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“BILL TO AMEND TITLE 49, UNITED STATES CODE, RELATING TO CRITERIA FOR GRANTING SLOTS TO NEW ENTRANT AIR CARRIERS” mentioning the U.S. Dept. of Transportation was published in the Extensions of Remarks section on pages E1653 on Sept. 4, 1997.
The publication is reproduced in full below:
BILL TO AMEND TITLE 49, UNITED STATES CODE, RELATING TO CRITERIA FOR
GRANTING SLOTS TO NEW ENTRANT AIR CARRIERS
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HON. JOHN J. LaFALCE
of new york
in the house of representatives
Thursday, September 4, 1997
Mr. LaFALCE. Mr. Speaker, today, I am introducing a bill that will increase competition among airlines, resulting in lower air fares for travelers throughout the country. Specifically, my bill would amend title 49, section 41714(c)(1) of the United States Code to enable new entrant air carriers to obtain access to airport slots at high density airports.
Under current law, the Secretary of Transportation may grant exemptions for new entrants to obtain slots at designated airports only if: First, it is in the public interest; and second, the Secretary finds that exceptional circumstances exist. An October 1996 report by the General Accounting Office found that few new entries have occurred because the exceptional circumstances requirement has been interpreted narrowly by the Department of Transportation, although there is no language in the legislative history to support a narrow construction. My bill would eliminate the exceptional circumstances criterion, thus encouraging the distribution of slots to new entrants.
Section 41714 governs the distribution of airport slots at the four slot-controlled airports in this country: LaGuardia, Kennedy, Chicago, and Washington National. To reduce congestion during peak traffic periods, in 1969 the Federal Aviation Administration [FAA] set limits on the number of takeoffs and landings that can occur at these airports by allocating takeoff and landing slots equitably among airlines. In an effort to minimize the Government's role in the allocation of slots, in 1985 the Department of Transportation [DOT] amended its regulations to allow airlines to buy and sell airport slots to one another. Under this buy/sell rule, the DOT grandfathered slots to the holders of record as of December 16, 1985. However, the DOT reserved its right to withdraw slots from those airlines and redistribute them at any time.
As a result of this grandfathering, a few established carriers control the vast majority of slots at these major airports. Not surprisingly, a seller's market for these slots has emerged. Established airlines rarely sell their slots and when they do the costs range from $500,000 during nonpeak hours to as much as $2 million during peak hours. The GAO report notes that in order to mount competitive service in a market, an airline needs about six slots, with at least three slots falling during peak periods. The unavailability and high costs of these slots has effectively precluded many low-cost carriers from entering the market.
Recognizing the need for new entry at these slot-controlled airports, in 1994 Congress passed Public Law 103-305, which directed the DOT to grant exemptions from these controls when the Secretary of Transportation ``finds it to be in the public interest and the circumstances to be exceptional.'' However, because of the Department's narrow construction of the exceptional circumstances requirement, little new entry has occurred. By eliminating this test, my bill will make it clear that Congress intends that these exemptions be liberally granted when it would serve the public interest.
The Department of Transportation's recent Domestic Airline Fares Consumer Report found that high airfares are a serious problem for the traveling public in many communities. Opening the market at these major airports to new entrants will increase competition and drive down airline ticket prices to destinations throughout the country. It is my hope that this bill will be the first step toward lowering airfares for those communities that have not benefitted from deregulation.
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