[Congressional Record (Bound Edition), Volume 145 (1999), Part 17]
[Senate]
[Pages 23937-23938]
[From the U.S. Government Publishing Office, www.gpo.gov]



             AIR TRANSPORTATION IMPROVEMENT ACT--Continued

  Mr. HARKIN. I thank the President for this time and his indulgence 
while I take my 10 minutes when I know we are supposed to be recessing 
for our luncheon caucuses. I appreciate the indulgence of the Senator 
from Wyoming.
  I want to take a few minutes to talk about the managers' amendment, 
the slot amendment that provides for a two-step process for the 
elimination of airline slots for landing and takeoff rights at O'Hare, 
Kennedy, and LaGuardia Airports.
  Senator Grassley and I have been working on this for quite awhile 
together. I am pleased we have been able to work closely with Chairman 
McCain, with Senator Rockefeller, Senator Gorton, and others on the 
development of this proposal.
  It is an important step toward eliminating a major barrier to airline 
competition. Not only must we eliminate the barrier, but we have to do 
it in a way that mitigates against the long-term effects of a 
Government-imposed slot rule. Under the current rules, most smaller 
airlines have, in effect, a far more difficult time competing, in part, 
because of the slot rule.
  In the first phase of the proposal, in the managers' amendment, small 
airlines will be allowed immediate expanded access to the airports. 
Again, this will help stimulate increased competition and lower ticket 
prices. Turboprop and regional jet aircraft will also be allowed 
immediate slot exemptions when they serve smaller markets. This will 
increase airline service available to smaller cities, especially cities 
west of the Mississippi, such as the Presiding Officer's cities in 
Wyoming, or Nebraska or the Dakotas or Iowa, or places such as that.
  The two-step mechanism in the bill has the support of 30 attorneys 
general, the Business Travel Coalition, and the Air Carrier Association 
of America which represents many of the smaller airlines.
  After that first phase, in the final step--after a number of years 
when the new competitive airlines might get a chance to establish a 
foothold and smaller cities would have established better service--the 
slot rules will be ended at O'Hare, Kennedy, and LaGuardia Airports.
  Again, I commend Chairman McCain for working so closely with us on 
this issue. Chairman McCain had a field hearing in Des Moines on April 
30 of this year to hear firsthand how the current system affects small- 
and medium-sized cities. Senator McCain has worked hard to move forward 
a proposal which I believe will significantly increase competition.
  I also thank Senator Gorton, and my colleague, Senator Rockefeller 
from West Virginia, for their considerable efforts. These Senators have 
shown a keen interest in the problems unique to smaller cities and 
rural areas where adequate service is a paramount issue.
  The provision has a number of items that address the noise 
implications of eliminating the slot rule near the three airports. I 
believe this final language is an excellent compromise. I am pleased 
that the structure of our original proposal is largely intact. I was 
also pleased that the House moved in June to eliminate the slot rule at 
these airports. I think the Senate provision improves on that.
  Access to affordable air service is essential to efficient commerce 
and economic development in States with a lot of small communities. 
Again, Americans have a right to expect this. Airports are paid for by 
the traveling public through taxes and fees charged by the Federal 
Government and local airport authorities. Unfortunately, when 
deregulation came through in 1978, there was no framework put in place 
to deal with anticompetitive practices. A lot of these outrageous 
practices have become business as usual.
  What happened? We went through deregulation in 1978; and then in 1986 
the DOT gave the right to land and take off under these slots to those 
that used them as of January 21, 1986. So what happened was, when the 
Secretary of DOT, in 1986 said, here, airlines, these are your slots, 
it locked them into those airports, and it effectively locked out 
competition in the future. It was, in fact, a give-away. I always said 
this was a give-away of a public resource. These airports do not belong 
to the airlines. They belong to us. They belong to the people of this 
country.
  So what has happened is that over the years these airlines have been 
able to lock them up. So we have this slot system. The slot system came 
in in the late 1960s because the air traffic control system was getting 
overwhelmed with the number of flights then being handled. So they had 
a slot system.
  Just the reverse is true today. With the modernization of our air 
traffic control system--with global positioning satellites, GPSs, all 
of the other things we have, the communications systems, our air 
traffic control system, and the ongoing modernization of it--we can 
handle it. We do not need the slots any longer.
  However, rather than just dropping them right away, we need to 
mitigate against the damage that has been caused by the slots. That is 
why we need to have a phaseout, a two-step phaseout--a phaseout that 
would both phase out the slots but at the same time include, in that 
first phase, turboprops that serve smaller cities, new airlines that 
would start up with small regional jets that would serve

[[Page 23938]]

some of the smaller cities that have been cut out of this for the last 
almost 20 years--well, I guess 14 years now since 1986.
  So, again, many airlines have monopolies in markets, especially if 
they control a hub airport. Local airport authorities at major hub 
airports do very little to encourage small carriers to use hub 
airports. It is no surprise that big airlines would rather see gates 
empty than lease them to competitors. Dominant carriers flood the 
market with cheap seats to destinations served by small carriers. They 
maintain the low price until the day the small carrier is gone.
  This happened in Des Moines with Vanguard Airlines. We had a new 
airline that started. What happened? United and American, flying to 
Chicago, dropped their fares by over half, dropped their fares down to 
below what Vanguard could do. The travelers were happy, but Vanguard 
could only afford to do that for so long, and then they went out of 
business. As soon as they went out of business, what did United and 
American do? They upped their fares 83 percent. That is what they were 
doing to stifle competition.
  I believe that allowing new entrant carriers, such as Vanguard, 
Access Air, and others that may be coming along, easier access to 
O'Hare from cities such Des Moines, and the Quad Cities--Moline, Rock 
Island, Bettendorf, and Davenport and others, will be a step in the 
right direction toward helping economic development and growth and 
providing for lower airfares for our people.
  The amendment of the managers opens up the opportunity for direct 
service into LaGuardia, important to cities such as Des Moines and 
Cedar Rapids and the Quad Cities.
  Again, the Quad Cities recently lost American Airlines' service to 
O'Hare because of the slot rule. American Airlines decided to fly their 
new regional jet between Omaha and O'Hare. Normally, this would not 
have had an impact on Quad Cities' service to O'Hare, but under the 
slot rule, Quad Cities lost American Airlines' service entirely. They 
entirely lost it.
  Without the slot limitation, Quad Cities would be a profitable market 
for American or any other airline. But the area did not make the cut 
with a limited number of landing rights available under the existing 
slot rule. Again, economic decisions are not based upon what they can 
expect to get from a market; it is based upon the slot rule. That is 
skewing the economic decisions made by airlines and by small community 
airports.
  So again, for our area, for Iowa, for areas west of the Mississippi--
I am sure for Wyoming and for West Virginia--we need to change this 
system, but we need to do it in a way that does not lock in the past 
anticompetitive activities of the larger airlines.
  Right now, Sioux City, IA, does not have service to O'Hare. It is the 
No. 1 destination of its business travelers. So, again, what is this 
doing? It hurts economic development and stifles competition in Sioux 
City.
  Again, I urge the Senate to support the managers' amendment. Doing so 
will lower airfares, it will improve air service to small- and medium-
sized cities across the Nation, and it will allow for economic 
decisions to be based on economics and not upon an outdated, outmoded, 
anticompetitive slot rule.
  I thank the Chair.

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