[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 415 Introduced in Senate (IS)]


107th CONGRESS
  1st Session
                                 S. 415

  To amend title 49, United States Code, to require that air carriers 
    meet public convenience and necessity requirements by ensuring 
competitive access by commercial air carriers to major cities, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 28, 2001

 Mr. Hollings (for himself, Mr. McCain, Mr. Dorgan, and Mr. Grassley) 
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 require that air carriers 
    meet public convenience and necessity requirements by ensuring 
competitive access by commercial air carriers to major cities, 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 Restoration 
Act''.

SEC. 2. FINDINGS.

    The Congress makes the following findings:
            (1) The airline industry continues to evolve into a system 
        dominated by a few large air carriers and a handful of smaller, 
        niche air carriers. Absent Congressional action, access to 
        critical markets is likely to be foreclosed.
            (2) In testimony before the Commerce Committee in 1978, the 
        then-President of Eastern Airlines testified that the top 5 air 
        carriers had 68.6 percent of the domestic market. If the 
        mergers and acquisitions proposed in 2000 and 2001 are 
        consummated, the 5 largest network airlines in the United 
        States will account for approximately 83 percent of the air 
        transportation business (based on revenue passenger miles flown 
        in 1999).
            (3) According to Department of Transportation statistics, 
        taking into account the proposed mergers of United Airlines and 
        US Airways, and of American Airlines and TWA, there will be at 
        least 20 large hub airports in the United States where a single 
        airline and its affiliate air carriers would carry more than 50 
        percent of the passenger traffic.
            (4) The continued consolidation of the airline industry may 
        inure to the detriment of public convenience and need, and the 
        further concentration of market power in the hands of even 
        fewer large competitors may lead to unfair methods of 
        competition.
            (5) A more concentrated airline industry would be likely to 
        result in less competition and higher fares, giving consumers 
        fewer choices and decreased customer service.
            (6) The Department of Transportation has documented that 
        air fares are relatively higher at those main hub airports 
        where a single airline carries more than 50 percent of the 
        passenger traffic, and studies indicate that unfair methods of 
        competition are more likely to occur at such airports, thus 
        inhibiting competitive responses from other carriers when fares 
        are raised or capacity reduced.
            (7) The General Accounting Office has conducted a number of 
        studies that document the presence of both high fares and 
        problems with competition in the airline industry at dominated 
        hub airports.
            (8) The National Research Council of the Transportation 
        Research Board has recognized that higher fares exist in short 
        haul markets connected to concentrated hub airports.
            (9) A Department of Transportation study indicates that the 
        entry and existence of low fare airline competitors in the 
        marketplace has resulted in a reported $6.3 billion in annual 
        savings to airline passengers.
            (10) While the antitrust rules generally govern mergers and 
        acquisitions in the air carrier industry, and will continue to 
        do so, the public concern about the importance of air 
        transportation, the impact of over scheduling, increasing 
        flight delays and cancellations, poor service, and continued 
        hub domination requires the Department of Transportation to 
        assert its authority in analyzing proposed transactions among 
        air carriers that affect consumers.

SEC. 3. PUBLIC INTEREST REVIEW OF AIR CARRIER ACQUISITIONS AND MERGERS.

