line, or its agents, the purpose of
which is to transport passengers to the
casino, hotel, or cruise ship where
gambling facilities are available, and
which meets the requirements of
§ 212.6.
Long-term wet lease means a wet lease
which either—
(1) Lasts more than 60 days, or
(2) Is part of a series of such leases
that amounts to a continuing
arrangement lasting more than 60 days.
Mixed charter means a charter, the
cost of which is borne partly by the

charter participants and partly by the
charterer, where all the passengers meet
the eligibility requirements for ‘‘affinity
(pro rata)’’ charters of § 212.5.
Part charter means flight carrying
both charter and scheduled passenger
traffic.
Single entity charter means a charter
the cost of which is borne by the
charterer and not by individual
passengers, directly or indirectly.
Third freedom charter means a
charter flight carrying traffic that
originates in the carrier’s home country
and terminates in another country.
Wet lease means a lease between
direct air carriers by which the lessor
provides all or part of the capacity of an
aircraft, and its crew, including
operations where the lessor is
conducting services under a blocked
space or code-sharing arrangement.
§ 212.3

General provisions.

(a) Certificated and foreign air carriers
may conduct charter flights as described
in this part, and may carry charter
passengers on scheduled flights, or
charter cargo on scheduled or
nonscheduled flights (or on the main
deck or in the belly of passenger charter
flights), subject to the requirements of
this chapter and any orders of, or
specific conditions imposed by, the
Department.
(b) Charter flights may be operated on
a round-trip or one-way basis, with no
minimum group, shipment, or contract
size.
(c) Contracts to perform charter flights
must be in writing and signed by an
authorized representative of the
certificated or foreign air carrier and the
charterer prior to the operation of the
flights involved. The written agreement
shall include:
(i) The name and address of either the
surety whose bond secures advance
charter payments received by the
carrier, or of the carrier’s depository
bank to which checks or money orders
for the advance charter payments are to
be made payable as escrow holder
pending completion of the charter trip;
and
(2) A statement that unless the
charterer files a claim with the carrier,
or, if the carrier is unavailable, with the
surety, within 60 days after the
cancellation of a charter trip with
respect to which the charterer’s advance
payments are secured by the bond, the
surety shall be released from all liability
under the bond to such charterer for
such trips.
(d) A certificated or foreign air carrier
must make a reasonable effort to verify
that any charterer with which it
contracts, and any charter it conducts,

28237

meets the applicable requirements of
this chapter.
(e) The certificated or foreign air
carriers shall require full payment of the
total charter price, including payment
for the return portion of a round trip, or
the posting of a satisfactory bond for full
payment, prior to the commencement of
any portion of the air transportation,
provided, however, that in the case of a
passenger charter for less than the entire
of an aircraft, the carrier shall require
full payment of the total charter price,
including payment for the return
portion of a round trip, from the
charterers not less than 10 days prior to
the commencement of any portion of the
transportation, and such payment shall
not be refundable unless the charter is
canceled by the carrier or unless the
carrier accepts a substitute charterer for
one which has canceled a charter, in
which case the amount paid by the
latter shall be refunded. For the purpose
of this section, payment to the carrier’s
depository bank, as designated in the
charter contract, shall be deemed
payment to the carrier.
(f) A certificated or foreign air carrier
operating a U.S.-originating passenger
charter shall be responsible to return to
his or her point of origin any passenger
who purchased round trip
transportation on that charter and who
was transported by that carrier on his or
her outbound flight; except that this
provision shall not apply in cases where
the return transportation is to be
provided by another certificated or
foreign air carrier.
(g) A certificated or foreign air carrier
may not perform any charter flight for
which a statement of authorization is
required under § 212.9 until one has
been granted by the Department. In
addition, if a foreign air carrier is
required to obtain a statement of
authorization under paragraph (e) of
that section, neither it, not any charter
operator, or any other person shall
advertise or sell any passenger charter
services except those that have been
specifically authorized by the
Department.
(h) A certificated air carrier may not
operate charters where such operations
would result in a substantial change in
the scope of its operations within the
meaning of part 204 of this chapter.
(i) A certificated air carrier may not
limit its baggage liability for interstate
charter flights except as set forth in part
254 of this chapter.
(j) A certificated air carrier may not,
except as set forth in part 121 of the
Federal Aviation Regulations (14 CFR
part 121), limit the availability, upon
reasonable request, of air transportation
and related services to a person who

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may require help from another person in
expeditiously moving to an emergency
exit for evacuation of an aircraft.
(k) A certificated air carrier holding a
certificate to conduct only cargo
operations may not conduct passenger
charters.
(l) A certificated air carrier may not
perform any charter in interstate
commerce within the State of Alaska.
(m) A foreign air carrier may operate
charters in foreign air transportation
only to the extent authorized by its
foreign air carrier permit under 49
U.S.C. 41302 or exemption authority
under 49 U.S.C. 40109, and only to the
extent to which such operations are
consistent with the provisions of any
applicable bilateral aviation
undertaking.
§ 212.4

Authorized charter types.

Certificated and foreign air carriers
may conduct the following charter
types, subject to the provisions of this
part:
(a) Affinity (pro rata) charters.
(b) Single entity charters, including:
(1) Wet leases involving the carriage
of passengers and/or cargo, provided,
that the wet lessee holds appropriate
economic authority from the
Department to conduct the proposed
operations; and
(2) Charters pursuant to contracts
with the Department of Defense,
provided, that foreign air carriers may
conduct charters for the Department of
Defense only to the extent that such
operations are consistent with the
provisions of 49 U.S.C. 40118.
(c) Mixed charters.
(d) Gambling junket charters.
(e) Public Charters in accordance with
part 380 of this chapter (including
operations by educational institutions as
defined in that part).
(f) Overseas military personnel
charters in accordance with part 372 of
this chapter.
(g) Cargo charters.
§ 212.5 Operation of affinity (pro rata)
charters.

An affinity (pro rata) charter operated
by a certificated or foreign air carrier
must meet the following criteria:
(a) The aircraft must be chartered by
an organization, no part of whose
business is the formation of groups for
transportation or solicitation or sale of
transportation services, for the purpose
of providing air transportation to its
members and their immediate families.
(b) The charter must be organized by
the organization itself, or by a person or
company who acts not as a principal,
but as an agent for the chartering
organization or the certificated or
foreign air carrier.

(c) No solicitation, sales, or
participation may take place beyond the
bona fide members of an eligible
chartering organization, and their
immediate families (spouse, children,
and parents). All printed solicitation
materials shall contain the following
notice in boldface, 10-point or larger
type—
Some of the Federal rules that protect
against tour changes and loss of passengers’
money in publicly sold charters do not apply
to this charter flight.

(d) ‘‘Bona fide members’’ are members
of an organization who: Have not joined
the organization merely to travel on a
charter flight; and who have been
members of the chartering organization
for a minimum of six months prior to
the date of commencement of the
affected flight; provided, that the ‘‘six
month’’ rule does not apply to:
(1) Employees of a single commercial
establishment, industrial plant, or
government agency, or
(2) Students and employees of a single
school.
(e) The charter price due the direct air
carrier shall be prorated equally among
all the charter passengers, except that
children under 12 may be offered
discounted or free transportation.
(f) The certificated or foreign air
carrier shall make reasonable efforts to
assure that passengers transported meet
the eligibility requirements of this
section. The certificated or foreign air
carrier shall also obtain (no later than
the date of departure), and maintain for
two years, a certification by an
authorized representative of the
chartering organization that all
passengers are eligible for transportation
under this section.
§ 212.6 Operation of gambling junket
charters.

A gambling junket charter operated by
a certificated or foreign air carrier must
meet the following criteria:
(a) The aircraft must be chartered by
(1) A casino, hotel, or cruise line duly
licensed by the government of any state,
territory or possession of the United
States, or by a foreign government, or
(2) An agent of such a casino, or
cruise line on behalf of that casino,
hotel, or cruise line.
(b) The casino, hotel, or cruise line or
its agents, may not require a passenger
to incur any expense in taking the trip,
provided, that this provision shall not
preclude the casino, hotel, or cruise line
or its agents, from requiring prospective
passengers to pay nominal reservation
fees that are duly refundable by the
casino, hotel, or cruise line before the
flight, establish a minimum line-ofcredit at the casino, hotel, or cruise line,

bring (but not necessarily spend) a
specified minimum amount of money,
or meet other requirements that do not
place them in financial jeopardy; nor
does it preclude the casino, hotel, or
cruise line, or its agents, from offering
operational land packages for a fee.
§ 212.7

Direct sales.

(a) Certificated and foreign air carriers
may sell or offer for sale, and operate,
as principal, Public Charter flights
under part 380 of this chapter directly
to the public.
(b) Each certificated or foreign air
carrier operating a charter trip under
this section shall comply with all the
requirements of part 380 of this chapter,
except that:
(1) Those provisions of part 380
relating to the existence of a contract
between a charter operator and a direct
air carrier do not apply;
(2) A depository agreement shall
comply with § 380.34a (d) and (f);
(3) A security agreement shall comply
with § 380.34 (c) and (d); and
(i) If no depository agreement is used,
protect charter participant payments
(including those for ground
accommodations and services) and
assure the certificated or foreign air
carrier’s contractual and regulatory
responsibilities to charter participants
in an unlimited amount (except that the
liability of the securer with respect to
any charter participant may be limited
to the charter price paid by or on behalf
of such participant);
(ii) If used in combination with a
depository agreement, protect charter
participant payments (including those
for ground accommodations and
services) and assure the certificated or
foreign air carrier’s contractual and
regulatory responsibilities to charter
participants in the amount of at least
$10,000 times the number of flights,
except that the amount need not be
more than $200,000. The liability of the
securer with respect to any charter
participant may be limited to the charter
price paid by or on behalf of such
participant.
(c) The Department reserves the right
to limit or prohibit the operation of
direct sales Public Charters by a foreign
air carrier upon a finding that such
action is necessary in the public
interest.
§ 212.8 Protection of customers’
payments.

