Served 8/3/95
ORDER
Agreement adopted by the Tariff | Coordinating Conferences of the | Docket 49759 International Air Transport Association | R-1 through R-28 relating to passenger fare matters |
Various members of the International Air Transport Association (IATA) have filed an agreement with the Department under section 41309 of Title 49 of the United States Code and Part 303 of the Department's regulations. The agreement was adopted at the Composite Passenger Tariff Coordinating Conference held in Geneva during July 18-23, 1994.1
The agreements propose a variety of amendments, many of which are technical, editorial or clarifying in nature, to existing resolutions, applicable on an area or worldwide basis. These include resolutions dealing with currency and fare construction rules, practices and/or procedures; establishment of mileages and routes for tariff purposes; use of add-on fares; refunds and reroutings; counting of transfers; inclusive tour provisions; fares for ships' crews and students; and charges for prepaid ticket advice services. The agreement also includes substantive proposals regarding fare construction and baggage rules.
Fare construction rules:
The agreement adopts a new "pricing unit" standard for special (discount and/or promotional) fare constructions.2 Accomplished through amendments to Resolution 100 (Standard Conditions for Special Fares), the new approach attempts to reconcile two different pricing approaches being used by computer reservation systems (CRS's) to calculate special fares for international journeys with multiple segments. The present "journey" concept treats the fare for a multiple segment international itinerary as a single unit, and applies various fare controls, such as the higher intermediate point check, to prevent the constructed through fare from undercutting fares for individual points on the itinerary. The new pricing unit concept, on the other hand, separates the multi-segment journey into several pricing units, as if selling separate tickets for each, and then adds them together on one ticket to see whether their sum produces a lower fare that can be then quoted to the customer.
Baggage rules:
The agreement also proposes a piece-related baggage system for application on most routes to/from the United States and its territories, Canada, Mexico (transpacific only) and between Japan and Brazil.3 Under the proposal, the free baggage allowance would consist of two checked pieces for all classes of service, subject to different dimensional limits by class, except in the case of economy class travel to the Philippines where passengers would be limited to one checked piece, plus a carry-on piece. The agreement keeps the maximum weight of any checked piece at 32 kilograms (70 pounds) and leaves excess baggage rules and charges in foreign air transportation to the discretion of individual members, except in the case of travel between U.S. points and Japan, where agreed excess baggage charges and rules will apply. Finally, the agreement includes special provisions for the carriage of pets and various kinds of sporting equipment.
Disposition:
Except as discussed below, we have decided to approve the agreement, subject to all conditions that we have imposed previously. For the most part, these changes and revisions are purely technical, editorial or clarifying in nature, and do not propose material changes at odds with our substantive policies and concerns. Based on our review of the information submitted and other relevant material, we conclude that these portions of the agreement, as conditioned, will not result in fares that are unlawful or injurious to competition in the markets at issue.
Baggage: We are unable to approve the piece-related baggage system proposed in Resolution 301. When we last examined an IATA piece-related baggage proposal in Order 89-10-15, October 6, 1989, we rejected it because it reduced the per piece weight from 70 pounds to 50 pounds on U.S.-South America routes, imposed a multiple charging system for excess baggage and permitted discretionary size limits on carry-on baggage.4 While the new proposal maintains the per piece weight limit at 70 pounds and generally leaves charges for excess baggage to individual carriers, it still contains several features that warrant its disapproval.
First, Resolution 301 limits economy class passengers traveling to the Philippines to one checked piece, plus a carry-on piece. IATA, however, has provided no justification for deviating from the standard free allowance of two checked pieces, plus a carry-on piece. In the absence of compelling and exceptional circumstances, we are simply not prepared to approve any intercarrier agreement that deviates from a basic free baggage allowance of two checked bags plus a carry-on piece. In this instance, no demonstration has been made of any compelling need for an agreed exception, binding on all IATA member carriers operating in U.S.-Philippine markets, from an industry standard. Should an individual carrier encounter operational or other circumstances that require a lesser free allowance, however, it may make an appropriate unilateral tariff filing along with detailed justification for the difference.