    (a) In General.--Subchapter I of chapter 417 of title 49, United 
States Code, is amended by adding at the end thereof the following:
``Sec. 41722. Mergers and acquisitions
    ``(a) Protection of Public Interest; Competition Test.--
            ``(1) In general.--An air carrier may not acquire, directly 
        or indirectly, any voting securities or assets of another air 
        carrier if, after the acquisition, the air carrier resulting 
        from the acquisition would have more than 10 percent of the 
        passenger enplanements in the United States (based on 
        projections from the most recent annual data available to the 
        Secretary of Transportation) if the Secretary determines that 
        the effect of the acquisition--
                    ``(A) would be substantially to lessen competition, 
                or
                    ``(B) would result in unreasonable industry 
                concentration, excessive market domination, monopoly 
                powers, or other conditions that would tend to allow at 
                least 1 air carrier unreasonably to increase prices, 
                reduce services, or exclude competition in air 
                transportation at any large hub airport (as defined in 
                section 47134(d)(2)) or in at least 10 percent of the 
                top 500 markets for passenger air transportation in the 
                United States.
            ``(2) Exception.--Notwithstanding paragraph (1), such an 
        acquisition may proceed if the Secretary finds that--
                    ``(A) the anticompetitive effects of the proposed 
                transaction are outweighed in the public interest by 
                the probable effect of the acquisition in meeting 
                significant transportation conveniences and needs of 
                the public; and
                    ``(B) those significant transportation conveniences 
                and needs of the public may not be satisfied by a 
                reasonably available alternative having materially less 
                anticompetitive effects.
    ``(b) Dominant Carriers Required To Relinquish Some Gates, 
Facilities, and Assets at Hub Airport.--
            ``(1) In general.--An air carrier may not acquire, directly 
        or indirectly, any voting securities or assets of another air 
        carrier if, after the acquisition, the air carrier resulting 
        from the acquisition would be a dominant air carrier at any 
        large hub airport (as defined in section 47134(d)(2)) unless 
        the Secretary of Transportation finds that--
                    ``(A) the air carrier resulting from the 
                acquisition will provide gates, facilities, and other 
                assets at that hub airport on a fair, reasonable, and 
                nondiscriminatory basis to another air carrier that--
                            ``(i) holds a certificate issued under 
                        chapter 411 authorizing it to provide air 
                        transportation for passengers;
                            ``(ii) has fewer than 15 percent of the 
                        average daily passenger enplanements at that 
                        airport; and
                            ``(iii) is able, or will be able, to 
                        utilize the gate, facility, or other asset 
                        provided to it at a reasonable level of 
                        utilization; or
                    ``(B) gates, facilities, and other assets are 
                available, or will be made available in a timely 
                manner, on a fair, reasonable, and nondiscriminatory 
                basis to accommodate competitive access to that airport 
                by other air carriers.
            ``(2) Limitation.--Paragraph (1) does not require an air 
        carrier to relinquish control, or otherwise dispose, of more 
        than 10 percent of the gates, facilities, and other assets 
        controlled by that air carrier at any airport, as determined by 
        the Secretary.
            ``(3) Plan required.--Before the Secretary may make a 
        finding under paragraph (1), the acquiring air carrier and the 
        air carrier being acquired shall file a joint plan in writing 
        with the Secretary that states with such specificity as the 
        Secretary may require exactly how the air carrier resulting 
        from the acquisition will comply with the requirements of 
        paragraph (1).
            ``(4) Enforcement of plan.--If the Secretary determines, 
        more than 90 days after the date on which an acquisition 
        described in paragraph (1) is completed, that the air carrier 
        has failed substantially to carry out the plan submitted under 
        paragraph (3), the Secretary may--
                    ``(A) withdraw approval of the acquisition;
                    ``(B) withdraw authority for the air carrier to 
                serve international markets; or
                    ``(C) take such other action as may be necessary to 
