Foreign and direct air carriers operating in United States airways must be properly credentialed by the federal government. Pursuant to Part §212.8 of Title 14, customer's payment must be protected by a financial assurance mechanism and/or segregated accounts with a financial institution. The direct air carrier's surety bond is a convenient method of complying with this Code requirement.
Per subsection (a), "(a) No certificated air carrier or foreign air carrier may perform any charter trip (other than cargo) originating in the United States or any Overseas Military Personnel Charter trip, nor accept an advance payment in connection with any such trip unless there is on file with the Department a surety bond which guarantees the performance of all charter trips in whole or in part by the carrier pursuant to any contracts entered into by the same." The amount of direct air carrier bond must be OPEN PENALTY. The claims are limited to amounts that are paid to the carrier for U.S.-originating passenger charter flights that carrier fails to perform or to refund. The surety bond must be issued by a bonding or surety company which is either listed in AM Best's Insurance Reports rating of A or better or appears on the U.S. Department of Treasury's circular of companies (the "T-List") that are acceptable sureties on federal obligations. An aggrieved party must file with the carrier or with the surety a claim within sixty (60) days after cancellation of a charter trip with respect to which the charterer's advance payments are secured by the direct air carrier's bond, or the claim is barred.
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