GAO: Slot Auctions Illegal

Air Safety Week, Oct 6, 2008

The Bush administration has no legal authority to auction coveted takeoff and landing rights at congested New York-area airports to ease congestion and boost competition,

The Government Accountability Office's (GAO) legal opinion requested by members of Congress was endorsed by major U.S. and foreign air carriers and airport organizations that have sued to block the market-based attempt to make the airports operate more efficiently.

GAO said "the FAA currently lacks authority to auction arrival and departure slots, and thus also lacks authority to retain and use auction proceeds. The FAA now asserts that it may assign the use of that airspace using its general property management authority. According to the FAA, slots are intangible property that it constructs, owns, and may lease for adequate compensation. An examination of those statutes read as a whole, however, makes clear that Congress was using the term "property" to refer to traditional forms of property. It was not referring to FAA's regulatory authority to assign airspace slots, no matter how valuable those slots may be in the hands of the regulated community..

"Accordingly, in our opinion, the FAA lacks a legal basis to go forward with the Newark auction or any other auction, and if the FAA were to go forward with auctioning slots without obtaining the necessary authority and retained and used the proceeds, the GAO would raise exceptions," the GAO letter continued.

The decision left unclear whether the U.S. Department of Transportation (DOT) would back down. It delayed the first slot auction involving Newark International, but had left the door open for the controversial approach. The DOT proposed earlier this year to sell access at busy airports, beginning with one arrival/departure slot.

A DOT spokesman said the GAO was unfamiliar with aviation law, and had little time to study it before reaching its conclusion. "Should Congress give the agency an opportunity to conduct a more thorough review, we are confident that GAO will better understand both the validity and the effectiveness of our approach," the spokesman added.

The Federal Aviation Administration (FAA) had delayed the initial slot auction planned for early September after running into fierce opposition from the affected air carriers and the New York area airports.

The U.S. airlines asked the FAA's Office of Dispute Resolution (ODRA) for Acquisition to halt the auction planned for Sept. 3 for two slots at Newark's airport. The slot auction would have led to others at Newark and New York's Kennedy International and LaGuardia.

The ruling by the FAA department did not address the merits of airline opposition to the auction, but said there is no harm in waiting. ``The air carriers have demonstrated compelling reasons to maintain the status quo'' pending a study of their objections, said Kerry Long, the FAA's chief counsel. The ODRA lifted its stay on the auctions on Sept. 30.

The Port Authority of New York and New Jersey (PANY/NJ) said "the FAA currently does not have authority to auction slots, and the GAO noted it would block attempts by the FAA to advance its plan.

"It's wrong to raise prices for everyone by implementing an untested and unauthorized scheme, particularly in this economy. The Port Authority's Task Force recommended the correct approach - increasing capacity and reducing delays while improving customer service - and we'll keep fighting for those needed changes until the federal government makes them a reality for passengers," the PANY/NJ said in a statement.

Airports Council International-North America (ACI-NA) said "the GAO decision vindicates the airport position that FAA has no statutory authority to force the slot auctions, which are universally opposed by the airport industry." Greg Principato, president of ACI-NA, said " the FAA should focus on working collaboratively with the PANY/NJ to develop and implement a reasonable and effective program to reduce passenger delays and congestion."

The Air Transport Association (ATA) said "the GAO issued an unambiguous opinion that the FAA does not have the legal authority to auction slots...ATA and the airlines applaud the clear and decisive opinion rendered by the GAO, which affirms what we have said all along - that the DOT slot auction is unlawful.

"We urge the FAA to put their focus and attention on increasing capacity and airspace redesign to make progress in actually reducing delay," said ATA President and CEO James C. May.

The GAO decision overshadows the decision by the FAA ODRA to lift a stay on the auction at Newark," ATA added.

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