I

106TH CONGRESS

2D SESSION H. R. 4978

To amend title 49, United States Code, to authorize the Secretary of Transportation to oversee the competitive activities of air carriers following

a concentration in the airline industry, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 26, 2000

Mr. OBERSTAR introduced the following bill; which was referred to the

Committee on Transportation and Infrastructure

A BILL

To amend title 49, United States Code, to authorize the

Secretary of Transportation to oversee the competitive

activities of air carriers following a concentration in the

airline industry, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Airline Competition

5 Preservation Act of 2000’’.
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1 SEC. 2. OVERSIGHT OF AIR CARRIER PRICING.

2 (a) IN GENERAL.—Chapter 415 of title 49, United

3 States Code, is amended by adding at the end the fol4 lowing:

5 ‘‘§ 41512. Oversight of air carrier pricing

6 ‘‘(a) EFFECTIVE DATE.—

7 ‘‘(1) IN GENERAL.—This section shall take ef8 fect immediately upon a determination by the Sec9 retary of Transportation that 3 or fewer air carriers

10 account for 70 percent or more of the scheduled rev11 enue passenger miles in interstate air transportation

12 as a result of—

13 ‘‘(A) the consolidation or merger of the

14 properties (or a substantial portion of the prop15 erties) of 2 or more of the 7 air carriers that

16 account for the highest number of scheduled

17 revenue passenger miles in interstate air trans18 portation into a single entity that owns or oper19 ates the properties previously in separate own20 ership; or

21 ‘‘(B) the acquisition (by purchase, lease, or

22 contract to operate) of the properties (or a sub23 stantial portion of the properties) of 1 or more

24 of the 7 air carriers described in subparagraph

25 (A) by another of such carriers.
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1 ‘‘(2) USE OF DATA.—For the purpose of deter2 mining the number of scheduled revenue passenger

3 miles under paragraph (1), the Secretary shall use

4 data from the latest year for which complete data is

5 available.

6 ‘‘(3) DETERMINATION OF AIR CARRIER CON7 CENTRATION.—In making a determination under

8 paragraph (1), the Secretary shall attribute to an air

9 carrier those scheduled revenue passenger miles in

10 interstate air transportation of the air carrier that

11 is consolidated, merged, or acquired that are associ12 ated with routes adopted by the remaining carrier.

13 ‘‘(b) FARES OF AIR CARRIERS.—

14 ‘‘(1) IN GENERAL.—On the initiative of the

15 Secretary or on a complaint filed with the Secretary,

16 the Secretary may undertake an investigation to de17 termine whether an air carrier is charging a fare or

18 an average fare for interstate air transportation on

19 a route that is unreasonably high.

20 ‘‘(2) CONSIDERATIONS.—In determining wheth21 er a fare or an average fare of an air carrier for

22 interstate air transportation on a route is unreason23 ably high, the Secretary shall consider, among other

24 factors, whether—
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1 ‘‘(A) the fare or average fare is higher

2 than the fare or average fare charged by the

3 carrier on other routes in interstate air trans4 portation of comparable distances;

5 ‘‘(B) the fare or average fare has increased

6 by a significant amount in excess of any in7 crease in the cost to operate flights on the

8 route; and

9 ‘‘(C) the range of fares specified on the

10 route or the carrier’s entire fare system offers

11 a reasonable balance and a fair allocation of

12 costs between passengers who are primarily

13 price sensitive and passengers who are pri14 marily time sensitive.

15 ‘‘(3) ACTIONS IN RESPONSE TO UNREASONABLE

16 FARES.—If the Secretary determines that an air car17 rier is charging a fare or an average fare for inter18 state air transportation on a route that is unreason19 ably high, the Secretary, after providing the carrier

20 an opportunity for a hearing, may order the

21 carrier—

22 ‘‘(A) to reduce the fare;

23 ‘‘(B) to offer the reduced fare for a spe24 cific number of seats on the route; and
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1 ‘‘(C) to offer rebates to individuals who

2 have been charged the fare.

3 ‘‘(4) PERIOD OF EFFECTIVENESS OF ORDER.—

4 An order issued by the Secretary under this sub5 section shall remain in effect for a period to be de6 termined by the Secretary.

