It has been a long time coming - some think too long - but the US Department of Transportation is promising to open up some of the key US hub airports and to get tough on carriers that behave anticompetitively. Predictably, the low-cost airlines applaud the move while the majors are mostly mute on the subject.
The DOT's deputy assistant secretary for aviation and international affairs, Patrick Murphy, pulled no punches in outlining his department's determination to stamp out anticompetitive behaviour within the US. The DOT has four key areas under review:
* Being more responsive to applications for slots at high-density airports, including the possibility of slot redestribution away from incumbents to new entrants.
* Giving more prominence to low-cost carriers in CRSs.
* Defining predatory practices more clearly and dealing with complaints of anticompetitive behaviour.
* Feeding information to the public, primarily so that civic leader and airport managers can use this data to seek new competitor airlines or pressure their existing airlines to be more competitive.
Murphy says that reaction by the majors to the last point, in particular, has been interesting. 'The shedding of light on some of their airline pricing practices has made some of the major airlines uncomfortable,' he says. 'They have complained that our data is a first step towards reregulation, that our data is misleading, that the airline industry has historically low average profits and we should not be concerned about high prices.'
What has prompted the DOT's rekindled interest in competition within the US has been the steep decline in new entrants since the ValuJet crash in May 1996. 'Only one low-fare new entrant has started operations over the past 16 months and no new applications have been filed in 1997,' explains Murphy.
Congress has now directed the DOT to be especially vigilant in investigating anticompetitive practices and political support for this is gaining momentum. Senator John McCain, chairman of the transportation committee, has added his voice of support to those of at least two other subcommittee chairmen who are seeking a more competitive airline environment. 'According to the airlines and others who benefit from the status quo, the sky would simply fall if these artificial barriers to competition were eliminated,' says McCain. 'I want to demonstrate to the world that the sky will not fall if we disturb the status quo.'
Frontier Airlines, which earlier this year filed a predatory practice complaint against United Airlines, which fiercely denies the charge, says the DOT's pledge is a 'very, very positive first step,' but wished it had happened a year ago. 'It finally looks as if the DOT is returning the cop to the block,' says Frontier. Other low-cost carriers are also supportive, but warn that much has to be done to reverse the severe downward trend that they have suffered in recent months as the majors have returned record profits.
Edward Fabermann, executive director of the Air Carriers Association of America, a lobbying organisation for startups, says: 'Talk is great, but it's action which is important. This has been very slow in happening.' Fabermann particularly wants to see slots made available at high density airports. 'If we can't add capacity, then they have to start redistributing capacity. That is essentially what our government is saying about Heathrow or Narita,' he says.
Source: Airline Business
