    [Senate Hearing 119-272]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 119-272

                            EXAMINING COMPETITION IN
                                AMERICA'S SKIES

    =======================================================================

                                    HEARING

                                   before the

                           SUBCOMMITTEE ON ANTITRUST,
                            COMPETITION POLICY, AND
                                CONSUMER RIGHTS

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                              UNITED STATES SENATE

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               SEPTEMBER 30, 2025

                                   __________

                               Serial No. J-119-42

                                   __________

             Printed for the use of the Committee on the Judiciary

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                            www.judiciary.senate.gov
                                www.govinfo.gov

                                       _______

                     U.S. GOVERNMENT PUBLISHING OFFICE

    62-655                    WASHINGTON : 2026

                           COMMITTEE ON THE JUDICIARY

                      CHARLES E. GRASSLEY, Iowa, Chairman
    LINDSEY O. GRAHAM, South Carolina    RICHARD J. DURBIN, Illinois,
    JOHN CORNYN, Texas                       Ranking Member
    MICHAEL S. LEE, Utah                 SHELDON WHITEHOUSE, Rhode Island
    TED CRUZ, Texas                      AMY KLOBUCHAR, Minnesota
    JOSH HAWLEY, Missouri                CHRISTOPHER A. COONS, Delaware
    THOM TILLIS, North Carolina          RICHARD BLUMENTHAL, Connecticut
    JOHN KENNEDY, Louisiana              MAZIE K. HIRONO, Hawaii
    MARSHA BLACKBURN, Tennessee          CORY A. BOOKER, New Jersey
    ERIC SCHMITT, Missouri               ALEX PADILLA, California
    KATIE BOYD BRITT, Alabama            PETER WELCH, Vermont
    ASHLEY MOODY, Florida                ADAM B. SCHIFF, California

                 Kolan Davis, Chief Counsel and Staff Director
             Joe Zogby, Democratic Chief Counsel and Staff Director

                Subcommittee on Antitrust, Competition Policy,
                              and Consumer Rights

                          MICHAEL S. LEE, Utah, Chair
    JOSH HAWLEY, Missouri                CORY A. BOOKER, New Jersey,
    THOM TILLIS, North Carolina              Ranking Member
    ERIC SCHMITT, Missouri               AMY KLOBUCHAR, Minnesota
    KATIE BOYD BRITT, Alabama            RICHARD BLUMENTHAL, Connecticut
    ASHLEY MOODY, Florida                PETER WELCH, Vermont
                                         ADAM B. SCHIFF, California

                   Thomas DeMatteo, Republican Chief Counsel
                     Lynda Garica, Democratic Chief Counsel

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page

    Lee, Hon. Michael S..............................................     1
    Booker, Hon. Cory A..............................................     3

                                   WITNESSES

    Anderson, Gregory................................................     6
        Prepared statement...........................................    45
        Responses to written questions...............................   104
    Biffle, Barry....................................................     7
        Prepared statement...........................................    52
        Responses to written questions...............................   109
    McGee, William J.................................................     9
        Prepared statement...........................................    57
        Responses to written questions...............................   113
    Pinkerton, Sharon................................................    11
        Prepared statement...........................................    67
        Responses to written questions...............................   122
    Sitaraman, Ganesh................................................    13
        Prepared statement...........................................    91
        Responses to written questions...............................   153

                             EXAMINING COMPETITION
                               IN AMERICA'S SKIES

                                  ----------

                          TUESDAY, SEPTEMBER 30, 2025

                          United States Senate,
        Subcommittee on Antitrust, Competition Policy,
                                   and Consumer Rights,
                                    Committee on the Judiciary,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 2:33 p.m., in
    Room 226, Dirksen Senate Office Building, Hon. Michael S. Lee,
    Chair of the Subcommittee, presiding.
        Present: Senators Lee [presiding], Hawley, Britt, Moody,
    Booker, Klobuchar, and Blumenthal.
        Also present: Senator Durbin.

               OPENING STATEMENT OF HON. MICHAEL S. LEE,
                 A U.S. SENATOR FROM THE STATE OF UTAH

        Chair Lee. I will call the hearing to order. Thanks to all
    of you for being here. We look forward to today's conversation.
        Every day in America, millions of passengers rely on
    airlines to get them safely, easily, and efficiently to life's
    most important moments--weddings, funerals, the birth of
    children and grandchildren, professional opportunities, job
    interviews, meeting with clients old or new, and even in some
    cases daily commutes. Air travel has become and genuinely is
    essential to our lives.
        Since deregulation of the airline industry began in 1978
    and increasingly in the years that followed from that,
    competition has driven affordability, innovation, and improved
    service in countless respects within the industry. For decades,
    rivalry among carriers allowed for consumer choice, and it kept
    fares within reach. Yet in recent years, there has been
    significant consolidation in the industry. This has reshaped in
    some ways the U.S. airline market, reducing the number of total
    competitors. Today, there are just four major carriers--
    American, Delta, United, and Southwest--that control over 80
    percent of U.S. domestic air travel. And that is a change from
    not too many decades ago when there were more players than
    that, far less market concentration.
        Legacy carriers have invested in creating a hub-and-spoke
    model. The model routes passengers through central airports
    more efficiently, and that has the effect of lowering
    maintenance costs, increasing connectivity, and otherwise
    increasing the beneficial network effects available to a larger
    airline.
        The hub system has also created some dominant positions,
    particularly at a few key airports. In Atlanta, Dallas/Fort
    Worth, Charlotte, and Newark, for example a single airline
    controls between 70 and 80 percent of passenger traffic. In
    Salt Lake City, St. Louis, and Minneapolis, one carrier
    accounts for roughly 60 percent of passenger traffic. Even at
    airports with far less concentrated market shares, carriers
    often don't compete on the same routes, leaving travelers
    effectively with only one direct option for a specific
    destination. Some of this, of course, is going to happen in any
    system that involves as many cities, as many places where
    people might want to travel as others. Nonetheless, we see the
    trend as what it is, a trend that is perhaps resulting in less
    competition within the industry than we have seen at times in
    the past.
        This concentration is, at least in part, the result of a
    wave of mergers--Delta-Northwest, then United-Continental, and
    Southwest-AirTran. The Obama administration initially
    challenged the American-U.S. Airways merger, but it reached a
    settlement, one that seemingly failed to address the broader
    nationwide concerns alleged in the complaint in that case.
        Most recently, the Biden administration blocked the
    proposed JetBlue-Spirit merger, ostensibly to preserve Spirit
    as an ultra-low-cost competitor. In that case, the Department
    of Justice took an acrobatic distortion and contortion of the
    market and overlooked a lot of the real-world dynamics. The
    merger likely would have enhanced competition by creating a
    more financially stable airline with a larger network, one that
    could provide additional competition to the legacy carriers.
    This would have enabled more competition with these legacy
    carriers nationwide. And one thing we know about competition,
    it tends to bring down prices, and it tends to result in
    improvements to quality as different competitors try to compete
    for the money of the passengers they want to carry.
        Yet after that merger was blocked, Spirit ended up filing
    for bankruptcy, as many predicted. This development raises key
    questions about enforcement and our antitrust framework such as
    how a market ought to be defined and whether the failing-firm
    defense captures real-world dynamics and incentives and how
    this ought to frame how we think about antitrust law and the
    manner in which it is enforced moving forward.
        Low-cost carriers and ultra-low-cost carriers have been an
    important competitive constraint on pricing, of course. There
    is a lot that they add to the picture. When one of these
    airlines enters a market, average fares typically drop, at
    least for the affected routes, but those competitive forces are
    facing financial headwinds. Spirit is in bankruptcy. Southwest
    is abandoning, in some ways, the very business model that made
    Southwest the disruptor that it has been, eliminating free
    checked bags and charging for seat assignments, moving closer
    to the legacy carrier model. JetBlue's partnership with
    American and the proposed merger with Spirit were blocked.
    JetBlue is now seeking a collaboration with United in order to
    survive.
        Broader economic conditions also present challenges.
    Aircraft supply shortages, engine repair delays, and rising
    labor costs all contribute in weighing on the overall
    competitive dynamic in the industry. Additionally, with fewer
    competitors than we've had in the past, the remaining airlines
    can coordinate on capacity more easily. This limits seat growth
    across the industry. Limited slots and limited gates also tend
    to reinforce those same constraints, so do shortages of air
    traffic controllers and an antiquated air traffic control
    system.
        The U.S. Department of Transportation is modernizing our
    air traffic control system. They are streamlining FAA hiring
    and raising the pay that they offer to controllers. And I want
    to commend Secretary Duffy at the Department of Transportation
    for his leadership in addressing these challenges and working
    toward solutions to each of them. The reforms are essential,
    not just for safety and reliability, but also for creating the
    capacity that we need in order to allow for an increase in
    competition.
        Today's hearing is one that I hope will be an important
    first step in examining competition issues as we face them in
    the airline industry. Americans deserve the benefits of
    competition, especially when they fly, in the form of lower
    fares, better service, and more choices.
        Chairman Lee. And in advance, I want to thank each of our
    witnesses for coming today. I look forward to their insights.
        Now we are going to turn to my friend and colleague, the
    Ranking Democrat on the Committee, Senator Cory Booker.

               OPENING STATEMENT OF HON. CORY A. BOOKER,
              A U.S. SENATOR FROM THE STATE OF NEW JERSEY

        Senator Booker. I am really grateful to the Chairman of
    this Committee for calling this. This is an actual area--in
    fact this whole Subcommittee is an area--there is a lot of
    bipartisan alignment and a lot of really growing concern as
    Americans are seeing prices on everything go up. This is not
    the relegation of any political party. These are trends in many
    ways that have been going on for too long.
        About the airline industry, I have to say, I am a very
    impacted witness, as well as the Ranking Member, because at
    6'3'' and larger than most Americans, I find our airline seats
    really inadequate, feeling that pain that many Americans are
    feeling, in addition to a lot of the other challenges with air
    travel.
        There are just things folks don't understand. They really
    can't, and it is understandable the confusion and the
    frustrations that American consumers are feeling when it comes
    to airlines. Most Americans don't understand why Google Flights
    will say that it is cheaper to fly for 10 hours with a stop
    instead of a 6-hour nonstop, or why it is cheaper to have a
    layover in Atlanta when you are flying from Philadelphia to
    Kansas City when no reasonable person can consider Atlanta on
    the way.
        Nowadays airlines advertise so many different fares and
    classes, whether it is premium, economy, board first, priority,
    economic, basic, and they tack on so many fees for everything
    from taking a bag on board to sitting with your other family
    members. It is unbelievable. Those fees get labeled as either
    ancillary or junk fees, and we really believe, at least I
    believe, that this is a regulatory question and more.
        And here is the thing. American passengers spend what seems
    like a third of their monthly mortgage to fly nowadays. Major
    airlines that have repeatedly benefited from Federal Government
    bailouts now pay less in taxes and pocket more from consumers
    because of these separate fees customers pay on add-ons that
    are not taxed like base airfare. Back when consumers paid in
    all in airfare, that tax revenue actually went toward improving
    airports and improving airport infrastructure. But the system
    as it was before is not what it is now. And these problems are
    hurting airline competition and really hurting consumers.
        And there are more issues than just fees. But let's just
    say that when the former Secretary Buttigieg initiated
    rulemaking that would have required airlines to be more
    transparent about these extra fees, unfortunately, that has
    been rolled back now under the current administration, which is
    going to make a bad situation far worse.
        But fees aren't the only thing. Price discrimination or
    price hikes due to the inflammation of AI-based surveillance
    pricing unfairly targets consumers and takes advantage of their
    circumstances, like flying solo or having must-go trips where a
    loved one is ill, or worse, where there is a funeral to attend.
    If AI-based surveillance pricing, for example, sees a consumer
    search for funeral home and palliative care while another
    search is last-minute couples getaway, the airline could show
    the grieving traveler higher prices based on their estimated
    willingness to pay.
        And that is where we go to low-cost airlines. And it is
    important that we realize that low-cost airlines have a role to
    play in the industry because when low-cost carriers enter the
    market, we see fundamentally that competition flourishes and
    prices go down. I remember a moment of honesty with JetBlue
    when they warned that all that power in the hands of a very few
    deep-pocketed airlines has implications for consumers in the
    form of reduced options, high fares, and often poor service.
        Now, that is really something that is getting worse.
    Anticompetitive practices seemingly have left Americans with
    less and less access to air travel. After both 9/11 and COVID-
    19 pandemics, Congress bailed out the airlines to avoid a
    collapse of our entire airline industry. Yet, since the
    pandemic, big airlines have dropped dozens of cities from
    services, places like Flint, Michigan, and Lincoln, Nebraska.
    Some cities like Dubuque, Iowa, and Toledo, Ohio, have lost all
    major carrier service. The capital city of Wyoming, Cheyenne,
    has lost service on and off over the last decade and has had to
    guarantee the revenue of a major airline merely to secure
    regularly scheduled service to a single hub all through
    taxpayer dollars. That is just not right.
        We are going to hear from incredible experts today about
    rural and mid-sized cities routes and connectivity and how
    airport hubs don't work, but it is clear to me that taxpayers
    and Government have been invested in the success of airlines
    and airports in America, and we deserve better returns on that
    investment in the form of efficient, safe, meaningful air
    choices and competitive pricings.
        The stakes are really high. Competition is critical for
    safety and for maintaining and supporting the essential
    workforce that ensures safety and maintenance. I believe that
    we have to do more. We must invest in our systems, including
    addressing our air traffic controller shortage and our
    infrastructure needs. And it seems like this industry needs
    capacity, more routes to smaller mid-sized cities and a bit of
    a buffer. This is something we should all be committed to. More
    staff, bigger seats, and extra aircrafts on standby should be
    part of this conversation.
        To weather crisis and the natural boom-and-bust cycles in
    the market, as well as to prevent bankruptcies and unfair
    competition that lead to ultimately less meaningful choices for
    hot and higher airfares for American travelers, is truly at
    issue. A resilient airline industry is the most important goal
    here. To keep American carriers competitive around the world
    and to protect travelers from safety issues that D.C. locals
    have been tragically reminded this year could have serious
    consequences. We have work to do, and competition is at the
    center of it. And this Committee, I am grateful for. It is
    hopefully going to start finding some solutions.
        The last thing I want to say is I want to add to these
    witnesses, it is a big deal when you come and testify before
    Congress, before the U.S. Senate. It is also a bit of a
    sacrifice leaving your jobs and your families often to come
    here. Many of you had to fly, and we know how burdensome that
    can be, so I want to thank everybody for being here.
        Senator Booker. And I will try not to get very upset at
    Professor Sitaraman because he is an extraordinary guy--I have
    read his bio--but that hair is very obnoxious to me----
        [Laughter.]
        Senator Booker [continuing]. And the Chairman of this
    Committee, sir. I should hold him in contempt of Congress but--
    --
        Chair Lee. It almost feels like a war crime.
        [Laughter.]
        Senator Booker. Yes, sir. There was a day that we looked
    that good.
        Chair Lee. It is a great point. We really do appreciate you
    coming here and knowing how busy you all are.
        It is important to remember that while much of what we have
    said and what we may explore may sound like a complaint. There
    is not any one person or one business that has developed the
    status quo. This has been an iterative process made over
    multiple decades under multiple administrations and different
    antitrust regulators over many years. I think the question
    before us is what the State of competition is in the industry
    and what, if anything, do we need to know as a Subcommittee
    charged with periodically reviewing our antitrust and
    competition policy laws and also the enforcement of those
    through our oversight capacity, whether things are going in the
    right direction.
        So with that, I will introduce our witnesses. We have got
    Gregory Anderson here as the president and CEO of Allegiant
    Airlines; Sharon Pinkerton, who is the senior vice president of
    legislative and regulatory policy at Airlines for America;
    Barry Biffle, who is the president and CEO of Frontier
    Airlines. We have Professor Ganesh Sitaraman here. He is a
    professor at Vanderbilt University School of Law. And last but
    not least, William McGee who is here as a senior fellow for
    aviation and travel at American Economic Liberties Project.
    Thanks to all of you for being here.
        If you will each stand, I will swear you in, and then we
    will begin.
        [Witnesses are sworn in.]
        Chair Lee. Thank you. The record will reflect that they
    each answered in the affirmative.
        All right. Let's begin with you, Mr. Anderson, and then we
    will move from your end of the table one by one down. So we
    will hear from Mr. Biffle, Mr. McGee, Ms. Pinkerton, and then
    we will finish with Mr. Sitaraman before opening it up for
    questions.
        Go ahead, Mr. Anderson.

