Mr. President, the present course of airline deregulation points towards failure. The continuing consolidation and concentration in the industry is contrary to the stated goal of airline deregulation that free and open competition would replace the heavy hand of government regulation and lead to benefits for the consumers.
In reality, there is less and less competition. Eastern, Pan Am, Midway, and Braniff have all ceased operating. In 1985, at the height of deregulation, ten airlines accounted for 80 percent of the U.S. market. Today, five airlines control this same share.
Testimony before the Senate Commerce Committee by the General Accounting Office, as well as the comments of industry observers and financial analysts,. indicate that further consolidation can lead to higher fares for consumers. Already, at hub airports where one carrier dominates, fares average 20 percent higher than at airports where competition is strong.
Reports by the General Accounting Office, Department of Justice, and the Department of Transportation (DOT) have identified two factors contributing to concentration in the industry: airline ownership of computer reservation systems (CRSs) and slot controls at four of the nation's busiest airports.
A recent study by the consumer group Public Citizen found that airline ownership of CRSs cost consumers between $500 million and $1 billion a year. Similarly, an analysis., by the General Accounting Office found that by excluding new entrants, slot controls lead to higher fares at the four slot controlled airports: Washington National, Chicago O'Hare, and New York's Kennedy and LaGuardia.
Clearly, these anticompetitive forces are choking airline deregulation. The 1978 Airline Deregulation Act directly spoke to this possibility in its statement of policy that the public interest requires 'the prevention of "unfair, deceptive, predatory, or anticompetitive practices in air transportation, and the avoidance of unreasonable industry concentration."
Given this requirement in law, how has DOT responded?
In both 1988 and 1990, DOT produced studies documenting the anticompetitive problems of CRSs. After years of delay, in March of 1991, DOT issued a notice of proposed rulemaking governing CRSs. The date for issuing a final CRSs rule has been officially delayed three times and is now postponed until December 1992.
Concerning slots, Congress passed legislation in 1988 and 1990 calling for a rulemaking to increase slot access for new entrants. On February 19, 1991, then Secretary Skinner promised the Senate Commerce Committee a slot rule in early 1991. In September 1991, one day before a Commerce Committee hearing on the issue, DOT issued a proposed slot rule. In another Commerce hearing in May of this year, DOT stated that the slot rule was indefinitely postponed due to the President's regulatory moratorium.
Given this history of inaction and delay on the part of the Administration, I have vigorously pushed legislation to deal with CRSs and slots. S. 2312, the Airline Competition Enhancement Act of 1992, levels the playing field for airline competition by removing the anticompetitive barriers in CRSs and slot controls.
At a hearing on June 10 on S. 2312, DOT testified that the legislation was not necessary because the issues of CRSs and slots are best dealt with through rulemakings and not legislation. Frankly, this statement left me incredulous. Given DOT's inaction, their position was nothing short of Orwellian.
Since that June 10 hearing, representatives of DOT have assured me that both CRSs and slot rules have been released from the regulatory moratorium and will be issued within two months. The amendment I am offering today merely holds DOT to its word.
The amendment requires DOT to issue final rules concerning CRSs and slot access by September 1, 1992. If DOT does not meet this requirement, it no longer shall have authority to regulate CRSs. That authority would transfer to the Federal Trade Commission, which would then be required to issue a final CRSs rule within 90 days.
This amendment is straightforward. Either the bureaucrats do their job, or the job is given to someone else. The type of inaction that DOT has demonstrated only reinforces the view of Americans that the Federal government is incapable of dealing with the nation's problems. It is time that we hold Federal agencies accountable for their responsibilities.
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