(a) Except as provided in paragraph
(c) of this section, no certificated air
carrier or foreign air carrier shall
perform any charter trip (other than a
cargo charter trip) originating in the
United States or any Overseas Military

Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Rules and Regulations
Personnel Charter trip, as defined in
part 372 of this chapter, nor shall such
carrier accept any advance payment in
connection with any such charter trip,
unless there is on file with the
Department a copy of a currently
effective agreement made between said
carrier and a designated bank, by the
terms of which all sums payable in
advance to the carrier by charterers, in
connection with any such trip to be
performed by said carrier, shall be
deposited with and maintained by the
bank, as escrow holder, the agreement to
be subject to the following conditions:
(1) The charterer (or its agent) shall
pay the carrier either by check or money
order made payable to the depository
bank. Such check or money order and
any cash received by the carrier from a
charterer (or its agent) shall be
deposited in, or mailed to, the bank no
later than the close of the business day
following the receipt of the check or
money order or the cash, along with a
statement showing the name and
address of the charterer (or its agent);
provided, however, that where the
charter transportation to be performed
by a carrier is sold through a travel
agent, the agent may be authorized by
the carrier to deduct its commission and
remit the balance of the advance
payment to the carrier either by check
or money order made payable to the
designated bank.
(2) The bank shall pay over to the
carrier escrowed funds with respect to
a specific charter only after the carrier
has certified in writing to the bank that
such charter has been completed;
provided, however, that the bank may
be required by the terms of the
agreement to pay over to the carrier a
specified portion of such escrowed
funds, as payment for the performance
of the outbound segment of a round-trip
charter upon the carrier’s written
certification that such segment has been
so completed.
(3) Refunds to a charterer from sums
in the escrow account shall be paid
directly to such charterer its assigns.
Upon written certification from the
carrier that a charter has been canceled,
the bank shall turn over directly to the
charterer or its assigns all escrowed
sums (less any cancellation penalties as
provided in the charter contract) which
the bank holds with respect to such
canceled charter, provided however,
that in the case of a split charter
escrowed funds shall be turned over to
a charterer or its assigns only if the
carrier’s written certification of
cancellation of such charter includes a
specific representation that either the
charter has been canceled by the carrier
or, if the charter has been canceled by

the charterer, that the carrier has
accepted a substitute charterer.
(4) The bank shall maintain a separate
accounting for each charter flight.
(5) As used in this section the term
‘‘bank’’ means a bank insured by the
Federal Deposit Insurance Corporation.
(b) The escrow agreement required
under paragraph (a) of this section shall
not be effective until approved by the
Department. Claims against the escrow
may be made only with respect to the
non-performance of air transportation.
(c) The carrier may elect, in lieu of
furnishing an escrow agreement
pursuant to paragraph (a) of this section,
to furnish and file with the Department
a surety bond with guarantees to the
United States Government the
performance of all charter trips (other
than cargo charter trips) originating in
the United States and of all overseas
military personnel charter trips, as
defined in part 372 of this chapter, to be
performed, in whole or in part, by such
carrier pursuant to any contracts entered
into by such carrier. The amount of such
bond shall be unlimited.1 Claims under
the bond may be made only with respect
to the non-performance of air
transportation.
(d) The bond permitted by this section
shall be in the form set forth as the
appendix to this part. Such bond shall
be issued by a bonding or surety
company—
(1) Which is listed in Best’s Insurance
Reports (Fire and Casualty) with a
general policyholders’ rating of ‘‘A’’ or
better or
(2) Which is listed in the U.S.
Department of Treasury’s notice listing
companies holding Certificates of
Authority as acceptable sureties on
Federal bonds and as acceptable
reinsuring companies, published in the
Federal Register on or about July 1. The
bonding or surety company shall be one
legally authorized to issue bonds of that
type in the State in which there is
located the office or usual residence of
the agency designated by the carrier
under 49 U.S.C. 46103 to receive service
of notices, process and other documents
issued by or filed with the Department
of Transportation. For the purposes of
this section the term ‘‘State’’ includes
any territory or possession of the United
States, or the District of Columbia. If the
bond does not comply with the
requirements of this section, or for any
reason fails to provide satisfactory or
adequate protection for the public, the
Department will notify the certificated
1 While the face amount of the bond is unlimited,
claims are limited to amounts that are paid to
carrier for U.S.-originating passenger charter flights
that carrier fails to perform or to refund.

28239

or foreign air carrier by registered or
certified mail, stating the deficiencies of
the bond. Unless such deficiencies are
corrected within the time limit set forth
in the notification, no amounts payable
in advance by customers for the subject
charter trips shall be accepted by the
carrier.
(e) The bond required by this section
shall provide that unless the charterer
files a claim with the carrier, or, if the
carrier is unavailable, with the surety,
within 60 days after cancellation of a
charter trip with respect to which the
charterer’s advance payments are
secured by the bond, the surety shall be
released from all liability under the
bond to such charterer for such charter
trip. The contract between the carrier
and the charterer shall contain notice of
this provision.
§ 212.9

Prior authorization requirements.

(a) Certificated air carriers shall obtain
a statement of authorization for each
long-term wet lease to a foreign air
carrier.
(b) Foreign air carriers shall obtain a
statement of authorization for each:
(1) Fifth freedom charter flight to or
from the United States;
(2) Long-term wet lease;
(3) Charter flight for which the
Department specifically requires prior
authorization under paragraph (e) or (f)
of this section; or
(4) Part charter.
(c) The Department may issue blanket
statements of authorization to foreign air
carriers to conduct fifth freedom
charters. The standards for issuing such
blanket authorizations shall be those
stated in § 212.11. The Department may
revoke any authority granted under this
paragraph at any time without hearing.
(d) The Department may at any time,
with or without hearing, but with at
least 30 days’ notice, require a foreign
air carrier to obtain a statement of
authorization before operating any
charter flight. In deciding whether to
impose such a requirement, the
Department will consider (but not be
limited to considering) whether the
country of the carrier’s nationality:
(1) Requires prior approval for third
or fourth freedom charter flights by U.S.
air carriers;
(2) Has, over the objection of the U.S.
Government, denied rights of a U.S. air
carrier guaranteed by a bilateral
agreement; or
(3) Has otherwise impaired, limited,
or denied the operating rights of U.S. air
carriers, or engaged in unfair,
discriminatory, or restrictive practices
with respect to air transportation
services to, from, through, or over its
territory.

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(e) The Department, in the interest of
national security, may require a foreign
air carrier to provide prior notification
or to obtain a statement of authorization
before operating any charter flight over
U.S. territory.
§ 212.10 Application for statement of
authorization.

(a) Application for a statement of
authorization shall be submitted on OST
Form 4540 except that for part charters
or long-term wet leases the application
may be in letter form. An application for
a long-term wet lease shall describe the
purpose and terms of the wet lease
agreement. An original and two copies
of an application shall be submitted to
the Department of Transportation,
Office of International Aviation, U.S.
Air Carrier Licensing Division, X–44 (for
an application by a certificated air
carrier), or Foreign Air Carrier Licensing
Division, X–45 (for an application by a
foreign air carrier), 400 Seventh Street,
SW., Washington, DC 20590. Upon a
showing of good cause, the application
may be transmitted by facsimile (fax) or
telegram, or may be made by telephone,
provided, that in the case of a fax or
telephone application, the applicant
must confirm its request (by filing an
original and two copies of its
application as described above) within
three business days.
(b) A copy of each application for a
long-term wet lease shall also be served
on the Director of Flight Standards
Service (AFS–1), Federal Aviation
Administration, 800 Independence
Avenue, SW., Washington, DC 20591,
and on each certificated air carrier that
is authorized to serve the general area in
which the proposed transportation is to
be performed.
(c)(1) Applicants for statements of
authorization filed by foreign air carriers
shall include documentation to
establish the extent to which the
country of the applicant’s nationality
deals with U.S. air carriers on the basis
of reciprocity for similar flights, if such
flights are not subject to a bilateral
agreement, and
(i) The Department has not
established that the country accords
reciprocity;
(ii) The Department has found
reciprocity defective in the most recent
prior approval application involving the
country; or
(iii) Changes in reciprocity have
occurred since the most recent
Department finding for the country in
question.
(2) Applications filed by certificated
or foreign air carriers to conduct longterm wet leases shall include, for the
country of the lessee’s nationality, the

documentation specified in paragraph
(c)(1) of this section.
(d)(1) Applications shall be filed at
least 5 business days before
commencement of the proposed flight or
flights, except as specified in paragraphs
(d)(2), (d)(3), and (d)(4) of this section.
Late applications may be considered
upon a showing of good cause for the
lateness.
(2) Applications for a part charter or
for a long-term wet lease shall be filed
at least 45 calendar days before the date
of the first proposed flight.
(3) Applications specifically required
under § 212.9(d) shall be filed at least 30
calendar days before the proposed flight
or flights (10 calendar days for cargo
charters), unless otherwise specified by
the Department.
(4) Applications required by a
Department order under § 212.9(e) shall
be filed at least 14 calendar days before
the proposed flight or flights, unless
otherwise specified by the Department.
(5) Where an application is required
by more than one provision of this part
and/or order of the Department, only
one application need be filed, but it
must conform to the earliest applicable
filing deadline.
(6) The Department may require
service of applications as it deems
necessary.
(e)(1) Any part in interest may file a
memorandum supporting or opposing
an application. Three copies of each
memorandum shall be filed within 7
business days after service of the
application or before the date of the
proposed flight or flights, whichever is
earlier. Memorandums will be
considered to the extent practicable; the
Department may act on an application
without waiting for supporting or
opposing memorandums to be filed.
(2) Each memorandum shall set forth
the reasons why the application should
be granted or denied, accompanied by
whatever data, including affidavits, the
Department is requested to consider.
(3) A copy of each memorandum shall
be served on the certified or foreign air
carrier applying for approval.
(f)(1) Unless otherwise ordered by the
Department, each application and
memorandum filed in response will be
available for public inspection at the
Office of International Aviation
immediately upon filing. Notice of the
filing of all applications shall be
published in the Department’s Weekly
List of Applications Filed.
(2) Any person objecting to public
disclosure of any information in an
application or memorandum must state
the grounds for the objection in writing.
If the Department finds that disclosure
of all or part of the information would

adversely affect the objecting person,
and that the public interest does not
require disclosure, it will order that the
injurious information be withheld.
§ 212.11 Issuance of statement of
authorization.

(a) The Department will issue a
statement of authorization if it finds that
the proposed charter flight, part charter,
or wet lease meets the requirements of
this part and that it is in the public
interest. Statements of authorization
may be conditioned or limited.
(b) In determining the public interest
the Department will consider (but not be
limited to) the following factors:
(1) The extent to which the authority
sought to covered by and consistent
with bilateral agreements to which the
United States is a party.
(2) The extent to which an applicant
foreign air carrier’s home country (and,
in the case of a long-term wet lease, the
lessee’s home country) deals with U.S.
air carriers on the basis of substantial
reciprocity.
(3) Whether the applicant or its agent
has previously violated the provisions
of this part.
(4) Where the application concerns a
long-term wet lease:
(i) Whether the lessor (applicant) or
its agent or the lessee (charterer) or its
agent has previously violated the
provisions of the Department’s charter
regulations.
(ii) Whether, because of the nature of
the arrangement and the benefits
involved, the authority sought should be
the subject of a bilateral agreement.
(iii) To what extent the lessor owns
and/or controls the lessee, or is owned
and/or controlled by the lessee.
(c) The Department will submit any
denial of an authorization specifically
required of a foreign air carrier under
§ 212.9(d) to the President of the United
States at least 10 days before the
proposed departure. The denial will be
subject to stay or disapproval by the
President within 10 days after it is
submitted. A shorter period for
Presidential review may be specified by
the Department where the application
for authorization is not timely or
properly filed. Denial of a late-filed
application need not be submitted to the
President. For the purposes of this
paragraph, an application filed by a
foreign air carrier under § 212.9(d) to
conduct a cargo charter will be
considered as timely filed only if it is
filed at least 30 calendar days before the
proposed flight, notwithstanding the 10day filing requirement for cargo charters
in § 212.10(d)(3).
(d) The Department will publish
notice of its actions on applications for

Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Rules and Regulations
statements of authorization in its
Weekly List of Applications Filed.
Interested persons may upon request
obtain copies of letters of endorsed
forms advising applicants of action
taken on their applications.
§ 212.12

Waiver.

