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OST-98-3713

Statement of the Department of Transportation’s Enforcement Policy Regarding Unfair Exclusionary Conduct in the Air Transportation Industry

OST-98-3713 | April 6, 1998

STATEMENT OF ENFORCEMENT POLICY REGARDING UNFAIR EXCLUSIONARY CONDUCT

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This notice sets forth a proposed Statement of the Department of Transportation’s Enforcement Policy Regarding Unfair Exclusionary Conduct in the Air Transportation Industry. By this notice, the Department is inviting interested persons to comment on the statement. The Department is acting on the basis of informal complaints.

Press Release | Summary Document

By: Rodney Slater

Policy Statement Regarding Unfair Exclusionary Practices

OST-98-3713 | April 10, 1998

Comments of Donald Pevsner

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This evil is rightly noted by the Department as the practice of the seven largest conventional major air carriers to stifle new, low-fare competition in their hub cities by matching fares on an often-below-cost basis; throwing capacity into such markets to drive the load-factors of new-entrants below profitable levels; using frequent-flyer plans, gate leases, commission overrides and similar advantages to consummate the gutting of the intruder. After the debacle and withdrawal, of course, comes the dramatic leap in airfares charged by the dominant major air carriers: back to their previously-unconscionable levels on all but a limited category of heavily restricted excursion fares. To have a self-styled "Airline Competition Committee", dominated by three of the most unscrupulous players in this noxious game (American, United and Delta Airlines),justify the status quo on the grounds that any regulation should be the same sort of anathema to the affected consumer as it is to these price-gouging titans is positively Orwellian, immediately bringing to mind the famous "Ministry of Truth" (which, of course, spread lies) from "1984"...though perhaps the "Ministry of Love" (which waged war) is a more appropriate metaphor.

Policy Statement Regarding Unfair Exclusionary Practices

OST-98-3713

• Comments of Tracy Ambler as agent for New Island Connections d/b/a Ocean Wings - April 10, 1998
• Comments of Bagley Acquisiton Corp. - April 7, 1998
• Comments of Jon Doehr - April 7, 1998
• Comments of R.J. Bourdin - April 9, 1998
• Comments of Kathy Jackson - April 7, 1998
• Comments of William Dottloff - April 7, 1998
• Comments of Janet Zinn - April 7, 1998
• Comments of Travel Agencies Association of Mid-Michigan - April 9, 1998
• Comments of Lesley Doehr - April 8, 1998
• Comments of Evelyn Monica - April 10, 1998
• Comments of Allan Rossmore - April 12, 1998 | The Problem | HTML

Predatory Guidelines - Policy Statement Regarding Unfair Exclusionary Practices

OST-98-3713

Comments of Donald D. Dodge - April 17, 1998

Comments of Christie A. Powers - April 17, 1998

Comments of William Osgood Associates - April 21, 1998

Comments of James Loosen - April 21, 1998

Policy Regarding Unfair Exclusionary Conduct

OST-98-3713

• Comments of Marilyn R. Beyer - April 23, 1998
• Comments of John D. Bauman - April 23, 1998
• Comments of Patrick G. Urbin - April 23, 1998
• Comments of Marilynn Magoon - April 24, 1998
• Comments of Howard J. Turek - April 24, 1998
• Comments of F.D. Mealey - April 24, 1998

Policy Statement on Unfair Exclusionary Practices

OST-98-3713 | April 29, 1998

Comments of Steven Warhol

Unfair Exclusionary Conduct in the Air Transportation Industry

OST-98-3713 | May 8, 1998

Emergency Petition of The Air Transport Association of America for Extension of Time

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The Air Transport Association of America petitions the Department of Transportation, under 49 C.F.R. § 5.25 (1998), on an emergency basis, to extend by 120 days the time for filing comments to the proposed Statement of the Department of Transportation's Enforcement Policy Regarding Unfair Exclusionary Conduct in the Air Transportation Industry

Counsel:  ATA and  Dyer Ellis, Warren Dean, 202-944-3000

Memorandum from Office of Aviation and International Economics - May 7, 1998

Attachment:  Predatory Behavior-Dominated Hub Route-Actual Data

Remainder of  Six documents consist of "Low-Cost Airline Service Revolution" from April 1996 and all the Fare Reports by Quarter - Domestic Airline Fares Consumer Reports

Letter from Shirley Espeland in Support of Policy - May 7, 1998

Predatory - Policy Statement Regading Unfair Exclusionary Practices

OST-98-3713

• Comments of Adam Pongetti - April 28, 1998
• Comments of Michael North - April 29, 1998              
• Comments of Lester Bridgeman - May 5, 1998

Policy Statement Regading Unfair Exclusionary Practices

OST-98-3713

Comments of World Travel Agency - April 23, 1998

Enforcement Policy Regarding Unfair Exclusionary Conduct in the Air Transportation Industry

OST-98-3713 | May 15, 1998

Answer of The Air Carrier Association of America in Opposition to Emergency Petition of The Air Transport Association

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It is in the public interest to leave the comment period unchanged and finalize the pro-competition guidelines. It is time to close the "hunting" season.

Counsel:  Edward Faberman

Answer of Delta Air Lines in Support of Emergency Petition of Air Transport Association

ATA has made a compelling case for an extension of time. As ATA points out, the Department's Notice did not specifically identify the numerous studies, reports, economic analyses and other data which the Department used to reach its tentative findings and conclusions. The Department needs to identify all of the documents on which it relied and to submit copies of those documents in the docket to all participants in order to provide interested parties a meaningful opportunity to comment on the proposed policy statement).

