Regulatory Policy

Airport Regulations Costly

Despite deregulation in the 1970s, competition among airlines is still hampered by surviving regulations -- three of which cost air travelers in United States about $1 billion a year, say experts. The three regulations are the so-called Wright amendment, perimeter rules and slot controls.

  • The Wright amendment, which limits the number of states to which airlines can fly directly from Dallas' Love Field, has reduced competition at that airport and at Dallas-Fort Worth International.

  • The effect has been to raise fares in some cases by 15 percent to 75 percent -- at an annual cost to travelers of some $800 million a year.

Perimeter rules also limit competition:

  • Perimeter rules prohibit most flights longer than 1,500 miles to or from New York's LaGuardia Airport and longer than 1,250 miles to or from Washington's National Airport.

  • Due to restrictions at these neighboring airports, fares for flights that exceed 1,250 miles to or from Dulles Airport near Washington are nearly 25 percent higher, while fares at Kennedy International in New York are nearly 15 percent higher.

  • Removing the perimeter rules could save New York passengers $100 million a year, and Washington passengers $90 million a year.

Finally, since 1969, takeoffs and landings -- called slots -- have been limited in number at LaGuardia, Kennedy, National and Chicago's O'Hare. Analysts say that, with the exception of Kennedy, fares for flights that involve any of these airports are 10 percent to 15 percent higher than flights of similar length that don't.

Although slot controls were designed to reduce congestion, they also reduce competition. Some analysts suggest they could be eliminated and replaced by congestion tolls.

Source: Steven A. Morrison (Northeastern University) and Clifford Winston (Brookings Institution), "Foul Regulatory Weather Grounds Airline Competition," Wall Street Journal, December 3, 1997.


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