The airline business always has been cyclical, and it is useful to remind ourselves of this from time to time, lest we take things for granted.

And so it is with government policies, including those that apply to airline regulation (or the lack thereof). These, too, go in and out of fashion, although the rise and fall of political fads hasn't always coincided logically with the ups and downs of the business cycle. But no matter. Change is upon us, and we must be alert.

Today's challenge is to make sense of the Transportation Department's effort to enunciate an "Enforcement Policy Regarding Unfair Exclusionary Conduct in the Air Transportation Industry."


The proposed policy is this: The DOT will regard it as an unfair practice if a major carrier overreacts to a low-fare initiative by a "new entrant" by dumping so many cheap seats on the market that it generates lower revenue for the major than would "a reasonable alternative response."

The proposed policy defines a "new entrant" as an airline less than 10 years old, which appears to mean that two old incumbents -- say, Northwest and Delta -- can beat their brains out in a $19 fare war against each other without running afoul of the government.

The proposed policy doesn't define a "reasonable alternative response," except to suggest that perhaps major carriers should match the low fares of a new entrant "on a restricted basis and without significantly increasing capacity."

This is an interesting turn of events from a government agency that, a few years ago, was accused of fostering a laissez-faire attitude toward mergers that had left the field dominated by mega-carriers and littered with the remains of forgotten upstarts like Muse Air, Jet America, Air One, Air Atlanta, Presidential Airways and Best Airlines -- poor devils.

There's probably nothing wrong with encouraging free and fair competition, and the DOT is getting praise for trying to do that. Rightly so. Hear, hear, and all that. But is this policy the way to do it?


What's wrong with all this, of course, is that the airlines--the deregulated airlines--are being subjected to a double standard that doesn't apply to other industries. We were told 20 years ago by the authors of the Airline Deregulation Act that the airlines, eventually, would enter the promised land of the American marketplace and would be treated "just like any other business."

The government is reneging on that promise. If the airlines are guilty of violating the antitrust laws, then the Department of Justice should screw up its courage, do its homework, and haul the airlines into court and sue them, just as it does with chip manufacturers, automobile dealers, concrete contractors, furniture makers and what-have-you.

Instead, the DOT clings to "our mandate to prohibit unfair methods of competition," and claims that it is empowered "to stop air carriers from engaging in conduct that can be characterized as anticompetitive under antitrust principles even if it does not amount to a violation of the antitrust laws." So it's not enough that airline managers have to abide by the antitrust laws, they now have to refrain from conduct "that can be characterized as anticompetitive" by DOT bureaucrats.

We like those warm and fuzzy low-fare new entrants as much as the next guy, but this "mandate" sounds like a hunting license, issued by the department of political correctness.

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