[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 770 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 770

To amend the Federal Aviation Act of 1958 to authorize the Secretary of 
 Transportation to prevent United States air carriers from engaging in 
                           predatory pricing.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                April 2 (legislative day March 3), 1993

 Mr. Danforth introduced the following bill; which was read twice and 
   referred to the Committee on Commerce, Science, and Transportation

_______________________________________________________________________

                                 A BILL


 
To amend the Federal Aviation Act of 1958 to authorize the Secretary of 
 Transportation to prevent United States air carriers from engaging in 
                           predatory pricing.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Airline Predatory Pricing Prevention 
Act of 1993''.

SEC. 2. AUTHORITY TO ISSUE CEASE AND DESIST ORDERS.

    (a) In General.--Section 411 of the Federal Aviation Act of 1958 
(49 App. U.S.C. 1381) is amended by adding at the end the following new 
subsection:
    ``(c) Predatory Pricing.--
            ``(1) Preliminary investigation and cease and desist 
        order.--
                    ``(A) Investigation.--Within seven days after 
                receiving a written complaint of sufficient 
                particularity by any person that any air carrier has 
                been engaging in predatory pricing in the provision of 
                air transportation in a city-pair market, the Secretary 
                of Transportation shall conduct a preliminary 
                investigation into the allegations made in the 
                complaint.
                    ``(B) Cease and desist order.--If as a result of 
                the preliminary investigation the Secretary finds that 
                there is a significant likelihood that one of the two 
                indicators of predatory pricing specified in paragraph 
                (4) exists, the Secretary shall order such air carrier 
                to cease and desist from engaging in the alleged 
                predatory pricing until the conclusion of a full 
                investigation under paragraph (2) or the elapse of 
                ninety days following the date of such order, whichever 
                occurs first.
                    ``(C) Negative finding.--If as a result of the 
                preliminary investigation the Secretary finds that 
                there is not such a significant likelihood, the 
                Secretary shall publish in the Federal Register an 
                explanation of the reasons for that finding.
            ``(2) Full investigation and permanent cease and desist 
        order.--
                    ``(A) Investigation.--If the Secretary of 
                Transportation makes the finding described in paragraph 
                (1)(B), the Secretary shall conduct a full 
                investigation into the alleged predatory pricing. The 
                Secretary shall, in the course of such full 
                investigation, provide interested parties with an 
                opportunity to furnish information that the Secretary 
                considers important.
                    ``(B) Permanent cease and desist order.--If after 
                conducting a full investigation under subparagraph (A) 
                the Secretary finds that an air carrier has been 
                engaging in predatory pricing, the Secretary shall 
                order such air carrier to cease and desist from 
                engaging in such predatory pricing.
                    ``(C) Rebuttable presumption.--In a full 
                investigation under this paragraph, an air carrier is 
                presumed to be engaging in predatory pricing in a city-
                pair market if any of the two indicators of predatory 
                pricing specified in paragraph (4) is shown to exist. 
                This presumption may be rebutted by clear and 
                convincing evidence.
            ``(3) Penalties.--Any person who knowingly fails to obey a 
        cease and desist order under paragraph (1) or (2) shall be 
        subject to a civil penalty of $10,000 for each offense, and 
        each day during which such offense continues is deemed a 
        separate offense.
            ``(4) Indicators of predatory pricing.--The two indicators 
        of predatory pricing referred to in paragraphs (1)(B) and 
        (2)(C) are as follows:
                    ``(A) The pricing by the air carrier for air 
                transportation in the city-pair market at issue is 
                below the direct operating costs of the air carrier in 
                providing such transportation.
                    ``(B) Decreases in the pricing by the air carrier 
                for such air transportation are occurring when market 
                forces have led to sustained downward development of 
                air fares deviating significantly from ordinary 
                seasonal pricing movements and resulting in widespread 
                losses among all air carriers for providing such air 
                transportation, taking into account--
                            ``(i) the level of pricing for air 
                        transportation in comparable city-pair markets;
                            ``(ii) the revenue levels that were at the 
                        time of the transportation adequate under 
                        honest, economical, and efficient management to 
                        cover total operating expenses and to provide 
                        each such carrier with a flow of net income, 
                        plus depreciation, adequate to support prudent 
                        capital outlays, assure the repayment of a 
                        reasonable level of debt, permit the raising of 
                        needed equity capital, and take into account 
                        reasonable estimated or foreseeable future 
                        costs.
            ``(5) Direct operating costs defined.--In this subsection, 
        the term `direct operating costs' means the costs sustained by 
        an air carrier in the preparation and execution of a single 
        flight of an aircraft in a city-pair market, including--
                    ``(A) expenses related to the aircraft, including 
                flight crew compensation, landing fees, fuel and oil, 
                hull insurance, all direct and overhead costs of 
                maintenance, and the prorated amount of the rental 
                charge or purchase amount of the aircraft; and
                    ``(B) expenses related to passengers and freight, 
                including sales or travel agents' compensation, in-
                flight food and beverage expenses, and liability 
                insurance.''.
    (b) Conforming Amendment.--In the table of contents of the Federal 
Aviation Act of 1958, the item relating to section 411 is amended by 
adding at the end the following:

``(c) Predatory pricing.''.

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