Slot auctions at all 3 NYC-area airports

May 16, 2008 12:26:06 PM PDT
Slot auctions designed to reduce delays and increase competition are coming to John F. Kennedy International Airport in New York and Newark Liberty International Airport in New Jersey, the government said Friday. The Transportation Department also said the government and industry must improve procedures for complying with maintenance and safety rules to avoid massive flight cancellations, like those that left hundreds of thousands of passengers stranded last month when American Airlines and other carriers had to ground MD-80 jetliners to inspect or redo wiring. Those inspections were supposed to have been completed by March 5.

The White House, which demanded action after last summer's record delays, lauded the announcement made just a week before one of the busiest traveling holidays. But the airline industry and some critics said the effort will do little to ease delays.

The department last month announced similar slot auctions for New York's LaGuardia Airport that will require carriers to auction off some of their existing slots over the next five years and possibly retire others. In 2007, the three New York-area airports had the lowest on-time arrival rates, and aviation officials say delays there cascade throughout the system.

Under the latest proposals from DOT Secretary Mary Peters, all airlines operating at Newark and JFK would be given as many as 20 daily slots for the 10-year life of the rule.

Under one option at JFK, 10 percent of the airline's slots above the base amount would be made available via an auction and the proceeds would be invested in congestion and capacity improvements in the region. Or the airlines would auction 20 percent of slots above the baseline and keep all of the proceeds.

Depending on the option, up to 179 slots of the airport's 1,245 could be affected, Peters said.

The plan also calls for auctioning 10 percent of slots at Newark above the baseline annually for the first five years of the rule, making 96 slots out of 1,219 at the airport auctioned over the 10-year span.

The Air Transport Association, which represents the nation's largest airlines, said the government lacks the legal authority to impose the auctions. The group also doesn't think the plans will alleviate delays.

The Port Authority of New York and New Jersey, which runs all three airports, agreed and said it will work with the industry "to examine our options for prohibiting the federal government from implementing this auction plan."

Analysts said the rules could raise fares since the nation's largest carriers control most of the slots at the New York-area airports and don't want to lose or sell them.

Sen. Charles Schumer, a frequent and vocal FAA critic, also blasted the move.

"Implementing an untested scheme to impose auctions at the busiest airports in America is nothing short of insanity," the New York Democrat said. "Auctions have never been tried and were hatched by a handful of ivory-tower types in the administration."

Peters disagreed and said the department was making the proposal because economists estimate that fares drop by more than 30 percent when new airlines enter a market.

"Competition drives down fares," Peters said in a release. The department will accept comments on the new proposal for the next 60 days before a final rule is issued.

After reviewing reports from the government and American Airlines about the grounded MD-80s, Peters said the FAA and the airlines must improve procedures for requesting and approving alternative solutions for safety directives, and review existing communication rules to ensure "significant safety decisions are made using a clearly documented process."

The initial audits, prompted by revelations that Southwest Airlines flew dozens of planes that had missed inspections under lax FAA supervision, checked 10 airworthiness directives that apply to each carrier's fleet. The second phase that runs through June will check 10 percent of the orders that apply to each airline's fleet.

FAA spokesman Les Dorr said the agency has performed more than 1,000 audit activities in the second round, and the compliance rate of 99 percent thus far is the same as the first phase. He added that he was aware of "no fleet-wide issues."

Elsewhere, the department will begin requiring airlines and travel agents to disclose fees for checking a second bag in their online and print ads, and before anyone buys a ticket. As carriers struggle to offset surging prices for jet fuel, many have raised ticket prices and started charging extra fees for checking baggage.

Airlines must also report new and more complete data on the time passengers spend on the tarmac, an issue that became more prominent after two winter weather-related incidents in recent years when hundreds of passengers were stuck on the tarmac for up to 10 1/2 hours.

Through March of this year, there were 1,387 flights that endured tarmac waits of more than two hours before takeoff, which puts the industry on pace to improve its performance, although the busy summer season is just starting and airlines are expected to operate fewer total flights. Still, the first-quarter tally was less than 0.1 percent of all flights, according to data from the Bureau of Transportation Statistics.

In 2007, there were 8,852 flights with tarmac waits of more than two hours, up from 7,405 flights in prior year, both of which were about 0.1 percent of the total flights for those years.