AGENCY:
Office of the Secretary, (OST), DOT.
ACTION:
60-day notice.
SUMMARY:
In compliance with the Paperwork Reduction Act of 1995, Public Law 104-13, the Office of the Secretary invites the general public, industry and other governmental parties to comment on the need for and usefulness of the Department's collecting three new quarterly reports from intra-Alaska air carriers required by the Rural Service Improvement Act of 2002 (RSIA) consisting of: Passenger, freight, and charter revenue by market by direction; a more detailed system income statement; and system excise taxes paid on passengers and freight. The reports would be required of all intra-Alaska carriers intending to qualify for the carriage of bush mail from the Postal Service.
DATES:
Written comments should be submitted by April 26, 2004.
ADDRESSES:
Comments should be directed to: Docket Management Facility; U.S. Department of Transportation, 400 Seventh Street, SW., PL-401, Washington, DC 20590-0001, fax no. (202) 493-2251 or e-mail: http://dms.dot.gov.
Comments: Comments should refer to the “RSIA Quarterly Financial Reports.” Persons wishing the Department to acknowledge receipt of their comments must submit with those comments a self-addressed stamped postcard on which the following statement is made: RSIA Quarterly Financial Reports. The postcard will be date/time stamped and returned.
FOR FURTHER INFORMATION CONTACT:
Kevin Adams, Office of Aviation Analysis, X-53, Room 6401, Office of the Secretary, 400 Seventh Street, SW., Washington, DC 20590-0001, (202) 366-1047.
SUPPLEMENTARY INFORMATION:
RSIA Quarterly Financial Reports
Title:
1. Quarterly Revenue Report by Community for Intra-Alaska Bush Carriers (net of excise tax);
2. Quarterly System Income Statement for Intra-Alaska Bush Mail Carriers;
3. Quarterly System Excise Tax.
This information was discussed in Order 2003-10-10, Issue 3.
Type of Review: New Reports required by the Rural Service Improvement Act of 2002, Section 3002 of Pub. L. 107-206.
Respondents: Intra-Alaska bush air carriers.
Number of Respondents: 33.
Number of Responses per year: 33 carriers × 4 quarters × 3 reports = 396.
Estimated Time per Response: 8 hours total per carrier per quarter.
Total Annual Burden: 33 carriers × 4 quarters × 8 hours = 1,056 hrs.
Needs and Uses: The Department will use this form to fulfill its obligation under the Rural Service Improvement Act of 2002 (RSIA). The Act states that to prevent carriers from overstating the amount of passengers and freight they carry in order to qualify for the carriage of Intra-Alaska bush mail, they must submit monthly reports depicting the excise taxes they paid for every market they served. We have fully discussed this issue in Department of Transportation Order 2003-10-10, http://www.dms.dot.gov,, Docket 14694, Issue 3 of that Order. We have attached that discussion herein as Appendix C. This information collection would allow the Department to monitor and disclose the amount of revenue each carrier generates in each market where it intends to qualify for the tender of mail by the Postal Service. All Intra-Alaska certificated carriers interested in being tendered bush mail are required to submit this information. The data would be submitted beginning with the quarter ended September 30, 2002, the first quarter when the Rural Service Improvement Act was implemented.
In order to encourage carriers to compete with each other as intended under the provisions of RSIA to qualify to carry mail at individual markets, and so that carriers in the market can review the accuracy of their competitors' reports, we intend to make the first and second reports public, 180 days after the end of the reporting period. Because the system excise taxes are drawn from and duplicative of IRS Form 720, which is not publicly disclosed, we would maintain the confidentiality of that individual report, and not disclose it outside the Department. The information to be collected and the requirement that it be collected were discussed in Department of Transportation Order 2003-10-10, Issue 3.
Issued in Washington, DC, on February 18, 2004.
Randall D. Bennett,
Director, Office of Aviation Analysis, X-50.
