Hearings to examine competition in America's skies.

1[Senate Hearing 119-272]2[From the U.S. Government Publishing Office]34                                                        S. Hrg. 119-27256                        EXAMINING COMPETITION IN7                            AMERICA'S SKIES89=======================================================================1011                                HEARING1213                               before the1415                       SUBCOMMITTEE ON ANTITRUST,16                        COMPETITION POLICY, AND17                            CONSUMER RIGHTS1819                                 OF THE2021                       COMMITTEE ON THE JUDICIARY22                          UNITED STATES SENATE2324                    ONE HUNDRED NINETEENTH CONGRESS2526                             FIRST SESSION2728                               __________2930                           SEPTEMBER 30, 20253132                               __________3334                           Serial No. J-119-423536                               __________3738         Printed for the use of the Committee on the Judiciary3940    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]4142                        www.judiciary.senate.gov43                            www.govinfo.gov4445                                   _______4647                 U.S. GOVERNMENT PUBLISHING OFFICE484962-655                    WASHINGTON : 20265051                       COMMITTEE ON THE JUDICIARY5253                  CHARLES E. GRASSLEY, Iowa, Chairman54LINDSEY O. GRAHAM, South Carolina    RICHARD J. DURBIN, Illinois,55JOHN CORNYN, Texas                       Ranking Member56MICHAEL S. LEE, Utah                 SHELDON WHITEHOUSE, Rhode Island57TED CRUZ, Texas                      AMY KLOBUCHAR, Minnesota58JOSH HAWLEY, Missouri                CHRISTOPHER A. COONS, Delaware59THOM TILLIS, North Carolina          RICHARD BLUMENTHAL, Connecticut60JOHN KENNEDY, Louisiana              MAZIE K. HIRONO, Hawaii61MARSHA BLACKBURN, Tennessee          CORY A. BOOKER, New Jersey62ERIC SCHMITT, Missouri               ALEX PADILLA, California63KATIE BOYD BRITT, Alabama            PETER WELCH, Vermont64ASHLEY MOODY, Florida                ADAM B. SCHIFF, California6566             Kolan Davis, Chief Counsel and Staff Director67         Joe Zogby, Democratic Chief Counsel and Staff Director6869            Subcommittee on Antitrust, Competition Policy,70                          and Consumer Rights7172                      MICHAEL S. LEE, Utah, Chair73JOSH HAWLEY, Missouri                CORY A. BOOKER, New Jersey,74THOM TILLIS, North Carolina              Ranking Member75ERIC SCHMITT, Missouri               AMY KLOBUCHAR, Minnesota76KATIE BOYD BRITT, Alabama            RICHARD BLUMENTHAL, Connecticut77ASHLEY MOODY, Florida                PETER WELCH, Vermont78                                     ADAM B. SCHIFF, California7980               Thomas DeMatteo, Republican Chief Counsel81                 Lynda Garica, Democratic Chief Counsel8283                            C O N T E N T S8485                              ----------8687                           OPENING STATEMENTS8889                                                                   Page9091Lee, Hon. Michael S..............................................     192Booker, Hon. Cory A..............................................     39394                               WITNESSES9596Anderson, Gregory................................................     697    Prepared statement...........................................    4598    Responses to written questions...............................   10499Biffle, Barry....................................................     7100    Prepared statement...........................................    52101    Responses to written questions...............................   109102McGee, William J.................................................     9103    Prepared statement...........................................    57104    Responses to written questions...............................   113105Pinkerton, Sharon................................................    11106    Prepared statement...........................................    67107    Responses to written questions...............................   122108Sitaraman, Ganesh................................................    13109    Prepared statement...........................................    91110    Responses to written questions...............................   153111112                         EXAMINING COMPETITION113                           IN AMERICA'S SKIES114115                              ----------116117                      TUESDAY, SEPTEMBER 30, 2025118119                      United States Senate,120    Subcommittee on Antitrust, Competition Policy,121                               and Consumer Rights,122                                Committee on the Judiciary,123                                                    Washington, DC.124    The Subcommittee met, pursuant to notice, at 2:33 p.m., in125Room 226, Dirksen Senate Office Building, Hon. Michael S. Lee,126Chair of the Subcommittee, presiding.127    Present: Senators Lee [presiding], Hawley, Britt, Moody,128Booker, Klobuchar, and Blumenthal.129    Also present: Senator Durbin.130131           OPENING STATEMENT OF HON. MICHAEL S. LEE,132             A U.S. SENATOR FROM THE STATE OF UTAH133134    Chair Lee. I will call the hearing to order. Thanks to all135of you for being here. We look forward to today's conversation.136    Every day in America, millions of passengers rely on137airlines to get them safely, easily, and efficiently to life's138most important moments--weddings, funerals, the birth of139children and grandchildren, professional opportunities, job140interviews, meeting with clients old or new, and even in some141cases daily commutes. Air travel has become and genuinely is142essential to our lives.143    Since deregulation of the airline industry began in 1978144and increasingly in the years that followed from that,145competition has driven affordability, innovation, and improved146service in countless respects within the industry. For decades,147rivalry among carriers allowed for consumer choice, and it kept148fares within reach. Yet in recent years, there has been149significant consolidation in the industry. This has reshaped in150some ways the U.S. airline market, reducing the number of total151competitors. Today, there are just four major carriers--152American, Delta, United, and Southwest--that control over 80153percent of U.S. domestic air travel. And that is a change from154not too many decades ago when there were more players than155that, far less market concentration.156    Legacy carriers have invested in creating a hub-and-spoke157model. The model routes passengers through central airports158more efficiently, and that has the effect of lowering159maintenance costs, increasing connectivity, and otherwise160increasing the beneficial network effects available to a larger161airline.162    The hub system has also created some dominant positions,163particularly at a few key airports. In Atlanta, Dallas/Fort164Worth, Charlotte, and Newark, for example a single airline165controls between 70 and 80 percent of passenger traffic. In166Salt Lake City, St. Louis, and Minneapolis, one carrier167accounts for roughly 60 percent of passenger traffic. Even at168airports with far less concentrated market shares, carriers169often don't compete on the same routes, leaving travelers170effectively with only one direct option for a specific171destination. Some of this, of course, is going to happen in any172system that involves as many cities, as many places where173people might want to travel as others. Nonetheless, we see the174trend as what it is, a trend that is perhaps resulting in less175competition within the industry than we have seen at times in176the past.177    This concentration is, at least in part, the result of a178wave of mergers--Delta-Northwest, then United-Continental, and179Southwest-AirTran. The Obama administration initially180challenged the American-U.S. Airways merger, but it reached a181settlement, one that seemingly failed to address the broader182nationwide concerns alleged in the complaint in that case.183    Most recently, the Biden administration blocked the184proposed JetBlue-Spirit merger, ostensibly to preserve Spirit185as an ultra-low-cost competitor. In that case, the Department186of Justice took an acrobatic distortion and contortion of the187market and overlooked a lot of the real-world dynamics. The188merger likely would have enhanced competition by creating a189more financially stable airline with a larger network, one that190could provide additional competition to the legacy carriers.191This would have enabled more competition with these legacy192carriers nationwide. And one thing we know about competition,193it tends to bring down prices, and it tends to result in194improvements to quality as different competitors try to compete195for the money of the passengers they want to carry.196    Yet after that merger was blocked, Spirit ended up filing197for bankruptcy, as many predicted. This development raises key198questions about enforcement and our antitrust framework such as199how a market ought to be defined and whether the failing-firm200defense captures real-world dynamics and incentives and how201this ought to frame how we think about antitrust law and the202manner in which it is enforced moving forward.203    Low-cost carriers and ultra-low-cost carriers have been an204important competitive constraint on pricing, of course. There205is a lot that they add to the picture. When one of these206airlines enters a market, average fares typically drop, at207least for the affected routes, but those competitive forces are208facing financial headwinds. Spirit is in bankruptcy. Southwest209is abandoning, in some ways, the very business model that made210Southwest the disruptor that it has been, eliminating free211checked bags and charging for seat assignments, moving closer212to the legacy carrier model. JetBlue's partnership with213American and the proposed merger with Spirit were blocked.214JetBlue is now seeking a collaboration with United in order to215survive.216    Broader economic conditions also present challenges.217Aircraft supply shortages, engine repair delays, and rising218labor costs all contribute in weighing on the overall219competitive dynamic in the industry. Additionally, with fewer220competitors than we've had in the past, the remaining airlines221can coordinate on capacity more easily. This limits seat growth222across the industry. Limited slots and limited gates also tend223to reinforce those same constraints, so do shortages of air224traffic controllers and an antiquated air traffic control225system.226    The U.S. Department of Transportation is modernizing our227air traffic control system. They are streamlining FAA hiring228and raising the pay that they offer to controllers. And I want229to commend Secretary Duffy at the Department of Transportation230for his leadership in addressing these challenges and working231toward solutions to each of them. The reforms are essential,232not just for safety and reliability, but also for creating the233capacity that we need in order to allow for an increase in234competition.235    Today's hearing is one that I hope will be an important236first step in examining competition issues as we face them in237the airline industry. Americans deserve the benefits of238competition, especially when they fly, in the form of lower239fares, better service, and more choices.240    Chairman Lee. And in advance, I want to thank each of our241witnesses for coming today. I look forward to their insights.242    Now we are going to turn to my friend and colleague, the243Ranking Democrat on the Committee, Senator Cory Booker.244245           OPENING STATEMENT OF HON. CORY A. BOOKER,246          A U.S. SENATOR FROM THE STATE OF NEW JERSEY247248    Senator Booker. I am really grateful to the Chairman of249this Committee for calling this. This is an actual area--in250fact this whole Subcommittee is an area--there is a lot of251bipartisan alignment and a lot of really growing concern as252Americans are seeing prices on everything go up. This is not253the relegation of any political party. These are trends in many254ways that have been going on for too long.255    About the airline industry, I have to say, I am a very256impacted witness, as well as the Ranking Member, because at2576'3'' and larger than most Americans, I find our airline seats258really inadequate, feeling that pain that many Americans are259feeling, in addition to a lot of the other challenges with air260travel.261    There are just things folks don't understand. They really262can't, and it is understandable the confusion and the263frustrations that American consumers are feeling when it comes264to airlines. Most Americans don't understand why Google Flights265will say that it is cheaper to fly for 10 hours with a stop266instead of a 6-hour nonstop, or why it is cheaper to have a267layover in Atlanta when you are flying from Philadelphia to268Kansas City when no reasonable person can consider Atlanta on269the way.270    Nowadays airlines advertise so many different fares and271classes, whether it is premium, economy, board first, priority,272economic, basic, and they tack on so many fees for everything273from taking a bag on board to sitting with your other family274members. It is unbelievable. Those fees get labeled as either275ancillary or junk fees, and we really believe, at least I276believe, that this is a regulatory question and more.277    And here is the thing. American passengers spend what seems278like a third of their monthly mortgage to fly nowadays. Major279airlines that have repeatedly benefited from Federal Government280bailouts now pay less in taxes and pocket more from consumers281because of these separate fees customers pay on add-ons that282are not taxed like base airfare. Back when consumers paid in283all in airfare, that tax revenue actually went toward improving284airports and improving airport infrastructure. But the system285as it was before is not what it is now. And these problems are286hurting airline competition and really hurting consumers.287    And there are more issues than just fees. But let's just288say that when the former Secretary Buttigieg initiated289rulemaking that would have required airlines to be more290transparent about these extra fees, unfortunately, that has291been rolled back now under the current administration, which is292going to make a bad situation far worse.293    But fees aren't the only thing. Price discrimination or294price hikes due to the inflammation of AI-based surveillance295pricing unfairly targets consumers and takes advantage of their296circumstances, like flying solo or having must-go trips where a297loved one is ill, or worse, where there is a funeral to attend.298If AI-based surveillance pricing, for example, sees a consumer299search for funeral home and palliative care while another300search is last-minute couples getaway, the airline could show301the grieving traveler higher prices based on their estimated302willingness to pay.303    And that is where we go to low-cost airlines. And it is304important that we realize that low-cost airlines have a role to305play in the industry because when low-cost carriers enter the306market, we see fundamentally that competition flourishes and307prices go down. I remember a moment of honesty with JetBlue308when they warned that all that power in the hands of a very few309deep-pocketed airlines has implications for consumers in the310form of reduced options, high fares, and often poor service.311    Now, that is really something that is getting worse.312Anticompetitive practices seemingly have left Americans with313less and less access to air travel. After both 9/11 and COVID-31419 pandemics, Congress bailed out the airlines to avoid a315collapse of our entire airline industry. Yet, since the316pandemic, big airlines have dropped dozens of cities from317services, places like Flint, Michigan, and Lincoln, Nebraska.318Some cities like Dubuque, Iowa, and Toledo, Ohio, have lost all319major carrier service. The capital city of Wyoming, Cheyenne,320has lost service on and off over the last decade and has had to321guarantee the revenue of a major airline merely to secure322regularly scheduled service to a single hub all through323taxpayer dollars. That is just not right.324    We are going to hear from incredible experts today about325rural and mid-sized cities routes and connectivity and how326airport hubs don't work, but it is clear to me that taxpayers327and Government have been invested in the success of airlines328and airports in America, and we deserve better returns on that329investment in the form of efficient, safe, meaningful air330choices and competitive pricings.331    The stakes are really high. Competition is critical for332safety and for maintaining and supporting the essential333workforce that ensures safety and maintenance. I believe that334we have to do more. We must invest in our systems, including335addressing our air traffic controller shortage and our336infrastructure needs. And it seems like this industry needs337capacity, more routes to smaller mid-sized cities and a bit of338a buffer. This is something we should all be committed to. More339staff, bigger seats, and extra aircrafts on standby should be340part of this conversation.341    To weather crisis and the natural boom-and-bust cycles in342the market, as well as to prevent bankruptcies and unfair343competition that lead to ultimately less meaningful choices for344hot and higher airfares for American travelers, is truly at345issue. A resilient airline industry is the most important goal346here. To keep American carriers competitive around the world347and to protect travelers from safety issues that D.C. locals348have been tragically reminded this year could have serious349consequences. We have work to do, and competition is at the350center of it. And this Committee, I am grateful for. It is351hopefully going to start finding some solutions.352    The last thing I want to say is I want to add to these353witnesses, it is a big deal when you come