BEFORE THE UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION WASHINGTON, D.C.

BEFORE THE UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION WASHINGTON, D.C. Docket No. FAA-2008-0517 IN THE MATTER OF NOTICE OF PROPOSED RULEMAKING CONCERNING CONGESTION MANAGEMENT RULE FOR JOHN F. KENNEDY INTERNATIONAL AIRPORT AND NEWARK LIBERTY INTERNATIONAL AIRPORT AIRPORTS COUNCIL INTERNATIONAL NORTH AMERICA S COMMENTS Gregory Principato Deborah McElroy Monica Hargrove Kemp ACI-NA 1775 K Street, NW Washington, DC 202.293.8500 gprincipato@aci-na.org Scott P. Lewis ANDERSON & KREIGER LLP One Canal Park, Suite 200 Cambridge, MA 02141 617.621.6560 slewis@andersonkreiger.com July 21, 2008

Airports Council International-North America ( ACI-NA ) applauds the efforts of the Federal Aviation Administration to address the issue of congestion management in the New York City area at two important airports with distinct issues of congestion and delay, namely John F. Kennedy International Airport ( JFK or Kennedy ) and Newark Liberty International Airport ( EWR or Newark ). ACI-NA also welcomes the opportunity to provide comments on behalf of its member airports in response to the Federal Aviation Administration s ( FAA s ) Notice of Proposed Rulemaking to address congestion at these two airports, 73 Fed. Reg. 29626 (May 21, 2008) (the NPRM ). A primary function of ACI-NA is, in rulemaking proceedings of this kind, to represent the interests of the local, regional and state governing bodies that own and operate the principal airports served by scheduled air carriers throughout North America. ACI-NA member airports are responsible for approximately 95 percent of the domestic and international scheduled airline passenger and cargo traffic in the United States and Canada. The FAA s NPRM raises important issues of law and policy potentially affecting the interests of all of ACI-NA s members, some of which currently have air carrier service to one or both of these airports and others of which may seek such service in the future. Additionally, the Port Authority of New York and New Jersey ( Port Authority ), the owner and operator of both Kennedy and Newark among other airports and transportation facilities, is an ACI-NA member airport. This rulemaking proceeding is another among many attempts by FAA to address problems of congestion and delay at the three major New York area airports. The present NPRM underscores the uniqueness of each airport s situation. The congestion problems at Newark have different roots, and present different issues, than the problems now faced 1

at JFK. As at LaGuardia International Airport, which is the subject of a companion rulemaking proceeding, 1 there has been a long history of congestion management initiatives at JFK and Newark. 2 Past Efforts to Address Congestion And Delays At Kennedy And Newark Have Proved Inadequate. The history of congestion management at JFK began in 1968 with the FAA s oversight of flight operations from 3 p.m. until 7:59 p.m. under the High Density Rule ( HDR ), which remained in effect through 2006. Beginning in 1994, the Secretary of Transportation was authorized by Congress to relax the HDR to enable new entrant carriers to provide air transportation at JFK and other slot-controlled airports. 3 The Department issued an order in 1999 authorizing 75 new flight operations at Kennedy by JetBlue Airways, to be phased in over a five-year period. 4 As required by the Wendell H. Ford Aviation Investment and Reform Act for the 21 st Century ( AIR-21 ) in 2000, the application of the HDR ended at JFK and LaGuardia, effective January 1, 2007. 5 AIR-21 also provided for the grant of exemptions from the HDR by the Secretary of Transportation for operations by new entrant carriers or flights to Small-Hub and Non- 1 Supplemental Notice of Proposed Rulemaking, Docket No. FAA-2006-05709, 73 Fed. Reg. 20846 (April 17, 2008). 2 73 Fed. Reg. 29626-29. 3 49 U.S.C. 41714. 4 Application of New Air Corporation for Exemption from 14 CFR part 93, Subparts K and S of 49 U.S.C. 41714, Order 99-9-11 (September 16, 1999). 5 49 U.S.C. 41715(a)(2). 2

