INTRODUCTION

The U.S. Department of Transportation (Department) proposes to enhance the quality ofinformation provided and strengthen legal protections applicable to air travelers by creating a"new class of indirect air carrier to be called air charter brokers. Air charter brokers will be'~.~

authorized to engage in indirect air transportation by contracting in their own right with,_customers to provide charter air transportation and separately arranging with direct air carriers to

provide such transportation services. Brokers have for many years facilitated the provision tit

charter air transportation, particularly involving business-sized aircraft. The Departmentrecognizes the important role air charter brokers can play in facilitating charter air transportationand that existing Department rules covering the indirect air transportation of passengers were notdesigned to accommodate such operations. Furthermore, today's air charter brokers do notalways provide consumers the level of protections to which they are entitled. The proposalwould establish a lawful means by which air charter brokers could engage in indirect air carriageof passengers and establish rules protecting such passengers. The Department also proposes toapply to air taxi operators similar rules protecting passengers where air taxi operators are sellingair charter flights that are operated by some other direct air carrier, and the costs and benefits ofthese provisions are analyzed below. The proposed rule also includes provisions grantingexemption authority to indirect air carriers that provide air ambulance services and clarifying thatthe contracting for air transportation with the Federal government under a GSA Scheduleinvolves common carriage operations. However, the Department has concluded that thesechanges have no additional costs and benefits, as they merely codify preexisting Departmentalpractice.

Executive Order 12866, Regulatory Planning and Review, defines a significant regulatory actionas one that is likely to have an annual effect on the economy of $100 million or more or wouldadversely affect in a material way the economy, particular sectors of the economy, or state orlocal governments. Regulatory actions are also considered significant if they are likely to createa serious inconsistency or interfere with the actions of another agency or if they materially alterthe budgetary impact of entitlements, grants, user fees, or loan programs or the rights andobligations of the recipients of such programs. The Office of Management and Budget hasdetermined that this proposed regulation is not a significant regulatory action.

For regulatory actions that are not considered significant, EO 12866 requires that agenciesconsider both the costs and benefits of the intended regulation and propose and adopt such aregulation only after a reasoned determination that the benefits justify the costs.

This regulatory evaluation presents costs and benefits of creating the air charter broker class ofindirect air carrier. The proposed rule would codify certain ofthe activities and businesspractices followed by many current air charter brokers, as well as codify consumer protectionrequirements. Many of these consumer protections are already in use by air charter brokers.The Department has limited data related to the costs, benefits and passenger activity currently

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arranged by air charter brokers, and this analysis is principally a discussion of costs and benefitsas they relate to charter brokerage activities rather than a precise estimate of them. TheDepartment hopes that comments to the Notice of Proposed Rulemaking provide specific anduseful information for completing more precise estimates, and to the extent that such commentsbecome available to the Department, the final regulatory evaluation will be revised to reflect

. those comments.

CHARACTERISTICS OF THE SINGLE ENTITY PASSENGER AIR CHARTERINDUSTRY

Direct air carriers are entities, including persons that are directly engaged in the operation ofaircraft under a certificate, permit, or exemption issued by the Department (or its predecessor theCivil Aeronautics Board) and requisite safety authority from the Federal Aviation Administration(FAA). An indirect air carrier is an entity that sells air transportation in its own right, such as apublic charter operator under 14 CFR Part 380 or an air freight forwarder under 14 CFR Part296, but that uses a direct air carrier to actually operate the flight on which the transportation isprovided. (The direct air carrier maintains operational control of the flight.) For purposes of thisrulemaking, unless specifically stated, air charter brokers are distinct from direct air carriers,which themselves often engage in "brokering" activities. An air charter broker is an entity,including a person that arranges single entity charter air transportation using a direct air carrier tooperate the flight. Under current law, an air charter broker is a ticket agent. (49 U.S.C. 40102(a)(45)) Air charter brokers arrange charter flights using both large and small aircraft, although theDepartment believes that substantially more transactions involve small aircraft charters. Asticket agents, air charter brokers are subject to the prohibition in 49 D.S.C. 41712 on engaging inunfair and deceptive practices and unfair methods of competition.

