Transportation Industry

Overview

Although market forces have replaced regulation for most forms of transportation, the need for economic analysis in transportation industries remains and in some cases has even increased because of continuing oversight by federal agencies, legislative proposals to reregulate, and private lawsuits.

The airline industry is just one example of where the need for analysis in the transportation sector has increased. Since deregulation of the airline industry, the Department of Justice, the Federal Trade Commission, other government agencies and private parties have scrutinized airline pricing and marketing by filing cases involving airline tariff publishing service, computer reservation systems, and pricing and capacity issues, among others. As demand for air travel increases, as new airlines enter the market and older ones exit, and as more and more airports face capacity constraints, the need for economic evaluation of these problems will continue. Economic analysis plays an important role in evaluating these issues and is vital in the search for potential solutions.

The marketing and selling of transportation services is another area where there have been changes and where economic analysis provides significant insight. The Internet, for example, is beginning to have a significant impact on the distribution of transportation services. As a result, economic issues related to this new and continuously changing distribution system have arisen. Specifically, as more and more passengers book tickets through the Internet, the demand for some services of travel agents may begin to decrease, which may in turn alter the traditional pricing of their services. Business-to-business Internet services have affected freight transportation as well. EI expertise can assist clients in responding to these changing economic conditions.

In addition to other changes in the transportation market, globalization has also affected transportation industries both by increasing demand for transportation of freight and passengers across borders, and by creating an environment conducive to alliances between U.S. and foreign transportation firms. For example, the need for economic analysis of alliances between airlines has grown in the increasingly “open skies” environment. EI has experience evaluating competitive effects of these alliances.

In ocean and inland waterway shipping, a number of proposals have been advanced, including proposals to modify the Jones Act and to restrict or eliminate the antitrust immunity for ocean shipping conferences. EI has the background and experience to analyze these proposals.

Similarly, the Federal Energy Regulatory Commission’s regulation of pipelines and electric power transmission continues to evolve. Because other aspects of oil, gas, and electric power markets have been freed from regulation, these energy segments markets now have become a mixture of regulated and unregulated sales and services.

EI economists have extensive experience in analyzing transportation issues. They have participated in the development and administration of transportation policy at the Department of Justice, Federal Trade Commission, Surface Transportation Board, Federal Energy Regulatory Commission, and Director of Investigation and Research, Canada. They have also prepared analyses and provided litigation support and testimony for individual airlines, pipelines, railroads, motor carriers, and other transportation companies.

Experience

EI expertise spans a variety of services:

  • Testimony regarding pricing and competition issues before the Surface Transportation Board, Federal Energy Regulatory Commission, Federal Maritime Commission, Department of Transportation, former Civil Aeronautics Board, and Canadian Competition Tribunal
  • Calculation of damages in antitrust cases
  • Design of tariffs based on economic principles
  • Analysis of competitive issues in mergers and joint ventures, including those involving shippers’ associations, U.S. and Canadian railroads, motor carriers, water carriers, domestic and international airlines, pipelines, and electric power transmission
  • Estimation of railroad property valuation
  • Application of antitrust principles to pipeline deregulation
  • Analysis of pricing, competition, and contracts in the airline computer reservation systems industry
  • Preparation of financial analyses of motor carriers and consequent Multi-employer Pension Plan Amendments Act (MPPAA) liability