        STATEMENT OF GREGORY ANDERSON, CHIEF EXECUTIVE OFFICER,
                      ALLEGIANT, LAS VEGAS, NEVADA

        Mr. Anderson. Chairman Lee, Ranking Member Booker, and
    Members of the Subcommittee, thank you for the opportunity to
    appear before you today. My name is Greg Anderson, and I serve
    as the CEO of Allegiant Travel Company.
        At Allegiant we offer safe, reliable, convenient travel at
    unbeatable value. All of our flights are nonstop and focused on
    the leisure traveler. Without Allegiant, many people who live
    outside major cities wouldn't have access to affordable air
    travel. By offering unbundled pricing and low fares, we make it
    possible for a broader spectrum of Americans to travel to high-
    priority vacation destinations. Roughly 70 percent of the
    routes we serve have no other nonstop flight options. The
    convenience and value we provide adds competition to the
    market, expanding the range of options available to these small
    and medium-sized communities.
        I am here to talk about potential ways to make air travel
    more accessible for everyone and to share my concern that, if
    trends continue, American travelers may have fewer options and
    face higher prices. We believe that there are a few key actions
    that can help strengthen the sector.
        First, the advancement and modernization of air traffic
    control systems across all communities, big and small.
    Inefficiencies and delays within the air travel industry are
    often attributable to outdated technology and insufficient
    staffing. We are encouraged by the administration's plan to
    modernize ATC and Congress' support and funding.
        Second, improving gate access for value airlines. The
    current gate allocation process tends to reinforce the existing
    advantages of legacy carriers. To address these discrepancies,
    we supported the bipartisan Airport Gate Competition Act
    introduced last Congress and would welcome such legislation.
        Third, international market access through joint ventures.
    Large legacy carriers have been allowed to enter into broad
    alliances for decades. These ventures give them marketing
    power, scheduling power, and pricing power that small carriers
    cannot match. Allegiant sought to pursue a similar joint
    venture but tailored that to the value airline model. In 2021,
    in partnership with Viva Aerobus in Mexico, we filed for a
    first-of-its-kind value airline alliance. Together, we proposed
    92 nonstop routes between the U.S. and Mexico. This alliance
    would introduce low-fare competition into the market. It could
    increase the total number of direct U.S.-to-Mexico routes by 50
    percent and give nearly 5 million more Americans access to
    affordable international travel. However, this venture has yet
    to receive approval from the Department of Transportation
    despite these clear procompetitive benefits.
        Last, I would like to discuss regulation of the industry.
    Let me be clear. Safety is and always must be the top priority.
    But rules that go beyond safety and into regulation of consumer
    choice will inevitably lead to pricing out the most the most
    fair-cost-conscious customers, customers that we are proud to
    serve. Full fare advertising rules intended to increase
    transparency actually conceal the impact the Government fees
    and taxes have on the consumer. Allegiant offers clear pricing,
    letting customers see and select only the options they want,
    prioritizing transparency and choice.
        We also go beyond what regulation requires when it comes to
    standing behind our product. For example, Allegiant compensates
    passengers up to $300 in addition to a ticket refund if we
    cancel a flight within our control.
        Air travel innovation is driven by competition. When value
    airlines like Allegiant enter new markets, the average fare
    dropped by 19 percent across all airlines. We believe that a
    healthy airline industry benefits everyone. Value airlines such
    as Allegiant make it possible for a family of four to take
    their dream vacation for hundreds of dollars less than they
    would otherwise pay.
        Allegiant is proof that competition and deregulation works.
    I am proud of the 70 percent of customers who choose to fly
    with us again. We provide otherwise ignored communities with
    safe, reliable, and nonstop service at prices that are
    affordable for everyday Americans. In my visits to our bases
    and through conversations with customers, I can tell you that
    what we provide is necessary and important to the industry.
        Thank you, and I look forward to your questions.
        [The prepared statement of Mr. Anderson appears as a
    submission for the record.]
        Senator Booker. Mr. Chairman, can I just put into the
    record that Barry Biffle is an awesome name? Yes, yes.
        [Laughter.]
        Chair Lee. Does anyone object?
        Senator Booker. No? Okay.
        [Laughter.]
        Chair Lee. Without objection, it will be duly noted in the
    record.
        Senator Booker. Thank you very much.
        Chair Lee. Go ahead, Mr. Biffle.

     STATEMENT OF BARRY BIFFLE, CHIEF EXECUTIVE OFFICER, FRONTIER
                       AIRLINES, DENVER, COLORADO

        Mr. Biffle. Thank you. I don't have the hair he does, and
    it's too late in life, I guess, for that, but thank you.
        So Chairman, Ranking Member, and Members of the
    Subcommittee, I thank you for the opportunity to appear before
    you today. Airline CEOs like myself usually get invited to
    Capitol Hill when something's gone wrong, a snowstorm, a
    canceled flight, or an angry customer on the evening news, so
    let me start by thanking you for inviting me under better
    circumstances.
        Again, I'm Barry Biffle. I'm the CEO of Frontier Airlines.
    At Frontier we have a simple mission--make flying affordable,
    greener, and more accessible for the average traveler. We're a
    low-cost carrier, which means we don't rely on fancy lounges or
    first-class suites. What we offer is safe, reliable, and
    affordable way for Americans to travel.
        Today, I want to speak very seriously about a few issues,
    and the first one I want to talk about is gate access and how
    that impacts competition. Air travel is not just about getting
    from point A to point B. It's about opportunity, the ability
    for a family in a small town to take their kids to Disney or
    for a student to jump on a trip home for the holidays.
    Competition makes all that possible.
        History shows us that when low-cost carriers like Frontier
    enter market, fares go down, sometimes 20, 30, even 40 percent.
    Customers win. The legacy airlines, United, Delta, American,
    have grown traffic just 6 percent since 2000 while raising
    fares over 40 percent. By contrast, low-cost carriers have
    grown traffic by 152 percent with only a 10 percent increase in
    fares. That's competition at work.
        So the question before us is not whether competition works.
    It's whether new competitors are allowed to compete at all, and
    that's what brings me back to gates. In our industry, the gate
    is the front door. You can have the planes, pilots, fuel, and
    crews, but if you don't have the gate, you don't get to play.
    Right now, too many of those gates are locked up by a handful
    of big airlines.
        Across the country, we see fortress hubs, airports with a
    single airline controlling 60, 70, 80 percent of the gates.
    This kind of dominance doesn't give carriers pricing power. It
    gives them control of who gets in and out of the market. Here's
    the kicker. Many of these gates are not even fully used.
    Dominant carriers hold them. They sit on them and block
    competitors from coming in. Meanwhile, customers in these
    cities pay higher airfares and have fewer choices as a result.
        To put in everyday terms, if McDonald's leased every street
    corner in a town, set up one restaurant and left the other
    corners empty, then told Burger King and Wendy's they weren't
    allowed to open shop, that's not a free market. That's
    protectionism with fries on the side, supersized, and that's
    what we have in the United States airline industry.
        The results are predictable and harmful. Fortress hub
    cities, fares, and higher competition is limited. Travelers in
    Atlanta, Newark, Dallas, and other concentrated airports
    routinely pay more than their counterparts in competitive
    markets. So when gates are locked up, it isn't just a headache
    for the airlines like mine, it's a tax on the traveling public.
        Moreover, the single largest disruption to our airline
    beyond weather and air traffic control is gate holds caused by
    obtaining gate--not getting gate access. Our daily flights per
    gate can be double that of most big airlines. However, the
    inefficiency of allocation of gates often results in our
    diminished on-time reliability and otherwise preventable
    cancellations.
        The Subcommittee has an opportunity to fix this. I want to
    suggest a few practical steps. We need use-it-or-lose-it rules.
    Airlines should not be allowed to hold preferential gates
    indefinitely without using them. If you don't use the gate
    efficiently, you should be required to give it up to another
    carrier who can. It should be measured monthly and held to
    account.
        Common-use requirements, when you build a new gate, at
    least a third of those gates should be available for common
    use. That means anyone can come in, not just the incumbent, and
    provide competition.
        And we also need DOT enforcement authority. The DOT should
    be empowered to step in when dominant carriers hoard all the
    gates and block competition. They already play a role in slot
    allocation. They should do the same thing with gates. And
    again, it should be done monthly.
        And there should be transparency in lease arrangements.
    Right now, gate leases can stretch decades, locking out new
    entrants. We should require clear reporting and accountability.
    These changes wouldn't cost taxpayers a dime, and they don't
    require subsidies or bailouts. They just open the door,
    literally, for competition.
        I know some may say, well, fortress hubs bring benefits,
    more flights, destinations, but the evidence is the opposite.
    Once one airline dominates, there's nothing there. But look, I
    think there's more to this than just gate access. There's
    loyalty programs that are subsidizing their basic economy,
    which enables them to dump low prices out there. Even you had
    the CEO of United Airlines saying recently that he allows
    carriers like us to carry traffic. That's an interesting
    comment that we get what they allow us to carry, so they should
    look into that. And then same thing on re-accom agreements. We
    should look into those because those are also harmful.
        I want to thank everybody for having us, and we look
    forward to discussing things we can do to help with
    competition.
        [The prepared statement of Mr. Biffle appears as a
    submission for the record.]
        Chair Lee. Thank you very much.
        Mr. McGee.

     STATEMENT OF WILLIAM J. McGEE, SENIOR FELLOW FOR AVIATION AND
      TRAVEL, AMERICAN ECONOMIC LIBERTIES PROJECT, WASHINGTON, DC

        Mr. McGee. Chair Lee, Ranking Member Booker, Ranking Member
    Durbin, and Members of the Subcommittee, thank you for hosting
    this hearing today. My name is William J. McGee, and I'm the
    senior fellow for aviation and travel at the American Economic
    Liberties Project, a nonprofit organization dedicated to
    addressing the problems of concentrated economic power.
        Over the past 40 years, I've worked in airline flight
    operations as an FAA licensed aircraft dispatcher and then as
    an aviation journalist and author. Since 2000, I've been an
    airline passenger advocate.
        The industry I entered 40 years ago no longer exists. It
    has been destroyed by deregulation and a lack of competition.
    When Congress passed the Airline Deregulation Act of 1978, it
    did so with the intention of ``placing maximum reliance on
    competition,'' ``avoidance of unreasonable concentration,'' and
    ``encouragement of entry by new air carriers.'' By its own
    aims, deregulation has failed. U.S. carriers are more
    concentrated than ever due to decades of lax antitrust
    enforcement and the failed experiment of deregulation.
        Consolidation is rampant. Competition has all but
    disappeared. What was once a vibrant industry is now led by an
    oligopoly of four airlines--American, Delta, Southwest, and
    United--controlling 80 percent of the market. They have immense
    pricing power, with a smattering of smaller low-fare airlines
    offering only limited alternatives.
        Neither size carrier has a long-term sustainable business
    model. How do we know? Mergers and bankruptcies have both been
    commonplace since 1978. Numerous airlines have had to merge, go
    bankrupt, or get American taxpayer-funded bailouts to survive.
    Across nine hubs nationwide, the three biggest airlines control
    70 percent or more of all flights, including in Newark,
    Minneapolis, and Salt Lake City. In Charlotte, American
    dominates 88 percent of departures. Since 2007, only two new
    entrants have emerged, marking the longest dry spell in
    history.
        Despite claims from the industry that there's competition
    between carriers, the DOT's quarterly airfare reports suggest
    the three largest airlines--American, Delta, and United--have
    virtually ceased to compete against each other on price. The
    few remaining low-fare airlines--Allegiant, Avelo, Breeze,
    Frontier, and Spirit--are the only meaningful source of pricing
    discipline, keeping fares on average 21 percent lower on the
    routes where they compete.
        The Big Four thwart competition through myriad means,
    including fortress hubs, global alliances, devalued frequent
    flyer programs, branded credit cards, predatory pricing, and
    more. Consumers and entire communities nationwide are worse off
    due to airline consolidation. Passengers are left with higher
    fares, fewer nonstop destinations, and fewer flights, and
    workers have fewer rights and have lost jobs. Airlines abuse
    their customers without consequence, whether it's inflicting
    physical violence on passengers after overbooking seats or
    charging them to sit next to toddlers. Major hubs were closed
    in cities as large as St. Louis and Raleigh-Durham. These
    closures hit smaller and rural communities particularly hard.
        While committing these harms, airlines do whatever they can
    to avoid oversight and regulation. For example, they often
    ignore DOT tarmac limitations, which can leave passengers
    stranded for hours. Today, the largest airlines want even more
    deregulation at the expense of passengers. In May, Airlines for
    America, representing the largest carriers, filed a 93-page
    comment requesting that DOT weaken or eliminate most passenger
    protections, including fee transparency, cash refunds, flight
    disruption compensation, and family seating policies for kids
    under 13. Two days later, DOT issued a deregulatory agenda that
    looked copy-pasted from Airlines for America's wish list.
        Given this regulatory peril, it's imperative Congress step
    in. This Subcommittee should consider the following proposals,
    which would directly address the concerns of passengers,
    workers, and local economies.
        First, we applaud Senator Hawley for cosponsoring the
    Airport Gate Competition Act. This is commonsense legislation.
    It would promote competition by ensuring access to critical
    airport infrastructure for smaller airlines.
        Second, Congress should eliminate Federal preemption, which
    has blocked State courts, legislatures, and Attorneys General
    from any airline oversight since 1978.
        Third, large institutional investors often pursue stakes in
    all four of the Big Four carriers, reducing their incentives to
    compete. It's time to restrict common ownership in more than
    one domestic airline.
        Fourth, Congress should require the FAA to prevent the
    majors from thwarting low-fare competition at congested
    airports. Takeoff and landing slots shouldn't be bought, sold,
    or traded by carriers.
        In conclusion, the failures of deregulation and
    consolidation have made it clear that new and sensible
    approaches to regulation are long overdue to protect consumers,
    enhance competition, and ensure access for smaller airlines.
    Your constituents will tell you the truth. Flying today is a
    miserable experience. It wasn't always this way. It doesn't
    have to be this way.
        We're at an inflection point. Congress needs to investigate
    the failures of deregulation and, just as it did 50 years ago,
    hear from the public, not just airline executives and their
    lobbyists.
        Thank you, and I look forward to your questions.
        [The prepared statement of Mr. McGee appears as a
    submission for the record.]
        Chair Lee. Thanks so much.
        Ms. Pinkerton.

