The Office of Aviation Analysis initiates and supports the development of the Department of Transportation's public policies regarding economic oversight of the airline industry in both domestic and international markets. The Office also has the responsibility to analyze and support the Department's decision makers on major airline issues, including airline mergers and acquisitions, domestic and international code-share alliances and other joint venture agreements, immunized international alliances between U.S. and foreign carriers, and airline distribution practices.
In addition, the Office administers important aviation regulatory programs for the fitness of commercial airlines, air service to small communities, access to slot-controlled airports, and the setting of mail rates within Alaska.
- Essential Air Service and Domestic Analysis Division
- Small Community Air Service Development Program
- Competition and Policy Analysis Division
- Air Carrier Fitness Division
The Essential Air Service and Domestic Analysis Division has a number of regulatory and advisory responsibilities. The Division administers the Essential Air Service (EAS) program, which guarantees that hundreds of small communities throughout the country receive air service to connect them to the National air transportation system. This involves a determination as to how many flights should be provided at the community, the type aircraft to be used, the carrier that should provide the service, and the level of subsidy that the Federal Government will pay the air carrier providing the community's air service. Division analysts negotiate the subsidy need for each applicant carrier before recommending to Department decision makers which carrier should be selected for the EAS subsidized service. The Division works with a budget of over $200 million for this program.
The Division also administers the Department's responsibility for air carrier access to certain airports where airline operations are limited. Certain airports in the United States are so congested that the U.S. Government controls not only the number of take-offs and landings (slots) that can operated each day, but also the number of flights that can be operated each hour at the airport. For the most, part the Federal Aviation Administration is responsible for distribution of the available slots at these airports. Exemptions from the slot restrictions to provide additional access to the slot-controlled airports are the responsibility of the Department of Transportation. The Essential Air Service and slot allocation responsibilities involve considerable contact with Capitol Hill and the Federal Aviation Administration, as well as numerous industry organizations.
In addition, the Division is responsible for establishing the rates that the U.S. Postal Service pays airlines to carry bypass mail within the State of Alaska. This function requires analysis of detailed revenue, costing, and traffic data and close coordination and interaction with the U.S. Postal Service.
The Small Community Air Service Development Program, designed to help small communities address air service and airfare issues, is managed by the one of the Office's Associate Directors. The financial assistance available under the program complements the subsidy support provided under the Essential Air Service program, extending to such areas as revenue guarantees, marketing support, assistance with airline start-up costs, and studies. Administration of the program draws upon various analysts from Office of Aviation Analysis divisions for review of the air carrier operating arrangements proposed in the grant requests, as well as reimbursement requests from grantees.
The Competition and Policy Analysis Division, through its advisory and statutory responsibilities, enables the Office of the Secretary to meet its responsibilities to exercise independent competition authority over the airline industry. It is responsible for providing short-, medium, and long-term views of the U.S. aviation industry's operating and competitive structures as well as taking action under its statutory authorities.
The Division monitors fundamental changes in the industry, analyzes industry trends, and evaluates policy options on a wide range of issues. It provides short-, medium-, and long-term views of the U.S. aviation industry's operating and competitive structures, including assessments of airline traffic, fares, costs, capacity, and financial conditions. These studies involve the analysis of historical data as well as the development and use of forecasting models to project the competitive and structural effects of changes on airline services and fares from mergers, alliances, code sharing and other cooperative arrangements among airlines, as well as bankruptcies. Since 9/11, the Division has assumed an active role in the monitoring and assessment of aviation security measures and system recovery planning.
In addition, the Division conducts studies of industry trends and developments relevant to the Department's industry oversight responsibilities. These reports, studies, and analyses are the bases on which the Office develops its recommendations to the Assistant Secretary and the Secretary on airline domestic and international economic issues as well as speeches and congressional testimony by Department officials. The Division also provides extensive analytical support and advice to Department decision makers with respect to specific cases and matters before the Department, including airline mergers and alliances, selection of U.S. carriers in international route authority selection cases, and antitrust immunity cases.
The analytical and advisory functions of the Division frequently involve interaction with Capitol Hill, other U.S. Government agencies, including the Departments of Justice, State, and Commerce, and the transportation and competition authorities of foreign governments. In particular, the Division has entered cooperative agreements with the Directorate General for Competition in the European Union and the General Civil Aviation Administration of China.
The Air Carrier Fitness Division analyzes and evaluates all applications for new economic authority to determine if the airline applicant is "fit, willing, and able" to conduct commercial airline operations and that the applicants are U.S. citizens as defined by the transportation statute. This involves analysis of the applicant's managerial capabilities and experience, the financial resources available for the proposed operations, its service plan, and the ability of the management personnel to comply with U.S. laws, as well as the ownership of the applicant. The Division also monitors on a regular basis the operations and financial conditions of all licensed U.S. airlines to ensure that they continue to be fit to hold their operating authority and to serve the U.S. public. Division analysts work closely with the Department's Office of Consumer Affairs and the Federal Aviation Administration, which is responsible for the safety oversight and licensing of U.S. airlines.