Hub airports as long as the aircraft providing such service had fewer than 71 seats. As the FAA s NPRM recognizes, since the spring of 2006, the domestic scheduled flights of U.S. air carriers serving Kennedy have increased significantly throughout the day and as a result the airport s capacity has been challenged. 6 Variations in runway usage patterns under the direction of air traffic controllers have been relied upon to maximize the effective capacity of the airfield. Due to significant increases in domestic scheduled operations throughout the day, however, summer 2007 demand exceeded airport capacity, producing a large volume of delays, especially from 7 a.m. to 9 a.m.. The FAA s own traffic statistics verify that as a result, the percentage of on-time arrivals and departures declined sharply from 2006 to 2007. 7 Not surprisingly, the increased congestion at Kennedy has had rippling effects throughout the navigable airspace, especially in the northeastern United States, and indeed, throughout the country. 8 Despite the FAA s efforts to implement airspace redesign and to work with stakeholders to improve the efficiency of airport operations at JFK, the problem of congestion has persisted. Indeed, in September of 2007 the FAA redesignated JFK as a Level 2 Schedules Facilitated Airport for the summer 2008 scheduling season, 9 and later that same month determined the airport to be a severely congested airport necessitating a scheduling reduction meeting pursuant to 49 U.S.C. 6 73 Fed. Reg. 29627. 7 These statistics are provided in the NPRM. 73 Fed. Reg. 29627. 8 New York Aviation Rulemaking Committee Report, December 13, 2007. htpp://www.dot.gov/affairs/finalarcreport.pdf. 9 72 Fed. Reg. 54317 (September 24, 2007). 3

41722. 10 Agreements reached during several scheduling reduction meetings involving the FAA and domestic and foreign carriers serving Kennedy culminated in the issuance of a temporary Order limiting scheduled operations at JFK from March 30, 2008 through October 24, 2009, and generally capping scheduled operations at 81 per hour. The history of congestion management initiatives at Newark has followed a similar pattern. Newark was also subject to the HDR, although its application was suspended by the FAA before the enactment of AIR-21 because, at the time, Newark had sufficient capacity to meet demand. 12 Over the past several years, however, Newark s congestion problems have increased as a result of volume-related delays (caused largely by high demand during peak hours approaching or exceeding runway capacity) aggravated by weather and other adverse operating conditions. 13 Like the statistics associated with Kennedy, Newark s on-time arrivals and on-time departures decreased from 2006 to 2007. Capacity constraints (especially during the hours of 2 to 10 p.m.) and projected levels of operations for 2008 led the FAA to designate the airport as a Level 2 IATA Schedules Facilitated Airport for the summer 2008 scheduling season 14 and later that same year to its Level 3 Coordinated Airport Designation. 15 As a result of discussions with carriers serving the airport and some voluntary schedule changes by Continental, some of the 11 10 73 Fed. Reg. 29627. 2009). 11 73 Fed. Reg. 3519 (January 18, 2008), as amended 73 Fed. Reg. 8737 (February 14, 12 35 Fed. Reg. 16591 (October 24, 1970). 13 73 Fed. Reg. 29628 (May 28, 2008). 14 72 Fed. Reg. 54317 (September 24, 2007). 15 72 Fed. Reg. 73418 (December 27, 2007). 4

problem was resolved. However, based on scheduling information submitted to FAA for the summer of 2008 season, which indicated a major increase in domestic and foreign flight operations mainly during afternoon and evening hours, the FAA proposed to cap peak hour operations at Newark on March 18, 2008. 16 This proposal was adopted and is scheduled to expire on October 24, 2009, with total scheduled and unscheduled operations capped at an average of 83. 17 ACI-NA Shares A Long History of Participation In Congestion Management Initiatives at New York Area Airports. Similarly, this is not a new issue to ACI-NA. As we noted in our comments on the companion LaGuardia SNPRM, [o]ur organization has consistently sought to ensure that the Department of Transportation ( DOT ) and FAA properly appreciate the important issues at stake for local airport proprietors whenever broad issues of capacity expansion and congestion management have been considered. 18 Indeed, ACI-NA has not only participated in the FAA s rulemaking and policy proceedings on congestion management, 19 but has also become involved on behalf of its members in other public forums, including Congressional hearings and the FAA s Aviation Rulemaking Committee ( ARC ), which met during the fall of 2007. 16 73 Fed. Reg. 14552. 17 73 Fed. Reg. 29628. 18 Comments of Airports Council International-North America, Docket No. FAA-2006-25709 (June 16, 2008) (Supplemental Notice of Proposed Rulemaking concerning Congestion Management Rule for LaGuardia Airport), at 3. 19 ACI-NA also filed comments on the FAA s recent NPRM on amendments to the FAA s Rates and Charges Policy dealing with the ability of local airport proprietors to structure their rates and charges to provide incentives to air carriers efficiently to use available airport capacity. Docket No. FAA-2008-0036, 73 Fed. Reg. 3310 (January 17, 2008). 5