Second, the resolution still allows member carriers the discretion to limit a passenger's carry-on piece to something smaller than the standard 45 inches. As we noted in Order 89-10-15, an interlining passenger could find that the carry-on bag allowed by one carrier would have to be checked with another carrier. If this passenger had already checked at least two other bags, he or she could suddenly be confronted with paying an excess-baggage charge for a piece which, at the start of the trip, he or she had reason to believe was "free". While documentation submitted in connection with the agreement indicates that the usual procedure in such cases is for the carrier to place the carry-on baggage in the hold and return it to the passenger at the end of the flight free of any charge, we do not regard such an informal practice as an adequate solution to the problem. There is no provision in the resolution that protects the passenger by making this practice mandatory. Moreover, a passenger may have specially packed the carry-on piece to contain jewelry, a camera or other valuable items for which a carrier normally excludes itself from liability. In any event, a passenger would still be subject to the inconvenience of checking a piece of baggage, thought to be a carry-on piece, even if it is carried free in the airplane hold. We simply cannot allow travelers to be exposed to such inconvenience and risk.
We will also disapprove Resolution 301a which contains excess baggage rules and charges for application between U.S. points and Japan. This proposal contains provisions for the double and triple charging of baggage in certain instances. We have disapproved similar provisions in Orders 82-10-85, 84-1-74 and 89-10-15, where they were discussed at some length. As we stated in these earlier orders, these multiple charges bear no relation to the costs involved in carrying such baggage. As noted in Order 89-10-15, it simply does not cost twice as much to carry an oversized bag that is one of three checked pieces, thus both oversized and excess, than if it were one of two, thus merely oversized, but not excess.
Fare construction: We will disapprove new paragraphs 1.b)ii of Resolution 100 (Standard Condition Resolution for Special Fares) and 4.c)i of Resolution 014a (Construction Rules for Passenger Fares. Both of these paragraphs impose limitations on the combinability of fares with other fares to produce through fares, thus violating the condition that the Civil Aeronautics Board placed on Resolution 001 (Permanent Effectiveness Resolution) in Order 82-2-130, February 26, 1982. This condition stipulated that all fares in foreign air transportation may be combined with any other fares provided that the passenger meets all other travel requirements affixed to use of the fares. Because this condition is attached to Resolution 001, it has the further effect of automatically applying to future IATA agreements (Order 86-7-67, July 28, 1986 at page 3).
In the past, we have disregarded combinability restrictions in individual fare resolutions because our Resolution 001 condition applied to all IATA resolutions. However, IATA continues to submit agreements containing these restrictions. While it may be permissible for an individual carrier to limit fare combinations in the tariffs it files with governments, we continue to believe that an intercarrier agreement that limits combinability is unwarranted and anticompetitive. Accordingly, we will disapprove the combinability restrictions proposed in this agreement, and put the IATA carriers on notice that we will disapprove any fare resolution in its entirety, should any portion of it place limits on combinability with fares to/from U.S. points.
Acting under Title 49 of the United States Code (the Code), and particularly sections 40101, 40103, 41300 and 41309:
1. We do not find the following resolutions, which are incorporated in the agreement in Docket 49759 as indicated and which have either direct or indirect application in foreign air transportation as defined by the Act, to be adverse to the public interest or in violation of the Act, provided that approval is subject, where applicable, to conditions previously imposed:
Docket IATA
49759 No Title Application
R-1 011 Standard Revalidation Resolution 1;2;3;1/2;
2/3;3/1;1/2/3
R-2 012 Glossary of Terms 1;2;3;1/2;
2/3;3/1;1/2/3
R-3 012b Countries, Currencies, Codes 1;2;3;1/2;
Administrative Resolution 2/3;3/1;1/2/3
R-4 014a Construction Rule for Passenger Fares 1;2;3;1/2;
(Except paragraph 4)c)i) 2/3;3/1;1/2/3
R-5 015v Add-on Amounts (Except in USA) 2;1/2;2/3;
1/2/3
R-6 024a Establishing Passenger Fares and 1;2;3;1/2;
Related Charges 2/3;3/1;1/2/3
R-7 024c Conversion of Local Currency Amounts 1;2;3;1/2;
for Combination/Construction Purposes 2/3;3/1;1/2/3
R-8 024d Currency Names, Codes, Rounding Units 1;2;3;1/2;