    STATEMENT OF SHARON PINKERTON, SENIOR VICE PRESIDENT OF POLICY
      AND REGULATORY AFFAIRS, AIRLINES FOR AMERICA, WASHINGTON, DC

        Ms. Pinkerton. Thank you so much for the invitation to
    testify today.
        Today, more people are flying than ever, and for good
    reason. Fierce competition between airlines has brought us
    bargain airfares and a vast array of flight options, but it
    hasn't always been like this. Before the 1978 Deregulation Act,
    fewer than one in four Americans had been on a plane, and
    that's because the Government controlled prices, schedules, and
    routes. That Government one-size-fits-all approach resulted in
    flying being a luxury that only the wealthy could afford. In
    contrast today, 90 percent of the American public has flown.
    That is competition in action. Freeing the marketplace from
    Government command-and-control has literally democratized air
    travel in this country.
        We can measure the State of competition in our industry
    using three metrics--price, diversity of options, and customer
    service. First, price. Affordable airfares are ubiquitous. Just
    yesterday, I got an email from one of our carriers offering a
    $39 fare. All airfares, including ancillaries, are at historic
    lows. That's the data. The price of an average domestic ticket
    back in 1977 was about $800. Today, it's 450 percent less.
        Now, we all know in contrast what's been happening with the
    consumer price index. You mentioned it, Senator Booker. The
    consumer price index over the last year has been five--up 23
    percent in all categories except one, airfare. It's gone down.
    In a world where inflation is hitting food, housing, medical
    expenses, and other essentials, the low cost of air travel is a
    noticeable and positive outlier. And frankly, much of that is
    due to the lower-cost carriers.
        And that gets me to my second metric, the availability of
    diverse options. Over the last few decades, the lower-cost
    carriers have indeed been a major engine of growth in our
    industry. They have taken market share away from the global
    network carriers. And as a result today, the lower-cost
    carriers carry almost 50 percent of domestic traffic in this
    country.
        It's important to know that the data show that the number
    of competitors per origin and destination city pair in this
    country has increased since deregulation, increased. Now, part
    of that is due to the fact that we've had new entrants join the
    fray. Breeze, Avelo joined in 2021. And in fact, Breeze just
    announced last week that they're going to be providing
    international service next year, which is an indication that
    just like the way the domestic market has transformed, the
    international market has been transformed through the pursuit
    of open-skies agreements that open up foreign markets.
        The third market--the third metric is customer service. Our
    carriers have been investing record-breaking amounts in
    innovations in order to elevate the customer service that they
    provide. They're investing in tech and physical infrastructure.
    They're improving their IT systems, mobile apps, lounges,
    loyalty programs, bigger overhead bins, and faster Wi-Fi on
    planes, just to name a few things. And it's working. Again,
    back to the data, independent survey after survey shows that
    customer satisfaction is high. Not perfect, but good. Given the
    incredible logistical complexity of carrying 2.7 million people
    every day safely on 27,000 flights, we are proud of the fact
    that the vast majority of Americans continue to give high marks
    to airlines and their airline travel experience.
        Given the robust State of competition, we do have a threat
    to competition. The biggest threat is our short staffing and
    our antiquated air traffic control system. You don't need to
    look any further than the tragedy at DCA, the outages in the
    northeast of the FAA equipment, and at DFW last week as
    evidence of the pitiful condition of our air traffic control
    system. That's why we are deeply appreciative that Congress has
    approved the $12.5 billion down payment on Secretary Duffy's
    air traffic control plan, but frankly it can't come soon
    enough. As you know, we are flying 10 percent fewer flights and
    have been for 2 years out of the major New York and New Jersey
    airports. Now, flying less is bad for big airlines, it's bad
    for small airplanes--airlines, but it's the worst for customers
    because it robs them of options.
        So while the State of competition is strong, demand is also
    strong by the way. TSA has had 8 of their 10 busiest days this
    year. We do think Congress needs to take action. We urge you to
    support a new air traffic control system that would be safer,
    will allow for increased flying, and give customers even more
    choice. Thank you.
        [The prepared statement of Ms. Pinkerton appears as a
    submission for the record.]
        Chair Lee. Thank you.
        Professor Sitaraman.

