9. AVIATION: Industry sues to block auction scheme for NYC airports (Greenwire, 10/15/2008)

Josh Voorhees, Greenwire reporter

The airline industry filed a lawsuit yesterday to block a controversial Bush administration auction scheme aimed at curbing delays at three New York City-area airports.

The Air Transport Association lawsuit came less than a week after the Transportation Department issued a final rulemaking to schedule the first batch of auctions for early January.

DOT plans to auction up to 10 percent of the takeoff and landing time slots at JFK International, LaGuardia and Newark Liberty airports over a five-year period (E&ENews PM, Oct. 9).

By forcing airlines to bid for the slots, DOT hopes it will make them more likely to fly larger aircraft -- a move aimed at reducing congestion, increasing capacity and lowering fares. Auction proceeds -- an estimated $10 million a year per airport -- would be spent on additional congestion-cutting measures at the three locations.

According to the department, under the current system, some airlines use less-desirable slots for smaller planes in an attempt to block competitors from flying additional routes and to keep fares artificially high.

The airlines, backed by a number of lawmakers, including Sen. Chuck Schumer (D-N.Y.), had previously voiced strong opposition to the auction plan, arguing DOT had no legal footing in its fight to sell the slots to the highest bidder. A recent Government Accountability Office report backed those claims.

DOT proceeded with its plans after receiving the go-ahead from the Justice Department, which disagreed with GAO's assertions and concluded the slots are the property of DOT's Federal Aviation Administration.

ATA lawyers called Justice's finding "baseless" in yesterday's petition. They said the confiscation and subsequent auction of the slots exceeds FAA's statutory authority and violates a number of statutory and constitutional restrictions, including "an explicit ban on spending appropriated funds to finalize or implement a regulation that imposes new aviation user fees."

The user-fee argument was refuted last week by DOT lawyers. "Because we are auctioning off the slots and not setting a price, it makes it very difficult to argue that this is a user fee," said D.J. Gribbin, DOT general counsel.

The airlines want to see the DOT rules invalidated or, at minimum, for the court to issue a stay and postpone the auction. Because the first auction is scheduled only days before the next president is sworn into office, it would not take a lengthy delay to take the agency's decision out of the hands of the current administration and place it into the hands of the next.

Speaking to reporters last week, however, Gribbin noted that similar market mechanisms were supported during the Clinton administration, so "there is no reason that an auction started by this administration wouldn't be continued by the next."

The auctions will be spaced out over five years, with the first batch of daily slots -- 18 each at JFK and Newark, and 22 or 23 at LaGuardia -- being awarded Jan. 12. Each slot represents one takeoff or landing a day.

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