Congress Stalls on Airline Industry Reform in FAA Reauthorization

February 9, 2024 Press Release

Washington, D.C. — Yesterday, the Senate Commerce Committee passed a version of the Federal Aviation Administration (FAA) Reauthorization Act of 2023 that did not go nearly far enough to address critical issues in competition, consolidation, passenger protections, and safety in the airline industry. As the bill moves on to a House and Senate committee before its final vote, the American Economic Liberties Project released the following statement.

“Our airline system is a vital, but broken, industry with clear solutions to fix its many problems,” said William J. McGee, Senior Fellow for Aviation and Travel for the American Economic Liberties Project. “But outside of acknowledging the need for some necessary changes, the sad truth is that the Senate’s latest version of FAA Reauthorization is full of half measures and missed opportunities. This bill presents an opportunity to promote true competition throughout the industry, address the problems that led to Boeing’s downfall, empower state attorneys general to protect their communities, and enshrine important passenger protections. While disappointed to see many of these measures left on the table yesterday, we urge Senate and House to bring them back in the final stages to fix the root of the airline industry’s problems.”

Last week in Washington AELP and Vanderbilt Policy Accelerator launched “How to Fix Flying: A New Approach to Regulating the Airline Industry,” a paper co-written by McGee and Ganesh Sitaraman that offers a suite of recommendations for Congress and federal agencies to introduce meaningful improvements. Among the ways Congress fell short:

  • Failing to pass an amendment from Sen. Ed Markey (D-Mass.) to empower state attorneys general with oversight of the airline industry, a basic right denied Americans since the Airline Deregulation Act in 1978.
  • A workable plan to address competition and access beyond funding the troubled Essential Air Service program; our paper provides detailed suggestions for boosting new-entrant airlines and reducing the power of the Big Four oligopoly of American, Delta, Southwest, and United. This includes addressing common ownership by investors that freeze out start-up carriers; mandating access and facilities for smaller and low fare carriers; reordering airline economics and pricing to eliminate regional inequality and provide equitable ways to serve underserved and unserved cities nationwide; downsizing fortress hub operations; requiring airline resilience plans; ending abusive frequent flyer program policies; and mandating interlining of tickets among competing airlines.
  • A thorough analysis of funding and staffing for the FAA to adequately address not just air traffic controller shortages, but enough trained inspectors (not “designees” working for the industry) capable of providing real oversight of aircraft manufacturers, airlines, and outside aircraft repair stations.
  • The elimination of all U.S. airline outsourcing of scheduled “heavy maintenance” to foreign repair stations in China, Singapore, El Salvador, Brazil, etc.; this bill attempts to provide more oversight when it’s clear neither the FAA nor the Transportation Security Administration can manage such tasks from afar, making maintenance outsourcing a threat to safety, security, and American jobs and trade all at once.

That said, credit is due to Congress for welcoming legislation, including on many issues recommended in our paper. This includes improving accessibility for the disabled; enhancing evacuation standards; tightening rules on flight refunds and vouchers; eliminating fees for families sitting together inflight; mandating airline call centers; setting real goals for completion of air traffic control modernization; and appointing an Assistant Secretary for DOT’s Office of Aviation Consumer Protection. Following yesterday’s vote, the FAA Reauthorization will go to conference committee to combine the House and Senate’s versions of the bill, where Congress will have another opportunity to strengthen the bill.

There’s much to do in addressing the broken promises of airline deregulation coupled with rampant industry consolidation. Economic Liberties’ new paper is designed to help kickstart a national conversation about fixing a broken industry. Congress was offered many viable proposals from multiple sources, but unfortunately many of these recommendations were left on the table. In doing so, they’re allowing passengers, workers, and entire communities and regions of the country to continually face the brunt of a too-big-to-care airline industry.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.