I
103D CONGRESS
1ST SESSION
H. R. 472
To amend the Federal Aviation Act of 1958 for the purpose of enhancing
competition among air carriers and protection of passengers of air car-
riers, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 6, 1993
Mr. OBERSTAR introduced the following bill; which was referred to the
Committee on Public Works and Transportation
A BILL
To amend the Federal Aviation Act of 1958 for the purpose
of enhancing competition among air carriers and protec-
tion of passengers of air carriers, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Airline Competition
Enhancement and Passenger Protection Act of 1993’’.
TITLE I—AIRLINE COMPETITION
ENHANCEMENT
SEC. 101. ENHANCEMENT OF COMPETITION RELATING TO
CERTIFICATES.
(a) IN GENERAL.—Section 401(h) of the Federal
Aviation Act of 1958 (49 U.S.C. 1371(h)) is amended to
read as follows:
‘‘(h) TRANSFER OF CERTIFICATE.—
‘‘(1) APPROVAL
REQUIRED.—No air carrier
may transfer a certificate issued under this section
authorizing the carrier to engage in foreign air
transportation or any portion of such a certificate
unless the carrier has submitted to the Secretary an
application for approval of the transfer and the Sec-
retary has approved the transfer under this sub-
section.
‘‘(2) OPPORTUNITY FOR COMPETING PROPOS-
ALS.—Not later than 180 days after the date of the
enactment of the Airline Competition Enhancement
and Passenger Protection Act of 1993, the Secretary
shall modify the rules promulgated under subsection
(p) to establish procedures for ensuring that, in any
case in which an air carrier has applied under this
subsection for approval of a transfer of a certificate
to another air carrier, all other air carriers inter-
ested in obtaining the certificate or any portion
thereof are provided an opportunity to submit, to the
carrier seeking to transfer the certificate and the
Secretary, proposals for obtaining the certificate or
portion.
‘‘(3) APPROVAL
IF
NO
COMPETING
PROPOS-
ALS.—If no proposal to obtain a certificate or por-
tion thereof is submitted to the Secretary pursuant
to paragraph (2), the Secretary, subject to para-
graph (5), shall approve the proposed transfer of the
certificate for which approval was sought under
paragraph (1) if the Secretary determines that the
proposed transfer is consistent with the public
interest.
‘‘(4) APPROVAL STANDARD IF COMPETING PRO-
POSALS.—If 1 or more proposals to obtain a certifi-
cate or portion thereof are submitted to the Sec-
retary pursuant to paragraph (2), the Secretary,
subject to paragraph (5), shall approve the proposed
transfer of the certificate for which approval was
sought under paragraph (1) or the proposal or pro-
posals submitted under paragraph (2) which the
Secretary determines are consistent with the public
interest and provide the maximum enhancement of
the public interest, unless the Secretary determines
that the proposed transfer or proposal or proposals,
as the case may be, do not include a purchase price
or other consideration that is fair. The Secretary
shall disapprove the proposed transfer and all such
proposals if the Secretary determines that none of
them would be consistent with the public interest.
‘‘(5) SERVICE
REQUIREMENT.—The Secretary
may not approve the transfer of a certificate to pro-
vide service on a route in foreign air transportation
issued to an air carrier under this section unless the
air carrier has provided the service for at least 1
year.
‘‘(6) PUBLIC INTEREST FACTORS.—In making
a determination with respect to public interest under
paragraphs (3) and (4), the Secretary shall consider
as being in the public interest the following factors:
‘‘(A) The factors listed in section 102 of
this Act.
‘‘(B) The enhancement of the financial via-
bility of each of the air carriers involved in the
transfer.
‘‘(C) The strengthening of smaller air car-
riers in order to enhance competition among air
carriers and inhibit concentration in the air car-
rier industry.
‘‘(D) The enhancement of the trade posi-
tion of the United States in the international
air transportation market.
‘‘(E) A commitment by the carrier trans-
ferring the certificate or portion thereof to use
the funds received from the transfer to provide
air transportation services in other markets.
‘‘(F) The quality of service likely to be pro-
vided to passengers by the carrier to whom the
certificate would be transferred as dem-
onstrated by information submitted under title
XVII of this Act and part 234 of title 14 of the
Code of Federal Regulations.
‘‘(7) PURCHASE PRICE FACTORS.—In making a
determination as to fairness of a purchase price or
other consideration under paragraph (4), the Sec-
retary shall consider the following factors (among
others):
‘‘(A) The price paid or other consideration
provided to obtain the certificate by the air car-
rier seeking to transfer the certificate.
‘‘(B) The period of time the air carrier has
used the certificate and the funds expended by
the air carrier for marketing and for capital im-
provements, facilities, and equipment in order
to use the certificate.
