The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“THE FRIENDLY SKIES RESTORATION ACT” mentioning the U.S. Dept. of Transportation was published in the Extensions of Remarks section on pages E1729-E1730 on Sept. 16, 1998.
The publication is reproduced in full below:
THE FRIENDLY SKIES RESTORATION ACT
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HON. JOHN D. DINGELL
of michigan
in the house of representatives
Wednesday, September 16, 1998
Mr. DINGELL. Mr. Speaker, today I rise to introduce H.R. 4577, the Friendly Skies Restoration Act, in order to protect the American public from unfair practices in the airline industry and to ensure that the traveling public has access to reasonable airfare. Monopolistic attitudes and unprecedented levels of market concentration have caused consumer's pocketbook balances to nosedive while airline profits have soared. Congress should act to bring the benefits of full competition to the Nation or else other relief must be brought to bear. This legislation will do that. Consumers deserve policies that will achieve affordable airfare and accessible service.
There is growing public interest and concern over the issue of predatory conduct by major air carriers. Such practices eliminate competition in the air travel industry and create formidable barriers for entrepreneurs to break into the market. As an example of some suspect conduct, one has only to look back to when Northwest Airlines cut its fare from Detroit to Boston to as low as $69 from an average of
$259 when Spirit Airlines entered the market in 1996. Coincidentally, once Spirit was pushed out of the market, the average fare went up to
$267, exceeding even the original level. More recently, Northwest ran an upstart, Pro Air, out of the Detroit-Milwaukee market and is engaged in some curious behavior in the Detroit to Baltimore market. To provide a level playing field, vigorous competition must be permitted to take root. Unfair exclusionary practices that eliminate that competition must be rooted out.
When carriers respond to new competitors with severe drops and capacity expansion in order to run the new carrier out of the market, it is not good for consumers in the long run because it diminishes the number of options consumers will have by further consolidating the strength that the major dominant air carriers have over the markets today. After a new entrant is grounded, the major carrier simply retrenches and raises fares higher still in its resumed control. This leads to a markedly worse situation for consumers.
Congress expressly gave the Department of Transportation authority to stop any ``unfair or deceptive practice or unfair method of competition.'' Further, Congress has directed the Secretary of Transportation by statute to consider ``preventing unfair, deceptive, predatory, or anticompetitive practices in air transportation'' as being in the ``public interest and consistent with public convenience and necessity.'' The Department of Transportation's action under this authority has been woefully lacking. The federal government should do its job to help the public.
The Secretary of the Department of Transportation should take real action to advance the pro-competition policy objectives of the Congress. That action includes ensuring that the Department of Transportation's guidelines, which it is currently developing to deal with predatory activity, are effective. As proposed, the guidelines would permit the Secretary to impose sanctions if a major carrier should respond to a new entrant into a market in an unfair or exclusionary manner. More tools are needed and this bill provides them.
The bill would permit the Secretary to require that any air carrier deemed to be engaged in an unfair method of competition or unfair exclusionary practice, as a condition of continued service on the route involving the violation, to maintain the same levels of capacity and fare pricing that was deemed exclusionary for a period not to exceed two years. Such a tool should give a carrier pause for thought before implementing any activity that would unfairly respond to legitimate competition. Additionally, the bill would increase the monetary penalty for such unfair methods of competition under the U.S. Code from the current $1,000 to $10,000 for each day the violation continues or, if applicable, for each flight involving the violation.
There are presently proposals before the Department of Transportation that would combine the Nation's six largest carriers into three alliances with strengthened control over the United States market. The bill would give the Secretary of Transportation the authority to review joint venture agreements or cooperative working arrangements between major air carriers to ensure that such cooperation and integration among air carriers does not result in unfair or deceptive practices or unfair methods of competition that would harm the public.
At the four slot-controlled or high-density airports, the vast majority of the schedules take off and landing slots are controlled by the major carriers at these key hub airports. The airports are: New York's Kennedy and LaGuardia Airports, Chicago's O'Hare, and Washington's National Airport. For meaningful competition to take root, new entrant carriers must have a real opportunity to provide service in those markets. Of the more than 3,100 domestic air carrier slots at these four airports, fewer than forty-five slots are held by all the new entrant air carriers combined. Moreover, foreign air carriers have more than twice as many slots as domestic new entrant air carriers combines. Most of these slots were grandfathered to the major carriers more than a decade ago. The slots are government property, and it is time that the federal government use them to benefit the public rather than just a handful of airlines.
In order to remedy this barrier to competition, the bill would give the Secretary the authority to create, withdraw, and, as a last resort, auction slots at each slot-controlled airport for assignment to new entrant air carriers and other carriers with very limited access. If there is a withdrawal of slots for an auction, the Secretary may not auction more than ten percent for the first auction and five percent for each succeeding auction. Auctions may not take place earlier than two years from each preceding auction. Income from any auctions would finance taxpayer relief and improved airport infrastructure for the American public. Further, as recent evidence makes quite clear, strikes at hub airports can ground thousands of flights and hundreds of thousands of passengers, even on a daily basis. The bill would permit the President to authorize other air carriers to use the slots and related gates and other such facilities of another carrier which are not in use because of a work stoppage.
Slot possession at the four key airports where such controls are in place is a major issue, but questions like long-term exclusive gate leases at other airports represent just as nearly insurmountable obstacles to real competition in the airline industry. For that reason, it seems to make good sense that such arrangements be reviewed. The bill would direct the Secretary to issue a study on the ability of and proposals for new entrant air carriers and those with limited access at major hub airports to obtain gates and other facilities at airports on terms substantially equivalent to the terms provided to the major carriers already using airport facilities. The airfield must become a level playing field for competition.
It is important that the American public have access to useful information about the market and who in the industry is providing the best consumer value. Various studies by the General Accounting Office and private organizations have shown that concentration in the domestic airline industry continues to grow and is at extraordinarily high levels. Where such concentration exists, fairs have increased with a significant impact on residents and businesses in those communities. In order to evaluate consumer value and review potential implications of market concentration at hub airports, the bill would require the Secretary to prepare two quarterly reports for the public. One would rank the top and bottom ten domestic routes with regard to their average cost to the passenger, and the second would rank the large hub airports by market concentration and identify the market share of each airline operating at each of those airports. As has been said, sunlight is the best disinfectant. Let's let it shine on the airline industry.
At best, the promises of deregulation have not been fulfilled. The traveling public is still captive to monopolized routes and airports. Since 1978, the Nation has had unregulated monopoly, instead of regulated monopoly in this industry. While I fully support the goals of competition, two decades of experience only reveal consolidation, diminished choice, and higher prices in many markets. As a last resort, wherever there is insufficient competition the Secretary of Transportation must be empowered to change unreasonable airfares. Such conditions exist where there are less than two carriers in full competition or one carrier controls more than sixty percent of the market share on any route that the public flies. Where deregulation has failed, the Congress should respond and give consumers the relief they deserve.
The American public has been held hostage by the poor service and inordinate fares at the hands of the cartels in the air for too long. That is why I am pleased to introduce this bill to generate legitimate competition and secure reasonable prices for air travel for the country's consumers.
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