Office of Aviation Analysis

Current Programs

Key Personnel

Randall Bennett, Director
Vacant, Deputy Director
Regis Milan, Associate Director and Assistant to the Deputy Assistant Secretary
Teresa Bingham, Associate Director for the Small Community Air Service Development Pilot Program
Todd Homan, Competition and Policy Analysis Division, Chief
Dennis Devany, Essential Air Service and Domestic Analysis Division, Chief
Patricia Thomas, Air Carrier Fitness Division, Chief

OFFICE FUNCTION

OFFICE MISSION: The Office of Aviation Analysis, through the Office of the Assistant Secretary for Aviation and International Affairs, initiates and supports the development of the Department of Transportation’s public policies regarding the airline industry in both domestic and international markets. The Office has the responsibility to analyze and support the Department’s decision makers on major airline issues, including airline mergers and acquisitions, domestic and international code-share alliances and other joint venture agreements, immunized international alliances between U.S. and foreign carriers, airline distribution practices, airline strike and bankruptcy issues, and airline service at small communities. In addition, the Office administers several important aviation regulatory programs, including the initial and continuing fitness of commercial airlines to serve the public, subsidy and grant programs for air service to small communities, access to slot-controlled airports, and the setting of mail rates within Alaska and in international markets.

KEY OFFICE FUNCTIONS:

a. Serves as an independent source of analytical input to the Department’s aviation and international affairs policy-making function.

b. Develops analytically based, medium-to-long-term views of the airline industry’s operating and competitive structures based on analysis of air carriers costs, fares, service, traffic, capacity, and financial information.
c. Develops an analytical agenda designed to address significant emerging airline industry issues, such as airline distribution practices, conducts internal studies of those issues, and designs and oversees studies by outside contractors.
d. Monitors industry developments and ensures that Department policies address those developments.
e. Reviews non-immunized marketing and alliance agreements between and among domestic air carriers, and where appropriate recommends disposition on competition grounds.

f. Reviews and recommends procedures and disposition for all airline merger, acquisition applications and applications for antitrust immunity for domestic and international alliances.

g. Provides economic analyses for international route cases.

h. Investigates the economic components of allegations of unfair methods of competition and deceptive practices in the airline industry and recommends action where appropriate.

i. Analyzes the public and competitive impact of airline strikes and bankruptcies.

j. Regularly provides quick-turn, analytically-based reviews of a variety of aviation economic issues for senior Department officials.

k. Provides leadership for large special projects that support Secretarial and other policy initiatives that are national in scope.

l. Provides a leadership role in the development and implementation of modernization of data systems and collection at the Department to facilitate all domestic and international analytical functions.

m. Develops and publishes recurrent reports on airline fares, costs, revenues, profitability, and operations for use by senior department officials and the public.

n. Participates in preparing rulemaking and departmental positions on legislative proposals concerning a variety of economic issues affecting the airline industry, including small community air service, air carrier fitness, access at slot-controlled airports, and airline industry structural issues.

o. Administers the Essential Air Service Program:

(i) determines levels of essential air service; reviews and updates such determinations; processes carrier selection cases and subsidy need issues; conducts rate negotiations with applicants, reviewing forecast expenses and revenues.
(ii) evaluates continuing reliability of carriers; monitors performance; and conducts periodic on-site operational examinations of carriers.
(iii) sets interim and final subsidy rates where necessary to maintain service and renews subsidy rates where appropriate at one- or two-year intervals.
(iv) processes and participates in community appeals and conducts on-site informal hearings relating to appeals on essential air service levels and eligibility.
(v) processes suspension notices and carrier essential air service hold-ins--determines allowable service reductions, and evaluates proposed replacement service.
(vi) processes claims for subsidies and compensation authorized to support essential air service.
p. Administers the Small Community Air Service Development Pilot Program, including (1) soliciting of community proposals; (2) selection of the grant recipients; (3) management of the grant process, including reimbursements; (4) the development of all procedures and analytical paradigms for administration of the program; and (5) additional requirements related to exercise of these responsibilities.
q. Reviews, processes, disposes of or recommends disposition of: (1) applications for initial U.S. air carrier certificates under 49 U.S.C. 41102 and 41103, and for commuter air carrier authority under 49 U.S.C. 42378, including a determination that the applicant is fit, willing, and able to conduct the proposed operations; (2) continuing fitness reviews under 49 U.S.C. 41110(e), including the modification, suspension, or revocation of authority, where appropriate; (3) applications for exemptions under 49 U.S.C. 40109; and (4) additional requirements related to the exercise these responsibilities, including participation in formal hearings involving air carrier fitness.
r. Develops policies, analyzes policy issues, and administers certain regulatory issues with respect to access at slot-controlled airports.

