Unveils $89 Million Plan To Increase JFK Capacity, Lower Prices

The Bush Administration will commit almost $90 million over the next eight years to expand capacity at John F. Kennedy International Airport, US Secretary of Transportation Mary E. Peters announced Thursday. She also unveiled new rules designed to lower fares, increase consumer choices and improve service for air travelers using JFK, Newark and LaGuardia airports.

The DOT plans to sign a Letter of Intent in coming days, committing the federal government to invest $89 million between 2009 and 2016 to fund a series of taxiway improvements at JFK airport. The taxiway improvements include constructing two new taxiways, extending or improving six others and creating new high-speed exit taxiways.

The taxiway work will make it easier for aircraft to maneuver between gates and the airport’s runways, cutting travel time and limiting delays, Peters said. Construction work is expected to begin in 2009 and would be completed by 2014.

"The best way to cut record airline delays nationwide is to expand the limited capacity at New York's airport," Peters said. "[But] building new taxiways or adding new runways takes time, though, which is why we’re also putting in place measures to cut delays and keep service vibrant over the short term."

In news that outraged airlines that serve those airports, the DOT added those measures will include caps on the number of takeoff and landing operations at certain times of the day, as well as a controversial plan to auction off landing slots at those airports. DOT says both steps are intended to cap New York-area commercial airline traffic to realistic levels... something that, for the most part, those airlines have refused to do for themselves.

Under its plan, DOT will limit the number of flights able to operate at a given hour at JFK and Newark airports. Combined with existing caps at LaGuardia airport, Peters said service at the airport was at risk of stagnating since other competitors are locked out of the market. She cautioned studies have found airfares at capped airports run 11 to 15 percent higher than at comparable airports without caps.

"In order to keep the New York aviation market open to new services that would promote competitive fares," in Peters' words, the Secretary also announced final rules to auction a limited number of landing and take-off slots at each of the region’s three airports. Under the final rules, airlines operating at JFK, Newark and LaGuardia would receive a 10-year ownership of the vast majority of FAA slots they currently operate, Peters said.

"Without slot auctions, a small number of airlines will profit while travelers bear the brunt of higher fares, fewer choices and deteriorating service," Peters said. "Slot auctions, meanwhile, will keep flights to New York affordable, available and vibrant while giving all airlines an opportunity to compete in one of the world’s most popular aviation markets."

The new rules call for a gradual auctioning over the next five years of up to 10 percent of the landing and take off slots these airlines currently operate free of charge. Peters added the rules also would lower the hourly operating cap at LaGuardia airport from 75 slots per hour to 71 slots per hour... a move DOT says would cut delays by an estimated 40 percent.

Under the rule for La Guardia, existing airlines would keep 988 of the slots they currently operate. The remaining 113 slots would be made available over the next five years by auction to airlines interested in starting new service or expanding current operations at the airport.

In addition, under the rule for JFK and Newark, existing airlines would keep 1,035 of the slots they currently operate at JFK Airport and 1,154 of the 1,245 slots they currently operate at Newark Airport. The remaining 89 slots at JFK and 91 slots at Newark would be made available over a five-year period for airlines wishing to expand their current operations or start new services at either of the airports.

Even couched by DOT as a consumer-friendly gesture, that plan will win few friends at the Government Accountability Office, which issued a non-binding ruling against the slot auction plan last month. Industry opponents of the move also lined up to criticize the DOT's plan.

"Despite conflicting legal opinions on whether the Federal Aviation Administration (FAA) has the authority to auction arrival and departure slots and unanimous opposition from the aviation industry, DOT continues to unlawfully usurp the proprietary right of the Port Authority of New York & New Jersey (PANYNJ)," said ACI-NA President Greg Principato. "Airport proprietors are in the best position to manage the use of the facilities they planned, designed, funded, built and currently operate. Slot auctions mandated by the federal government will not reduce delays or improve efficiency, competition or passenger service."

James C. May, president of the Air Transport Association, said the DOT's shot across the bow leaves his organization little choice but to pursue its legal options.

"The DOT decision patently defies the recommendation of the Government Accountability Office (GAO), as well as the will of Congress, by attempting to move forward with an illegal auction of airport slots," May said. "Rather than needlessly forcing a costly and protracted legal challenge over an ideological experiment, DOT should follow the recommendations made by the New York Aviation Rulemaking Committee and implement fair and practical solutions to address delays and add needed new capacity.

"The Secretary of Transportation’s own group of key stakeholders has proposed a clear set of solutions, while rejecting the idea of auctions. It is past time to act on those recommendations," May concluded.

Despite bluster from opponents, DOT and Federal Aviation Administrator officials say their efforts are the quickest way to address what everyone agrees is a serious problem with overcapacity.

"The goal is simple, find every possible way to safely add as much capacity as possible to some of the most popular airports in the country," said Acting FAA Administrator Robert Sturgell. "Combined with dozens of other capacity improvements we’re making at the airport, this new investment will lead to more flights, fewer delays and a better traveling experience for countless flyers."

"Without slot auctions, a small number of airlines will profit while travelers bear the brunt of higher fares, fewer choices and deteriorating service," Peters said. "Slot auctions, meanwhile, will keep flights to New York affordable, available and vibrant while giving all airlines an opportunity to compete in one of the world’s most popular aviation markets."

FMI: Review The JFK And Newark Rules, And LaGuardia Rules (.pdf), www.dot.gov, www.faa.gov, www.aci-na.org, www.airlines.org