Washington Wire - 1996-06-24

By Barbara Cook / June 23, 1996

<H1>Washington Wire</H1>

DOT Appproves Delta's European Alliances

The Department of Transportation, as expected, granted antitrust immunity to a marketing alliance signed by Delta, Austrian Airlines, Sabena and Swissair, allowing the carriers to operate as if they were a single company. DOT tentatively cleared the pact in late May but gave interested parties one more opportunity to file comments.

In its final decision, DOT applied limits to its antitrust waiver in three business travel markets-Atlanta-Brussels, Atlanta-Zurich and Cincinnati-Zurich-reasoning that full antitrust immunity would reduce the level of competition on these routes. However, DOT rejected arguments from the Department of Justice that limits also should be placed on routes out of New York to Zurich, Geneva, Brussels and Vienna, also heavily used by business travelers. DOJ argued that passengers on these routes do not have good substitutes for the non-stop service offered by the four carriers. DOT agreed to re-examine competition on these routes in the next 18 months.

ValuJet Grounding Will Affect Fares

The grounding of ValuJet will "definitely be a detriment to business travelers" because the carrier has been "an excellent disciplinarian of fares," said consultant Tom Wilkinson, president of the Travel Management Group. "We need low-fare carriers in business travel markets or we will see higher fares overall."

Wilkinson said he has heard from several agencies that they expect fares to climb, especially out of Atlanta. "The government is on the right track in supporting low-fare airlines," he said. "That ultimately will allow all travelers, especially business travelers, to take advantage of lower-cost transportation."

ValuJet president Lewis Jordan told a press conference in Atlanta the day after the shutdown that his company will be smaller initially when it resumes service, but maintained that ValuJet can maintain its low-fare structure. However, Vivian Lee, an analyst with BT Securities Corp., issued a report disputing the notion that ValuJet could emerge from this service suspension with its low-cost structure intact. Her report pointed out that meeting new and tougher FAA maintenance standards would destroy the company's financial structure, which has made its low fares possible.

Bill Would Improve Cabin Air

To respond to passenger and airline crew complaints about poor air quality in airline cabins, legislation has been introduced in both the House and Senate that would require commercial carriers to equip aircraft with ventilation systems that meet minimum standards. Carriers also would be required to maintain a minimum standard of humidity, check ozone levels and check air filters to ensure that they are working properly during a flight.

The bill is supported by the Association of Flight Attendants, whose members testified about the effects of poor-quality air, including lightheadedness, headaches and breathing problems. The Air Transport Association objected to the legislation, saying research does not demonstrate a correlation between cabin air quality and the health problems reported by the flight attendants.

Federal Aviation Administration regulations set a minimum standard of 10 cubic feet of fresh air per person per minute. Bill sponsor Sen. Diane Feinstein (D-Calif.) said this is "not good enough." Her legislation calls for a minimum ventilation standard of 20 cubic feet per minute of fresh air per passenger.

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