‘‘(8) OPPORTUNITY TO MODIFY PROPOSALS.—If
the purchase price or other consideration included in
a proposal for transfer is determined not to be fair
under paragraph (4), the Secretary shall provide the
person submitting the proposal a reasonable oppor-
tunity to modify the proposal in order that a fair
price or other consideration may be offered. If, after
being provided the opportunity to modify the pro-
posal, the price or other consideration offered by the
person is still not determined by the Secretary to be
fair, the Secretary may approve in accordance with
paragraph (4) the proposed transfer for which ap-
proval was sought under paragraph (1) or any other
proposal or proposals for such transfer submitted
pursuant to paragraph (2).
‘‘(9) EQUAL CONSIDERATION OF PROPOSALS TO
OBTAIN PORTIONS OF CERTIFICATES.—In consider-
ing proposals under this subsection, the Secretary
shall give the same consideration to proposals to ob-
tain only a portion of the routes covered by the cer-
tificate that the air carrier is seeking to transfer as
the Secretary gives to proposals to obtain all of such
routes.
‘‘(10) DEADLINE FOR DECISION.—
‘‘(A) GENERAL
RULE.—The Secretary
shall make a decision to approve or disapprove
transfer of a certificate under this subsection
not later than the 90th day following the last
day of the period for submitting proposals for
obtaining the certificate established pursuant to
paragraph (2).
‘‘(B) EXTENSION.—The Secretary may ex-
tend the 90-day period referred to in subpara-
graph (A) for an additional period not to exceed
60 days if the Secretary determines that such
extension would not have a significant adverse
effect on the financial viability on the carrier
seeking to transfer the certificate under para-
graph (1).’’.
(b) SECRETARY DEFINED.—Section 101 of such Act
(49 U.S.C. App. 1301) is amended by redesignating para-
graphs (37), (38), (39), (40), and (41), and any references
thereto, as paragraphs (38), (39), (40), (41), and (42),
respectively, and by inserting after paragraph (36) the fol-
lowing new paragraph:
‘‘(37) ‘Secretary’ means the Secretary of Transpor-
tation.’’.
SEC. 102. ENHANCEMENT OF COMPETITION RELATING TO
SLOTS.
Title IV of the Federal Aviation Act of 1958 (49
U.S.C. App. 1371–1389) is amended by adding at the end
the following new section:
‘‘SEC. 420. ENHANCEMENT OF COMPETITION WITH RE-
SPECT TO SLOTS.
‘‘(a) APPROVAL OF TRANSFERS REQUIRED.—No air
carrier may transfer to any 1 person in any 1-year period
10 or more of the slots allocated at a high density airport,
unless the carrier has submitted to the Secretary an appli-
cation for approval of the transfer and the Secretary has
approved the transfer under this section.
‘‘(b) OPPORTUNITY FOR COMPETING PROPOSALS.—
Not later than 180 days after the date of the enactment
of this section, the Secretary shall issue regulations estab-
lishing procedures for ensuring that all carriers and other
persons interested in obtaining slots the transfer of which
are subject to subsection (a) or any portion of such slots,
are provided an opportunity to submit, to the air carrier
seeking to transfer such slots and the Secretary, proposals
for obtaining such slots or portion of such slots.
‘‘(c) APPROVAL IF NO COMPETING PROPOSALS.—If
no proposal to obtain slots or a portion of such slots is
submitted to the Secretary pursuant to subsection (b), the
Secretary, subject to subsection (h), shall immediately ap-
tion which is, or owns or controls, the air car-
rier would be citizens of the United States;
‘‘(C) that the laws and regulations of the
foreign country would permit a citizen of the
United States to acquire, under similar terms
and conditions, the same percentage of stock
(by vote or value) of a person who provides in
the foreign country transportation by aircraft of
person or property as a common carrier for
compensation as the percentage of ownership
which the person making the purchase would
have in the air carrier after the purchase;
‘‘(D) that the purchaser is not a corpora-
tion or association of which 50 percent or more
of its stock (by vote or value) is owned or con-
trolled by a government of a foreign country;
‘‘(E) that after the purchase, no person
who is not a citizen of the United States would
have the power to exercise control over the air
carrier;
‘‘(F) that the purchase is consistent with
the national security interests of the United
States; and
‘‘(G) that the purchase is otherwise in the
public interest.
‘‘(b) MAXIMUM REDUCED PERCENTAGE.—The 75
percent stock ownership and control requirement of sec-
tion 101(16) of this Act may not be reduced to less than
51 percent of stock by vote or value under this section.