    STATEMENT OF GANESH SITARAMAN, PROFESSOR OF LAW, VANDERBILT LAW
                      SCHOOL, NASHVILLE, TENNESSEE

        Professor Sitaraman. Chairman Lee, Ranking Member Booker,
    and Members of the Subcommittee, thank you for the opportunity
    to testify on the State of competition in the airline industry.
    My name is Ganesh Sitaraman. I'm a professor at Vanderbilt
    University and the New York Alumni Chancellor's Chair in Law. I
    also direct the Vanderbilt Policy Accelerator. I'm the author
    of a textbook Networks, Platforms & Utilities, which covers the
    transportation sector, among others, and a popular book called
    ``Why Flying is Miserable: And How to Fix It,'' which offers a
    history of airline regulation and deregulation. I've also
    coauthored some white papers on this topic as well.
        My testimony today draws on this scholarship, and it
    represents my personal opinions, not the views of Vanderbilt
    University.
        Air travel is one of humanity's extraordinary achievements,
    and it has become essential to modern life and commerce. The
    people who work in the industry from baggage handlers and
    customer service representatives to air traffic controllers,
    flight attendants, and pilots do us all a great service in
    making air travel possible. I believe it is essential that we
    have an air transportation system that is stable and resilient,
    that is competitive, that provides access across the country,
    and that treats passengers fairly. Regrettably, I do not think
    we are meeting that standard today.
        First, stability and resilience. The airline industry
    suffers from cycles of boom and bust, with dozens of
    bankruptcies and repeated taxpayer bailouts.
        Second, competition. The airline industry is less
    competitive and more consolidated than in the past. At some hub
    airports, a single carrier can now have 60 percent, 70 percent,
    80 percent market share. More broadly, the four biggest
    airlines today have a larger market share than they did in
    1977. This is an astonishing fact. We have less--we have more
    competition--sorry, less competition today than we did during
    regulation.
        Third, geographic access. Smaller communities and mid-sized
    cities are losing service. Big carriers abandoned dozens of
    cities during and after COVID-19. Airports that once had
    multiple airlines and daily flights now struggle. Some places,
    like Cheyenne, Wyoming, have been forced to agree to subsidize
    highly profitable airlines to ensure they get even a minimum
    level of service.
        And fourth and finally, there is the thing everyone knows,
    and that is that the passenger experience is often miserable.
    Seats are smaller, fees have proliferated, pricing is getting
    more complicated and less transparent, connections through
    giant hubs are stressful, and of course less competition and
    limited service make it all worse.
        So my message to the Subcommittee is this. The airline
    industry is not resilient enough, it is not competitive enough,
    it is not serving the public or national interest well enough.
    Addressing the problems in this sector requires understanding
    how we got here, and in my written testimony, I described the
    history of this sector and some of the dynamics that create a
    tendency toward consolidation and concentration. The key lesson
    from this history is that without pro-competitive, pro-
    resilience, pro-growth, and pro-passenger rules, this industry
    will never meet the high standard our country needs for this
    critical infrastructure.
        But I come with good news too, and that is that you have it
    in your power to fix flying. On stability and resilience, you
    could require airlines to develop resilience plans or rainy-day
    funds. On competition, you could expand access to gates and
    reduce hub concentration. On geographic access, you can drop a
    draft pick plan as the one I've proposed so bigger airlines
    will serve small cities at affordable prices. And you can
    improve the passenger experience by setting minimum seat sizes,
    making it cheaper for parents to fly with infants, preventing
    AI-enhanced personalized and dynamic pricing, and giving
    passengers the ability to sue airlines when they engage in
    abusive practices. In short, flying might be miserable today,
    but it doesn't have to stay that way.
        Thank you for holding this important hearing, I welcome
    your questions, and I look forward to working with you to
    ensure the United States has an airline industry that meets our
    national needs and that is thriving, stable, and competitive.
        [The prepared statement of Professor Sitaraman appears as a
    submission for the record.]
        Chair Lee. Thank you very much.
        Mr. Anderson, let's start with you. We are now going to go
    through 5-minute rounds alternating between Republicans and
    Democrats in order of seniority, subject to the early bird
    rule.
        But Allegiant frequently operates in a way that connects
    smaller airports to, among other things, vacation destinations.
    I know a lot of your routes pretty well because you are
    courteous enough to fly out of Provo Airport, and that is where
    I live, and that is fantastic. And you happen to fly to a
    couple of cities where my adult children live, and so that is
    very helpful. But very often you are connecting these smaller
    airports to vacation destinations or places where they
    otherwise need to travel. What headwinds have you had as a
    smaller, kind of more low-cost carrier in trying to gain scale
    within that market?
        Mr. Anderson. Senator Lee, thank you for the question.
    We're really proud of Allegiant, and the model that we've
    developed and invented over the years, as you mentioned, we
    provide small and medium-sized communities service. We serve
    more cities than nearly any other carrier in the United States,
    and that's at low fares and nonstop. That's the value that we
    provide. And we feel we have the opportunity to continue to
    grow our model and expand our service to other like
    communities.
        And to specifically your question, some of the barriers
    that we have faced, I mean, when you think about just typical
    costs, and is--are we able to stimulate demand in a particular
    market? But outside of that, it's we're looking for ways to be
    more efficient, and we--we're really excited about some of the
    measures that we've seen from like the ATC modernization
    program. We think that will help for Allegiant to continue to
    expand its service. We also think the gate access bill is--
    items like that where we can go into these destination airports
    and have more of an opportunity to connect smaller and medium-
    sized communities into those larger airports.
        Chair Lee. Right. And gate limitations often impose burdens
    for an up-and-coming, you know, a new market entrant.
        By the way, on that topic, during the COVID pandemic, the
    U.S. Congress doled out I think it was about $54 billion to the
    industry as a whole. How did that impact market share or your
    ability to break into the market? Did that have an impact on
    your ability to gain market share, or did it diminish it? No
    effect?
        Mr. Anderson. Thanks for the question, Senator. I would
    say--I was the CFO at Allegiant during the time of the
    pandemic, and it was a challenging time and very appreciative
    of the CARES Act funds that were provided to airlines during
    such time. Given Allegiant's unique model in the communities
    that we serve, actually during the pandemic there was a period
    of time where we were the fourth largest carrier in the United
    States. I want to say it was May 2020. But overall, we were
    able to navigate the pandemic I think relatively as well as
    anybody, and we appreciate the support that the Government and
    leadership that the Government played at that time.
        Chair Lee. Mr. Biffle, some more questions. What headwinds
    have you faced at Frontier as you have tried to gain scale
    within the market?
        Mr. Biffle. Yes, thanks. Thanks. Look, we've faced all
    types of issues with scale. I mean, obviously, the gates that I
    mentioned is a major factor. Also--and I mentioned to you re-
    accom. You know, prior to all the consolidation, it was common
    practice, as it is most parts of the world, until consolidation
    in the United States, where, you know, if I cancel a flight or
    someone else cancels a flight, we would take those customers at
    whatever they paid if there are seats left last minute so that
    people aren't convenienced. It was kind of--inconvenienced--so
    it helped. So that hurts experience.
        But one of the big things on scale beyond the gates is
    actually just the loyalty programs. When you look at the
    subsidization that is going on of the big credit card companies
    to the big airlines, it's massive, and it exceeds, in almost
    every case of the big airlines, all their profits. And they're
    using those profits to actually subsidize basic economy. So
    you're taking credit card interchange and interest rates,
    subsidizing basic economy, allowing them to dump cheap prices
    and compete----
        Chair Lee. For the loyalty programs and the credit card
    programs----
        Mr. Biffle. Yes, I mean, if they didn't have this massive
    subsidy that they're getting from that, they wouldn't be able
    to flood the market and dump prices like that. I mean, it's--
    you're creating an economic situation that is completely driven
    by their size and scale. And once you get to a dominance--I
    mean, he mentioned, I guess it was Charlotte, 88 percent. You
    know, your problem is, if you're in Charlotte, you're kind of
    beholden to them. You have to play the game. But it's the
    biggest dupe on those people too. I mean, the odds of them
    getting upgraded, they're--I mean, when they look on their
    upgrade list, they're probably number 76 on the upgrade list.
    They're never going to get upgraded to first class. So a
    carrier like us, I mean, our elite customers, 80 percent get
    upgraded. Eighty percent get upgraded to our European business
    class upfront plus product. Compared to the big guys, I offer
    better value, but I just don't get the scale because they're
    able to subsidize it with these credit card programs.
        Chair Lee. Right. And that is one of the inevitable
    realities of this industry or any other industry where there is
    a network effect. The bigger your network, the bigger the draw,
    the more capable you are of having a credit card program or a
    rewards program that allows you to do that.
        Mr. Biffle. Yes, and so when you get into position, you
    control the gates, you control the re-accom, you control the
    ability to be able to be on time. I mean, you control the
    ecosystem with the loyalty. I mean, it's pretty rigged.
        Chair Lee. Okay. I see my time has expired. I have got a
    lot more questions. We will hope to do multiple rounds today.
    We will turn next to Senator Booker.
        Senator Booker. I am going to do the prudent thing and
    defer to the Ranking Member of this Committee, who has a lot of
    power and authority over me.
        Senator Durbin. Oh, the power of this Committee. Thank you
    very much, Cory. It is great to be with you all, and I was just
    sitting here jotting down. I have been in Congress for 43
    years, 50 round trips a year, 2,000 flights, millions and
    millions of miles. Maybe this is my subspecialty that I have
    developed over the years.
        But I do find a couple things interesting. First, I want to
    shout out to Northwest Orient Airlines, long gone, the only
    airline that publicly supported my effort to ban smoking on
    airplanes. Air Canada had already done it, but the majors would
    not. They were afraid to take the heat, and they were glad when
    it finally passed.
        But the thing that I found interesting--Mr. Biffle just
    referred to it in his answer to Senator Lee's question--is one
    element that I would like to discuss for a moment. When they
    got us in our seats with all the safety warnings--and God bless
    the flight attendants, I love them all--and they got you
    buckled up, and things have quieted down in the cabin, what do
    you hear over the microphone? A pitch for a credit card. And
    then next thing you know, the flight attendants who are focused
    on safety are walking the aisles trying to pass out brochures.
    Why? You have said it. For many airlines, there is more money
    made on the rewards and loyalty program than on air operations.
    In fact, these planes are flying banks with Visa and
    Mastercards in them, and the airlines make their money off of
    the loyalty programs.
        What percentage of airline travelers participate in a
    loyalty program? Any idea, Mr. Biffle?
        Mr. Biffle. I don't know the national average, but I can
    tell you that, you know, dollars per passenger, I mean, we have
    a program ourselves, but it's a few dollars a passenger. The
    big airlines are $25 to $40 a passenger is generated from
    credit card revenue. It's massive.
        Senator Durbin. 82 percent?
        Mr. Biffle. 82 percent--or----
        Senator Durbin. Airline passengers participate in a loyalty
    program?
        Mr. Biffle. Oh sure, yep.
        Senator Durbin. What kind of law is there that regulates
    the frequent flyer programs so that the airlines can't just
    dump your miles that you have accumulated over years and years?
    It is a trick question. There is none.
        Mr. Biffle. Yes.
        Senator Durbin. So I introduced a bill called the Protect
    Your Points Act, which just answers the basic questions. I am
    going out of my way to save up all these frequent flyer miles.
    Are they worth anything? Can they cancel them all tomorrow? Do
    they owe me anything? Do they have any value to them? For a lot
    of people, this is a big investment. They make a decision on
    when and whether they are going to travel based on whether they
    can use miles or win miles in the process. What does it do to
    your competition at Frontier?
        Mr. Biffle. Well, so it helps us to a degree, but it harms
    us in that we just don't have the scale, right? So if I had
    access to the big airlines networks, the same credit card
    someone used would get them more places they could fly, as an
    example. We are doing things to innovate, like we're
    introducing a first-class seat so people can get upgrades and
    so forth, but again, I just don't have the scale, so I don't
    get that benefit.
        Again, having--I made the comment a while ago, people will
    get much more value from my card, but I'm small, so it's hard
    to convince people and market it. Once you get into that
    behemoth status, it's hard to stop that kind of momentum.
        Senator Durbin. I have learned the hard way what it takes
    to get your name in lights at DCA, just to introduce a bill
    that addresses the interchange fee and the swipe fee on credit
    cards, and they will have a sign that says ``Stop the Durbin-
    Marshall Amendment.'' Do you have any idea what the interchange
    fee is that you are collecting or paying?
        Mr. Biffle. It depends upon the--you know, the network, but
    we pay as little as 200 basis points, as high as 300 depending
    upon who it is. American Express is one of the highest.
        Senator Durbin. Obviously, the major airlines look at my
    bill with Senator Marshall like the devil hates holy water, the
    idea that there would be some competition on the swipe fee or
    interchange fee, and that is to the benefit of consumers,
    ultimately, if we can do it.
        I would like to ask you as well, when you look back over
    time, you have been involved with a number of airlines on the
    safety issue. Can you make any comment on the pilots and the
    availability of them and the shortages and pilots that we are
    running into with many airlines?
        Mr. Biffle. Sure, So fortunately, the pilot shortage that
    we had a few years ago has now kind of dissipated. It could
    come back at some point. I think the main concern we should
    have with pilots is the availability of quality training and so
    forth, and there's a lot of data-driven things that we can do
    and simulations that can get them there, and I think we should
    spend time looking at, you know, the data we have, even once
    they're on the line, and--because you've got Folkwood Data as
    an example where you can monitor bad habits of some versus
    others. I mean, we can--in every one of these incidents--take
    the Colgan incident and many of the others. There were plenty
    of predictors. Had you been following those pilots before, you
    would have seen that there--these habits were there before. And
    so a simple 1,500 arbitrary rule is not how you get it. There
    are data-driven approaches that you could do to improve safety
    with pilots.
        Senator Durbin. Thank you. Thanks, Senator Booker.
        Chair Lee. Senator Hawley will be up next, but since we
    have had a couple of question rounds in there where we have had
    some focus by the smaller companies, Ms. Pinkerton, if you
    wanted to respond to the smaller carriers before we turn to
    Senator Hawley, and I would be happy to let you fill in here.
    If not, we will catch you in subsequent rounds.
        Ms. Pinkerton. I'm happy to address the gate access issue,
    for example, that that is certainly something--you know, A4A
    represents large carriers and some smaller ones, and we've
    heard from smaller carriers about gate access issues. I think,
    though, it's important to remember, No. 1, it's the law that
    airports must provide access to new entrants, and there are a
    number of mechanisms that enable that to happen. So if you're
    going to take a Federal grant, you have to provide access.
        Many airports are required to file a competition plan where
    they have to spell out exactly how they are going to provide
    access. And then Mr. Biffle mentioned the lease agreements.
    Lease agreements are another tool that airports have to ensure
    that new entrants have access. In fact, there are already use
    requirements so that carriers cannot sit on gates that aren't
    utilized. If they do that, the airport is well within their
    rights to take that gate back.
        I think what's important here is that the FAA should be
    providing oversight to airports to make sure that they're
    enforcing the law that exists, and then if the FAA isn't
    providing that oversight to airports, I would say Congress
    needs to provide some oversight to FAA.
        Chair Lee. Okay. Senator Hawley.
        Senator Hawley. Thank you very much, Mr. Chairman. Thanks
    to all the witnesses for being here.
        Mr. Biffle, if I could just start with you. About 9 months
    ago, your chief commercial officer testified to me that
    Frontier pays its gate agents bounties to stop paying customers
    from carrying bags onto the plane. Is this still happening?
        Mr. Biffle. Not at the rate it was. We changed our----
        Senator Hawley. Well, wait, wait, wait. What does that
    mean? So are you still paying your gate agents to stop your
    customers from carrying bags on? You were paying them at least
    10 bucks every time you would stop a paying customer from
    carrying on a bag, your gate agents to get paid for it. Is that
    still happening?
        Mr. Biffle. We do offer incentives and commissions----
        Senator Hawley. You do.
        Mr. Biffle [continuing]. To stop people who didn't pay, not
    who paid, who didn't pay.
        Senator Hawley. No, you are paying your gate agents, so it
    sounds like you are still doing it. You are still paying them
    money to harass customers from bringing bags onto the airline
    by saying it is too big or it doesn't fit in the little box or
    whatever the case may be. You are still doing it. That is your
    testimony today? Why?
        Mr. Biffle. I don't know that I would describe it that way,
    but we do provide incentives.
        Senator Hawley. Why would you pay your own employees to
    harass your customers? Why is this good business practice?
        Mr. Biffle. Unbundling enables us to offer low fares, and
    the lower fares, many people could not afford to fly if they
    didn't have the lower fare option. But in order for the system
    to work, everyone has to be treated fairly, and when people
    then--a small percentage----
        Senator Hawley. Wait a minute. Why are you paying your
    agents? This has got to be the only business in the world I
    have heard of that pays your people to harass your own
