oversight

Airline Competition: Impact of FAA Legislation on Passenger Facilities Charges and Trust Fund Spending

Published by the Government Accountability Office on 1990-08-13.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                          United States General Accounting            Office
                          Testimony
GAO


For Release                Airline     Competition:           Impact  of FAA
on Delivery                Reauthorization          Legislation      on Passenger
Expected    at
10-00 a.m. PDT             Facilities        Charges     and    Trust     Fund    Spending
Monday
August   13, 1990




                           Statement        by

                           Kenneth    M. Mead
                           Director,    Transportation               Issues
                           Resources,    Community,            and     Economic
                           Development     Division

                           Before     the
                           California        State     Commission        on Aviation




 GAO/T-RCED-90-     104                                                                GAO Form 160 (12/87)
Mr.      Chairman       and Members of the                     Commission:

          We appreciate              the     opportunity              to testify            today        on our work on
airline       competition                 and on the          implications             of proposed                 FAA
reauthorization                 legislation            for     enhancing            airline         access          to
airports.            The California                 legislature           has recently                  considered            a
series       of bills           aimed at           improving          access        to major            airports          in the
state,       and the           Congress        is also         concerned            about        whether        there         is
sufficient           competition             among the             airlines         at the        nation's           major
airports.            This       problem       of competitive                  access        to many major
airports       has been an important                          focus      of GAO work              for      several
years.        We recently                 completed          a national          airport          survey        that
examined       the      availability                of gates          and the         ability           of airports               to
build       new gates           to accommodate                airlines         that      want       to     start         up
service       at the           airport.


          In addition             to briefly          reviewing           our       recent        work        on airline
competition           in our         testimony          today,         we will         address           several
provisions           of the        proposed          reauthorization                  legislation              (H.R.
5170).        This      bill       addresses          the      problem         of     inadequate              capacity            to
accommodate           new entry             and seeks          to provide             means to expand
aviation       system           capacity.            Our testimony               today          focuses        on our
findings       on airport                 access     and addresses               approaches              to    expanding
airport       capacity            as advanced           in H.R.          5170.         Our principal                 points
are:




                                                               1
--H.R.      5170 authorizes                  the     Secretary               of Transportation                     to grant
airports        the     authority            to     levy     passenger                facility              charges        (PFCs)
on travelers            using     the        airport.             Although             it        is   not      a panacea           for
competition           and capacity                problems             at the         nation's              airports,
airports        could      use this           independent                   source          of      funds      to expand
capacity        to accommodate                new entry.


--Legislation            authorizing                PFCs must be carefully                              structured            so
that      new facilities             built          with     PFC revenues                    are      readily           accessible
to potential            new entrants.


--H.R.       5170 also          authorizes              more spending                  on airports                and airways
by accelerating              spending              from     the        uncommitted                  balance       in the
aviation        trust      fund      for      air       traffic             control          modernization,                 for
airport       development,             and for             FAA operations                    and systems
maintenance.


OVERVIEW OF GAO WORK IN THE AIRLINE                                         COMPETITION AREA


          For several           years,        GAO has been actively                                 studying        airline
industry        competition,               especially                 the    relationship                   between       fares
and market         dominance.                Our principal                   reports             and testimonies                  on
airline       competition            are      listed         in Appendix                    I to this           testimony.
Our work        indicates           that      while         deregulation                    still       benefits          many
American        travelers,           a growing              trend           toward          reconcentration                 exists



                                                                  2
in the        industry,         with     the     major       airlines        establishing                 dominant
positions           at key airports               around         the    nation.


           Indeed,       through        various        strategies,            such as frequent                     flyer
programs,           ownership          of the       computerized            reservations                 systems           (CRS)
used by travel             agents,         travel        agent         commission          overrides,
codesharing             arrangements,             and other            marketing          practices,              airlines
dominating           particular          markets         have made it              very      difficult             for
other       airlines       to enter           these      markets         and to compete                  for      the
traffic.            In addition,           traditional             airline/airport                 arrangements,
such as long-term                 exclusive-use              leases        and majority-in-interest
clauses        in lease         agreements            also    make it        difficult             for         airlines           to
enter       into     markets       dominated           by othersl.                We have       found           that       air
fares       are     generally          higher       at airports           where      one or two carriers
handle       most of the           traffic.