Current Department policy related to existing air charter broker activities is set forth in a 2004document providing guidance on their lawful roles in the provision of air transportation I and inDepartment enforcement case precedent. That guidance, followed in enforcement caseprecedence, notes that air charter brokers do not have the authority to hold out or sell airtransportation in their own right. As such, they cannot, as principals, enter into contracts orotherwise have contractual privity with customers ("charterers") to provide air transportation.The document also notes the Department's concern about brokers that mislead the public intothinking they are direct air carriers, when that is not the case, and indicates that anyadvertisement of air charter brokerage service should convey clearly that the broker is not adirect air carrier and that the air service advertised will be provided by a properly licensed aircarrier. This proposed regulation would authorize brokers to engage in indirect charter airtransportation, but only so long as they comply with certain consumer protection provisionsincluded in the rule.

1The Role of Air Charter Brokers in Arranging Air Transportation, Notice, United States Department ofTransportation, October 8, 2004, available at http://airconsumer.ost.dot.gov/rules/brokernoticefinal.pdf.

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The total level of flight and passenger activity of single entity passenger air charters is notpublicly tracked or reported. In the most recent reliable survey, the number of direct air carriersin the industry varies with economic conditions, but there are currently 114 active certificated aircarriers licensed by the Department to engage in large aircraft charter passenger operations? TheFederal Aviation Administration (FAA) estimated the number of active Part 135/298 operators at1,896 in August 2013. Revenues of these operators are also not publicly reported, andtransactions in the industry are not necessarily related to fixed price schedules, but are negotiatedby the air carrier and the charterer. Some charter operators report "normal" or "average" hourlycosts of chartering different sizes of aircraft.3 These hourly values-ranging from the highhundreds of dollars per hour to over ten thousand dollars, depending on the aircraft type andsize-provide a rough sense of the prices paid by charterers.

Although flight activity by Part 135 non-scheduled operators is not publicly reported, flightrecords from the air traffic control radar system and data reports from private sector aviationresearch organizations provide ranges for estimating annual flight activity in this sector. Basedon the categorization of annual U.S. radar system flight count data developed by GRA,Incorporated for the FAA, Table 1 displays annual flight activity for non-scheduled Part 135passenger operations from Fiscal Year 2006 through Fiscal Year 2011. These data are developedfrom the Enhanced Traffic Management System (ETMS)4 flight records, and rely on aircraft anduser classifications made by air traffic controllers as well as tail number and operator data. 5

These data indicate annual flight activity by these operators of between 760,000 and 1.1 millionflights, depending on the fiscal year." For reference, the table also reports the sum of these flightsand flights by operators of aircraft fractionally owned by multiple parties.

Table 1.

Part 135 Non-ScheduledPassenger Flights

FY06FY07FY08

1,005,248965,4011,084,398

2 http://ostpxweb.dot.gov/aviation/certific/certlist.pdf as of August 6, 2013. These certificated air carriers includescheduled air carriers, some of which also operate charter services.3 See,for example, http://www.paramountbusinessjets.com!private jet charter pricing.php orhttp://www.newflightcharters.com/privatejetcharterflightpricing.htm#TrueLifeQuote

4 http://www.fly.faa.gov/Products/lnformation/ETMS/etms.htm I

5 The development of these data for the FAABusinessmodel is presented in the report Air Traffic Services BusinessModel: Overview, Model Description and Applications with Supporting Documentation, Final Report (September2011), prepared for the FAAby GRA,Incorporated.

