[Federal Register Volume 63, Number 133 (Monday, July 13, 1998)]
[Notices]
[Pages 37612-37613]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18615]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary
Federal Aviation Administration
[Docket No. OST 98-4025]


Request for Public Comment on Competitive Issues Affecting the 
Domestic Airline Industry

AGENCY: Office of the Secretary, Federal Aviation Administration, 
United States Department of Transportation.

ACTION: Request for public comment.

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SUMMARY: The Department of Transportation is gathering information on 
airport practices and whether they may affect competition among air 
carriers. We intend to meet with airport and airline professional 
associations and other interested participants, review data and 
information provided by industry organizations, review of comments 
filed in this docket, and use other means as appropriate. Specifically, 
we seek to determine: (1) Whether airports have used Passenger Facility 
Charges in ways that have enhanced competition; (2) whether the types 
of issues raised in complaints to the Department regarding airport 
practices have prevented competition among air carriers; (3) whether 
leasing agreements and financing arrangements at airports limit access 
and thus competition; and (4) whether airport planning, development, 
and commercial practices limit access.

DATES: Comments should be received by September 1, 1998. Comments that 
are received after that date will be considered to the extent possible.

ADDRESSES: Comments should be sent to: Docket Clerk, Docket No. OST-98-
4025, Room PL-401, United States Department of Transportation, 400 7th 
Street, SW, Washington DC, 20590.

FOR FURTHER INFORMATION CONTACT: Please contact James New (202-366-
4868) or Larry Phillips (202-366-4382) for additional information on 
the scope of the Department's study or the name of the individual in 
DOT who is in the best position to answer your questions. A copy of 
this Notice can be obtained via the World Wide Web at: http://
www.dot.gov/ost/aviation/. Comments placed in the docket will be 
available for viewing on the Internet.

SUPPLEMENTARY INFORMATION: Deregulation of the domestic airline 
industry has resulted in enormous benefits for the traveling public. 
Average air fares (adjusted for inflation) have declined approximately 
one-third since 1978, and airline service has improved in the vast 
majority of markets. Despite the overall success of deregulation, 
however, questions remain as to whether certain conditions and 
institutional arrangements are preventing the industry from being as 
competitive as it could be. For example, several studies, including 
those performed by DOT staff, have found fare premiums at certain 
airports where market concentration is high and where new entrant air 
carriers have either not attempted or have been largely unsuccessful in 
establishing a significant market presence. In other instances, new 
entrant air carriers have encountered problems in gaining access to the 
range of airport facilities that would allow them to challenge 
incumbent air carriers.
    Competition is a dynamic process, especially in the airline 
industry. Competition works best, however, when carriers are able to 
enter and exit markets in response to changing market conditions. Air 
carriers are only able to raise fares above competitive levels when 
competitors are unable to enter a market or to expand service. We 
recognize that the ability of an air carrier to provide new service at 
an airport depends on numerous factors, including the expected growth 
in passenger demand, the ability to gain access to gates and other 
critical facilities, the cost and marketing advantages incumbent air 
carriers enjoy, and the size of the irreversible (``sunk'') investment 
an entrant would incur if it were forced to withdraw from the market.
    Our objective is to gather information and data about current 
market conditions at airports. We are not investigating compliance or 
judging business practices. We welcome comments from all interested 
parties, including state and local officials, airport operators, air 
carriers, academics, financial experts, and the traveling public. Our 
goal is to have a final report completed by February 1999.
    We are interested in obtaining information that would help us 
answer the following questions: (1) What is the exact nature of the 
airport (landside) constraints air carriers have encountered when 
attempting to enter a market or expand service? (2) Have these 
constraints been so significant as to preclude entry at certain 
airports? (3) What is the exact nature and competitive significance of 
the complaints that have been raised against current airport practices? 
(4) Do leasing practices and financing agreements at airports limit 
access and discourage entry? (5) Are airport financing practices

[[Page 37613]]

changing in ways that will allow airports to have greater control over 
how they allocate gates? (6) Have airport projects funded through 
Passenger Facility Charges been successful in promoting competition? 
Why or why not? (7) What actions have airports taken to promote entry? 
(8) How do Majority-in-Interest Agreements affect the competitive 
environment at airports? (9) Is there a trend away from long-term, 
exclusive-use gate leases? (10) Have airports reallocated gates away 
from incumbent carriers (``recapture'' provisions) in ways that promote 
entry? (11) Do airports involve themselves in monitoring subleasing/use 
agreements among air carriers? (12) Do airports attempt to ensure that 
prices charged for subleased facilities or ancillary services are 
reasonable? (13) Is there any evidence that established air carriers 
are transferring access to airport facilities among themselves in ways 
that affect competition? (14) Are there reasons to retain current 
airport practices even if they adversely affect competition?

    Issued in Washington, D.C., July 8, 1998.
Rosalind A Knapp,
Deputy General Counsel, Department of Transportation.

Susan L. Kurland,
Assistant Administrator for Airports, Federal Aviation Administration.
[FR Doc. 98-18615 Filed 7-10-98; 8:45 am]
BILLING CODE 4910-62-P