"FAA Reopens Discussion On LaGuardia Slot Proposals -- Demand Management Options May Limit Access For Regionals"

Monday, April 1, 2002

FAA Reopens Discussion On LaGuardia Slot Proposals -- Demand Management
Options May Limit Access For Regionals
Commuter/Regional Airline News


The Federal Aviation Administration (FAA) has revived its attempts to
determine what sort of demand management should be imposed at New York's
LaGuardia airport, and indications are now even stronger that limitations
could be aimed at curbing regional aircraft numbers.

LaGuardia has been the focal point in the nationwide debate about how to
solve airport congestion, as it has traditionally been one of the most
delay- prone airports in the nation. In June last year the FAA sought
comment on a list of demand management options, but in November postponed
the comment deadline indefinitely due to the Sept. 11 terrorist attacks.

However, on March 22 the agency reopened the LaGuardia debate by announcing
a new comment period on the options, which will close June 20.

The demand management options were drafted by the FAA and the Port Authority
of New York and New Jersey (PANYNJ). One option that looks particularly bad
for regional carriers would see smaller aircraft discouraged from using the
airport. Other options would retain slots designated for service to small
communities, although the ratio of slots varies.

Despite the five-month freeze, the demand management options for LaGuardia
remain unchanged. However, the latest FAA notice includes one important
addition to the original version, an invitation to comment on several recent
actions that "may affect the appropriateness of demand management options
described in the notice."

Most significantly for the regional airline industry, these actions include
"the shift in fleet mix resulting in an increased number of regional jet
flights at LaGuardia since Sept. 11." Other actions that the FAA is
requesting comments on are the Sept. 11 attacks themselves, and the PANYNJ's
rate increase for the three airports it controls.

Regional Airline Association (RAA) President Deborah McElroy said that the
demand management proposal looks "uglier and uglier" from a regional airline
perspective. With the addition of the three extra caveats, including the one
relating to the increase in the regional jet fleet, McElroy said the FAA
notice is "clearly an expansion" of the original version.

The association will be crafting its official response with the help of a
consultancy company.

While the airline industry in general has always opposed any form of demand
management, airports have been pushing for the government to give them the
authority to use landing fees and other restrictions to control the type and
amount of traffic during peak hours.

Many experts have argued for shifting general aviation and regional aircraft
to satellite airports. Conservative lobby groups have also argued for a
change from weight-based landing fees to flat fees, which would advantage
the heavier mainline jets.

Although many airports would like to use landing fees to control demand,
they feel that they are unable to do so unless the federal government takes
action. Because of this, LaGuardia will likely be a test case for the wider
application of demand management techniques.

McElroy said that she, like many others in the regional industry, was
surprised that the FAA resuscitated the demand management proposal so soon.
Although capacity is starting to come back, it is still well below what is
was before Sept. 11 and because of that, the congestion debate has died to a
whisper during the past six months.

The FAA announcement says that use of regulated slots at LaGuardia is about
14 percent below last year's levels. However, it says that based on
projected airline schedules, flights will return to pre-Sept. 11 levels at
LaGuardia by the end of 2002.

FAA Administrator Jane Garvey stated that "with the anticipated strong
recovery of airline traffic in 2003, we believe it is appropriate to resume
the discussion on long-term demand management at LaGuardia." She added that
FAA is "asking for aviation industry comments on ways to increase efficiency
at this vital link in our network of airports."

LaGuardia is currently a slot-controlled airport, but slot restrictions will
be removed in 2007. Congress allowed new entrant carriers or those serving
small airports an exemption from the slot requirements. This created even
greater congestion at LaGuardia, and triggered the FAA's consideration of
demand management proposals.

As a temporary solution, the FAA in December 2000 capped the number of
exemptions, and reallocated them using a lottery system.

New Twist To LaGuardia Proposal

In addition to comments on the original set of demand management options,
the FAA is now asking for submissions on how the following events "may
affect the appropriateness" of the list of options.

* The attacks of Sept. 11;



* The Port Authority's rate increase for LaGuardia, JFK, and Newark
Airports;

and


* The shift in fleet mix resulting in an increased number of regional jet
flights at LaGuardia since Sept. 11.

Proposals For Demand Management At LaGuardia

Congestion Fees

* Retain high-density rule. PANYNJ imposes congestion fee in addition to
current

landing fees.


* Two possible variations of fees - same level fee for HDR and AIR-21 slots,
or
higher fee for HDR slots, and lower fee for some AIR-21 operations. (AIR-21
slots refer to exemptions granted by Congress to new entrants and carriers
serving small communities.)

Auctions.

* Reservations replace HDR slots and AIR-21 exemptions. Carrier reservations

allocated in the following manner:


* Each carrier given a baseline of 20 operations a day; 80 reservations per
day
auctioned to carriers serving small communities; 70 percent of remainder
allocated to carriers based on share of enplaned passengers; remaining
reservation auctioned among competing carriers.

* Two implementation options: immediate replacement of all HDR and AIR-21
allocations, or four-year phase-out of HDR and AIR-21 allocations.

Encourage use of larger aircraft.

* Three variations: replace HDR/AIR-21 with scheduling process with larger
aircraft preference; retain HDR/AIR-21 framework and eliminate use of
commuter aircraft in air carrier slots; retain HDR/AIR-21 and eliminate
commuter slot category. All variations contain means of protecting service
to small communities.

Integrate/streamline existing rule.

* Consolidate HDR/AIR-21, creating two categories - one for air carriers and
one

for service to small communities.


* A periodic withdrawal and reallocation of air carrier slots would
accommodate

new entry access. Reallocation would be done through a lottery.


* Change buy/sell rule to promote efficient use of slots.


Reallocation of slots under a replacement rule


* Consolidates and reallocates HDR slots and AIR-21 exemptions.



* Majority of slots would remain with current carriers.



* Create pool of slots for allocation by lottery to new entrants, small
community service, and limited redistribution among incumbents.

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