6 October through September.

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FY09FYI0FYll

761,301900,003870,619

Because of the private and relatively unmonitored nature of the air charter industry, with pricingfor most transactions based on negotiations rather than posted prices, it is difficult to estimateannual revenues for the air taxi and air charter industry as a whole. The Department requestscomment and additional information from interested parties regarding these uncertainties aboutthe size and structure of the air charter market, which determines the scale of activity availablefor air charter brokerage.

While these data paint a rough picture of aspects of the volume of air taxi and Part 135 aircharter activity from year to year, there is no publicly available data on the percentage of theseflights that are currently arranged by or involve an air charter broker (or by direct air carriersacting as charter brokers by arranging transportation services that are fulfilled by a second directair carrier). There is considerable uncertainty regarding these issues.

Uncertainties include:

• The proportion of air charter transactions that involve a broker in some way, whether anair charter broker or a direct air carrier brokering air services to be provided by anotherdirect air carrier;

• The financial arrangements that characterize these broker-intermediated transactions,especially the mark up over "customary" passenger air charter prices that brokers receivefor their services (or the amount that direct air carriers might discount their rates inexchange for providing the air transportation services arranged by charter brokers);

• The number of entities or persons involved in passenger air charter transactions as aircharter brokers; and

• The size distribution, by revenues or by the number of flights arranged, of these brokerbusinesses or individuals and the frequency with which they conduct transactions,especially for the smaller, single individual enterprises within the sector.

The Department requests comment and additional information from interested parties regardingthese uncertainties about the size and structure of the air charter broker market.

ESTIMATING THE NUMBER OF AIR CHARTER FLIGHTS ARRANGED BY AIRCHARTER BROKERS

In order to estimate costs and other impacts on regulated parties that arise due to the proposedrule, it is necessary to make assumptions about these parameters characterizing air charteroperations. In particular, assumptions are necessary regarding:

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• The proportion of flights by charter air carriers that are non-revenue positioning flights;and

• The proportion of revenue flights that involve brokered arrangements by an air charterbroker or a direct air carrier providing brokered arrangements for transportation servicesfulfilled by another direct air carrier.

The values assumed above will drive estimates for the number of annual chartered airtransportation transactions that would be affected by the proposed rule, and the second permitsestimation of the annual revenues associated with air transportation brokerage activities.

The approach taken for estimating these values is to use the FY2011 Part 135 Non ScheduledPassenger Flights count of870,619 (see Table 1). Not all these flights are revenue flights,because sometimes aircraft have to be positioned to meet customers. The frequency of thesenon-revenue positioning flights - referred to as "empty legs" - is treated as sensitive andproprietary by most operators. Based on discussions with parties knowledgeable about thisaspect of the industry, for this calculation an estimate of25 percent non-revenue flights isassumed, with the parallel assumption that 75 percent of the FY2011 flights, or 652,964 arerevenue flights (.75 * 870,619). The Department requests comment on this assumption and onother elements of this analysis from interested parties and entities affected by the proposed rule.

We next need to estimate the percentage of revenue air charter flights that are arranged bybrokers. There is no firm estimate of this value in the industry, so low, midrange or baseline, andhigh estimates are created by assuming broker percentages of 20 percent, 30 percent, and 40percent, respectively. The Department requests comment on these estimated values frominterested parties.

Using this approach yields a low estimate of 130,593 revenue flights arranged by brokers(652,964* .2), a midrange or baseline estimate or 195,889 revenue flights arranged by brokers(652,964 * .3), and a high estimate of 261,186 revenue flights arranged by brokers in 2011(652,964 * .4). These values are shown in Table 2.

Table 2. Estimates for the Proportion ofFY2011 Part 135 Nonscheduled Passenger FlightsArranged by Air Charter Brokers

% of Charter RevenueFlights Involving aCharter Broker

Revenue FlightsInvolving a Broker

(FY11)20% of Charter

Flights30% of Charter

Flights40% of Charter

Flights

130,593

195,889

261,186

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The Department requests comment on these estimates from interested parties, especially otherinformation that could improve the estimates.

