[Congressional Record Volume 142, Number 112 (Friday, July 26, 1996)]
[Senate]
[Pages S8979-S8980]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              AIRLINE DEREGULATION IS NOT HELPING EVERYONE

  Mr. DORGAN. Mr. President, about 2 years ago, Frontier Airlines began 
jet airplane service in North Dakota. It was actually a carrier that 
had previously quit service, and some years later a new group of people 
using the same name, Frontier, reorganized and started a new airline.
  Two years ago, when Frontier started service to parts of North 
Dakota, we were fairly excited about that, because in a small, 
sparsely-populated State like North Dakota, we need more competition in 
airline services. North Dakota is served by one major carrier. The fact 
is that when you have one-carrier service--although I admire that 
carrier--you generally pay higher prices, and you have the kind of 
service they decide they want to give to you. So we were fairly excited 
that we would get that jet airline service to North Dakota.
  This morning, Frontier Airlines announced that it will withdraw its 
service to North Dakota. I spoke with the president of the company this 
morning. I also spoke with the Secretary of Transportation this morning 
about this issue, and I want to comment for a moment about this matter 
because it deals with the larger issue of airline deregulation.
  We have people in this Chamber, in the other Chamber, and out in the 
country who do handstands and all kinds of gymnastic feats when they 
describe the wonders of airline deregulation for America. They say the 
deregulation of the airlines has been remarkable. You get lower prices, 
and you get more service. Well, that certainly is true if you happen to 
live in Chicago, New York, Los Angeles, or perhaps a dozen other 
cities. If you are traveling from Chicago to Los Angeles, guess what? 
Look at an airline guide and you have all kinds of carriers to choose 
from, and they are vigorously competing with price and so on and so 
forth. Those are the benefits and virtues of airline deregulation. But 
the fact is, if you do not live in one of the large cities, airline 
deregulation has not been a success for you. It means less service and 
higher prices.
  Now, what happened when we had airline deregulation was--and we have 
seen merger after merger in the combination of smaller airlines bought 
up or merged into the larger airlines and a subsequent concentration of 
economic power--the airlines sliced up parts of the country into hubs, 
and they control the hubs and decide how they want to serve the public 
with price and service. Then a new carrier starts up. How does a new 
carrier compete when you have an airline industry that is now highly 
concentrated with a few giant economic powers? The fact is, it does not 
compete, and it cannot compete very well.
  Two years ago, when this airline started, I went to the Secretary of 
Transportation and had a meeting with him in his office. I said, the 
fact is, a new jet carrier cannot start up and be successful under the 
current circumstances unless the discriminatory practices that exist 
with the big carriers against these new carriers are ended. The 
Department of Transportation has a responsibility to end it. That was 2 
years ago. Now, a jet carrier trying to serve a State like North Dakota 
and going into a hub like Denver, in order to be successful, is going 
to have the other major carriers provide code-sharing arrangements. 
But, guess what? A very large airline carrier, one of the largest in 
the country, would say to a carrier like this, I am sorry, we do not 
intend to cooperate with you under any circumstances--on ticketing, on 
baggage--and we use our own computer reservation system, and you will 
not even show up on the first couple of screens that travel agents pull 
up.

  So what happens? The fact is that the new carriers that start up do 
not make it because there are fundamentally discriminatory practices, 
and we have a Department of Transportation that drags its feet and does 
nothing about it. In the last couple of months, the Department of 
Transportation has started to do some things, but not nearly enough. 
For 1\1/2\ years they did nothing. That result is evident not only in 
North Dakota, but also around the country where we see regional 
startups trying to promote more competition in the airline industry. 
The regional startups are squashed like bugs by the big carriers 
because of what, I think, are fundamentally anticompetitive practices.
  Now, you can make a case, I suppose, that a big carrier does not have 
to cooperate with anybody under any conditions. I think it is a silly 
case to make, but I know people will make that case. What that will 
lead to is the circumstance that now exists, only more concentrated, 
and with fewer carriers. We have only five or six major carriers in 
this country. They have gotten bigger, with more economic power. They 
have the capability of deciding anyplace, at any time, that a startup 
carrier is not going to make it because they are not going to allow it.
  I have a fistful of information here from travel agents and others, 
who describe what they consider to be anticompetitive practices by 
other carriers against this startup carrier in North Dakota. I do not 
have stock in this company. I do not know much about this company. I do 
not care about one company versus another. All I care about is that we 
have a circumstance where we have competitive airline service and an 
opportunity to get more and better service in a State like North 
Dakota.
  The current system, under deregulation, is an abysmal failure. Those 
who twirl around like cheerleaders, believing this represents something 
good for this country, ought to understand that it represents something 
good for only part of the country; for those people lucky enough to 
live in the major cities who are going to get more service at lower 
prices. For the people in the parts of the country where there is less 
opportunity and where we have a need for the startup of new regional 
jet carrier services, the cheerleaders for deregulation ought to 
understand that these startups are squashed like bugs by the major 
carriers of this country, and the major carriers do this under the 
watchful eye of the people who are supposed to be concerned about 
competition.
  I hope the Secretary of Transportation and the Department of 
Transportation are able, at some point, to take the kind of action that 
we expect them to take to deal with these issues.
  We have a DOT bill coming to the floor next week. I intend to be 
here, if necessary, with a whole range of amendments talking about the 
airline issues and what DOT has or has not been doing on these issues. 
I might not get more than one vote for them. It would not matter much 
to me.
  I am not going to sit by and see this happen. This notice today of 
the withdrawal of service of another carrier in North Dakota means 
North Dakotans will have less service and pay higher prices once again. 
The fact is, this is not brain surgery, and this is not a problem for 
which we do not know a

[[Page S8980]]

cure or a solution. We understand the problem and we know the solution. 
The solution is not to preach about deregulation and then decide you 
could care less about whether there is anticompetitive behavior. If 
this Government, this Congress, this Department of Transportation, or 
this Secretary of Transportation, do not do something about the 
anticompetitive practices and anticompetitive behavior, we will never 
see this problem resolved.
  If I sound a little upset this morning, I am. I hope that perhaps 
some discussions in the coming days might convince some of these 
carriers, that are out there trying to make it in an anticompetitive 
environment, that somebody is going to do something to make it 
competitive and fair once again.
  Mr. President, as I said, from what I hear about the Senate schedule 
next week we will have the Department of Transportation appropriations 
bill on the floor. I intend to be over here actively and aggressively 
working on some of these issues then. It may be the only appropriate 
and opportunistic way for me to make the point that I think needs to be 
made.
  So I appreciate the indulgence.

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