Posted on: February 6, 2013
Concerns lead DOT to ease proposed rules on public charters
The Transportation Department (DOT) has backpedaled on some new guidelines for enforcing its public charter rules, after getting pushback from the air charter industry.
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Responding to industry concerns, the DOT said it will drop a proposed blanket prohibition on the use of debit cards as a form of passenger payment.
The DOT also agreed to soften its plan to ban so-called ACMI charters, where the charter airline provides only the aircraft, crew, maintenance and insurance but where the tour operator assumes responsibility for paying for fuel.
The DOT said debit cards will be acceptable if operators provide assurances that their merchant banks and card processors offer the same chargeback protections that they offer for credit cards.
The DOT also acknowledged that its rules only allow it to apply this restriction to charter operators using escrow accounts. Critics had pointed out that operators who use a bond-only security option without escrow accounts can accept any form of payment without restriction, and the DOT concurred.
Regarding charter contracts, the DOT said that instead of banning ACMI contracts outright, it will permit them if the operators and their escrow banks maintain a "full and accurate accounting of disbursements." For operators using the bond-only option, the surety must be large enough to cover the full cost, the DOT said.
Those restrictions were published in a November "guidance" notice that the DOT issued as a way to prevent a recurrence of some of the consumer disruptions caused by last year's collapse of Direct Air, the trade name for Southern Sky Air & Tours of Myrtle Beach, S.C.
Several charter airlines and aviation lawyers challenged various aspects of the November notice, however.
Some said the DOT had crossed the line from clarifying its enforcement policy to re-writing the charter rules without the usual procedure of public notice and an open docket for public comments.
Citing such procedural "deficiencies," Allegiant, for example, said it was reserving its right to seek judicial review of any DOT pronouncements.
The DOT, for its part, has said it merely seeks to rein in what it deems to be risky business practices that exacerbated the Direct Air bankruptcy, such as a reliance on a third party to manage a reservations database to which the operator and airline did not have access.
In its November notice, the DOT said it will henceforth require operators to maintain the ability to access reservations records and make them available to the airline in the event of a disruption.
It also banned the Direct Air practice of issuing undated vouchers for future charters rather than reservations for a specific date and flight.
Although those two restrictions also triggered some comments from the industry, the DOT decided to keep them largely intact. The revised policies are now slated to take effect in mid-March.