NCPA - National Center for Policy Analysis

More Competition -- Or Regulation -- At Airports?

September 14, 1999

In May the Justice Department filed an antitrust suit against American Airlines, alleging the carrier illegally drove small competitors out of its hub airport, Dallas-Fort Worth International Airport. A "hub" is an airport where a carrier bases many of its operations, including originating, and transferring passengers between, flights. As part of this crack down on practices federal regulators say allow big airlines to dominate their major hubs, the Transportation Department is preparing a report which calls on airports to foster greater competition.

While the recommendations have not been finalized and could change, here are some highlights:

  • Airports can encourage competitive access by closely monitoring how gates are used and ensuring that carriers are using gates under their control -- rather than simply locking others out of them.
  • Airports could also convert exclusive-use gates to common use when possible, and expand terminals to create new openings for airlines.
  • The Federal Aviation Administration -- which oversees federal airport funding, as well as how airports levy passenger fees that go toward construction -- would be called upon to make competitive issues a central part of their review process on such projects.
  • The task force found that airports are legally obligated to provide access to competitive airlines, including "every reasonable effort to accommodate new entrants."

Major carriers have fought the initiative, arguing the department's proposal would approach reregulation and hinder competition. Many of the hub airports are built up with major investments from the carriers themselves.

Small carriers have complained of being frozen out of major hubs by high fees, as well as problems getting convenient gates.

Source: Anna Wilde Mathews, "Crackdown on Airline Hubs to Be Sought," Wall Street Journal, September 14, 1999.


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