and testify before354Congress, before the U.S. Senate. It is also a bit of a355sacrifice leaving your jobs and your families often to come356here. Many of you had to fly, and we know how burdensome that357can be, so I want to thank everybody for being here.358    Senator Booker. And I will try not to get very upset at359Professor Sitaraman because he is an extraordinary guy--I have360read his bio--but that hair is very obnoxious to me----361    [Laughter.]362    Senator Booker [continuing]. And the Chairman of this363Committee, sir. I should hold him in contempt of Congress but--364--365    Chair Lee. It almost feels like a war crime.366    [Laughter.]367    Senator Booker. Yes, sir. There was a day that we looked368that good.369    Chair Lee. It is a great point. We really do appreciate you370coming here and knowing how busy you all are.371    It is important to remember that while much of what we have372said and what we may explore may sound like a complaint. There373is not any one person or one business that has developed the374status quo. This has been an iterative process made over375multiple decades under multiple administrations and different376antitrust regulators over many years. I think the question377before us is what the State of competition is in the industry378and what, if anything, do we need to know as a Subcommittee379charged with periodically reviewing our antitrust and380competition policy laws and also the enforcement of those381through our oversight capacity, whether things are going in the382right direction.383    So with that, I will introduce our witnesses. We have got384Gregory Anderson here as the president and CEO of Allegiant385Airlines; Sharon Pinkerton, who is the senior vice president of386legislative and regulatory policy at Airlines for America;387Barry Biffle, who is the president and CEO of Frontier388Airlines. We have Professor Ganesh Sitaraman here. He is a389professor at Vanderbilt University School of Law. And last but390not least, William McGee who is here as a senior fellow for391aviation and travel at American Economic Liberties Project.392Thanks to all of you for being here.393    If you will each stand, I will swear you in, and then we394will begin.395    [Witnesses are sworn in.]396    Chair Lee. Thank you. The record will reflect that they397each answered in the affirmative.398    All right. Let's begin with you, Mr. Anderson, and then we399will move from your end of the table one by one down. So we400will hear from Mr. Biffle, Mr. McGee, Ms. Pinkerton, and then401we will finish with Mr. Sitaraman before opening it up for402questions.403    Go ahead, Mr. Anderson.404405    STATEMENT OF GREGORY ANDERSON, CHIEF EXECUTIVE OFFICER,406                  ALLEGIANT, LAS VEGAS, NEVADA407408    Mr. Anderson. Chairman Lee, Ranking Member Booker, and409Members of the Subcommittee, thank you for the opportunity to410appear before you today. My name is Greg Anderson, and I serve411as the CEO of Allegiant Travel Company.412    At Allegiant we offer safe, reliable, convenient travel at413unbeatable value. All of our flights are nonstop and focused on414the leisure traveler. Without Allegiant, many people who live415outside major cities wouldn't have access to affordable air416travel. By offering unbundled pricing and low fares, we make it417possible for a broader spectrum of Americans to travel to high-418priority vacation destinations. Roughly 70 percent of the419routes we serve have no other nonstop flight options. The420convenience and value we provide adds competition to the421market, expanding the range of options available to these small422and medium-sized communities.423    I am here to talk about potential ways to make air travel424more accessible for everyone and to share my concern that, if425trends continue, American travelers may have fewer options and426face higher prices. We believe that there are a few key actions427that can help strengthen the sector.428    First, the advancement and modernization of air traffic429control systems across all communities, big and small.430Inefficiencies and delays within the air travel industry are431often attributable to outdated technology and insufficient432staffing. We are encouraged by the administration's plan to433modernize ATC and Congress' support and funding.434    Second, improving gate access for value airlines. The435current gate allocation process tends to reinforce the existing436advantages of legacy carriers. To address these discrepancies,437we supported the bipartisan Airport Gate Competition Act438introduced last Congress and would welcome such legislation.439    Third, international market access through joint ventures.440Large legacy carriers have been allowed to enter into broad441alliances for decades. These ventures give them marketing442power, scheduling power, and pricing power that small carriers443cannot match. Allegiant sought to pursue a similar joint444venture but tailored that to the value airline model. In 2021,445in partnership with Viva Aerobus in Mexico, we filed for a446first-of-its-kind value airline alliance. Together, we proposed44792 nonstop routes between the U.S. and Mexico. This alliance448would introduce low-fare competition into the market. It could449increase the total number of direct U.S.-to-Mexico routes by 50450percent and give nearly 5 million more Americans access to451affordable international travel. However, this venture has yet452to receive approval from the Department of Transportation453despite these clear procompetitive benefits.454    Last, I would like to discuss regulation of the industry.455Let me be clear. Safety is and always must be the top priority.456But rules that go beyond safety and into regulation of consumer457choice will inevitably lead to pricing out the most the most458fair-cost-conscious customers, customers that we are proud to459serve. Full fare advertising rules intended to increase460transparency actually conceal the impact the Government fees461and taxes have on the consumer. Allegiant offers clear pricing,462letting customers see and select only the options they want,463prioritizing transparency and choice.464    We also go beyond what regulation requires when it comes to465standing behind our product. For example, Allegiant compensates466passengers up to $300 in addition to a ticket refund if we467cancel a flight within our control.468    Air travel innovation is driven by competition. When value469airlines like Allegiant enter new markets, the average fare470dropped by 19 percent across all airlines. We believe that a471healthy airline industry benefits everyone. Value airlines such472as Allegiant make it possible for a family of four to take473their dream vacation for hundreds of dollars less than they474would otherwise pay.475    Allegiant is proof that competition and deregulation works.476I am proud of the 70 percent of customers who choose to fly477with us again. We provide otherwise ignored communities with478safe, reliable, and nonstop service at prices that are479affordable for everyday Americans. In my visits to our bases480and through conversations with customers, I can tell you that481what we provide is necessary and important to the industry.482    Thank you, and I look forward to your questions.483    [The prepared statement of Mr. Anderson appears as a484submission for the record.]485    Senator Booker. Mr. Chairman, can I just put into the486record that Barry Biffle is an awesome name? Yes, yes.487    [Laughter.]488    Chair Lee. Does anyone object?489    Senator Booker. No? Okay.490    [Laughter.]491    Chair Lee. Without objection, it will be duly noted in the492record.493    Senator Booker. Thank you very much.494    Chair Lee. Go ahead, Mr. Biffle.495496 STATEMENT OF BARRY BIFFLE, CHIEF EXECUTIVE OFFICER, FRONTIER497                   AIRLINES, DENVER, COLORADO498499    Mr. Biffle. Thank you. I don't have the hair he does, and500it's too late in life, I guess, for that, but thank you.501    So Chairman, Ranking Member, and Members of the502Subcommittee, I thank you for the opportunity to appear before503you today. Airline CEOs like myself usually get invited to504Capitol Hill when something's gone wrong, a snowstorm, a505canceled flight, or an angry customer on the evening news, so506let me start by thanking you for inviting me under better507circumstances.508    Again, I'm Barry Biffle. I'm the CEO of Frontier Airlines.509At Frontier we have a simple mission--make flying affordable,510greener, and more accessible for the average traveler. We're a511low-cost carrier, which means we don't rely on fancy lounges or512first-class suites. What we offer is safe, reliable, and513affordable way for Americans to travel.514    Today, I want to speak very seriously about a few issues,515and the first one I want to talk about is gate access and how516that impacts competition. Air travel is not just about getting517from point A to point B. It's about opportunity, the ability518for a family in a small town to take their kids to Disney or519for a student to jump on a trip home for the holidays.520Competition makes all that possible.521    History shows us that when low-cost carriers like Frontier522enter market, fares go down, sometimes 20, 30, even 40 percent.523Customers win. The legacy airlines, United, Delta, American,524have grown traffic just 6 percent since 2000 while raising525fares over 40 percent. By contrast, low-cost carriers have526grown traffic by 152 percent with only a 10 percent increase in527fares. That's competition at work.528    So the question before us is not whether competition works.529It's whether new competitors are allowed to compete at all, and530that's what brings me back to gates. In our industry, the gate531is the front door. You can have the planes, pilots, fuel, and532crews, but if you don't have the gate, you don't get to play.533Right now, too many of those gates are locked up by a handful534of big airlines.535    Across the country, we see fortress hubs, airports with a536single airline controlling 60, 70, 80 percent of the gates.537This kind of dominance doesn't give carriers pricing power. It538gives them control of who gets in and out of the market. Here's539the kicker. Many of these gates are not even fully used.540Dominant carriers hold them. They sit on them and block541competitors from coming in. Meanwhile, customers in these542cities pay higher airfares and have fewer choices as a result.543    To put in everyday terms, if McDonald's leased every street544corner in a town, set up one restaurant and left the other545corners empty, then told Burger King and Wendy's they weren't546allowed to open shop, that's not a free market. That's547protectionism with fries on the side, supersized, and that's548what we have in the United States airline industry.549    The results are predictable and harmful. Fortress hub550cities, fares, and higher competition is limited. Travelers in551Atlanta, Newark, Dallas, and other concentrated airports552routinely pay more than their counterparts in competitive553markets. So when gates are locked up, it isn't just a headache554for the airlines like mine, it's a tax on the traveling public.555    Moreover, the single largest disruption to our airline556beyond weather and air traffic control is gate holds caused by557obtaining gate--not getting gate access. Our daily flights per558gate can be double that of most big airlines. However, the559inefficiency of allocation of gates often results in our560diminished on-time reliability and otherwise preventable561cancellations.562    The Subcommittee has an opportunity to fix this. I want to563suggest a few practical steps. We need use-it-or-lose-it rules.564Airlines should not be allowed to hold preferential gates565indefinitely without using them. If you don't use the gate566efficiently, you should be required to give it up to another567carrier who can. It should be measured monthly and held to568account.569    Common-use requirements, when you build a new gate, at570least a third of those gates should be available for common571use. That means anyone can come in, not just the incumbent, and572provide competition.573    And we also need DOT enforcement authority. The DOT should574be empowered to step in when dominant carriers hoard all the575gates and block competition. They already play a role in slot576allocation. They should do the same thing with gates. And577again, it should be done monthly.578    And there should be transparency in lease arrangements.579Right now, gate leases can stretch decades, locking out new580entrants. We should require clear reporting and accountability.581These changes wouldn't cost taxpayers a dime, and they don't582require subsidies or bailouts. They just open the door,583literally, for competition.584    I know some may say, well, fortress hubs bring benefits,585more flights, destinations, but the evidence is the opposite.586Once one airline dominates, there's nothing there. But look, I587think there's more to this than just gate access. There's588loyalty programs that are subsidizing their basic economy,589which enables them to dump low prices out there. Even you had590the CEO of United Airlines saying recently that he allows591carriers like us to carry traffic. That's an interesting592comment that we get what they allow us to carry, so they should593look into that. And then same thing on re-accom agreements. We594should look into those because those are also harmful.595    I want to thank everybody for having us, and we look596forward to discussing things we can do to help with597competition.598    [The prepared statement of Mr. Biffle appears as a599submission for the record.]600    Chair Lee. Thank you very much.601    Mr. McGee.602603 STATEMENT OF WILLIAM J. McGEE, SENIOR FELLOW FOR AVIATION AND604  TRAVEL, AMERICAN ECONOMIC LIBERTIES PROJECT, WASHINGTON, DC605606    Mr. McGee. Chair Lee, Ranking Member Booker, Ranking Member607Durbin, and Members of the Subcommittee, thank you for hosting608this hearing today. My name is William J. McGee, and I'm the609senior fellow for aviation and travel at the American Economic610Liberties Project, a nonprofit organization dedicated to611addressing the problems of concentrated economic power.612    Over the past 40 years, I've worked in airline flight613operations as an FAA licensed aircraft dispatcher and then as614an aviation journalist and author. Since 2000, I've been an615airline passenger advocate.616    The industry I entered 40 years ago no longer exists. It617has been destroyed by deregulation and a lack of competition.618When Congress passed the Airline Deregulation Act of 1978, it619did so with the intention of ``placing maximum reliance on620competition,'' ``avoidance of unreasonable concentration,'' and621``encouragement of entry by new air carriers.'' By its own622aims, deregulation has failed. U.S. carriers are more623concentrated than ever due to decades of lax antitrust624enforcement and the failed experiment of deregulation.625    Consolidation is rampant. Competition has all but626disappeared. What was once a vibrant industry is now led by an627oligopoly of four airlines--American, Delta, Southwest, and628United--controlling 80 percent of the market. They have immense629pricing power, with a smattering of smaller low-fare airlines630offering only limited alternatives.631    Neither size carrier has a long-term sustainable business632model. How do we know? Mergers and bankruptcies have both been633commonplace since 1978. Numerous airlines have had to merge, go634bankrupt, or get American taxpayer-funded bailouts to survive.635Across nine hubs nationwide, the three biggest airlines control63670 percent or more of all flights, including in Newark,637Minneapolis, and Salt Lake City. In Charlotte, American638dominates 88 percent of departures. Since 2007, only two new639entrants have emerged, marking the longest dry spell in640history.641    Despite claims from the industry that there's competition642between carriers, the DOT's quarterly airfare reports suggest643the three largest airlines--American, Delta, and United--have644virtually ceased to compete against each other on price. The645few remaining low-fare airlines--Allegiant, Avelo, Breeze,646Frontier, and Spirit--are the only meaningful source of pricing647discipline, keeping fares on average 21 percent lower on the648routes where they compete.649    The Big Four thwart competition through myriad means,650including fortress hubs, global alliances, devalued frequent651flyer programs, branded credit cards, predatory pricing, and652more. Consumers and entire communities nationwide are worse off653due to airline consolidation. Passengers are left with higher654fares, fewer nonstop destinations, and fewer flights, and655workers have fewer rights and have lost jobs. Airlines abuse656their customers without consequence, whether it's inflicting657physical violence on passengers after overbooking seats or658charging them to sit next to toddlers. Major hubs were closed659in cities as large as St. Louis and Raleigh-Durham. These660closures hit smaller and rural communities particularly hard.661    While committing these harms, airlines do whatever they can662to avoid oversight and regulation. For example, they often663ignore DOT tarmac limitations, which can leave passengers664stranded for hours. Today, the largest airlines want even more665deregulation at the expense of passengers. In May, Airlines for666America, representing the largest carriers, filed a 93-page667comment requesting that DOT weaken or eliminate most passenger668protections, including fee transparency, cash refunds, flight669disruption compensation, and family seating policies for kids670under 13. Two days later, DOT issued a deregulatory agenda that671looked copy-pasted from Airlines for America's wish list.672    Given this regulatory peril, it's imperative Congress step673in. This Subcommittee should consider the following proposals,674which would directly address the concerns of passengers,675workers, and local economies.676    First, we applaud Senator Hawley for cosponsoring the677Airport Gate Competition Act. This is commonsense legislation.678It would promote competition by ensuring access to critical679airport infrastructure for smaller airlines.680    Second, Congress should eliminate Federal preemption, which681has blocked State courts, legislatures, and