s. Reviews international and intra-Alaska mail rates for adequacy and appropriateness; reviews contractual arrangements between the United States Postal Service and certificated air carriers for the transportation of mail; reviews Postal Service rules and regulations relating to the carriage of mail by aircraft; conducts non-hearing investigations through show-cause procedures to establish individual and/or class rates.
The Essential Air Service and Domestic Analysis Division has a number of regulatory and advisory responsibilities. The Division administers the Essential Air Service (EAS) program, which guarantees that hundreds of small communities throughout the country receive air service to connect them to the National air transportation system. This involves a determination as to how many flights should be provided at the community, the type aircraft to be used, the carrier that should provide the service, and the level of subsidy that the Federal Government will pay the air carrier providing the community's air service. Division analysts negotiate the subsidy need for each applicant carrier before recommending to Department decision makers which carrier should be selected for the EAS subsidized service. The Division works with a budget of over $100 million for this program.
The Division also administers the Department's responsibility for air carrier access to certain airports where airline operations are limited. Certain airports in the United States are so congested that the U.S. Government controls not only the number of take-offs and landings (slots) that can operated each day, but also the number of flights that can be operated each hour at the airport. For the most, part the Federal Aviation Administration is responsible for distribution of the available slots at these airports. Exemptions from the slot restrictions to provide additional access to the slot-controlled airports are the responsibility of the Department of Transportation. The Essential Air Service and slot allocation responsibilities involve considerable contact with Capitol Hill and the Federal Aviation Administration, as well as numerous industry organizations.

In addition, the Division is responsible for establishing the rates that the U.S. Postal Service pays airlines to carry mail within the State of Alaska and in international markets. This function requires analysis of detailed revenue, costing, and traffic data and close coordination and interaction with the U.S. Postal Service.

Small Community Air Service Development Pilot Program

The Small Community Air Service Development Pilot Program, a $20 million grant program designed to help small communities address air service and airfare issues, is managed by the one of the Office's Associate Directors. Unlike the EAS program, the financial assistance available under the Pilot Program is not limited to air carrier subsidy. It can involve, among others, financial assistance for marketing programs, additional personnel, studies, and aircraft acquisitions. Administration of the program draws upon the Chief and analysts from the EAS and Domestic Analysis Division for analysis of the air carrier operating arrangements proposed in the grant requests. These responsibilities involve considerable contact with Capitol Hill and industry organizations.
Competition Policy and Analysis Division
The Competition and Policy Analysis Division is responsible for providing short-, medium, and long-term views of the U.S. aviation industry's operating and competitive structures. It is also responsible for monitoring major economic aspects of the airline industry, providing regular reports and analyses of airline traffic, fares, costs, capacity, and financial conditions. These responsibilities involve the analysis of historical data as well as the development and use of forecasting models to project the competitive and structural effects of changes on airline services and fares from mergers, alliances, code sharing and other cooperative arrangements among airlines, as well as bankruptcies. In addition, the Division conducts studies of industry trends and developments relevant to the Department's industry oversight responsibilities. These reports, studies, and analyses are the bases on which the Office develops its recommendations to the Assistant Secretary and the Secretary on airline domestic and international economic issues as well as speeches and congressional testimony by Department officials.

The Division also provides extensive analytical support and advice to Department decision makers with respect to specific cases and matters before the Department, including airline mergers and alliances, selection of U.S. carriers in international route authority selection cases, and antitrust immunity cases.
The analytical and advisory functions of the Division frequently involve interaction with Capitol Hill, other U.S. Government agencies, including the Departments of Justice, State, and Commerce, and the transportation and competition authorities of foreign governments.

The Air Carrier Fitness Division analyzes and evaluates all applications for new economic authority to determine if the airline applicant is "fit, willing, and able" to conduct commercial airline operations and that the applicants are U.S. citizens as defined by the transportation statute. This involves analysis of the applicant's managerial capabilities and experience, the financial resources available for the proposed operations, its service plan, and the ability of the management personnel to comply with U.S. laws, as well as the ownership of the applicant. The Division also monitors on a regular basis the operations and financial conditions of all licensed U.S. airlines to ensure that they continue to be fit to hold their operating authority and to serve the U.S. public. Division analysts work closely with the Department's Office of Consumer Affairs and the Federal Aviation Administration, which is responsible for the safety oversight and licensing of U.S. airlines.

 

Revised on Thursday, January 15, 2004
Content provided by Randall Bennett, Director
(202) 366-5903