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060

Comments of Frontier Airlines, Inc. in Opposition to the Emergency Petition of the Air Transport Association for Extension of Time

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Frontier believes that the request would serve no purpose other than to delay the issuance of policies long overdue. Adding 120 days to a 60-day comment period would mean that five months will have passed for the original comment period, then another 30days for rebuttal comments, and then several months more for the Department to evaluate comments-before producing a final policy statement. Meanwhile, competition continues to be threatened, and the major airlines enter into more concentrated alliances.

The major airlines ask for citation to studies indicating they are engaging in predatory conduct. Such literature is abundant. They need only look to the writings of Michael Levine authored before he became Vice President of Northwest Airlines, published more than a decade ago. Levine found "predation attempts have been plentiful: a higher-cost incumbent may lower fares to a level apparently lowver than cost and, on occasion, lower than those introduced by a low-cost new entrant, and then refuse to match increases proposed by the new entrant until the new entrant is financially exhausted or withdraws from the route."

By: Paul Dempsey, VP & Dir. Frontier, 303.871.6260

Policy Statement on Unfair Competitive Practices in the Aviation Industry

OST-98-3713 | May 15, 1998

Comments of Various American Airlines Pilots (OST-98-3713-40)

(Editor's Note: The Following is the Full Text of the Form Letter used by American Airlines Pilots)

Dear Mr. Secretary: As an American Airlines pilot, I am writing to you to express my opposition to any effort to reregulate the airline industry.Our pilots and many other unionized airline employees were called upon to make financial sacrifices as the industry struggled to adjust to deregulation. Now the major carriers, including American Airlines, are posting strong financial results. It isn't fair to penalize major carriers for their success by giving an artificial advantage to non-union new-entrant carriers, which have not made the same substantial investments in maintenance and training facilities, quality assurance programs and employee benefits. I urge you to rethink any policy that would tilt the playing field against American Airlines and other major airlines. Otherwise, my fellow employees and I will ultimately pay the price.

Comments of City of Syracuse, Dept. of Aviation

We implore the U.S. DOT to continue to pursue this issue with other agencies like the Department of Justice and also the legislative branches of the federal government to resolve this most important issue. If we are able to protect and maintain a competitive market, everyone stands to benefit.

Policy Statement Regarding Unfair Exclusionary Practices - Statement of Enforcement Policy

OST-98-3713 | May 27, 1998

Comments of The International Association of Machinists and Aerospace Workers

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The IAM strenuously opposes the DOT's proposed policy because it singles out new entrant carriers for preferential treatment at the expense of established major carriers that employ 110,000 highly skilled IAM members and pay a living wage. The proposed policy is seriously at odds with the agency's statutorily mandated responsibilities to promote the economic stability and viability of the industry as a whole, to encourage fair wages and working conditions, and to ensure the highest standards of safety in air commerce. To the contrary, these ill-conceived proposed regulations threaten to again destabilize the industry, punish carriers that pay industry standard wages and jeopardize the margin of safety.

By:  R. Thomas Buffenbarger, 301-967-4503

Policy Statement on Unfair Exclusionary Practices

OST-98-3713

• Comments of Minneapolis Building and Construction Trades Council - May 18, 1998
• Comments of BHI Marketing - May 20, 1998
• Comments of Various Parties
• Comments of Chattanooga Metropolitan Airport Authority - May 26, 1998
• Comments of Ronald Nehring - May 26, 1998
• Comments of Laura Barrett - May 26, 1998
• Comments of Florida State Council - May 25, 1998
• Comments of Northwest Arkansas Regional Airport - May 25, 1998
• Comments of Tallahassee Area Convention and Visitors Bureau - May 26, 1998
• Comments of Sheet Metal Workers International Association - May 27, 1998

Policy Statement on Unfair Exclusionary Practices

OST-98-3713

• Comments of Association of Flight Attendants
• Comments of Mark Staples (Counsel for Montana Tavern Association)
• Comments of Missouri State Representative Roy W. Holland M.D.
• Comments of Frank and Ellen Longo
• Comments of Washington State Hotel and Motel Association
• Comments of Accessible San Diego
• Comments of Paul Mueller Company
• Comments of John McIntosh
• Comments of International Brotherhood of Electrical Workers
• Comments of Lew and Carol Childs
• Comments of David Koch (Shady Inn, Inc.)
• Comments of Missouri State Representative Gary Burton
• Comments of Carpenter Communication Consultants
• Comments of Michigan State Building and Construction Trades Council
• Comments of Kathleen Vitale