           Currently,        we are using              an econometric               model       of airline                 fare
determination             to analyze            the    relative          importance           of the            various
barriers           to market       entry        in determining              air     fares.          Once this               work
is complete,             we will        issue       a report           to Congress          with         appropriate
policy       recommendations.




lA majority-in-interest         clause in airport      leases give airlines
with a majority         of the operations     at an airport      a voice in airport
decisions     that would affect       the airlines'    financial      commitment to
the airport.
                                                             3
         In the     course           of our work            on airline            competition,         we have
developed         a number of policy                    options         for     improving        the    competitive
climate.          Some of these                options       address           the   problem      of airport
access      and are       included             in the       proposed           reauthorization
legislation.             Other        options        address           the     barriers      to competition
raised      by airline             marketing         strategies,               such as codesharing
agreements         and computerized                  reservation               systems.        Legislation
proposed        in the        Senate         (S.    1741,        the    Airline        Competition
Enhancement         Act       of     1989)      addressed           some of these            marketing
barriers.

Airport/Airline               Asreements            Limit        Airnort        Access


         In order        to    learn       more about             market        dominance        and the
accessibility            of airport             gates       and other           facilities        to potential
entrants,         we recently            surveyed           more than           180 airports           in the
continental         United           States,        including           all     27 airports        we classified
(using      FAA criteria)              as large          and all           39 we classified             as medium-
sized.         Sixteen        California            airports           were     included       in the     survey.2




         Nearly     99 percent             of the        airports             responded      to our      survey.
The respondents               said     they        want to accommodate                    new entrants,         but

2Airline  Comnetition:  Industry    Oneratina    and Marketins      Practices
Limit Market Entry (GAO/RCED-90-147).          The California      airports    in
our survey were Burbank,    Fresno,   Los Angeles,      Long Beach, Oakland,
Ontario,  Orange County, Palm Springs,        Redding,   Sacramento,       San
Diego, San Jose, San Francisco,      Santa Barbara,      Stockton,     and Lake
Tahoe.
                                                             4
many reported                   that      they          face        major        constraints                 in making           existing
facilities               available               or in expanding                      airport          capacity.              Most
existing              gate      space       is     leased            for        the    long-term,                exclusive         use of
the      incumbent              airlines,               with        most of these                 gates          leased       to the
eight          major         airlines.             This            is particularly                    true       at the       larger
airports.                Nearly          88 percent                 of the         3,129        gates         at the       66 large
and medium-sized                       airports              are     leased           to the          airlines         and 85
percent           of the          leases          are        for     the        exclusive             use of the           lessee.
Ninety          percent          of all           leased            gates        are      leased         by the        eight       major
airlines.                Gate      leases          also            tend        to be long             term.          Eighty-seven
percent           of leased              gates          at     large           and medium-sized                   airports         have
long-term              leases.            Two-thirds                 of gate           leases          at     large       airports
have more than                    10 years              remaining               before        the      lease         expires.


              California           airports              in our            survey         reported            that     they       leased
75 percent               of their           gates.                 Larger        airports             leased         a greater
proportion               of their           gates.                 Los Angeles               leased          nearly       80 percent
of      its      gates        and San Francisco                           leased       all      its      gates.           Five
airports--             Long Beach,                Oakland,             Ontario,              Redding,            and Stockton--
reported              no leased           gates.               Over 80 percent                    of all          gates       leased        in
California               are      leased          for        exclusive             use.


              Our nationwide                survey             showed that                about        16 percent             of the
large          and medium-sized                    airports                have use-or-lose                    provisions              in
their          gate      lease         agreements,                  allowing           the      airport           to recapture              the
control           of the         gate       if     the         leasing           airline          does not            use it.