    customers. These are customers who have purchased a ticket.
    They have a carry-on bag, and you are paying your people at the
    gate to stop them and say your bag is not quite right. It
    doesn't fit in this.
        We heard testimony. The Permanent Select Committee in this
    Senate has done a thorough investigation of this. We heard
    testimony from numerous of your customers saying they were
    wrongly stopped and harassed. There is no appeals process.
    There is nothing. You are making gobs of money on it. You
    generated $40 million in fees on this according to your own
    data. That is amazing. And you are still doing it. I mean, in
    what world is this defensible?
        Mr. Biffle. It's fair.
        Senator Hawley. It is fair to whom?
        Mr. Biffle. Well, you continue to insinuate that they paid
    for their bag, and they did not pay for their bag.
        Senator Hawley. They paid for a ticket that allows them----
        Mr. Biffle. They paid----
        Senator Hawley [continuing]. To have a carry-on bag, and
    you are paying your agents to harass them to stop them from
    carrying it on. You know, the only other airline I know of,
    Spirit, was doing this, and they stopped because they said it
    was a terrible experience for the customers. Your customers
    hate it. This is one of the reasons they hate to fly. I can't
    believe you are still doing it. How much money have you made on
    it this year so far?
        Mr. Biffle. Considerably less, if you will let me speak.
    What we did is we introduced the New Frontier. We have very
    simple branded choices, complete transparency.
        Senator Hawley. Wait a minute. Wait a minute. First of all,
    you are not a victim here, Mr. Biffle, okay? You are making
    billions of dollars, and you are treating your customers
    appallingly badly. And the fact that you are still paying your
    employees to harass your own customers, I think, frankly, is
    unconscionable. I said this 9 months ago. I thought for sure it
    would have stopped by now, but I can't believe you are still
    doing it. So I don't feel sorry for you one little bit. In
    fact, I think you should apologize right now to all of your
    customers for what you are doing to them. And I think you
    should turn around and give them back the money that you have
    taken by forcing them to surrender their bags and pay extra
    fees after they have already paid a price.
        I mean, I don't get it. You know, you seem to be totally
    baffled by this. You think that this is just fine.
        Mr. Biffle. I'm not baffled. I think it's--you're
    insinuating that they paid for a bag that they didn't pay for.
        Senator Hawley. No, I am insinuating----
        Mr. Biffle. It's----
        Senator Hawley. I am not insinuating anything. I am
    accusing you, actually, of doing something that I think is
    wrong, of incentivizing your own employees to treat your
    customers badly. And the money you are making on it is
    astounding, just astounding, $40 million in fees. 62 percent of
    your revenues come from these ancillary fees, of which these
    additional baggage fees are part of it, and you just seem to
    see nothing wrong with this. I mean, do you not understand that
    this is why people hate to fly? They hate that they are treated
    terribly when they go to the airport by airlines, and you are
    paying your own people to do it. Do you want to say anything to
    your customers or to the flying public?
        Mr. Biffle. I think we've made huge progress in this area
    this year. We have introduced--as I started to say, we've
    introduced an economy product. That product is for $20 to $30,
    gives you free change fees, free seat assignment, carry-on bag.
    The persons that you're discussing are the people who bought a
    basic product, not that product, and they didn't pay for it.
        Senator Hawley. Will you commit to quit giving incentives
    to your employees to stop customers and take their bags away?
    Will you stop that? Your other airlines have done it, your
    competitor airlines, your peer airlines. Will you commit here
    today to stop paying your employees to harass customers?
        Mr. Biffle. Can I ask a question?
        Senator Hawley. I would like an answer to mine first.
        Mr. Biffle. I--we will look at that, but I don't----
        Senator Hawley. That doesn't sound like a yes or a no. Can
    you just say, yes, we will stop paying our gate agents to
    harass our own customers over their bags?
        Mr. Biffle. We are not harassing customers.
        Senator Hawley. Yes, you are. And I invite you to read the
    report by the Permanent Select Committee of this body that
    investigated this and took testimony from your customers.
    Indeed, we took testimony from your own executives on this.
    This is a reality. Or, alternatively, you could go out to DCA
    here and go and ask some of your customers how they feel about
    it. I know what they will tell you. They will tell you what
    they told us. They hate it. They feel badly treated. They feel
    like they are treated like cattle, and you are making tens of
    millions of dollars off of it, and I just think that is wrong.
    I just think it is ridiculous.
        I have got a lot more questions for you, but I know other
    people want to ask questions.
        Chair Lee. Thank you. Senator Booker.
        Senator Booker. Professor Sitaraman, first of all, my tone
    will be different than Senator Hawley's but the same energy. I
    want to bring that to you for that hair, the same negative
    energy there, sir. I just want to stipulate that for the
    record. Okay? Are you ready for me?
        Professor Sitaraman. I'll trade you an inch of hair for an
    inch of height if we can make that deal.
        Senator Booker. We might have a deal. We might have a deal,
    sir. Okay. I would like permission to treat the witness as
    hostile.
        Sir, I am really concerned about Americans who don't have
    access to air travel because of where they live, and I want to
    know how can we ensure that millions of Americans who don't
    live around major cities can have access to reliable, efficient
    flights and that the airlines themselves stay afloat. Can you
    give me your perspective on that?
        Professor Sitaraman. Well, thanks, Senator. I agree this is
    a big problem, and I think the core thing to start by
    understanding is why this happens. Why are small cities, why
    are mid-sized cities losing air service? And I think there's
    really two reasons behind it. The first is that in some places
    it is uneconomical to serve. The volume of passengers is very
    small, and it's costly to fly. And in those places, it's not
    going to make sense for an airline to serve unless they get a
    subsidy, or unless there's a requirement, a kind of duty to
    serve like we have in other areas of law.
        The second reason is because of consolidation. As a number
    of people have mentioned already up on this witness stand, and
    as has been mentioned by Senator Lee, this is an industry in
    which there are network effects, there's economies of scale,
    and there are barriers to entry. And those things create
    tendencies toward consolidation and concentration, and when you
    have that, there's an incentive for airlines to focus their
    operations in bigger and bigger cities. That's why we have the
    hubs that we have, and that often means de-hubbing certain
    places or reducing service to others. And I think this is a
    serious problem because we have an airline system that is
    essential infrastructure for our country. It provides----
        Senator Booker. And you in your testimony go into that a
    lot, and you speak actually I think quite persuasively about
    the economic benefit to our country as a whole when you ease
    transportation. Roads, we don't not pave roads to areas. And
    you almost say that it should be almost like a utility and that
    kind of obligation. Is that correct?
        Professor Sitaraman. Yes, that's right. And if you think
    about it this way, would you ever start a Fortune 500 company
    in a city with no air service? You wouldn't do it. If you were
    an entrepreneur with a great idea, a kid growing up----
        Senator Booker. But we have even seen VC dollars far more--
    if you have a direct from Silicon Valley, VC dollars more. That
    is how vital it is that people won't even necessarily even
    invest in businesses that don't have that. There is a
    correlation, I should say, maybe not a causation.
        Professor Sitaraman. And that's why this is basic
    infrastructure. And I think that what we want as a country is
    for people who grow up anywhere to have opportunities.
        Senator Booker. But your solution to that is for Congress
    to act.
        Professor Sitaraman. Yes, I think that's right. So the
    current solution that we have right now I don't think is
    working, and that's the Essential Air Service program. It
    provides a subsidy to a number of very small cities. But these
    are very, very small cities, and they don't include a number of
    other places that have lost service in recent years.
        I think one proposal that I've put forward, and these are
    ideas that I think should be debated, is what I call the NFL
    draft-pick model. And the idea is that the biggest airlines
    would be like the teams. There'd be a bunch of cities that
    would be like the players. And the airlines would have to pick
    cities that they want to serve, would go in order, until all
    the cities are covered. And they would have to have affordable
    access.
        Senator Booker. Right, and I am just going to interrupt you
    because I want to get one more question before my time. But it
    is this concern I have about the hollowing out of certain
    communities because of consolidation. We have talked about in
    the agricultural sector we have seen entire businesses being
    killed in towns that are the connective tissue of our country.
    And I think this should be one of the things we should be
    looking at when these towns and communities lose air traffic,
    they lose economic investment, they lose opportunity, and many
    times they lose out on what adds--how should I say it? It adds
    vibrancy to a community.
        I just want to shift, Mr. McGee, to you really quickly in
    the remaining time that I have. Can you speak to me about an
    idea that I really believe in, which is this idea of passengers
    have fundamental rights and what Congress could do to better
    protect passengers who still often report very bad experiences?
    I think that Senator Hawley was scratching at that as well--
    well, maybe not scratching, but pounding at that as well.
        Mr. McGee. Yes, thank you, Senator. The fact is the United
    States lags much of the world in terms of passenger rights.
    This is the standard operating system in the European Union,
    United Kingdom, Canada, India, countries all over the world,
    that there are mandatory rights in terms of what you--how you
    will be compensated when there is a flight delay, a
    cancellation, mishandled baggage.
        Here in the United States, we greatly allow airlines to
    police themselves. They write contracts of carriage written for
    and by themselves, and we adhere to them every time we swipe a
    credit card and buy a ticket. Now, the fact is that the irony
    is the largest U.S. airlines--Delta, American, United--if
    you're flying on them and you encounter a problem, a canceled
    flight or a delay on foreign soil, you will be treated much
    better than on American soil. So if you're on Delta and your
    flight is canceled----
        Senator Booker. And I want to----
        Mr. McGee [continuing]. You want to be in Brussels, not
    Atlanta.
        Senator Booker. I want to just be respectful of Senator
    Moody, but I just want to say because there is so much
    bipartisan space and I am not trying to be partisan, but the
    Trump administration has rolled back some rules that would have
    given passengers transparency. Can you talk about the actual
    impact for American consumers of that?
        Mr. McGee. It would be devastating. As I said, we already
    lag much of the world, but the few existing protections that we
    have, as I said, Airlines for America issued a 93-page
    suggestion to the DOT, and unfortunately, it seems like this
    DOT is adhering to it. It would be devastating. Right now,
    they're doing it in a request for further information. We and
    others will be weighing in. But we should all be on guard that
    if you think air travel is problematic now, it will be
    absolutely awful a year from now if the DOT rolls back the
    provisions that we already have.
        Senator Booker. Thank you, sir.
        Thank you, Mr. Chairman.
        Chair Lee. Senator Moody.
        [Off mic.]
        Senator Booker. Microphone. And I am sure he spends more
    money on product than you do.
        [Laughter.]
        Senator Moody. For sure. You can give me your tips later.
        Thank you for being here today, very important hearing,
    very important hearing. One of the things that we struggle
    with, I think, specifically in the airline industry is the
    understanding--as I come at other industries--coming from as
    attorney general, one of our big challenges was we had consumer
    protection laws. Many of us had antitrust divisions. And when
    you are approaching mergers, acquisitions, you are always
    trying to make sure that there is meaningful, true competition,
    while at the same time making sure you are never, as a
    Government, selecting the winners in a market because that in
    of itself negates meaningful competition.
        And I was very frustrated with a particular case in the
    sense that we have--for those that don't know--and the American
    people that may be watching, we have legacy airlines, we have
    low-cost airlines, and then we have ultra-low-cost airlines.
    And we have two of our ultra-low-cost airlines with us today.
    Is that how you would describe yourself? Is that your----
        Mr. Anderson. Sorry, Senator, we like to refer to ourselves
    as value airlines, but----
        Senator Moody. Value airlines.
        Mr. Anderson [continuing]. It is a common----
        Senator Moody. Okay.
        Mr. Anderson [continuing]. Term that is used, ultra-low-
    cost carrier.
        Senator Moody. So my concern is, once you come into the
    market as a new player, and let's say you come in as a value
    airline or even a low-cost airline, do you think that you have
    to stay there for the duration of the existence of your
    company?
        Mr. Biffle. Is that----
        Senator Moody. Just answer, either one of you.
        Mr. Biffle. Well, it is not uncommon for airlines to
    evolve. Probably the best example today is Southwest, started
    out as low-cost, and they are now evolving to offering and
    suggesting that they may have either other legacy or big
    network attributes if that makes sense.
        Senator Moody. Yes, so I was very frustrated under the
    Biden administration when the Spirit and Jet Blue announced
    that merger, and by the next March, Florida came in and looked
    at that and said very clearly, we can make sure we have better
    capacity, better flights, ensure competition. We announced a
    settlement. This was only probably about 6 months after the
    announcement. And the next day, DOJ announced they were going
    to fight, and they were going to block that, the next day. It
    showed very differing philosophies on how to ensure competition
    and ensure that Government was not picking winners and losers,
    very different philosophies.
        And the reason we worked so hard on that settlement and
    announced that settlement was because we knew that one of those
    players was in financial jeopardy, and this was going to be a
    way to make sure that consumers could still take advantage of
    that capacity. And it might even present more competition for
    legacy airlines. I mean, that would be new, right, and
    something we would all want to see. And within a year, because
    the DOJ under Biden fought that, that was blocked. And then, of
    course, what we expected, Spirit filed bankruptcy. I think now
    they are on their second bankruptcy. I think I would like to
    ask Ms. Pinkerton, how can we ensure that Government is not
    placing a finger on who wins and loses in competition among
    airlines?
        Ms. Pinkerton. Well, without addressing--I can't address
    your specific situation that you're talking about there, but I
    believe that something that is definitely an issue for all
    airlines are certainly what we're calling cost convergence. So
    we're seeing increased airport costs, we're seeing increased
    labor costs because we're paying our employees more, and we're
    seeing increased regulatory costs. So I think it certainly
    wouldn't be tipping scales to say we shouldn't be imposing
    additional costs on the industry, and also what can we do for
    the entire industry?
        As I have said in my testimony, I really think a broken air
    traffic control system and an air traffic controller shortage
    is the most significant threat to competition because we're
    flying 10 percent less today because we don't have adequate
    controllers and adequate infrastructure. So that's my--that's
    our policy suggestion.
        Senator Moody. If I had more time----
        Chair Lee.
        [Off mic.]
        Senator Moody. I do? Thank you. Since it is so specifically
    related to antitrust, can I ask our value-based airlines if in
    fact you were facing a situation where you were dealing with
    the financial health of your company, and the only way to
    continue to provide service and capacity was to evaluate
    merging, do you believe Government should work with the
    stakeholders in order to ensure that you can continue in
    existence, or do you think that they should block you out of
    some sort of----
        Mr. Biffle. Well, I would say that----
        Senator Moody [continuing]. Protection of----
        Mr. Biffle. Well, I think----
        Senator Moody. Maybe protection of legacy carriers.
        Mr. Biffle. Let's go back to the Spirit--let's go back to
    the Spirit-JetBlue example. Having been around the industry for
    three decades, I was shocked. I mean, we created a system of
    the Big Four controlling over 80 percent of the market, and
    then two of the small players were trying to get together. I
    mean, I found it laughable that anyone would think that was
    something that should be stopped. In fact, I would argue that
    all of the other small carriers--and just stop and think about
    this. All of the non-Big Four altogether are not as big as one
    of the Big Four. You should give all of us antitrust immunity.
    Like your job should be to say, if I really want to fix these
    things, what should I go do? You should give us all antitrust
    immunity. You should give us not lip service about the gates.
        I'll give you real examples about gates. I should tell you
    about some horror stories about things that have happened this
    summer in Atlanta. I take real exception to being--that the
    answers are that I should be fined or do things when the
    reality is the system's rigged against us. You fix the gates.
        And I think you need to look for scale things that you
    could do on the mileage programs. Example being, you know, one
    of the things you could do is give value carriers like us, our
    mileage programs, access to the big airlines' networks at the
    cost that they charge themselves for miles. I mean, there's
    some real remedies that the Government should do to correct
    what we now all recognize has been bad for consumers, and
    that's allowing the Big Four to control the market.
        Senator Moody. We had a low-cost airline trying to merge
    with a value-cost airline so that one could stay in existence--
    --
        Mr. Biffle. Yep.
        Senator Moody [continuing]. And the Government said, nope,
    we are the Government, we are going to block that, and then one
    had to file bankruptcy. I just don't know that that has
    resonated with our policymakers or our lawmakers. Hopefully,
    this administration takes a new approach to ensuring true
    meaningful competition. That is my hope. I am seeing very good
    signs out of this new administration.
        But I do think we need to not lose sight of the fact that
    exactly what I knew it was going to happen, happened. And we
    can't keep this up if, in fact, we are trying to keep costs low
    and travel possible for all Americans.
        So thank you so much.