ACI-NA prefers the use of market-based tools when they are implemented by local airport proprietors as opposed to administrative measures, in managing airport congestion and delay. See Comments of Airports Council International - North America, Docket No. OST- 2001-9849 (July 22, 2002) (Notice of Market-Based Actions to Relieve Airport Congestion and Delay) ( ACI-NA s Market-Based Comments ); Comments of Airports Council International - North America, Docket No. FAA-2001-9854 (June 19, 2002) (Alternative Policy Options for Managing Capacity at LaGuardia Airport). We must reemphasize here, as we stated in our comments in the companion LaGuardia proceeding, that ACI-NA believes the use of marketbased mechanisms can effectively be combined with measures that recognize the importance of promoting competition and providing service to small communities. These three policy objectives are essential components of any well-designed program to align demand with capacity at congested airports, in the opinion of ACI-NA, and should be the linchpins of any congestion management program implemented at Kennedy and Newark. See ACI-NA s Market-Based Comments at 18-21. The Proposed Rule Would Allocate Auction Proceeds in Unprecedented Manners. As introduced in the companion LaGuardia rulemaking proceeding, the FAA s current proposal as outlined in the NPRM would combine caps established by the FAA limiting the total number of slots available at Kennedy and Newark with two alternative forms of slot auctions that are intended to use market mechanisms to allocate some of the slots among competing air carriers. 20 Under one form of auctions ( Option 1 ), the proceeds of the auction 20 A summary of the features of the proposed rule appears in chart form at 73 Fed. Reg. 29629. 6

would flow to the FAA, to cover its expenses and then to support capacity expansion projects in the New York region; under the alternate form ( Option 2 available only at Kennedy ), the proceeds of the slot auction (net of expenses) would be given to the incumbent carrier. 21 Under Option 1, which is proposed at both airports, the NPRM states simply that the FAA would auction off a portion of the slots and retain the net proceeds of the auctions for use on congestion and delay management initiatives in the New York City area. 22 Under Option 2, the auction proceeds at JFK would be given to the carrier previously holding the slot rather than to the FAA. Both scenarios are unprecedented in the history of the FAA s oversight of U.S. navigable airspace. Each proposed dispensation of the auction proceeds raises legal questions worthy of careful analysis. Notably the NPRM is silent in describing the method for setting aside the proceeds for congestion and delay management initiatives in the New York City area. If the proceeds are retained by the FAA, how will they be accounted for? Who will decide what congestion and delay management initiatives they are to be applied to? What role will the airport proprietor, the Port Authority of New York and New Jersey, play in this process? Likewise, the NPRM fails to explain how funds would be made available to incumbent carriers and also fails to provide legal support for allowing incumbent carriers who have made investments in slots to receive the auction proceeds. The FAA gives short shrift to these matters in the NPRM. Yet, these are important legal issues that must be addressed prior to the implementation of the proposed rule. ACI-NA believes the FAA should give more consideration to these issues and provide interested parties additional time to comment on 21 73 Fed. Reg. at 29646. 22 73 Fed. Reg. at 29626. 7

supplemental information it provides in this docket prior to the implementation of either of the proposed forms of slot auctions. The FAA s NPRM Does Not Properly Respect The Role of Local Airport Proprietors. As ACI-NA has advocated in the past, airport proprietors are in the best position to manage the use of the facilities they planned, designed, funded, built and currently operate. They have the proper incentives and are well-situated to respond to unique and ever-changing, local circumstances. They understand their own airports, the markets they serve and the roles they play within their regions. Their interest to have air carriers offer the greatest number of seats at the lowest cost to as many markets as possible comports with the FAA s interest in the efficient use of the nation s airspace. Local airport owners understand the intricacies of their own facilities: the configurations of runways, taxiways and gates; the existing legal arrangements with tenant air carriers; and a wide variety of logistical details that affect the operational efficiency of the airports they manage. ACI-NA has, as a result, consistently objected to federally-imposed congestion management measures. Accordingly, since the NPRM was first published, ACI-NA has opposed the implementation of the slot auctions at any of the New York area airports that have been proposed by the FAA. 23 ACI-NA remains committed to the expansion of airport capacity, wherever possible, and to the use of new technologies and procedures both to relieve existing problems of congestion and delay and to provide for the future growth of air transportation in the United States. We 8

