MARK PILLING WASHINGTON DC
As US Transportation Secretary Rodney Slater prepared to leave office, the issue of US low-cost airline competition once again came to the fore.
Slater must have been reminded of his first year in the job. In 1997, his department promised a more pro-active stance on predatory practices by majors against low-cost carriers. The announcement came against the background of a disastrous time for the low-cost industry.
Slater's parting shot - just four days before the end of the Clinton administration - was to highlight predatory practices as a continuing problem. Reaction to Slater's announcements, which included the release of three studies showing carriers have used various tactics to suppress competition, has been positive in that it puts the spotlight on an area long overdue for attention.
However, critics point out that the administration has talked more about action than actually taking any. Seasoned US aviation analyst, Morten Beyer of MBA Consulting, expressed scepticism that Slater's initiative will produce any results when for years successive administrations have shown little appetite to take concrete action. "Over the last 20 years some 100 upstart airlines have been exterminated and nobody has done anything about it," he notes, adding that new entrant hopes that Slater's move heralds a shift in government inertia in this area is "wishful thinking".
Edward Faberman, executive director of the Air Carrier Association of America (ACAA), which represents small- and medium-sized communities across the USA and six new entrant carriers - AirTran, Frontier, Legend, Spirit, Sun Country, and Vanguard - says the recommendations are overdue but welcome. He believes the consolidation manoeuvres of American, TWA, United and US Airways, and the market size that such behemoths will achieve, have changed the agenda as far as competition is concerned: "The bottom line is that we either have real competition in this country, or we're at a point where we give up on deregulation."
The ACAA was formed in 1997 specifically to give start-ups, and the communities they serve, a voice in Washington. It is not against current mergers in principle, but stresses the government has the chance to take a "big picture" view of the proposals, suspending all transfers of airport slots and facilities until measures are in place that give new entrants access to airports like Boston, Washington-National and Philadelphia in the process. The government should also take steps to ensure dominant carriers cannot drive new entrants out of markets, he adds.
According to Slater, promoting competition has been one of the Department of Transport's (DoT's) major initiatives, giving new entrants access to slot-constrained airports such as New York LaGuardia.
But these efforts only go so far. For Slater, the new reports offer the DoT the foundation to be more aggressive.
However, it has shied away from publishing guidelines, as it originally proposed, to define exactly what constitutes predatory behaviour in a particular case. Instead, DOT will take a case-by-case approach to developing standards. A "one-size fits all" approach won't work, says Slater.
Slater also said the DOT should continue to work closely with the Department of Justice to maximise the government's ability to prevent anti-competitive conduct.
Source: Airline Business