                                                                           5
While        we did        not     ask the           airports             how often           they       invoke        these
provisions,              officials            at     four       airports             told     us that          an airline            had
to cease          all      operations              for      at least          one to three                  months          before
the     airport          could        exercise            the     use-or-lose                option.           Orange         County,
Palm Springs,                  and Santa           Barbara          airports            reported            that      all     leased
gates        were covered                by use-or-lose                   provisions.


          Some airports                  have tried             to regain             control          over        airport
facilities              by moving           toward          more preferential-use                           leases,          more
short-term              leases,          and more widespread                         use of       recapture
provisions.                The airlines,                  however,           are      resisting             these      changes.
As a result,               airlines           seeking           to start             new services              at airports
will      often         find      that      they         must sublease                space       from       the      incumbent
carriers.               Airline          officials           told         us subleasing                is much more
expensive          than         leasing        facilities                 directly           from      an airport
operator.


          One solution                to the         problem            of   facility           control            through
airline        exclusive-use                  leases         is     for      the      airport          to build             more
facilities,              but      airports           face       several         major         constraints              to
capacity          expansion.                Community             opposition                to expansion              (especially
to     increased           noise),          and majority-in-interest                                (MII)      clauses          in
airport        lease           agreements            are     leading          factors           limiting            or delaying
airport        expansion.




                                                                    6
           Noise       was the          most freguently                    cited         factor         affecting               airport
expansion,             and it          was particularly                    important              to    California               airport
respondents.                  Nationally,                21 percent            of the        178 airports                  that
answered            our      inquiry          on noise           said      community              opposition              to
increased             noise      would         "greatly           limit        or delay"               airport           expansion.
Officials             at half          of the         California            airports,              including              San
Francisco             and Los Angeles,                    said       community            opposition                to    increased
noise       would         "greatly            limit       or delay"            airport            expansion.               Only
Stockton            and Redding               airport         officials            did     not         report         noise        as a
problem        limiting             expansion.


           In addition,                majority-in-interest                        clauses             in lease           agreements
give       airlines           some control                over       airport         expansion.                  Airlines,             in
return        for      making          a long-term               lease      commitment                 to    a particular
airport,            sometimes           receive           the     right        to approve               some or all
airport        expansion               projects.              Airports          securing               these        long-term
agreements             are     generally              able       to get        lower       interest              rates          on their
debt       issues.            In return,              the     airlines          seek some guarantee                             that      the
airport        could          not      unilaterally               issue        additional               debt,         which        the
airlines            would      have to help                  repay        through         higher            lease        payments,
landing        fees,          or other           charges.                Over half         of the            large        and
medium-sized                airports           we surveyed                reported         they         had MI1
agreements.                 Of the        California              airports           in our            survey,           only      three
indicated            they      had MI1 agreements.                          Officials              at one California
airport        indicated               that      their        MI1 agreement                could            greatly        limit          or
delay       expansion            plans.

                                                                     7
           These      long-term              agreements             could          negatively              affect
competition              if      they       are    used to prevent                      or delay           the      expansion          of
facilities            that          would        allow     space         for       new entrants.                    According          to
airport         officials,                the     signatory             airlines              generally           approve
expansion          projects               that     directly             benefit           the        incumbent          airlines
but     are     reluctant               to approve          projects               that        would       benefit         other
users        or projects                 such as parking                 garages              that     would        benefit
passengers,             but         not     the    airlines             directly.                In addition,              airlines
are     often      reluctant                to    fund     expansion               projects            before          their
operations            are        actually          overcrowded.                   As a result,                 we believe             that
MIIs       contribute               to chronic            overcrowding                  and this,             in turn,
discourages             entry           by competing             airlines.