        Senator Booker. See, you could have taken more time. The
    Chairman was distracted for a moment by his incredible staffer
    behind him.
        Chair Lee. We were just commenting on how outstanding your
    questions were.
        [Laughter.]
        Chair Lee. All right. Ms. Pinkerton, let's go back to you
    for a minute. You noted that air traffic control systems cost
    the economy about $25 billion annually in delays. That is every
    single year. That is nothing to sneeze at. That is a
    significant thing. That is, I assume, taking into account the
    economic cost.
        Ms. Pinkerton. Of time.
        Chair Lee. People, yes, sitting where they would be moving.
    So what impact do you think the modernization of air traffic
    control might have on that problem and on the market as a
    whole?
        Ms. Pinkerton. In fact, I heard Administrator Bedford at
    the U.S. Chamber a couple of weeks ago say that he thinks the
    economic benefit--I'm going to get his numbers wrong--but could
    be anywhere from almost $1 trillion over time because we're
    not--you're not just stopping the delays and cancelations,
    you're building the system and allowing for more growth. And as
    you know, we drive 5 percent of the GDP, et cetera. So it's--
    I'll get back to you on the exact--his exact numbers, but it is
    an enormous potential for economic benefit.
        Chair Lee. Okay. Because otherwise, you are just talking
    about delays, just delays because of administrative limitations
    on our ability to direct air traffic, whereas if we modernized
    it, you would have fewer of those.
        Ms. Pinkerton. Fewer of those and the ability to grow----
        Chair Lee. Yes.
        Ms. Pinkerton [continuing]. Instead of shrinking, which is
    what we're----
        Chair Lee. Right.
        Ms. Pinkerton [continuing]. Doing right now.
        Chair Lee. Right. So right now, we are acting as if the pie
    were limited or even a shrinking pie.
        Ms. Pinkerton. Correct.
        Chair Lee. Yes. We have been forced into that. Okay. Thank
    you. That is very helpful.
        Mr. Anderson, I want to go back to you for a second. In
    your opening testimony, you talked about some of the benefits
    of international joint ventures. Talk to us about that. And you
    know, do you see the Caribbean, Canada, or Europe as additional
    markets that could benefit from value, ultra low cost, whatever
    you want to call this niche of the market, joint ventures going
    on in that area?
        Mr. Anderson. Senator, thank you for the question. We
    applied about 1,400 days ago for antitrust immunity with Viva
    Aerobus down in Mexico. And Mexico was the largest transporter
    international market. And what that was--what we were asking
    for is the ability to scale in size and compete with some of
    the larger carriers, the international carriers that--such as
    the legacy carriers that have these antitrust immunities. And
    so by----
        Chair Lee. You mean the immunities in connection with the
    international co-chairs?
        Mr. Anderson. Right, with partners. For example--well,
    there's several examples, I think dozens of them that exist
    today, international being a very important part of obviously
    the travel ecosystem. What we were looking to do was provide
    direct nonstop service from those communities that we serve
    that currently do not have it into some of those Mexican
    beaches such as Cancun, Cabo, or Puerto Vallarta and to do it
    at lower fares.
        Chair Lee. What is the biggest impediment to that? Is it
    regulatory, or is it something in the market itself? In other
    words, is there a regulatory reason why it is harder for them
    to do it, or is it just less attractive for them to go to all
    the work to do it with a smaller carrier?
        Mr. Anderson. I think for us, our view is partnering--
    entering in the international market such as Mexico for
    Allegiant, partnering with somebody like Viva, who has the
    know-how and experience in that market, we think will allow us
    to scale in size and be more successful when we go up against
    some of the larger legacy carriers in the similar markets.
        Chair Lee. Is there also a part of the limitation that has
    to do with the airports that you fly? A lot of the airports
    that you service are not currently international airports. Does
    that contribute to the problem? In other words, do you have to
    have presence from, I guess it would be CBP, at that airport?
        Mr. Anderson. Yes, not all of our airports, given some of
    the communities we serve, have FIS clearance, which would allow
    for clearing customs, but there is a significant number of our
    airports that do, that we could fly or add direct nonstop
    service into those Mexican beach destinations.
        Chair Lee. Okay, but that will typically--in order for that
    to occur on the U.S. end, you would have to have the
    involvement of both CBP and DOT. Is that right? Do both
    entities have to approve designating something for
    international flights?
        Mr. Anderson. My understanding--and I apologize if I'm
    incorrect on this, but we are just waiting--or it's for the DOT
    that would approve.
        Chair Lee. DOT is the one----
        Mr. Anderson. Yes.
        Chairman Lee [continuing]. That approves it. Okay. Got one
    other question, and then we will turn to Senator Blumenthal.
        Mr. Biffle, a moment ago you took me off guard when you
    said maybe we should have all airlines, regardless of size,
    legacy, value, ultra value, or whatever you call yourselves,
    should have full antitrust immunity. I did not expect that.
    That was not on my bingo card for today's hearing, particularly
    from a smaller carrier. Tell me why you say that and why you
    think that would enhance the state of competition in the
    industry.
        Mr. Biffle. Well, I took this hearing very seriously. I was
    flying out last night, and I thought about how do you get it
    where the small carriers can compete with the Big Four? And I
    came up with a couple of solutions, and I think that's one that
    would be very powerful. I'm not saying antitrust with the Big
    Four. I'm saying everybody else should work together to provide
    a real forcing mechanism to provide competition to the Big
    Four, and that would be a great way to do it.
        Chair Lee. But if nobody is subject to the antitrust laws
    at that point, the skeptic would say that is going to foster
    collusion.
        Mr. Biffle. Well, help me out with it. I mean, so a quarter
    of the market is controlled by one. There's three other
    carriers that are around the 20 percent mark. You've already
    got 20 percent being controlled by one entity. What's your
    problem with the small guys controlling 20 percent?
        Chair Lee. I mean, one could argue that, moving forward,
    what that would do with respect to future proposed mergers and
    acquisitions, I mean, particularly if you are talking about
    full antitrust immunity from the full panoply of antitrust
    laws. There is no reason why you wouldn't see even more
    consolidation than we have had up until this point.
        Mr. Biffle. I don't know if you'd see more consolidation,
    but you'd see us work together better in airports, and you've
    got--let's take gates. You've got finite resources. If Greg and
    I were able to work together, our teams work together on
    coordinating schedules so that we better mash up our schedules
    so that we both run a better reliable operation in fill-in-the-
    blank city, the big airlines get to do that.
        So I'm saying you've got a massive problem in this country
    where the Big Four scale is pushing down competition. If you
    want to give us a level playing field, give us a level playing
    field on the gates, give us a level playing field on
    competition, give us some kind of remedy to solve against the
    loyalty and the credit card. I mean, that was my other
    suggestion is give our credit card customers access to the big
    networks at the same cost that they booked for themselves in
    their accounting. So I'm just giving you real solutions. Look,
    I took it serious. You want more competition in the country,
    and I'm telling you these are things that are big issues.
        And I would throw you one more that's very low cost, much
    cheaper than the modernization of ATC and not well understood.
    When you have--look, we're going to have weather, especially in
    Florida, right? And so there's limited corridors, and we can
    modernize, but I don't think a lot of people realize that
    general aviation can manipulate the ATC capacity. So a private
    jet can actually go in, and when we have a scheduled flight at,
    say, 11 a.m., I can't file a flight plan for a different time.
    I have to file the flight plan for my scheduled time, right?
        So let's say Mr. Blumenthal has a private jet. He wants to
    fly at 11. Maybe he doesn't, but I'm just saying, say he did,
    you know, as an example. Well, what his pilots----
        Senator Blumenthal. From your lips to somebody's ear.
        Mr. Biffle. Right. Maybe it's somebody else, but I'm just
    using it as an example. So his pilots know he wants to go at
    11. They know there's a 3-hour ground delay program. Well, his
    pilots will just file for 8 a.m. He shows up at the 11, never
    knows the wiser, they go take off.
        Meanwhile, I have to go through this airspace a couple
    times a day, and I blow up my crew, and then I have to cancel
    two flights with a couple hundred people on each. Four hundred
    people get inconvenienced so three people could take a private
    jet. And this is happening every day in every major storm event
    for the Northeast and Florida, and this is what contributes to
    thousands of customers being canceled. And this is why I take
    real exception to people saying, oh, I should compensate them.
    No, I think the Government should step in and look at all the
    places that I have to cancel a flight. Neither one of us ever
    want to cancel a flight. I don't want to harass customers. I
    don't want to cancel a flight, but I want to operate safely.
    There's never a time where I'm going to want to inconvenience
    someone. There's generally a reason, and I think what you
    should look into is why. Why would we have to cancel at a
    higher rate?
        Take Atlanta. Let's talk about gates. So this summer, true
    story, I personally got involved. We had over 10 flights that
    had over 3-hour tarmac delays, over three, one 5 hours. I got
    on the phone personally with the airport control towers in the
    middle of this event because I was so upset about why can we
    have this delay. I'm on the phone with them. We had a medical
    emergency on a 5-hour delay, medical emergency. Someone would
    have a heart issue. We got cleared by the tower to go. Our
    plane starts moving toward the gate, and an Alaska plane pulled
    in front of us and parked at the gate.
        We found out that Delta controls the ramp there, and they
    had cleared them. While we're trying to figure that out, Delta
    goes and takes another plane at another common-use gate. This
    was just happening, and no one else experienced this kind of
    event, but we had a couple thousand customers that experienced
    over 3 hours, all because we don't have the same gate access.
        And while all this was going on--and I take real exception
    to your comment earlier about there's rules--Southwest Airlines
    has four flights per day, and during that event, during that
    event, Southwest gates were open. I had customers and employees
    taking pictures, so I've got people even including a medical
    emergency----
        Chair Lee. Is there an area where they have exclusive
    ownership of the gate?
        Mr. Biffle. They've got exclusive ownership of the gate,
    and their minimum use is only four flights a day in Atlanta.
    They can control a gate with four flights, and yet I'm using
    the equivalent of 10 to 12 flights. Anyway----
        Chair Lee. Okay. I apologize to Senator Blumenthal. I
    didn't intend to eat up that much time. You are up to bat.
    Thank you. And I will give you all the time you want now, both
    because I feel bad, and I want to ride on your plane someday,
    so----
        [Laughter.]
        Senator Blumenthal. You know, I always knew I disliked
    those private planes, and now I know why. And just anecdotally,
    I fly from Hartford to Washington, DC, pretty regularly, and I
    fly in the regular whatever it's called now, class, and every
    other flight someone will say to me, ``I thought you guys had
    private planes.'' And I know that my colleagues from places a
    lot more difficult to get to than Connecticut wish they had
    private planes, but we experience the same kinds of travails
    that your customers do.
        And plainly, we have a lot to learn about how we can
    improve this system because it sounds like we are, often to me,
    dealing with a system that is decades old, and we have failed
    to use the more modern technology on air traffic control, on
    the gate system, kind of an archaic rubber-bands-and-glue kind
    of system that we have right now.
        But I want to focus on an area that Senator Hawley, I
    think, introduced, which seems really top of mind for a lot of
    flying customers. First of all, you know, for a long time, I
    have fought the consolidation of the airline industry, so I am
    with you on the level playing field. 80 percent of the market
    for air travel in the United States is controlled by four giant
    airlines, and the mergers over the last 20 years, and having
    produced this consolidation, mean fewer choices for many
    people, a worse travel experience, and more nickel-and-dime
    fees, one of them being this bounty system. I know Senator
    Hawley has asked you about it. Not sure that he had time to
    finish.
        Last year, the Permanent Subcommittee on Investigations,
    which I Chaired, conducted a yearlong investigation of all of
    the airlines' approaches to these fees and charges, and we
    found that five airlines generated $12.4 billion, $12.4 billion
    in seat fee revenue alone between 2018 and 2023. Billions of
    dollars more are collected in the bag fees. The Subcommittee
    revealed for the first time, the extent that your airline and
    Spirit had a bag bounty scheme where those airlines, as you
    know, pay so-called bounty to their employees for collecting
    bag fees at the boarding gate.
        So first, I would like to know--and I think you answered
    this--that the practice is continuing. What the justification
    would be, what explanation you would have, but also what can be
    done about those other fees, the charges for sitting together,
    family Members, the charges for the other kinds of services
    that are provided when the cost for them to the airline is way
    below what is charged, and therefore, it is used as a profit or
    revenue center.
        I will begin with you and maybe others can answer.
        Mr. Biffle. I'm sorry, so there's a lot there. What are the
    main questions?
        Senator Blumenthal. The main question is, why do you
    continue with a bounty fee?
        Mr. Biffle. Well, so at Frontier, we want to enable the
    most people to fly. We have the lowest costs in the country. We
    actually generate the lowest amount of revenue per passenger,
    so we're giving more consumers the ability to fly than others.
        Unbundling had proven to be very successful in enabling a
    lower entry price, and just like you sell a car, there's cars
    that--you can buy a Tercel that's stripped down, or you could
    buy a fully loaded Cadillac Escalade. And so it has been common
    practice in the world to offer a base model and bundle them
    back up.
        And so what has happened is that if you have a system like
    this, if people cheat, it's no different than somebody
    shoplifting. I mean, if they go through, take a product, and
    the other person is charged for it, that's just not fair to
    consumers.
        Senator Blumenthal. But just to stop you there for a
    moment, I understand the business model, but it seems to me
    that if you were to raise your prices just ever so slightly,
    you could compensate for the fees that you charge on the bags,
    and most important, people would know before they got to the
    gate what the charges would be because right now, they arrive,
    and some agent at the gate figures they can be rewarded, so
    then someone is charged----
        Mr. Biffle. Well, let me go back. So, look, I want to be
    the most friendly. We believe we've tried to be the most
    friendly, and I hope we could agree that that would be right.
    So before I answer the question about unintended consequences,
    so Southwest Airlines earlier this year announced they're going
    to start charging for bags, and we saw this as a major
    opportunity. We thought, my gosh, they've spent billions of
    dollars to build this brand, and, well, gosh, if it was so
    important, these are things people complain about, and so
    forth, let's do it.
        So we announced that we would adopt free bags, right? And
    quite honestly, I was really hoping it would work for all these
    reasons. I wish they would. But you know what we found? It
    worked for a few days, and we got a lot of publicity, but
    ultimately, people didn't want to pay us more. There's what
    people say, and then there's what they actually do. And so I'd
    love to be as friendly as possible.
        So what we've done--I don't want to pay anyone a bounty.
    And we've cut it way, way down because I've introduced an
    economy product for as little as $20. People are getting a bag,
    free change fees, and free seat assignments. And so with that
    low price, there's very little cheating going on. But the
    problem is, if you don't have some kind--I'd love to figure out
    a way to do it. The challenge is, is that everybody will flood
    them and not comply, and it's not fair to other people. It's
    just like insurance fraud. I mean, it's not a victimless crime.
        So I'd love to figure out how to do it and have the best
    experience possible because I think we are on the side of the
    consumer. People can afford to fly by flying Frontier. So
    having said that, we haven't figured out a better solution just
    yet. And I even tried to raise the prices a little more, but it
    just hadn't worked.
        Senator Blumenthal. I don't want to dwell on you, but I
    understand your answer.
        Let me ask Mr. McGee. My impression is the three largest
    airlines raise their bag fees pretty much in lockstep. Is that
    a sign of lack of meaningful competitive pressure to charge
    lower fees or other ancillary fees?
        Mr. McGee. Thank you, Senator. And yes, I think the answer
    is absolutely. I mean, what we see with the big three in
    particular--American, Delta, and United--not just on fees, but
    even on fares, there's no need to signal pricing in this
    industry. Everybody sees them in ATPCO, in the reservation
    systems, et cetera. They see the prices. They don't have to
    have a clandestine meeting somewhere to talk about it, and
    there's no question that they're in lockstep.
        That's not our opinion. That is stated every--4 times a
    year in the DOT's quarterly airfare reports. We were pouring
    over the last year's worth over the weekend, and you see that
    in--on routes in which the only competition is any combination
    of the big three, American and/or Delta and/or United, three,
    two, or one of them, you're paying the highest fares in the
    country, all across the country.
        And, you know, I spoke about the effects of the low-fare
    carriers, but that doesn't mean there still isn't a lot of
    consumer anger and confusion over fees, and particularly the
    transparency of fees. And when you get to the gate, that's not
    the time you want to know that suddenly you can't, you know,
    bring your carry-on bag with you because that was the deal that
    you agreed to.
        As I said before, these contracts of carriage, they are
    written by and for the airlines. We don't get to say, well,
    wait a minute, what about our rights? And so when you swipe the
    credit card, you're adhering to it.
        Ms. Pinkerton. Senator----
        Senator Blumenthal. I was going to say, I'll give you a
    chance to answer.
        Ms. Pinkerton. Thank you so much. From Airlines for
    America's perspective, none of our carriers charge a bounty,
    none of our carriers charge a fee for families sitting
    together, and none of our carriers are colluding on price. We
    are incredibly transparent. That is called competition.