and Acceptability of Currencies 2/3;3/1;1/2/3
R-9 024h Refunds and Reroutings 1;2;3;1/2;
2/3;3/1;1/2/3
R-10 024j Special Construction Rules 1;2;3;1/2;
2/3;3/1;1/2/3
R-11 040b Counting of Transfers 3
(So Pacific)
R-12 047a Provisions for Inclusive Tours 1;2;3;1/2;
2/3;3/1;1/2/3
R-13 047b Provisions for Inclusive Tours 2;1/2;2/3;
Initiated in Germany 1/2/3
R-14 087aa Group Fares for Ships' Crews 2
Docket IATA
49759 No Title Application
R-15 090 Individual Fares for Ships' Crews 2
R-16 092 Student Fares 2
R-17 100 Standard Condition Resolution for 1;2;3;1/2;
Special Fares (Except paragraph 1) 2/3;3/1;1/2/3
b)ii)
R-18 151a Fares for Circle Trips 1;2;3;1/2;
2/3;3/1;1/2/3
R-19 152a Fares for Other than Round or Circle 1;2;3;1/2;
Trips 2/3;3/1;1/2/3
R-20 152d Open Jaw-Special Fares 1;2;3;1/2;
2/3;3/1;1/2/3
R-21 152e Rules for Fares Expressed as a 1;2;3;1/2;
Percentage 2/3;3/1;1/2/3
R-22 152f Fare Calculation for En-Route 1;2;3;1/2;
Voluntary Rerouting 2/3;3/1;1/2/3
R-23 210 Charge for PTA Services 1;2;3;1/2;
2/3;3/1;1/2/3
R-24 312 Baggage Excess Value Charge 1;2;3;1/2;
2/3;3/1;1/2/3
R-25 001qq Special Baggage Resolution 1;2;3;1/2;
2/3;3/1;1/2/3
2. We find the following resolutions, which are incorporated in the
agreement in Docket 49759 as indicated and which have direct
application in foreign air transportation as defined by the Act, to
be adverse to the public interest and in violation of the Act:
Docket IATA
49759 No Title Application
R-4 014a Construction Rule for Passenger Fares 1;2;3;1/2;
(Paragraph 4)c)i) 2/3;3/1;1/2/3
R-17 100 Standard Condition Resolution for 1;2;3;1/2;
Special Fares (Paragraph 1)b)ii) 2/3;3/1;1/2/3
R-26 301 Baggage Allowance (Piece System)(to/ 1;2;3;1/2;
from Canada, USA, US Territories) 2/3;3/1;1/2/3
(TC31 to/from Mexico)(TC31 Japan-
Brazil)
Docket IATA
49759 No Title Application
R-27 313 Commercial Couriers 1;2;3;1/2;
2/3;3/1;1/2/3
R-28 301a Baggage Allowance (Piece System) 3;3/1
(between Japan and USA, US Territories)
3. This agreement is a product of the IATA tariff conference
machinery, which the Department found to be anticompetitive but
nevertheless approved on foreign policy and comity grounds by Order
85-5-32, May 6, 1985. The Department found that important
transportation needs were not obtainable by reasonably available
alternative means having materially less anticompetitive effects.
Antitrust immunity was automatically conferred upon these
conferences because, where an anticompetitive agreement is approved
in order to attain other objectives, the conferral of antitrust
immunity is mandatory under Title 49 of the United States Code.Order 85-5-32 contemplates that the products of fare and rate conferences will be subject to individual scrutiny and will be approved, provided they are of a kind specifically sanctioned by Order 85-5-32 and are not adverse to the public interest or in violation of the Code. As with the underlying IATA conference machinery, upon approval of a conference agreement, immunity for that agreement must be conferred under the Code. Consequently, we will grant antitrust immunity to those portions of the agreement in Docket 49759, as set forth in finding paragraph 1 above, subject, where applicable, to conditions previously imposed.
ACCORDINGLY,
1. We approve and grant antitrust immunity to those portions of the agreement contained in Docket 49759, as set forth in finding paragraph one above, subject, where applicable, to conditions previously imposed; and
2. We disapprove those portions of the agreement contained in Docket 49759, as set forth in finding paragraph two above.
By:
PATRICK V. MURPHY
Acting Assistant Secretary for Aviation
and International Affairs
(Seal)
[2] The IATA carriers were unable to agree to the "pricing unit" concept as an industry standard for normal (first, intermediate, and economy class) fares. Agreeing that an urgent need to find an acceptable standard for normal fares exists, the carriers directed the fares working group to find an acceptable solution as soon as possible.
[3] The piece-related system would not apply from West Africa, where the weight system applies by government order.
[4]The Civil Aeronautics Board first approved a piece-related baggage system for U.S. points by Order 77-4-97, April 20, 1977. This agreement was in response to Order 76-3-81, March 12, 1976, (Baggage Allowance Tariff Rules in Overseas and Foreign Air Transportation, Docket 24869), where the Board found that the prevailing free baggage allowance based solely on weight was unlawful and had to be altered, and that the prevailing excess-baggage charge of one percent of the first-class fare per kilogram was unreasonably high. However, IATA's piece-related system subsequently lapsed, and the Board disapproved later versions of it in Orders 82-10-85, October 21, 1982; and 84-1-74, January 19, 1984.