Attorneys General682from any airline oversight since 1978.683    Third, large institutional investors often pursue stakes in684all four of the Big Four carriers, reducing their incentives to685compete. It's time to restrict common ownership in more than686one domestic airline.687    Fourth, Congress should require the FAA to prevent the688majors from thwarting low-fare competition at congested689airports. Takeoff and landing slots shouldn't be bought, sold,690or traded by carriers.691    In conclusion, the failures of deregulation and692consolidation have made it clear that new and sensible693approaches to regulation are long overdue to protect consumers,694enhance competition, and ensure access for smaller airlines.695Your constituents will tell you the truth. Flying today is a696miserable experience. It wasn't always this way. It doesn't697have to be this way.698    We're at an inflection point. Congress needs to investigate699the failures of deregulation and, just as it did 50 years ago,700hear from the public, not just airline executives and their701lobbyists.702    Thank you, and I look forward to your questions.703    [The prepared statement of Mr. McGee appears as a704submission for the record.]705    Chair Lee. Thanks so much.706    Ms. Pinkerton.707708STATEMENT OF SHARON PINKERTON, SENIOR VICE PRESIDENT OF POLICY709  AND REGULATORY AFFAIRS, AIRLINES FOR AMERICA, WASHINGTON, DC710711    Ms. Pinkerton. Thank you so much for the invitation to712testify today.713    Today, more people are flying than ever, and for good714reason. Fierce competition between airlines has brought us715bargain airfares and a vast array of flight options, but it716hasn't always been like this. Before the 1978 Deregulation Act,717fewer than one in four Americans had been on a plane, and718that's because the Government controlled prices, schedules, and719routes. That Government one-size-fits-all approach resulted in720flying being a luxury that only the wealthy could afford. In721contrast today, 90 percent of the American public has flown.722That is competition in action. Freeing the marketplace from723Government command-and-control has literally democratized air724travel in this country.725    We can measure the State of competition in our industry726using three metrics--price, diversity of options, and customer727service. First, price. Affordable airfares are ubiquitous. Just728yesterday, I got an email from one of our carriers offering a729$39 fare. All airfares, including ancillaries, are at historic730lows. That's the data. The price of an average domestic ticket731back in 1977 was about $800. Today, it's 450 percent less.732    Now, we all know in contrast what's been happening with the733consumer price index. You mentioned it, Senator Booker. The734consumer price index over the last year has been five--up 23735percent in all categories except one, airfare. It's gone down.736In a world where inflation is hitting food, housing, medical737expenses, and other essentials, the low cost of air travel is a738noticeable and positive outlier. And frankly, much of that is739due to the lower-cost carriers.740    And that gets me to my second metric, the availability of741diverse options. Over the last few decades, the lower-cost742carriers have indeed been a major engine of growth in our743industry. They have taken market share away from the global744network carriers. And as a result today, the lower-cost745carriers carry almost 50 percent of domestic traffic in this746country.747    It's important to know that the data show that the number748of competitors per origin and destination city pair in this749country has increased since deregulation, increased. Now, part750of that is due to the fact that we've had new entrants join the751fray. Breeze, Avelo joined in 2021. And in fact, Breeze just752announced last week that they're going to be providing753international service next year, which is an indication that754just like the way the domestic market has transformed, the755international market has been transformed through the pursuit756of open-skies agreements that open up foreign markets.757    The third market--the third metric is customer service. Our758carriers have been investing record-breaking amounts in759innovations in order to elevate the customer service that they760provide. They're investing in tech and physical infrastructure.761They're improving their IT systems, mobile apps, lounges,762loyalty programs, bigger overhead bins, and faster Wi-Fi on763planes, just to name a few things. And it's working. Again,764back to the data, independent survey after survey shows that765customer satisfaction is high. Not perfect, but good. Given the766incredible logistical complexity of carrying 2.7 million people767every day safely on 27,000 flights, we are proud of the fact768that the vast majority of Americans continue to give high marks769to airlines and their airline travel experience.770    Given the robust State of competition, we do have a threat771to competition. The biggest threat is our short staffing and772our antiquated air traffic control system. You don't need to773look any further than the tragedy at DCA, the outages in the774northeast of the FAA equipment, and at DFW last week as775evidence of the pitiful condition of our air traffic control776system. That's why we are deeply appreciative that Congress has777approved the $12.5 billion down payment on Secretary Duffy's778air traffic control plan, but frankly it can't come soon779enough. As you know, we are flying 10 percent fewer flights and780have been for 2 years out of the major New York and New Jersey781airports. Now, flying less is bad for big airlines, it's bad782for small airplanes--airlines, but it's the worst for customers783because it robs them of options.784    So while the State of competition is strong, demand is also785strong by the way. TSA has had 8 of their 10 busiest days this786year. We do think Congress needs to take action. We urge you to787support a new air traffic control system that would be safer,788will allow for increased flying, and give customers even more789choice. Thank you.790    [The prepared statement of Ms. Pinkerton appears as a791submission for the record.]792    Chair Lee. Thank you.793    Professor Sitaraman.794795STATEMENT OF GANESH SITARAMAN, PROFESSOR OF LAW, VANDERBILT LAW796                  SCHOOL, NASHVILLE, TENNESSEE797798    Professor Sitaraman. Chairman Lee, Ranking Member Booker,799and Members of the Subcommittee, thank you for the opportunity800to testify on the State of competition in the airline industry.801My name is Ganesh Sitaraman. I'm a professor at Vanderbilt802University and the New York Alumni Chancellor's Chair in Law. I803also direct the Vanderbilt Policy Accelerator. I'm the author804of a textbook Networks, Platforms & Utilities, which covers the805transportation sector, among others, and a popular book called806``Why Flying is Miserable: And How to Fix It,'' which offers a807history of airline regulation and deregulation. I've also808coauthored some white papers on this topic as well.809    My testimony today draws on this scholarship, and it810represents my personal opinions, not the views of Vanderbilt811University.812    Air travel is one of humanity's extraordinary achievements,813and it has become essential to modern life and commerce. The814people who work in the industry from baggage handlers and815customer service representatives to air traffic controllers,816flight attendants, and pilots do us all a great service in817making air travel possible. I believe it is essential that we818have an air transportation system that is stable and resilient,819that is competitive, that provides access across the country,820and that treats passengers fairly. Regrettably, I do not think821we are meeting that standard today.822    First, stability and resilience. The airline industry823suffers from cycles of boom and bust, with dozens of824bankruptcies and repeated taxpayer bailouts.825    Second, competition. The airline industry is less826competitive and more consolidated than in the past. At some hub827airports, a single carrier can now have 60 percent, 70 percent,82880 percent market share. More broadly, the four biggest829airlines today have a larger market share than they did in8301977. This is an astonishing fact. We have less--we have more831competition--sorry, less competition today than we did during832regulation.833    Third, geographic access. Smaller communities and mid-sized834cities are losing service. Big carriers abandoned dozens of835cities during and after COVID-19. Airports that once had836multiple airlines and daily flights now struggle. Some places,837like Cheyenne, Wyoming, have been forced to agree to subsidize838highly profitable airlines to ensure they get even a minimum839level of service.840    And fourth and finally, there is the thing everyone knows,841and that is that the passenger experience is often miserable.842Seats are smaller, fees have proliferated, pricing is getting843more complicated and less transparent, connections through844giant hubs are stressful, and of course less competition and845limited service make it all worse.846    So my message to the Subcommittee is this. The airline847industry is not resilient enough, it is not competitive enough,848it is not serving the public or national interest well enough.849Addressing the problems in this sector requires understanding850how we got here, and in my written testimony, I described the851history of this sector and some of the dynamics that create a852tendency toward consolidation and concentration. The key lesson853from this history is that without pro-competitive, pro-854resilience, pro-growth, and pro-passenger rules, this industry855will never meet the high standard our country needs for this856critical infrastructure.857    But I come with good news too, and that is that you have it858in your power to fix flying. On stability and resilience, you859could require airlines to develop resilience plans or rainy-day860funds. On competition, you could expand access to gates and861reduce hub concentration. On geographic access, you can drop a862draft pick plan as the one I've proposed so bigger airlines863will serve small cities at affordable prices. And you can864improve the passenger experience by setting minimum seat sizes,865making it cheaper for parents to fly with infants, preventing866AI-enhanced personalized and dynamic pricing, and giving867passengers the ability to sue airlines when they engage in868abusive practices. In short, flying might be miserable today,869but it doesn't have to stay that way.870    Thank you for holding this important hearing, I welcome871your questions, and I look forward to working with you to872ensure the United States has an airline industry that meets our873national needs and that is thriving, stable, and competitive.874    [The prepared statement of Professor Sitaraman appears as a875submission for the record.]876    Chair Lee. Thank you very much.877    Mr. Anderson, let's start with you. We are now going to go878through 5-minute rounds alternating between Republicans and879Democrats in order of seniority, subject to the early bird880rule.881    But Allegiant frequently operates in a way that connects882smaller airports to, among other things, vacation destinations.883I know a lot of your routes pretty well because you are884courteous enough to fly out of Provo Airport, and that is where885I live, and that is fantastic. And you happen to fly to a886couple of cities where my adult children live, and so that is887very helpful. But very often you are connecting these smaller888airports to vacation destinations or places where they889otherwise need to travel. What headwinds have you had as a890smaller, kind of more low-cost carrier in trying to gain scale891within that market?892    Mr. Anderson. Senator Lee, thank you for the question.893We're really proud of Allegiant, and the model that we've894developed and invented over the years, as you mentioned, we895provide small and medium-sized communities service. We serve896more cities than nearly any other carrier in the United States,897and that's at low fares and nonstop. That's the value that we898provide. And we feel we have the opportunity to continue to899grow our model and expand our service to other like900communities.901    And to specifically your question, some of the barriers902that we have faced, I mean, when you think about just typical903costs, and is--are we able to stimulate demand in a particular904market? But outside of that, it's we're looking for ways to be905more efficient, and we--we're really excited about some of the906measures that we've seen from like the ATC modernization907program. We think that will help for Allegiant to continue to908expand its service. We also think the gate access bill is--909items like that where we can go into these destination airports910and have more of an opportunity to connect smaller and medium-911sized communities into those larger airports.912    Chair Lee. Right. And gate limitations often impose burdens913for an up-and-coming, you know, a new market entrant.914    By the way, on that topic, during the COVID pandemic, the915U.S. Congress doled out I think it was about $54 billion to the916industry as a whole. How did that impact market share or your917ability to break into the market? Did that have an impact on918your ability to gain market share, or did it diminish it? No919effect?920    Mr. Anderson. Thanks for the question, Senator. I would921say--I was the CFO at Allegiant during the time of the922pandemic, and it was a challenging time and very appreciative923of the CARES Act funds that were provided to airlines during924such time. Given Allegiant's unique model in the communities925that we serve, actually during the pandemic there was a period926of time where we were the fourth largest carrier in the United927States. I want to say it was May 2020. But overall, we were928able to navigate the pandemic I think relatively as well as929anybody, and we appreciate the support that the Government and930leadership that the Government played at that time.931    Chair Lee. Mr. Biffle, some more questions. What headwinds932have you faced at Frontier as you have tried to gain scale933within the market?934    Mr. Biffle. Yes, thanks. Thanks. Look, we've faced all935types of issues with scale. I mean, obviously, the gates that I936mentioned is a major factor. Also--and I mentioned to you re-937accom. You know, prior to all the consolidation, it was common938practice, as it is most parts of the world, until consolidation939in the United States, where, you know, if I cancel a flight or940someone else cancels a flight, we would take those customers at941whatever they paid if there are seats left last minute so that942people aren't convenienced. It was kind of--inconvenienced--so943it helped. So that hurts experience.944    But one of the big things on scale beyond the gates is945actually just the loyalty programs. When you look at the946subsidization that is going on of the big credit card companies947to the big airlines, it's massive, and it exceeds, in almost948every case of the big airlines, all their profits. And they're949using those profits to actually subsidize basic economy. So950you're taking credit card interchange and interest rates,951subsidizing basic economy, allowing them to dump cheap prices952and compete----953    Chair Lee. For the loyalty programs and the credit card954programs----955    Mr. Biffle. Yes, I mean, if they didn't have this massive956subsidy that they're getting from that, they wouldn't be able957to flood the market and dump prices like that. I mean, it's--958you're creating an economic situation that is completely driven959by their size and scale. And once you get to a dominance--I960mean, he mentioned, I guess it was Charlotte, 88 percent. You961know, your problem is, if you're in Charlotte, you're kind of962beholden to them. You have to play the game. But it's the963biggest dupe on those people too. I mean, the odds of them964getting upgraded, they're--I mean, when they look on their965upgrade list, they're probably number 76 on the upgrade list.966They're never going to get upgraded to first class. So a967carrier like us, I mean, our elite customers, 80 percent get968upgraded. Eighty percent get upgraded to our European business969class upfront plus product. Compared to the big guys, I offer970better value, but I just don't get the scale because they're971able to subsidize it with these credit card programs.972    Chair Lee. Right. And that is one of the inevitable973realities of this industry or any other industry where there is974a network effect. The bigger your network, the bigger the draw,975the more capable you are of having a credit card program or a976rewards program that allows you to do that.977    Mr. Biffle. Yes, and so when you get into position, you978control the gates, you control the re-accom, you control the979ability to be able to be on time. I mean, you control the980ecosystem with the loyalty. I mean, it's pretty rigged.981    Chair Lee. Okay. I see my time has expired. I have got a982lot more questions. We will hope to do multiple rounds today.983We will turn next to Senator Booker.984    Senator Booker. I am going to do the prudent thing and985defer to the Ranking Member of this Committee, who has a lot of986power and authority over me.987    Senator Durbin. Oh, the power of this Committee. Thank you988very much, Cory. It is great to be with you all, and I was just989sitting here jotting down. I have been in Congress for 43990years, 50 round trips a year, 2,000 flights, millions and991millions of miles. Maybe this is my subspecialty that I have992developed over the years.993    But I do find a couple things interesting. First, I want to994shout out to Northwest Orient Airlines, long gone, the only995airline that publicly supported my effort to ban smoking on996airplanes. Air Canada had already done it, but the majors would997not. They were afraid to take the heat, and they were glad when998it finally passed.999    But the thing that I found interesting--Mr. Biffle just1000referred to it in his answer to Senator Lee's question--is one1001element that I would like to discuss for a moment. When they1002got us in our seats with all the safety warnings--and God bless1003the flight attendants, I love them all--and they got you1004buckled up, and things have quieted down in the cabin, what do1005you hear over the microphone? A pitch for a credit card. And1006then next thing you know, the flight attendants who are focused1007on safety are walking the aisles trying to pass out brochures.1008Why? You have said it. For many airlines, there is more money1009made on the rewards and loyalty program than on air operations.1010In fact, these planes are flying banks with Visa and1011Mastercards in them, and the airlines make their money off of1012the loyalty programs.1013    What percentage of airline travelers participate in a1014loyalty program? Any idea, Mr. Biffle?1015    Mr. Biffle. I don't know the national average, but I can1016tell you that, you know, dollars per passenger, I mean, we have1017a program ourselves, but it's a few dollars a passenger. The1018big airlines are $25 to $40 a passenger is generated from1019credit card revenue. It's massive.1020    Senator Durbin. 