The Department may grant a waiver of
any of the provisions of this part upon
a finding that such waiver is in the
public interest. A certificated or foreign
air carrier may request a waiver by filing
a written application with the
Department, citing the specific
provision to be waived and providing
justification for such waiver.
Appendix A—Certificated or Foreign
Air Carrier’s Surety Bond Under Part
212 of the Regulations of the
Department of Transportation (14 CFR
Part 212)
Know all persons by these presents, that
we llllllllll (Name of
certificated or foreign air carrier) of
llllllllll, (City)
llllllllll (State or Country) as
Principal (hereinafter called Principal), and
llllllllll (name of Surety) a
corporation created and existing under the
laws of the State of llllllll (State)
as Surety (hereinafter called Surety) are held
and firmly bound unto the United States of
America in an unlimited amount, as required
by 14 CFR 212.8, for which payment, well
and truly to be made, we bind ourselves and
our heirs, executors, administrators,
successors, and assigns, jointly and severally,
firmly by these presents.
Whereas the principal, a certificated air
carrier holding a certificate of public
convenience and necessity issued under 49
U.S.C. 41102, or a foreign air carrier holding
a foreign air carrier permit issued under 49
U.S.C. 41302 or an exemption issued under
49 U.S.C. 40109 authorizing that foreign air
carrier to engage in charter trips in foreign air
transportation, is subject to rules and
regulations of the Department of
Transportation relating to security for the
protection of charterers of civil aircraft and
has elected to file with the Department of
Transportation such a bond as will guarantee
to the United States Government the
performance of all charter trips (other than
cargo charter trips) originating in the United
States and of all Overseas Military Personnel
Charters, as defined in 14 CFR part 372, to
be performed, in whole or in part, by such
certificated or foreign air carrier pursuant to
contracts entered into by such carrier after
the execution date of this bond, and
Whereas this bond is written to assure
compliance by the Principal with rules and
regulations of the Department of
Transportation relating to security for the
protection of charterer of civil aircraft for
charter trips (other than cargo charters)
originating in the United States or of
Overseas Military Personnel Charter trips and
shall inure to the benefit of any and all such
charterers to whom the Principal may be held
legally liable for any of the damages herein
described.

Now, therefore, the condition of this
obligation is such that if the Principal shall
pay or cause to be paid to such charterer any
sum or sums for which the Principal may be
held legally liable by reason of the Principal’s
failure faithfully to perform, fulfill, and carry
out all contracts made by the Principal while
this bond is in effect for the performance of
charter trips (other than cargo charter trips)
originating in the United States and of
Overseas Military Personnel Charter trips,
then this obligation shall be void, otherwise
to remain in full force and effect.
The liability of the Surety shall not be
discharged by any payment or succession of
payments hereunder in any specified
amount. The surety agrees to furnish written
notice to the Department of Transportation
forthwith of all suits filed, judgments
rendered, and payments made by said Surety
under this bond.
This bond is effective the lll day of
llllllll, llll, 12:01 a.m.,
standard time at the address of the Principal
as stated herein and shall continue in force
until terminated as hereinafter provided. The
Principal or the Surety may at any time
terminate this bond by written notice to the
Department of Transportation at its office in
Washington, D.C., such termination to
become effective thirty (30) days after actual
receipt of said notice by the Department. The
Surety shall not be liable hereunder for the
payment of the damages hereinbefore
described which arise as the result of any
contracts for the performance of air
transportation services made by the Principal
after the termination of this bond becomes
effective, as herein provided, but such
termination shall not affect the liability of the
Surety hereunder for the payment of any
such damages arising as the result of
contracts for the performance of air
transportation services made by the Principal
after the termination of this bond becomes
effective. Liability of the Surety under this
bond shall in all events be limited only to a
charterer who shall within sixty (60) days
after the cancellation of a charter trip with
respect to which the charterer’s advance
payments are secured by this bond give
written notice of claim to the certificated or
foreign air carrier, or, if it is unavailable, to
the Surety, and all liability on this bond for
such charter trip shall automatically
terminate sixty (60) days after the
termination date thereof except for claims
filed within the time provided herein.
In witness whereof, the said Principal and
Surety have executed this instrument on the
lll day of llllllll, llll.
Principal
Name llllllllllllllllll
By: Signature and title llllllllll
Witness lllllllllllllllll
Surety
Name llllllllllllllllll
By: Signature and title llllllllll
Witness lllllllllllllllll
Bonding or surety company must be listed in
Best’s Insurance Reports (Fire and Casualty)
with a general policyholders’ rating of ‘‘A’’ or
better or in the Department of the Treasury
listing of companies holding certificates of
authority as acceptable sureties on Federal

28241

bonds. In addition, the bonding or surety
company shall be one legally authorized to
issue bonds of that type in the State(s) in
which the charter flight(s) originate. Agents
must provide satisfactory proof that they
have the requisite authority to issue this
bond.

Appendix B—Certification of
Compliance
Organization Charterworthiness for Affinity
Charter Air Transportation and Eligibility of
All Prospective Passengers for Such Flights
Under Part 212 of the Regulations of the
Department of Transportation (14 CFR Part
212)
I declare under penalty of perjury under
the laws of the United States of America that
the foregoing is true and correct.

4. Part 380 is revised to read as
follows:
PART 380—PUBLIC CHARTERS
Subpart A—General Provisions
Sec.
380.1 Applicability.
380.2 Definitions.
380.3 General provisions.
380.4 Enforcement.
Subpart B—Conditions and Limitations
380.10 Public Charter requirements.
380.11 Payment to direct air carrier(s).
380.12 Cancellation by charter operator and
notice to participants.
380.13 Prohibition on sale of round trips
with open returns.
380.14 Unused space.
380.15 Substitution for charter participants.
380.17 Charters conducted by educational
institutions.
Subpart C—Requirements Applicable to
Charter Operators
380.20 Relief from the Statute.
380.21 380.23 [Reserved]
380.24 Suspension of exemption authority.
380.25 Prospectus filing and related
requirements.
380.26 Discrimination.
380.27 Methods of competition.
380.28 Charter prospectus.
380.29 Charter contract.
380.30 Solicitation materials.
380.31 General requirements for operatorparticipant contracts.
380.32 Specific requirements for operatorparticipant contracts.
380.33 Major changes in itinerary or price;
refunds.
380.33a Operator’s option plan.
380.34 Security and depository agreements.
380.34a Substitution of direct air carrier’s
security or depository agreement.
380.35 Disbursements from depository
account.
380.36 Record retention.
Subpart D—Requirements Applicable to
Direct Air Carriers
380.40 Charter not to be performed unless
in compliance with this part 380.
380.41 380.42 [Reserved]
380.43 Cancellations by direct air carriers.

28242
380.45
380.46

Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Rules and Regulations
Suspension of exemption authority.
Charter trip reporting.

Subpart E—Registration of Foreign Charter
Operators
380.60 Purpose.
380.61 Operations by foreign charter
operators.
380.62 Registration applications.
380.63 Objections to registration
applications.
380.64 Department action on a registration
application.
380.65 Notification of change of operations
or ownership.
380.66 Cancellation or conditioning of the
registration.
380.67 Waiver of sovereign immunity.
Appendix A—Public Charter Operator’s
Surety Bond Under Part 380 of the
Special Regulations of the Department of
Transportation (14 CFR Part 380)
Appendix B Public Charter Surety Trust
Agreement
Authority: 49 U.S.C. 40101, 40102, 40109,
40113, 41101, 41103, 41301, 41504, 41702,
41708, 41712, 46101.

Subpart A—General Provisions
§ 380.1

Applicability.

This part applies to Public Charter air
transportation of passengers in interstate
or foreign air transportation, whether
furnished by direct air carriers or Public
Charter operators. This part also relieves
such charter operators from various
provisions of subtitle VII of Title 49 of
the United States Code (statute),
formerly Title IV of the Federal Aviation
Act of 1958, as amended, for the
purpose of enabling them to provide
Public Charters utilizing aircraft
chartered from such direct air carriers.
It also declines jurisdiction over foreign
Public Charter operators operating
foreign-originating Public Charters.
§ 380.2

Definitions.

For the purposes of this part:
Certificated air carrier means a U.S.
direct air carrier holding a certificate
issued under the statute.
Charter flight means a flight operated
under the terms of a charter contract
between a direct air carrier and its
customer. It does not include scheduled
air transportation, scheduled foreign air
transportation, or nonscheduled cargo
air transportation, sold on an
individually ticketed or individually
waybilled basis.
Direct air carrier means a certificated
or foreign air carrier, or an air taxi
operator or commuter air carrier
registered under part 298 of this
chapter, or a Canadian charter air taxi
operator registered under part 294 of
this chapter, that directly engages in the
operation of aircraft under a certificate,
permit or exemption issued by the
Department.

Educational institution means a
school that is operated as such on a
year-round basis and is empowered to
grant academic degrees or secondary
school diplomas by any government in
the United States or by a foreign
government.
Foreign air carrier means a direct air
carrier that holds a foreign air carrier
permit issued under the statute or an
exemption issued under the statute
authorizing direct foreign air
transportation.
Foreign Public Charter opertor means
an indirect air carrier which is not a
citizen of the United States as defined
in the statute, that is authorized to
engage in the formation of groups for
transportation on Public Charters in
accordance with this part.
Indirect air carrier means any person
who undertakes to engage indirectly in
air transportation operations and who
uses for such transportation the services
of a direct air carrier.
Public Charter means a one-way or
round-trip charter flight to be performed
by one or more direct air carriers that is
arranged and sponsored by a charter
operator.
Public Charter operator means a U.S.
or foreign Public Charter operator.
Security agreement means:
(1) A surety bond issued by a
company—
(i) That is listed in the Best’s
Insurance Reports (Fire and Casualty)
with a general policyholders’ rating of
‘‘A’’ or better, or
(ii) That is listed in the U.S.
Department of Treasury’s notice listing
companies holding Certificates of
Authority as acceptable sureties on
Federal bonds and as acceptable
reinsuring companies, published in the
Federal Register in the first week in
July; or
(2) A Surety trust agreement or a
letter-of-credit, issued by a Federal
Deposit Insurance Corporation-insured
financial institution, which provides
substantially equivalent protection.
Statute means Subtitle VII of Title 49
of the United States Code
(Transportation).
Sub-operator means a Public Charter
operator that has contracted for its
charter seats from a Public Charter
operator that has contracted from one or
more direct air carriers. A sub-operator
is itself an indirect air carrier, not an
agent of the Public Charter operator
from which it has obtained its seat.
U.S. Public Charter operator means an
indirect air carrier that is a citizen of the
United States as defined in 49 U.S.C.
40102(a) and that is authorized to
engage in the formation of groups for

transportation on Public Charters in
accordance with this part.
§ 380.3

General provisions.

