In a gutsy move that is sure to draw the ire of Congressional leaders as well as the Air Transport Association, the FAA announced last Friday, October 10, 2008, that it had promulgated two “congestion management” rules: one for LaGuardia Airport, and the other for JFK and Newark Airports. In these rules, the FAA stated that it would proceed with its auctions of slots at the airports despite the GAO Report indicating that it was unlawful to do so. (See, GAO Declares FAA Does Not Have Legal Authority to Auction Slots).
The Rule for JFK and Newark and the Rule for Newark, which both become effective December 9, 2008, establish procedures to address “congestion in the New York City area by assigning slots” at the three airports in a way that the FAA believes will allow “carriers to respond to market forces to drive efficient airline behavior.” The JFK/EWR Rule extends the caps on the operation at the two airports, assigns to existing operators the majority of slots at the airports, while the LGA Rule grandfathers the majority of operations at the airport. The FAA claims that both Rules will develop a “robust” secondary market by annually auctioning off a limited number of slots in each of the first five years of this rule. The FAA states that the proceeds of the auction will be used to mitigate congestion and delay in the New York City area. Finally, the Rule also contains provisions for minimum usage, capping unscheduled operations, and withdrawal for operational need. Leases obtained in the first auction will start on October 25, 2009.
Most of the Federal Register notice announcing the promulgation of the Rules is spent justifying the Rules in the face of the GAO’s report that concluded that the FAA did not have the authority to auction the slots. The FAA concludes that “the issues involved represent novel legal issues upon which reasonable poeple, and agencies, acting in good faith, have disagreed. The FAA disagrees with the GAO conclusions and has decided to proceed with the adoption of this final rule.”
An analysis of the legal statements will be forthcoming in future blogs.