March 31, 2008
The Honorable Mary Peters
Secretary
U.S. Department of Transportation
400 7th Street, S.W.
Washington, DC 20590
Re: Airport Auctions
Dear Secretary Peters:
The Air Transport Association (ATA) and its member airlines appreciate your leadership and commitment to reducing congestion and flight delays in the New York metropolitan area. We are committed to working with the administration and fully support practical, constructive and proven measures that will accomplish our mutual goals.
The ability of the Department of Transportation (DOT) and airlines to implement meaningful solutions makes recent actions by the DOT both confusing and disappointing. By all accounts, the Department is forcing slot auctions and congestion pricing on the industry. The JFK and Newark schedule-limitation orders make it clear that the Department intends to establish a slot auction mechanism, and a recent Federal Aviation Administration (FAA) Web site notice that seeks comment from auction software designers on a potential solicitation for auction services confirms DOT’s objective. In addition, the Department has proposed changes to its policy on airport rates and charges that are specifically intended to encourage congestion pricing. These actions are legally indefensible, inconsistent with international practice and they are adamantly opposed by virtually the entire U.S. and international airline community.
As discussed at length during the course of the New York Aviation Rulemaking Committee (NYARC) and in meetings with your staff and the Office of Management and Budget, DOT does not have the authority to mandate so-called “market mechanisms” – auctions and congestion pricing – to allocate access to congested airports. The Department’s general authority to manage the airspace for safety and efficiency does not provide the specific congressional mandate needed to impose an airport access pricing regime. That is why the FAA acknowledged it lacks authority for market mechanisms in the LaGuardia Congestion Management Rulemaking. Moreover, even if the Department did have such authority, it simply has not engaged in the kind of notice-and-comment process required under the Administrative Procedure Act to establish an auction scheme. Many questions about such a scheme, including who receives the revenues and how they may be used, remain unanswered. This makes the FAA auction design notice all the more puzzling. These actions also conflict with the DOT 2008 appropriations legislation, which prohibits new aviation user fees not specifically authorized by law.
Public interest considerations also weigh heavily against auctions. First, auctions do not address the underlying responsibility of the federal government to improve capacity in the National Air Space (NAS) in general and in the New York region particularly – indeed they facilitate that problem; and second, auctions add even more costs for airlines that they will either be forced to absorb – at a time when airlines are trying to deal with runaway fuel costs, or fares will go up unnecessarily for the traveling and shipping public. Either way, customers, and ultimately airline employees, lose.
Finally, it is clear from the presentations made during the NYARC that there is near unanimity among U.S. and foreign airlines in support of the Worldwide Scheduling Guidelines, with a secondary trading market, as the best market mechanism to allocate airport access. The issues of new entry and competition, raised by some, can be addressed adequately by appropriate rules and procedures and are not sufficient reasons to jettison this widely accepted mechanism for a complex and untried theoretical alternative.
Please be assured that ATA and its member airlines want to work with the administration and fully support meaningful measures to alleviate congestion in the New York metropolitan area and throughout the NAS. I would be pleased to discuss these issues with you at your convenience.