82 percent?1021    Mr. Biffle. 82 percent--or----1022    Senator Durbin. Airline passengers participate in a loyalty1023program?1024    Mr. Biffle. Oh sure, yep.1025    Senator Durbin. What kind of law is there that regulates1026the frequent flyer programs so that the airlines can't just1027dump your miles that you have accumulated over years and years?1028It is a trick question. There is none.1029    Mr. Biffle. Yes.1030    Senator Durbin. So I introduced a bill called the Protect1031Your Points Act, which just answers the basic questions. I am1032going out of my way to save up all these frequent flyer miles.1033Are they worth anything? Can they cancel them all tomorrow? Do1034they owe me anything? Do they have any value to them? For a lot1035of people, this is a big investment. They make a decision on1036when and whether they are going to travel based on whether they1037can use miles or win miles in the process. What does it do to1038your competition at Frontier?1039    Mr. Biffle. Well, so it helps us to a degree, but it harms1040us in that we just don't have the scale, right? So if I had1041access to the big airlines networks, the same credit card1042someone used would get them more places they could fly, as an1043example. We are doing things to innovate, like we're1044introducing a first-class seat so people can get upgrades and1045so forth, but again, I just don't have the scale, so I don't1046get that benefit.1047    Again, having--I made the comment a while ago, people will1048get much more value from my card, but I'm small, so it's hard1049to convince people and market it. Once you get into that1050behemoth status, it's hard to stop that kind of momentum.1051    Senator Durbin. I have learned the hard way what it takes1052to get your name in lights at DCA, just to introduce a bill1053that addresses the interchange fee and the swipe fee on credit1054cards, and they will have a sign that says ``Stop the Durbin-1055Marshall Amendment.'' Do you have any idea what the interchange1056fee is that you are collecting or paying?1057    Mr. Biffle. It depends upon the--you know, the network, but1058we pay as little as 200 basis points, as high as 300 depending1059upon who it is. American Express is one of the highest.1060    Senator Durbin. Obviously, the major airlines look at my1061bill with Senator Marshall like the devil hates holy water, the1062idea that there would be some competition on the swipe fee or1063interchange fee, and that is to the benefit of consumers,1064ultimately, if we can do it.1065    I would like to ask you as well, when you look back over1066time, you have been involved with a number of airlines on the1067safety issue. Can you make any comment on the pilots and the1068availability of them and the shortages and pilots that we are1069running into with many airlines?1070    Mr. Biffle. Sure, So fortunately, the pilot shortage that1071we had a few years ago has now kind of dissipated. It could1072come back at some point. I think the main concern we should1073have with pilots is the availability of quality training and so1074forth, and there's a lot of data-driven things that we can do1075and simulations that can get them there, and I think we should1076spend time looking at, you know, the data we have, even once1077they're on the line, and--because you've got Folkwood Data as1078an example where you can monitor bad habits of some versus1079others. I mean, we can--in every one of these incidents--take1080the Colgan incident and many of the others. There were plenty1081of predictors. Had you been following those pilots before, you1082would have seen that there--these habits were there before. And1083so a simple 1,500 arbitrary rule is not how you get it. There1084are data-driven approaches that you could do to improve safety1085with pilots.1086    Senator Durbin. Thank you. Thanks, Senator Booker.1087    Chair Lee. Senator Hawley will be up next, but since we1088have had a couple of question rounds in there where we have had1089some focus by the smaller companies, Ms. Pinkerton, if you1090wanted to respond to the smaller carriers before we turn to1091Senator Hawley, and I would be happy to let you fill in here.1092If not, we will catch you in subsequent rounds.1093    Ms. Pinkerton. I'm happy to address the gate access issue,1094for example, that that is certainly something--you know, A4A1095represents large carriers and some smaller ones, and we've1096heard from smaller carriers about gate access issues. I think,1097though, it's important to remember, No. 1, it's the law that1098airports must provide access to new entrants, and there are a1099number of mechanisms that enable that to happen. So if you're1100going to take a Federal grant, you have to provide access.1101    Many airports are required to file a competition plan where1102they have to spell out exactly how they are going to provide1103access. And then Mr. Biffle mentioned the lease agreements.1104Lease agreements are another tool that airports have to ensure1105that new entrants have access. In fact, there are already use1106requirements so that carriers cannot sit on gates that aren't1107utilized. If they do that, the airport is well within their1108rights to take that gate back.1109    I think what's important here is that the FAA should be1110providing oversight to airports to make sure that they're1111enforcing the law that exists, and then if the FAA isn't1112providing that oversight to airports, I would say Congress1113needs to provide some oversight to FAA.1114    Chair Lee. Okay. Senator Hawley.1115    Senator Hawley. Thank you very much, Mr. Chairman. Thanks1116to all the witnesses for being here.1117    Mr. Biffle, if I could just start with you. About 9 months1118ago, your chief commercial officer testified to me that1119Frontier pays its gate agents bounties to stop paying customers1120from carrying bags onto the plane. Is this still happening?1121    Mr. Biffle. Not at the rate it was. We changed our----1122    Senator Hawley. Well, wait, wait, wait. What does that1123mean? So are you still paying your gate agents to stop your1124customers from carrying bags on? You were paying them at least112510 bucks every time you would stop a paying customer from1126carrying on a bag, your gate agents to get paid for it. Is that1127still happening?1128    Mr. Biffle. We do offer incentives and commissions----1129    Senator Hawley. You do.1130    Mr. Biffle [continuing]. To stop people who didn't pay, not1131who paid, who didn't pay.1132    Senator Hawley. No, you are paying your gate agents, so it1133sounds like you are still doing it. You are still paying them1134money to harass customers from bringing bags onto the airline1135by saying it is too big or it doesn't fit in the little box or1136whatever the case may be. You are still doing it. That is your1137testimony today? Why?1138    Mr. Biffle. I don't know that I would describe it that way,1139but we do provide incentives.1140    Senator Hawley. Why would you pay your own employees to1141harass your customers? Why is this good business practice?1142    Mr. Biffle. Unbundling enables us to offer low fares, and1143the lower fares, many people could not afford to fly if they1144didn't have the lower fare option. But in order for the system1145to work, everyone has to be treated fairly, and when people1146then--a small percentage----1147    Senator Hawley. Wait a minute. Why are you paying your1148agents? This has got to be the only business in the world I1149have heard of that pays your people to harass your own1150customers. These are customers who have purchased a ticket.1151They have a carry-on bag, and you are paying your people at the1152gate to stop them and say your bag is not quite right. It1153doesn't fit in this.1154    We heard testimony. The Permanent Select Committee in this1155Senate has done a thorough investigation of this. We heard1156testimony from numerous of your customers saying they were1157wrongly stopped and harassed. There is no appeals process.1158There is nothing. You are making gobs of money on it. You1159generated $40 million in fees on this according to your own1160data. That is amazing. And you are still doing it. I mean, in1161what world is this defensible?1162    Mr. Biffle. It's fair.1163    Senator Hawley. It is fair to whom?1164    Mr. Biffle. Well, you continue to insinuate that they paid1165for their bag, and they did not pay for their bag.1166    Senator Hawley. They paid for a ticket that allows them----1167    Mr. Biffle. They paid----1168    Senator Hawley [continuing]. To have a carry-on bag, and1169you are paying your agents to harass them to stop them from1170carrying it on. You know, the only other airline I know of,1171Spirit, was doing this, and they stopped because they said it1172was a terrible experience for the customers. Your customers1173hate it. This is one of the reasons they hate to fly. I can't1174believe you are still doing it. How much money have you made on1175it this year so far?1176    Mr. Biffle. Considerably less, if you will let me speak.1177What we did is we introduced the New Frontier. We have very1178simple branded choices, complete transparency.1179    Senator Hawley. Wait a minute. Wait a minute. First of all,1180you are not a victim here, Mr. Biffle, okay? You are making1181billions of dollars, and you are treating your customers1182appallingly badly. And the fact that you are still paying your1183employees to harass your own customers, I think, frankly, is1184unconscionable. I said this 9 months ago. I thought for sure it1185would have stopped by now, but I can't believe you are still1186doing it. So I don't feel sorry for you one little bit. In1187fact, I think you should apologize right now to all of your1188customers for what you are doing to them. And I think you1189should turn around and give them back the money that you have1190taken by forcing them to surrender their bags and pay extra1191fees after they have already paid a price.1192    I mean, I don't get it. You know, you seem to be totally1193baffled by this. You think that this is just fine.1194    Mr. Biffle. I'm not baffled. I think it's--you're1195insinuating that they paid for a bag that they didn't pay for.1196    Senator Hawley. No, I am insinuating----1197    Mr. Biffle. It's----1198    Senator Hawley. I am not insinuating anything. I am1199accusing you, actually, of doing something that I think is1200wrong, of incentivizing your own employees to treat your1201customers badly. And the money you are making on it is1202astounding, just astounding, $40 million in fees. 62 percent of1203your revenues come from these ancillary fees, of which these1204additional baggage fees are part of it, and you just seem to1205see nothing wrong with this. I mean, do you not understand that1206this is why people hate to fly? They hate that they are treated1207terribly when they go to the airport by airlines, and you are1208paying your own people to do it. Do you want to say anything to1209your customers or to the flying public?1210    Mr. Biffle. I think we've made huge progress in this area1211this year. We have introduced--as I started to say, we've1212introduced an economy product. That product is for $20 to $30,1213gives you free change fees, free seat assignment, carry-on bag.1214The persons that you're discussing are the people who bought a1215basic product, not that product, and they didn't pay for it.1216    Senator Hawley. Will you commit to quit giving incentives1217to your employees to stop customers and take their bags away?1218Will you stop that? Your other airlines have done it, your1219competitor airlines, your peer airlines. Will you commit here1220today to stop paying your employees to harass customers?1221    Mr. Biffle. Can I ask a question?1222    Senator Hawley. I would like an answer to mine first.1223    Mr. Biffle. I--we will look at that, but I don't----1224    Senator Hawley. That doesn't sound like a yes or a no. Can1225you just say, yes, we will stop paying our gate agents to1226harass our own customers over their bags?1227    Mr. Biffle. We are not harassing customers.1228    Senator Hawley. Yes, you are. And I invite you to read the1229report by the Permanent Select Committee of this body that1230investigated this and took testimony from your customers.1231Indeed, we took testimony from your own executives on this.1232This is a reality. Or, alternatively, you could go out to DCA1233here and go and ask some of your customers how they feel about1234it. I know what they will tell you. They will tell you what1235they told us. They hate it. They feel badly treated. They feel1236like they are treated like cattle, and you are making tens of1237millions of dollars off of it, and I just think that is wrong.1238I just think it is ridiculous.1239    I have got a lot more questions for you, but I know other1240people want to ask questions.1241    Chair Lee. Thank you. Senator Booker.1242    Senator Booker. Professor Sitaraman, first of all, my tone1243will be different than Senator Hawley's but the same energy. I1244want to bring that to you for that hair, the same negative1245energy there, sir. I just want to stipulate that for the1246record. Okay? Are you ready for me?1247    Professor Sitaraman. I'll trade you an inch of hair for an1248inch of height if we can make that deal.1249    Senator Booker. We might have a deal. We might have a deal,1250sir. Okay. I would like permission to treat the witness as1251hostile.1252    Sir, I am really concerned about Americans who don't have1253access to air travel because of where they live, and I want to1254know how can we ensure that millions of Americans who don't1255live around major cities can have access to reliable, efficient1256flights and that the airlines themselves stay afloat. Can you1257give me your perspective on that?1258    Professor Sitaraman. Well, thanks, Senator. I agree this is1259a big problem, and I think the core thing to start by1260understanding is why this happens. Why are small cities, why1261are mid-sized cities losing air service? And I think there's1262really two reasons behind it. The first is that in some places1263it is uneconomical to serve. The volume of passengers is very1264small, and it's costly to fly. And in those places, it's not1265going to make sense for an airline to serve unless they get a1266subsidy, or unless there's a requirement, a kind of duty to1267serve like we have in other areas of law.1268    The second reason is because of consolidation. As a number1269of people have mentioned already up on this witness stand, and1270as has been mentioned by Senator Lee, this is an industry in1271which there are network effects, there's economies of scale,1272and there are barriers to entry. And those things create1273tendencies toward consolidation and concentration, and when you1274have that, there's an incentive for airlines to focus their1275operations in bigger and bigger cities. That's why we have the1276hubs that we have, and that often means de-hubbing certain1277places or reducing service to others. And I think this is a1278serious problem because we have an airline system that is1279essential infrastructure for our country. It provides----1280    Senator Booker. And you in your testimony go into that a1281lot, and you speak actually I think quite persuasively about1282the economic benefit to our country as a whole when you ease1283transportation. Roads, we don't not pave roads to areas. And1284you almost say that it should be almost like a utility and that1285kind of obligation. Is that correct?1286    Professor Sitaraman. Yes, that's right. And if you think1287about it this way, would you ever start a Fortune 500 company1288in a city with no air service? You wouldn't do it. If you were1289an entrepreneur with a great idea, a kid growing up----1290    Senator Booker. But we have even seen VC dollars far more--1291if you have a direct from Silicon Valley, VC dollars more. That1292is how vital it is that people won't even necessarily even1293invest in businesses that don't have that. There is a1294correlation, I should say, maybe not a causation.1295    Professor Sitaraman. And that's why this is basic1296infrastructure. And I think that what we want as a country is1297for people who grow up anywhere to have opportunities.1298    Senator Booker. But your solution to that is for Congress1299to act.1300    Professor Sitaraman. Yes, I think that's right. So the1301current solution that we have right now I don't think is1302working, and that's the Essential Air Service program. It1303provides a subsidy to a number of very small cities. But these1304are very, very small cities, and they don't include a number of1305other places that have lost service in recent years.1306    I think one proposal that I've put forward, and these are1307ideas that I think should be debated, is what I call the NFL1308draft-pick model. And the idea is that the biggest airlines1309would be like the teams. There'd be a bunch of cities that1310would be like the players. And the airlines would have to pick1311cities that they want to serve, would go in order, until all1312the cities are covered. And they would have to have affordable1313access.1314    Senator Booker. Right, and I am just going to interrupt you1315because I want to get one more question before my time. But it1316is this concern I have