FOR IMMEDIATE RELEASE February 11, 2001

SCHUMER OUTLINES MEASURES TO EXPAND UPSTATE AIR SERVICE AND INCREASE COMPETITION

Having delivered on pledge to bring JetBlue to Rochester, Syracuse, and Buffalo, Senator fights to pave way for more low-cost carriers to serve region

After one year in business, "JetBlue Effect" being felt throughout Western New York and getting ready to spread to Central New York

On the eve of the first anniversary of the low-cost airline JetBlue, US Senator Charles E. Schumer called on the Departments of Justice and Transportation to take steps to help other low-cost airlines break into the Upstate air market. In response to the growing consolidation of the airline industry, Schumer said increased enforcement of 'predatory pricing' and an immediate moratorium on new mergers are needed to foster competition and lower fares for area residents and businesses.

"For way too long, Upstate air travelers have been at the mercy of the major carriers," Schumer said. "With JetBlue, we've now seen what airfares should look like in Rochester and Buffalo. It's now time to pave the way for other low-cost carriers to land Upstate and allow consumers to reap the full benefits of competition."

Schumer pointed to the dramatic impact JetBlue has had in reining in skyrocketing airfares since its inception last February. According to DOT data, six months after JetBlue arrived in Buffalo, the average round trip fare to New York City's John F. Kennedy airport decreased by 58%, from $330 to $138. By June 2000, JetBlue had captured 33% of the market for travel between Buffalo and the New York City. Schumer, who helped bring Southwest to Buffalo and Albany, noted that the low- cost carrier had also contributed to the reduced fares.

In Rochester, JetBlue has gained a 10% share of passenger traffic at Greater Rochester International Airport in just six months of operation and airport officials estimate that the low-cost carrier helped attract tens of thousands of travelers, reaching about 13,000 in December. Schumer expects Central New York to see similar benefits once JetBlue begins serving Syracuse in May.

"Low-cost carriers are a major economic development tool which is why I made sure that JetBlue agreed to serve three Upstate cities within its first 18 months before I secured landing and takeoff rights for it at Kennedy last year," Schumer said. Earlier this week, Schumer delivered on a pledge he made a year ago to have JetBlue serving three Upstate cities by August 2001 when he announced that it would begin service to Syracuse this spring.

"More JetBlues, not more mergers, are the key to lowering air fares in New York. The challenge is breaking the stranglehold that the big carriers have over the region and making sure that they don't employ 'predatory pricing' and other techniques to drive new entrants out of business," Schumer said.

Schumer outlined a series of measures to develop and protect airline competition including:

1. Stepping up enforcement efforts against airlines that engage in 'predatory pricing,' a practice where big carriers lower their fares to draw business away from low-cost competitors and then raise them when the low-cost carriers go out of business or stop service to a given region. DOJ currently has a case pending against American Airlines that contends that the airline used the practice to drive competitors out of its Dallas-Fort Worth hub. That case is scheduled to go to trial in May.
2. Guidelines to curb anti-competitive behavior. Although DOT has been working on the guidelines for three years, it recently scrapped plans to release them. Schumer said that several low-cost carriers that have served Upstate appear to have fallen victim to the anti- competitive behavior in recent years, including Vanguard Airlines in 1999 and Shuttle America last year.
   
3. A moratorium on airline mergers for at least nine months so that DOJ can study how the consolidation of the airline industry will affect competition, especially with respect to its effects on competition in smaller markets like Upstate New York, predatory pricing, and how airline hubs are affecting competition.
4. Ensuring that DOJ is employing appropriate guidelines with respect to how it reviews airline mergers. Currently, DOJ focuses on how many overlapping routes merging airlines have with one another to determine if they will control too much of a given market and be in violation of anti-trust laws. Schumer suggested that a better system might be to review merger applications in light of the competitiveness of national networks, not just market by market.

"Ending the reign of the major carriers and ensuring competition needs to be a top priority," Schumer said. "I hope the Justice and Transportation Departments will act to ensure that New Yorkers see the benefits of real airline competition."

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