[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1331 Introduced in Senate (IS)]







105th CONGRESS
  1st Session
                                S. 1331

  To amend title 49, United States Code, to enhance domestic aviation 
 competition by providing for the auction of slots at slot-controlled 
                   airports, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 29, 1997

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

_______________________________________________________________________

                                 A BILL


 
  To amend title 49, United States Code, to enhance domestic aviation 
 competition by providing for the auction of slots at slot-controlled 
                   airports, and for other purposes.

    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 ``Aviation Competition Enhancement Act 
of 1997''.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) the Airline Deregulation Act anticipated the opening of 
        markets and the growth of competitive airline service 
        throughout the United States;
            (2) airline competition benefits communities and consumers 
        and should be promoted by the Federal government;
            (3) the introduction of low-fare competition into certain 
        markets has enabled more consumers to fly in those markets, 
        resulting in enormous economic growth for those communities;
            (4) although the deregulation of the domestic airline 
        industry has led to better service and lower fares for most air 
        travelers, the full benefits of airline deregulation have yet 
        to be realized, particularly in communities served by small hub 
        airports and medium hub airports;
            (5) the Secretary of Transportation has the authority to 
        promulgate and enforce standards of fair competition in the 
        airline industry under section 41712 of title 49, United States 
        Code;
            (6) studies by the General Accounting Office (GAO) and 
        independent concerns show that concentration in the domestic 
        airline industry continues to increase and that, where such 
        concentration exists, fares have increased, with a significant 
        impact on communities and their residents;
            (7) the GAO has identified operating limits, to include 
        slot controls, perimeter rules, and other airport restrictions 
        that continue to block airline entry at key airports in the 
        East and upper Midwest, that have an impact on air 
        transportation service throughout the country;
            (8) of the over 3,100 domestic air carrier slots at the 4 
        slot-controlled airports, which are known as ``high density 
        airports''--
                    (A) fewer than 45 slots are held collectively by 
                air carriers started after deregulation; and
                    (B) foreign carriers hold approximately twice as 
                many slots as new entrant air carriers;
            (9) the Department of Transportation allowed the 
        established air carriers to retain a large portion of their 
        slots free-of-charge when the current ``Buy-Sell Rule'' was 
        instituted in 1985;
            (10) access to slot-controlled airports is crucial to 
        establishing new air service in the heavily-traveled eastern 
        and midwestern markets and if carriers are going to be able to 
        increase services to markets served by small hub airports and 
        medium hub airports, particularly in the Southeast and the 
        Midwest;
            (11) the 1993 National Commission to Ensure a Strong 
        Competitive Airline Industry recommended that the Federal 
        Aviation Administration (FAA) ``review the rule that limits 
        operations at high density airports with the aim of either 
        removing these artificial limits or raising them to the highest 
        practicable level consistent with safety requirements'';
            (12) the GAO reports that additional action is needed 
        because the Department of Transportation is limited in the 
        number of new slots it can grant through the current exemption 
        process;
            (13) the perimeter rule at Washington National Airport is 
        Federally-mandated; and
            (14) increasing competition by removing barriers would not 
        increase noise at Washington National Airport due to the 
        continued applicability of limitations on the number of hourly 
        air carrier operations, and noise restrictions that are in 
        effect at Washington National Airport after 10:00 p.m., which 
        further restrict operations by certain Stage 3 aircraft, the 
        standard for the quietest aircraft technology.

SEC. 3. REDISTRIBUTION OF SLOTS BY AUCTION.

    (a) In General.--Subpart II of part A of subtitle VII of title 49, 
United States Code, is amended by adding at the end thereof the 
following:

