Showdown Approaching Between Agency, Port Authority of New York And New Jersey

Things are coming to a head between the FAA and the Port Authority of New York And New Jersey, over a controversial plan by the Department of Transportation to auction slots at John F. Kennedy International, LaGuardia and Newark Liberty International Airports.

The first such auction is scheduled to take place September 3. The DOT will auction the two landing slots at Newark previously allocated to EOS Airlines, which went bankrupt and folded its wings earlier this year. That auction will test the DOT's theory to implement similar slot auctions at all three airports, as a measure towards combating ramp congestion and flight delays.

Predictably, airlines are fiercely opposed to that plan, saying the government plans to step in where the free market system should reign. Those airlines -- represented by the Air Transport Association -- have a powerful ally in the Port Authority, which boldly confronted DOT earlier this month... saying the airports under its authority would refuse to accept any flights using slots acquired via auctions.

On Tuesday, the Federal Aviation Administration initiated an administrative proceeding, known as a notice of investigation, to determine whether PANYNJ would violate federal regulations if it makes good on the threatened ban.

Under law, airports receiving federal grants are required to provide airlines with reasonable and nondiscriminatory access to their facilities. As part of its investigation, the FAA will evaluate whether the Port Authority’s August 4 proposal is unlawfully interfering with the airlines’ ability to access takeoff and landing slots at the airports by discouraging bidders from participating in slot auctions.

If the proposal by the Port Authority is in fact discouraging open access to the airports, the Port Authority may no longer be eligible for FAA grants, or payments under existing grants, until the matter is resolved. The FAA could also issue an immediate cease and desist order requiring the Port Authority to grant access to the airports. The three airports received a total of $27 million in grants from the FAA’s Airport Improvement Program during fiscal year 2008.

In addition to the upcoming Newark auction, DOT also announced two proposed rulemakings in April and May of this year that, if finalized, would auction a limited number of takeoff and landing slots at JFK, Newark and LaGuardia Airports.

DOT maintains the slot auctions are necessary to ensure that all airlines have an opportunity to compete in the New York markets now that the number of flights at each of the three major regional airports has been capped. The auctions will preserve competitive airline service, help lower fares for service to and from the region, and give new carriers an opportunity to enter the market.

The FAA asked the Port Authority to file its response within 30 days.

FMI: www.dot.gov, www.panynj.gov, www.airlines.org