Summary: This testimony discusses air service problems that some communities have experienced since the deregulation of the airline industry in 1978. In summary, a combination of factors continue to limit entry at airports serving small- and medium-sized communities in the East and upper Midwest. These factors include the dominance of routes to and from those airports by one or two traditional hub-and-spoke airlines and operating barriers, such as slot controls and long-term exclusive-use gate leases at hub airports. Little progress has been made in lowering the barriers to entry since GAO first reported on them in 1990. GAO recommended that, in regions that have not seen lower fares as a result of airline deregulation, the Transportation Department (DOT) create a pool of available slots by periodically withdrawing some grandfathered slots from the major incumbents and redistributing them to increase competition. DOT indicated that it would revise its restrictive interpretation of the legislative criteria governing the granting of new slots. In October 1997, DOT announced its decision on some of the pending requests for slot exemptions and set forth its new policy on slot exemptions. DOT is also evaluating how effectively slots are being used and it is formalizing a policy to identify anticompetitive behavior as a precursor for formal enforcement action. The proposed Aviation Competition Enhancement Act of 1997 addresses three barriers to competition: slot controls, the perimeter rule, and predatory behavior by air barriers.