PASSENGER FACILITY CHARGES PROVIDE AN INDEPENDENT
SOURCE OF FUNDING FOR AIRPORT EXPANSION


           An alternative                  way for         airports              to     finance         capacity               expansion
would        be through              charging            passengers              for      using        the     airport.              Such
charges         are prohibited                    under       the       Airport           Development               Acceleration
Act     of    1973,           but    H.R.        5170 would             authorize              the     Secretary               of
Transportation                   to allow          airports             to collect               a fee       of     $1,        $2,   or $3
from       passengers               enplaning            at the         airport.               The fee,           or passenger
facility         charge,             would        be included              in the             ticket       price,         collected
by the        airlines              the     same way the                federal           ticket        tax       is    collected,
and remitted                  directly           to the       airports,                less      a uniform             handling
charge,         approved             by the        Secretary,              for         the     airlines.               In our

                                                                    8
recent        testimony           before         the    Subcommittee                  on Aviation,              House
Committee          on Public             Works and Transportation,                               we addressed           the
need for          PFCs and ways to ensure                            that         PFCs, if        permitted,          are used
for     the    purposes           Congress           intended.3


          We believe            PFCs could             shift         some control                over    airport
expansion          decisions             from     the     airlines                back to the           airports        by
reducing          airports'             need for        airline             approval          of capital           projects.
A PFC could           be especially                  useful          at airports              where      one or two
airlines          control         most of the             traffic            or most of the               gates       and
other      essential            facilities             through           restrictive              leases.          PFC funds
could      also      help       fill      the     gap between                airport          capital       needs       and
federal        funding.                However,        a PFC is not                  a panacea,          as a lack           of
adequate          funding         is not         the    only         problem          faced       by airports           trying
to expand          capacity             or promote             greater            competition           among airlines.
At some airports                  noise        concerns          could            effectively           block      capacity
expansion.            At others,               the     marketing             practices            of the        incumbent
airlines          may make it             very       difficult              for      potential          competitors            to
capture        a meaningful               share        of the         air         travel      market,       even if          gates
and other          facilities             are     available..


Potential          Problems             With     PFC Funds




3Airline    Competition:  Passenser Facility  Charaes Can Provide                                                            An
Independent    Source of Fundina for Airport   Expansion and
Imnrovement    Proiects  (GAO/T-RCED-90-99,  June 19, 1990).

                                                                 9
         We have identified                          a number of potential                       problems           with         PFC

funds      such as the                possible             diversion            of the     revenues               collected             to
nonairport             uses.          This          problem       could     be avoided,                   as we stated                in
our testimony,                  if    the       authorizing             legislation              contains           adequate
safeguards             to ensure             that       PFC funds          would         be used only                   for     airport
projects          to expand             capacity              and improve           competitive               access            and to
ensure        that      potential               entrant         airlines          have access                to    PFC-funded
facilities.               H.R.        5170 requires                that     PFC funds               be spent             only      to
support          projects            eligible           for     assistance           under          the      federal            Airport
Improvement             Program             or noise           abatement          program.                In addition,                the
proposed          legislation                authorizes            using         PFCs for           gates         and related
areas      for       handling           passengers.                The proposed              bill          also     provides
that     any facilities                     built       with      PFC funds          may not              be subject             to
contracts            granting           airlines              exclusive          right     to use the               facilities.
Without          such safeguards,                     a risk       exists         that     PFC funds               collected
from     the      traveling             public          could      be used to             reinforce               the         dominant
position          of    incumbent               airlines          at some airports.


         For example,                 exclusive-use                lease         provisions               on facilities
built      with        PFC funds             could        ultimately             serve     to benefit               only
incumbent            airlines           without            improving        access         for       potential
competitors.                We believe                that      any facilities               built          with         PFC funds
should        be leased              only       on a preferential-use                      basis.             Preferential-
use leases             protect          the         tenant      airline          by giving           it     the         first      right
to use the             facilities               under         lease,      but     also     allow           the     airport
operator          to assign             secondary              use of the           facilities              to     other

                                                                   10
airlines            when the            tenant         airline            does not           have operations
scheduled.


          Leases           on PFC-funded                    facilities             could        also      contain           a clause
providing            that        the     tenant          airline           accommodate                 a secondary                user     at
some of the                facilities            it         leases,         if     the      airline's            use of all
leased        facilities                (including               those           on pre-existing                 exclusive-use
leases)           permits.              Without             such a clause,                  an airline            could           lease
PFC-funded              facilities             on a preferential-use                             basis,          use the           new
facilities              intensely,             and leave                 exclusively               leased        facilities
unused        for       extended          periods,               thereby           negating            the    capacity             and
competition-enhancing                          effect            of the           new facilities.