(a) Public Charters may be operated
on a one-way or round-trip basis, with
no minimum group or contract size.
Public Charters may be sold on an aironly basis, or with mandatory or
optional land arrangements.
(b) A U.S. Public Charter operator
operating a Public Charter which
originates in a foreign country shall not
be subject to the requirements of
§§ 380.25, 380.28, 380.30 and 380.35.
(c) The Department declines to
exercise jurisdiction over a foreign
Public Charter operator which operates
a Public Charter originating in a foreign
country, but reserves the right to
exercise its jurisdiction over any foreign
Public Charter operator at any time its
finds that such action is in the public
interest.
(d)(1) An educational institution
operating a Public Charter need not
comply with the financial security
requirements of § 380.34 if each student
participant in the charter is enrolled in
a formal academic course of study
outside the United States, sponsored by
or in conjunction with that institution,
that is of at least four weeks’ duration.
(2) The spouse, children, and parents
of a student participant may accompany
the participant on a charter operated
under this section.
(e) The Department, upon application
or on its own initiative, may waive any
of the provision of this part if it finds
such action to be in the public interest.
§ 380.4

Enforcement.

In the case of any violation of the
provision of the Statute or of this part,
or any other rule, regulations, or order
issued under the Statute, the violator
may be subject to a proceeding pursuant
to the Statute before the Department or
a U.S district court, as the case may be,
to compel compliance therewith; to civil
penalties pursuant to the provisions of
the Statute, or to criminal penalties
pursuant to the provisions of the
Statute, or other lawful sanctions.
Subpart B—Conditions and Limitations
§ 380.10

Public Charter requirements.

Public Charters under this part shall
meet the following requirements:
(a)–(b) [Reserved]
(c) If the charter is on a round-trip
basis, the departing flight and returning
need not be performed by the same
direct air carrier.
(d) The air transportation portion of
the charter must be performed by direct
air carriers that hold authority under

Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Rules and Regulations
Chapter 411 and 413 of the Statute, or
are operating under 14 CFR part 298,
except that only U.S. citizen direct air
carriers may provide air transportation
for operations in interstate air
transportation.
§ 380.11

Payment to direct air carrier(s).

Except for air taxi operators and
commuter air carriers (which are
governed by 14 CFR 298.38) and
Canadian charter air taxi operators
(which are governed by 14 CFR 294.32),
the direct air carrier(s) shall be paid in
full for the cost of the charter
transportation (for both legs, if a roundtrip charter) prior to the scheduled date
of flight departure, as provided for in
the basic charter regulations applicable
to the direct air carrier(s) under part 212
of this chapter.
§ 380.12 Cancellation by charter operator
and notice to participants.

(a) The charter operator may not
cancel a charter for any reason
(including insufficient participation),
except for circumstances that make it
physically impossible to perform the
charter trip, less than 10 days before the
scheduled date of departure of the
outbound trip.
(b) If the charter operator cancels 10
or more days before the scheduled date
of departure, the operator must so notify
each participant in writing within 7
days after the cancellation but in any
event not less than 10 days before the
scheduled departure date of the
outbound trip. If a charter is canceled
less than 10 days before scheduled
departure (i.e., for circumstances that
make it physically impossible to
perform the charter trip), the operator
must get the message to each participant
as soon as possible.
§ 380.13 Prohibition on sale of round trips
with open returns.

The charter operator shall not accept
any participant’s payment for return
transportation unless the participant has
specified a particular return flight.
§ 380.14

Unused space.

Noting contained in this part shall
preclude a charter operator from
utilizing any unused space on an
aircraft by it for a Public Charter for the
transportation, on a free or reduced
basis, of such charter operator’s
employees, directors, and officers, and
parents and immediate families of such
persons.
§ 380.15 Substitution for charter
participants.

Subsititues may be arranged for
charter participants at any time
preceding departure. Participants who

provide the charter operator or its sales
agent with a substitute participant, or
who are substituted for by a participant
found by the operator, shall receive a
refund of all moneys paid to the
operator, except that the operator may
reserve the right to retain an
administrative fee not to exceed $25 for
effecting the substitution.
§ 380.17 Charters conducted by
educational institutions.

(a) This section shall apply only to
charters conducted by educational
institutions for charter groups
comprised of bona fide participants in a
formal academic course of study abroad
which is of at least 4 weeks duration.
The charter group may also include a
student participant’s immediate family
(spouse, children, and parents). Except
as modified in this section, all terms
and conditions of this part applicable to
the operation of Public Charters shall
apply to charters conducted by
educational institutions.
(b) An educational institution
conducting such a charter shall submit
to the Office of Aviation Analysis,
Special Authorities Division, a
statement, signed by its president,
certifying that it meets the definition of
‘‘educational institution’’ set forth in
§ 380.2.
(c) An educational institution
conducting such a charter need not
comply with the requirements of
§§ 380.25, 380.28, 380.34, and 380.35.
Subpart C—Requirements Applicable
to Charter Operators
§ 380.20

Relief from the Statute.

(a) To the extent necessary to permit
them to organize and arrange public
charters, charter operators and foreign
charter operators are hereby relieved
from the following provisions of
Subtitle VII of Title 49 of the U.S. Code,
only if and so long as they comply with
the provisions and the conditions
imposed by this part:
(1) Chapter 411.
(2) Chapter 413.
(3) Chapter 415.
(4) Chapter 419.
(5) If foreign charter operators receive
interstate air transportation rights, any
other provision of the statute that would
otherwise prohibit them from organizing
and arranging Public Charters in
interstate air transportation.
(b) A charter operator who is a citizen
of the United States shall not be subject
to the following requirements with
respect to Public Charters that originate
in a foreign country: §§ 380.25, 380.28,
and 380.30 through 380.35.

§§ 380.21–380.23

28243

[Reserved]

§ 380.24 Suspension of exemption
authority.

The Department reserves the power to
deny the exemption authority of any
charter operator, without hearing, if it
finds that such action is necessary in the
public interest or is otherwise necessary
in order to protect the rights of the
traveling public.
§ 380.25 Prospectus filing and related
requirements.

A charter operator may organize and
operate a Public Charter only in
accordance with this part, and subject to
the following conditions:
(a) No charter operator shall operate,
sell, receive money from any
prospective participant for, or offer to
sell or otherwise advertise a charter or
series of charters until the Office of
Aviation Analysis, Special Authorities
Division, has accepted a Public Charter
prospectus as described in § 380.28.
(b) If within 10 days after the filing
the Department notifies the charter
operator that it has rejected the
prospectus for noncompliance with this
part, the prohibitions set forth in
paragraph (a) of this section shall
continue until the Department advises
that it has accepted the prospectus.
(c) The following amendments to a
filed prospectus may be made:
(1) The addition or cancellation of any
flight;
(2) A change in any flight, date, origin
city or destination city; and
(3) A change in or addition of any
direct air carrier, securer, or depository
bank.
(d) The charter operator shall amend
the prospectus to reflect any change
described in paragraph (c) of this
section. The amendment shall be filed
in the manner and form used for the
original prospectus. It shall become
effective upon filing unless the operator
is otherwise notified.
(e) The charter operator shall notify
the depository bank (if any) and the
securer of any change described in
paragraph (c) of this section not later
than when filing a prospectus
amendment to reflect the change. If the
securer is unable to adjust the security
agreement as required by the change,
the Office of Aviation Analysis, Special
Authorities Division shall be advised of
this fact within 2 business days.
(Approved by the Office of Management and
Budget under Control Number 2106–0005).
§ 380.26

Discrimination.

No charter operator shall make, give,
or cause any undue or unreasonable
preference or advantage to any

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particular person, port, locality, or
description of traffic in air
transportation in any respect
whatsoever, or subject any particular
person, port, locality, or description of
traffic in air transportation to any unjust
discrimination or any undue or
unreasonable prejudice or disadvantage
in any respect whatsoever.
§ 380.27

Methods of competition.

No charter operator shall engage in
unfair or deceptive practices or unfair
methods of competition in air
transportation or the sale thereof.
§ 380.28

Charter prospectus.

(a) The charter prospectus shall
include an original and two copies of
the following:
(1) From the charter operator and the
direct air carrier:
(i) The proposed flight schedule,
listing the origin and destination cities,
dates, type of aircraft, number of seats,
and charter price for each flight;
(ii) The tour itinerary (if any)
including hotels (name and length of
stay at each), and other ground
accommodations and services; and
(iii) A statement that they have
entered into a charter contract that
covers the proposed flight schedule, that
the contract complies with all
applicable Department regulations, and
that a copy of the schedule has been
sent to the depository bank (if any) and
the operator’s securer. The schedule
shall be identified with a number
assigned by the charter operator that
does not duplicate any schedule
numbers assigned by the operator to
other proposed flight schedules. The
proposed flight schedule, tour itinerary
(if any), and statement shall be filed on
OST Form 4532.
(2)(i) From the charter operator and
the securer, a statement:
(A) That they have entered into a
security agreement covering the
proposed flight schedule that complies
with § 380.34, including the amount of
the coverage, the number assigned to it
by the securer, and the amount of any
outstanding claims against it, and
(B) That the securer has received a
copy of the proposed flight schedule.
The statement shall identify the
proposed flight schedule by the
schedule number assigned by the
charter operator in accordance with
paragraph (a) of this section. If there are
any outstanding claims against the
agreement, the charter operator and
securer shall also state that they have
executed a rider or amendment
increasing the coverage by the amount
of the claims, or that the securer will
separately pay any claims for which it

may be liable without impairing the
agreement or reducing the amount of its
coverage.
(ii) These statements shall be filed an
OST Form 4533.
(3) If a depository agreement is used,
a statement from the charter operator,
the direct air carrier, and the depository
bank:
(i) That they have entered into a
depository agreement covering the
proposed flight schedule that complies
with § 380.34, and
(ii) That the bank has received a copy
of the proposed flight schedule by the
schedule number assigned by the
charter operator in accordance with
paragraph (a)(1) of this section. This
statement shall be filed on OST Form
4534.
(b) Each of the statements described
in paragraph (a) of this section shall also
include the names and addresses of the
parties to it, and the originals shall be
signed by those parties.
(c) The prospectus may cover a series
of charters performed by one charter
operator if the departure of the last
charter is not more than one year after
the departure of the first.
(d) If the prospectus covers a series of
charters and the air transportation will
be performed by more than one direct
air carrier, the prospectus shall include
separate statements in accordance with
paragraphs (a)(1) and (a)(3) of this
section to cover the flights that will be
performed by each direct carrier.
(Approved by the Office of Management and
Budget under Control Number 2106–0005).
§ 380.29

Charter contract.

The charter contract between the
charter operator or foreign charter
operator and the direct air carrier shall
evidence a binding commitment on the
part of the carrier to furnish the air
transportation required for the trip or
trips covered by the contract.
§ 380.30

Solicitation materials.

