ABSTRACT
In April 1998, the US Department of Transportation (DoT) issued a controversial proposal for an enforcement policy on predatory conduct in US domestic aviation.2 Behind the proposal is a growing concern in the United States that the considerable reduction in real air fares achieved since de-regulation of the industry in the late 1970s was coming to an end. In the year to February 1997, for example, average fares rose 9 per cent,3 and whereas previously decreases in discounted fares more than offset increases in unrestricted full fares, this was no longer the case. The US DoT’s view is that this reversal of the previous trend in air fares is due, in large measure, to the difficulties new entrant carriers4 face when competing with established carriers. New entrants face particular difficulties in penetrating the hub-based networks of the major carriers; the organisational structures of such networks make entry inherently difficult,5 but the barriers are often reinforced by the ‘exclusionary conduct’ of the incumbents. It is the latter issue that is the focus of the DoT’s proposal.