about the hollowing out of certain1317communities because of consolidation. We have talked about in1318the agricultural sector we have seen entire businesses being1319killed in towns that are the connective tissue of our country.1320And I think this should be one of the things we should be1321looking at when these towns and communities lose air traffic,1322they lose economic investment, they lose opportunity, and many1323times they lose out on what adds--how should I say it? It adds1324vibrancy to a community.1325    I just want to shift, Mr. McGee, to you really quickly in1326the remaining time that I have. Can you speak to me about an1327idea that I really believe in, which is this idea of passengers1328have fundamental rights and what Congress could do to better1329protect passengers who still often report very bad experiences?1330I think that Senator Hawley was scratching at that as well--1331well, maybe not scratching, but pounding at that as well.1332    Mr. McGee. Yes, thank you, Senator. The fact is the United1333States lags much of the world in terms of passenger rights.1334This is the standard operating system in the European Union,1335United Kingdom, Canada, India, countries all over the world,1336that there are mandatory rights in terms of what you--how you1337will be compensated when there is a flight delay, a1338cancellation, mishandled baggage.1339    Here in the United States, we greatly allow airlines to1340police themselves. They write contracts of carriage written for1341and by themselves, and we adhere to them every time we swipe a1342credit card and buy a ticket. Now, the fact is that the irony1343is the largest U.S. airlines--Delta, American, United--if1344you're flying on them and you encounter a problem, a canceled1345flight or a delay on foreign soil, you will be treated much1346better than on American soil. So if you're on Delta and your1347flight is canceled----1348    Senator Booker. And I want to----1349    Mr. McGee [continuing]. You want to be in Brussels, not1350Atlanta.1351    Senator Booker. I want to just be respectful of Senator1352Moody, but I just want to say because there is so much1353bipartisan space and I am not trying to be partisan, but the1354Trump administration has rolled back some rules that would have1355given passengers transparency. Can you talk about the actual1356impact for American consumers of that?1357    Mr. McGee. It would be devastating. As I said, we already1358lag much of the world, but the few existing protections that we1359have, as I said, Airlines for America issued a 93-page1360suggestion to the DOT, and unfortunately, it seems like this1361DOT is adhering to it. It would be devastating. Right now,1362they're doing it in a request for further information. We and1363others will be weighing in. But we should all be on guard that1364if you think air travel is problematic now, it will be1365absolutely awful a year from now if the DOT rolls back the1366provisions that we already have.1367    Senator Booker. Thank you, sir.1368    Thank you, Mr. Chairman.1369    Chair Lee. Senator Moody.1370    [Off mic.]1371    Senator Booker. Microphone. And I am sure he spends more1372money on product than you do.1373    [Laughter.]1374    Senator Moody. For sure. You can give me your tips later.1375    Thank you for being here today, very important hearing,1376very important hearing. One of the things that we struggle1377with, I think, specifically in the airline industry is the1378understanding--as I come at other industries--coming from as1379attorney general, one of our big challenges was we had consumer1380protection laws. Many of us had antitrust divisions. And when1381you are approaching mergers, acquisitions, you are always1382trying to make sure that there is meaningful, true competition,1383while at the same time making sure you are never, as a1384Government, selecting the winners in a market because that in1385of itself negates meaningful competition.1386    And I was very frustrated with a particular case in the1387sense that we have--for those that don't know--and the American1388people that may be watching, we have legacy airlines, we have1389low-cost airlines, and then we have ultra-low-cost airlines.1390And we have two of our ultra-low-cost airlines with us today.1391Is that how you would describe yourself? Is that your----1392    Mr. Anderson. Sorry, Senator, we like to refer to ourselves1393as value airlines, but----1394    Senator Moody. Value airlines.1395    Mr. Anderson [continuing]. It is a common----1396    Senator Moody. Okay.1397    Mr. Anderson [continuing]. Term that is used, ultra-low-1398cost carrier.1399    Senator Moody. So my concern is, once you come into the1400market as a new player, and let's say you come in as a value1401airline or even a low-cost airline, do you think that you have1402to stay there for the duration of the existence of your1403company?1404    Mr. Biffle. Is that----1405    Senator Moody. Just answer, either one of you.1406    Mr. Biffle. Well, it is not uncommon for airlines to1407evolve. Probably the best example today is Southwest, started1408out as low-cost, and they are now evolving to offering and1409suggesting that they may have either other legacy or big1410network attributes if that makes sense.1411    Senator Moody. Yes, so I was very frustrated under the1412Biden administration when the Spirit and Jet Blue announced1413that merger, and by the next March, Florida came in and looked1414at that and said very clearly, we can make sure we have better1415capacity, better flights, ensure competition. We announced a1416settlement. This was only probably about 6 months after the1417announcement. And the next day, DOJ announced they were going1418to fight, and they were going to block that, the next day. It1419showed very differing philosophies on how to ensure competition1420and ensure that Government was not picking winners and losers,1421very different philosophies.1422    And the reason we worked so hard on that settlement and1423announced that settlement was because we knew that one of those1424players was in financial jeopardy, and this was going to be a1425way to make sure that consumers could still take advantage of1426that capacity. And it might even present more competition for1427legacy airlines. I mean, that would be new, right, and1428something we would all want to see. And within a year, because1429the DOJ under Biden fought that, that was blocked. And then, of1430course, what we expected, Spirit filed bankruptcy. I think now1431they are on their second bankruptcy. I think I would like to1432ask Ms. Pinkerton, how can we ensure that Government is not1433placing a finger on who wins and loses in competition among1434airlines?1435    Ms. Pinkerton. Well, without addressing--I can't address1436your specific situation that you're talking about there, but I1437believe that something that is definitely an issue for all1438airlines are certainly what we're calling cost convergence. So1439we're seeing increased airport costs, we're seeing increased1440labor costs because we're paying our employees more, and we're1441seeing increased regulatory costs. So I think it certainly1442wouldn't be tipping scales to say we shouldn't be imposing1443additional costs on the industry, and also what can we do for1444the entire industry?1445    As I have said in my testimony, I really think a broken air1446traffic control system and an air traffic controller shortage1447is the most significant threat to competition because we're1448flying 10 percent less today because we don't have adequate1449controllers and adequate infrastructure. So that's my--that's1450our policy suggestion.1451    Senator Moody. If I had more time----1452    Chair Lee.1453    [Off mic.]1454    Senator Moody. I do? Thank you. Since it is so specifically1455related to antitrust, can I ask our value-based airlines if in1456fact you were facing a situation where you were dealing with1457the financial health of your company, and the only way to1458continue to provide service and capacity was to evaluate1459merging, do you believe Government should work with the1460stakeholders in order to ensure that you can continue in1461existence, or do you think that they should block you out of1462some sort of----1463    Mr. Biffle. Well, I would say that----1464    Senator Moody [continuing]. Protection of----1465    Mr. Biffle. Well, I think----1466    Senator Moody. Maybe protection of legacy carriers.1467    Mr. Biffle. Let's go back to the Spirit--let's go back to1468the Spirit-JetBlue example. Having been around the industry for1469three decades, I was shocked. I mean, we created a system of1470the Big Four controlling over 80 percent of the market, and1471then two of the small players were trying to get together. I1472mean, I found it laughable that anyone would think that was1473something that should be stopped. In fact, I would argue that1474all of the other small carriers--and just stop and think about1475this. All of the non-Big Four altogether are not as big as one1476of the Big Four. You should give all of us antitrust immunity.1477Like your job should be to say, if I really want to fix these1478things, what should I go do? You should give us all antitrust1479immunity. You should give us not lip service about the gates.1480    I'll give you real examples about gates. I should tell you1481about some horror stories about things that have happened this1482summer in Atlanta. I take real exception to being--that the1483answers are that I should be fined or do things when the1484reality is the system's rigged against us. You fix the gates.1485    And I think you need to look for scale things that you1486could do on the mileage programs. Example being, you know, one1487of the things you could do is give value carriers like us, our1488mileage programs, access to the big airlines' networks at the1489cost that they charge themselves for miles. I mean, there's1490some real remedies that the Government should do to correct1491what we now all recognize has been bad for consumers, and1492that's allowing the Big Four to control the market.1493    Senator Moody. We had a low-cost airline trying to merge1494with a value-cost airline so that one could stay in existence--1495--1496    Mr. Biffle. Yep.1497    Senator Moody [continuing]. And the Government said, nope,1498we are the Government, we are going to block that, and then one1499had to file bankruptcy. I just don't know that that has1500resonated with our policymakers or our lawmakers. Hopefully,1501this administration takes a new approach to ensuring true1502meaningful competition. That is my hope. I am seeing very good1503signs out of this new administration.1504    But I do think we need to not lose sight of the fact that1505exactly what I knew it was going to happen, happened. And we1506can't keep this up if, in fact, we are trying to keep costs low1507and travel possible for all Americans.1508    So thank you so much.1509    Senator Booker. See, you could have taken more time. The1510Chairman was distracted for a moment by his incredible staffer1511behind him.1512    Chair Lee. We were just commenting on how outstanding your1513questions were.1514    [Laughter.]1515    Chair Lee. All right. Ms. Pinkerton, let's go back to you1516for a minute. You noted that air traffic control systems cost1517the economy about $25 billion annually in delays. That is every1518single year. That is nothing to sneeze at. That is a1519significant thing. That is, I assume, taking into account the1520economic cost.1521    Ms. Pinkerton. Of time.1522    Chair Lee. People, yes, sitting where they would be moving.1523So what impact do you think the modernization of air traffic1524control might have on that problem and on the market as a1525whole?1526    Ms. Pinkerton. In fact, I heard Administrator Bedford at1527the U.S. Chamber a couple of weeks ago say that he thinks the1528economic benefit--I'm going to get his numbers wrong--but could1529be anywhere from almost $1 trillion over time because we're1530not--you're not just stopping the delays and cancelations,1531you're building the system and allowing for more growth. And as1532you know, we drive 5 percent of the GDP, et cetera. So it's--1533I'll get back to you on the exact--his exact numbers, but it is1534an enormous potential for economic benefit.1535    Chair Lee. Okay. Because otherwise, you are just talking1536about delays, just delays because of administrative limitations1537on our ability to direct air traffic, whereas if we modernized1538it, you would have fewer of those.1539    Ms. Pinkerton. Fewer of those and the ability to grow----1540    Chair Lee. Yes.1541    Ms. Pinkerton [continuing]. Instead of shrinking, which is1542what we're----1543    Chair Lee. Right.1544    Ms. Pinkerton [continuing]. Doing right now.1545    Chair Lee. Right. So right now, we are acting as if the pie1546were limited or even a shrinking pie.1547    Ms. Pinkerton. Correct.1548    Chair Lee. Yes. We have been forced into that. Okay. Thank1549you. That is very helpful.1550    Mr. Anderson, I want to go back to you for a second. In1551your opening testimony, you talked about some of the benefits1552of international joint ventures. Talk to us about that. And you1553know, do you see the Caribbean, Canada, or Europe as additional1554markets that could benefit from value, ultra low cost, whatever1555you want to call this niche of the market, joint ventures going1556on in that area?1557    Mr. Anderson. Senator, thank you for the question. We1558applied about 1,400 days ago for antitrust immunity with Viva1559Aerobus down in Mexico. And Mexico was the largest transporter1560international market. And what that was--what we were asking1561for is the ability to scale in size and compete with some of1562the larger carriers, the international carriers that--such as1563the legacy carriers that have these antitrust immunities. And1564so by----1565    Chair Lee. You mean the immunities in connection with the1566international co-chairs?1567    Mr. Anderson. Right, with partners. For example--well,1568there's several examples, I think dozens of them that exist1569today, international being a very important part of obviously1570the travel ecosystem. What we were looking to do was provide1571direct nonstop service from those communities that we serve1572that currently do not have it into some of those Mexican1573beaches such as Cancun, Cabo, or Puerto Vallarta and to do it1574at lower fares.1575    Chair Lee. What is the biggest impediment to that? Is it1576regulatory, or is it something in the market itself? In other1577words, is there a regulatory reason why it is harder for them1578to do it, or is it just less attractive for them to go to all1579the work to do it with a smaller carrier?1580    Mr. Anderson. I think for us, our view is partnering--1581entering in the international market such as Mexico for1582Allegiant, partnering with somebody like Viva, who has the1583know-how and experience in that market, we think will allow us1584to scale in size and be more successful when we go up against1585some of the larger legacy carriers in the similar markets.1586    Chair Lee. Is there also a part of the limitation that has1587to do with the airports that you fly? A lot of the airports1588that you service are not currently international airports. Does1589that contribute to the problem? In other words, do you have to1590have presence from, I guess it would be CBP, at that airport?1591    Mr. Anderson. Yes, not all of our airports, given some of1592the communities we serve, have FIS clearance, which would allow1593for clearing customs, but there is a significant number of our1594airports that do, that we could fly or add direct nonstop1595service into those Mexican beach destinations.1596    Chair Lee. Okay, but that will typically--in order for that1597to occur on the U.S. end, you would have to have the1598involvement of both CBP and DOT. Is that right? Do both1599entities have to approve designating something for1600international flights?1601    Mr. Anderson. My understanding--and I apologize if I'm1602incorrect on this, but we are just waiting--or it's for the DOT1603that would approve.1604    Chair Lee. DOT is the one----1605    Mr. Anderson. Yes.1606    Chairman Lee [continuing]. That approves it. Okay. Got one1607other question, and then we will turn to Senator Blumenthal.1608    Mr. Biffle, a moment ago you took me off guard when you1609said maybe we should have all airlines, regardless of size,1610legacy, value, ultra value, or whatever you call yourselves,1611should have full antitrust immunity. I did not expect that.1612That was not on my bingo card for today's hearing, particularly1613from a smaller carrier. Tell me why you say that and why you1614think that would enhance the state of competition in the1615industry.1616    Mr. Biffle. Well, I took this hearing very seriously. I was1617flying out last night, and I thought about how do you get it1618where the small carriers can compete with the Big Four? And I1619came up with a couple of solutions, and I think that's one that1620would be very powerful. I'm not saying antitrust with the Big1621Four. I'm saying everybody else should work together to provide1622a real forcing mechanism to provide competition to the Big1623Four, and that would be a great way to do it.1624    Chair Lee. But if nobody is subject to the antitrust laws1625at that point, the skeptic would say that is going to foster1626collusion.1627    Mr. Biffle. Well, help me out with it. I mean, so a quarter1628of the market is controlled by one. There's three other1629carriers that are around the 20 percent mark. You've already1630got 20 percent being controlled by one entity. What's your1631problem with the small guys controlling 20 percent?1632    Chair Lee. I mean, one could argue that, moving forward,1633what that would do with respect to future proposed mergers and1634acquisitions, I mean, particularly if you are talking about1635full antitrust immunity from the full panoply of antitrust1636laws. There is no reason why you wouldn't see even more1637consolidation than we have had up until this point.1638    Mr. Biffle. I don't know if you'd see more consolidation,1639but you'd see us work together better in airports, and you've1640got--let's take gates. You've got finite resources. If Greg and1641I were able to work