    Absolutely, passengers today have more access to fares and the
    fee information than they've ever had before. It's ubiquitous.
    It's all over the internet. It's not collusion. It is
    transparency.
        Senator Blumenthal. Let me ask you, because we have had
    some evidence that AI is being used to target fees to
    individuals based on information as to their past travel and
    their ability to afford higher prices and their need to travel
    for certain reasons. Can you commit that none of the airlines
    that are Members of Airlines for America use AI in that way?
        Ms. Pinkerton. In fact, to prepare for this hearing, I
    asked the carriers exactly that, and all of them--two A
    carriers said, no, they do not use personal information to do
    pricing.
        Senator Blumenthal. So if I wrote to them, and I intend to
    do it, you can guarantee that they would be willing to tell me
    that they never use personal information in artificial
    intelligence systems to change prices, vary them according to--
    --
        Ms. Pinkerton. To target a price toward you and using
    personal information to target a price toward a person, they do
    not.
        Now, as I think Mr. Johnson from American told you, if you
    want a free bag, you need to put in the fact that you're a
    frequent flyer at American. So they do use that kind of
    information, but absolutely, they do not use personal
    information like have you--did you have a death in the family
    or anything like that with AI.
        Senator Blumenthal. Well, I don't mean only a death in the
    family. I mean, have you traveled first-class on an----
        Ms. Pinkerton.
        [Off mic.]
        Senator Blumenthal. Okay. Well, I don't want to prolong
    this questioning, but thanks, Mr. Chairman.
        Chair Lee. Thank you.
        Mr. McGee. Senator Britt.
        Senator Britt. Yes, Mr. McGee, you were shaking your head.
    Do you mind responding to that?
        Mr. McGee. Yes, thanks very much, Senator. I think the
    devil is in the details and in the language, and we really need
    to clarify, once and for all, bring in all the airline CEOs and
    ask them, please define personal information. It may not say
    that Senator Britt or Senator Hawley, that we are targeting
    pricing on that, but what it will say is there are algorithms
    built into these systems that track how you shop, when you
    shop, why you shop, how often you book, how long you're on
    there. I think if we all knew----
        Ms. Pinkerton. But that's----
        Mr. McGee. Excuse me. I think if we all knew what the
    airlines knew about us, it would be--it would blow our mind.
    And I can tell you that Consumer Reports in 2001, almost 25
    years ago, we first stumbled upon this odd thing where we were
    doing testing just to see which were the best websites, and we
    suddenly found, but wait a minute, in real time doing very
    precise testing with identical itineraries, we were getting
    different results on different browsers and different
    computers. That's 24 years ago. I can't imagine how much the
    technology has improved since then.
        So we need to clarify, what is it about your shopping
    habits? They may not know personal information about you, per
    se, but we need to clarify that.
        Senator Britt. Thank you very much. Mrs. Pinkerton, I would
    like to just talk to you real quick. Alabama's four largest
    airports are predominantly served by carriers within your
    organization there. Look, we depend on that, the reliability,
    the accessibility to these various different markets, and
    determines whether or not I get home for my daughter's
    volleyball game on Thursday night, or I am back at home in time
    for parent dinner with my son and his team. And so, you know,
    that just scratches the surface. Every, you know, working
    parent or people that are traveling around have things that
    they are depending on.
        I have a question for you in just the sustainability to
    those markets. You know, what are you looking for? And just
    very quickly, you know, what keeps those routes open and
    reliable?
        Ms. Pinkerton. Yes, you--so you've identified small
    community and medium community service as being absolutely
    essential, and I will say that this network system that the
    carriers have developed, hub and spoke, is what enables them to
    efficiently, with fewer planes and fewer people, serve those
    markets. I talked earlier about the increasing costs, whether
    it be regulatory costs or labor costs or fuel costs are all
    increasing. So to the extent, you know, that we can help keep
    costs down will help continue to see airfares be at all-time
    lows. There are some structural issues like----
        Senator Britt. Okay.
        Ms. Pinkerton [continuing]. Yep, sure.
        Senator Britt. And I am running out of time. So just
    quickly, what are those structural issues?
        Ms. Pinkerton. Structural issues, no one's making a 50-seat
    plane anymore, and so----
        Senator Britt. Okay.
        Ms. Pinkerton [continuing]. You're--you may see less
    frequencies in small communities, but you're seeing more seats
    because they're flying bigger planes. That's good. And
    certainly for small communities, the pilot supply and mechanic
    supply has been a problem.
        Senator Britt. Okay.
        Ms. Pinkerton. What we've seen is the regionals increase
    wages for pilots, and that seems to be working.
        Senator Britt. And so I think about somewhere like Dothan
    that is the hub and spoke, and obviously services our military
    community, too, right there, and we obviously do not want to
    see that continue to grow.
        You know, Mr. Anderson, when we are looking at that--and I
    know Allegiant is the only airline that actually services Gulf
    Shores International Airport, and I would like to do a little
    invitation here for everyone to come to Alabama's beautiful
    white sand beaches. I think you will be pleasantly surprised.
    We are talking about other destinations here. I think you could
    just come right down to Alabama's Gulf Shores. But that has
    proven to be wildly successful. When you look at that, I think
    you have seen over 40,000 travelers coming down back and forth
    to Alabama's beautiful beaches.
        Talk to me--and I think you also service Huntsville as
    well--about how you added those routes to underserved or new
    markets. What were the challenges or the barriers that you face
    to expanding? And what is the decision point for continuing
    those?
        Mr. Anderson. Thank you for the question, Senator. We--as
    we evaluate markets, we have hundreds of markets that we look
    at regularly. 90 percent of those currently do have--do not
    have non-stop service, so it fits our model beautifully. We
    focus 100 percent on the leisure customer, which is a price-
    sensitive customer, and the value we offer is low fares with
    convenience.
        And when we've entered into the Gulf Shores and the
    Huntsville markets in Alabama, those fit our model beautifully,
    and they've been successful, and we're excited about what we're
    seeing. We have service from Kansas City into Gulf Shores and
    other communities throughout the Midwest. But when we see the
    ability to stimulate demand and keep costs low, that's good,
    and that allows us to continue to grow our unique model.
        Senator Britt. Mr. Biffle, I would like for you to answer
    that same question as well, but before I do that, Roll Tide. It
    was a big win on Saturday, good stuff.
        Mr. Biffle. That was huge, right?
        Senator Britt. It really was. My favorite play was the
    Kadyn Proctor to the side, number 74, getting the ball. I don't
    know if you all watched this, but you should Google it right
    now.
        Mr. Biffle. Oh, well, my favorite was the look on Kirby's
    face when he was walking off the field, but----
        Senator Britt. That was something too.
        Mr. Biffle. Yes, that was good.
        Senator Britt. So tell me, how do you decide about new
    markets, and how do you expand those?
        Mr. Biffle. So look, we--unlike Allegiant, we're more in--
    competitive. I forget, it's less than a few percent of our
    routes have no competition. So we tend to focus on giving
    consumers a choice in established markets. And so--and our
    smallest aircraft is 186 seats, so I have a difficult time,
    even though I'm extremely familiar with Alabama and all the
    markets there, even Gulf Shores. Some of them are smaller for
    us, and so it's more of a challenge for us to serve.
        So we typically look at markets that we could fly at least
    twice a week, so the minimum market size, if we look at
    stimulation and so forth, we're going to be looking for a few
    hundred passengers that we think could go per week.
        Senator Britt. And what would create an incentive structure
    for you to come there? What do you look for in that market?
        Mr. Biffle. So we're just looking, you know, is the demand
    there from A to B? We do do some limited connections in some of
    our bases, but we're typically looking at that local market,
    and so, you know, how many people want to go there?
        The next thing is, what is the season? Is the season long?
    You know, for example, some of these small communities that
    have difficulty--I mean, I really feel for these. I'm from
    rural Texas, so I understand how a lot of this works too. And
    so I know that a lot of communities, they're very seasonal too.
    So small, seasonal, it makes it difficult. And so I have a--you
    know, I have a soft spot for these places, but the economic
    realities oftentimes are challenging for them.
        This is where I do and would support some type of EIS, and
    possibly needs to be looked at for the size. I think the EIS
    needs to be moved up, I think. And also not just size, but just
    how hard is it to get there, right? So you've got places, let's
    take the Northwest United States. I mean, you get into the
    Dakotas and over. I mean, it can get really hard to get
    somewhere. I mean, not only do they not have service, it may be
    500 miles----
        Senator Britt. Yes.
        Mr. Biffle [continuing]. To drive to the next place that
    might have service, and it's not even great service there. So I
    do think there needs to be a more holistic approach there.
        But yes, we look at the market size and the potential. Can
    it stimulate? And in general, we look at where--in many cases,
    where the legacies charge a lot of money. And we--we're
    attracted to that.
        Senator Britt. Thank you.
        Chair Lee. Okay. I have another matter I have got to attend
    to, so I am going to hand the gavel off to Senator Hawley, as I
    recognize Senator Booker, who will be up next. It is unlikely
    that I will be able to return before you have adjourned. I will
    come back if you are still in session after then, but I will
    leave that in the hands of he who holds the gavel.
        And Senator Klobuchar, you are recognized.
        Mr. Biffle. Before you leave, Senator Lee, can I clarify
    something earlier?
        Chair Lee. Sure.
        Mr. Biffle. And just to make sure I understood you and you
    understood me. When I suggested that we should have antitrust
    for the carriers, I mean just the small carriers, not----
        Chair Lee. Okay.
        Mr. Biffle [continuing]. With the Big Four.
        Chair Lee. Okay. Yes, that makes sense.
        Mr. Biffle. I'm saying that----
        Chair Lee. I was confused by that part.
        Senator Klobuchar. Yes, that would create----
        Mr. Biffle. Yes, I'm just----
        Senator Klobuchar [continuing]. A lot of news.
        Mr. Biffle. I'm saying the small carriers that represent
    the 20 percent----
        Chair Lee. Got you.
        Mr. Biffle [continuing]. Could work together to be a force
    to compete with the Big Four, not across them. They don't need
    any more help.
        Chair Lee. Yes. Yes. I thought maybe you were setting
    yourself up for an acquisition or something.
        Mr. Biffle. No, no, no, no. I apologize. Maybe I spoke too
    fast, but I just wanted to clarify. I was just saying, I
    think--I'm just, again, looking for practical solutions to fix
    the situation so----
        Chair Lee. Okay. That makes sense. Thank you.
        Senator Klobuchar. Okay. Thank you. I want to thank
    Chairman Lee and Ranking Member Booker for this really
    important hearing. And I will say that with everything going
    on--that is a little bit of a euphemism--today, the fact that
    we have had so many Senators here and that they, as leaders,
    had so many Senators here show how important this is to people.
        So our airport was once again named best in the country.
    Yes, you are welcome. But we hosted more than 340,000 planes
    carrying 37 million passengers last year at Minneapolis-St.
    Paul Airport and, of course, major hub. But it is also really
    important for us, being this hub, that we also have competitive
    carriers. We are the home of Sun Country, as you know, Mr.
    Biffle, and appreciate all of the competitive carriers we can
    get.
        And one of the things that I have focused on with funding
    is to make sure we get gates in what we call our terminal 2,
    right, so that we have more infrastructure for competitive
    carriers, especially some of these big hub airports. Everyone
    is gravitating there, and it makes it more important than ever
    that we have competitive carriers. Could you talk about--I know
    you have been an advocate for this--but for just the
    infrastructure and the gates and how important that is in this
    marketplace of competition?
        Mr. Biffle. Sure. I mean, look, I mentioned the beginning
    and we talked a little bit, the gates are the big thing. And
    it's not just having access, but having them at access at the
    same rules as the big guys. I mean, you know, we've had
    situations--I'll go back to Atlanta. You know, we've operated
    on 25, 30 different gates in a week. I mean, like, I could put
    my entire operation on seven gates. I mean, so--and that's
    across four different terminals. I mean, and you're putting our
    people and our employees, our customers, all having to move
    around like gypsies. And so it disrupts our operation. We don't
    provide as good on time. It ends up causing cancelations of
    flights, and people miss their flights because we have these
    constant gate changes.
        And so, you know, the distinction of pref gates and having,
    you know, our fair share of pref gates and the ability to use
    them--I know in Las Vegas, we've had challenges--I know
    Allegiant has too--with, you know, common-use gates. But it's a
    major factor. And I think that it really needs to be looked
    into. It's just not a fair system. There are airlines hoarding
    gates. Over and over again, there's examples of gates given
    back to the airport, airlines like us trying to get them, and
    all of a sudden, the legacy carrier in fill-in-the-blank city
    all of a sudden just happens to get those gates. And nobody
    seems to care. And----
        Senator Klobuchar. Well, I think who cares is when you look
    at the numbers, right? When low-cost carriers serve a route, it
    is 20 percent lower.
        Mr. Biffle. Well, I think it has to get to the level it's
    gotten for people--thank you for having this hearing--that
    we're finally going to get some attention drawn to this and
    getting some fair access to gates. It's a major issue, and it
    impacts us dramatically. I would say it was the No. 1--after
    weather and ATC, it was the No. 1 cause of cancelations for our
    airline this summer was gate access.
        Senator Klobuchar. Wow. Mr. McGee, do you want to add
    anything? By the way, congratulations on hiring Phil, our
    former staffer back there.
        Mr. McGee. Yes, we're very lucky to get him. Thank you,
    Senator. Yes, as I said earlier in my opening remarks, we
    praise Senator Hawley for cosponsoring the Gate Competition
    Act. We think it's one of the single best pieces of airline
    competition legislation we've ever seen.
        But I think, you know, we need to give some context, too,
    and that is that a lot of times when you walk into an airport
    in the United States, you'll see a big sign saying, welcome to
    our customers. Let's be clear, we are not--we the traveling
    public are not the airport's customers. Airlines are their
    customers. And so if you have a situation like you have in
    Charlotte where American Airlines controls 88 percent of all
    flight departures, it's hard to believe that the airport
    authorities are going to equally treat their customers when one
    of them is nine out of ten of all flights.
        And so this really speaks to the larger systemic problems
    that we've had with deregulation. We have a commercial aviation
    system that has the best of both worlds. When times are good,
    they make money and they keep it and they use it for stock
    buybacks and they use it for executive compensation. And then
    when times are bad, they come right here, and they ask all of
    us taxpayers to bail them out. And so we need to have a bigger
    discussion. We're talking about a lot of really important
    issues today, but we need to have a bigger discussion about the
    systemic problems with deregulation and ways of fixing aviation
    once and for all.
        Senator Klobuchar. Just one, I know Senator Booker asked
    some good questions about that passenger bill of rights and how
    we got that passed a while ago out of the Commerce Committee
    and, you know, that was a while ago. And so that's why I think
    you see us working on some of these other issues like families
    sitting together. Could you comment on that one?
        Mr. McGee. Absolutely. And we are very grateful to you for
    all your work in this area. The bottom line is that it seems we
    can never gain any traction. Every time we make any sort of
    progress on passenger rights in this country, after I already
    noted we lag much of the world, immediately airline lobbyists
    are trying to roll it back, to weaken it, or just eliminate it.
    And we saw it with the Airlines for America 93-page comments
    that they filed a few weeks ago. And we're very, very worried
    about the current DOT rolling back all of that hard work that
    has taken, in some cases, not years, but decades.
        Look, as soon as we got fee transparency become a
    regulation, Airlines for America and other big carriers
    immediately sued the DOT. Really think about that a moment.
    They're suing the DOT, spending God knows how many millions of
    dollars on that. To do what? To prevent all of us from knowing
    the full price of a product before we swipe our credit card and
    buy it. There's something wrong with the inherent system here.
        Senator Klobuchar. Thank you very much.
        Mr. McGee. Thank you.
        Senator Hawley [presiding]. Senator Booker.
        Senator Booker. Great. Three quick questions. Mr. Anderson,
    just really quickly, we talked a little bit earlier--you did--
    about the joint venture with Viva Aerobus, a Mexican-based low-
    cost carrier. The proposed deal which was reviewed this past
    April has faced opposition from labor unions, including the
    Teamsters, which represent 1,400 Allegiant pilots through
    Teamsters Local 2118. They are concerned, understandably, that
    this partnership could lead to U.S. jobs being outsourced to
    Mexican crews that are undercutting their wages.
        And so, Mr. Anderson, is Allegiant still pursuing this
    deal? And if so, can you provide us any assurances that
    American jobs will be secured? And then do you really commit
    here that American pilots will not face job losses if the deal
    is successful?
        Mr. Anderson. Thank you, Senator Booker, for the very
    important question. We are continuing to pursue this deal. We
    believe that through this joint venture, we will grow jobs,
    including pilot jobs Allegiant for American pilots, and we will
    commit to that within our application. I believe that is laid
    out as well.
        Senator Booker. I appreciate it. I am hoping we can have
    more of a dialog on this as this goes forward. Is that Okay?
        Mr. Anderson. We would welcome that.
        Senator Booker. Thank you very much.
        Mr. McGee, my penultimate question goes to you. Could you
    just be a little bit more specific--because I actually think we
    can get bipartisan support on this--about what the Trump
    administration is doing when it comes to rolling back these
    efforts of the previous administration and what the specific
