One slot has become available at Newark Airport (due to an airline bankruptcy), so the U.S. DOT plans to auction it off next month. From all the noise being made by the airline trade association and the Port Authority of New York and New Jersey, you'd think the world was coming to an end.
I have written at length about how pricing mechanisms are far better than government mandates for deciding how to make the most economically valuable use of a scarce goodâ€“such as landing and taking off at congested airports like Newark. Suffice it to say that either market-based runway charges or slot auctions would allocate that limited capacity to those who could make the most productive use of it. Such a system would reduce congestion, because it would give airlines bottom-line incentives to use larger-capacity planes, on average, than the dramatically downsized mix they have shifted to over the last five years at the major New York area airports.
And don't believe the ridiculous claims being made by the legacy airlines and the Port Authority that DOT slot auctions are illegal. The legal history of "slots" dating back to before airline deregulation (1978) makes clear that they are not the property of either airlines or airports. The airlines conceded as much when Congress phased out slots a few years agoâ€“and not a single one took any legal action to argue that their property rights had been "taken" from them. DOT's FAA had the legal right to re-impose slots, to limit hourly runway operations to the maximum safe level.
The Port Authority the other day announced that it would refuse to allow an airline that leased a slot from DOT to use any of its airports. That is flat-out illegal, since as the operator of public airports that receive federal grants, it is required to serve all airlines on a non-discriminatory basis.
What's going on here is an effort to keep out new competitors at the New York airports. It flies in the face of airline deregulation, and will therefore harm consumers. Sen. Charles Schumer knows DOT has the law on its side; that's why he has introduced legislation to block slot auctions. For the sake of air travelers everywhere, let's hope he does not succeed.