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DEPARTMENT OF TRANSPORTATION PLANS TO FORMALLY LIMIT ILLEGAL AIR FARE PRICING, PRACTICES

The U.S. Department of Transportation plans to get serious about attacking anti-competitive practices that have boosted air fares at many of the nation's airports, a top department official said Friday.

The DOT used to be able to persuade offending airline executives to stop illegal predatory practices aimed at forcing their competitors out of some markets, said Patrick V. Murphy Jr., deputy assistant secretary for aviation and international affairs.

"But now we are no longer convinced that informal actions are sufficient," Murphy said. "We're going to issue policy guidelines on these matters and then pursue enforcement actions."

Murphy's announcement came at a day-long summit on airline competition, which business leaders and airport operators used to bemoan industry practices that boost prices at large "hub" airports and in midsized cities such as Buffalo.

Major airlines refused to take part in the summit, which was sponsored by Business Travel Contractors Corp.

The panelists appeared to reach a consensus that government has to do something to lower air fares.

"It appears that government and business and industry leaders are moving in the same direction," said Kevin Mitchell, president of the Business Travel Contractors.

Summit participants detailed all sorts of allegedly anti-competitive practices engaged in by big airlines.

Bob Rowen, vice president of Reno Air, noted that when Spirit Air began service between Detroit and Boston, Northwest Airlines cut fares on that route by half. Northwest did that even though Spirit was flying only one small jet a day on the route, leaving most of the business on the route to Northwest.

Northwest's intent was to prevent Spirit from getting a toehold on the route. "The predatory actions are becoming more and more blatant," Rowen said.

Others charged that the major airlines act together in setting fares.

Kenneth W. Paulin Jr., assistant vice president and manager of corporate purchasing and travel at M&T Bank, noted that when one major airline recently announced a fare increase, the rest of the industry followed -- and then followed again when fares were cut.

"If that isn't evidence of price-fixing, what is?" Paulin asked.

Recent DOT studies have shown that Buffalo has among the highest air fares in the country, which is why New York congressmen have been particularly aggressive in pushing for lower fares.

Reps. Louise M. Slaughter, D-Fairport, and Charles E. Schumer, D-Brooklyn, plan on introducing comprehensive legislation to address the fare situation. Rep. Jack F. Quinn, R-Hamburg, has said he is considering sponsoring legislation, too.

Rep. John J. LaFalce, D-Town of Tonawanda, has introduced a bill that would encourage the DOT to reallocate the flight "slots" that allow a few major airlines to dominate New York's LaGuardia and Kennedy airports, Chicago's O'Hare Airport and Washington's National Airport.

LaFalce says the slot system bars new, low-fare airlines from serving major Northeastern airports, making those airlines reluctant to enter other markets such as Buffalo.

LaFalce's bill drew praise at Friday's event. "We support any approach that encourages DOT to reassign slots," said Ed Faberman, executive director of the Air Carriers Association of America, which represents small carriers.

The law allows slots to be reassigned only in "exceptional circumstances," but LaFalce's bill would strike that language. That's important because "DOT has read the exceptional circumstances clause very narrowly," Faberman said.

The bill that Schumer and Mrs. Slaughter are writing would go further than LaFalce's effort, directly encouraging the DOT to withdraw slots from established carriers.

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