(a) All solicitation materials for a
Public Charter shall include the name of
the charter operator and the name of the
direct air carrier.
(b) Any solicitation material that
states a price per passenger shall also
include one of the following:
(1) A statement referring to the
operator-participant contract for further
information about conditions applicable
to the charter; or
(2) The full text of the operatorparticipant contract.
(c) Except as set forth in § 380.33a for
operator’s option plan contracts, if the
charter prospectus names alternative
dates or cities, any solicitation material
that states a price per passenger shall

also state that the actual dates or cities
have not yet been selected, if that is the
case.
(d) Any solicitation material that
names a hotel but does not name every
hotel named in the operator-participant
contract shall also state that
substitutions may be made.
(e) In any solicitation material from a
direct air carrier, indirect air carrier, or
an agent of either, for a charter, charter
tour (i.e., a combination of air
transportation and ground
accommodations), or a charter tour
component (e.g., a hotel stay), any price
stated for such charter, tour, or
component shall be the entire price to
be paid by the participants to the air
carrier, or agent, for such charter, tour,
or component.
§ 380.31 General requirements for
operator-participant contracts.

(a) Except for telephone sales for
which payment is made by credit card
as described in paragraph (b) of this
section, the charter operator shall not
accept payment from or on behalf of a
prospective participant unless the
participant has agreed to the conditions
of the charter by signing an operatorparticipant contract as described in
§ 380.32. If a member of a group that
will travel together pays for the group,
that member may sign the contract on
behalf of the group.
(b) For telephone sales only, the
charter operator may accept payment by
credit card without the participant
having first signed an operatorparticipant contract provided that the
charter operator first advises the
customer:
(1) That he or she has the right to
receive the operator-participant contract
before making a booking;
(2) That the operator-participant
contract will be mailed to the
participant within 24 hours of accepting
payment by credit card; and
(3) That the operator-participant
contract must be signed, and the signed
portion returned to the operator, before
travel.
(4) A full refund must be made of any
amounts charged to a credit card for any
participant who cancels before the
operator-participant contract is signed.
(c) The contract form may include a
space that participants may check to
authorize the charter operator to retain
their money while attempting to make
other arrangements for them if there is
no space available on the flight or on
specific alternative flights they have
requested.
(d) If there is no space available on
the flight or specific alternative flights
requested by the participant the

Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Rules and Regulations
operator shall return all the participant’s
money within 7 days after receiving it
unless the participant, in accordance
with paragraph (c) of this section, has
authorized the operator to retain the
payments while the operator attempts to
make other arrangements for the
participant. If the operator retains the
payments while attempting to make
other arrangements for the participant, it
shall notify the participant of the fact
within 7 days after receiving the
payments, but in no event later than the
departure. For the purpose of the time
periods in this paragraph, receipt of
money by a travel agent on behalf of a
charter operator will not be considered
as receipt by the operator.
(e) Except as set forth in § 380.33a for
operator’s option plan contracts, the
operator-participant contract shall not
specify alternative dates for the
outbound or return flights, or alternative
origin or destination cities for any flight
leg.
(f) The contract form shall be printed
in 7-point or larger type. The statements
required by paragraph (a), (f), (h), (l), (r),
(s), and (x) of § 380.32 shall be printed
so as to contrast with the rest of the
contract by the use of bold-faced type,
capital letters, or a type size that is at
least 50 percent larger than that used for
the rest of the contract.
(g) The contract form shall include a
space that participants may check to
indicate that they wish to be furnished
details of trip cancellation, health, and
accident insurance.
(h) The contract form shall be
designed so as to enable participants to
retain a copy of the general terms and
conditions after signing it. The specific
information supplied by participants
(such as choices of dates, cities, or other
options) need not be retainable.
§ 380.32 Specific requirements for
operator-participant contracts.

Contracts between charter operators
and charter participants shall state:
(a) The name and complete mailing
address of the charter operator;
(b) The name of the direct air carrier,
the dollar amounts of that carrier’s
liability limitations for participant’s
baggage, the type and capacity of the
aircraft to be used for the flight, and the
conditions governing aircraft-equipment
substitutions;
(c) The dates of the outbound and
return flights;
(d) The origin and destination cities of
each flight leg;
(e) The amount and schedule of
payments;
(f) If a depository agreement as
provided in § 380.34(b) is used: That all
checks, money orders, and credit card

drafts must be made payable to the
escrow account at the depository bank
(identifying bank) 1 or, when the charter
is sold to the participant by a retail
travel agent, checks and money orders
may be made payable to the agent, who
must in turn make his check payable to
the escrow account at the depository
bank;
(g) The tour itinerary, if any,
including the name and location of the
hotels, length of stay at each, and other
ground accommodations and services
that are part of the tour;
(h) That the charter operator may not
cancel the charter less than 10 days
before the scheduled departure date,
except for circumstances that make it
physically impossible to perform the
charter tip;
(i) That if a charter is canceled 10 or
more days before the scheduled
departure date, the operator will notify
the participant in writing within 7 days
after the cancellation, but in any event
at least 10 days before the scheduled
departure;
(j) That is a charter is canceled less
than 10 days before departure (i.e., for
circumstances that make it physically
impossible to perform the charter trip),
the operator will get the message to the
participant as soon as possible;
(k) That if the charter is canceled, a
refund will be made to the participant
within 14 days after the cancellation;
(l) The right to refunds if the
participant changes plans is limited;
(m) The right to refunds if the
participant changes plans, including
(1) The right to a full refund, for sales
made by credit card, until an operatorparticipant contract is signed; and
(2) That any participant who wishes
to cancel will receive a full refund (less
any applicable administrative fee, not to
exceed $25) upon providing a substitute
participant to the charter operator or its
sales agent, or upon being substituted
for by a participant found by the charter
operator;
(n) The procedure for obtaining the
refunds described in paragraph (m) of
this section, including that they will be
made within 14 days after the
cancellation or substitution;
(o) The meaning of ‘‘major change’’, as
set forth in § 380.33(a);
1 If the credit card merchant account is separate
from the depository account, it must be used solely
as a conduit, i.e., all credit card payments toward
Public Charter trips must be immediately remitted
to the depository account in full, without holdback,
or retention of any portion of the participant’s
payment. If the depository bank is not the credit
card merchant bank, the Department must be
satisfied that there are adequate procedural
safeguards for the protection of participants’
payments.

28245

(p) That if the charter operator knows
of a major change 10 or more days
before scheduled departure, the operator
will notify the participant of the change
within 7 days after first knowing of it,
but in any event at least 10 days before
scheduled departure;
(q) That is the operator first knows of
a major change less than 10 days before
scheduled departure, the operator will
get the message to the participant as
soon as possible;
(r) That within 7 days after receiving
a pre-departure notification of a major
change but in no event later than
departure, the participant may cancel,
and that a full refund will be made to
the participant within 14 days after
canceling;
(s) That upon a post-departure
notification of a major change, the
participant may reject the substituted
hotel or the changed date, origin, or
destination of a flight leg and be sent,
within 14 days after the return date
named in the contract, a refund of the
portion of his payment allocable to the
hotel accommodations or air
transportation not provided;
(t) That the participants rights and
remedies set forth in the contract,
including the procedures for major
changes, shall be in addition to any
other rights or remedies available under
applicable law, although the operator
may condition a refund on the
participant’s waiver of additional
remedies;
(u) That trip cancellation, health, and
accident insurance is available and that
the operator will furnish details of the
insurance to participants who check the
space provided for this purpose on the
contract form;
(v) The name and address of the
surety company or bank issuing the
security agreement; and that unless the
charter participant files a claim with the
charter operator or, if he is unavailable,
with the securer, within 60 days after
termination of the charter, the securer
shall be released from all liability under
the security agreement to that
participant. Termination means the date
of arrival (or in the case of a canceled
charter, the intended date or arrival) of
the return flight. If there is no return
flight in a participant’s itinerary,
termination means the date or intended
date of departure of the last flight in the
participant’s itinerary;
(w) For international flights only:
That additional restrictions may be
imposed on the flight by the foreign
government involved, and that if
landing rights are denied by a foreign
government the flight will be canceled
with a full refund to the participant.

28246

Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Rules and Regulations

This statement need not be included in
the contract if—
(1) The prospectus includes a
certification by the charter operator and
the direct air carrier that landing rights
have been obtained from all the foreign
governments involved, and
(2) All the foreign governments
involved have adopted country-of-origin
rules for charterworthiness;
(x) That the charter operator is the
principal and is responsible to the
participants for all services and
accommodations offered in connection
with the charter. However, the contract
may expressly provide that the charter
operator, unless negligent, is not
responsible for personal injury or
property damage caused by any direct
air carrier, hotel or other supplier of
services in connection with the charter.
§ 380.33 Major changes in itinerary or
price; refunds.

(a) For the purposes of this section,
‘‘major change’’ means any of the
following:
(1) A change in the departure or
return date shown in the operatorparticipant contract, (or, if the contract
states alternative dates, the date
designated to the participant by the
charter operator in accordance with
§ 380.33a(b)), unless the change results
from a flight delay. In any event,
however, a date change that the operator
knows of more than 2 days before the
scheduled flight date, and any delay of
more than 48 hours, will be considered
a major change.
(2) A change in the origin or
destination city shown in the operatorparticipant contract for any flight leg
(or, if the contract states alternative
cities, the city designated to the
participant by the operator in
accordance with § 380.33a(b)), unless
the change affects only the order in
which cities named in a tour package
are visited.
(3) A substitution of any hotel that is
not named in the operator-participant
contract; and
(4) A price increase to the participant
that occurs 10 or more days before
departure and results in an aggregate
price increase of more than 10 percent.
(b) The charter operator shall not
increase the price to any participant less
than 10 days before departure.
(c) The charter operator shall notify
all participants of major changes, as
required by the operator-participant
contracts. This notification shall include
the participants’ rights to refunds
required to be described in the operatorparticipant contract. The operator shall,
if applicable, also notify the participants

that the acceptance of a refund
constitutes a waiver of their legal rights.
(d) Except as otherwise specified,
notifications and refunds required by
this part are considered made at the
time they are mailed or sent by an
equivalent method.
(e) The charter operator shall make all
refunds required to be described in the
operator-participant contract within the
time limits set forth in paragraphs (k),
(n), (r), and (s) of § 380.32, as applicable.
§ 380.33a

Operator’s option plan.

(a) For the purposes of this part, an
operator’s option plan contract that
states alternative dates for the outbound
or return flights, or alternative origin or
destination cities for any flight leg.
(b) Operator’s option plan contracts
shall state, in addition to the
information required by § 380.32, that
the selection of the actual dates or cities,
as applicable, is at the charter operator’s
option and will not entitle the
participant to a refund, and that the
operator will notify the participant of
the actual dates or cities at least 10 days
before the earliest of any alternative
dates for the outbound flight.
(c) Contract forms for all operator’s
option plan contracts shall be labeled
‘‘OPERATOR’S OPTION PLAN’’ in
bold-faced capital letters at least 1⁄4 inch
high. The statement required by
paragraph (b) of this section and the
statement of alternative dates
(§ 380.32(c)) or alternative cities
(§ 380.32(d)), as applicable, shall be
printed so as to contrast with the rest of
the contract, as set forth in § 380.31(f).
(d) Any solicitation material that
states a price per passenger for an
operator’s option plan contract shall
clearly and conspicuously—
(1) Identify that price as being for the
operator’s option plan,
(2) Name all the possible dates or
cities, as applicable, and
(3) State that the selection of the
actual dates or cities is at the charter
operator’s option.
(e) Charter operators and their agents
shall not misrepresent to prospective
participants, orally, in solicitation
materials, or otherwise, the probability
that any particular city or date will be
selected from among the alternatives
named in an operator’s option plan
contract.
(f) The charter operator shall notify all
participants with operator’s option plan
contracts of the actual dates or cities, as
applicable, as required by contracts.
§ 380.34 Security and depository
agreements.

