Study: Congestion Pricing Is Long-Term Answer to Air Travel Delays

New federal plan to cut delays more likely to stifle competition than help passengers

Los Angeles (December 19, 2007) – Congestion pricing is the most effective way to reduce air travel delays and congestion at New York-area airports, according to a new Reason Foundation study. The report systematically debunks the arguments that airlines try to use against congestion pricing and details exactly how airport pricing would impact each of the three major New York airports.

"It is disappointing that the federal plan to reduce delays was unable to incorporate congestion pricing or produce a real auction that puts every runway spot up for bid. The new plan is a band-aid that won't cure delays," said Robert Poole, who recently advised the U.S. Department of Transportation on this topic and is lead author of the Reason Foundation report. "Airlines schedule more flights than can be safely handled by today's existing runways and air traffic technology, but they don't bear the costs of the delays they create."

Consider one random day in New York this year. The airlines scheduled 59 departures between 8:00 a.m. and 9:30 a.m. at JFK even though the Federal Aviation Administration can only safely handle 42 to 50 take-offs, depending on weather conditions. Passengers were guaranteed to be delayed before the day even started.

To force airlines to confront the consequences of their scheduling, the Reason Foundation study says runway fees, varying by demand and time of day, should be set by airport operators (the Port Authority in New York's case) and that all three major airports – Kennedy, LaGuardia and Newark - should implement congestion pricing, which would replace the current broken weight-based landing fee system. The revenues from congestion pricing should be put into a "lockbox" that is exclusively devoted to expanding capacity at the three airports.

The Reason study systematically debunks the arguments that airlines and others use against congestion pricing.

For example, airlines claim, "Pricing will be ineffective because there are no off-peak times at the New York airports." In reality, there are definite peaks and valleys at all three airports. Sophisticated modeling of congestion pricing shows prices of up to $1,200 per plane produce significantly less traffic during LaGuardia's rush hours. At JFK, where peak charges would run $2,000 per plane ($10 per passenger on a 200-person aircraft) congestion pricing would reduce the evening departure queue by a third, from today's 45 planes to 30 planes.

Smaller cities are worried that airlines would stop service to them if congestion pricing is implemented. But congestion pricing simulations show very few flights to small and mid-size airports will actually be eliminated. Instead, most of these flights will simply be moved to off-peak hours. Most flights that would be cut from schedules are frequent small-jet flights to major cities, which would be replaced by a smaller number of flights on larger jets.

The airlines also allege that congestion pricing will hurt domestic carriers and give an unfair advantage to foreign airlines. But congestion pricing is fully compatible with international aviation law and there is no basis for exempting foreign airlines. Thus, all airlines would have to pay the same fees and be on a level playing field.

"The airlines like to say congestion pricing will be a tax, but that's not true if the revenues are used to expand the airports' capacity," said Poole, who has advised the last four presidential administrations. "Capacity expansion and congestion pricing won't be a tax and will work for all of aviation's interest groups. Replacing current landing fees with true congestion pricing and guaranteeing that all revenues are used to expand capacity is a win-win approach."

Full Report Online

The full study, Congestion Pricing for New York Airports: Reducing Delays While Promoting Growth and Competition, is online at: www.reason.org/ps366.pdf. Reason Foundation's air traffic research and commentary is here: www.reason.org/airtraffic/index.shtml.

About Reason

Reason Foundation is a nonprofit think tank dedicated to advancing free minds and free markets. Reason produces respected public policy research on a variety of issues and publishes the critically acclaimed monthly magazine, Reason. Reason Foundation also produces Reason.tv, featuring short documentaries hosted by Drew Carey. For more information, please visit www.reason.org.

Contacts

Chris Mitchell, Director of Communications, Reason Foundation, (310) 367-6109




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