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Procedures for Compensation of Air Carriers

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Information about this document as published in the Federal Register.

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Office of the Secretary, DOT.


Final rule; amendment.


On September 22, 2001, President Bush signed into law the Air Transportation Safety and System Stabilization Act (“the Act”). The Act makes available to the President funds to compensate air carriers, as defined in the Act, for direct losses suffered as a result of any Federal ground stop order and incremental losses beginning September 11, 2001, and ending December 31, 2001, resulting from the September 11 terrorist attacks on the United States. In order to fulfill Congress' intent to expeditiously provide compensation to eligible air carriers, the Department used procedures set out in Program Guidance Letters to make initial estimated payments amounting to about 50 percent of the authorized funds. On October 29, 2001, the Department published a final rule and request for comments establishing application procedures for air carriers interested in requesting compensation under this statute. On January 2, 2002, the Department published amendments to the final rule responding to comments and establishing a deadline for submitting applications by indirect air carriers and wet lessors. This document further amends the final rule to allow additional time for indirect air carriers and wet lessors to submit applications for compensation.


This rule is effective February 1, 2002.

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Steven Hatley, U.S. Department of Transportation, Office of International Aviation, 400 7th Street, SW., Room 6402, Washington, DC 20590. Telephone 202-366-1213.

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As a consequence of the terrorist attacks on the United States on September 11, 2001, the U.S. commercial aviation industry suffered severe financial losses. These losses placed the financial survival of many air carriers at risk. Acting rapidly to preserve the continued viability of the U.S. air transportation system, President Bush sought and Congress enacted the Air Transportation Safety and System Stabilization Act (“the Act”), Public Law 107-42.

Under section 101(a)(2)(A-B) of the Act, a total of $5 billion in compensation is provided for “direct losses incurred beginning on September 11, 2001, by air carriers as a result of any Federal ground stop order issued by the Secretary of Transportation or any subsequent order which continues or renews such stoppage; and the incremental losses incurred beginning September 11, 2001 and ending December 31, 2001, by air carriers as a direct result of such attacks.” The Department of Transportation previously disbursed initial estimated payments of nearly $2.5 billion of the $5 billion amount that Congress authorized, using procedures set forth in the Department's Program Guidance Letters that were widely distributed and posted on the Department's web site.

On October 29, 2001 (66 FR 54616), the Department published in the Federal Register a final rule and request for comments to establish procedures for air carriers who had received or wished to receive compensation under the Act. On January 2, 2002 (67 FR 250), the Department published amendments to the final rule responding to comments and establishing a deadline for submitting requests for compensation by indirect air carriers and wet lessors. Under the amended Start Printed Page 4900final rule, indirect air carriers and wet lessors could submit an application for compensation within 14 days of the January 2, 2002 publication date.

Request for Extension of Time

On January 16, 2002, the Department received a “Request for Extension of Time to Submit Applications for Compensation Pursuant to 14 CFR Part 330” from the New York/New Jersey Foreign Freight Forwarders and Brokers Association, Inc., the J.F.K. Airport Customs Broker Association Inc., and the South Florida Non-Vessel-Operating Common Carriers and Non-Aircraft-Operating Common Carriers Association, Inc. In the request, the Associations cite the lack of notice that indirect air carriers would be considered “eligible” for compensation and that 14 days is an inadequate amount of time to “prepare, identify shipments (actual and lost), properly document all losses related to air cargo operations during the Act's stated time period (September 11 through December 31, 2001), and submit all required materials prior to the January 16, 2002 deadline.” The Associations requested an extension through January 30, 2002.

DOT Response

After reviewing the request for extension of time, the Department has determined that a reasonable basis exists for extending the time period. First, although the compensation provisions of the Act had been implemented soon after its enactment, the Associations are correct that the first indication that indirect air carriers and wet lessors could be eligible for compensation—albeit under narrow circumstances—did not occur until January 2. Second, the Department is sensitive to the fact that small businesses may not have had the opportunity to thoroughly review the regulations and collect the necessary information within the 14 days provided. Third, extending the time period for indirect air carriers and wet lessors to submit a compensation application is consistent with the longer time period we gave air taxis (which are also primarily small businesses) to submit a compensation application. Finally, we believe that any potential prejudice to other carriers that have applied for compensation can be largely mitigated by proceeding with further payments of estimated compensation under the Act based on an estimate of the maximum number of revenue ton-miles (RTM) that could be reasonably claimed by both present and new applicants.

Accordingly, the Department hereby amends the final rule to allow an additional 7 calendar days from the date of this publication for indirect air carriers and wet lessors to submit a compensation application. However, we will adhere strictly to this new deadline. The Department will not accept late submissions unless an indirect air carrier or wet lessor demonstrates to the satisfaction of the Department that extremely unusual, extenuating circumstances, completely beyond its control, prevented it from making a timely submission and the Department determines that accepting the application is in the public interest.

Information Applicants Must Submit

Like all other applicants, indirect carriers and wet lessors (air carriers who provide “lift” to other air carriers under wet leases) applying under § 330.21(d), which is the section that contains the application deadline being extended today, should be careful to meet the documentation requirements of the regulations.

