Airlines ask court to stop landing rights auction

By John Hughes BLOOMBERG NEWS | Tuesday, August 12, 2008

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U.S. airlines asked a federal appeals court to stop government auctions for takeoff and landing rights such as one planned Sept. 3 for the Newark, N.J., airport.

The Air Transport Association trade group said it filed a petition with the U.S. Court of Appeals for the District of Columbia Circuit for a review of the Federal Aviation Administration plan, saying the FAA lacks auction authority.

The appeal comes as the FAA prepares to test auctions as a method to boost competition among airlines, whose flights are limited at Newark's Liberty International Airport to reduce delays. The trade group, with members including Continental Airlines Inc., Newark's largest operator, says auctions will worsen delays and amount to an added tax on carriers.

"Sadly, FAA believes that it has the right to make up the rules as it goes along," group President James May said in a statement Monday.

The group said in its petition that "slots are not FAA property and cannot be auctioned by FAA."

Brian Turmail, a spokesman for Transportation Secretary Mary E. Peters, said "airline lobbyists are more interested in blocking new competitors from entering the New York market than they are in reducing delays." Ms. Peters's agency includes the FAA.

The petition may not stop the Sept. 3 Newark auction. A ruling will take "several months at a minimum," and the Air Transport Association may ask the court to delay the auction while the appeal is pending, the group said in a statement.

The Sept. 3 results will be used to craft final rules this year allowing auctions of 70 to 80 slots at each of the three major New York airports, according to D.J. Gribbin, Ms. Peters' chief attorney. The three New York-area airports, Newark, LaGuardia and Kennedy, were the most congested in the nation last year.

LaGuardia and Kennedy, like Newark, have flight caps.

The Newark takeoff and landing slot will likely be sold for "hundreds of thousands" of dollars, Mr. Gribbin said. Proceeds will be used to boost capacity at New York airports, his agency has said. The April bankruptcy of Eos Airlines left the FAA in control of the Newark slots being sold.

Sale of some slots would encourage competition by allowing new entrants to gain a foothold in limited markets, Ms. Peters' agency has said. Forcing carriers to buy some takeoff and landing slots would also encourage more efficient use of the airspace, such as flying larger jets, Ms. Peters has said.

The Sept. 3 auction will aggravate delays by adding service in congested airspace, according to airlines including Continental, which along with regional affiliates operates about 70 percent of Newark flights. Auctions will increase prices for passengers as airlines pass on the cost of buying slots by raising fares, carriers have said.

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