Airline Competition and Lower Fares Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Airline Competition and Lower Fares 
Act''.

SEC. 2. WITHDRAWAL OF SLOTS.

    (a) Written Determination.--Not later than 1 year after the date of 
the enactment of this Act, the Secretary shall issue a separate written 
determination with respect to each of LaGuardia Airport, O'Hare 
International Airport, John F. Kennedy International Airport, and 
Metropolitan Washington Airport (commonly known as Washington National 
Airport) as to whether the demand among air carriers for slots at the 
airport can be met with the slots at the airport that are available to 
the Secretary.
    (b) Initial Withdrawal of Slots.--If the Secretary determines under 
subsection (a) that the demand among air carriers for slots at an 
airport cannot be met with the slots at the airport that are available 
to the Secretary, the Secretary shall withdraw slots at that airport 
from dominant carriers for redistribution pursuant to this Act. Such 
withdrawals shall be made in accordance with section 41714 of title 49, 
United States Code, and other applicable laws and regulations.
    (c) Subsequent Withdrawals.--
            (1) Written determination.--Not later than 2 years after 
        the date of the auction under section 3(a), and every 2 years 
        thereafter, the Secretary shall issue a written determination 
        as to whether the redistribution of additional slots under this 
        Act would significantly increase competition between air 
        carriers.
            (2) Requirement to withdraw slots.--If the Secretary 
        determines under paragraph (1) that the redistribution of 
        additional slots would significantly increase competition, the 
        Secretary shall withdraw slots, in accordance with this 
        section, in a manner which will ensure such an increase. Such 
        withdrawals shall be made in accordance with section 41714 of 
        title 49, United States Code, and other applicable laws and 
        regulations.
    (d) Limitation on Slot Withdrawals.--
            (1) Initial auction.--The Secretary may not withdraw for 
        redistribution under this Act more than 10 percent of the total 
        number of slots held at an airport by a dominant carrier for 
        auction pursuant to section 3(a).
            (2) Subsequent auctions.--The Secretary may not withdraw 
        for redistribution under this Act more than 5 percent of the 
        total number of slots held at an airport by a dominant carrier 
        for auction pursuant to section 3(b).
            (3) Calculation of percentage.--In calculating under this 
        subsection the total number of slots held at an airport by a 
        dominant carrier, the Secretary shall not take into account 
        slots used by the carrier for direct flights to low-competition 
        airports.
    (e) Prohibition on Certain Slot Withdrawals.--The Secretary may not 
withdraw for redistribution under this Act a slot of a dominant carrier 
if the Secretary determines that the slot has been used by the carrier 
for direct flights to a low-competition airport throughout at least 24 
of the preceding 30 months.
    (f) Withdrawal of International Slots.--The Secretary shall not 
withdraw any slots used for international flights.

SEC. 3. AUCTIONS.

