[Congressional Record Volume 144, Number 123 (Wednesday, September 16, 1998)]
[Extensions of Remarks]
[Pages E1729-E1730]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E1729]]



                   THE FRIENDLY SKIES RESTORATION ACT

                                 ______
                                 

                          HON. JOHN D. DINGELL

                              of michigan

                    in the house of representatives

                     Wednesday, September 16, 1998

  Mr. DINGELL. Mr. Speaker, today I rise to introduce H.R. 4577, the 
Friendly Skies Restoration Act, in order to protect the American public 
from unfair practices in the airline industry and to ensure that the 
traveling public has access to reasonable airfare. Monopolistic 
attitudes and unprecedented levels of market concentration have caused 
consumer's pocketbook balances to nosedive while airline profits have 
soared. Congress should act to bring the benefits of full competition 
to the Nation or else other relief must be brought to bear. This 
legislation will do that. Consumers deserve policies that will achieve 
affordable airfare and accessible service.
  There is growing public interest and concern over the issue of 
predatory conduct by major air carriers. Such practices eliminate 
competition in the air travel industry and create formidable barriers 
for entrepreneurs to break into the market. As an example of some 
suspect conduct, one has only to look back to when Northwest Airlines 
cut its fare from Detroit to Boston to as low as $69 from an average of 
$259 when Spirit Airlines entered the market in 1996. Coincidentally, 
once Spirit was pushed out of the market, the average fare went up to 
$267, exceeding even the original level. More recently, Northwest ran 
an upstart, Pro Air, out of the Detroit-Milwaukee market and is engaged 
in some curious behavior in the Detroit to Baltimore market. To provide 
a level playing field, vigorous competition must be permitted to take 
root. Unfair exclusionary practices that eliminate that competition 
must be rooted out.
  When carriers respond to new competitors with severe drops and 
capacity expansion in order to run the new carrier out of the market, 
it is not good for consumers in the long run because it diminishes the 
number of options consumers will have by further consolidating the 
strength that the major dominant air carriers have over the markets 
today. After a new entrant is grounded, the major carrier simply 
retrenches and raises fares higher still in its resumed control. This 
leads to a markedly worse situation for consumers.
  Congress expressly gave the Department of Transportation authority to 
stop any ``unfair or deceptive practice or unfair method of 
competition.'' Further, Congress has directed the Secretary of 
Transportation by statute to consider ``preventing unfair, deceptive, 
predatory, or anticompetitive practices in air transportation'' as 
being in the ``public interest and consistent with public convenience 
and necessity.'' The Department of Transportation's action under this 
authority has been woefully lacking. The federal government should do 
its job to help the public.
  The Secretary of the Department of Transportation should take real 
action to advance the pro-competition policy objectives of the 
Congress. That action includes ensuring that the Department of 
Transportation's guidelines, which it is currently developing to deal 
with predatory activity, are effective. As proposed, the guidelines 
would permit the Secretary to impose sanctions if a major carrier 
should respond to a new entrant into a market in an unfair or 
exclusionary manner. More tools are needed and this bill provides them.