                      ``CHAPTER 455--SLOT AUCTIONS

``Sec.
``45501. General authority to create, withdraw, and auction slots.
``45502. Auction.
``45503. Special rules.
``45504. Definitions.
``Sec. 45501. General authority to create, withdraw, and auction slots
    ``(a) In General.--The Secretary of Transportation shall allocate 
slots at each slot-controlled airport for assignment to new entrant air 
carriers and limited incumbent carriers in accordance with this 
chapter.
    ``(b) Application Process.--
            ``(1) Request for slots.--An air carrier with appropriate 
        Federal Aviation Administration safety certification and 
        Department of Transportation economic certification may submit 
        a request to the Secretary for slots at a high density airport. 
        The application shall include--
                    ``(A) the markets to be served;
                    ``(B) the times requested;
                    ``(C) information on the passenger demand for the 
                service to be provided; and
                    ``(D) such additional information as the Secretary 
                may require.
            ``(2) Action on request; failure to act.--Within 45 days 
        after a request under paragraph (1) is received by the 
        Secretary, the Secretary shall--
                    ``(A) approve the request for processing if the 
                Secretary believes that--
                            ``(i) the applicant can operate the service 
                        for a period of not less than 180 days; and
                            ``(ii) the service will improve the 
                        competitive environment; or
                    ``(B) return the request to the applicant for 
                further information.
        If the Secretary neither approves the request under 
        subparagraph (A) nor returns the request under subparagraph (B) 
        within the 45-day period beginning on the date it is received, 
        then a request under paragraph (1) is deemed to have been 
        approved on the 45th day.
            ``(3) Priority for certain markets.--In carrying out this 
        subsection, the Secretary shall give priority to the 
        consideration of applications that propose to provide service 
        to communities served by small hub airports, medium hub 
        airports, and other airports that do not have service to the 
        high-density airport to which the application relates.
    ``(c) Allocation Process.--
            ``(1) If slots are available.--If an application under 
        subsection (b) is approved for processing, the Secretary first 
        shall allocate slots within 60 minutes of the requested times 
        if--
                    ``(A) unused slots are available; or
                    ``(B) slots may be awarded through the exemption 
                process in accordance with the Federal Aviation 
                Administration's air traffic priorities.
            ``(2) If slots are unavailable.--If an application under 
        subsection (b) is approved for processing but the requested 
        slots are not available for allocation under paragraph (a) of 
        this subsection, then the Secretary may withdraw slots, under 
        subsection (d), for auction under section 45502 or create new 
        slots.
    ``(d) Withdrawal of Slots for Auction.--
            ``(1) Withdrawal of existing slot assignments.--The 
        Secretary shall withdraw, from major carriers at each airport--
                    ``(A) for the first auction under this section, not 
                more than 10 percent of the auctionable slots assigned 
                to such carriers at that airport; and
                    ``(B) for any subsequent auction under this 
                section, not more than 5 percent of the auctionable 
                slots assigned to such carriers at that airport.
            ``(2) Frequency.--Auctions under this section shall not be 
        held more frequently than 24 months after the preceding 
        auction.
            ``(3) Auctionable slots.--For purposes of this subsection, 
        an auctionable slot is--
                    ``(A) a slot assigned to an air carrier in 1985 
                that is still assigned to that air carrier, or a slot 
                received in even exchange with another air carrier for 
                a slot assigned to that air carrier in 1985; and
                    ``(B) any slot other than a slot--
                            ``(i) used by a major carrier to provide 
                        service to an airport that is a small or medium 
                        hub airport; or
                            ``(ii) acquired for value by an air carrier 
                        before July 1, 1997.
``Sec. 45502. Auction
    ``(a) General Authority.--The Secretary of Transportation shall 
assign a slot to a qualified applicant through the use of a system of 
competitive bidding.
    ``(b) Uses to Which Bidding May Apply.--A slot may be assigned 
under this subsection if the Secretary determines that the assignment 
of such slot will, or is reasonably likely to, increase competition 
among air carriers nationally, regionally, or in the markets affected 
by the slot assignment in accordance with section 45501(b).
    ``(c) Design of Systems of Competitive Bidding.--In identifying 
slots to be withdrawn for auction under section 45501(d)(1), in 
specifying eligibility and other characteristics of such slots, and in 
designing the methodologies for use under this subsection, the 
Secretary shall include safeguards to protect the public interest in 
the use of the slots and shall seek to promote the following 
objectives:
            ``(1) increasing competition in the provision of air 
        transportation in a way that benefits the public, including 
        those residing in rural areas;
            ``(2) promoting economic opportunity and competition and 
        ensuring that air transportation at competitive rates is 
        readily accessible to the American people by avoiding excessive 
        concentration of slots among major air carriers;
            ``(3) recovery for the public of a portion of the value of 
        the slots made available by competitive bidding and the 
        avoidance of unjust enrichment through the methods employed to 
        award slots; and
            ``(4) efficient and intensive use of slots.
    ``(d) Bidder Qualification.--No air carrier other than a new 
entrant air carrier or a limited incumbent carrier may participate in a 
system of competitive bidding under this section. No license shall be 
granted to an applicant selected pursuant to this section unless the 
Secretary determines that the applicant is qualified to utilize the 
slot or slots to be so assigned.
    ``(e) Rules of Construction.--Nothing in this section, or in the 
use of competitive bidding, shall--
            ``(1) alter slots allocation criteria and procedures 
        established by the other provisions of this subtitle;
            ``(2) diminish the authority of the Secretary under the 
        other provisions of this Act to regulate or reclaim slots;
            ``(3) be construed to convey any rights, including any 
        expectation of renewal of a slot assignment, that differ from 