Appendix A—Carrier Name
Quarterly Revenue Report at Communties in Which Carriers are Interested in Being Tendered Mail
Appendix B—Name of Carrier
Quarterly System Income Statement Submitted by Carrier, Replacing Schedule F-1
Appendix C—Discussion of the New Reporting Requirements, per Order 2003-10-10, Docket 14694, October 8, 2003, Issue 3
The other issues discussed in that Order may be viewed on the Department's Docket Management System, http://www.dms.dot.gov.
Issue 3: section (k)(5) of the law provides that: “(5) Not later than 30 days after the last day of each calendar month, carriers qualified or attempting to be qualified to be tendered nonpriority bypass mail shall report to the Secretary the excise taxes paid by city pair to the Department of the Treasury and the weight of and revenue earned by the carriage of nonmail freight. Final compiled data shall be made available to carriers providing service in the hub.”
We have discussed this issue with BTS and the Postal Service. Some carriers have informally stated that quantifying excise taxes by market would prove difficult, if not impossible. It is not clear from the legislative history what the purpose is of carriers reporting excise taxes by route. We thus request comments on the best method to meet the requirements of the law.
The italicized elements were first listed in the Department's notice posted on April 16, 2003, in the docket to this proceeding (14694) in the Department's docket management system, and are referred to as the RFC, or Request for Comments.
Issue 3 Responses: In response to the RFC, many carriers said they were fearful the law would be thwarted by carriers' misreporting data. The law provides that only carriers transporting significant shares of passengers or non-mail freight will be tendered mail. For a few carriers, the bulk of their revenue and traffic is mail. In other words, those most dependent on mail revenue are those most at risk to have it taken away.
The law recognizes this concern by penalizing carriers that significantly overstate their passenger or cargo carriage by taking them out of tender, for increasingly extended periods of time with each violation. To attempt to ensure that carriers' passenger and cargo reports are accurate, the RSIA requires carriers to submit excise taxes by city-pair each month, with the expectation that, given such information, the Department and Postal Service could more readily detect misreporting of traffic. Many carriers state that excise taxes by city pair will be burdensome to report, because excise taxes are paid by the carrier selling the ticket or waybill, not necessarily by the carrier providing the service. They also argue that since excise taxes are paid when the sale is made, they may not reflect when passengers or freight are actually transported and the revenue earned. Warbelow's Air Ventures (Warbelow's) notes that excise taxes are a straight percentage of revenue, so in lieu of directly reporting excise taxes by each market, carriers could meet the requirements of the law by reporting revenue by market. We note too that for the freight pool, unlike the passenger pool, RSIA permits the Postal Service to use either the weight of the freight transported in the market, as reported on the T-100, or the associated revenue to determine qualification for tender, and this further supports our tentative decision to require the reporting of revenue.
One month for the first offense, six months for the second, one year for the third, and permanently for the fourth.
Excise tax is applied at 7.5% of passenger revenue and 6.25% of freight revenue. In addition, at a few non-rural airports in Alaska, carriers collect an excise tax of $3 per segment. Charter revenue is taxed similarly to scheduled revenue, except that aircraft with certificated take-off weight of less than 6,000 pounds are not taxed unless they operate with some degree of regularity between definite points.
While we recognize that the statute is designed to ensure accurate mail tender by the Postal Service and is not our primary responsibility to interpret, we believe the carriers raise serious problems with implementation of the excise tax report. We will continue to consider those concerns, but tentatively require that carriers report the data described in Appendix A on an interim basis. Since excise tax is a straight percentage of revenue, rather than directly reporting excise taxes by market, the same goal can be accomplished by reporting revenue by market. Because the Postal Service has said it will tender mail based on annual results, perhaps updated every three months, it would serve no purpose to collect this information by month, so we will require only quarterly submissions of the data in Appendix A. The information (consistent with the overall intent of the law) is to be made public and will accordingly be placed on the BTS Web site. As with the T-100 On-Flight O&D reports, which it crosschecks, we will afford carriers a 15-day grace period after the information is published on the BTS Web site to report corrections. We believe this interim reporting, along with that in Appendix B, will fully accomplish the intent of the legislation and considerably lessen the carriers' reporting burden.