‘‘(c) APPLICATION.—A person interested in purchas-
ing stock with respect to which subsection (a) applies must
submit an application with respect to such stock purchase
to the Secretary. The application must be in such form
and contain such information as the Secretary may re-
quire by regulation.’’.
(b) DEFINITION
OF
CITIZEN
OF
THE
UNITED
STATES.—Section 101(16)(c) of such Act (49 U.S.C. App.
1301(16)(c)) is amended—
(1) by striking ‘‘voting interest’’ and inserting
‘‘stock (by vote or value)’’; and
(2) by striking the period at the end and insert-
ing ‘‘and over which no person who is not a citizen
of the United States has the power to exercise con-
trol.’’.
(c) CONFORMING AMENDMENT TO TABLE OF CON-
TENTS.—The table of contents contained in the first sec-
tion of the Federal Aviation Act of 1958 is amended by
adding at the end of the matter relating to title IV of such
Act the following:
‘‘Sec. 420. Enhancement of competition with respect to slots.
‘‘(a) Approval of transfers required.
‘‘(b) Opportunity for competing proposals.
‘‘(c) Approval if no competing proposals.
‘‘(d) Approval standard if competing proposals.
‘‘(e) Purchase price factors.
‘‘(f) Opportunity to modify proposals.
‘‘(g) Equal consideration of proposals to obtain portions of slots.
‘‘(h) Limitation on statutory construction.
‘‘(i) Definitions.
‘‘Sec. 421. Reduction of U.S. citizenship voting interest ownership requirement.
‘‘(a) General rule.
‘‘(b) Maximum reduced percentage.
‘‘(c) Application.’’.
TITLE II—AIRLINE PASSENGER
PROTECTION
SEC. 201. REQUIREMENTS RELATING TO BANKRUPTCY AND
FREQUENT FLYER PROGRAMS.
(a) IN GENERAL.—The Federal Aviation Act of 1958
(49 U.S.C. App. 1301 et seq.) is amended by adding at
the end the following new title:
‘‘TITLE XVII—AIRLINE
PASSENGER PROTECTION
‘‘SEC. 1701. BANKRUPTCY PROTECTION.
‘‘(a) INTERIM PROGRAM.—
‘‘(1) IN GENERAL.—If an air carrier becomes a
debtor in a case under title 11, United States Code,
and is not providing air transportation of passengers
between 2 points, covered air carriers providing air
transportation of passengers between such points
must provide, on a space available basis, such air
transportation for persons holding airline tickets
sold by the debtor air carrier or an agent thereof for
such air transportation before the date on which
such case is commenced. Any such transportation
shall be provided at no additional charge.
‘‘(2) LIMITATION
ON
APPLICABILITY.—This
subsection only requires the provision of air trans-
portation for passengers of an air carrier which be-
comes a debtor described in paragraph (1) before
the date of issuance of an order under subsection (d)
or the date of issuance of regulations under sub-
section (e), as the case may be.
‘‘(b) DEVELOPMENT
OF BANKRUPTCY TRANSPOR-
TATION PLANS.—
‘‘(1) ORDER.—Not later than 60 days after the
date of the enactment of this title, the Secretary
shall issue an order authorizing covered air carriers
to develop a plan for providing air transportation for
any person who holds an airline ticket for provision
of such transportation by a covered air carrier who,
after the date of purchase of such ticket, becomes a
debtor in a case under title 11, United States Code.
In issuing such an order, the Secretary shall have
authority to grant an exemption with respect to
interstate air transportation, overseas air transpor-
tation, and foreign air transportation in accordance
with section 414.
‘‘(2) DEADLINE FOR SUBMISSION.—A plan de-
veloped under paragraph (1) shall be submitted to
the Secretary for approval within 180 days after the
date of the enactment of this section.
‘‘(c) TIME LIMIT AND BASIS FOR APPROVAL.—If a
plan is submitted to the Secretary in accordance with sub-
section (b), the Secretary shall approve or disapprove such
plan within 60 days after the date of such submission. If
the Secretary determines that such plan will provide (or
would provide if all covered air carriers participate in im-
plementation of such plan) satisfactory protection for all
persons who hold airline tickets described in subsection
(b), the Secretary shall approve such plan. Otherwise, the
Secretary shall disapprove such plan.
‘‘(d) IMPLEMENTATION OF APPROVED PLANS.—If
the Secretary approves a plan under this section, the Sec-
retary shall issue an order requiring implementation of
such plan by the covered air carriers who submitted such
plan and any other covered air carriers. If there are any
covered air carriers who did not participate in development
of a plan approved under this section, such carriers shall
be treated under such order and plan in the same manner
as carriers who did participate in development of such
plan.