Policy Statement on Unfair Exclusionary Practices

OST-98-3713

• Comments of National Consumer League
• Comments of SWBR Architects
• Comments of Michael O. Ferguson
• Comments of Milton R. Snyder, III
• Comments of City of Brownsville
• Comments of Dallas AFL-CIO
• Comments of Delaware State Representative Roger P. Roy
• Comments of Kentucky State Senator Richard Sanders, Jr.
• Comments of The Honorable Renona C. Browning (38th Judicial District, Kentucky)
• Comments of Seattle Hotel Association
• Comments of Betty Kirkland
• Comments of Joyce P. Meunch
• Comments of N.E. Reed, Edmonson County Judge/Executive
• Comments of Hodges Bonded Warehouse
• Comments of McDonough Homes
• Comments of Marshall Mungle
• Comments of Stand Up
• Comments of Richard Codey, New Jersey Senate
• Comments of Northwest Strategies
• Comments of Catharine Crawford
• Comments of Marie Cooper
• Comments of Easton-Babcock Development
• Comments of Rochester Chamber of Commerce
• Comments of Mobile Convention and Visitors Corporation
• Comments of Readmore Communications
• Comments of Thumb Area UAW Cap Council
• Comments of Edmonson County Court Clerk Richard Sanders
• Comments of Air Transport Local of Nations Lodge 2643
• Comments of International Association of Machinists and Aerospace Workers
• Comments of Fort Smith Airport Commission

Policy Statement on Unfair Exclusionary Practices

OST-98-3713

• Comments of Applied Digital Sytems, Inc.
• Comments of AM&M Companies, LTD
• Comments of  Chattanooga Metropolitian Airport Authority
• Comments of  Missouri State Senator Danny Staples
• Comments of J. Ed Bell, President EBD
• Comments of  NJ Assemblyman Francis Bodine
• Comments of  American General Life and Accident Insurance Company
• Comments of Creve Couer Olivette Chamber of Commerce
• Comments of  Alexander Keyes, Keystone Architects
• Comments of  Boston Convention and Visitors Bureau
• Comments of  John Pflug
• Comments of  Bank One Texas, N.A.
• Comments of  Western Leisure, Inc.
• Comments of Multi-National Foods
• Comments of  Florida Chamber of Commerce
• Comments of  Armato and Associates, Inc.
• Comments of  The Game of Work, Inc.
• Comments of The Business Travel Coalition
• Comments of  Amalgamated Transit Union Local 308
• Comments of  The Henderson Company
• Comments of  Lange, Simpson, Robinson & Langville LLP
• Comments of  PC Industries, Inc.
• Comments of  John Nolan
• Comments of  Culligan Water of Montgomery
• Comments of  Morris Insurance
• Comments of  Furniture Management Coalition
• Comments of  Key Decisions
• Comments of  Business Aviation
• Comments of  The Patrician Bed and Breakfast Inn
• Comments of   Angelton Chamber of Commerce
• Comments of  The Computer Broker, Inc
• Comments of  Career Dynamics International, Inc.
• Comments of Service Distributing Inc.
• Comments of  William Boyd
• Comments of Diana Parks

Policy Statement on Unfair Competitive Practices

OST-98-3713 | Filed June 11, 1998

Comments of The Heritage Foundation

Attachment:  "20TH ANNIVERSARY OF AIRLINE DEREGULATION: CAUSE FOR CELEBRATION, NOT RE-REGULATION," The Heritage Foundation Backgrounder, April 22, 1998, Adam D. Thierer.

[Editor's Note: Attachment is a Publication Included in The Heritage Foundation's Public Comments in this Docket.]

Policy Statement Regarding Unfair Exclusionary Practices

OST-98-3713 | June 23, 1998

Statement of National Business Travel Association

By:  NBTA

Policy Statement on Unfair Competitive Practices

OST-98-3713 | (Prior Testimony Entered before Congress)

Charles Hunnicutt

• Testimony before the Senate Committee on Commerce, Science and Transportation (Las Vegas, NV April 16, 1998)
• Testimony before the Subcommittee on Transportation and Infrastructure (April 30, 1998)
• Testimony before the Senate Commerce, Science and Transportation's Aviation Subcommittee (June 4, 1998)

Nancy McFadden

• Testimony before the Senat eCommerce, Science and Transportation's Aviation Subcommittee (April 23, 1998)
• Testimony before the House Committee on the Judiciary (May 19, 1998)

Patrick Murphy

• Testimony before the Senate Commerce, Science and Transportation's Subcommittee on Aviation (October 28, 1997)
• Testimony before the Senate Appropriations' Subcommittee on Transportation (March 5, 1998)
• Testimony before the Senate Appropriations' Subcommittee on Transportation (May 5, 1998)

Enforcement Policy Regarding Unfair Exclusionary Conduct

OST 98-3713 | July 1, 1998

Comments of Midwest Express Airlines, Inc.

While Midwest Express understands the Department's desire to be proactive in the development of a competition policy, it cannot support the proposed guidelines. This is not to say Midwest Express condones every airline practice justified in the name of deregulation. However, adopting vague guidelines aimed at protecting only one class of air carrier in connection with only one type of allegedly anticompetitive conduct is not sound transportation policy. Midwest Express also views the DOT's guidelines as inconsistent with the principles of airline deregulation.

Counsel:  Bagileo Silverberg, Robert Silverberg, 202.944.3300

Proposed Rules on Unfair Exclusionary Conduct

OST-98-3713 | July 21, 1998

Comments of Delta Air Lines

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The proposed policy statement and guidelines are anti-consumer and anticompetitive. They will inevitably discourage price competition and reduce the availability of low fare options for the traveling public throughout the country. The proposal is a misdirected attempt to shield from competition by regulatory fiat a limited class of airlines that should not be artificially protected from the rigors of competition. The guidelines represent bad law and bad policy and should be withdrawn.

