[Congressional Record (Bound Edition), Volume 145 (1999), Part 2]
[Extensions of Remarks]
[Pages 2860-2861]
[From the U.S. Government Publishing Office, www.gpo.gov]




  H.R. 780, THE PASSENGER ENTITLEMENT AND COMPETITION ENHANCEMENT ACT

                                 ______
                                 

                          HON. JOHN D. DINGELL

                              of michigan

                    in the house of representatives

                       Tuesday, February 23, 1999

  Mr. DINGELL. Mr. Speaker, today I rise to introduce H.R. 780, the 
``Passenger Entitlement and Competition Enhancement Act of 1999.''
  This legislation has two purposes. First, it will give airline 
passengers the rights they deserve and have been calling for. Second, 
it will protect the American public from harmful, anti-competitive 
market concentration in the airline industry. With monopolized routes 
and unprecedented levels of market concentration, airline profits have 
soared at the expense of consumers' checkbooks, comfort, and 
convenience.
  The first title of my bill is all about passenger protections. 
Recently, due to complications involving bad weather and a severe lack 
of planning, thousands of passengers were stranded onboard aircraft at 
Detroit Metropolitan Airport for intolerable lengths of time. Many of 
these passengers were detained on the tarmac for seven, eight, or nine 
hours. They ran out of food and water, and the restroom facilities 
became unusable. Situations like this can pose major obstacles to 
emergency medical treatment and cause serious anxiety among the 
passengers and their families.
  This bill would require all airlines to have an emergency plan on 
record with the Department of Transportation to ensure that, in the 
event of an emergency, all boarded passengers would have access to all 
necessary services and conditions. Also, the plan should outline the 
means to deplane the passengers safely. Failure to have such a plan on 
file would result in the suspension of the carrier's license. Also, 
violations of the emergency plan would yield $10,000 fines.
  Additionally, aggrieved passengers should be entitled to compensation 
for unreasonable delays. My legislation would establish air carrier 
liability to each passenger on an aircraft for an excessive departure 
or arrival delay which the carrier could have avoided. If the departure 
or arrival delay is more than two, but less than three hours, the 
airline would be required to compensate each passenger in an amount 
equal to twice the value of the price paid for the passenger's ticket. 
If the delay is at least three hours in length, then each passenger is 
entitled to compensation equaling the number of hours (or portion 
thereof) multiplied by the price paid for their ticket. Also, air 
carriers would be required to give each passenger sufficient and 
accurate notice of information it has regarding any potential or actual 
significant delays in the departure or arrival of any flight segment. 
Wherever possible, such notice shall be given to the passengers before 
boarding an aircraft.
  Passenger complaints about their mishandled baggage continue to climb 
and they need to be addressed. Under this bill, air carrier liability 
would be doubled from the current $1,250 for lost or damaged baggage to 
$2,500 for provable damages that the passenger incurred because of the 
carrier's improper baggage handling.
  Many airlines engage in the business practice of overbooking flights 
to ensure that as many seats as possible are sold on their flights. 
Often, ticket holders do not show and carriers can maximize their 
revenue by having properly predicted how many seats it can overbook to 
fill in this gap. While this may be an intelligent practice for an 
airline, from time to time it can tremendously inconvenience a ticket 
holder when the airline guesses wrongly. Too many seats are sold, and 
the passengers are all there to fly to their destinations as promised. 
In this situation, some cannot fly and must be ``bumped.''
  My legislation would simplify the current bumping regulations. Should 
a passenger be involuntarily denied boardin, the air carrier would not 
be absolved of its responsibility to carry the passenger to the 
passenger's final destination. Further, if the scheduled arrival time 
of the alternate transportation is not within two hours of the 
originally scheduled arrival time, then the airline must also provide 
affected passengers with a voucher or refund equal in value to the 
original price paid by the passenger for the original flight.
  Without this legislation, passengers rights are woefully lacking. 
Passengers also need to be advised of their rights, and good airlines 
should endorse this idea. Under the legislation, the Secretary of 
Transportation would be required to establish a statement that outlines 
the consumer rights of air passengers, including the rights contained 
in the bill. Each air carrier would be required to provide the 
statement to each passenger along with its existing onboard seat-back 
safety placard and ticketing materials. The statement would also be 
conspicuously posted at all ticket counters.
  The second title of my bill concerns competition in the airline 
industry. Competition can increase consumer choice, lower price, and 
improve customer satisfaction. Many will note that 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 price drops and 
capacity expansion in order to run the new carrier out of the market, 
it ill serves consumers in the long run. After a new entrant is 
grounded, the major carrier simply retrenches and raises fares higher 
still in its resumed control.
  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 stands to be improved. The federal government should do its 
job to expeditiously 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. And the Congress ought not seek 
to delay the implementation of a reasoned and appropriate rulemaking. 
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 fine any air carrier deemed to 
be engaged in an unfair method of competition or unfair exclusionary 
practice. Such a tool should give a carrier pause for thought before 
implementing any activity that would unfairly respond to legitimate 
competition. 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.
  Further obstacles to competition arise from the fact that at the four 
slot-controlled or high-density airports, the vast majority of the

[[Page 2861]]

scheduled 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 develop, 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 combined. 
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 taxpaying 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 and, as a last resort, withdraw 
and auction slots at each slot-controlled airport for assignment to new 
entrant air carriers and other carriers with very limited access. The 
Secretary would be authorized to use pro-consumer criteria to withdraw 
slots from a carrier who is not using its slots in a competitive 
fashion. If there is a withdrawal of slots for an auction, the 
Secretary may not auction more than ten percent of existing slots 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 improved airport 
infrastructure for the American public.
  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 meaningful competition in the airline industry. For that 
reason, it makes 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 is at extraordinarily high levels and continues to 
grow. Where such concentration exists, fares 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 promised benefits of deregulation have not been fully 
realized. The traveling public is still captive to monopolized routes 
and airports. Indeed, since 1978, the Nation has endured unregulated 
monopoly on many routes and airports. Indeed, since 1978, the Nation 
has endured unregulated monopoly on many routes. While I fully support 
the goals of competition, two decades of experience reveal 
consolidation, diminished choice, and higher prices in many markets. To 
the extent that deregulation has failed, the Congress should respond 
and correct its course. Full and fair competition is what consumers 
demand and deserve. When any carrier dominates a hub, it can lose its 
edge and the incentive to meet consumer needs. This ought not be the 
case. The Congress has the opportunity to act now to remedy the defects 
in the law that permit our constituents to be exposed to undue and 
intolerable grief.
  The American public has been held hostage by the poor service and 
excessive 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 appropriate protections for the country's 
airline passengers. To my friends in the airline industry, I want to 
observe that one airline executive recently told me that a good airline 
should be doing these things anyway. While the airlines may feel their 
best option is to fight and hope to block this bill in Congress, I 
believe it would be vastly preferable to start working to solve these 
problems on their own. As with any problem, the first step on the road 
to recovery is to stop denying and start accepting. Today, the major 
airlines are the guests of honor at my ``intervention.''
  The ``Passenger Entitlement and Competition Enhancement Act'' is 
common sense legislation that responds to the call for fair play and 
substantial justice in the airline industry. I applaud the efforts of 
my colleagues who are helping to advance the message of our 
constituents, which I began to carry last year, and ask that they join 
me at their earliest opportunity.

                          ____________________