Says Likely Plan Will Stifle Competition, Not Help Passengers

Congestion pricing is the most effective way to reduce air travel delays and congestion at New York-area airports, according to a new study by the Reason Foundation... although that's likely not the way the government will chose to deal with those problems.

As ANN reported last week, a proposal hatched by the Bush administration three months ago to fine airlines for using runways during peak hours -- thus, in theory, more evenly spreading out departures and arrivals at New York-area airports -- appears headed for defeat, due to stiff opposition from the industry. The final report from the Aviation Rulemaking Committee is expected later this week... and will likely encourage airlines to use fewer, and larger, aircraft, and shift traffic to underutilized airports, instead of congestion pricing.

"It is disappointing that the federal plan to reduce delays was unable to incorporate congestion pricing or produce a real auction that puts every runway spot up for bid. The new plan is a band-aid that won’t cure delays," said Robert Poole, who recently advised the US Department of Transportation on this topic and is lead author of the Reason Foundation report. "Airlines schedule more flights than can be safely handled by today’s existing runways and air traffic technology, but they don’t bear the costs of the delays they create."

The Foundation cites a random day in New York this year. The airlines scheduled 59 departures between 0800 and 0930 at JFK, even though the Federal Aviation Administration can only safely handle 42 to 50 take-offs, depending on weather conditions. Passengers were guaranteed to be delayed before the day even started.

To force airlines to confront the consequences of their scheduling, the Reason Foundation study says runway fees, varying by demand and time of day, should be set by airport operators (the Port Authority in New York’s case) and that all three major airports -- Kennedy, LaGuardia and Newark -- should implement congestion pricing, which would replace the current broken weight-based landing fee system. The revenues from congestion pricing should be put into a "lockbox," the Foundation adds, exclusively devoted to expanding capacity at the three airports.

Group Debunks Airline Arguments

Airlines counter congestion pricing, saying it would be "ineffective, because there are no off-peak times at the New York airports." The Foundation replies there are definite peaks and valleys at all three airports. Sophisticated modeling of congestion pricing shows prices of up to $1,200 per plane produce significantly less traffic during LaGuardia’s rush hours. At JFK, where peak charges would run $2,000 per plane ($10 per passenger on a 200-person aircraft), congestion pricing would reduce the evening departure queue by a third, from today’s 45 planes to 30 planes.

Smaller cities are worried airlines would stop service to them if congestion pricing is implemented. But congestion pricing simulations show very few flights to small and mid-size airports will actually be eliminated, according to the foundation. Instead, most of these flights will simply be moved to off-peak hours. Most flights that would be cut from schedules are frequent small-jet flights to major cities, which would be replaced by a smaller number of flights on larger jets.

The airlines also allege that congestion pricing will hurt domestic carriers and give an unfair advantage to foreign airlines. But congestion pricing is fully compatible with international aviation law and there is no basis for exempting foreign airlines. Thus, all airlines would have to pay the same fees and be on a level playing field.

"The airlines like to say congestion pricing will be a tax, but that’s not true if the revenues are used to expand the airports’ capacity," said Poole, who has advised the last four presidential administrations. "Capacity expansion and congestion pricing won’t be a tax and will work for all of aviation’s interest groups. Replacing current landing fees with true congestion pricing and guaranteeing that all revenues are used to expand capacity is a win-win approach."

FMI: Read The Foundation Study (.pdf), www.reason.org/airtraffic/index.shtml