It takes a bit of a travel geek to understand or even care about the concept of an "indirect air carrier," the Transportation Department's (DOT) peculiar designation for a certain class of intermediaries in air transportation.
But if you're in the business of selling air travel as an intermediary, it might be worth a few minutes of geekiness to understand that the DOT recently did something new with this concept. It could turn out to be a milestone in the evolution of the government's approach to regulating the sale of air travel.
First, a quick refresher. A direct air carrier, of course, is an airline or other air carrier that operates commercial aircraft in scheduled or charter service, i.e., air transportation. An indirect air carrier is an entity, other than a carrier or its agent, that arranges, provides or sells air transportation as an independent principal.
In passenger transportation, the best example comes from the public charter regulations. A public charter operator contracts with a charter airline to fly a certain pattern, and then sells the seats to the public, with the attendant inventory risk. The operator puts the program together as an independent principal, not as the airline's agent. The airline is, theoretically, a contractor.
The public charter is just about the only legal way for a travel company to sell passenger air travel as an indirect air carrier. Even wholesalers who buy airline seats in bulk tend to be regarded by the DOT as agents of the airlines rather than independent principals.
In fact, other than the public charter rule, the DOT doesn't even have a system for registering or authorizing indirect air carriers for passenger transportation.
For what appears to be the first time since airline deregulation in 1978, the DOT is proposing to create a new class of indirect air carriers to accommodate changes in the marketplace. As we report in the news pages today, the DOT has come to recognize that air charter brokers who arrange air taxi, business jet and single-entity charter flights occasionally need to act as indirect air carriers, even through there is no DOT rule or regulation that allows them to do so.
If the DOT follows through with its plan, brokers will be able to make commitments to their customers that they are not now permitted to make, subject to certain disclosure requirements.
"Regulatory flexibility" is usually dismissed as an oxymoron, but if this is a real example of it, we welcome it.
We welcome this proposal not just for what it does for charter brokers but because it demonstrates a willingness by the DOT to change its regulatory regime to reflect the way their marketplace has evolved.
Could something similar ever happen in the traditional scheduled service marketplace?
Over the years the DOT has imposed various layers of advertising, disclosure and other consumer protection provisions on sellers of air travel, including airlines, GDSs and retailers, that are based on consumer preferences and behaviors, and on technologies, that are changing more rapidly than they ever have.
This is not a time for regulatory rigidity.
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Correction: Last week we lamented the prospect that passport applications by U.S. citizens and visa processing for foreign visitors would be interrupted by a government shutdown. It turns out that these are among a handful of government functions that can continue on the basis of revenue from user fees.