Relaxed Charter Rules Are Proposed : Airlines: Travelers would be able to pay for flights on credit, but would lose some mandated protections.

Changes in the rules affecting charter flights are in the works under a new Department of Transportation proposal. According to the DOT, the proposed overhaul would foster competition in the marketplace and promote more low-cost air transportation.

In explaining the reasons for the revisions, the DOT cited a healthier and more financially stable charter industry.

“Our experience in the charter field suggests that we can relax regulations without causing risks to consumers,” said John Coleman, director of the office of aviation analysis for the DOT in Washington, D.C.

The proposed revisions include: dropping the requirement that charter operators place consumer money for each charter flight in a special escrow account, a sign that the industry is more financially secure; leaving refund policies up to the individual operator, and permitting operators to accept credit card payment for charter flights.

Charter flights were one of three areas left under governmental regulation when the Civil Aeronautics Board was dissolved in 1978 and airlines were deregulated. (The other two: overbooking compensation for passengers bumped from flights, and lost baggage.)

Now the DOT, which took over administration of the carriers after deregulation, has proposed a simplification of the charter rules. Consumers are invited to offer their comments to the DOT on this issue.

Currently, charter operators have to put passenger money for each flight into an escrow account in a federally insured bank or savings and loan, and this money can’t be touched until the flight has departed.

“Most of the burden under this proposal would fall upon the charter airline, which would have the responsibility of making sure the consumer money for the flight is safe, since it would be responsible for any refunds in case a flight is canceled,” said Brian Clewer, president of Continental Travel in Santa Monica. Clewer has been involved in the charter market for more than 30 years. “There has been such a shakeout in the charter field over the years that those left are quite responsible. The charter airlines today tend to be in better shape than some of our scheduled airlines.”

Currently, consumers sign a contract with the charter operator. But this is another provision that the DOT would like to see dropped. “This is an administrative burden that adds to the cost of the charter and which isn’t needed any longer,” Coleman said. “However, we’re still insisting on full disclosure of all conditions and terms about price changes, cancellations, refunds and like matters.”

Current rules require charter operators to give consumers the right to cancel and receive a full refund if they choose not to accept any “major change” in either the price of a charter or the charter’s itinerary. Typically, a “major change” in itinerary means a change in the time of departure or arrival of more than 48 hours. A major change in price is one that involves more than a 10% hike.

“The change needs to be one that would seriously affect an itinerary, and such changes have been of minimal importance,” Clewer said. “Major changes are very rare.”

Clewer provided an example of how major changes are avoided.

“One charter operator had flights from Los Angeles and San Francisco to Paris last summer,” he explained. “The flight from Los Angeles didn’t fill up, so it was consolidated with the San Francisco departure. This development wasn’t considered a ‘major change’ since the operator purchased one-way tickets on a scheduled airline to fly the L.A. passengers up to San Francisco, and the entire group got to Paris within three hours of their original arrival time.”

Under the DOT’s proposal, no contract would have to be signed by the consumer, and the DOT would no longer dictate a rule about refunds. Instead, charter operators would be required to give passengers advance notice--either in their brochures or the point of sale--about cancellation and refund policies, and the right to file a claim under the charter operator’s bond. Claims against the operator’s bond now have to be made within 60 days after a flight returns, but this cutoff point would be dropped under the new rules.

If the rules are passed, travelers would be able to see a full contract of carriage, which the operator would have to make available by mail. Travelers could then book a flight and still be able to cancel and get a full refund after they see the terms of the contract.

“Instead of dictating a refund policy, such as about ‘major changes,’ we’re considering allowing operators to work under marketplace conditions as long as they provide notice of their policies to travelers,” Coleman said.

“While there would be less protection for the consumer, technically, on the books under this proposal, the escrow account is no longer that important and careful travelers shouldn’t have any problem, especially if they work with a knowledgeable travel agent,” said Heinz Neiderhoff, head of Los Angeles-based Der Travel, a company active in the charter market.

“While charter operators would be able to issue their own policies on refunds, I don’t anticipate any changes since operators will want to make their products competitive with other fares offered to the public, such as those promoted by consolidators.”

On the credit card issue, travelers can use a credit card to book a charter flight if they go through a travel agent. But charter operators can only accept a check or money order on sales made directly to them. The DOT would like to do away with this rule as well. “The credit card restriction is archaic,” Coleman said.

Consumers who pay by credit card have the extra protection of protesting any non-performance through the credit card issuer.

Consumers are invited to send their comments to the DOT on the proposed rules changes in charter flights. Comments should be submitted by Nov. 16 to the Department of Transportation, Docket 48341, 400 Seventh St. S.W., Washington, D.C. 20590.