• Exhibit DL-1: Delta Is a Significant Provider of Low Fares
• Exhibit DL-2: Annually, over 30 Million or 56% Of Delta's Domestic Coach Passengers Travel on Deep Discounted Fares
• Exhibit DL-3: 32 Million Domestic Passengers Flew on Deep-Discount Fares Averaging Less than $100 Each Way
• Exhibit DL-4: In 1995, Delta Did Not Match the New Entrant's ATL-MCO (Orlando) Fares, Resulting in a 13% Decrease in Local Revenue and a 35% Decrease in Local Passengers
• Exhibit DL-5: The Result of Matching Fares and Increasing Capacity in the ATL-MCO Market was a 61% Increase in Local Revenue and a 111% Increase in Local Passengers
• Exhibit DL-6: Delta Segment Profit in ATL-MCO Increased as a Result of These Actions
• Exhibit DL-7: The DOT Rules Would Have Denied 235,000 Passengers Deep Discount Fares on Their Carrier of Choice in the Atlanta-Orlando Market
• Exhibit DL-8: In 1995, Delta Did Not Match the New Entrant's ATL-IAD (Dulles) Fares, Resulting in a 6% Increase in Local Revenue and a 22% Decrease in Local Passengers
• Exhibit DL-9: The Result of Matching Fares and Increasing Capacity in the ATL-IAD Market was a 56% Increase in Local Revenue and a 7% Increase in Local Passengers
• Exhibit DL-10: Delta Segment Profit in ATL-IAD Increased as a Result of These Actions
• Exhibit DL-11: The DOT Rules Would Have Denied 95,000 Passengers DeepDiscount Fares on Their Carrier of Choice in the ATL-IAD Market
• Exhibit DL-12: In 1995, Delta Did Not Match the New Entrant's ATL-FLL (Ft.Lauderdale) Fares, Resulting in a 5% Decrease in Local Revenue and a 32% Decrease in Local Passengers
• Exhibit DL-13: The Result of Matching Fares and Increasing Capacity in the ATL-FLL Market was a 39% Increase in Local Revenue and a 79% Increase in Local Passengers
• Exhibit DL-14: Delta Segment Profit in ATL-FLL Increased as a Result of These Actions
• Exhibit DL-15: The DOT Rules Would Have Denied 191,000 Passengers Deep Discount Fares on Their Carrier of Choice in the ATL-FLL Market

Counsel: Shaw Pittman, Robert Cohn, 202.663.8060

Enforcement Policy Regarding Unfair Exclusionary Conduct

OST-98-3713

Comments of The Economic Strategy Institute

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Twenty years of deregulation have produced a vibrant, highly competitive industry that has provided consumers with greater choice at price levels -that continue to decline. The fact that some carriers fail or that some routes have few competitors does not provide a basis for a proposal that effectively represents re-regulation of the industry.

Appendix A:  Hub Pricing Analysis

By:  Scott Gibson, Visiting FEllow, 202-289-1288

Policy Statement on Unfair Competitive Practices

OST-98-3713 | July 23, 1998

Editor and Paralegal Note:  Because filings received in this Docket are "Comments" - The Docket Section is not required to post a "Board" copy to the Public.  When filing comments, replies, answers, objections etc.,  please provide extra copies for everyone who anxiously wait for all documents - especially Counsel that does send a paralegal on a daily basis.

If you would like to file any document with Daily Airlines Filings -   send the file as an attachment in your e-mail.  Any format is accepted.   Send to info@airlineinfo.com  Please do Not send a filing by fax because - though equally appreciated - a fax copy does not scan well and renders the OCR process for HTML useless.

Filings that are sent in electronic submission cuts down the time your Editor has to hunt down all those darn footnotes when converting to HTML!!!!!!!  It also allows for Zero mistakes.  Besides, wouldn't it be great to see all the charts in color and with a searchable content?

Comments of United Retired Government Employees Local Number One (U.R.G.E.)

By: Donald Phillips, U.R.G.E.

Proposed Statement of Enforcement Policy on Unfair Exclusionary Conduct

OST-98-3713

Comments of the Air Transport Association of America - July 23, 1998 (In FAST PDF - Will download and print quickly!)

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• Appendix A: Statement of Professors Ordover & Willig (In FAST PDF - Will download and print quickly!)
• Appendix B: Statement of Daniel Kasper (In FAST PDF - Will download and print quickly!)
• Appendix C: Charts of Airline Yields (In Color!)
• Appendix D:

By:  ATA and Cleary Gottlieb

Comments of Alaska Airlines, Inc. - July 24, 1998

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By: Keith Loveless, Assoc. Gen'l Counsel, Alaska Airlines, 206.431.5102

Comments of Allied Pilots Association - July 23, 1998

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By: Captain Richard LaVoy, Pres. APA

Comments of American Airlines, Inc. in Opposition to Proposed Statement - July 23, 1998

• Declaration of Professor William Baumol 
• Figure 1 
• Figure 2
• Figure 3

By: George Nicoud III, Sr. Attorney, American, 817.967.3812

Comments of America West Airlines

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Counsel:  America West and Baker Hostetler, Joanne Young, 202-861-1532

The American Antitrust Institute's Comments - July 24, 1998

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By: Albert Foer, AAI, 202.362.8704

Comments of American Express Travel Related Services Company, Inc. - July 21, 1998

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By: Edward Gilligan, Pres. Corporate Services, AETRSC, 212.640.5395

