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Despite Opposition, Feds Plan to Auction Airport Slots in Jan.

Posted on: Friday, 10 October 2008, 06:00 CDT

By Alan Levin

The federal government announced Thursday it intends to shake up New York's congested airports by bringing in new airlines in an effort to reduce delays and lower fares.

The controversial program is designed to bring more competition and efficiency by auctioning off the right to take off at some of the nation's most desired -- and most delayed -- airports. Airline carriers will be allowed to bid for slots at LaGuardia, John F. Kennedy International and Newark Liberty International.

Over five years, the Department of Transportation (DOT) plans to take 10% of flight slots at those airports away from current airlines and auction them. The proceeds will go to airport improvements. In the first auction set for Jan. 12, 23 LaGuardia slots would be sold and 18 slots each at Newark and Kennedy.

Transportation Secretary Mary Peters said the move will reduce delays and lower air fares. "Without slot auctions, a small number of airlines will profit while travelers bear the brunt of higher fares, fewer choices and deteriorating service," she said.

Airlines, airports and lawmakers reacted with anger. The Air Transport Association, which represents the large carriers that would have to give up slots, vowed to sue to block the regulation. It argues that auctions will increase fares as airlines pass on the costs to passengers.

Opponents cited an opinion last month by the non-partisan Government Accountability Office, the investigative arm of Congress, that said such auctions are illegal.

"It is simply shocking that the DOT is unabashedly continuing this ideological battle despite the staunch opposition from the entire aviation community," said Sen. Charles Schumer, D-N.Y.

The Justice Department said the government has the authority to hold the auctions.

The Bush administration and Peters have signaled for about a year that they wanted to impose the auctions despite growing opposition and the end of Bush's term. The first auction comes eight days before a new president takes office.

With so few slots at stake initially, it will be difficult for an airline to buy enough to set up a beachhead at one of the airports, said airline industry analyst Roger King of CreditSights.

"You really have to have a market share to have any effect on consumer behavior," King said. (c) Copyright 2008 USA TODAY, a division of Gannett Co. Inc.

Source: USA TODAY

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