Entry and Competition in the U.S. Airline Industry: Issues and Opportunities (Photocopy Edition)

This report is available on line at http://gulliver.trb.org/publications/sr/sr255/sr255toc.pdf. This study focuses on some well understood and recognized opportunities to encourage airline competition, especially in larger markets. Many smaller airline markets, however, are potentially promisingand needycandidates for increased entry and competition, particularly by carriers offering new nonstop jet service. Some suggestions and ideas for further exploration are offered at the end of this report to foster more competitive services in these markets, which could serve as points of entry into the industry. Indeed, encouraging and providing opportunities for communities to attract and retain airline services is both sensible and timely, as smaller, regional jets are being widely introduced. This is a case in which government actions might be appropriate to promote new airline competition. In general, the committee strongly and unanimously urges positive steps that would encourage entry and competition in the entire industry. More emphasis should be placed on providing infrastructure capacity responsively and efficiently, without impeding legitimate competition. This approach must be accompanied by vigilant oversight of airline marketing and ticket distribution, making certain they are fundamentally fair and do not predispose the industry to further unhealthy consolidation. Some committee members are uncertain, and others are skeptical, about the prospects of using administrative procedures such as those proposed by DOT to police airline predation. All believe, however, that DOTs basic aim of preserving and expanding opportunities for competition should remain the principal goal of aviation economic policy.