                  MI1 clauses             can also               detract           from      the       effectiveness                of a
PFC.         Some MI1 agreements                         require           airline           approval            for      any
projects            that       could      affect             incumbent             airlines'            operating             costs,
even if           the      projects          are       not       financed           with        airline-backed                    bonds.
Thus,        at     some airports,                    PFC funds            could         not     be used to               support          a
bond issue              or combined              with          funds       from         other        sources,           including
federal           grants,         without             the      consent            of the        incumbent              airline.
According            to the          Airport           Operators                 Council        International,                    25 of
the     nation's            30 largest                airports            have restrictions                      in their
agreements              with      airlines             that       limit           the    airport's            ability             to make
effective            use of a PFC.                     Some agreements                      contain          specific             clauses
prohibiting                the    airport             from       charging            fees       to     airline          passengers.
In addition,                residual           funding            agreements               would        include           PFC

                                                                      11
receipts           as airport              revenues          and such agreements                            would      require          the
airport        to        lower      its     landing          fees          or lease           charges         to the          extent
it    received            PFC revenues.                We told              the         Subcommittee            that
authorizing               legislation              must take               these         agreements            into         account      if
PFCs are           to be effective.                    H.R.         5170 prohibits                     PFCs from             being
counted        as airport                 revenues          for     contract              purposes.


Potential           Benefits              From PFC Funds


           PFCs could              help     close      the         gap between                federal          funding          and
airport        capital             needs     in two ways.                    First,           a PFC would              give
airports           additional              funds      to use on projects                          eligible            for     federal
funds       but     for      which         federal          funds          are unavailable.                     Second,          PFC
funds       could         be used for              projects,               needed         to expand           airport
capacity           or to promote               competition,                  that         are     not       currently
eligible           for      federal         funds.           The FAA provides                      grants           to airports
out     of the           Airport          and Airways              Trust       Fund through                  the      Airport
Improvement               Program          (AIP)      for         capacity              and safety           projects.
However,           expansion              of revenue-producing                           facilities,            such as gates,
are not        covered             by this         program.                Nearly         one-third           of the          airports
in our       survey          reported          that         the     unavailability                     of    funding,
including           funds          from     the      AIP,         could      greatly            impede        their          plans      for
expansion.


           Available             federal          funding          falls          far     short        of meeting             airport
capital           development              needs      in the          next         five       years.           FAA estimates

                                                                    12
airport          AIP-eligible                  capital         needs over             the    next        five      years        are
$31 billion,                 an average              of more than              $6 billion            annually.              The
President's                 Budget      for         fiscal       year      1991 allocated                 only      $1.5
billion          for        AIP projects.                    In addition,             the    Airport            Operators
Council          International                  estimates             there       is a current              backlog         of        $7
billion          in unfunded                 AIP projects.                 PFCs could             help      alleviate                the
shortfall              in    federal           funding.           For example,               in     1990 the          nation's
31 busiest              airports             will      receive          approximately               $250 million                in AIP
entitlements.                    A $3 PFC at all                  of these            airports           would      generate
almost       $1 billion.


          Although              airports            with      fewer       boardings          might        not      be able            to
generate          sufficient                 funds         through        PFCs to        finance          needed        projects,
they      could         still         gain      from         PFCs.        Large       airports           levying        PFCs
could       forego           some AIP funds                   which,       in turn,          could        be made
available              to    smaller          airports.               Large       airports         would         benefit             from
having       access             to    funding          that      was independent                  from      airline
approval          as long             as the         reduction            in AIP funds             was not          on a dollar
for     dollar          basis.          However,              as the       reduction          in AIP funds                 to        large
airports          increases,                 the     incentive            to   levy      a PFC would               decrease.


Protection              of Passenger                 Interests


          Finally,              air    traveler              interests         need to be safeguarded                           if
PFCs are          approved.                  We testified               that      some limit             should       be placed
on the       number of PFCs that                             can be assessed                on a single             trip        and

                                                                     13
that     travelers               should      be informed               of the         effect           of PFCs on the
cost     of their           trips.