PROPOSED NEW REGULATORY REQUIREMENTS FOR AIR CHARTER BROKERS

There are several regulatory requirements proposed for air charter brokers in the proposed rule.These requirements address issues of consumer protection and information disclosure by aircharter brokers and informational or transparency requirements for direct air carriers that sub-contract charter flights (Part 298 Subpart I of the proposed rule). This section is a summary ofthe provisions of the proposed rule, and readers should look to the proposed rule itself for thegoverning language of the proposed rule.

Consumer protections specified in the proposed rule include:

• Use of direct air carriers by those brokering air transportation services;• Identification of misrepresentations that air charter brokers may not engage in, since they

constitute forms of unfair or deceptive practice, or an unfair method of competition;• Disclosures in advertising and solicitation materials and, prior to contracting with a

consumer, disclosures regarding operations, insurance, total cost, agency roles and otherspecial relationships with direct air carriers that air charter brokers must provide tocharterers; and

• Requirement to make prompt refunds when refunds are due.

Finally, for air taxi operators selling charter flights that are operated by another direct air carrier,the proposed rule identifies

• Misrepresentations that should not be engaged in by direct air carriers that are sub-contracting single entity charters by using other direct air carriers; and

• Disclosures that direct air carriers that are sub-contracting single entity charters shallprovide to charterers, which are analogous to those proposed for air charter brokers.

BENEFITS OF THE PROPOSED RULE

The Department believes that the role of broke ring in the marketplace for on-demand passengerair transportation services has become common and relatively routine, but that existingregulations authorizing indirect air carriage operations have not kept pace with the brokeringmarketplace. Furthermore, the Department believes that the on-demand passenger airtransportation marketplace is especially susceptible to inefficiency due to imperfect information.Air charter brokers are particularly valuable where consumer information is costly to collect dueto the number of features to compare across products, e.g., safety audit information, aircraftspecifications, ancillary services, and the difficulty obtaining price information. Therefore, thereare benefits for market participants from explicit codification of existing Department guidanceand directives regarding air charter broker business practices. In particular, the rules proposed

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here are intended to remove unnecessary restrictions on innovations in the on-demand charterindustry while ensuring necessary consumer protections are met.

The Department believes that there is value for both the public and competitors in this marketfrom the increased transparency and consistency of practice that the proposed rule wouldencourage for air charter brokering activity. This is especially true with respect to the proposedrule's prohibitions on specific types of misrepresentation by air charter brokers of broker serviceofferings and the proposed rule's requirement for timely disclosure ofthe identity of the directair carrier that will be actually providing air transportation. The value of timely and accurateproduct information for consumer decision making is recognized as a compelling rationale forgovernment regulation if the market place is not providing this information in all circumstances.

As is noted in OMB Circular A_4,7 "when it is time-consuming or costly for consumers toevaluate complex information about products or services ... , they may expect government toensure that minimum quality standards are met." It is the Department's view that informationabout the operational details of passenger air charter flights arranged by an air charter broker orother entity subject to the provisions of this NPRM is an example of information that would betime-consuming or costly for consumers to obtain and evaluate on their own and damaging ordisruptive for consumers if they do not receive such information or if the information theyreceive is inaccurate. For this reason, the Department believes that it is reasonable to require thatair charter brokers make these informational benefits possible by providing their customers withcomplete and accurate representations of operational and other details of the flights arranged forthem, as detailed in the proposed rule.

This said, it is not possible to quantify in monetary terms the benefits of the proposed regulation.In many ways, the requirements for disclosure that air charter brokers do not themselves providetransportation through operational control of an aircraft and disclosure of the details about thetransaction with the direct air carrier that will provide the transportation services are similar ineffect to past regulations affecting aviation passenger well-being and state of mind. An exampleis the DOT Final Rule on Disclosure of Code Sharing Arrangements and Long-Term WetLeases," where it was argued that "to the extent that the rule protects these travelers from beingmisled or inconvenienced, the passengers are benefited.?" Air charter brokers and the direct aircarriers with which they transact business should also benefit from increased chartererconfidence in the industry's behavior. For cases where new escrow requirements are part of theproposed rule, charterers will be able to have greater confidence in the reliability of theirtransactions and their counterparties in charter transactions.

