DOT to Propose Auctions

Press reports indicate the Department of Transportation will make auctions part of its recommendations when Secretary Mary Peters reports to President Bush next week. The 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 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 Port Authority of New York & New Jersey, 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 that would ease congestions at the three troubled New York airports. The Port Authority favors the International Air Transport Association World Scheduling Guidelines which were part of the recommendations made recently. Related Story
The auction idea faces tough hurdles since airlines count their slots as property and seizing them would be a violation of the Fifth Amendment to the Constitution, which calls for just compensation in such seizures. This, despite the fact, the slots were given away by the government when they were first created. In addition to rulemaking, court battles are highly likely since auctions would be unique to the New York airports.