         The development                   of hub-and-spoke                    route          systems       means that
many travelers                   must change           planes          one or more times                     to complete
their     trips.            If     they      are      assessed           a PFC at each airport                         where
they     board       or change             planes,         the     air        fare      paid        could      increase
significantly.                    We suggested             that        the     Congress             might     wish      to      limit
the     number of times                   a PFC can be levied                        on a single             trip.        H.R.
5170 limits           the         number of PFCs to                    2 on each one way trip.


         Passengers               must also           be informed              about          the      presence        and
amounts          of PFC charges               for      their       trips.             One alternative                  would         be
to require           that         PFC charges             be included                in advertised               air    fares.
Another          alternative              would       be to allow              airlines             to exclude          PFCs
from     their       advertised              fares        but     require            their       disclosure            when
travelers          book their              flights.             The Secretary                   of Transportation
could       resolve         this      issue         through        the        PFC regulations                  authorized               by
H.R.     5170.


TRUST FUND PROVISIONS IN H.R. 5170 REDUCE THE
SURPLUS AND GIVE FAA GREATER FUNDING FLEXIBILITY


         H.R.       5170 would             expand         the     capacity            of nation's              aviation
system       by accelerating                  spending            out        of the          Airport        and Airways
Trust       Fund.       This         trust         fund    was established                      by the       Congress           in
1970 and is            financed            by excise             taxes        levied          on passengers,              air
                                                                  14
cargo,          and aviation                  fuel.           Most of the                   fund       is devoted            to airport
grants          and capital              improvements,                      such as new radar                        and traffic
control          towers.          The fund                  can also           be used to support                           FAA's
operations,              but     the          amount          available               for         FM      operations            has
historically               been limited                     by the          Congress               with       the    remainder            paid
out     of the       general             fund.              Generally,                receipts             have exceeded                 trust
fund      spending.              The current                   $14.6          billion              balance          exceeds
outstanding              commitments                  by more than                    $7.6         billion.


          Trust         fund     spending               for         operations               is     currently              capped        at an
amount equal               to    50 percent                   of the          total          amounts           available           for
airport          grants,         acquisition                   of     facilities                   and equipment,                 and
research          and development.                            This      cap is much less                        than        the    burden
created          by the         aviation              system's              users.                A 1988 Congressional
Budget         Office         study           concluded              that      commercial                  and general
operations              are     responsible                   for     about           85 percent               of FAA's           programs,
while      public          aviation                 (primarily              military)               account          for       15 percent.
The maximum allowable                               amount that               can be spent                    on FAA operations
is     further          reduced          if         spending          targets               for     capital          programs            are
not     met.       As a result,                      only      about          one-half              of FAA's           budget         (and
about      one-fourth             of          its     operating               expenses)                have been financed                      by
the     trust       fund.          If         it     were not           for      these             limitations              on financing
operations,              there          would         be no surplus.


          This     year         the      administration                       proposed              that       the     trust       fund        be
used to cover                 85 percent                of FAA's              total          budget,           thereby

                                                                       15
eliminating              the        subsidy         from       the       general          fund     to aviation               system
users.           The administration                       proposed           that     passenger              ticket          taxes,
which      form         the     bulk       of trust             fund      revenues,          be increased                  from      8
percent          to     10 percent.                 However,             in our May 8, 1990,                      testimony
before      the         Subcommittee                on Investigations                      and Oversight,               House
Committee             on Public            Works and Transportation,                              we suggested                that
current          user     fee        revenues            could       be combined             with         the     uncommitted
balances          in the         trust           fund     to cover           75 percent             of FAA's           budget.
This      approach            would        reduce         the     subsidy           and draw down the                   surplus
over      time        without           raising          the     excise       tax.          H.R.         5170 authorizes
trust      fund         spending           of $13.2            billion        in the         next         2 years       and
provides          that        the       trust       fund       may be used to underwrite                              75 percent
of FAA's          authorized               budget.             Capital        spending             for     air     traffic
control          is     scheduled           to      increase           by 59 percent,                    while     spending              on
airport          development               would         increase          by 29 percent.