(a) Except as provided in paragraph
(b) of this section, the charter operator

or foreign charter operator shall furnish
a security agreement in an amount for
not less than the charter price for the air
transportation, if only air transportation
is involved, or, if the charter involves
land accommodations in addition to air
transportation, a security agreement in
one of the following amounts dependent
upon the length of the charter or series
of charters:
(1) For a charter or series of charters
of 14 days or less, security in an amount
of not less than the charter price for the
air transportation to be furnished in
connection with such charter or series
of charters;
(2) For a charter or series of charters
of more than 14 days but less than 28
days security in an amount of not less
than twice the charter price; and
(3) For a charter or series of charters
of 28 days or more, security in an
amount of not less than three times the
charter price: Provided, however, That
the liability of the securer to any charter
participant shall not exceed amounts
paid by that participant to the charter
operator with respect to the charter.
(b) The direct air carrier and the
charter operator or foreign charter
operator may elect, in lieu of furnishing
a security agreement as provided under
paragraph (a) of this section, to comply
with the requirements of paragraphs
(b)(1) and (b)(2) of this section, as
follows:
(1) The charter operator shall furnish
a security agreement in an amount of at
least $10,000 times the number of
flights, except that the amount need not
be more than $200,000. The liability of
the securer to any charter participant
shall not exceed the amount paid by the
participant to the charter operator for
that charter.
(2) The direct air carrier and charter
operator or foreign charter operator shall
enter into an agreement with a
designated bank, the terms of which
shall provide that all payments by
charter participants paid to charter
operators or foreign charter operators
and their retail travel agents shall be
deposited with and maintained by the
bank subject to the following
conditions:
(i) On sales made to charter
participants by charter operators or
foreign charter operators the participant
shall pay by check, money order, or
credit card draft payable to the bank; 2
on sales made to charter participants by
retail travel agents, the retail travel
agent may deduct his commission and
remit the balance to the designated bank
by check, money order, or electronic
transfer: Provided, That the travel agent
2 See

also n.1, supra.

Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Rules and Regulations
agrees in writing with the charter
operator or foreign charter operator that
if the charter is canceled the travel agent
shall remit to the bank the full amount
of the commission previously deducted
or received within 10 days after receipt
of notification of cancellation of the
charter; except for the credit card
company’s usual commission (not to
exceed 3 percent), the charter operator
shall not permit any portion of a charter
participant’s payments by credit cared
to be ‘‘held back’’ by the credit card
merchant bank; 3
(ii) The bank shall pay the direct air
carrier the charter price for the
transportation not earlier than 60 days
(including day of departure) prior to the
scheduled day of departure of the
originating or returning flight, upon
certification of the departure date by the
air carrier: Provided, That, in the case of
a round trip charter contract to be
performed by one carrier, the total
round trip charter price shall be paid to
the carrier not earlier than 60 days prior
to the scheduled day of departure of the
originating flight;
(iii) The bank shall reimburse the
charter operator or foreign charter
operator for refunds made by the latter
to the charter participant upon written
notification from the charter operator or
foreign charter operator;
(iv) If the charter operator, foreign
charter operator or the direct air carrier
notifies the bank that a charter has been
canceled, the bank shall make
applicable refunds directly to the
charter participants;
(v) After the charter price has been
paid in full to the direct air carrier, the
bank shall pay funds from the account
directly to the hotels, sightseeing
enterprises, or other persons or
companies furnishing ground
accommodations and services, if any, in
connection with the charter or series of
charters upon presentation to the bank
of vendors’ bills and upon certification
by the charter operator or foreign charter
operator of the amounts payable for
such ground accommodations and
services and the person or companies to
whom payment is to be made: Provided,
however, That the total amounts paid by
the bank pursuant to paragraphs (b)(2)
(ii) and (v) of this section shall not
exceed either the total cost of the air
transportation, or 80 percent of the total
deposits received by the bank less any
refunds made to charter participants
pursuant to paragraphs (b)(2) (ii) and
(iv) of this section, whichever is greater;
3 ‘‘Holdback’’ is an amount in excess of usual
commissions that a credit card merchant bank
sometimes retains to cover potential charge-backs or
other charges.

(vi) As used in this section, the term
‘‘bank’’ means a bank insured by the
Federal Deposit Insurance Corporation;
(vii) The bank shall maintain a
separate accounting for each charter
group;
(viii) Notwithstanding any other
provisions of this section, the amount of
total cash deposits required to be
maintained in the depository account of
the bank may be reduced by one or both
of the following: The amount of the
security agreement in the form
prescribed in this section in excess of
the minimum coverage required by
paragraph (b)(1) of this section; an
escrow with the designated bank of
Federal, State, or municipal bonds or
other securities, consisting of
certificates of deposit issued by banks
having a stated policy of redeeming
such certificates before maturity at the
request of the holder (subject only to
such interest penalties or other
conditions as may be required by law),
or negotiable securities which are
publicly traded on a securities
exchange, all such securities to be made
payable to the escrow account:
Provided, That such other securities
shall be substituted in an amount no
greater than 80 percent of the total
market value of the escrow account at
the time of such substitution: And
provided, further, That should the
market value of such other securities
subsequently decrease, from time to
time, then additional cash or securities
qualified for investment hereunder shall
promptly be added to the escrow
account, in an amount equal to the
amount of such decreased value; and
(ix) Except as provided in paragraph
(b)(2)(i), (iii), (iv), (v), and (viii) of this
section, the bank shall not pay out any
funds from the account prior to 2
banking days after completion of each
charter, when the balance in the account
shall be paid the charter operator or
foreign charter operator, upon
certification of the completion date by
the direct air carrier: Provided, however,
That if the Charter involves air
transportation only and the bank has
paid the direct air carrier(s) the charter
price for the originating flight, and the
returning flight if any, and has paid all
refunds due to participants, as provided
in paragraph (b)(2)(ii) and (iii),
respectively, of this section, then the
bank may pay the balance in the
account to the charter operator upon
certification by the direct air carrier
performing the originating flight that
such flight has in fact departed.
(c)(1) The security agreement required
under paragraphs (a) and (b) of this
section shall insure the financial
responsibility of the charter operator or

28247

foreign charter operator and the
supplying of the transportation and all
other accommodations, services, and
facilities in accordance with the
contract between the charter operator or
foreign charter operator and the charter
participants.
(2) The security agreement may be
either:
(i) A surety bond in the form set forth
as appendix A to this part;
(ii) A surety trust agreement in the
form set forth as appendix B to this part;
or
(iii) An arrangement with a bank (for
instance, a standby letter of credit) that
provides protection of charter
participants’ funds equivalent to or
greater than that provided by the Bond
in appendix A. An arrangement that
furnishes a lesser degree of protection
than would be provided under the bond
shall be invalid to that extent, and
instead the bank, the charter operator or
foreign charter operator, and the charter
participants shall have the same rights
and liabilities as provided under a bond
in the form of appendix A. If the
arrangement does not give as much
protection as a bond against the risk of
the charter operator’s bankruptcy, the
bank shall be liable in the event of
bankruptcy to the same extent as if it
had entered into a bond.
(3) Any agreement under paragraph
(c)(2)(iii) of this section shall include a
statement that, in the event that the
other provisions of the agreement do not
provide protection to charter
participants comparable to that
provided under a bond in the form of
appendix A, the bank shall assume, for
the benefit of the charter participants,
all the liabilities it would have if it
entered into the bond.
(4) The security agreement shall be
effective on or before the date the
charter prospectus is filed with the
Department.
(5) The security agreement shall be
specifically identified by the issuing
securer with a numbering system so that
the Department can identify the security
agreement with the specific charter or
charters to which it relates. These data
may be set forth in an addendum
attached to the security agreement,
which addendum must be signed by the
charter operator or foreign charter
operator and the securer.
(6) When security is provided by a
surety bond, such bond shall be issued
by a bonding or surety company that is
listed in Best’s Insurance Reports (Fire
and Casualty) with a general
policyholders’ rating of ‘‘A’’ or better.
The bonding or surety company shall be
one legally authorized to issue bonds of
that type in the State in which the

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Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Rules and Regulations

charter originates. For purposes of this
section the term ‘‘State’’ includes any
territory or possession of the United
States, or the District of Columbia.
(7) When security is provided by a
security agreement other than a bond,
the agreement shall be issued by a
national bank complying with the
provisions of 12 CFR 7.7010(a), or by a
State bank complying with applicable
State laws that give authority to issue
such agreements, and all such banks
must be insured by the Federal Deposit
Insurance Corporation.
(d) The security agreement required
by this section shall provide that unless
the charter participant files a claim with
the charter operator or foreign charter
operator, or, if it is unavailable, with the
securer, within 60 days after
termination of the charter, the securer
shall be released from all liability under
the security agreement to such charter
participant. Terminations means the
date of arrival (or in the case of a
canceled charter, the intended date of
arrival) of the return flight. If there is no
return flight in a participant’s itinerary,
termination means the date or intended
date of departure of the last flight in the
participant’s itinerary.
§ 380.34a Substitution of direct air
carrier’s security or depository agreement.

(a) A direct air carrier may substitute
its own security agreement and/or
depository arrangements, as specified in
this section, for those required of the
charter operator under § 380.34, but
only for charter trips in which all the air
transportation is provided by one direct
air carrier. Charter operators are relieved
from § 380.34 to the extent that the
direct carrier substitutes its own
arrangements.
(b) The direct air carrier may
substitute its security agreement for all
of the arrangements required of the
charter operator under § 380.34 (a) or
(b). Alternatively, it may substitute its
depository agreement for the depository
agreement required of the charter
operator under § 380.34(b)(2). If the
direct carrier substitutes its depository
agreement, it may also obtain and
substitute a security agreement for the
one otherwise required of the charter
operator under § 380.34(b)(1). If the
direct carrier substitutes its depository
agreement only, the charter operator
must supply the security agreement
required under § 380.34(b)(1).
(c) If the direct carrier substitutes a
security agreement for all the charter
operator’s requirements under § 380.34,
the charter operator shall include in the
charter prospectus, in place of the
information in § 380.28(a)(2) regarding