                compel compliance with the plan.
    ``(c) Notification; Waiting Period; Final Rule.--
            ``(1) In general.--In order for the Secretary to be able to 
        make the determination required by subsection (a)--
                    ``(A) each air carrier (or in the case of a tender 
                offer, the acquiring air carrier) shall submit a 
                notification to the Secretary, in such form and 
                containing such information as the Secretary may 
                require; and
                    ``(B) wait until the waiting period described in 
                paragraph (2) has expired before effecting the 
                acquisition.
            ``(2) Waiting period.--
                    ``(A) In general.--The waiting period begins on the 
                date of receipt by the Secretary of a completed 
                notification required by paragraph (1)(A) and ends on 
                the thirtieth day after that date, or (in the case of a 
                cash tender offer) the fifteenth day after that date.
                    ``(B) Waiver; modification.--The Secretary may 
                waive the notification requirement, shorten the waiting 
                period, or extend the waiting period (by not more than 
                180 days), in order to coordinate action under this 
                subsection with the Department of Justice under the 
                antitrust laws of the United States.
            ``(3) Coordination with doj.--The Secretary and the 
        Attorney General may enter into a memorandum of understanding 
        to ensure that the determination required by subsection (a) is 
        made within the same time frame as any Department of Justice 
        review of a proposed acquisition under section 7A of the 
        Clayton Act (15 U.S.C. 18a).
            ``(4) Final action within 180 days.--The Secretary shall 
        take final action with respect to any acquisition requiring a 
        determination under subsection (a) within 180 days after the 
        date on which the Secretary receives the notification required 
        by paragraph (1)(A).
    ``(d) AIR 21 Competition Plan Review.--The Secretary shall examine 
any hub airport affected by a proposed acquisition described in 
subsection (a) to determine whether that airport has complied with the 
competition plan requirement of sections 47106(f) or 40117(k) of title 
49, United States Code, and whether gates and other facilities are 
being made available at costs that are fair and reasonable to air 
carriers in accordance with the requirements of section 41712(c)(3). 
The sponsor (as defined in section 47102(19)) of any hub airport shall 
cooperate fully with the Secretary in carrying out an examination under 
this subsection.
    ``(e) Definitions.--In this section:
            ``(1) Dominated hub airport.--The term `dominated hub 
        airport' means an airport--
                    ``(A) that each year has at least .25 percent of 
                the total annual boardings in the United States; and
                    ``(B) at which 1 air carrier accounts for more than 
                50 percent of the enplaned passengers.
            ``(2) Dominant air carrier.--The term `dominant air 
        carrier' means an air carrier that accounts for more than 50 
        percent of the enplaned passengers at an airport.
            ``(3) Control.--With respect to whether a corporation or 
        other entity is considered to be controlled by another 
        corporation or other entity, the term `control' means that more 
than 10 percent of the ownership, voting rights, capital stock, or 
other pecuniary interest in that corporation or entity is owned, held, 
or controlled, directly or indirectly, by such other corporation or 
entity.
            ``(4) Enplanements.--The term `passenger enplanements' 
        means the annual number of passenger enplanements, as 
        determined by the Secretary of Transportation, based on the 
        most recent data available.
            ``(5) Asset.--The term `asset' includes slots (as defined 
        in section 41714(h)(4)) and slot exemptions (within the meaning 
        of section 41714(a)(2)).''.
    (b) Special Rule.--For the purpose of applying section 41722 of 
title 49, United States Code, to an acquisition or merger involving 
major air carriers proposed after January 1, 2000, that has not been 
consummated before February 15, 2001--
            (1) subsection (c) of that section shall not apply; but
            (2) the Secretary of Transportation shall require such 
        information from the acquiring air carrier and the acquired air 
        carrier, or the merging air carriers, as may be necessary to 
        carry out that section, and shall complete the review required 
        by that section within a reasonable period that is not to 
        exceed 180 days from the date on which the Secretary receives 
        the requested information from all parties.
    (c) Conforming Amendment.--The chapter analysis for chapter 417 of 
title 49, United States Code, is amended by adding at the end the 
following;