7 ‘‘(c) ACTIONS OF DOMINANT AIR CARRIERS IN RE8 SPONSE TO NEW ENTRANTS.—If, with respect to a route

9 in interstate air transportation to or from a hub airport,

10 a dominant air carrier at the airport—

11 ‘‘(1) institutes or changes its fares for air

12 transportation on the route in a manner that results

13 in fares that are lower than or comparable to the

14 fares offered by a new entrant air carrier for such

15 air transportation; and

16 ‘‘(2) increases the passenger capacity at which

17 such fares are offered on the route to a level which

18 is—

19 ‘‘(A) 2 or more times the capacity pre20 viously offered by the carrier at such fares on

21 the route; and

22 ‘‘(B) 2 or more times the total capacity of23 fered by the new entrant air carrier on the

24 route, the dominant air carrier, in the 2-year

25 period beginning on the date that such fares
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1 and additional capacity are instituted, shall con2 tinue to offer such fares with respect to not less

3 than 80 percent of the highest number of seats

4 per week for which the dominant air carrier has

5 offered the fares.

6 ‘‘(d) ENSURING COMPETITION AT HUB AIRPORTS.—

7 ‘‘(1) IN GENERAL.—On the initiative of the

8 Secretary or on a complaint filed with the Secretary,

9 the Secretary may undertake an investigation to de10 termine whether a dominant air carrier at a hub air11 port is charging higher than average fares at the

12 airport.

13 ‘‘(2) HIGHER THAN AVERAGE FARES.—For

14 purposes of paragraph (1), the Secretary may deter15 mine that a dominant air carrier is charging higher

16 than average fares at a hub airport if the carrier is

17 charging, with respect to 20 percent or more of its

18 routes in interstate air transportation that begin or

19 end at the airport, an average fare that is at least

20 5 percent higher than the average fare being

21 charged by all air carriers on routes in interstate air

22 transportation of comparable distances and density,

23 after adjustments for costs that are carrier or air24 port specific, such as passenger facility charges or

25 employee compensation.
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1 ‘‘(3) ACTIONS IN RESPONSE TO UNFAIR COM2 PETITION.—If the Secretary determines under para3 graph (1) that a dominant air carrier is charging

4 higher than average fares at a hub airport, the Sec5 retary, after providing the carrier an opportunity for

6 a hearing, may order the carrier to take actions to

7 increase opportunities for competition at the hub

8 airport, including—

9 ‘‘(A) requiring the carrier to make gates,

10 slots, and other airport facilities available to

11 other air carriers on reasonable and competitive

12 terms;

13 ‘‘(B) requiring adjustments in the commis14 sions paid by the carrier to travel agents;

15 ‘‘(C) requiring adjustments in the carrier’s

16 frequent flyer program; and

17 ‘‘(D) requiring adjustments in the carrier’s

18 corporate discount arrangements and com19 parable corporate arrangements.

20 ‘‘(e) DEFINITIONS.—In this section, the following

21 definitions apply:

22 ‘‘(1) DOMINANT AIR CARRIER.—The term ‘dom23 inant air carrier’, with respect to a hub airport,

24 means an air carrier that accounts for more than 50

25 percent of the total annual boardings at the airport
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1 in the preceding 2-year period or a shorter period

2 specified in paragraph (3).

3 ‘‘(2) HUB AIRPORT.—The term ‘hub airport’

4 means an airport that each year has at least .25

5 percent of the total annual boardings in the United

6 States.

7 ‘‘(3) INTERSTATE AIR TRANSPORTATION.—The

8 term ‘interstate air transportation’ includes intra9 state air transportation.

10 ‘‘(4) NEW ENTRANT AIR CARRIER.—The term

11 ‘new entrant air carrier’, with respect to a hub air12 port, means an air carrier that accounts for less

13 than 5 percent of the total annual boardings at the

14 airport in the preceding 2-year period or in a shorter

15 period specified by the Secretary if the carrier has

16 operated at the airport less than 2 years.’’.

17 (b) CONFORMING AMENDMENT.—The analysis for

18 such chapter is amended by adding at the end the fol19 lowing:

‘‘41512. Oversight of air carrier pricing.’’.

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