the charter operator’s security
agreement:
(1) A statement by the direct air
carrier on OST Form 4535 that it will
take responsibility for all charter
participant payments (including those
for ground accommodations and
services) and for the fulfillment of all
the charter operator’s contractual and
regulatory obligations to the charter
participants.
(2) A statement from the direct air
carrier and its securer (under § 212.12 of
this chapter), OST Form 4533, that they
have entered into a security agreement
assuring the direct air carrier’s
responsibilities to charter participants
under this section in an unlimited
amount (except that the liability of the
securer with respect to any charter
participant may be limited to the charter
price paid by or on behalf of such
participant), and that the securer has
received a copy of the proposed flight
schedule identified by the schedule
number assigned by the charter operator
under this part.
(d) A substitute depository agreement
under this section shall be signed by the
direct air carrier, the charter operator,
and the depository bank, and shall
provide, in addition to existing
requirements under § 212.8 of this
chapter, that:
(1) Payments by or on behalf of
charter participants shall be allocated to
the flight accounts matching the
participant’s itinerary in the following
way: Each account shall have allocated
to it the charter cost of the participant’s
air transportation on that flight. The
portion of each payment not intended
for air transportation services shall be
allocated to the account for the return
flight in the participant’s itinerary. If
there is only one flight in the itinerary,
the entire payment shall be allocated to
that account.
(2) The bank shall pay funds from a
flight account directly to the hotels,
sightseeing enterprises, or other persons
or companies furnishing ground
accommodations and services, if any, in
connection with the charter flight, upon
presentation to the bank of vendor’s
bills and upon certification by the
person who contracted for the ground
accommodations or services of the
amounts payable and the persons or
companies to whom payment is to be
made, except that no disbursement shall
be made that would reduce the balance
in the account below the charter cost of
the flight.
(3) On sales made to participants by
a person other than a retail travel agent,
the participant shall pay by check,
money order, or credit card draft
payable to the bank. On sales made to

participants by a retail travel agent,
payments shall be made in the same
manner unless the agent deducts its
commission and remits the balance to
the bank by check, money order, or
electronic transfer. The agent may
deduct its commission only if it agrees
in writing with its principal (the charter
operator or direct air carrier, as
applicable) that, if the charter is
canceled, the agent shall remit to the
bank the full amount of the commission
previously deducted or received within
10 days after receipt of notification of
the cancellation. The depository bank
shall pay refunds directly to
participants according to the terms of
the operator-participant contract and the
terms of this part.
(e) If the direct carrier substitutes a
security agreement in addition to
substituting a depository agreement, the
charter prospectus information must
include all the information required by
paragraphs (c) and (d) of this section,
except for the amount of the security
agreement. That agreement shall be in
an amount of at least $10,000 times the
number of flights, except that the
amount need not be more than
$200,000.
(f) A copy of the depository agreement
under paragraph (d) of this section shall
be filed with the Department, and it
shall not be effective until approved by
the Department.
(g) A copy of the security agreement
under paragraph (c) or paragraph (e) of
this section shall be filed with the
Department. It shall insure the financial
responsibility of the direct air carrier for
supplying the transportation and all
other accommodations, services, and
facilities in accordance with the
contracts between the charter operator
and the charter participants. Such
security agreement shall meet all the
other requirements of § 380.34 (c) and
(d).
§ 380.35 Disbursements from depository
account.

No charter operator or direct air
carrier shall cause its agents or the
depository bank to make disbursements
or payments from deposits except in
accordance with the provisions of this
part.
§ 380.36

Record retention.

Every charter operator conducting a
charter pursuant to this part shall
comply with the applicable recordretention provisions of part 249 of this
chapter.

Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Rules and Regulations
Subpart D—Requirements Applicable
to Direct Air Carriers
§ 380.40 Charter not to be performed
unless in compliance with this part 380.

(a) For all Public Charters other than
foreign-originating charters organized by
foreign charter operators: A direct air
carrier shall not perform air
transportation in connection with such
a charter unless it has made a
reasonable effort to verify that all
provisions of this part have been
complied with and that the charter
operator’s authority under this part has
not been suspended by the Department.
(b) For foreign-originating Public
Charters organized by foreign charter
operators: A direct air carrier shall not
perform air transportation in connection
with such a charter unless—
(1) The charter is conducted in
accordance with subpart B of this part
and
(2) The charter operator conforms to
all requirements of this part that are
applicable to charter operators within
the Department’s jurisdiction, other
than §§ 380.25, 380.28, 380.30 through
380.36, and 380.50.
§§ 380.41–380.42

[Reserved]

§ 380.43 Cancellations by direct air
carriers.

The direct air carrier shall not cancel
any charter under this part less than 10
days before the scheduled departure
date, except for circumstances that make
it physically impossible to perform the
charter trip.
§ 380.45 Suspension of exemption
authority.

The Department reserves the power to
suspend the exemption authority of any
air carrier, without hearing, if it finds
that such action is necessary in order to
protect the rights of the traveling public.
§ 380.46

Charter trip reporting.

The direct air carrier shall promptly
notify the Office of Aviation Analysis,
Special Authorities Division, regarding
any charters covered by a prospectus
filed under § 380.28 that are later
canceled.
Subpart E—Registration of Foreign
Charter Operators
§ 380.60

Purpose.

This subpart establishes registration
procedures for foreign charter operators
intending to engage in the formation of
groups for transportation on Public
Charters that originate in the United
States.

§ 380.61 Operation by foreign charter
operators.

(a) Each foreign charter operator shall
be registered under this subpart and file
a prospectus under § 380.25 before
organizing groups for transportation on
Public Charters that originate in the
United States.
(b) Each foreign charter registered
under this subpart shall comply with
the other provisions of this part directed
to charter operators.
§ 380.62

Registration applications.

(a) To be registered under this
subpart, a foreign charter operator shall
file two copies of an application for
registration with the Office of Aviation
Analysis, Special Authorities Division.
The Department will list the names and
nationalities of all persons applying for
registration in its Weekly Summary of
Filings.
(b) The application shall be made on
OST Form 4530, which can be obtained
from the Office of Aviation Analysis,
Special Authorities Division.
(c) The applicant shall clearly
indicate in its application for
registration whether it requests
authority to engage in foreign and/or
interstate air transportation.
§ 380.63 Objections to registration
applications.

Any person objecting to the
registration application of a foreign
charter operator or to a proposed change
in the name or ownership of that
operator shall file an objection with the
Office of Aviation Analysis, Special
Authorities Division, within 28 days
after the Department receives the
properly completed registration
application.
§ 380.64 Department action on a
registration application.

(a) After a registration is received, one
of the following actions will be taken.
(1) The application will be approved
by the stamping of the effective date of
registration on OST Form 4530 and
returning the duplicate copy of the form
to the operator;
(2) Additional information will be
requested for the applicant;
(3) The applicant will be notified that
its application will require further
analysis or procedures, or is being
referred to the Department for formal
action;
(4)The registration application will be
rejected if it does not comply with the
filing requirements of this subpart;
(5) The application will be approved
subject to such terms, conditions, or
limitations as may be required by the
public interest; or

28249

(6) The registration application will
be rejected for reasons relating to the
failure of effective reciprocity or if the
Department finds that it would be in the
public interest to do so.
(b) One of the actions described in
paragraph (a) of this section will
normally be taken within 60 days after
the registration application is received.
The Department will also consider
requests for faster action that include a
full explanation of the need for
expedited action.
§ 308.65 Notification of change of
operations or ownership.

(a) Not later than 30 days before any
change in its name or address or before
a temporary or permanent cessation of
operations, each foreign charter operator
registered under this subpart shall
notify the Office of Aviation Analysis,
Special Authorities Division, of the
change by resubmitting OST Form 4530.
(b) A foreign charter operator
registered under this subpart shall apply
for an amendment to that registration
not later than 30 days after either of the
following events:
(1) A person listed on its existing
registration as owning or holding
beneficial interest in at least 10 percent
of the operator or of the operator’s stock
reduces its holding to below 10 percent;
(2) A person not listed on the existing
registration as owning or holding
beneficial interest in at least 10 percent
of the operator or of the operator’s stock
becomes an owner or holder of 10
percent or more of the company or of its
stock.
(c) An application for an amendment
shall be made by resubmitting OST
Form 4530. The existing registration
shall remain valid pending Department
action on the amendment.
§ 380.66 Cancellation or conditioning of
the registration.

The registration of a foreign charter
operator may be canceled or subjected
to additional terms, conditions, or
limitations if any of the following occur:
(a) The operator files a written notice
with the Department that it is
discontinuing its charter operations;
(b) A substantial ownership interest is
acquired by persons who are not
citizens of the same country as the
registrant; or
(c) The Department finds, after notice
and an opportunity for responses, that it
is in the public interest to do so. In
making this finding, the Department
will consider whether effective
reciprocity exists between the United
States and the government of the foreign
charter operator.

28250
§ 380.67

Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Rules and Regulations
Waiver of sovereign immunity.

By accepting an approved registration
form under this subpart, an operator
waives any right it may have to assert
any defense of sovereign immunity from
suit in any proceeding against it, in any
court or other tribunal of the United
States, that is based upon a claim arising
out of operations by the operator under
this part.
Appendix A—Public Charter Operator’s
Surety Bond Under Part 380 of the
Special Regulations of the Department
of Transportation (14 CFR Part 380)
Know all men by these presents, that we
(name of charter
operator) of llllllllll, (city)
llllllllll (state or country) as
Principal (hereinafter called Principal),
andllllllllll (name of surety) a
corporation created and existing under the
laws of the State of llllllllll
(State) as Surety (hereinafter called Surety)
are held and firmly bound unto the United
States of America in the sum of
$llllllllll (see § 380.34(f) of Part
380) for which payment, well and truly to be
made, we bind ourselves and our heirs,
executors, administrators, successors, and
assigns, jointly and severally, firmly by these
presents.
Whereas Principal intends to become a
Public Charter operator pursuant to the
provisions of part 380 of the Department’s
Special Regulations and other rules and
regulations of the Department relating to
insurance or other security for the protection
of charter participants, and has elected to file
with the Department of Transportation such
a bond as will insure financial responsibility
with respect to all moneys received from
charter participants for services in
connection with a Public Charter to be
operated subject to Part 380 of the
Department’s Special Regulations in
accordance with contracts, agreements, or
arrangements therefor, and
Whereas this bond is written to assure
compliance by Principal as an authorized
charter operator with Part 380 of the
Department’s Special Regulations, and other
rules and regulations of the Department
relating to insurance and other security for
the protection of charter participants, and
shall inure to the benefit of any and all
charter participants to whom Principal may
be held legally liable for any damages herein
described.
Now, therefor, the condition of this
obligation is such that if Principal shall pay
or cause to be paid to charter participants any
sum or sums for which Principal may be held
legally liable by reason of Principal’s failure
faithfully to perform, fulfill and carry out all
contracts, agreements, and arrangements
made by Principal while this bond is in effect
with respect to the receipt of moneys from
charter participants, and proper
disbursement thereof pursuant to and in
accordance with the provisions of Part 380 of
the Department’s Special Regulations, then
this obligation shall be void, otherwise to
remain in full force and effect.
llllllllll