together, our teams work together on1642coordinating schedules so that we better mash up our schedules1643so that we both run a better reliable operation in fill-in-the-1644blank city, the big airlines get to do that.1645    So I'm saying you've got a massive problem in this country1646where the Big Four scale is pushing down competition. If you1647want to give us a level playing field, give us a level playing1648field on the gates, give us a level playing field on1649competition, give us some kind of remedy to solve against the1650loyalty and the credit card. I mean, that was my other1651suggestion is give our credit card customers access to the big1652networks at the same cost that they booked for themselves in1653their accounting. So I'm just giving you real solutions. Look,1654I took it serious. You want more competition in the country,1655and I'm telling you these are things that are big issues.1656    And I would throw you one more that's very low cost, much1657cheaper than the modernization of ATC and not well understood.1658When you have--look, we're going to have weather, especially in1659Florida, right? And so there's limited corridors, and we can1660modernize, but I don't think a lot of people realize that1661general aviation can manipulate the ATC capacity. So a private1662jet can actually go in, and when we have a scheduled flight at,1663say, 11 a.m., I can't file a flight plan for a different time.1664I have to file the flight plan for my scheduled time, right?1665    So let's say Mr. Blumenthal has a private jet. He wants to1666fly at 11. Maybe he doesn't, but I'm just saying, say he did,1667you know, as an example. Well, what his pilots----1668    Senator Blumenthal. From your lips to somebody's ear.1669    Mr. Biffle. Right. Maybe it's somebody else, but I'm just1670using it as an example. So his pilots know he wants to go at167111. They know there's a 3-hour ground delay program. Well, his1672pilots will just file for 8 a.m. He shows up at the 11, never1673knows the wiser, they go take off.1674    Meanwhile, I have to go through this airspace a couple1675times a day, and I blow up my crew, and then I have to cancel1676two flights with a couple hundred people on each. Four hundred1677people get inconvenienced so three people could take a private1678jet. And this is happening every day in every major storm event1679for the Northeast and Florida, and this is what contributes to1680thousands of customers being canceled. And this is why I take1681real exception to people saying, oh, I should compensate them.1682No, I think the Government should step in and look at all the1683places that I have to cancel a flight. Neither one of us ever1684want to cancel a flight. I don't want to harass customers. I1685don't want to cancel a flight, but I want to operate safely.1686There's never a time where I'm going to want to inconvenience1687someone. There's generally a reason, and I think what you1688should look into is why. Why would we have to cancel at a1689higher rate?1690    Take Atlanta. Let's talk about gates. So this summer, true1691story, I personally got involved. We had over 10 flights that1692had over 3-hour tarmac delays, over three, one 5 hours. I got1693on the phone personally with the airport control towers in the1694middle of this event because I was so upset about why can we1695have this delay. I'm on the phone with them. We had a medical1696emergency on a 5-hour delay, medical emergency. Someone would1697have a heart issue. We got cleared by the tower to go. Our1698plane starts moving toward the gate, and an Alaska plane pulled1699in front of us and parked at the gate.1700    We found out that Delta controls the ramp there, and they1701had cleared them. While we're trying to figure that out, Delta1702goes and takes another plane at another common-use gate. This1703was just happening, and no one else experienced this kind of1704event, but we had a couple thousand customers that experienced1705over 3 hours, all because we don't have the same gate access.1706    And while all this was going on--and I take real exception1707to your comment earlier about there's rules--Southwest Airlines1708has four flights per day, and during that event, during that1709event, Southwest gates were open. I had customers and employees1710taking pictures, so I've got people even including a medical1711emergency----1712    Chair Lee. Is there an area where they have exclusive1713ownership of the gate?1714    Mr. Biffle. They've got exclusive ownership of the gate,1715and their minimum use is only four flights a day in Atlanta.1716They can control a gate with four flights, and yet I'm using1717the equivalent of 10 to 12 flights. Anyway----1718    Chair Lee. Okay. I apologize to Senator Blumenthal. I1719didn't intend to eat up that much time. You are up to bat.1720Thank you. And I will give you all the time you want now, both1721because I feel bad, and I want to ride on your plane someday,1722so----1723    [Laughter.]1724    Senator Blumenthal. You know, I always knew I disliked1725those private planes, and now I know why. And just anecdotally,1726I fly from Hartford to Washington, DC, pretty regularly, and I1727fly in the regular whatever it's called now, class, and every1728other flight someone will say to me, ``I thought you guys had1729private planes.'' And I know that my colleagues from places a1730lot more difficult to get to than Connecticut wish they had1731private planes, but we experience the same kinds of travails1732that your customers do.1733    And plainly, we have a lot to learn about how we can1734improve this system because it sounds like we are, often to me,1735dealing with a system that is decades old, and we have failed1736to use the more modern technology on air traffic control, on1737the gate system, kind of an archaic rubber-bands-and-glue kind1738of system that we have right now.1739    But I want to focus on an area that Senator Hawley, I1740think, introduced, which seems really top of mind for a lot of1741flying customers. First of all, you know, for a long time, I1742have fought the consolidation of the airline industry, so I am1743with you on the level playing field. 80 percent of the market1744for air travel in the United States is controlled by four giant1745airlines, and the mergers over the last 20 years, and having1746produced this consolidation, mean fewer choices for many1747people, a worse travel experience, and more nickel-and-dime1748fees, one of them being this bounty system. I know Senator1749Hawley has asked you about it. Not sure that he had time to1750finish.1751    Last year, the Permanent Subcommittee on Investigations,1752which I Chaired, conducted a yearlong investigation of all of1753the airlines' approaches to these fees and charges, and we1754found that five airlines generated $12.4 billion, $12.4 billion1755in seat fee revenue alone between 2018 and 2023. Billions of1756dollars more are collected in the bag fees. The Subcommittee1757revealed for the first time, the extent that your airline and1758Spirit had a bag bounty scheme where those airlines, as you1759know, pay so-called bounty to their employees for collecting1760bag fees at the boarding gate.1761    So first, I would like to know--and I think you answered1762this--that the practice is continuing. What the justification1763would be, what explanation you would have, but also what can be1764done about those other fees, the charges for sitting together,1765family Members, the charges for the other kinds of services1766that are provided when the cost for them to the airline is way1767below what is charged, and therefore, it is used as a profit or1768revenue center.1769    I will begin with you and maybe others can answer.1770    Mr. Biffle. I'm sorry, so there's a lot there. What are the1771main questions?1772    Senator Blumenthal. The main question is, why do you1773continue with a bounty fee?1774    Mr. Biffle. Well, so at Frontier, we want to enable the1775most people to fly. We have the lowest costs in the country. We1776actually generate the lowest amount of revenue per passenger,1777so we're giving more consumers the ability to fly than others.1778    Unbundling had proven to be very successful in enabling a1779lower entry price, and just like you sell a car, there's cars1780that--you can buy a Tercel that's stripped down, or you could1781buy a fully loaded Cadillac Escalade. And so it has been common1782practice in the world to offer a base model and bundle them1783back up.1784    And so what has happened is that if you have a system like1785this, if people cheat, it's no different than somebody1786shoplifting. I mean, if they go through, take a product, and1787the other person is charged for it, that's just not fair to1788consumers.1789    Senator Blumenthal. But just to stop you there for a1790moment, I understand the business model, but it seems to me1791that if you were to raise your prices just ever so slightly,1792you could compensate for the fees that you charge on the bags,1793and most important, people would know before they got to the1794gate what the charges would be because right now, they arrive,1795and some agent at the gate figures they can be rewarded, so1796then someone is charged----1797    Mr. Biffle. Well, let me go back. So, look, I want to be1798the most friendly. We believe we've tried to be the most1799friendly, and I hope we could agree that that would be right.1800So before I answer the question about unintended consequences,1801so Southwest Airlines earlier this year announced they're going1802to start charging for bags, and we saw this as a major1803opportunity. We thought, my gosh, they've spent billions of1804dollars to build this brand, and, well, gosh, if it was so1805important, these are things people complain about, and so1806forth, let's do it.1807    So we announced that we would adopt free bags, right? And1808quite honestly, I was really hoping it would work for all these1809reasons. I wish they would. But you know what we found? It1810worked for a few days, and we got a lot of publicity, but1811ultimately, people didn't want to pay us more. There's what1812people say, and then there's what they actually do. And so I'd1813love to be as friendly as possible.1814    So what we've done--I don't want to pay anyone a bounty.1815And we've cut it way, way down because I've introduced an1816economy product for as little as $20. People are getting a bag,1817free change fees, and free seat assignments. And so with that1818low price, there's very little cheating going on. But the1819problem is, if you don't have some kind--I'd love to figure out1820a way to do it. The challenge is, is that everybody will flood1821them and not comply, and it's not fair to other people. It's1822just like insurance fraud. I mean, it's not a victimless crime.1823    So I'd love to figure out how to do it and have the best1824experience possible because I think we are on the side of the1825consumer. People can afford to fly by flying Frontier. So1826having said that, we haven't figured out a better solution just1827yet. And I even tried to raise the prices a little more, but it1828just hadn't worked.1829    Senator Blumenthal. I don't want to dwell on you, but I1830understand your answer.1831    Let me ask Mr. McGee. My impression is the three largest1832airlines raise their bag fees pretty much in lockstep. Is that1833a sign of lack of meaningful competitive pressure to charge1834lower fees or other ancillary fees?1835    Mr. McGee. Thank you, Senator. And yes, I think the answer1836is absolutely. I mean, what we see with the big three in1837particular--American, Delta, and United--not just on fees, but1838even on fares, there's no need to signal pricing in this1839industry. Everybody sees them in ATPCO, in the reservation1840systems, et cetera. They see the prices. They don't have to1841have a clandestine meeting somewhere to talk about it, and1842there's no question that they're in lockstep.1843    That's not our opinion. That is stated every--4 times a1844year in the DOT's quarterly airfare reports. We were pouring1845over the last year's worth over the weekend, and you see that1846in--on routes in which the only competition is any combination1847of the big three, American and/or Delta and/or United, three,1848two, or one of them, you're paying the highest fares in the1849country, all across the country.1850    And, you know, I spoke about the effects of the low-fare1851carriers, but that doesn't mean there still isn't a lot of1852consumer anger and confusion over fees, and particularly the1853transparency of fees. And when you get to the gate, that's not1854the time you want to know that suddenly you can't, you know,1855bring your carry-on bag with you because that was the deal that1856you agreed to.1857    As I said before, these contracts of carriage, they are1858written by and for the airlines. We don't get to say, well,1859wait a minute, what about our rights? And so when you swipe the1860credit card, you're adhering to it.1861    Ms. Pinkerton. Senator----1862    Senator Blumenthal. I was going to say, I'll give you a1863chance to answer.1864    Ms. Pinkerton. Thank you so much. From Airlines for1865America's perspective, none of our carriers charge a bounty,1866none of our carriers charge a fee for families sitting1867together, and none of our carriers are colluding on price. We1868are incredibly transparent. That is called competition.1869Absolutely, passengers today have more access to fares and the1870fee information than they've ever had before. It's ubiquitous.1871It's all over the internet. It's not collusion. It is1872transparency.1873    Senator Blumenthal. Let me ask you, because we have had1874some evidence that AI is being used to target fees to1875individuals based on information as to their past travel and1876their ability to afford higher prices and their need to travel1877for certain reasons. Can you commit that none of the airlines1878that are Members of Airlines for America use AI in that way?1879    Ms. Pinkerton. In fact, to prepare for this hearing, I1880asked the carriers exactly that, and all of them--two A1881carriers said, no, they do not use personal information to do1882pricing.1883    Senator Blumenthal. So if I wrote to them, and I intend to1884do it, you can guarantee that they would be willing to tell me1885that they never use personal information in artificial1886intelligence systems to change prices, vary them according to--1887--1888    Ms. Pinkerton. To target a price toward you and using1889personal information to target a price toward a person, they do1890not.1891    Now, as I think Mr. Johnson from American told you, if you1892want a free bag, you need to put in the fact that you're a1893frequent flyer at American. So they do use that kind of1894information, but absolutely, they do not use personal1895information like have you--did you have a death in the family1896or anything like that with AI.1897    Senator Blumenthal. Well, I don't mean only a death in the1898family. I mean, have you traveled first-class on an----1899    Ms. Pinkerton.1900    [Off mic.]1901    Senator Blumenthal. Okay. Well, I don't want to prolong1902this questioning, but thanks, Mr. Chairman.1903    Chair Lee. Thank you.1904    Mr. McGee. Senator Britt.1905    Senator Britt. Yes, Mr. McGee, you were shaking your head.1906Do you mind responding to that?1907    Mr. McGee. Yes, thanks very much, Senator. I think the1908devil is in the details and in the language, and we really need1909to clarify, once and for all, bring in all the airline CEOs and1910ask them, please define personal information. It may not say1911that Senator Britt or Senator Hawley, that we are targeting1912pricing on that, but what it will say is there are algorithms1913built into these systems that track how you shop, when you1914shop, why you shop, how often you book, how long you're on1915there. I think if we all knew----1916    Ms. Pinkerton. But that's----1917    Mr. McGee. Excuse me. I think if we all knew what the1918airlines knew about us, it would be--it would blow our mind.1919And I can tell you that Consumer Reports in 2001, almost 251920years ago, we first stumbled upon this odd thing where we were1921doing testing just to see which were the best websites, and we1922suddenly found, but wait a minute, in real time doing very1923precise testing with identical itineraries, we were getting1924different results on different browsers and different1925computers. That's 24 years ago. I can't imagine how much the1926technology has improved since then.1927    So we need to clarify, what is it about your shopping1928habits? They may not know personal information about you, per1929se, but we need to clarify that.1930    Senator Britt. Thank you very much. Mrs. Pinkerton, I would1931like to just talk to you real quick. Alabama's four largest1932airports are predominantly served by carriers within your1933organization there. Look, we depend on that, the reliability,1934the accessibility to these various different markets, and1935determines whether or not I get home for my daughter's1936volleyball game on Thursday night, or I am back at home in time1937for parent dinner with my son and his team. And so, you know,1938that just scratches the surface. Every, you know, working1939parent or people that are traveling around have things that1940they are depending on.1941    I have a question for you in just the sustainability to1942those markets. You know, what are you looking for? And just1943very quickly, you know, what keeps those routes open and1944reliable?1945    Ms. Pinkerton. Yes, you--so you've identified small1946community and medium community service as being absolutely1947essential, and I will say that this network system that the1948carriers have developed, hub and spoke, is what enables them to1949efficiently, with fewer planes and fewer people, serve those1950markets. I talked earlier about the increasing costs, whether1951it be regulatory costs or labor costs or fuel costs are all1952increasing. So to the extent, you know, that we can help keep1953costs down will help continue to see airfares be at all-time1954lows. There are some structural issues like----1955    Senator Britt. Okay.1956    Ms. Pinkerton [continuing]. Yep, sure.1957    Senator Britt. And I am running out of time. So just1958quickly, what are those structural issues?1959    Ms. Pinkerton. Structural issues, no one's making a 50-seat1960plane anymore, and so----1961    Senator Britt. Okay.1962    Ms. Pinkerton [continuing]. You're--you may see less1963frequencies in small communities, but you're seeing more seats1964because they're flying bigger planes. That's good. And1965certainly for small communities, the pilot supply and mechanic1966supply has been a problem.1967    Senator Britt. Okay.1968    Ms. Pinkerton. What we've seen is the regionals increase1969wages for pilots, and that seems to be working.1970    Senator Britt. And so I think about somewhere like Dothan1971that is the hub and spoke, and obviously services our military1972community, too, right there, and we obviously do not want to1973see that continue to grow.1974    You know, Mr. Anderson, when we are looking at that--and I1975know Allegiant is the only airline that actually services Gulf1976Shores International Airport, and I would like to do a little1977invitation here for everyone to come to Alabama's beautiful1978white sand beaches. I think you will be pleasantly surprised.1979We are talking about other destinations here. I think you could1980just come right down to Alabama's Gulf Shores. But that has1981proven to be wildly successful. When you look at that, I think1982you have seen over 40,000 travelers coming down back and forth1983to Alabama's beautiful beaches.1984    Talk to me--and I think you also service Huntsville as1985well--about how you added those routes to underserved or new1986markets. What were the challenges or the barriers that you face1987to expanding? And what is the decision point for continuing1988those?1989    Mr. Anderson. Thank you for the question, Senator. We--as1990we evaluate markets, we have hundreds of markets that we look1991at regularly. 