7 http://www.whitehouse.gov!sites!default!files!omb!assets!regulatory matters pdf!a-4.pdf8 Docket DOT-OST-1995-179 and DOT-05T-1995-6239 Final Regulatory Evaluation, Final Rule on Disclosure of Code-Sharing Arrangements and Long-Term Leases, page17. OST-95-179-74

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The Department requests comments from interested parties regarding its understanding of the aircharter broker market and the opportunities for enabling these benefits within it for consumers.We also solicit comment on the benefits to air charter brokers of the proposal that allows them tolawfully engage in indirect air transportation.

ESTIMATED COSTS OF THE PROPOSED RULE

The proposed rule establishes requirements for actions and disclosures to be made by air charterbrokers that result in more accurate and transparent information about brokered air transportationtransactions being present in the marketplace for charterers. This includes disclosures that are tobe made by air taxi operators that may be selling air charter flights that are operated by someother direct air carrier.

Cost Element 1. Disclosure of the nature of air charter brokers as indirect airtransportation

This refers to the requirement in 295.24(a) that all air charter broker solicitation materials andadvertising, including Internet webpages should clearly and conspicuously state that the aircharter broker is not a direct air carrier in operational control of aircraft, and that the air serviceadvertised would be provided by a properly licensed direct air carrier.

Discussions with individuals knowledgeable about the current air charter broker industry indicatethat costs to comply with this disclosure requirement by changing a small portion of an aircharter broker's advertising webpages or printed materials would be minimal. In addition,making the required disclosures is already customary business practice in a significant part of thecurrent industry.

Based on these discussions, the Department believes that the cost of compliance with this aspectof the proposed rule is de minimis for entities in the air charter broker industry.

Cost Element 2. Timely communication to charterer of required disclosures (and timelyupdates or changes in details of these disclosures as necessary)

This refers to the disclosure requirements itemized for air charter brokers in 295.24(b) through29S.24(g) and similarly itemized for air taxi operators selling air charter flights that are operatedby some other direct air carrier in 298.100.

Costs associated with these disclosure requirements arise with each arrangement of airtransportation by an air charter broker (or by an air taxi operator selling air charter flightsoperated by some other direct air carrier). For this reason, new annual costs of compliance withthese disclosure requirements for the air charter broker industry as a whole scale directly with thenumber of air travel arrangements made by the industry for charterers each year.

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Discussions with individuals knowledgeable about the current air charter broker industry indicatethat making these disclosures to charterers are a standard part of current business practice withinthe industry, and that there would therefore be no new compliance costs in this area for asignificant proportion of air charter broker transactions with charterers. However, because thescale of the industry is so poorly understood, and because the proportion of air chartertransactions that involve an air charter broker at all is unknown, it is difficult to quantify thisaspect of the compliance costs associated with required disclosures.

The range of proportions for air charter broker presence in the overall air charter marketplacedeveloped above can be used to inform an estimate. This range was reported in Table 4 below.

For each air charter broker transaction, discussions with individuals knowledgeable about thecurrent air charter broker industry indicate that the time required for an air charter broker torecord and share the necessary data elements with a charterer is modest. To estimate the cost ofthis for air charter brokers not currently providing charterers with the identified disclosures, it isassumed that accomplishing the disclosures takes 15 minutes of the time of a qualified sales staffperson employed by the air charter broker. Part of the justification for this time estimate is thatthe information to be disclosed is comprised of data elements that arise naturally from thearrangement of a flight operated by a direct air carrier.