                              ``41722. Mergers and acquisitions''.

SEC. 4. COMPETITIVE ACCESS TO GATES, FACILITIES, AND OTHER ASSETS.

    (a) Subchapter I of chapter 417, as amended by section 3, is 
further amended by adding at the end thereof the following:
``Sec. 41723. Competitive access to gates, facilities, and other assets
    ``(a) DOT Review of Gates, Facilities, and Assets.--Within 90 days 
after the date of the enactment of Aviation Competition Restoration 
Act, the Secretary of Transportation shall investigate the assignment 
and usage of gates, facilities, and other assets by major air carriers 
at the largest 35 airports in the United States in terms of air 
passenger traffic. The investigation shall include an assessment of--
            ``(1) whether, and to what extent, gates, facilities, and 
        other assets are being fully utilized by major air carriers at 
        those airports;
            ``(2) whether gates, facilities, and other assets are 
        available for competitive access to enhance competition; and
            ``(3) whether the reassignment of gates, facilities, and 
        other assets to, or other means of increasing access to gates, 
        facilities, and other assets for, air carriers (other than 
        dominant air carriers (as defined in section 41722(e)(2)) would 
        improve competition among air carriers at any such airport or 
        provide other benefits to the flying public without 
        compromising safety or creating scheduling, efficiency, or 
        other problems at airports providing service to or from those 
        airports.
    ``(b) Authority of Secretary To Make Gates, Etc., Available.--The 
Secretary shall require a major air carrier, upon application by 
another air carrier or on the Secretary's own motion to make gates, 
facilities, and other assets available to other air carriers on terms 
that are fair, reasonable, and nondiscriminatory to ensure competitive 
access to those airports if the Secretary determines, on the basis of 
the investigation conducted under subsection (a), that such gates, 
facilities, and other assets are not available and that competition 
would be enhanced thereby at those airports.
    ``(c) Definitions.--
            ``(1) Major air carrier.--In this section the term `major 
        air carrier' means an air carrier certificated under section 
        41102 that accounted for at least 1 percent of domestic 
        scheduled-passenger revenues in the 12 months ending March 31 
        of each year, as reported to the Department of Transportation 
        pursuant to part 241 of title 14, Code of Federal Regulations, 
        and identified as a reporting carrier periodically in 
        accounting and reporting directives issued by the Office of 
        Airline Information.
            ``(2) Asset.--The term `asset' includes slots (as defined 
        in section 41714(h)(4)) and slot exemptions (within the meaning 
        of section 41714(a)(2)).''.
    (b) Conforming Amendment.--The chapter analysis for chapter 417 of 
title 49, United States Code, is amended by inserting after the item 
relating to section 41722 the following:

        ``41723. Competitive access to gates, facilities, and other 
                  assets''.

SEC. 5. UNFAIR METHODS OF COMPETITION IN AIR TRANSPORTATION.

    (a) Unfair Competition Through Use of Gates, Facilities, and Other 
Assets.--Section 41712 of title 49, United States Code, is amended by 
adding at the end the following:
    ``(c) Underutilization of Gates, Facilities, or Other Assets.--
            ``(1) In general.--It is an unfair method of competition in 
        air transportation under subsection (a) for a dominant air 
        carrier at a dominated hub airport--
                    ``(A) to fail to utilize gates, facilities, and 
                other assets fully at that airport; and
                    ``(B) to refuse, deny, or fail to provide a gate, 
                facility, or other asset at such an airport that is 
                underutilized by it, or that will not be fully utilized 
                by it within 1 year, to another carrier on fair, 
                reasonable, and nondiscriminatory terms upon request of 
                the airport, the other air carrier, or the Secretary.
            ``(2) Requesting carrier must file with dot.--An air 
        carrier making a request for a gate, facility, or other asset 
        under paragraph (1) shall file a copy of the request with the 
        Secretary when it is submitted to the dominant air carrier.
            ``(3) Availability of gates and other essential services.--
        The Secretary shall ensure that gates and other facilities are 
        made available at costs that are fair and reasonable to air 
        carriers at covered airports where a `majority-in-interest 
        clause' of a contract or other agreement or arrangement 
        inhibits the ability of the local airport authority to provide 
or build new gates or other essential facilities.
            ``(4) Definitions.--In this subsection:
                    ``(A) Dominant air carrier.--The term `dominant air 
                carrier' has the meaning given that term by section 
                41722(e)(2).
                    ``(B) Dominated hub airport.--The term `dominated 
                hub airport' has the meaning given that term by section 
                41722(e)(1).
                    ``(C) Covered airport.--The term `covered airport' 
                has the meaning given that term by section 47106(f)(3).
                    ``(D) Asset.--The term `asset' includes slots (as 
                defined in section 41714(h)(4)) and slot exemptions 
                (within the meaning of section 41714(a)(2)).''.
    (b) Conforming Amendment.--Section 155 of the Wendell H. Ford 
Aviation Investment and Reform Act of the 21st Century (49 U.S.C. 47101 
nt) is amended by striking subsection (d).

