The Department of Transportation is considering guidelines to prevent unfair competition between major airlines and low-fare carriers

WASHINGTON (CNN) -- Some government officials blame big airlines for running smaller carriers out of business with unfair competitive tactics, and have called on federal agencies to enact guidelines on what the industry calls "predatory practices." But others say involving the government in airline competition could be an expensive solution to a dubious problem.

When a low-fare airline flies into an airport where high ticket prices have been the norm, many travelers rejoice because major airlines usually match -- and in some cases beat -- the lower fares.

It might seem like a win-win situation, but critics say established airlines sometimes only cut their prices temporarily, to drive start-up carriers out of business. Those critics want the Department of Transportation to take action.

"Investigate those places where a new airline will come into a route and the larger airline will drop its fares way down below that of the new entrant's until the new entrant drops, and then they raise their prices up," says Senate Transportation Committee Chairman John McCain, R-Arizona. "That's clearly predatory behavior. "

Small airlines say other predatory practices hurt their business even more. They say they can't compete when big airlines flood the market with seats by adding more flights, lock up business from corporations and travel agents, and offer travelers perks, in addition to lowering prices.

The Transportation Department says it is considering guidelines to control predatory behavior. But airline industry officials say the market's doing fine on its own and that there is no need for government intervention.

Ed Faberman, who heads the advocacy group Air Carriers Association for small, low-fare airlines, says he hopes the DOT will clearly set out what is -- and isn't -- permissible.

"I think what they will say is that matching fares is okay, but if you match fares and you do one or two other things, that you're really only going to drive a competitor out of the marketplace," says Faberman. "Then that's crossing the line, and the department will take action against you for doing that."

If the DOT does act, it would be the first time it has attempted to enforce airline competition guidelines.

Based on a report from CNN's Business and Travel and Beyond. The segment appears weekdays on Early Edition at 7 AM (ET) and on Morning News at 10 AM (ET).

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Related stories:

• Fluctuating ticket prices frustrate air travelers - March 9, 1998
• Congress to take up skyrocketing airfares, claims of predatory pricing - January 28, 1998

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• Sen. John McCain
• U.S. Department of Transportation

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