Comments of the American Society of Travel Agents - July 24, 1998

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By: Paul Ruden, Sr. VP Legal and Industry Affairs, ASTA

Comments of the Attorneys General of the States of Arkansas, Connecticut, Florida, Iowa, Kansas, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New York, North Carolina, North Dakota, Oklahoma, Oregon, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming

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By: Thomas Miller, Iowa Atty. General, 515.281.8414

Comments of Continental Airlines - July 24, 1998

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Counsel:  Continental and Crowell Moring, Bruce Keiner, 202-624-2615

Comments of Northwest Airlines - July 22, 1998

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• Attachment A: Statement of Dr. Laura D'Andrea Tyson
• CV for Dr. Tyson
• Attachment B: Statement of Dr. Franklin Fisher
• CV for Dr. Fisher
• Attachment C: Statement of Dr. George Eads
• Appendix:  Reviews of Individual Studies and Reports
• CV for Dr. Eads
• Attachment D: Northwest Data in Support of Comments

By: Elliott Seiden, VP Law and Gov't Affairs, Northwest, 202.842.3193

Comments of Norman Mineta - July 24, 1998

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Comments of Pro Air

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By: Kevin Stamper and Bradley Toney, Pro Air, 206.623.2000

Comments of Spirit Airlines - July 24, 1998

• Attachment:  Statement before the US Senate Committee on Commerce, Subcommittee on Aviation, April 23, 1998
• Attachment:  Statement before the US House Committee on the Judiciary, May 19, 1998

By:  Mark Kahan, 810-779-2700

Comments of Sun Country Airlines - July 23, 1998

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• Attachment 1: Own-Risk Charter Services
• Attachment 2: Northwest 1998 Response to Own-Risk Charter Services

By: James Olson, VP Strategic Planning, Sun Country, 612.681.3900

Comments of Sun Pacific International

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Counsel:  Sher Blackwell, Mark Atwood

Letter Seeking Support from Gerald Greenwald, Chariman and CEO United Airlines, Inc. to James Sabol - July 14, 1998

• Attachment: Call to Action

By: Gerald Greenwald, Chariman and CEO United

Comments of United Air Lines - July 24, 1998

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Counsel:  United and Ginsburg Feldman, Joel Burton, 202-637-9130

Policy Statement on Unfair Competitive Practices

OST-98-3713 | July 28, 1998

Comments of the Air Line Pilots Association

Counsel:  ALPA, Russell Bailey

Comments of the International Air Transport Association

By:  IATA, David O'Connor

Comments of Southwest Airlines

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Editor's Note:  Thank you counsel for providing an electronic copy

Counsel:  Southwest, Robert Kneisley

Comments of Woodside Travel Trust

It is high time for debate and reflection to end and for the Government to undertake its duty to protect the travelers of this country. The Department of Transportation should immediately finalize the Enforcement Policy and take swift and major action against those carriers engaging in anticompetitive behavior in order to ensure the future of airline competition and reasonably priced airfares for all travelers.

Counsel: Ungaretti Harris, Edward Faberman, 202.778.4460

Policy Statement on Unfair Competitive Practices

OST-98-3713 | July 24, 1998

Comments of the Regional Airline Association

By: Walter Coleman, Pres., 202.857.1170

Comments of Those in Suppport of "the Olson Family" (Air Carrier Association of America)

Through the pen of Brian's sister, "Susie," we've taken the liberty to tell the real story. If the Air Transport Association really wants to help "Brian" get to Florida, perhaps it, or any of its members or the "independent" groups they fund could take Brian to the next "lobbying" retreat held in Florida.

• Attachment: Vacation Canceled
• Attachment: Letter from Susie Olson, Older Sister of Dejected Looking Brian Olson

Counsel: ACA and Friends of "the Olson Family", Michelle Faust, 202.778.4442

Policy Statement on Unfair Exclusionary Practices

OST-98-3713 | July 31, 1998

Comments of The Air Carrier Association of America

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• Exhibit 1:  Major Alliances' Market Share at Major Hubs
• Exhibit 2:  HHI for 17 Hub Airports of 6 Largest Arilines in Comparison to 33 Other Airports
• Exhibit 3:  Average Fare Premium Charged at 17 Major Hub Airport
• Exhibit 4:  Delta Air Lines Press Release, March 30, 1998, Skymiles Promotion
• Exhibit 5:  Continental Airlines and Continental Express Advertisement, Extra Bucks

Counsel: Edward Faberman, 202.778.4462

Policy Statement on Unfair Exclusionary Practices

OST-98-3713 | August 5, 1998

Comments of Baylen Linnekin

Enforcement Policy Regarding Unfair Exclusionary Conduct in the Air Transportation Industry

OST-98-3713 | September 2, 1998

Re:  Comments of Congressmen William Lipinski and James Oberstar

Proposed Rules Regarding Unfair Exclusionary Conduct

OST-98-3713 | September 8, 1998

Notice Extending Comment Period - Posted at 3:20 p.m.

The Department has now decided, on its own initiative, to extend the period for reply comments from September 8, 1998 to September 25, 1998. In an effort to encourage a meaningful dialogue on the issues involved in the policy statement, the Department has conducted meetings with various air carrier parties and several additional meetings are scheduled for the near future. Since our regulations require that a written summary of the meetings be placed in the docket, we have decided to extend the due date for reply comments to more easily accommodate the submission of the written summaries and to give commenters an opportunity to file comments after reviewing the documents.