  The bill would permit the Secretary to require that any air carrier 
deemed to be engaged in an unfair method of competition or unfair 
exclusionary practice, as a condition of continued service on the route 
involving the violation, to maintain the same levels of capacity and 
fare pricing that was deemed exclusionary for a period not to exceed 
two years. Such a tool should give a carrier pause for thought before 
implementing any activity that would unfairly respond to legitimate 
competition. Additionally, the bill would increase the monetary penalty 
for such unfair methods of competition under the U.S. Code from the 
current $1,000 to $10,000 for each day the violation continues or, if 
applicable, for each flight involving the violation.
  There are presently proposals before the Department of Transportation 
that would combine the Nation's six largest carriers into three 
alliances with strengthened control over the United States market. The 
bill would give the Secretary of Transportation the authority to review 
joint venture agreements or cooperative working arrangements between 
major air carriers to ensure that such cooperation and integration 
among air carriers does not result in unfair or deceptive practices or 
unfair methods of competition that would harm the public.
  At the four slot-controlled or high-density airports, the vast 
majority of the schedules take off and landing slots are controlled by 
the major carriers at these key hub airports. The airports are: New 
York's Kennedy and LaGuardia Airports, Chicago's O'Hare, and 
Washington's National Airport. For meaningful competition to take root, 
new entrant carriers must have a real opportunity to provide service in 
those markets. Of the more than 3,100 domestic air carrier slots at 
these four airports, fewer than forty-five slots are held by all the 
new entrant air carriers combined. Moreover, foreign air carriers have 
more than twice as many slots as domestic new entrant air carriers 
combines. Most of these slots were grandfathered to the major carriers 
more than a decade ago. The slots are government property, and it is 
time that the federal government use them to benefit the public rather 
than just a handful of airlines.
  In order to remedy this barrier to competition, the bill would give 
the Secretary the authority to create, withdraw, and, as a last resort, 
auction slots at each slot-controlled airport for assignment to new 
entrant air carriers and other carriers with very limited access. If 
there is a withdrawal of slots for an auction, the Secretary may not 
auction more than ten percent for the first auction and five percent 
for each succeeding auction. Auctions may not take place earlier than 
two years from each preceding auction. Income from any auctions would 
finance taxpayer relief and improved airport infrastructure for the 
American public. Further, as recent evidence makes quite clear, strikes 
at hub airports can ground thousands of flights and hundreds of 
thousands of passengers, even on a daily basis. The bill would permit 
the President to authorize other air carriers to use the slots and 
related gates and other such facilities of another carrier which are 
not in use because of a work stoppage.
  Slot possession at the four key airports where such controls are in 
place is a major issue, but questions like long-term exclusive gate 
leases at other airports represent just as nearly insurmountable 
obstacles to real competition in the airline industry. For that reason, 
it seems to make good sense that such arrangements be reviewed. The 
bill would direct the Secretary to issue a study on the ability of and 
proposals for new entrant air carriers and those with limited access at 
major hub airports to obtain gates and other facilities at airports on 
terms substantially equivalent to the terms provided to the major 
carriers already using airport facilities. The airfield must become a 
level playing field for competition.

  It is important that the American public have access to useful 
information about the market and who in the industry is providing the 
best consumer value. Various studies by the General Accounting Office 
and private organizations have shown that concentration in the domestic 
airline industry continues to grow and is at extraordinarily high 
levels. Where such concentration exists, fairs have increased with a 
significant impact on residents and businesses in those communities. In 
order to evaluate consumer value and review potential implications of 
market concentration at hub airports, the bill would require the 
Secretary to prepare two quarterly reports for the public. One would 
rank the top and bottom ten domestic routes with regard to their 
average cost to the passenger, and the second would rank the large hub 
airports by market concentration and identify the market share of each 
airline operating at each of those airports. As has been said, sunlight 
is the best disinfectant. Let's let it shine on the airline industry.
  At best, the promises of deregulation have not been fulfilled. The 
traveling public is still captive to monopolized routes and airports. 
Since 1978, the Nation has had unregulated monopoly, instead of 
regulated monopoly in this industry. While I fully support the goals of 
competition, two decades of experience only reveal consolidation, 
diminished choice, and higher prices in many markets. As a last resort, 
wherever there is insufficient competition the Secretary of 
Transportation must be empowered to change unreasonable airfares. Such 
conditions exist where there are less than two carriers in full 
competition or one carrier controls more than sixty percent of the 
market share on any route that the public flies. Where deregulation has 
failed, the Congress should respond and give consumers the relief they 
deserve.

[[Page E1730]]

  The American public has been held hostage by the poor service and 
inordinate fares at the hands of the cartels in the air for too long. 
That is why I am pleased to introduce this bill to generate legitimate 
competition and secure reasonable prices for air travel for the 
country's consumers.

                          ____________________