The liability of Surety with respect to any
charter participant shall not exceed the
charter price paid by or on behalf of such
participant.
The liability of Surety shall not be
discharged by any payment or succession of
payments hereunder, unless and until such
payment or payments shall amount in the
aggregate to the penalty of the bond, but in
no event shall Surety’s obligation hereunder
exceed the amount of said penalty.
Surety agrees to furnish written notice to
the Office of Aviation Analysis, Department
of Transportation, forthwith of all suits or
claims filed and judgments rendered, and
payments made by Surety under this bond.
The bond shall cover the following
charters:1
Surety company’s bond No. llllllll
Date of flight departure llllllllll
Place of flight departure lllllllll
This bond is effective on the lll day of
llll, 12:01 a.m., standard time at the
address of Principal as stated herein and as
hereinafter provided. Principal or Surety may
at any time terminate this bond by written
notice to: ‘‘Special Authorities Division (P–
57), Office of Aviation Analysis, U.S.
Department of Transportation, Washington,
DC 20590,’’ such termination to become
effective thirty (30) days after the actual
receipt of said notice by the Department.
Surety shall not be liable hereunder for the
payment of any damages hereinbefore
described which arise as a result of any
contracts, agreements, undertakings, or
arrangements for the supplying of
transportation and other services made by
Principal after the termination of this bond
as herein provided, but such termination
shall not affect the liability of the bond
hereunder for the payment of any damages
arising as a result of contracts, agreements, or
arrangements for the supplying of
transportation and other services made by
Principal prior to the date that such
termination becomes effective. Liability of
Surety under this bond shall in all events be
limited only to a charter participant or
charter participants who shall within sixty
(60) days after the termination of the
particular charter described herein give
written notice of claim to the charter operator
or, if it is unavailable, to Surety, and all
liability on this bond shall automatically
terminate sixty (60) days after the
termination date of each particular charter
covered by this bond except for claims made
in the time provided herein.
In witness whereof, the said Principal and
Surety have executed this instrument on the
lll day of llllllll, llll.
Principal
Name llllllllllllllllll
By: Signature and title
Surety
Name llllllllllllllllll
By: Signature and title llllllllll
Only corporations may qualify to act as
surety and they must meet the requirements
set forth in § 380.34(c)(6) of Part 380.
1 These data may be supplied in addendum
attached to the bond.

Appendix B—Public Charter Surety
Trust Agreement
This Trust Agreement is entered into
between llllllllll (charter
operator) incorporated under the law of
llllllllll with the principal
place of business being llllllllll
(hereinafter referred to as the Operator), and
llllllllll (Bank) with its
principal place of business being
llllllllll (hereinafter referred to
as the ‘‘Trustee’’), for the purpose of creating
a trust to become effective as of the lll
day of llllllll, llll, which
trust shall continue until terminated as
hereinafter provided.
The Operator intends to become a Public
Charter operator pursuant to the provisions
of Part 380 of the Department’s Special
Regulations and other rules and regulations
of the Department relating to insurance or
other security for the protection of charter
participants, and has elected to file with the
Department of Transportation such a Surety
Trust Agreements as will insure financial
responsibility with respect to all moneys
received from charter participants for
services in connection with a Public Charter
to be operated subject to Part 380 of the
Department’s Special Regulations in
accordance with contracts, agreements, or
arrangements therefor.
This Surety Trust Agreement is written to
assure compliance by the Operator with the
provisions of Part 380 of the Department’s
Special Regulations and other rules and
regulations of the Department relating to
insurance or other security for the protection
of charter participants.
It shall inure to the benefit of any and all
charter participants to whom the Operator
may be held legally liable for any of the
damages herein described.
It is mutually agreed by and between the
operator and Trustee that the Trustee shall
manage the corpus of the trust and carry out
the purposes of the trust as hereinafter set
forth during the term of the trust for the
benefit of charter participants (who are
hereinafter referred to as ‘‘Beneficiaries.’’)
Beneficiaries of the trust created by this
Agreement shall be limited to those charter
participants who meet the following
requirements:
1. Those for whom Operator or Operator’s
agent has received payment toward
participation in one or more charters
operated by or proposed to be operated by
Operator.
2. Who have legal claim or claims for
money damages against the Operator by
reason of the Operators’ failure faithfully to
perform, fulfill, and carry out all contracts,
agreements, and arrangements made by the
Operator while this trust is in respect to the
receipt of moneys and proper disbursement
thereof pursuant to Part 380 of the
Department’s Special Regulations; and
3. Who have given notice of such claim or
claims in accordance with this Trust
Agreement, but who have not been paid by
the Operator.
The Operator shall convey to the Trustee
legal title to the trust corpus, which has a
value of $llllllll by the time of the
execution of this Agreement.

Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Rules and Regulations
Trustee shall assume the responsibilities of
the Trustee over the said trust corpus and
shall distribute from the trust corpus to any
and all Beneficiaries to whom the Operator,
in its capacity as a Public Charter operator,
may be held legally liable by reason of the
Operator’s failure faithfully to perform,
fulfill, and carry out all contracts,
agreements, and arrangements made by the
Operator, while this trust is in effect with
respect to the receipt of moneys and proper
disbursement thereof pursuant to Part 380 of
the Department’s Special Regulations in
connection with said charters, such damages
as will discharge such liability while this
trust is in effect; Provided, however, That the
liability of the trust to any Beneficiary shall
not exceed the charter price (as defined in
Part 380 of the Department’s Special
Regulations) paid by or on behalf on any
such Beneficiary; Provided, further, That
there shall be on obligation of the trust to any
Beneficiary if the Operator shall pay or cause
to be paid to any Beneficiary any sum or
sums for which the Operator may be held
legally liable by reasons of its failure
faithfully to perform, fulfill, and carry out all
contracts, agreements, and arrangements
made by the Operator in its capacity as
charter operator while this trust is in effect
with respect to the receipt of moneys and
proper disbursement thereof pursuant to Part
380 of the Department’s Special Regulations;
And provided still further, That the liability
of the trust as administered by the Trustee
shall not be discharged by any payment or
succession of payments hereunder, unless
and until such payment or payments, shall
amount in the aggregate to
$llllllll. Notwithstanding
anything herein to the contrary, in no event
shall the obligation of the trust or the Trustee
hereunder exceed the aggregate amount of
$llllllll.
The Trustee agrees to furnish written
notice to the Office of Aviation Analysis,
Department of Transportation, forthwith of
all suits of claims filed and judgments
rendered (of which it has knowledge), and of
payments made by the Trustee under the
terms of this trust.
The Trust shall not be liable hereunder for
the payment of any damages hereinbefore
described which arise as a result of any
contracts, agreements, undertakings, or
arrangements for the supplying of
transportation and other services made by the
Operator after the termination of this trust as
herein provided, but such termination shall
not affect the liability of the trust hereunder
for the payment of any damages arising as a
result of contracts, agreements, or
arrangements for the supplying of
transportation and other services made by the
Operator prior to the date that such
termination becomes effective.
Liability of the trust shall in all events be
limited only to a Beneficiary or Beneficiaries
who shall within sixty days after the
termination of the particular charter give
written notice of claim to the Operator or, if
it is unavailable, to the Trustee, and all
liability of the trust with respect to
participants in a charter shall automatically
terminate sixty days after the termination
date of each particular charter covered by

this trust except for claims filed in the time
provided herein. Sixty-one days after the
completion of the last charter covered by this
Trust Agreement, the trust shall
automatically terminate except for claims of
any Beneficiary or Beneficiaries previously
made in accordance with this Agreement still
pending on and after said sixty-first day. To
the extent of such claims, the trust shall
continue until those claims are discharged,
dismissed, dropped, or otherwise terminated;
the remainder of the trust corpus shall be
conveyed forthwith to the Operator. After all
remaining claims which are covered by this
Trust Agreement pending on and after the
said sixty-first day have been discharged,
dismissed, dropped, or otherwise terminated,
the Trustee shall convey forthwith the
remainder of the trust corpus, if any, to the
Operator.
Either the Operator or Trustee may at any
time terminate this trust by written notice to:
‘‘Special Authorities Division (P–57), Office
of Aviation Analysis, U.S. Department of
Transportation, Washington, DC 20590,’’
such termination to become effective thirty
days after the actual receipt of said notice by
the Department.
In the event of any controversy or claim
arising hereunder, the Trustee shall not be
required to determine same or take any other
action with respect thereto, but may await
the settlement of such controversy or claim
by final appropriate legal proceedings, and in
such event shall not be liable for interest or
damages of any kind.
Any Successor to the Trustee by merger,
consolidation, or otherwise, shall succeed to
this trusteeship and shall have the powers
and obligations set forth in this Agreement.
The trust created under this Agreement
shall be operated and administered under the
laws of the State of llllllll.
IN WITNESS WHEREOF, the Operator and
Trustee have executed this instrument on the
lll day of llllllll, llll.
Trustee
Name llllllllllllllllll
By: Signature and title
Charter Operator
Name llllllllllllllllll
By: Signature and title
Issued in Washington, DC, on May 8, 1998.
Charles A. Hunnicutt,
Assistant Secretary For Aviation and
International Affairs.
[FR Doc. 98–12980 Filed 5–21–98; 8:45 am]
BILLING CODE 4910–62–M

ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 82
[FRL–6015–3]

Protection of Stratospheric Ozone
Environmental Protection
Agency.
ACTION: Notice of acceptability.
AGENCY:

28251

This document expands the
list of acceptable substitutes for ozonedepleting substances (ODS) under the
U.S. Environmental Protection Agency’s
(EPA) Significant New Alternatives
Policy (SNAP) program.
EFFECTIVE DATE: May 22, 1998.
ADDRESSES: Information relevant to this
document is contained in Air Docket A–
91–42, U.S. Environmental Agency,
Office of Air and Radiation Docket and
Information Center, Room M–1500, 401
M Street, SW, Washington, DC 20460.
Telephone: (202) 260–7548. The docket
may be inspected between 8:00 a.m. and
5:30 p.m. weekdays. As provided in 40
CFR Part 2, a reasonable fee may be
charged for photocopying.
FOR FURTHER INFORMATION CONTACT:
William Monroe at (202) 564–9161 or
fax (202) 565–2093, U.S. EPA,
Stratospheric Protection Division, 401
M Street, S.W., Mail Code 6205J,
Washington, D.C. 20460; EPA
Stratospheric Ozone Protection Hotline
at (800) 296–1996; EPA World Wide
Web Site (http://www.epa.gov/ozone/
title6/snap).
SUPPLEMENTARY INFORMATION:
SUMMARY:

I. Section 612 Program
A. Statutory Requirements
B. Regulatory History
II. Listing of Acceptable Substitutes
A. Aerosols
III. Additional Information
Appendix A—Summary of Acceptable
Decisions

I. Section 612 Program
A. Statutory Requirements
Section 612 of the Clean Air Act
authorizes EPA to develop a program for
evaluating alternatives to ozonedepleting substances. EPA refers to this
program as the Significant New
Alternatives Policy (SNAP) program.
The major provisions of section 612 are:
• Rulemaking—Section 612(c)
requires EPA to promulgate rules
making it unlawful to replace any class
I (chlorofluorocarbon, halon, carbon
tetrachloride, methyl chloroform,
methyl bromide, and
hydrobromofluorocarbon) or class II
(hydrochlorofluorocarbon) substance
with any substitute that the
Administrator determines may present
adverse effects to human health or the
environment where the Administrator
has identified an alternative that (1)
reduces the overall risk to human health
and the environment, and (2) is
currently or potentially available.
• Listing of Unacceptable/Acceptable
Substitutes—Section 612(c) also
requires EPA to publish a list of the
substitutes unacceptable for specific
uses. EPA must publish a corresponding