Airlines Furious Over DOT Slot Move

Armed with a novel legal idea--that FAA owns slots--the U.S. Transportation Dept. said Friday it wants to attack congestion in the New York air space with a package of flight caps and slot auctions, instantly drawing the ire of the airline industry and the Port Authority of New York and New Jersey.

DOT is planning to cap flights at Newark to 83 flights per hour until at least through October of next year and is proposing slot auctions at Newark and New York Kennedy, Secretary Mary Peters said today.

Incumbent airlines at Newark would get 20 slots a day, with 10% of the slots over that baseline available for auction during the five-year life of the rule. Airlines could bid on their own slots, and the proceeds of the auction would go toward New York air space improvements, Peters said.

The department is proposing two options for JFK. One, similar to Newark's, would take 10% of the slots above the baseline 20 for auction, plowing the proceeds back into the New York air space. The second option would make airlines auction 20% of the slots above the baseline but would allow carriers to keep the proceeds.

Flight caps alone would drive fares up and prevent new entrants from serving the market, Peters said. This proposal "strikes a balance" between incumbents, which have invested heavily in the airports, and new entrants, which want greater access, she told AVIATION WEEK. The competition spurred by auctions and new entrants will ultimately drive fares down.