The Department assumes that the qualified sales staff employee has training and compensationcomparable to a first line supervisor of office and administrative support staff. As of May 2011,based on survey data from the U.S. Department of Labor, persons in such an occupational nichehad a mean hourly wage of$25.62 and a mean annual salary of$52,280.10

Combining this mean hourly wage with the estimated time requirement of 15 minutes foraccomplishing the disclosure requirements for air charter brokers not already making thedisclosures to its charterers results in a cost per air transportation transaction of $6.41.11

The low estimate for the extent of the presence of brokered transactions in the charter marketresults in an annual cost of$837,000 (130.593 *$6.41), the midrange or baseline estimate anannual cost of$1.256 million (195,889 * $6.41), and the high estimate results in an annual costof $1.674 million (261,186 * $6.41). Because an unknown proportion of these transactionsinvolve air charter brokers that already comply with the information disclosure requirements andwould face no new costs from compliance, these estimates are conservative in the sense that theyoverstate the aggregate annual costs to the industry of compliance. These costs are reported inTable 3.

10 See the Occupational Employment Statistics profile at http://www.bls.gov/oes/current/naics4_481200.htm#OO-0000.11 $25.62 x 0.25 hour = $6.41.

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Table 3. Estimated Annual Costs of Compliance with Information DisclosureRequirements

Annual Cost to% of Charter Revenue 2011 Air Charter ProvideFlights Involving a Flights Involving a Information toCharter Broker Broker Charterers

20% of Charter Flights 130,593 $837,101

30% of Charter Flights 195,889 $1,255,648

40% of Charter Flights 261,186 $1,674,202

The Department believes that these costs of information disclosure by air charter brokers tocharterers represent the single quantifiable cost associated with compliance with the proposedrule.

The Department requests comment and other information regarding this estimate of informationdisclosure costs and regarding the assumptions underlying the estimate from interested partiesand entities affected by the proposed rule.

COMPARISON OF COSTS AND BENEFITS

Although it was not found possible to quantify the benefits of greater codification and markettransparency in the air charter broker market, qualitative consideration of the effects of thistransparency and greater information availability for travelers using air charter brokers lead theDepartment to conclude that the proposed rule would be cost beneficial. The Department callsfor comments on this determination, including any information that could improve theunderlying analysis.

PROJECTIONS OF FUTURE COST IMPACTS

We project future cost impacts ofthe proposed rule by taking the discounted present value of thecost impact in Cost Element 2 over 20 years (2013-2032) using a discount rate of seven percentas specified in OMB Circular A-4. The corresponding discount factor is then 10.594 for the 20-year period of analysis. 12 For example, the present value using the 20 percent low-end would beabout $8.7 million (821,429 * 10.594). If the number of annually affected flights grows overtime, these numbers will be on the low side. The Department requests comment on theseassumptions from affected entities.

12Discounted Present Value= Annual Cost * [(1.07)20 _1/(1.07)20 * (.07)]The discount factor is [{1.07)20 _1/(1.07)20 * (.07)]

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Using these assumptions, Table 4 presents the 20 year projection of the annual cost impacts ofthe proposed rule for the range of compliance cost estimates reported in Table 3.

Table 4. Discounted Present Value of 20 Year Compliance Costs for the Proposed AirCharter Broker Rule

Cost Impact ($millions), 20% Cost Impact ($millions), 30% Cost Impact ($millions), 40%Charter Brokeraqe Charter Brokeraqe Charter Brokerage8.868 13.302 17.736

INITIAL REGULATORY FLEXIBILITY DETERMINATION

The Regulatory Flexibility Act of 1980 (Public Law 96-354) (RFA) was enacted by Congress toensure that small entities are not unnecessarily and disproportionately burdened by governmentregulations. It requires that agencies review regulations that may have a significant economicimpact on a substantial number of small entities, and if possible to fit regulatory andinformational requirements to the scale of the entities subject to regulation. However, if it isdetermined that a rule is not expected to have a significant economic impact on a substantialnumber of small entities, section 605(b) of the RFA provides that the head of the agency may socertify and a regulatory flexibility analysis is not required. The certification must include astatement providing the factual basis for this determination, and the reasoning should be clear.