          In our May 11,                   1989 testimony                  before          the    Subcommittee                on
Transportation,                  Senate           Committee            on Appropriations,                        we suggested
that      the     Congress              consider          eliminating               the     restrictions               on
spending          from        the      trust        fund       to cover          FAA operating                   expenses.
H.R.      5170 eliminates                   the         penalty        clause,        while         reaffirming
congressional                 commitment                to capital           spending            as the          primary
purpose          of the         trust           fund.




                                                                     16
CONCLUSIONS


          We believe            that       the    proposals        in H.R.            5170 to permit            airports
to      levy      passenger           facility      charges        and to          increase       and liberalize
spending           from      the    Airport        and Airways           Trust         Fund are        steps        in the
right          direction        but      are not      panaceas          for     the     problem        facing
competition                in the      nation's       airline          industry.          Solutions            to
capacity           limits       must also          address        the    problems         of aircraft               noise
and the           need to build               new airports.             Solutions         to the        problems
arising           from      anticompetitive            practices              must also       address          airline
marketing            practices           that     make it       very     difficult         for     new entrants
to successfully                 enter         new markets         even when airport                facilities               are
available.


          Mr.      Chairman,           this      concludes        my statement.               I will       be glad           to
respond          to any questions                 you may have.




                                                             17
Attachment       I                                                  Attachment         I


      SELECTED GAO REPORTS AND TESTIMONIES ON AIRLINE                             COMPETITION


ISSUED REPORTS:
Airline   Comnetition:          Hisher Fares and Reduced Comnetition                              at
Concentrated   Airnorts           (GAO/RCED-90-102, July 11, 1990).
Airline      Comnetition:  DOT's Imnlementation  of Airline                           Resulatorv
Authority      (GAO/RCED-89-93,  June 28, 1989).
Airline    Service:    Chanaes at Major Montana Airnorts                          Since
Deresulation      (GAO/RCED-89-141FS,  May 24, 1989).
Airline Competition:            Fare and Service   Chances at St. Louis                            Since
the TWA-Ozark Merser            (GAO/RCED-88-217BR,   Sept. 21, 1988).
Airline Comnetition:     Impact  of Comnuterized                        Reservation         Systems
(GAO/RCED-86-74,     May 9, 1986).
Airline    Take-off     and Landins Slots:     The Department of
Transnortationls        Slot Allocation    Rule (GAO/RCED-86-92,                           Jan.        31,
1986).
Deresulation:     Increased           Competition  is Makins Airlines                      More
Efficient     and Resnonsive           to Consumers (GAO/RCED-86-26,                       November          6,
1985).
TESTIMONIES:
Airline   Comnetition: Passenser Facility   Charaes Can Provide                                        An
Independent   Source of Fundina for Airport   Expansion and
Imnrovement   Proiects  (GAO/T-RCED-90-99,  June 19, 1990).
Effects   of Airline          Entry    Barriers         on Fares     (GAO/T-RCED-90-62,
April   5, 1990).
Operations  of and Outlook              for the         Transportation        Trust        Funds
(GAO/T-RCED-90-78,  May 8,              1990).
Barriers  to Competition              in the      Airline      Industry      (GAO/T-RCED-89-
65, Sept. 20, 1989).
Air Fares and Service             at Concentrated            Airnorts       (GAO/T-RCED-89-37,
June 7, 1989).
Transnortation        Trust     Funds     (GAO/T-RCED-89-36,              May 11,      1989.
                                                   18
ComDetition             .
               in the Air1  ine   ComDuterized Reservation       System
Industry    (GAO/T-RCED-88-62,     Sept. 14, 1988).
DOT Airline   Industry    Oversisht    (GAO/T-RCED-88-36,    April     21,   1988).
REPORTS IN PROCESSING
Airline ComDetition:       Industry  ODeratina   and Marketina       Practices
Limit Market Entrv       (GAO/RCED-90-147).




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