applaud the FAA for its recent efforts to recognize the importance of airport infrastructure development, technological improvements through NEXTGEN and investments in capacity projects that provide national benefits. We look forward to continuing to work with the DOT and the FAA and with the Congress as they continue to consider these issues. Airport capacity expansion, however, is not always an available alternative. Where, as at Newark and Kennedy, existing capacity may be inadequate to meet demand and significant airfield capacity expansion is infeasible, aggregate airfield operational limits ( caps ) may be unavoidable. The FAA should not attempt, however, to expand its purview and usurp control of local airport facilities when local airport proprietors, such as the Port Authority, propose to manage their own airports in ways that will maintain an operational balance and do not impair the FAA s ability to provide for the safe and efficient use of the nation s airspace. As recent experience has shown, problems of congestion and delay resulting from inadequate airport capacity as well as the potential solutions change over time and vary widely from airport to airport because of differences in local conditions. The problems at JFK and Newark today are different than the challenges faced there previously, and the situation at JFK and Newark call for different solutions than might fit the circumstances that have plagued airports elsewhere, such as the airports in Boston, Philadelphia, Chicago O Hare and San Francisco. There is no one size fits all program for congestion management. The FAA should defer to local initiatives to resolve problems of congestion and delay whenever such methods are consistent with the safe and efficient use of the airspace and otherwise comply with 23 A press release was issued on April 18, 2008, stating the association s opposition. The press release can be viewed at www.aci-na.org/news/2008_apr18. 9

applicable law. 24 The agency s NPRM, however, proposes to treat the problems at LaGuardia, JFK and Newark as if they were all essentially the same and to displace local control of Newark and JFK with a federally-imposed auction scheme that the Port Authority opposes. The FAA s Proposal Would Unlawfully Deprive the Port Authority of its Proprietary Right to Manage Congestion at Kennedy and Newark. In this rulemaking proceeding, the FAA claims very broad authority under 49 U.S.C. 40103 since the United States Government holds exclusive sovereignty over United States airspace. 73 Fed. Reg. at 29631. There is little doubt that the FAA has power under this provision to regulate take-offs, flight patterns and landings. Section 40103(a) gives the FAA exclusive sovereignty of airspace of the United States ; Section 40103(b) gives the FAA authority to develop plans and policy for the use of the airspace and assign by regulation or order the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. ACI-NA does not question the FAA s authority to manage the use of the nation s airspace through the air traffic control system; that is one of the FAA s core responsibilities under 40103. ACI-NA acknowledges that the FAA can and sometimes should prescribe, as it 24 Notably, when she addressed the FAA s Forecast Conference in March 2008, Secretary Peters observed that [i]deally the problem of congestion would be tackled at the local level... without the intervention of the federal government. Secretary Peters noted as an example of an effective local initiative that the minimum landing fees put into place by the Port Authority in 1968 had an almost immediate impact on congestion. See http://www.dot.gov/affairs/peters031008.htm. 10

has for JFK and Newark, limits on the total number of operations that the agency will permit at a given airport at particular times when either safety issues arise or, as at JFK or Newark, when intolerable congestion and delays threaten to disrupt the national air transportation system. ACI-NA disputes, however, that the FAA has or should be given power under 40103 or otherwise to go beyond setting operational limits and grant, allocate, withdraw or auction operating rights or dictate how an airport proprietor must manage its airfield or passenger terminals. Section 40103 surely does not give the FAA power to manage how airports are used. That is the job assigned by our legal system to local airport operators. An airport sponsor has the proprietary right to manage the use of its own airfield and terminal facilities (subject to compliance with applicable AIP grant assurances and federal law). See Western Air Lines v. Port Authority of New York and New Jersey, 658 F. Supp. 952, 956-57 (S.D.N.Y. 1986), aff d, 817 F.2d 222 (2 nd Cir. 1987) (airport proprietor s regulation of ground congestion arising from the use of its terminals would appear to be at the core of the proprietor s function as airport manager ). Within this NPRM, however, the FAA asserts solely on the basis of 40103 the power to grant, allocate, withdraw and auction slots allowing air carriers to use the Port Authority s facilities at Kennedy and Newark and the power either to capture the resulting revenue for its own purposes or to bestow it upon incumbent carriers. The FAA has never shown that it has such far-reaching legal authority under 40103, and ACI-NA believes that it does not. Under the FAA s misconceived theory, any regulatory action taken by the FAA that might improve passenger throughput (or any other measure of the efficiency of the use of the airspace) would be permitted, no matter how far it intruded upon the proprietary rights of local airport sponsors; and, since the FAA has exclusive sovereignty to regulate the use of the airspace, any actions by local 11