90 percent of those currently do have--do not1992have non-stop service, so it fits our model beautifully. We1993focus 100 percent on the leisure customer, which is a price-1994sensitive customer, and the value we offer is low fares with1995convenience.1996    And when we've entered into the Gulf Shores and the1997Huntsville markets in Alabama, those fit our model beautifully,1998and they've been successful, and we're excited about what we're1999seeing. We have service from Kansas City into Gulf Shores and2000other communities throughout the Midwest. But when we see the2001ability to stimulate demand and keep costs low, that's good,2002and that allows us to continue to grow our unique model.2003    Senator Britt. Mr. Biffle, I would like for you to answer2004that same question as well, but before I do that, Roll Tide. It2005was a big win on Saturday, good stuff.2006    Mr. Biffle. That was huge, right?2007    Senator Britt. It really was. My favorite play was the2008Kadyn Proctor to the side, number 74, getting the ball. I don't2009know if you all watched this, but you should Google it right2010now.2011    Mr. Biffle. Oh, well, my favorite was the look on Kirby's2012face when he was walking off the field, but----2013    Senator Britt. That was something too.2014    Mr. Biffle. Yes, that was good.2015    Senator Britt. So tell me, how do you decide about new2016markets, and how do you expand those?2017    Mr. Biffle. So look, we--unlike Allegiant, we're more in--2018competitive. I forget, it's less than a few percent of our2019routes have no competition. So we tend to focus on giving2020consumers a choice in established markets. And so--and our2021smallest aircraft is 186 seats, so I have a difficult time,2022even though I'm extremely familiar with Alabama and all the2023markets there, even Gulf Shores. Some of them are smaller for2024us, and so it's more of a challenge for us to serve.2025    So we typically look at markets that we could fly at least2026twice a week, so the minimum market size, if we look at2027stimulation and so forth, we're going to be looking for a few2028hundred passengers that we think could go per week.2029    Senator Britt. And what would create an incentive structure2030for you to come there? What do you look for in that market?2031    Mr. Biffle. So we're just looking, you know, is the demand2032there from A to B? We do do some limited connections in some of2033our bases, but we're typically looking at that local market,2034and so, you know, how many people want to go there?2035    The next thing is, what is the season? Is the season long?2036You know, for example, some of these small communities that2037have difficulty--I mean, I really feel for these. I'm from2038rural Texas, so I understand how a lot of this works too. And2039so I know that a lot of communities, they're very seasonal too.2040So small, seasonal, it makes it difficult. And so I have a--you2041know, I have a soft spot for these places, but the economic2042realities oftentimes are challenging for them.2043    This is where I do and would support some type of EIS, and2044possibly needs to be looked at for the size. I think the EIS2045needs to be moved up, I think. And also not just size, but just2046how hard is it to get there, right? So you've got places, let's2047take the Northwest United States. I mean, you get into the2048Dakotas and over. I mean, it can get really hard to get2049somewhere. I mean, not only do they not have service, it may be2050500 miles----2051    Senator Britt. Yes.2052    Mr. Biffle [continuing]. To drive to the next place that2053might have service, and it's not even great service there. So I2054do think there needs to be a more holistic approach there.2055    But yes, we look at the market size and the potential. Can2056it stimulate? And in general, we look at where--in many cases,2057where the legacies charge a lot of money. And we--we're2058attracted to that.2059    Senator Britt. Thank you.2060    Chair Lee. Okay. I have another matter I have got to attend2061to, so I am going to hand the gavel off to Senator Hawley, as I2062recognize Senator Booker, who will be up next. It is unlikely2063that I will be able to return before you have adjourned. I will2064come back if you are still in session after then, but I will2065leave that in the hands of he who holds the gavel.2066    And Senator Klobuchar, you are recognized.2067    Mr. Biffle. Before you leave, Senator Lee, can I clarify2068something earlier?2069    Chair Lee. Sure.2070    Mr. Biffle. And just to make sure I understood you and you2071understood me. When I suggested that we should have antitrust2072for the carriers, I mean just the small carriers, not----2073    Chair Lee. Okay.2074    Mr. Biffle [continuing]. With the Big Four.2075    Chair Lee. Okay. Yes, that makes sense.2076    Mr. Biffle. I'm saying that----2077    Chair Lee. I was confused by that part.2078    Senator Klobuchar. Yes, that would create----2079    Mr. Biffle. Yes, I'm just----2080    Senator Klobuchar [continuing]. A lot of news.2081    Mr. Biffle. I'm saying the small carriers that represent2082the 20 percent----2083    Chair Lee. Got you.2084    Mr. Biffle [continuing]. Could work together to be a force2085to compete with the Big Four, not across them. They don't need2086any more help.2087    Chair Lee. Yes. Yes. I thought maybe you were setting2088yourself up for an acquisition or something.2089    Mr. Biffle. No, no, no, no. I apologize. Maybe I spoke too2090fast, but I just wanted to clarify. I was just saying, I2091think--I'm just, again, looking for practical solutions to fix2092the situation so----2093    Chair Lee. Okay. That makes sense. Thank you.2094    Senator Klobuchar. Okay. Thank you. I want to thank2095Chairman Lee and Ranking Member Booker for this really2096important hearing. And I will say that with everything going2097on--that is a little bit of a euphemism--today, the fact that2098we have had so many Senators here and that they, as leaders,2099had so many Senators here show how important this is to people.2100    So our airport was once again named best in the country.2101Yes, you are welcome. But we hosted more than 340,000 planes2102carrying 37 million passengers last year at Minneapolis-St.2103Paul Airport and, of course, major hub. But it is also really2104important for us, being this hub, that we also have competitive2105carriers. We are the home of Sun Country, as you know, Mr.2106Biffle, and appreciate all of the competitive carriers we can2107get.2108    And one of the things that I have focused on with funding2109is to make sure we get gates in what we call our terminal 2,2110right, so that we have more infrastructure for competitive2111carriers, especially some of these big hub airports. Everyone2112is gravitating there, and it makes it more important than ever2113that we have competitive carriers. Could you talk about--I know2114you have been an advocate for this--but for just the2115infrastructure and the gates and how important that is in this2116marketplace of competition?2117    Mr. Biffle. Sure. I mean, look, I mentioned the beginning2118and we talked a little bit, the gates are the big thing. And2119it's not just having access, but having them at access at the2120same rules as the big guys. I mean, you know, we've had2121situations--I'll go back to Atlanta. You know, we've operated2122on 25, 30 different gates in a week. I mean, like, I could put2123my entire operation on seven gates. I mean, so--and that's2124across four different terminals. I mean, and you're putting our2125people and our employees, our customers, all having to move2126around like gypsies. And so it disrupts our operation. We don't2127provide as good on time. It ends up causing cancelations of2128flights, and people miss their flights because we have these2129constant gate changes.2130    And so, you know, the distinction of pref gates and having,2131you know, our fair share of pref gates and the ability to use2132them--I know in Las Vegas, we've had challenges--I know2133Allegiant has too--with, you know, common-use gates. But it's a2134major factor. And I think that it really needs to be looked2135into. It's just not a fair system. There are airlines hoarding2136gates. Over and over again, there's examples of gates given2137back to the airport, airlines like us trying to get them, and2138all of a sudden, the legacy carrier in fill-in-the-blank city2139all of a sudden just happens to get those gates. And nobody2140seems to care. And----2141    Senator Klobuchar. Well, I think who cares is when you look2142at the numbers, right? When low-cost carriers serve a route, it2143is 20 percent lower.2144    Mr. Biffle. Well, I think it has to get to the level it's2145gotten for people--thank you for having this hearing--that2146we're finally going to get some attention drawn to this and2147getting some fair access to gates. It's a major issue, and it2148impacts us dramatically. I would say it was the No. 1--after2149weather and ATC, it was the No. 1 cause of cancelations for our2150airline this summer was gate access.2151    Senator Klobuchar. Wow. Mr. McGee, do you want to add2152anything? By the way, congratulations on hiring Phil, our2153former staffer back there.2154    Mr. McGee. Yes, we're very lucky to get him. Thank you,2155Senator. Yes, as I said earlier in my opening remarks, we2156praise Senator Hawley for cosponsoring the Gate Competition2157Act. We think it's one of the single best pieces of airline2158competition legislation we've ever seen.2159    But I think, you know, we need to give some context, too,2160and that is that a lot of times when you walk into an airport2161in the United States, you'll see a big sign saying, welcome to2162our customers. Let's be clear, we are not--we the traveling2163public are not the airport's customers. Airlines are their2164customers. And so if you have a situation like you have in2165Charlotte where American Airlines controls 88 percent of all2166flight departures, it's hard to believe that the airport2167authorities are going to equally treat their customers when one2168of them is nine out of ten of all flights.2169    And so this really speaks to the larger systemic problems2170that we've had with deregulation. We have a commercial aviation2171system that has the best of both worlds. When times are good,2172they make money and they keep it and they use it for stock2173buybacks and they use it for executive compensation. And then2174when times are bad, they come right here, and they ask all of2175us taxpayers to bail them out. And so we need to have a bigger2176discussion. We're talking about a lot of really important2177issues today, but we need to have a bigger discussion about the2178systemic problems with deregulation and ways of fixing aviation2179once and for all.2180    Senator Klobuchar. Just one, I know Senator Booker asked2181some good questions about that passenger bill of rights and how2182we got that passed a while ago out of the Commerce Committee2183and, you know, that was a while ago. And so that's why I think2184you see us working on some of these other issues like families2185sitting together. Could you comment on that one?2186    Mr. McGee. Absolutely. And we are very grateful to you for2187all your work in this area. The bottom line is that it seems we2188can never gain any traction. Every time we make any sort of2189progress on passenger rights in this country, after I already2190noted we lag much of the world, immediately airline lobbyists2191are trying to roll it back, to weaken it, or just eliminate it.2192And we saw it with the Airlines for America 93-page comments2193that they filed a few weeks ago. And we're very, very worried2194about the current DOT rolling back all of that hard work that2195has taken, in some cases, not years, but decades.2196    Look, as soon as we got fee transparency become a2197regulation, Airlines for America and other big carriers2198immediately sued the DOT. Really think about that a moment.2199They're suing the DOT, spending God knows how many millions of2200dollars on that. To do what? To prevent all of us from knowing2201the full price of a product before we swipe our credit card and2202buy it. There's something wrong with the inherent system here.2203    Senator Klobuchar. Thank you very much.2204    Mr. McGee. Thank you.2205    Senator Hawley [presiding]. Senator Booker.2206    Senator Booker. Great. Three quick questions. Mr. Anderson,2207just really quickly, we talked a little bit earlier--you did--2208about the joint venture with Viva Aerobus, a Mexican-based low-2209cost carrier. The proposed deal which was reviewed this past2210April has faced opposition from labor unions, including the2211Teamsters, which represent 1,400 Allegiant pilots through2212Teamsters Local 2118. They are concerned, understandably, that2213this partnership could lead to U.S. jobs being outsourced to2214Mexican crews that are undercutting their wages.2215    And so, Mr. Anderson, is Allegiant still pursuing this2216deal? And if so, can you provide us any assurances that2217American jobs will be secured? And then do you really commit2218here that American pilots will not face job losses if the deal2219is successful?2220    Mr. Anderson. Thank you, Senator Booker, for the very2221important question. We are continuing to pursue this deal. We2222believe that through this joint venture, we will grow jobs,2223including pilot jobs Allegiant for American pilots, and we will2224commit to that within our application. I believe that is laid2225out as well.2226    Senator Booker. I appreciate it. I am hoping we can have2227more of a dialog on this as this goes forward. Is that Okay?2228    Mr. Anderson. We would welcome that.2229    Senator Booker. Thank you very much.2230    Mr. McGee, my penultimate question goes to you. Could you2231just be a little bit more specific--because I actually think we2232can get bipartisan support on this--about what the Trump2233administration is doing when it comes to rolling back these2234efforts of the previous administration and what the specific2235impact it will have on Americans from all across our country?2236    Mr. McGee. Absolutely. Thank you, Senator. I'm happy to do2237that. The bottom line is we don't yet know because the Trump2238administration is asking for public comments, et cetera, as2239part of the rulemaking process. But just the mere fact that2240these would even be put on the chopping block is extremely2241disturbing.2242    As you know, we had a very successful FAA reauthorization2243last year. It was bipartisan support. It was both houses. It2244was both parties. And we got protections that we had never seen2245before, including for the first time automatic cash refunds.2246And yet on the DOT list are things like fee transparency, on2247compensation, on all kinds of things. And so we don't yet know,2248but it is not a good sign that they're even asked to consider2249this. It's part of their larger deregulatory effort.2250    And it's just heartbreaking to think what travel will be2251like. We are talking about not being able to know the full2252price of your fare. We are talking about not being compensated2253when there are disruptive flight delays and lengthy flight2254delays and flight cancellations. As I keep saying, the2255contracts are written by and for the airlines. When do we get2256our say? If we don't have Federal protection, and particularly2257with Federal preemption that does not allow the States to get2258involved, who's going to protect the consumers? If we have a2259DOT Secretary who is indifferent to the concerns of passengers,2260you're pretty much out of luck other than with Congress.2261    Ms. Pinkerton. Senator, if I can just interject, I want to2262say for the record, Airlines for America supports every2263provision in the FAA reauthorization bill, whether it was2264family seating, whether it was reimbursement, automatic2265refunds. We are in support of those provisions.2266    Mr. McGee. But Senator, at the same time, they are saying2267that Secretary Buttigieg overstepped and expanded on some of2268these ideas. As one example, the language in FAA2269reauthorization was flight cancelations. He expanded it to2270lengthy flight delays. So we are in the same spirit of what2271Congress asked for.2272    Senator Booker. Okay. I just really want to end with you,2273Professor. Things have gotten a little hairy between us. But I2274want you to hit us with some bald-faced facts before we go.2275Could you do me a favor? Like you have written so extensively.2276This is such