Amid press reports indicating the Department of Transportation will make auctions part of its recommendations when Secretary Mary Peters reports to President Bush this week, the department published the 188-page report from Aviation Rulemaking Committee tasked with coming up with solutions. The report came on the heels of nearly 100 recommendations made by a Port Authority of New York and New Jersey task force recently. Related Story
The ARC material indicated a New York area Czar would be useful, although it said little on up-gauging, which is aimed at small regional jets instead of the mainline narrow bodies that have constituted most of the growth at Kennedy. Related Story
“Service to small communities is often on regional jets,” said the ARC report. “A pricing scenario may make operations on such aircraft impractical (because the cost would only be spread among a few passengers). Therefore, service to these small cities may be at jeopardy. Under the High Density Rule Congress made carve-outs for service to small communities. Any solution for the New York area will likely need to consider whether provisions should be made for preserving service to small communities.” It concluded by saying any policy-based exceptions to congestion pricing/auctions such as for small community air service and new entrants would undermine the benefits of market-based solutions. However, it did not recommend such market solutions, instead, it expressed deep concern over such initiatives saying they would not work.
Amongst the other policy issues to be resolved is competition from new entrants, international operations, general aviation, which the group noted constituted few operations, use of revenues, the duration of slots and the type of auction to be used. It also said any such solutions must recognize the investment made by airlines and airports, although it is unclear whether the group condemned auctioning future capacity increases versus current capacity. Such market mechanisms could impact aircraft gauge and frequency along with aviation investments.
Besides the Regional Airline Association, ARC members included officials from the PANY&NJ , airlines, consumer groups, the FAA and DOT. The committee developed workings groups to cover operational/infrastructure improvement, a NY Czar, general aviation and voluntary reductions which was part of Working Group 1’s mandate, along with examinations of the recent Port Authority proposal. Working Group 2 covered congestion pricing, auctions and aircraft gauge, while Group 3 deliberated gate utilization and perimeter rule. Working Group 4 focused on priority aviation traffic preferences, while Group 5 examined the scheduling guidelines published by the International Air Transport Association (IATA) and other options.
One of the more interesting observations concerning market-based solutions, came from Working Group 2 which noted that organizations that control airport and airspace access are both monopolies and, therefore, are themselves not market-based. For this reason, pricing of airport or airspace access as proposed would operate as a government tax, rather than a market price between two private entities. In addition, the group noted there were no viable reliever airports in the region for those who cannot afford to serve JFK under a pricing option or those who do not need to connect, which is a limited number of flights.
The auction news, which also includes the possibility that caps would be imposed on all three New York area airports, met with universal condemnation from aviation groups, including the Air Carriers Association, which represents low-cost carriers who, it said, would be squeezed out of Kennedy should caps or auctions become a reality. The ultimate victim would be passengers who will have fewer choices and higher fares as airlines pass along the higher costs of slots to them.
Auctions, which would take a rulemaking to become effective, became the preferred option after plans to impose congestion pricing – also universally condemned – was overruled by the PANY&NJ, which operates the airports.
News of the proposed limitations came on the heels of 100 recommendations made by a coalition created by the Port Authority, which embraced the IATA World Scheduling Guidelines called for by IATA Director General and CEO Giovanni Bisignani, during a speech before Washington’s Aero Club. He pointed to the Port Authority list of 75 operational and infrastructure improvements that should be launched to help alleviate congestion.
The auction idea faces tough hurdles since airlines count their slots as property and seizing them would be a constitutional violation, which calls for just compensation in such seizures. Such compensation would divert much needed funding for NextGen improvements. In addition to rulemaking, court battles are highly likely since auctions would be unique to the New York airports.
IATA, representing 60 member carriers operating at Kennedy, also opposed congestion pricing. Bisignani called making military airspace availability during holidays a “political placebo for a serious long-term illness” in the face of the only solution to congestion, accelerating capacity improvements through NextGen. "Instead of addressing the problem, the DOT wants to change the way people travel by making it more expensive at peak times," Bisignani said, who called Kennedy congestion a global concern and said congestion/peak pricing “a bandaid” which has never worked anywhere in the world. He blamed Congress for not affording FAA the appropriate resources to deal with air traffic management problems in the area.

