FAA Investigates Port Authority's Proposed Auctioned Slot Flight Ban

The Federal Aviation Administration on Aug. 26 initiated an administrative proceeding, known as a notice of investigation, to determine whether the Port Authority of New York and New Jersey will violate federal regulations if it follows through with its proposal to bar airlines from using takeoff and landing slots at JFK, LaGuardia, and Newark Liberty International Airports if the slots are acquired by auction.

Under law, airports receiving federal grants are required to provide airlines with reasonable and nondiscriminatory access to their facilities. As part of its investigation, FAA will evaluate whether the Port Authority's Aug. 4 proposal is unlawfully interfering with the airlines’ ability to access takeoff and landing slots at the airports by discouraging bidders from participating in slot auctions.

If the proposal by the Port Authority is in fact discouraging open access to the airports, the Port Authority may no longer be eligible for FAA grants, or payments under existing grants, until the matter is resolved. FAA could also issue an immediate cease and desist order requiring the Port Authority to grant access to the airports. The three airports received a total of $27 million in grants from FAA's Airport Improvement Program during fiscal year 2008.

FAA is scheduled to auction two slots previously allotted to now-bankrupt EOS Airlines at Newark on Sept. 3. In addition, the U.S. Department of Transportation announced two proposed rulemakings in April and May of this year that, if finalized, would auction a limited number of takeoff and landing slots at JFK, Newark, and LaGuardia Airports.

FAA said the slot auctions are necessary to ensure that all airlines have an opportunity to compete in the New York markets now that the number of flights at each of the three major regional airports has been capped. According to FAA, the auctions will preserve competitive airline service, help lower fares for service to and from the region, and give new carriers an opportunity to enter the market.

FAA has asked the Port Authority to file its response within 30 days.

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