Will it cost extra to land the plane?

by David Woodruff, September 3rd, 2008, 7:00 am

Regular air travelers can be forgiven for being short on sympathy for the airline industry. Unexpectedly high fuel prices have led to service cutbacks and fee increases, and you can expect more of those as carriers implement their fall schedules. But airlines, already beleaguered, might feel as though the rug had been pulled out from under them if a proposed federal auction of landing rights at Newark Liberty International Airport takes place.

The US Department of Transportation has formally recognized what business travelers have known for some time: New York’s three main airports are a bottleneck in the air transportation system. It’s a problem of supply and demand. The airports — JFK, LaGuardia, and Newark, all run by the Port Authority of New York and New Jersey — serve a high-demand market where space to add runway capacity is in short supply (read: nonexistent).

So the auction option has emerged as a way to allocate a scarce resource. The bankruptcy earlier this year of a start-up transatlantic airline, Eos, made the Newark runway slots available. Regulators hope an auction will be a precursor to a comprehensive redistribution of takeoff and landing rights at the New York facilities.

So where do we place our bids? On eBay? Not so fast. The auction idea has attracted fierce opposition from airlines, who say they don’t have money to bid for something they had previously been able to trade among themselves. Other naysayers include the Port Authority and members of Congress. Legal skirmishing heated up during August, and the chief counsel of the Federal Aviation Administration decided last week to halt the auction, which had been scheduled to begin today. The FAA order gives the airlines more time to press their case but does not rule out the possibility that a sale will proceed.

Even if it goes nowhere, the idea of auctioning runway slots is a useful reminder of one of the facts of life in the airline business: Though officially deregulated in 1978, the industry still remains subject to government regulations of all sorts, just as it remains the beneficiary of massive public investment in infrastructure. Fees paid by airlines to airport operators help keep runways paved, but without public money there wouldn’t be many runways to pave.

Meeting the demands of the market and the demands of public safety is hard enough even when fuel prices are historically low. Nowadays, it’s a bear. But if you fly much, you knew that already.