airport proprietors that might affect passenger throughput would arguably be preempted even if they were otherwise a lawful exercise of airport proprietors rights. The FAA s strained interpretation of 40103 cannot be reconciled with its plain language, flies in the face of the well-established division of responsibility between federal regulators and local airport proprietors, and should be abandoned. 25 Moreover, the Port Authority of New York and New Jersey has questioned the necessity for slot auctions at either airport given the results of recent capacity evaluations it has undertaken at Newark and Kennedy. Given the chaotic state of the airline industry as a result of recent jet fuel price increases, projections of future levels of aircraft operations at Newark and Kennedy need to be reevaluated prior to implementing slot auctions at either airport. At a minimum, the FAA should consider the analysis of the Port Authority on the issue of capacity needs at the three New York area airports for which operational caps and slot auctions have been proposed, and make a new assessment of the need for extraordinary new measures such as slot auctions based on changes that have occurred in the industry over the past several months. The Proposal Set Forth In the NPRM Compromises Important Policy Objectives. As ACI-NA has emphasized in previous filings submitted to the FAA and the DOT, as well as in Congressional Hearings and other forums, airport congestion management programs 25 Indeed, ACI-NA notes that it has joined several other entities, including the Port Authority of New York and New Jersey, the Air Transport Association, the Regional Airline Association, and the International Air Transport Association in supporting legislation introduced by Senator Schumer to prevent slot auctions. See recent article appearing in Aviation Week on this subject at http://www.aviationnow.com/aw/generic/story_generic.jsp?channel=aviationdaily&id=news/bl OCK06198.xml&headline=LaGuardia%20Slot%20Auction%20Faces%20New%20Foe 12

need to adequately consider several equally important policies; namely optimizing the efficient use of scarce airport capacity, promoting air carrier competition and ensuring the provision of service to small communities. The current proposal does not serve well any of these policy objectives. The FAA proposes to rely upon a fixed operational cap and the perpetuation of a modified slot regime, augmented by alternative forms of slot auctions, which will strongly constrain the ability of market forces to determine how the limited capacity at JFK and Newark can most efficiently be used. The FAA s current proposal will not adequately promote air carrier competition because it would enshrine incumbency by allowing existing carriers operating at Kennedy and Newark to maintain most of their current slots for the duration of the rule. The proposal does not ensure that new entrant or limited incumbent carriers will be able to gain access to slots at either airport even if they are able to participate in the secondary market for slots that the FAA proposes to create. The proposal fails to give due consideration to the preservation of small community service to and from Kennedy and Newark. ACI-NA remains firm in its position that small community access needs to be preserved. ACI-NA therefore suggests that if the FAA proceeds to implement its slot auction proposal at JFK and Newark, a reasonable share of the slots should be set aside for flights offering service to small communities. Conclusion. For the reasons set forth in these comments, ACI-NA believes that the FAA cannot and should not adopt either of the proposed rules set forth in its NPRM. The FAA has not shown that it has statutory authority to adopt the proposed rules or that the FAA s suggested scheme would achieve its stated objectives, promote air carrier competition or preserve service to small communities. The NPRM fails to recognize the primary role of local airport proprietors in 13

managing congestion at their airports and seeks unlawfully to usurp the proprietary right of the Port Authority to control how its facilities at JFK and Newark are used. Instead of pursuing its misconceived slot auction proposal, the FAA should work collaboratively with the Port Authority and the air carriers to develop and implement a reasonable and effective program of congestion management for Newark and JFK. July 21, 2008 Respectfully submitted, Gregory Principato Deborah McElroy Monica Hargrove Kemp ACI-NA 1775 K Street, NW Washington, DC 202.293.8500 gprincipato@aci-na.org Scott P. Lewis ANDERSON & KREIGER LLP One Canal Park, Suite 200 Cambridge, MA 02141 617.621.6560 slewis@andersonkreiger.com 14