In administering the regulatory requirements, DOT is aware that the financial situations of some carriers may be extremely precarious, and that Congress intended they be afforded prompt action on their applications for relief. However, DOT must be scrupulous in assuring that public funds are disbursed in strict accord with statutory requirements. Thus, applicants should be aware that DOT will not process applications that fail to provide all of the information required. That information was set out in Part 330, and for all-cargo indirect air carriers and wet lessors, the data submission requirements of section 330.31 require particular attention.

A carrier that claims RTMs must document the RTMs generated for its own account, which was flown on its all-cargo flights, and it must identify the RTMs generated by other air carriers (under Aircraft, Crew, Maintenance, Insurance (ACMI) wet lease lift arrangements or other agreements). This information must be presented by carrier name and carrier code, with the number of RTMs clearly stated and segregated between RTMs generated by the claiming carrier and RTMs generated by other air carriers. Finally, applicants are again reminded that their applications must be accompanied by a certified statement, from the company's Chief Executive Officer, Chief Financial Officer, or Chief Operating Officer or, if those titles are not used, the equivalent officer, that the information was prepared under his or her supervision and is true and accurate under penalty of law. The claimant should also provide a similar certified statement from the other air carrier(s) stating that these RTMs were not claimed and will not be claimed by the other air carrier.

In meeting these requirements, applicants should especially ensure that written evidence is submitted that: (1) Demonstrates that the applicant meets the United States citizenship requirements to be an “air carrier” (49 U.S.C. § 40102); (2) clearly establishes the number of RTMs actually flown, segregated as necessary by the identity of the reporting carrier; (3) clearly establishes that the RTMs were generated on all-cargo flights only and not generated as “belly cargo” on combined passenger/cargo flights; [1] and (4) clearly establishes, in writing, both the carrier's entitlement to the RTMs and that no other carrier has claimed or will claim the RTMs.

Regulatory Analysis and Notices

This rule is an economically significant rule under Executive Order 12886, since it will facilitate the distribution of more than a billion dollars into the economy during the 12-month period following its issuance. Because of the need to move quickly to provide compensation to air carriers for the purpose of maintaining a safe, efficient, and viable commercial aviation system in the wake of the events of September 11, 2001, we are not required to provide an assessment of the potential cost and benefits of this regulatory action. The Department has determined that this rule is being issued in an emergency situation, within the meaning of Section 6(a)(3)(D) of Executive Order 12866. However, this impact is expected to be a favorable one: making these funds available to air carriers to compensate them for losses resulting from the terrorist attacks of September 11th.

Because a notice of proposed rulemaking is not required for this rulemaking under 5 U.S.C. 553, we are not required to prepare a regulatory flexibility analysis under 5 U.S.C. 604. However, we do note that this rule may have a significant economic effect on a substantial number of small entities. Among the entities in question are many indirect air carriers, wet lessors and air taxis, as well as some commuters and small certificated air carriers. In Start Printed Page 4901analyzing small entity impact for purposes of the Regulatory Flexibility Act, we believe that, to the extent that the rule impacts small air carriers, the impact will be a favorable one, since it will consist of receiving compensation. We have facilitated the participation of small entities in the program by allowing a longer application period for indirect air carriers, wet lessors and air taxis, which are generally the smallest carriers covered by this rule and which generally do not otherwise report traffic or financial data to the Department. The Department has also concluded that this rule does not have sufficient Federalism implications to warrant the consultation requirements of Executive Order 13132.

We are making this rule effective immediately, without prior opportunity for public notice and comment. Because of the need to move quickly to provide compensation to air carriers for the purpose of maintaining a safe, efficient, and viable commercial aviation system in the wake of the events of September 11, 2001, prior notice and comment would be impractical, unnecessary, and contrary to the public interest. Consequently, prior notice and comment under 5 U.S.C. 553 and delay of the effective date under 5 U.S.C. 801, et seq., are not being provided. On the same basis, we have determined that there is good cause to make the rule effective immediately, rather than in 30 days.

The Office of Management and Budget has approved the information collection requirements of this rule, with Control Number 2105-0546.

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List of Subjects in 14 CFR Part 330

  • Air carriers
  • Grant programs—transportation
  • Reporting and recordkeeping requirements
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Issued this 30th day of January, 2002, at Washington, DC.

Read C. Van de Water,

Assistant Secretary for Aviation and International Affairs.

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For the reasons set forth in the preamble, the Department amends 14 CFR part 330 as follows:

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1. Authority citation for Part 330 continues to read as follows:

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Authority: Pub. L. 107-42, 115 Stat. 230 (49 U.S.C. 40101 note); sec. 124(d), Pub. L. 107-71, 115 Stat. 631 (49 U.S.C. 40101 note).

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2. Revise § 330.21(d) introductory text to read as follows:

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When must air carriers apply for compensation?
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(d) Notwithstanding any other provision of this section, if you are an eligible air carrier that did not submit an application or wishes to amend its application, you may do so by February 8, 2002 if you are one of the following:

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1.  Congress set out separate eligibility schemes for passenger and cargo carriers, and included combined passenger-cargo flights within the passenger-only category. Compensation for passenger flights—including “combi” flights—is based upon available seat-miles, not RTMs, making it clear that Congress did not intend separate compensation for belly-cargo.

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[FR Doc. 02-2652 Filed 1-30-02; 4:57 pm]