        the rights that apply to other slots at the same airport that 
        were not issued pursuant to this section; or
            ``(4) be construed to prohibit the Secretary from issuing 
        additional slots.
    ``(f) Consideration of Revenues in Public Interest 
Determinations.--
            ``(1) Consideration prohibited.--In making a decision to 
        assign slots pursuant to this section, and in prescribing 
        regulations pursuant to this section, the Secretary may not 
        base a finding of public interest, convenience, and necessity 
        on the expectation of Federal revenues from the use of a system 
        of competitive bidding under this section.
            ``(2) Consideration limited.--In prescribing regulations 
        pursuant to this section, the Secretary may not base a finding 
        of public interest, convenience, and necessity solely or 
        predominantly on the expectation of Federal revenues from the 
        use of a system of competitive bidding under this section.
            ``(3) Consideration of demand for slots.--Nothing in this 
        subsection shall be construed to prevent the Secretary from 
        considering consumer demand for slots-based services.
    ``(g) Treatment of Revenues.--
            ``(1) General rule.--Except as provided in paragraph (2), 
        all proceeds from the use of a competitive bidding system under 
        this subsection shall be deposited in the Airport and Airway 
        Trust Fund established under section 9502 of the Internal 
        Revenue Code of 1986.
            ``(2) Deposit and use of auction escrow accounts.--Any 
        deposits the Secretary may require for the qualification of any 
        person to bid in a system of competitive bidding pursuant to 
        this subsection shall be deposited in an interest bearing 
        account at a financial institution designated for purposes of 
        this subsection by the Secretary (after consultation with the 
        Secretary of the Treasury). Within 45 days following the 
        conclusion of the competitive bidding--
                    ``(A) the deposits of successful bidders shall be 
                paid to the Treasury;
                    ``(B) the deposits of unsuccessful bidders shall be 
                returned to such bidders; and
                    ``(C) the interest accrued to the account shall be 
                transferred to the Airport and Airway Trust Fund.
    ``(h) Evaluation.--Not later than March 1, 1999, the Secretary 
shall conduct a public inquiry and submit to the Congress a report--
            ``(1) containing a statement of the revenues obtained, and 
        a projection of the future revenues, from the use of 
        competitive bidding systems under this section;
            ``(2) describing the methodologies established by the 
        Secretary pursuant to subsections (c) and (d);
            ``(3) comparing the relative advantages and disadvantages 
        of such methodologies in terms of attaining the objectives 
        described in such subsections; and
            ``(4) recommending any statutory changes that are needed to 
        improve the competitive bidding process.
``Sec. 45503. Special rules
    ``(a) Resale or Reversion of Purchased Slots.--
            ``(1) Resale.--A slot assigned by competitive bidding under 
        section 45502 may be--
                    ``(A) sold by the air carrier to which it was 
                assigned only to a new entrant air carrier or limited 
                incumbent carrier within 24 months of the slot 
                acquisition; or
                    ``(B) leased to any air carrier, except that any 
                such leased slot shall be sold to a new entrant air 
                carrier or limited incumbent air carrier that offers to 
                purchase it.
            ``(2) Reversion.--A slot assigned by competitive bidding 
        under section 45502 that is lost by the air carrier to which it 
        was assigned under section 93.227 of the Federal Aviation 
        Administration's regulations (14 C.F.R. 93.227), shall be 
        returned to the Federal Aviation Administration.
    ``(b) Other Existing Slots.--
            ``(1) Expiration.--Any slot not withdrawn for assignment 
        under this chapter shall continue in effect until the earlier 
        of--
                    ``(A) the date on which it is subsequently 
                withdrawn for such assignment; or
                    ``(B) the date on which it expires or is withdrawn 
                according to the terms of its assignment.
            ``(2) Future revenues.--Any amount paid for assignment or 
        use of an expired slot shall be treated in accordance with the 
        provisions of section 45502(h) as if received under that 
        section.
    ``(c) Application of 80-Percent Rule.--
            ``(1) In general.--In applying section 93.227(a) of the 
        Federal Aviation Administration's regulations (14 C.F.R. 
        93.227(a)), the Secretary of Transportation shall take such 
        action as may be necessary to maximize slot usage.
            ``(2) Study.--The Secretary of Transportation shall 
        initiate a study to determine whether the application of the 
        high density rule contained in subpart S of part 93 of title 
        14, Code of Federal Regulations, promotes or hinders airline 
        competition or has no effect on airline competition, and the 
        impact of changes to the rule on safety.
            ``(3) Use of slots by commuter operators.--The Secretary of 
        Transportation shall limit the use of air carrier slots by 
        commuter air carriers. In carrying out this paragraph, the 
        Secretary shall weigh the benefits of the use of air carrier 
        slots by commuter air carriers against the use of those slots 
        by other air carriers, taking into account the provisions of 
        section 93.227 of the Federal Aviation Administration's 
        regulations (49 C.F.R. 93.227).
``Sec. 45504. Definitions
    ``For purposes of this chapter--
            ``(1) High density airport.--The term `high density 
        airport' has the meaning given it by section 41714(h)(2) of 
        this title.
            ``(2) New entrant air carrier; limited incumbent carrier.--
        The terms `new entrant air carrier' and `limited incumbent 
        carrier' have the meaning given such terms by section 93.213 of 
        the Federal Aviation Administration's regulations (14 C.F.R. 
        93.213).
            ``(3) Commuter air carrier.--The term `commuter air 
        carrier' has the meaning given that term by section 41714(h)(1) 
        of this title.
            ``(4) Major carrier.--The term `major carrier' means an air 
        carrier to which Part 121 of title 14, Code of Federal 
        Regulations, applies.
            ``(5) Medium hub airport.--The term `medium hub airport' 
        means an airport that each year has at least 0.25 percent, but 
        less than 1.00 percent, of the total annual boardings in the 
        United States.
            ``(6) Slot.--The term `slot' has the meaning given that 
        term by section 41714(h)(4) of this title.
            ``(7) Small hub airport.--The term `small hub airport' has 
        the meaning given that term by section 41731(a)(3).''.