By:  Charles Hunnicutt

Reply Comments of The Air Transport Association of America

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The comments submitted to DOT both in opposition to and in support of the Rules confirm that the Rules are bad law and bad policy. They are bad policy because the Rules will have profound anticompetitive and anti-consumer effects, and because the Rules are so vague and confusing that attempts to comply will likely lead to less, not more, competition. They are bad law because the scope of the Rules would exceed DOT's authority and because DOT has committed fatal procedural errors in promulgating the Rules.

• Appendix A:  Reply Statement of Janusz Ordover and Robert Willig
• Appendix B:  Reply Statement of Daniel Kasper
• Appendix C:  Government Intervention in the Airline Industry REquested by Supporters of the Rules

All Appendices in FastPDF

Counsel:  ATA and Cleary Gottlieb, Mark Leddy, 202-974-1500

Reply Comments of American Airlines in Opposition to Proposed Statement

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American reads the proposed Statement as calling for comments only on the proposed Statement. Accordingly, American will not burden this already-burgeoning docket with replies to complaints about other matters. Instead, American limits these reply comments to the issue at hand - should the Department adopt the proposed Statement? For the reasons discussed in American's opening comments and the opening and reply comments of the Air Transport Association (in which American joins), and the reasons that follow, even if the Department had the authority to adopt the proposed pricing and capacity rules, it should not do so.

Counsel:  American, George Nicoud, 817-967-3812

Reply Comments of America West Airlines

In its initial comments, America West expressed the view that Departmental action to eliminate system constraints creating direct preferences for the prederegulation major carriers would have a substantial impact on competitive opportunities and provide, greater consumer benefits than a policy designed to provide special pricing protection to a small and select group of "new entrant" carriers. America West also expressed its concern with the pace of change and urged the Department to use its power under Section 41712 as well as its legislative program to increase access to slot constrained airports; to support legislation permitting exemptions from the perimeter rules at both Reagan Washington National Airport and New York's LaGuardia Airport to enable post-deregulation carriers based in the West to have competitive access to these airports from their primary hubs; to enable post-deregulation carriers to have a first right on new common use facilities at airport rates reflecting average airport costs and to obtain better access to existing gates and overnight parking facilities; and to immediately separate CRS booking fee issues from other more complicated CRS issues and move forward quickly with a proposed rule to prevent CRS abuses that benefit CRS owner airlines.

Counsel:  America West and Baker Hostetler, Joanne Young, 202-861-1532

Reply Comments of Continental Airlines

The initial comments demonstrate that the proposed enforcement policy is bad for all segments of the aviation industry. First and foremost, the Department's proposal is bad for consumers, who would face higher fares and reduced capacity while losing the economic benefits of hub efficiency. The proposal is bad for competition, which would be artificially constrained; bad for hub airports, which would receive less frequent service than they now receive; bad for small and medium-sized communities, which may lose present or future service; and bad for major airlines, which would lose the opportunity to meet consumer demand. As an airline which has overcome rigors of competition with the Big Three airlines through its managerial know-how, financial investment and customer service to become the fifth largest U.S. carrier, Continental agrees with the Air Transport Association that it would be a "tragic mistake" for the Department to commemorate the 20th anniversary of aviation deregulation by adopting a policy that would undermine the very benefits deregulation has produced.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202-624-2500

Reply Comments of Delta Air Lines

The comments also demonstrate that the adverse impacts on low fare competition will go well beyond local city-pairs and will adversely undermine existing competition among network carriers. While preventing major carriers from matching new entrant low fares, traffic and revenue will be diverted from the major carriers, resulting in heavy losses of local traffic necessary to support service from smaller spoke cities. By preventing major carriers from filling seats, the proposed rules will affect the efficiency of network flying and result in a shift of aircraft to markets not served by the new entrant. Such a result may well be beneficial to the new entrant by protecting it from competition, but consumers will be deprived of network service and low-fare options.

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060

Reply Comments of Midwest Express Airlines

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Nothing contained in the voluminous record compiled in this Docket has caused Midwest Express to swerve from its fundamental position that the Department currently has all the legal tools needed to prohibit airline conduct that is adjudged to be either anticompetitive or an unfair practice. The guidelines are totally unnecessary to achieve this purpose. However, recognizing the Department's interest in taking a more active posture in combating unfair or anticompetitive conduct, Midwest Express once again urges the Department to coordinate its efforts with those of the Department of Justice to insure the industry remains healthy by challenging and eliminating conduct that is appropriately determined to be illegal.

Counsel:  Bagileo Silverberg, Robert Silverberg, 202-944-3300

Reply Comments of Norman Mineta

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Section 411 gives DOT the authority to act by regulation and/or enforcement against unfair and deceptive practices and unfair methods of competition. That authority includes instances in which the action is taken against a practice which violates anti-trust law; it includes instances in which the action is taken against practices which are simply outside the ambit of anti-trust law (for example, proper notice to passengers of terms and conditions of carriage); and it includes actions taken which are consistent with anti-trust principles, whether or not an anti-trust violation is alleged or has occurred (for example, the CRS rules promulgated by the Department). What Section 411 does not give the Department the authority to do is to take action against a practice which anti-trust law expressly holds to be legal.