The intent of this part of the legislation is to substantiate passenger and freight counts, and to reward carriers that transport significant passenger and freight levels with mail tender. Thus, carriers that do not expect to qualify for bypass mail do not need to submit the data on Appendix A.
We note that the Postal Service has said that it intends to modify its tender of non-priority, non-bypass mail to conform with the RSIA requirements for tender of bypass mail, even though the RSIA does not so require. The Consolidated Carriers object, stating that any special RSIA reporting cannot be extended beyond bypass mail. We agree, but the Postal Service can undertake its own data collection as necessary to administer its tender policy for non-priority, non-bypass mail. Of course, consistent with our rules, all carriers are still required to report the T-100 passenger and freight traffic, even those that do not transport any bypass mail.
The Consolidated Carriers consist of: Alaska Seaplane, Baker, Bellair, Cape Smythe, Grant, Iliamna, Island Air, Katmai, LAB, Larry's Flying Service, Olson, Servant, Skagway, Smokey Bay, Tanana, Taquan, Wings, and Wright.
Additional Reports, Appendix B
Larry's Flying Service recommends that the Department have carriers report a more detailed income statement, in lieu of excise taxes, stating: “Scheduled passenger revenue follows the Net Income line on [Schedule F-1 and] should not be flawed by any code-sharing or ticket stock issued by other airlines. If reported accurately, this should give the same or better information as would a creative exercise with excise taxes. We would not be averse to an added line for passenger charter revenue or (taxable) freight revenue as well.”
Again, we think RSIA imposes ultimate responsibility for data use on the Postal Service. While we consider this additional concern, this revised interim Schedule F-1 will serve as a proxy. Moreover, it requires minimal additional detail, will tentatively be submitted quarterly, not monthly, beginning with the QE 9/30/02, and is shown in Appendix B. Under the RSIA, Freight Revenue is an alternate way to rank carriers for inclusion in the freight pool. Also, having Charter Revenue will be useful as a check on carrier reporting, because many carriers are currently claiming that other operators are misclassifying charter passenger and freight operations as scheduled service. We will also tentatively require carriers to report, from the first page of IRS Form 720, system excise taxes for persons by air and property by air, beginning with QE 9/30/02. It is very easily reported, and should enable us to conduct reviews of carriers to pinpoint where on-site reviews might be required or where the Postal Service should be alerted to a potential problem. We will hold confidential the information on Form 720.
The only additional data that must be submitted are charter revenue, mail revenue, and freight revenue. The other additional lines are simply subtotals and totals of those data.
We believe Department instructions are clear: charter operations, including part charters, are those where customer(s) contract for the entire plane, without individual tickets or waybills. Comparing flight regularity with scheduled service is often not determinative in Alaska.
Appendix D—Carriers Transporting Intra-Alaska Bush Mail as of February 1, 2004
1. 40-Mile Air.
2. Alaska Central Express (ACE).
3. Alaska Seaplane.
4. Arctic Circle.
5. Arctic Transportation Services (ATS).
6. Baker.
7. Bellair.
8. Bering.
9. Camai (Village).
10.Cape Smythe.
11. ERA Aviation.
12. Frontier Flying Service.
13. Grant.
14. Hageland.
15. Iliamna.
16. Inland.
17. Island (Redemption).
18. LAB.
19. Larry's Flying Service.
20. Olson.
21. Peninsula.
22. Promech.
23. Servant.
24. Skagway.
25. Smokey Bay.
26. Spernak.
27. Tanana.
28. Taquan.
29. Tatonduk (Everts).
30. Warbelows Air Ventures.
31. Wings of Alaska.
32. Wright Air Service.
33. Yute.
[FR Doc. 04-4169 Filed 2-24-04; 8:45 am]
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