Proposed Czar
“This New York Czar proposal is based on recent successes within the Air Traffic Organization wherein a single individual/entity was granted sufficient authority to facilitate initiatives and implement much needed enhancements encountering little, if any, delay,” said Group 1. “The current structure within the ATO (FAA’s Air Traffic Organization) does not provide the level of speed and agility required to implement the initiatives identified in the New York ARC in a timely manner. The ATO’s current structure seems to have greatly increased coordination across the different lines of business. There is concern that it has been inefficient and at times the structure seems to have been a direct impediment to making significant progress, specifically, the amount of time involved in reviewing, adjusting, and implementing most of the suggested initiatives.”
To be successful, said ARC, this individual should receive the full backing and support from each ATO vice president as well as their entire directorate level to ensure positive results in a much more expeditious manner. “It is imperative that this position be given the necessary authority to cross all the lines of business to manage these critical processes and to expedite their implementation,” said the report. “I recommended having the czar report directly to ATO’s Chief Operating Officer and be readily accountable to the ATO’s Executive Council (EC) on all matters that deal with these strategic initiatives from inception through implementation and follow up.”

NY Airports Offer Decongestant Ahead of Federal Mandates
LaGuardia, JFK and Newark, joined by the PANY&NJ and airline executives actually made 100 recommendations to decongest air traffic in the New York metropolitan airspace and seemingly allow airlines to have their cake and eat it, too, since they do not do not call for up-gauging or a reduction in the number of flights. Nor do they include peak or congestion pricing or auctions. If that is so, then regionals can heave a sigh of relief since their RJs have been the target of steady attacks since the Federal Aviation Administration began decongestion efforts at O’Hare and LaGuardia last year. That would only be fair since the Regional Airline Association showed that increases in narrow bodies outweigh those of regional airlines which are naturally up-gauging from market demand.
Part of the solution would be airline rescheduling to avoid congestion and quicker action to get aircraft off runways sooner and more efficient routing in the heavy NY-Washington corridor. The task force also wants accelerated deployment of NextGen technology already in use at other airports. That means increased funding which is also required for lengthening and reconfiguring taxiways to offload aircraft from runways more quickly.
The recommendations resulted from a PA&NYNJ Flight Delay Task Force, which included a top FAA official, and are designed to reduce delays and congestion by next summer if 27 are become effective shortly. The task force said that adopting all 100 would pave the way for 3.5 million additional passengers at Kennedy, without increasing delays. The task force specifically wants to avoid federally mandated limits at Kennedy where restrictions were lifted earlier this year, limiting the number of passengers and revenue.
The task force hopes DOT Secretary Mary Peters will make the recommendations part of her report to President Bush. The FAA is already trying to adopt some of the provisions, making that more likely. Demand is expected to increase by 50 percent by 2025 over the 104 million passengers using the three airports.
ARC’s Working Group 1 said the 77 recommendations made by the Port Authority fell into five categories – efficient airport surface movement; departure efficiency; arrival efficiency; regional airspace efficiency; and technology – and concluded 18 are already underway with completion expected by summer. The most promising of the 77 involved excessive spacing on final approach, runway/taxiway improvements, a second J80 – an east-west corridor leading to Boston, New York, Philadelphia and Washington, DC – the most heavily traveled skyway in the system and the source of many delays. Potential savings of $2.8 million/annual based on minutes of delay saved, increase capacity and reduces delays at numerous airports.
It also discussed surface management systems as well as multiple runway entry points and high-speed taxiways. Group 1 said creating a surface management system would eliminate the lack of coordination between surface and air controllers, affording a much more efficient airfield operation.
Even as controversy raged over limitations, Continental’s new service with Colgan Airways’ Bombardier Q400 was gaining attention for its ability to increase capacity at Newark by using a cross-wind runway for takeoffs and landings. RJs, can only use the runway in optimal weather. Pinnacle, Colgan’s parent company, has long been touting the capacity-generating ability of its new 74-seat turboprop scheduled to enter service next month at Colgan, especially as the 15 aircraft slated for the airline will replace 50-seat regional jets. The Q400s’s operating characteristics allow it to use Runway 11/29, a short east-west runway when wind conditions would force regional jets to use the busy main runways, according NewJersey.com which reported on the planned new service. The article noted that Bombardier borrowed nuclear submarine noise-suppression technology to provide a quieter, smoother ride. Coverage included the only other U.S. operator – Horizon, with its 33 Q-400s – and reported that the Q400 is one of a dozen Continental efforts to reduce congestion. NewJersey.com also said in 2006, about 38 percent of Newark's 363,555 domestic flights used regional jets, adding some critics say the Q400s will not make that much of a difference. However, it continued to call the use of regional jets a huge congestion problem, even after the Regional Airline Association showed that growth of narrow-body flights outweighed those of regional jets.
A copy of the ARC’s report can be found here or here.