an area of research expertise for you. If you were2277advising this Committee--and you have some great ideas, I just2278don't know to the realm of what they are possible. But you can2279see that this is a Committee that has a lot of bipartisan2280feelings about our airlines. If you wanted to give us as a2281takeaway some specific achievable advice perhaps in this2282Congress of what this Committee can do together around these2283issues of airline concentration, what would you say?2284    Professor Sitaraman. Well, thank you, Senator. Let me pick2285a few very specific topics for you. One is, I think, gate2286competition and hub concentration. I think we've heard a lot2287about that today, and there's room for action on that. And I2288think Senator Hawley and Senator Warren's bill on this would go2289a great deal in that direction.2290    Second, on the passenger side, the one that you opened2291with, which I think seat sizes are a thing that people find2292extremely frustrating all around the country, and I think2293setting a minimum floor could be a helpful step forward for2294passengers.2295    And then third, on stability and resilience, I think2296everyone is frustrated when you have an industry that does2297extremely well in the good years and then comes running to2298Congress for taxpayer bailouts and support when times get2299tough. And so I think requiring airlines to think about2300planning and being prepared for the crises that are likely to2301come is something that would be a reasonable thing to do.2302    Senator Booker. And the one thing I often hear in my2303conversations with some of the airlines is that on the global2304scale, they are competing against State-sponsored airlines. Do2305you have any thoughts about that competition that we have2306globally now as the world becomes a smaller place?2307    Professor Sitaraman. Well, thanks, Senator. I think there's2308two parts to it. You know, one is sometimes you hear from2309people that the way to increase competition is to open up for2310foreign carriers to operate within points in the United States,2311and I think that's potentially a mistake because they are2312State-sponsored and might be able to predatory-price airlines2313here.2314    I think the second thing is we need to think about the2315competition side as well. And, you know, a number of people2316have touched on this as well, but I think there are real2317questions around partnerships and loyalty programs there, too,2318that could have an effect on competition.2319    Senator Booker. Yes, I really appreciate your work. I2320appreciate all the witnesses. And to our stand-in Chairman, I2321thank you very much for the latitude.2322    Senator Hawley. Absolutely. Thank you.2323    Let me just ask a question about the FAA reauthorization or2324tied to it. And thank you for mentioning it a couple of times2325now, Mr. McGee, and particularly the automatic refunds portion.2326That was my amendment with Senator Warren.2327    Mr. McGee. We're well aware of it, Senator, and we2328appreciate it.2329    Senator Hawley. I am glad that we were able to get it2330passed. Something else that the FAA did on a bipartisan basis,2331that reauthorization bill, was direct or authorize the2332Department of Transportation to issue rules making sure that2333families can sit with their children. And I can say, as a2334father of three young children, you know, this is something2335that is very important to families. Now, a lot of times2336passengers feel like they should be paid to sit next to my2337children, and maybe there is something to that.2338    But I just want to ask, Mr. Anderson, DOT maintains a list2339of airlines that are currently complying with this and allow2340families to sit with their children next to them. The children2341are ticketed passengers, I just want to clarify, this isn't2342free tickets. But they allow the children to sit next to the2343parents at no additional seat charge. Now, according to the2344dashboard the DOT has, your airline is not one of them,2345meaning, there is Allegiant right there with a big red X,2346meaning that you are charging families additional money over2347and above the child's ticket in order to sit next to a parent.2348I am hoping maybe you will tell me this is wrong. Is this2349accurate?2350    Mr. Anderson. Senator Hawley, as a father of four young2351children, it is a very important issue to me as well. We in2352practice nearly always accommodate our families. Our gate2353agents are trained and empowered to make sure it happens. And2354over the past few years, I think there has only been a handful2355of times in which we haven't been able to accommodate families2356to sit together.2357    Senator Hawley. But am I hearing you to say that--that2358doesn't sound like a yes. Am I hearing you to say that your2359policy is not to provide seating for families, that they may2360have to pay a fee depending on the circumstances? Is that2361right? Is that why you have an X? Or is this wrong? I would2362love to hear you say that this is just incorrect. Like all of2363these other airlines that have green checks, we do not charge2364additional fees for children who have already paid. They2365already have a ticket. They are ticketed. But your airline2366apparently is charging additional fees. I just want to know,2367are you still doing that? It sounds to me like you are, but2368please tell me that I am wrong.2369    [Poster is displayed.]2370    Mr. Anderson. You're not wrong. And the fact that we do2371have a red X on the DOT tracker there, but----2372    Senator Hawley. Why do you do that? Can you change that? I2373mean, can you tell us today that you are going to do what your2374other peer airlines do and you are going to quit charging2375families extra to sit next to their parents? I mean, we are2376talking about kids who are 13 years of age and younger. This2377isn't like the 18-year-old who probably doesn't want to sit2378next to his parents anyway. I mean, these are a little--it is2379like my 4-year-old little girl. I mean, I would kind of like to2380have her next to me and not--I have already paid for her, and2381not have to pay again. So I guess I don't understand. I know it2382is money, but, you know, I mean, don't you think that keeping2383families together is, you know, kind of important? The kids2384have already paid.2385    Mr. Anderson. Very important. And----2386    Senator Hawley. Okay, good. Will you commit then to ending2387this policy of charging additional fees?2388    Mr. Anderson. Senator, in practice, we accommodate our2389families to sit together without paying additional fees. Our2390gate agents are trained and empowered to make sure that2391happens.2392    Senator Hawley. Well, you do it when you can, but your2393policy is you can charge them if it comes down to it. So will2394you just say here today, we are going to stop doing that. We2395are not going to charge additional fees for families with young2396kids. This is it. This could be a big moment. This could be2397news.2398    Mr. Anderson. Yes, we will--there were some technology2399issues that we're working through. We transformed our system,2400but we will look into this and explore the red X.2401    Senator Hawley. Okay. Well, it would--maybe what we need to2402do is we just need to make it law. I mean, maybe Congress is2403just going to have to outright mandate it. You know, we hear2404all the time, and you guys come up here and you say, don't2405regulate us, don't tell us what to do. Well, I mean, there is a2406reason that sometimes we have to, and this is the reason.2407    Let me ask you about something else. Can I just say for the2408record, I think it is ridiculous that anybody is charging2409families who already paid for tickets with small children,2410charging them extra in order to have the kids next to them2411making profit off of it. I mean, I just think that is kind of2412predatory. I think it is really predatory, actually.2413    But let me ask you this. Dynamic seat pricing, which I2414think both Frontier and Allegiant engage in, tell me if I am2415wrong, but this is where you may charge me one fee and Katie2416Britt a different fee and Cory Booker yet a third fee for the2417same seat on the airline. It just depends. It is dynamic. There2418is no set fee. You are shaking your head no, Mr. Biffle. So you2419don't do dynamic seat pricing?2420    Mr. Biffle. So let's clarify dynamic seat pricing.2421    Senator Hawley. Price changes. It is not set.2422    Mr. Biffle. Yes, but it's set by route, not by individual2423customer.2424    Senator Hawley. Okay. So you don't collect personal2425information before people can see a price?2426    Mr. Biffle. No, we don't--we don't use personal2427information----2428    Senator Hawley. You collect it, though.2429    Mr. Biffle. We collect it, but we don't charge you2430differently.2431    Senator Hawley. Well, how do I know that? You collect ZIP2432Code, you use browser cookies, location information, search2433history. You collect date of birth. You collect gobs of stuff.2434I got to enter all of that before I can see a seat price. And2435my seat price may well be different than what Cory gets,2436depending on what he enters.2437    Mr. Biffle. Well, I will tell you we've been changing that.2438I have to have your date of birth to buy the ticket. That is2439actually clunky. Back to technology things, we're changing that2440so you won't have to do hardly anything. I want you to be able2441to search and click quickly. So----2442    Senator Hawley. But why are you collecting all of this2443personal information? What guarantee do I have that you are not2444using this to set my price? I have no idea how you are setting2445the price.2446    Mr. Biffle. I just guarantee you we're not.2447    Senator Hawley. Well----2448    Mr. Biffle. But----2449    Senator Hawley. Right, just like you guarantee me your2450agents won't harass me, but you are paying them to do it. So, I2451mean, don't you think that you owe us some evidence? I mean,2452you are forcing your customers to enter all of this stuff2453before they can even see a price.2454    Mr. Biffle. I will say it again. We are in the process of2455eliminating that. It's actually----2456    Senator Hawley. Meaning I won't have to enter in this2457personal information to see a price? You are just going to2458use----2459    Mr. Biffle. Correct.2460    Senator Hawley [continuing]. A set price? Do you use AI in2461your dynamic to see pricing at all?2462    Mr. Biffle. No.2463    Senator Hawley. Any advanced algorithms? Do you, Mr.2464Anderson?2465    Mr. Anderson. No, not from----2466    Senator Hawley. Will you both agree not to do so going2467forward?2468    Mr. Biffle. Okay. I don't know that I can agree to not use2469AI. We use AI in all types of things. We will never use----2470    Senator Hawley. That is what worries me.2471    Mr. Biffle [continuing]. AI to use personal information. So2472the insinuation that we're using your ZIP Code, your gender, or2473any of those things too actually change the prices I find2474appalling personally. I know there's another travel business--2475not an airline--that I changed my credit card, and when they2476figured out that I was using my business credit card, the price2477changed. I was appalled. I was appalled.2478    Senator Hawley. That is dynamic pricing.2479    Mr. Biffle. Well, yes--well, that's--well, dynamic--when2480you said dynamic, we--what we mean by that is actually a 1-hour2481flight versus a 5-hour flight might have a different price,2482just like the fare might be different.2483    Senator Hawley. No, it means that the consumer has no2484idea--I have no idea what the price is going to be for a given2485seat on a given flight until I give you all of my personal2486information. It also means I have no idea if my price will be2487the same as Katie's price or the same as Cory's price.2488    Mr. Biffle. As I said, we are eliminating all of that2489information from being gathered.2490    Senator Hawley. Okay, good.2491    Mr. Biffle. We will still have to get your date of birth2492before you buy because we're required for security reasons,2493but, but we're going to stop collecting it up front.2494    Senator Hawley. Mr. Anderson, what about you? Will you2495commit to not using personal information of any kind of set2496prices?2497    Mr. Anderson. Yes, we have no intention of using personal2498information to set prices.2499    Senator Hawley. Do you collect personal information before2500you allow customers to see a price?2501    Mr. Anderson. We do before the seat selection, but that's2502to accommodate SSRs and who is able to sit in exit row seats.2503    Senator Hawley. Mr. McGee, do you want to speak to this?2504You have mentioned this earlier. I mean, the consumer here, we2505are told, you know, trust us, trust us. But then the consumer2506is also told, but give us all of your stuff. Give us all your2507information. We will put it all in here. I can't go so much as2508check to see what is available, the flight home to Springfield,2509Missouri, unless I enter all of this junk. And I have no idea2510what is being done with it.2511    Mr. McGee. Yes, Senator. Thank you very much. I was2512recently on the privacy statement of one of the big three2513carriers, and it was this long if you printed it out. And it2514basically said that they were going to--that as soon as you go2515on their site for the very first time, they're going to monitor2516what you do, how long you're there, how long you stay on each2517page, presumably also the sites that you were on before and2518after it. Again, as I said, I think it would blow our minds to2519know exactly what they're collecting. That's before we get into2520the definition that most people would accept as personal2521information. That's why I was warning that I think we need to2522be much clearer about the language here.2523    I would argue that that is private information. If I'm a2524shopper that goes on and is more impulsive and maybe books a2525flight after 5 minutes of shopping, why should I be at a2526disadvantage than someone that goes on 3 days in a row and2527spends an hour? That is the definition of surveillance pricing,2528personalized pricing, customized pricing, more synonyms than we2529can even count on this, but it is unfair. It is un-American.2530    Senator Hawley. And it is going to get much worse with AI.2531    Ms. Pinkerton, let me just finish with you. I think it is2532Delta said that they are using AI now to set prices, these2533customized prices. Isn't this a terrible idea?2534    Ms. Pinkerton. Well, they've also made it----2535    Senator Hawley. I think--yes, there you go.2536    Ms. Pinkerton. Thank you. They've also made it very clear--2537I know their general counsel and executive vice president wrote2538a letter to Congress clarifying that they do not use personal2539information.2540    Senator Hawley. How are we to know that? I mean, the whole2541value of AI is to ingest massive amounts of personal2542information in order to extract as much profit as you can from2543every person. Why else would they use AI?2544    Ms. Pinkerton. Well, again, I think it's probably worth a2545deeper conversation about our definitions of personal.2546    Senator Hawley. Maybe we should just ban it. How about2547that? Should we just ban the use of AI in setting----2548    Ms. Pinkerton. AI has so many potential benefits in terms2549of----2550    Senator Hawley. And abuses.2551    Ms. Pinkerton [continuing]. Providing--yes, absolutely. And2552that's why we're committed to not using it----2553    Senator Hawley. Well, let's just make it easy. Would your2554organization support a ban on using AI to set individualized2555seat prices?2556    Ms. Pinkerton. No, no.2557    Senator Hawley. Why not?2558    Ms. Pinkerton. I think AI can be used in many, many2559different ways to come up with----2560    Senator Hawley. Name me one that isn't about making a2561profit for the airline at the expense of the customer. Why else2562would you need AI to do it, to charge these differential2563prices?2564    Ms. Pinkerton. It only an efficiency tool. I mean, we do--2565--2566    Senator Hawley. Efficiency means money. It means profit for2567the airline.2568    Ms. Pinkerton. Which, by the way, we're not very good at.2569    Senator Hawley. Oh, I disagree. I think your customers2570would disagree.2571    Ms. Pinkerton. Yes, no, our profit margins are miserably2572low. We never even are an average profit margin----2573    Senator Hawley. Okay.2574    Ms. Pinkerton [continuing]. So----2575    Senator Hawley. Okay. All right. I find that very hard to2576believe----2577    Ms. Pinkerton. It's true.2578    Senator Hawley [continuing]. Or stomach. Well, I tell you2579what is true is that the flying experience for most Americans2580is terrible. It is atrocious. If you look at the surveys,2581customer satisfaction surveys, airlines are always like at the2582bottom. People hate it. They hate to fly. They have to fly, but2583they hate to fly, and they hate it because of the policies we2584have been talking about today. You charge them for your kids.2585You make them enter all of this personal information. You pay2586your own employees to harass them. And now you are going to use2587AI to extract every last penny from them. It is terrible.2588    Ms. Pinkerton. I would love to show you the JD Power and2589the American Consumer surveys----2590    Senator Hawley. Listen, I have seen the data and, you know,2591not only that, I have talked to people all over my State who2592fly, and I have flown all the time with my small children. It2593is horrible. It is horrible. And it needs to be better. And I2594think based on what we have heard today, Congress has got a lot2595of work to do to make it better.2596    All right. With that, I don't need to read a script,2597anything magic here to close this hearing? The record will be2598open? Okay. Questions for the record are due a week from now. I2599thank all of the witnesses for being here. All of you have2600traveled. We are delighted that you have been here. Thanks to2601our audience for being so polite.2602    And this hearing is adjourned.2603    [Whereupon, at 4:48 p.m., the hearing was adjourned.]26042605    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]26062607                                 [all]