SEC. 4. SECRETARY MAY GRANT EXEMPTIONS TO PERIMETER RULE.

    (a) In General.--The Secretary of Transportation shall by order 
grant exemptions from the application of section 6012 of the Washington 
Metropolitan Airport Authority Act of 1986 (49 U.S.C. App. 2461) to all 
air carriers to operate limited frequencies and aircraft on select 
routes between Washington National Airport and other airports if the 
Secretary finds that the exemption will--
            (1) provide air transportation service with network 
        benefits; and
            (2) increase competition in multiple markets.
    (b) Criteria.--The Secretary shall apply the criteria set forth in 
section 45502(c) of this title in granting exemptions under subsection 
(a).
    (c) Limitations.--Any exemption granted under subsection (a)--
            (1) may not affect the number of hourly commercial 
        operations permitted at Washington National Airport; and
            (2) may not be granted with respect to any aircraft that is 
        not a Stage 3 aircraft (as defined by the Secretary).
    (d) The Secretary shall not approve applications that propose to 
relinquish service to small hub airports and medium hub airports in 
return for long haul service beyond the perimeter rule. The Secretary 
shall subsequently prohibit the holder of the exemption from shifting 
service among slots at Washington National Airport in order to provide 
the high frequency service that it relinquished to provide long haul 
service under the exemption.
    (e) Report.--Within 1 year after the date of enactment of this Act, 
and biannually thereafter, the Secretary shall certify to the United 
States Senate Committee on Commerce, Science, and Transportation and 
the United States House of Representatives Committee on Transportation 
and Infrastructure that noise standards, air traffic congestion, 
airport-related vehicular congestion, safety standards, and adequate 
air service to communities within the perimeter described in section 
6012 of the Washington Metropolitan Airport Authority Act of 1986 (49 
U.S.C. App. 2461) have been maintained at levels that are the same as, 
or better than, the levels maintained in 1997.

SEC. 5. COMPLAINTS CONCERNING PREDATORY BEHAVIOR.

    Section 41712 of title 49, United States Code, is amended--
            (1) by inserting ``(a) General.--'' before ``On the 
        initiative''; and
            (2) by adding at the end thereof the following:
    ``(b) Predatory Behavior Complaints.--If an air carrier files a 
complaint under subsection (a) that another air carrier has engaged in 
predatory behavior, then the Secretary of Transportation shall respond 
to that complaint within 90 days by--
            ``(1) finding that the air carrier that is the subject of 
        the complaint has engaged in predatory behavior;
            ``(2) finding that such air carrier has not engaged in such 
        behavior; or
            ``(3) requesting additional information from the parties; 
        or
            ``(4) finding that there is insufficient evidence on which 
        to base a finding under paragraph (1) or (2) of this 
        subsection.''.
                                 <all>