Criteria for identifying small business entities are provided by the Small Business Administrationin its publication, Table of Small Business Size Standards Matched to North American IndustryClassification System Codes. These size standards are customarily based on an entity's grossreceipts or its employment. There is no North American Industry Classification System(NAICS) code for air charter brokers. Industries that are similar to air charter brokers areNonscheduled chartered passenger air transportation (NAICS code 481211), Travel agencies(NAICS code 561510) and All other travel arrangements and reservations services (NArCScode 561599). It is important to note that firms in NArCS code 481211 provide transportationservices, while air charter brokers do not.

The size standard for nonscheduled chartered passenger air transportation firms is 1,500employees; firms with fewer than 1,500 employees are designated as small entities by the SBA.If air charter brokers were treated as analogous to these firms, all air charter brokers would besmall entities, based on discussions with those knowledgeable about the industry. There is nopublic data on the number of air charter brokers operating in the country.

The size standard for travel agencies is $3.5 million in annual gross revenue, and the sizestandard for all other travel arrangements and reservations services is $7 million in annual grossreceipts. However, "amounts collected for another by a travel agent" are not included in grossreceipts (13 CFR 121.104). This exclusion would reasonably exclude the amounts collected byair charter brokers for the direct air carriers that actually provide the air transportation arranged

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by brokers. While there is no reported data on the distribution of annual gross receipts by aircharter broker firms, discussion with those knowledgeable about the industry indicate that nearlyall air charter broker firms would be small entities under either of these standards.

Therefore, the Department believes that the majority, if not all, air charter brokers are smallentities.

One of the cost impacts on regulated entities of the proposed rule for air charter brokers stemsfrom 295.24(a), which requires that certain disclosures about the nature of the air charter brokerbusiness be placed on entity solicitation materials and advertisements, including webpages. TheDepartment believes that this cost impact is de minimis, since compliance involves adding therequired disclosure information to the existing HTML code for pages on a website, or adding therequired disclosure information to pages of an entity's advertising or solicitation printedmaterials. Neither of these represent significant incremental outlays for the coding of a webpageor the preparation and printing of hard copy materials, since the materials were to have beenproduced in any case.

A second cost impact arises from the information disclosure requirements regarding air charterbroker transactions with charterers. These requirements are identified in 295.24(b) (1)--(6) andthe requirements for timely updating of changed information for charterers in 295 .24(c) and295.24(f). These requirements affect each arrangement of air transportation that a charter brokerwould transact, and based on discussions with knowledgeable parties in the industry, theinformation disclosures required in the proposed rule represent current practice for many charterbrokers already. For these brokers, there would be no costs associated with aligning businesspractices with the new requirements.

It is not known what proportion of air charter transactions are done by brokers, nor how manybrokers and broker transactions would be affected by the new information disclosurerequirements. However, the information required to be disclosed to charterers is information thatis fundamental to the air charter brokering transaction, so there is no requirement for newinformation gathering by air charter brokers affected by the proposed rule. As described in thediscussion of cost impacts, it is estimated, based on discussions with knowledgeable persons inthe industry that organizing and presenting the required information to potential charterers wouldrequire no more than 15 minutes of air charter broker staff time. Using an average hourly wageof $25.62, the cost of complying with the information disclosure requirements ofthe proposedrule total $6.41 per brokered charter arrangement. The Department does not consider this pertransaction cost significant, especially since a sizeable part of the air charter broker industryalready makes such disclosures as part of current business practice.

As a result, the Department certifies that the proposed rule would not have a significanteconomic impact on a substantial number of small entities. The Department requests commentsfrom affected entities on this finding and determination.

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