    (a) In General.--After a withdrawal of slots pursuant to section 2, 
the Secretary shall auction such slots to new entrants and limited 
incumbents and shall award each slot, pursuant to this section, to the 
highest bidder for that slot.
    (b) Limitation on Use of Slots.--The Secretary, in a manner which 
to the extent practicable represents the times and characteristics of 
all slots available for auction pursuant to this subsection, shall 
ensure that--
            (1) 40 percent of the slots redistributed under this Act at 
        each of LaGuardia Airport, O'Hare International Airport, and 
        Metropolitan Washington Airport; and
            (2) 10 percent of the slots redistributed under this Act at 
        John F. Kennedy International Airport,
are distributed for use for flights to low-competition airports.
    (c) Eligible Bidders.--A person may bid for or hold a slot offered 
at an auction conducted under this section only if that person--
            (1) is a new entrant or limited incumbent;
            (2) is a citizen of the United States, or in the case of a 
        partnership or corporation, organized under the laws of the 
        United States or a State;
            (3) has appropriate safety certification from the Federal 
        Aviation Administration;
            (4) has appropriate economic certification from the 
        Department of Transportation;
            (5) with respect to slots at a particular airport, has not 
        declined any slot at the airport for which the new entrant or 
        limited incumbent was eligible before January 1, 1986;
            (6) is not substantially owned or otherwise controlled, as 
        determined by the Secretary, by an ineligible person; and
            (7) is qualified, as determined by the Secretary, to use a 
        purchased slot.
    (d) Limitation on Transfer of Slots.--A slot obtained by a new 
entrant or limited incumbent at an auction conducted under this section 
may only be sold, leased, traded, or transferred to a new entrant or 
limited incumbent that meets the requirements of subsection (c).
    (e) Changes in Ownership.--If there is a change in the ownership of 
a new entrant or limited incumbent that obtains a slot at an auction 
conducted under this section, the slot shall revert to the Secretary, 
except that the Secretary may allow the new entrant or limited 
incumbent to retain the slot if the Secretary determines that such 
action is in the best interest of promoting competition.
    (f) Limitation on Statutory Construction.--Nothing in this section 
or section 2, including the use of competitive bidding, may be 
construed--
            (1) to alter slots allocation criteria and procedures 
        established by section 41714 of title 49, United States Code, 
        or any other provision of law;
            (2) to diminish the authority of the Secretary under any 
        other provision of law to regulate or reclaim slots; or
            (3) to convey any rights, including any expectation of 
        renewal of a slot assignment, that differ from the rights that 
        apply to other slots at the same airport that were not issued 
        pursuant to this section.
    (g) Revenues.--The Secretary may use funds received from auctions 
held pursuant to this section to provide reimbursement to dominant 
carriers from which slots have been withdrawn under this Act for 
investments made by the carrier in the withdrawn slots and in airport 
improvements at the airport where the carrier held the withdrawn slots. 
Any funds remaining after providing such reimbursements shall be 
credited to the general fund of the Treasury as miscellaneous receipts.

SEC. 4. SLOTS NOT ASSETS.

    (a) In General.--A slot obtained under this Act or any other 
provision of law shall not be considered an asset for any purpose, 
including for collateral, for any agreement which would require 
forfeiture of the slot, or in any bankruptcy proceeding.
    (b) Applicability.--This section shall not apply to any agreement 
or any renewal provision of any agreement in effect on the date of the 
enactment of this Act.

SEC. 5. UNFAIR COMPETITION.

    (a) Determinations Regarding Actions Filed.--
            (1) Actions filed on or before december 31, 1997.--Not 
        later than 6 months after the date of the enactment of this 
        Act, the Secretary shall complete action on all complaints 
        alleging predatory practices by air carriers that were filed 
        with the Secretary on or before December 31, 1997.
            (2) Actions filed after december 31, 1997, and before the 
        date of the enactment of this act.--Not later than 9 months 
        after the date of the enactment of this Act, the Secretary 
        shall complete action on all complaints alleging predatory 
        practices by air carriers that were filed with the Secretary 
        after December 31, 1997, but before the date of the enactment 
        of this Act.
            (3) Actions filed on or after the date of the enactment of 
        this act.--The Secretary shall make an initial finding 
        regarding any complaint alleging a predatory practice by an air 
        carrier that is filed with the Secretary after the date of the 
        enactment of this Act, not later than 30 days after such 
        complaint is filed.
    (b) Restraining Order.--Not later than 15 days after date of an 
initial finding under subsection (a)(3), and after notice and 
opportunity for a hearing, the Secretary shall enjoin, pending final 
determination, any action that is found to be a predatory practice.
    (c) Report to Congress.--Not later than 6 months after the date of 
the enactment of this Act, and every 6 months thereafter, the Secretary 
shall transmit a report to Congress describing complaints received by 
the Secretary which allege predatory practices by air carriers and any 
action taken by the Secretary on those complaints.
    (d) Guidelines.--Not later than 6 months after the date of the 
enactment of this Act, the Secretary, in consultation with the Attorney 
General of the United States, shall issue guidelines defining predatory 
practices and unfair competition practices under this section and under 
title 49, United States Code.

SEC. 6. ACCESS TO FACILITIES.

    The Secretary shall ensure that all airport facilities are 
available to new entrants at fees that are comparable to the average 
fees paid by incumbents.

SEC. 7. EVALUATION OF RULE.

    The Secretary shall initiate a rulemaking proceeding to determine 
whether the application of the 80-percent rule contained in section 
93.227(a) of title 49, Code of Federal Regulations, promotes, hinders, 
or has no effect on airline competition.

SEC. 8. LIMITS ON COMPETITION IN AVIATION INDUSTRY.