Reply Comments of Northwest Airlines

The proposed rule would produce adverse consequences much worse than any imaginable disease. Dozens of expert analysts and economists have advised the Department that the proposal would be harmful to competition and to consumers. Even supporters of the Department's proposal admit that there are serious problems with it. The comments, including those of the author and floor leader of the key Civil Aeronautics Board Sunset Act, also demonstrate that the Department does not have the authority to propound an anti-predation policy, such as this one, which conflicts with the antitrust laws.

• Attachment 1:  Statement of Michael Carnall
• Attachment 2:  Competitor Analysis:  Vanguard Airlines

Counsel:  Northwest, Megan Rae Poldy, 202-842-3193

Proposed Policy Statement Regarding Unfair Exclusionary Conduct in the Air Transportation Industry

OST-98-3713 | September 8, 1998

Reply Comments Submitted by the Attorneys General of Arkansas, Connecticut, Florida, Idaho, Iowa, Kansas, Michigan, Minnesota, Missouri, Montana, Nevada, New York, North Carolina, North Dakota, Oklahoma, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming

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These attorneys general support the Department of Transportation's effort to address unfair marketing strategies in the airline industry, including the active enforcement of §41712 with the goal of generating more choice and more competition for the benefit of all air travelers.

Comments of The George Washington University

Without using the term monopoly, the guidelines assume a monopoly. There can be neither predatory behavior nor exclusionary behavior outside the realm of a monopoly. First it must be shown that markets can be monopolized. This falls under the concept of the "relevant market." This goes to one of the arguments that needs to be in this debate and that is what is the relevant market and how is it decided.

By: Darryl Jenkins

Comments of Pro Air

The Statement will not have an adverse effect on service to small and medium-sized communities. Some dominant carriers claim that the Statement threatens the air service that is provided to small and medium-sized communities. This disingenuous argument ignores the fact that there is such a lack of meaningful competition in the vast majority of these communities that consumers there are paying some of the highest air fares in the country for substandard service. The solution to this problem is to encourage competition by new entrants rather than to further entrench the dominant carriers who have been unwilling in the past to provide reasonable service at a fair price. When a low-fare carrier enters a new small or medium-sized market, the dominant carrier often diverts traffic from the new entrant by temporarily lowering fares and increasing capacity. This almost always results in the route losing its economic viability for the new entrant, and the new service is either reduced or terminated. In the absence of the adoption of the Statement, low-fare carriers will continue to be driven out of these small markets, thereby further entrenching the monopolies of the dominant carriers.

By:  Bradley Toney

Proposed Rule of Unfair Exclusionary Practices

By:  Charles Robb

By:  Leslie Head

Proposed Rule on Unfair Exclusionary Practices

OST-98-3713

September 14, 1998

Comments of The American Antitrust Institute

Today's world of scheduled air carriers, working out of a hub-and-spoke network, is fundamentally different from the world in which Areeda and Turner and others debated about cost-based tests of predation. In this world, the very concept of "a" cost for a particular spoke is a chimera. And when the airlines argue that we already have antitrust laws that deal sufficiently with price predation, on the basis of a cost-based test, they are wrongly implying that the antitrust laws offer a more certain method for coping with air hub predation.

By:  Albert Foer, 202-362-8704

Proposed Rule on Unfair Exclusionary Practices

OST-97-3713	September 14, 1998	Re: July 29, 1998 DOT Meeting with American Airlines, Inc.
		Attachment: DOT Proposed Pricing and Capacity Rules
		Re: July 17, 1998 DOT Meeting with Business Travel Contractors Corporation
		Re: July 28, 1998 DOT Meeting with Continental Airlines, Inc.
		Re: July 21, 1998 DOT Meeting with Delta Air Lines, Inc.
		Re: July 23, 1998 DOT Meeting with Northwest Airlines, Inc.
		Attachment: Competitor Analysis of Vanguard Airlines

By: [Unsigned DOT Publication]

Policy Statement on Unfair Competitive Practices

Policy Statement Regarding Unfair Exclusionary Conduct

Unfair Exclusionary Practices

OST-98-3713

September 30, 1998

Errata Statement of Spirit Airlines, Inc.

Spirit Airlines, Inc. hereby submits this errata statement to correct clerical errors contained in its September 25, 1998 Reply and in the report attached as Appendix A to the Reply.

Counsel:  Mark Kahan, 810.779.2700

OST-98-3713	September 21, 1998	Business Travel Coalition
		Service List

In our view, it seems appropriate to direct the Policy toward the most extreme responses to new entry where, for example, an incumbent airline loses millions of dollars by offering tens of thousands of seats at or below the ennui entrant's fare level.

Unfair Exclusionary Practices

OST-98-3713

September 29, 1998

Reply Comments in Support by Air Carrier Association of America

Unfair Exclusionary Conduct

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The complaints raised by the ATA parties are without merit. The problem the ATA parties have with the guidelines is neither its purported vagueness nor "re-regulating" effect. The ATA parties are not concerned with whether the guidelines are more general or more specific; their sole concern is warding off any threat to their market dominance. Thus, they continue to make inflammatory and incongruous arguments, hoping that one may stick whether or not it is for the good of the American public.