SEC. 6. AIP COMPETITION FUNDING.

    (a) In General.--Subchapter I of chapter 471 of title 49, United 
States Code, is amended by adding at the end the following:
``Sec. 47138. Competition enhancement program
    ``(a) In General.--The Secretary of Transportation shall make 
project grants under this subchapter from the Airport and Airway Trust 
Fund for gates, related facilities, and other assets to enhance and 
increase competition among air carriers for passenger air 
transportation.
    ``(b) Secretary May Incur Obligations.--The Secretary may incur 
obligations to make grants under this section.
    ``(c) Authorization of Appropriations.--There are authorized to be 
appropriated from the Airport and Airway Trust Fund $300,000,000 for 
fiscal year 2002, such amount to remain available until expended.''.
    (b) AIP Grants.--Section 47107 of title 49, United States Code, is 
amended by adding at the end the following:
    ``(q) Gates, Facilities, and Other Assets.--
            ``(1) In general.--The Secretary of Transportation may 
        approve an application under this subchapter for an airport 
        development project grant at a dominated hub airport only if 
        the Secretary--
                    ``(A) receives appropriate assurances that the 
                airport will provide gates, facilities, and other 
                assets on fair, reasonable, and nondiscriminatory terms 
                to air carriers, other than a dominant air carrier, to 
                ensure competitive access to essential facilities; or
                    ``(B) determines that gates, facilities, and other 
                assets are available at that airport on a fair, 
                reasonable, and nondiscriminatory basis to air carriers 
                other than a dominant air carrier.
            ``(2) Definitions.--In this subsection:
                    ``(A) Dominant air carrier.--The term `dominant air 
                carrier' has the meaning given that term by section 
                41722(e)(2).
                    ``(B) Dominated hub airport.--The term `dominated 
                hub airport' has the meaning given that term by section 
                41722(e)(1).
                    ``(C) Asset.--The term `asset' includes slots (as 
                defined in section 41714(h)(4)) and slot exemptions 
                (within the meaning of section 41714(a)(2)).''.
    (c) PFC Funds.--Section 40117 of title 49, United States Code, is 
amended by adding at the end the following:
    ``(l) Facilities for Competitive Access.--
            ``(1) In general.--The Secretary may approve an application 
        under subsection (c) for a project at a dominated hub airport 
        only if the Secretary--
                    ``(A) receives appropriate assurances that the 
                airport will provide gates, facilities, and other 
                assets on fair, reasonable, and nondiscriminatory terms 
                to air carriers, other than a dominant air carrier, to 
                ensure competitive access to essential facilities; or
                    ``(B) determines that gates, facilities, and other 
                assets are available at that airport on a fair, 
                reasonable, and nondiscriminatory basis to air carriers 
                other than a dominant air carrier.
            ``(2) Definitions.--In this subsection:
                    ``(A) Dominant air carrier.--The term `dominant air 
                carrier' has the meaning given that term by section 
                41722(e)(2).
                    ``(B) Dominated hub airport.--The term `dominated 
                hub airport' has the meaning given that term by section 
                41722(e)(1).
                    ``(C) Asset.--The term `asset' includes slots (as 
                defined in section 41714(h)(4)) and slot exemptions 
                (within the meaning of section 41714(a)(2)).''.
    (d) Conforming Amendment.--The chapter analysis for subchapter I of 
chapter 471 of such title is amended by inserting after the item 
relating to section 47137 the following:

                              ``47138. Competition enhancement 
                                        program''.
                                 <all>