Extensions of Remarks 20629 Extensions of Remarks

September 16, 1998 EXTENSIONS OF REMARKS 20629 EXTENSIONS OF REMARKS THE FRIENDLY SKIES lacking. The federal government should do its sort, auction slots at each slot-controlled air RESTORATION ACT job to help the public. port for assignment to new entrant air carriers The Secretary of the Department of Trans and other carriers with very limited access. If HON. JOHN D. DINGELL portation should take real action to advance there is a withdrawal of slots for an auction, OF MICHIGAN the pro-competition policy objectives of the the Secretary may not auction more than ten IN THE HOUSE OF REPRESENTATIVES Congress. That action includes ensuring that percent for the first auction and five percent the Department of Transportation's guidelines, for each succeeding auction. Auctions may not Wednesday, September 16, 1998 which it is currently developing to deal with take place earlier than two years from each Mr. DINGELL. Mr. Speaker, today I rise to predatory activity, are effective. As proposed, preceding auction. Income from any auctions introduce H.R. 4577, the Friendly Skies Res the guidelines would permit the Secretary to would finance taxpayer relief and . improved toration Act, in order to protect the American impose sanctions if a major carrier should re airport infrastructure for the American public. public from unfair practices in the airline indus spond to a new entrant into a market in an un Further, as recent evidence makes quite clear, try and to ensure that the traveling public has fair or exclusionary manner. More tools are strikes at hub airports can ground thousands access to reasonable airfare. Monopolistic atti needed and this bill provides them. of flights and hundreds of thousands of pas tudes and unprecedented levels of market The bill would permit the Secretary to re sengers, even on a daily basis. The bill would concentration have caused consumers' pock quire that any air carrier deemed to be en permit the President to authorize other air car etbook balances to nosedive while airline prof gaged in an unfair method of competition or riers to use the slots and related gates and its have soared. Congress should act to bring unfair exclusionary practice, as a condition of other such facilities of another carrier which the benefits of full competition to the Nation or continued service on the route involving the are .not in use because of a work stoppage. else other relief must be brought to bear. This violation, to maintain the same levels of ca Slot possession at the four key airports legislation will do that. Consumers deserve pacity and fare pricing that was deemed exclu where such controls are in place is a major policies that will achieve affordable airfare and sionary for a period not to exceed two years. issue, but questions like long-term exclusive accessible service. Such a tool should give a carrier pause for gate leases at other airports represent just as There is growing public interest and concern thought before implementing any activity that nearly insurmountable obstacles to real com over the issue of predatory conduct by major would unfairly respond to legitimate competi petition in the airline industry. For that reason, air carriers. Such practices eliminate competi tion. Additionally, the bill would increase the it seems to make good sense that such ar tion in the air travel industry and create formi monetary penalty for such unfair methods of rangements be reviewed. The bill would direct dable barriers for entrepreneurs to break into competition under the U.S. Code from the cur the Secretary to issue a study on the ability of the market. As an example of some suspect rent $1,000 to $10,000 for each day the viola and proposals for new entrant air carriers and conduct, one has only to look back to when tion continues or, if applicable, for each flight those with limited access at major hub airports Northwest Airlines cut its fare from Detroit to involving the violation. to obtain gates and other facilities at airports Boston to as low as $69 from an average of There are presently proposals before the on terms substantially equivalent to the terms $259 when Spirit Airlines entered the market Department of Transportation that would com provided to the major carriers already using in 1996. Coincidentally, once Spirit was bine the Nation's six largest carriers into three airport facilities. The airfield must become a pushed out of the market, the average fare alliances with strengthened control over the level playing field for competition. went up to $267, exceeding even the original United States market. The bill would give the It is important that the American public have level. More recently, Northwest ran an upstart, Secretary of Transportation the authority to re access to useful information about the market and who in the industry is providing the best Pro Air, out of the Detroit-Milwaukee market view joint venture agreements or cooperative consumer value. Various studies by the Gen and is engaged in some curious behavior in working arrangements between major air car eral Accounting Office and private organiza the Detroit to Baltimore market. To provide a riers to ensure that such cooperation and inte tions have shown that concentration in the do level playing field, vigorous competition must gration among air carriers does not result in mestic airline industry continues to grow and be permitted to take root. Unfair exclusionary unfair or deceptive practices or unfair methods is at extraordinarily high levels. Where such practices that eliminate that competition must of competition that would harm the public. concentration exists, fairs have increased with At the four slot-controlled or high-density air be rooted out. a significant impact on residents and busi When carriers respond to new competitors ports, the vast majority of the scheduled take nesses in those communities. In order to with severe price drops and capacity expan off and landing slots are controlled by the evaluate consumer value and review potential sion in order to run the new carrier out of the major carriers at these key hub airports. The implications of market concentration at hub market, it is not good for consumers in the airports are: New York's Kennedy and airports, the bill would require the Secretary to long run because it diminishes the number of LaGuardia Airports, Chicago's O'Hare, and prepare two quarterly reports for the public. options consumers will have by further con Washington's National Airport. For meaningful One would rank the top and bottom ten do solidating the strength that the major dominant competition to take root, new entrant carriers mestic routes with regard to their average cost air carriers have over the markets today. After must have a real opportunity to provide serv to the passenger, and the second would rank a new entrant is grounded, the major carrier ice in those markets. Of the more than 3,100 the large hub airports by market concentration simply retrenches and raises fares higher still domestic air carrier slots at these four airports, and identify the market share of each airline in its resumed control. This leads to a mark fewer than forty-five slots are held by all the operating at each of those airports. As has edly worse situation for consumers. new entrant air carriers combined. Moreover, been said, sunlight is the best disinfectant. Congress expressly gave the Department of foreign air carriers have more than twice as Let's let it shine on the airline industry. Transportation authority to stop any "unfair or many slots as domestic new entrant air car At best, the promises of deregulation have deceptive practice or unfair method of com riers combined. Most of these slots were not been fulfilled. The traveling public is still petition." Further, Congress has directed the grandfathered to the major carriers more than captive to monopolized routes and airports. Secretary of Transportation by statute to con a decade ago. The slots are government prop Since 1978, the Nation has had unregulated sider "preventing unfair, deceptive, predatory, erty, and it is time that the federal government monopoly, instead of regulated monopoly in or anticompetitive practices in air transpor use them to benefit the public rather than just this industry. While I fully support the goals of tation" as being in the "public interest and a handful of airlines. competition, two decades of experience only consistent with public convenience and neces In order to remedy this barrier to competi reveal consolidation, diminished choice, and sity." The Department of Transportation's ac tion, the bill would give the Secretary the au higher prices in many markets. As a last re tion under this authority has been woefully thority to create, withdraw, and, as a last re- sort, wherever there is insufficient competition e This "bullet" symbol identifies statements or insertions which are not spoken by a Member of the Senate on the floor. Matter set in this typeface indicates words inserted or appended, rather than spoken, by a Member of the House on the floor. _, ·- '·,, .....J·-· J----·~-~---......· 20630 EXTENSIONS OF REMARKS September 16, 1998 the Secretary of Transportation must be em serving as a "T-ball" coach and serves on the we will always remember how much he did to powered to change unreasonable airfares. Clairemont Town Council. He has donated his make Connecticut a great place to live. Such conditions exist where there are less time and trade skills to the community by or than two carriers in full competition or one car ganizing members of local 229 to join him in rier controls more than sixty percent of the vofunteering their skills to erect new score market share on any route that the public flies.

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