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Joe Lancaster

Airlines Ask FAA To Regulate Competitor Out of Business

Air travel is never particularly glamorous, but nowadays—with long lines, cramped seats, and the larger prospect of flight cancellations—it feels less appealing than ever. A recent survey by the travel site Expedia found that 55 percent of Americans find commercial flight "more daunting than filing taxes or visiting the dentist."

One smaller airline is thriving by giving customers a better experience at a price comparable to the major carriers'. Naturally, the larger companies are petitioning the federal government to shut it down.

Rather than big commercial jets flying out of major airports, the regional airline JSX flies smaller planes that look like private jets out of smaller private terminals. Most flights, like its popular Burbank to Las Vegas route, last only a couple of hours, though it also offers a flight from Miami to New York.

At the smaller terminals, passengers walk right out onto the tarmac to board the plane and don't have to go through Transportation Security Agency (TSA) checkpoints. In fact, JSX checks passengers against the TSA pre-check database ahead of time and brags that travelers can show up as little as 20 minutes before departure. This saves more than just time: Passengers on flights that require TSA checkpoints pay for them with a per-ticket fee. JSX fares run from $300 to $800, roughly equivalent to a commercial flight and cheaper than a first-class ticket.

JSX gets away with this by taking advantage of a loophole in Federal Aviation Administration (FAA) regulations: Flights with 30 or fewer passenger seats can be classified as "public charters" and therefore aren't subject to the same rules. The carrier won FAA approval to operate as a public charter in 2016; its original fleet consisted of 37-seat passenger jets from which it removed seven seats, meeting the FAA maximum and giving passengers extra legroom. Ticket prices include drinks, snacks, WiFi, and checked bags.

Passengers are thrilled: Last year, JSX was the only regional airliner in the world to win a five-star rating from the American Passenger Experience Association, winning top honors for the third year in a row. A Forbes contributor called JSX flights a "new, simple, and wonderful solution" to air travel woes.

But not everybody is pleased. In May, American Airlines asked the Department of Transportation (DOT) to "provide regulatory clarity," charging that JSX's business model "degrades our nation's aviation system and distorts competition." Southwest Airlines said that "there needs to be one level of safety for anyone flying on a scheduled passenger carrier." The Air Line Pilots Association, International (ALPA), the world's largest pilot union, accused JSX of "abusing a loophole that should be closed in the best interest of safety."

In August, the FAA announced that it would consider changing the regulations that let JSX operate, declaring that it "intends to initiate a rulemaking to address the safety risks."

The major carriers' complaints are not persuasive. American may claim that JSX "distorts competition," but there's nothing stopping American—or any other airline—from doing the same thing, offering short-hop flights on smaller planes that passengers can get to and from quickly. Yet the company prefers to complain that an upstart has found a way to eat into its market share without spending as much money as would be required to operate as a major carrier.

ALPA doesn't like that JSX is exempted from regulations like the "1,500 hour rule," which says pilots and co-pilots must have at least that many hours of flight experience before they can fly commercially, plus regulations on how much downtime a pilot must have between flights. But Gary Leff of George Mason University's Mercatus Center points out that JSX has "30,000 hour captains mentoring sub-1,500 hour co-pilots." And since they are "largely one and two hour flights," the company's "pilots mostly sleep in their own beds—far better for fatigue than at nearly all" major carriers.

In an email seen by Reason, JSX CEO Alex Wilcox asked customers to submit public comments to the FAA opposing new regulations. Wilcox called the effort "a brazen attempt to regulate JSX out of business" and said that "JSX has a flawless safety record and far exceeds applicable safety, security, and regulatory standards." He has also told The Dallas Morning News that "not once in our nine-year operating history has anyone at TSA, FAA or DOT ever raised any concern with the way in which we operate."

In his email to customers, Wilcox notes that in Dallas, where American, Southwest, and JSX are all headquartered, "American has an 86% market share at [Dallas Fort Worth International Airport] and Southwest has a stunning 96% market share" at Dallas Love Field Airport. He accuses American and Southwest of operating a "de facto duopoly in Dallas that they surely want to preserve. That they'd stoop to trying to convince regulators and lawmakers that safety is in jeopardy, in order to maintain their duopoly, is shameful."

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