FOR IMMEDIATE RELEASE
Monday, April 6,
1998
Contact: Bill Mosley
Tel.: (202) 366-5571
DOT 63-98
DOT Releases Airline Competition
Policy
Statement
Addressing growing public concerns over unfair exclusionary practices designed to eliminate competition in commercial aviation, Transportation Secretary Rodney E. Slater today announced a proposed policy to guide its enforcement actions against these practices.
"Consumers deserve a pro-competitive standard that helps ensure affordable airfares and accessible service," said Slater. "To provide a level playing field, we must preserve vigorous competition and prohibit unfair exclusionary practices meant solely to eliminate that competition."
The proposed policy does not attempt to regulate the market in any way, but instead seeks to ensure that free market principles and competition continue to thrive in commercial aviation.
According to the proposed policy statement, there have been instances in which a new, small carrier has offered low price service between a major carrier's hub and a spoke city, only to find the major carrier cutting its own airfares and increasing the number of seats -- or even airplanes -- on that route and sacrificing short-term profits with only one goal in mind: to drive the new entrant out of the market and then raise its own fares to their original level or higher, and cut back its level of service. The department proposes to consider such a practice, with its single goal of eliminating competition, as unfair and exclusionary, and subject to enforcement action.
Secretary Slater emphasized that the proposed policy is being presented for a 60-day public comment period to enable all interested parties an opportunity to participate in its final adoption. The approach was chosen in an effort to work with all airlines, communities and the traveling public to develop a solution to the concerns that have been raised.
Today’s action is only the latest of a number of initiatives the department has taken to enhance airline competition, Secretary Slater said. The department publishes a quarterly report on average airline fares to better inform the public and local authorities about how average fares at their cities compare with fares for other markets and cities.
DOT also has taken steps to address the disparity in fares and service to smaller communities, the Secretary said. Last fall, the department authorized landing slot exemptions to help promote competition at New York's LaGuardia and Chicago's O'Hare Airports. Operations at these airports are constrained because of the necessity of obtaining landing and takeoff slots. The department also has begun a process of evaluating how effectively slots are currently being used at all of the slot-controlled airports.
The department has worked with Congress to improve the Essential Air Service program which in turn has assured viable service levels for one hundred rural communities across the nation, Secretary Slater said. DOT also has issued new rules to address competitive issues that have arisen involving computer reservation systems (CRS), and is re-examining all the existing CRS rules to assure that these powerful marketing tools are used in a way that promotes competition.
The Statement of Enforcement Policy Regarding Unfair Exclusionary Conduct can be obtained via the World Wide Web at http://ostpxweb.dot.gov/aviation.
Slater noted that the House Aviation Subcommittee plans to hold a hearing on domestic aviation competition on April 23. The DOT will provide testimony at the hearing and other forums as they occur.
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