Counsel:  Edward Farberman, 202.778.4462

Unfair Exclusionary Practices

OST-98-3713

September 28. 1998

Comments of Alfred Khan

Computer Reservation Systems / Unfair Exclusionary Conduct

OST-97-2881 OST-98-3713

October 19, 1998

Minutes between Department Officials and Staff Members and the Air Carrier Association et al

Charles Hunnicutt, the Department's Assistant Secretary for Aviation and International Affairs, and Patrick Murphy, the Deputy Assistant Secretary, told the group that the Department is working on significantly improving its system for collecting and publishing fare and traffic data and hopes to finish this project within two years. The transition will enable the Department to publish real-time data from computer reservations systems rather than the ten-percent sample that it currently publishes a year after the fact. As in all other meetings with interested parties, Mr. Hunnicutt invited those present to file reply comments stating their views and providing supporting evidence and analysis. He acknowledged that major carriers' pricing and capacity strategies are not the only challenge faced by new-entrant carriers and characterized the proposed policy as the Department's first step in addressing problems with competition.

By:  Charles Hunnicutt

Unfair Exclusionary Practices

OST-98-3713

November 9, 1998

Comments of The Savannah Airport Commision

Policy Statement on Unfair Exclusionary Practices

By:  Patrick Graham, Executive Director, 912-964-0514, savaptcomm@aol.com

Unfair Exclusionary Practices

OST-98-3713	November 18, 1998	David M. Patterson - Comment
		George A. Compton - Comment
		Wilcox Travel Cruise & Company - Comment
		Various Parties (3) - Comment(s)
		R. A. Politte - Comment
		Various Parties (10) - Comment(s)
		Various Parties (14) - Comment(s)
		Various Parties (3) - Comment(s)
		Various Parties (3) - Comment(s)

Policy Statement Regarding Unfair Exclusionary Practices

OST-98-3713

November 23, 1998

US Airways - Meeting Summary re Proposed Airline Competition Policy Statement

Enforcement Policy Regarding Unfair Exclusionary Conduct in the Air Transportation Industry

OST-98-3713	December 11, 1998	Motion for Leave to File an Otherwise Unauthorized Document and Surreply of The Air Transport Association of America	Enforcement Policy Regarding Unfair Exclusionary Conduct
		Appendix A:   Surreply of Janusz Ordover and Robert Willig
		Appendix B:   Surreply Comments of Daniel Kasper

Counsel:  ATA and Cleary Gottlieb, Mark Leddy, 202-974-1500

OST-98-3713	December 11, 1998	Motion of Northwest Airlines for Leave to File Surreply Comments and Surreply Comments of Northwest Airlines	Enforcement Policy Regarding Unfair Exclusionary Conduct
		Appendix A:  Resolving the Debate: Comments of the Responses to DOT's Proposed Enforcement Policy by Dr. Laura D'Andrea Tyson

Several commenters, including the Department, failed to submit their comments within the prescribed time limits. Dr. Kahn submitted his comments in an untimely manner. In those comments, he made a number of new arguments, some of which were directed at Northwest specifically. Northwest addresses Dr. Kahn's new arguments in its surreply.

The Department also filed documents after the close of the comment period, supplying its summary of its meeting with the Air Carrier Association on October 19, almost a month after the reply comment period closed, over a month after it supplied the, summaries of all the other meetings it had with airlines, and almost two months after the meeting itself. Several arguments were raised in that meeting for the first time. A more timely submission by the Department would have allowed Northwest to reply to those arguments during the reply period; because it was filed after the reply period was closed, Northwest is forced to submit this surreply out-oftime.

Counsel:  Northwest, Megan Rae Poldy, 202-842-3193

Policy Statement Regarding Unfair Exclusionary Practices - Statement of Enforcement Policy
Regarding Unfair Exclusionary Conduct

OST-98-3713

September 17, 1998

Southwest Airlines - Department Meeting with Southwest Airlines on September 17, 1998

Policy Statement Regarding Unfair Exclusionary Practices

OST-98-3713	January 7, 1999	Additional Reply Comments of The Air Carrier Association of America	Unfair Exclusionary Conduct
		Attachment:   Wall St. Journal Cartoon

Counsel:  ACA, Edward Faberman

Policy Statement Regarding Unfair Exclusionary Practices

OST-98-3713

January 29, 1999 Docketed February 2, 1999

The Reason Foundation - Policy Study on Airline Policy Issues "Airline Deregulation - The Unfinished Revolution"

Ufair Exclusionary Practices

By:  Reason Foundation, Robert Poole, President, Los Angeles, CA

Policy Statement Regarding Unfair Exclusionary Practices

OST-98-3713

September 7, 1998 Docekted February 17, 1999

Meeting Summary of September 7, 1998 with United Airlines

Policy Statement Regarding Unfair Exclusionary Practices - Statement of Enforcement Policy Regarding Unfair Exclusionary Conduct

United believes that the Department and the industry have two different versions of the future. The Department’s public statements indicate a belief that the industry is moving toward being dominated by a few big airlines. The industry, on the other hand, sees the large airlines as struggling for success and having a shrinking market share, unlike airlines like Southwest. Southwest has had a much higher growth rate than the overall industry. Southwest is the largest monopolist today - it has more monopoly markets than the big six airlines combined.  The dialogue has not worked because the Department and the industry interpret existing facts so differently. United thinks there have been a number of industry efforts to achieve a dialogue that have not been successful.

By:  DOT

Policy Statement Regarding Unfair Exclusionary Practices

By:  Randall Bennett

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