    Not later than 1 year after the date of the enactment of this Act, 
and annually thereafter, the Secretary shall transmit to Congress a 
report on barriers to entry, predatory pricing, and other limits on 
competition in the aviation industry.

SEC. 9. PROHIBITION ON INCREASED NOISE.

    The Secretary shall issue such regulations as are necessary to 
carry out this Act. However, the Secretary shall not issue or approve 
any regulation or exemption in carrying out this Act which would 
increase airplane noise in communities surrounding an airport.

SEC. 10. CLARIFICATION OF LEGAL STANDING.

    Section 41713(b) of title 49, United States Code, is amended by 
adding at the end the following new paragraph:
    ``(5) This subsection shall not bar any cause of action brought 
against an air carrier by 1 or more private parties seeking to enforce 
any right under the common law of any State or under any State statute, 
other than a statute purporting to directly prescribe fares, routes, or 
levels of air transportation service.''.

SEC. 11. DEFINITIONS.

    For purposes of this Act, the following definitions apply:
            (1) Dominant carrier.--The term ``dominant carrier'' means 
        a person that holds 10 percent or more of the slots in an 
        airport.
            (2) Limited incumbent.--The term ``limited incumbent'' 
        means a person that holds or operates fewer than 12 slots at a 
        particular airport, not including international slots, 
        Essential Air Service Program slots, or slots between the hours 
        of 2200 and 0659 at Metropolitan Washington Airport or 
        LaGuardia Airport.
            (3) New entrant.--The term ``new entrant'' means a person 
        that does not hold a slot at a particular airport and has not 
        sold or given up a slot at that airport after December 16, 
        1985.
            (4) Person.--The term ``person'' includes a commuter 
        operator or air carrier.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Transportation.
            (6) Slot.--The term ``slot'' means the operational 
        authority to conduct one landing or takeoff operation each day 
        during a specific hour or 30 minute period at LaGuardia 
        Airport, O'Hare International Airport, John F. Kennedy 
        International Airport, or Metropolitan Washington Airport.
            (7) Low-competition airport.--The term ``low-competition 
        airport'' means an airport that--
                    (A) is not classified as a large hub; and
                    (B) the Secretary determines has substantially less 
                service than average or substantially higher than 
                average airfares.

Summary: Airline Competition and Lower Fares Act - Directs the Secretary of Transportation to determine whether the demand among air carriers for slots at LaGuardia Airport, O'Hare International Airport, John F. Kennedy International Airport, and Metropolitan Washington Airport (commonly known as Washington National Airport) can be met with the slots available to the Secretary.  Requires the Secretary, if the demand among dominant air carriers for slots at such an airport cannot be met with the slots available to the Secretary, to withdraw from such carriers up to ten percent of such slots at that airport for redistribution to new entrants and limited incumbents through auction on a competitive bidding basis, as long as the redistribution of the additional slots significantly increases competition between air carriers. Prohibits withdrawal of any slots used for international flights or for direct flights to a low-competition airport. 
(Sec. 4) Prohibits slots obtained under this Act from being considered an asset (including for collateral) for any agreement which would require its forfeiture, or in any bankruptcy proceeding. 
(Sec. 5) Directs the Secretary to complete action on all complaints alleging predatory practices by air carriers that were filed with the Secretary on or before December 31, 1997, and after such date, but before the enactment of this Act.  Directs the Secretary, after notice and opportunity for a hearing, to enjoin any action that is found to be a predatory practice.  Directs the Secretary to report biannually to the Congress about such complaints. 
(Sec. 8) Directs the Secretary to initiate a rulemaking to determine whether the application of the 80-percent rule with respect to the allocation of airport slots promotes, hinders, or has no effect on airline competition. 
Directs the Secretary to report annually to the Congress on barriers to entry, predatory pricing, and other limits on competition in the aviation industry. 
(Sec. 9) Prohibits the Secretary from issuing or approving any regulation or exemption in carrying out this Act which would increase airplane noise in communities surrounding an airport. 
(Sec. 10) Amends Federal aviation law provisions prohibiting State regulation of air prices, routes, and services to declare that such provisions shall not bar a cause of action brought against an air carrier by one or more private parties seeking to enforce any right under the common law of any State or State statute, other than a statute purporting to directly prescribe fares, routes, or levels of air transportation service.