    impact it will have on Americans from all across our country?
        Mr. McGee. Absolutely. Thank you, Senator. I'm happy to do
    that. The bottom line is we don't yet know because the Trump
    administration is asking for public comments, et cetera, as
    part of the rulemaking process. But just the mere fact that
    these would even be put on the chopping block is extremely
    disturbing.
        As you know, we had a very successful FAA reauthorization
    last year. It was bipartisan support. It was both houses. It
    was both parties. And we got protections that we had never seen
    before, including for the first time automatic cash refunds.
    And yet on the DOT list are things like fee transparency, on
    compensation, on all kinds of things. And so we don't yet know,
    but it is not a good sign that they're even asked to consider
    this. It's part of their larger deregulatory effort.
        And it's just heartbreaking to think what travel will be
    like. We are talking about not being able to know the full
    price of your fare. We are talking about not being compensated
    when there are disruptive flight delays and lengthy flight
    delays and flight cancellations. As I keep saying, the
    contracts are written by and for the airlines. When do we get
    our say? If we don't have Federal protection, and particularly
    with Federal preemption that does not allow the States to get
    involved, who's going to protect the consumers? If we have a
    DOT Secretary who is indifferent to the concerns of passengers,
    you're pretty much out of luck other than with Congress.
        Ms. Pinkerton. Senator, if I can just interject, I want to
    say for the record, Airlines for America supports every
    provision in the FAA reauthorization bill, whether it was
    family seating, whether it was reimbursement, automatic
    refunds. We are in support of those provisions.
        Mr. McGee. But Senator, at the same time, they are saying
    that Secretary Buttigieg overstepped and expanded on some of
    these ideas. As one example, the language in FAA
    reauthorization was flight cancelations. He expanded it to
    lengthy flight delays. So we are in the same spirit of what
    Congress asked for.
        Senator Booker. Okay. I just really want to end with you,
    Professor. Things have gotten a little hairy between us. But I
    want you to hit us with some bald-faced facts before we go.
    Could you do me a favor? Like you have written so extensively.
    This is such an area of research expertise for you. If you were
    advising this Committee--and you have some great ideas, I just
    don't know to the realm of what they are possible. But you can
    see that this is a Committee that has a lot of bipartisan
    feelings about our airlines. If you wanted to give us as a
    takeaway some specific achievable advice perhaps in this
    Congress of what this Committee can do together around these
    issues of airline concentration, what would you say?
        Professor Sitaraman. Well, thank you, Senator. Let me pick
    a few very specific topics for you. One is, I think, gate
    competition and hub concentration. I think we've heard a lot
    about that today, and there's room for action on that. And I
    think Senator Hawley and Senator Warren's bill on this would go
    a great deal in that direction.
        Second, on the passenger side, the one that you opened
    with, which I think seat sizes are a thing that people find
    extremely frustrating all around the country, and I think
    setting a minimum floor could be a helpful step forward for
    passengers.
        And then third, on stability and resilience, I think
    everyone is frustrated when you have an industry that does
    extremely well in the good years and then comes running to
    Congress for taxpayer bailouts and support when times get
    tough. And so I think requiring airlines to think about
    planning and being prepared for the crises that are likely to
    come is something that would be a reasonable thing to do.
        Senator Booker. And the one thing I often hear in my
    conversations with some of the airlines is that on the global
    scale, they are competing against State-sponsored airlines. Do
    you have any thoughts about that competition that we have
    globally now as the world becomes a smaller place?
        Professor Sitaraman. Well, thanks, Senator. I think there's
    two parts to it. You know, one is sometimes you hear from
    people that the way to increase competition is to open up for
    foreign carriers to operate within points in the United States,
    and I think that's potentially a mistake because they are
    State-sponsored and might be able to predatory-price airlines
    here.
        I think the second thing is we need to think about the
    competition side as well. And, you know, a number of people
    have touched on this as well, but I think there are real
    questions around partnerships and loyalty programs there, too,
    that could have an effect on competition.
        Senator Booker. Yes, I really appreciate your work. I
    appreciate all the witnesses. And to our stand-in Chairman, I
    thank you very much for the latitude.
        Senator Hawley. Absolutely. Thank you.
        Let me just ask a question about the FAA reauthorization or
    tied to it. And thank you for mentioning it a couple of times
    now, Mr. McGee, and particularly the automatic refunds portion.
    That was my amendment with Senator Warren.
        Mr. McGee. We're well aware of it, Senator, and we
    appreciate it.
        Senator Hawley. I am glad that we were able to get it
    passed. Something else that the FAA did on a bipartisan basis,
    that reauthorization bill, was direct or authorize the
    Department of Transportation to issue rules making sure that
    families can sit with their children. And I can say, as a
    father of three young children, you know, this is something
    that is very important to families. Now, a lot of times
    passengers feel like they should be paid to sit next to my
    children, and maybe there is something to that.
        But I just want to ask, Mr. Anderson, DOT maintains a list
    of airlines that are currently complying with this and allow
    families to sit with their children next to them. The children
    are ticketed passengers, I just want to clarify, this isn't
    free tickets. But they allow the children to sit next to the
    parents at no additional seat charge. Now, according to the
    dashboard the DOT has, your airline is not one of them,
    meaning, there is Allegiant right there with a big red X,
    meaning that you are charging families additional money over
    and above the child's ticket in order to sit next to a parent.
    I am hoping maybe you will tell me this is wrong. Is this
    accurate?
        Mr. Anderson. Senator Hawley, as a father of four young
    children, it is a very important issue to me as well. We in
    practice nearly always accommodate our families. Our gate
    agents are trained and empowered to make sure it happens. And
    over the past few years, I think there has only been a handful
    of times in which we haven't been able to accommodate families
    to sit together.
        Senator Hawley. But am I hearing you to say that--that
    doesn't sound like a yes. Am I hearing you to say that your
    policy is not to provide seating for families, that they may
    have to pay a fee depending on the circumstances? Is that
    right? Is that why you have an X? Or is this wrong? I would
    love to hear you say that this is just incorrect. Like all of
    these other airlines that have green checks, we do not charge
    additional fees for children who have already paid. They
    already have a ticket. They are ticketed. But your airline
    apparently is charging additional fees. I just want to know,
    are you still doing that? It sounds to me like you are, but
    please tell me that I am wrong.
        [Poster is displayed.]
        Mr. Anderson. You're not wrong. And the fact that we do
    have a red X on the DOT tracker there, but----
        Senator Hawley. Why do you do that? Can you change that? I
    mean, can you tell us today that you are going to do what your
    other peer airlines do and you are going to quit charging
    families extra to sit next to their parents? I mean, we are
    talking about kids who are 13 years of age and younger. This
    isn't like the 18-year-old who probably doesn't want to sit
    next to his parents anyway. I mean, these are a little--it is
    like my 4-year-old little girl. I mean, I would kind of like to
    have her next to me and not--I have already paid for her, and
    not have to pay again. So I guess I don't understand. I know it
    is money, but, you know, I mean, don't you think that keeping
    families together is, you know, kind of important? The kids
    have already paid.
        Mr. Anderson. Very important. And----
        Senator Hawley. Okay, good. Will you commit then to ending
    this policy of charging additional fees?
        Mr. Anderson. Senator, in practice, we accommodate our
    families to sit together without paying additional fees. Our
    gate agents are trained and empowered to make sure that
    happens.
        Senator Hawley. Well, you do it when you can, but your
    policy is you can charge them if it comes down to it. So will
    you just say here today, we are going to stop doing that. We
    are not going to charge additional fees for families with young
    kids. This is it. This could be a big moment. This could be
    news.
        Mr. Anderson. Yes, we will--there were some technology
    issues that we're working through. We transformed our system,
    but we will look into this and explore the red X.
        Senator Hawley. Okay. Well, it would--maybe what we need to
    do is we just need to make it law. I mean, maybe Congress is
    just going to have to outright mandate it. You know, we hear
    all the time, and you guys come up here and you say, don't
    regulate us, don't tell us what to do. Well, I mean, there is a
    reason that sometimes we have to, and this is the reason.
        Let me ask you about something else. Can I just say for the
    record, I think it is ridiculous that anybody is charging
    families who already paid for tickets with small children,
    charging them extra in order to have the kids next to them
    making profit off of it. I mean, I just think that is kind of
    predatory. I think it is really predatory, actually.
        But let me ask you this. Dynamic seat pricing, which I
    think both Frontier and Allegiant engage in, tell me if I am
    wrong, but this is where you may charge me one fee and Katie
    Britt a different fee and Cory Booker yet a third fee for the
    same seat on the airline. It just depends. It is dynamic. There
    is no set fee. You are shaking your head no, Mr. Biffle. So you
    don't do dynamic seat pricing?
        Mr. Biffle. So let's clarify dynamic seat pricing.
        Senator Hawley. Price changes. It is not set.
        Mr. Biffle. Yes, but it's set by route, not by individual
    customer.
        Senator Hawley. Okay. So you don't collect personal
    information before people can see a price?
        Mr. Biffle. No, we don't--we don't use personal
    information----
        Senator Hawley. You collect it, though.
        Mr. Biffle. We collect it, but we don't charge you
    differently.
        Senator Hawley. Well, how do I know that? You collect ZIP
    Code, you use browser cookies, location information, search
    history. You collect date of birth. You collect gobs of stuff.
    I got to enter all of that before I can see a seat price. And
    my seat price may well be different than what Cory gets,
    depending on what he enters.
        Mr. Biffle. Well, I will tell you we've been changing that.
    I have to have your date of birth to buy the ticket. That is
    actually clunky. Back to technology things, we're changing that
    so you won't have to do hardly anything. I want you to be able
    to search and click quickly. So----
        Senator Hawley. But why are you collecting all of this
    personal information? What guarantee do I have that you are not
    using this to set my price? I have no idea how you are setting
    the price.
        Mr. Biffle. I just guarantee you we're not.
        Senator Hawley. Well----
        Mr. Biffle. But----
        Senator Hawley. Right, just like you guarantee me your
    agents won't harass me, but you are paying them to do it. So, I
    mean, don't you think that you owe us some evidence? I mean,
    you are forcing your customers to enter all of this stuff
    before they can even see a price.
        Mr. Biffle. I will say it again. We are in the process of
    eliminating that. It's actually----
        Senator Hawley. Meaning I won't have to enter in this
    personal information to see a price? You are just going to
    use----
        Mr. Biffle. Correct.
        Senator Hawley [continuing]. A set price? Do you use AI in
    your dynamic to see pricing at all?
        Mr. Biffle. No.
        Senator Hawley. Any advanced algorithms? Do you, Mr.
    Anderson?
        Mr. Anderson. No, not from----
        Senator Hawley. Will you both agree not to do so going
    forward?
        Mr. Biffle. Okay. I don't know that I can agree to not use
    AI. We use AI in all types of things. We will never use----
        Senator Hawley. That is what worries me.
        Mr. Biffle [continuing]. AI to use personal information. So
    the insinuation that we're using your ZIP Code, your gender, or
    any of those things too actually change the prices I find
    appalling personally. I know there's another travel business--
    not an airline--that I changed my credit card, and when they
    figured out that I was using my business credit card, the price
    changed. I was appalled. I was appalled.
        Senator Hawley. That is dynamic pricing.
        Mr. Biffle. Well, yes--well, that's--well, dynamic--when
    you said dynamic, we--what we mean by that is actually a 1-hour
    flight versus a 5-hour flight might have a different price,
    just like the fare might be different.
        Senator Hawley. No, it means that the consumer has no
    idea--I have no idea what the price is going to be for a given
    seat on a given flight until I give you all of my personal
    information. It also means I have no idea if my price will be
    the same as Katie's price or the same as Cory's price.
        Mr. Biffle. As I said, we are eliminating all of that
    information from being gathered.
        Senator Hawley. Okay, good.
        Mr. Biffle. We will still have to get your date of birth
    before you buy because we're required for security reasons,
    but, but we're going to stop collecting it up front.
        Senator Hawley. Mr. Anderson, what about you? Will you
    commit to not using personal information of any kind of set
    prices?
        Mr. Anderson. Yes, we have no intention of using personal
    information to set prices.
        Senator Hawley. Do you collect personal information before
    you allow customers to see a price?
        Mr. Anderson. We do before the seat selection, but that's
    to accommodate SSRs and who is able to sit in exit row seats.
        Senator Hawley. Mr. McGee, do you want to speak to this?
    You have mentioned this earlier. I mean, the consumer here, we
    are told, you know, trust us, trust us. But then the consumer
    is also told, but give us all of your stuff. Give us all your
    information. We will put it all in here. I can't go so much as
    check to see what is available, the flight home to Springfield,
    Missouri, unless I enter all of this junk. And I have no idea
    what is being done with it.
        Mr. McGee. Yes, Senator. Thank you very much. I was
    recently on the privacy statement of one of the big three
    carriers, and it was this long if you printed it out. And it
    basically said that they were going to--that as soon as you go
    on their site for the very first time, they're going to monitor
    what you do, how long you're there, how long you stay on each
    page, presumably also the sites that you were on before and
    after it. Again, as I said, I think it would blow our minds to
    know exactly what they're collecting. That's before we get into
    the definition that most people would accept as personal
    information. That's why I was warning that I think we need to
    be much clearer about the language here.
        I would argue that that is private information. If I'm a
    shopper that goes on and is more impulsive and maybe books a
    flight after 5 minutes of shopping, why should I be at a
    disadvantage than someone that goes on 3 days in a row and
    spends an hour? That is the definition of surveillance pricing,
    personalized pricing, customized pricing, more synonyms than we
    can even count on this, but it is unfair. It is un-American.
        Senator Hawley. And it is going to get much worse with AI.
        Ms. Pinkerton, let me just finish with you. I think it is
    Delta said that they are using AI now to set prices, these
    customized prices. Isn't this a terrible idea?
        Ms. Pinkerton. Well, they've also made it----
        Senator Hawley. I think--yes, there you go.
        Ms. Pinkerton. Thank you. They've also made it very clear--
    I know their general counsel and executive vice president wrote
    a letter to Congress clarifying that they do not use personal
    information.
        Senator Hawley. How are we to know that? I mean, the whole
    value of AI is to ingest massive amounts of personal
    information in order to extract as much profit as you can from
    every person. Why else would they use AI?
        Ms. Pinkerton. Well, again, I think it's probably worth a
    deeper conversation about our definitions of personal.
        Senator Hawley. Maybe we should just ban it. How about
    that? Should we just ban the use of AI in setting----
        Ms. Pinkerton. AI has so many potential benefits in terms
    of----
        Senator Hawley. And abuses.
        Ms. Pinkerton [continuing]. Providing--yes, absolutely. And
    that's why we're committed to not using it----
        Senator Hawley. Well, let's just make it easy. Would your
    organization support a ban on using AI to set individualized
    seat prices?
        Ms. Pinkerton. No, no.
        Senator Hawley. Why not?
        Ms. Pinkerton. I think AI can be used in many, many
    different ways to come up with----
        Senator Hawley. Name me one that isn't about making a
    profit for the airline at the expense of the customer. Why else
    would you need AI to do it, to charge these differential
    prices?
        Ms. Pinkerton. It only an efficiency tool. I mean, we do--
    --
        Senator Hawley. Efficiency means money. It means profit for
    the airline.
        Ms. Pinkerton. Which, by the way, we're not very good at.
        Senator Hawley. Oh, I disagree. I think your customers
    would disagree.
        Ms. Pinkerton. Yes, no, our profit margins are miserably
    low. We never even are an average profit margin----
        Senator Hawley. Okay.
        Ms. Pinkerton [continuing]. So----
        Senator Hawley. Okay. All right. I find that very hard to
    believe----
        Ms. Pinkerton. It's true.
        Senator Hawley [continuing]. Or stomach. Well, I tell you
    what is true is that the flying experience for most Americans
    is terrible. It is atrocious. If you look at the surveys,
    customer satisfaction surveys, airlines are always like at the
    bottom. People hate it. They hate to fly. They have to fly, but
    they hate to fly, and they hate it because of the policies we
    have been talking about today. You charge them for your kids.
    You make them enter all of this personal information. You pay
    your own employees to harass them. And now you are going to use
    AI to extract every last penny from them. It is terrible.
        Ms. Pinkerton. I would love to show you the JD Power and
    the American Consumer surveys----
        Senator Hawley. Listen, I have seen the data and, you know,
    not only that, I have talked to people all over my State who
    fly, and I have flown all the time with my small children. It
    is horrible. It is horrible. And it needs to be better. And I
    think based on what we have heard today, Congress has got a lot
    of work to do to make it better.
        All right. With that, I don't need to read a script,
    anything magic here to close this hearing? The record will be
    open? Okay. Questions for the record are due a week from now. I
    thank all of the witnesses for being here. All of you have
    traveled. We are delighted that you have been here. Thanks to
    our audience for being so polite.
        And this hearing is adjourned.
        [Whereupon, at 4:48 p.m., the hearing was adjourned.]

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