Praising US airlines for product innovation, strong balance sheets and wise capacity discipline, a top US Department of Transportation (DOT) official said the government is inclined to stay out of the industry’s way and let the market play out.

“The lesson for us in Washington [from US airlines’ recent financial success and the emergence of ultra-LCCs] is to remove onerous regulatory burdens,” DOT undersecretary for policy Derek Kan told an International Aviation Club (IAC) luncheon in Washington DC.

Noting the variety of airline business models in the US and the product investments being made by a number of carriers, Kan said: “We want to be a part of that.”

He said the management strategies that led to numerous airline bankruptcies appear to be a thing of the past. “Airlines are no longer simply chasing market share,” he said.

Kan said DOT takes a “vigorous systematic approach” to reviewing regulations on all transportation sectors, and has found that a number of regulations or proposed regulations “do not seem to have a cost-benefit” rationale. Emphasizing that regulations “critical for safety” will “remain untouched,” Kan encouraged airline representatives in the IAC luncheon audience to communicate with DOT regarding unnecessary regulations. “Please flag for us regulations that you think need to be looked at,” he said.

In December 2017, DOT withdrew two proposed rules that would have forced US airlines to collect and publish detailed data on ancillary revenue and disclose baggage fees to passengers at point-of-sale.

Speaking a day earlier at the US Chamber of Commerce Aviation Summit, Southwest Airlines CEO Gary Kelly said US airlines are operating in a more reasonable regulatory environment than in the past. He said the tax bill passed late last year by Congress and signed by President Donald Trump, which lowered the corporate tax rate to 21%, was “a great down payment on a more favorable business environment.”

Kelly said airline ticket taxes remain too high, but added that the overall regulatory environment is improving. “We still have an excessive aviation tax burden, but we’re beginning to move in the right direction,” he said. “I think it’s a more favorable business environment right now and certainly tax reform is a big part of that … I don’t think anyone wants the government meddling in how we do business.”

Aaron Karp/Aviation Daily,