US Proposes Congestion Pricing Plan For Airlines

January 15, 2008

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Airlines could have to pay more to use congested US airports at busy times of the day under a proposal unveiled by the Bush administration on Monday to reduce flight delays.

The surprising move by the US Transportation Department comes after months of weighing options for airlines to voluntarily smooth out flight schedules and streamline air traffic operations in New York and other key cities.

The congestion pricing plan is opposed by major carriers, which want no new costs as they struggle with higher fuel prices, softer demand, and shrinking profit margins. They say new fees would simply drive up fares.

Airlines have repeatedly urged the government to concentrate on improving air traffic control run by the Federal Aviation Administration and let demand and market measures drive their business.

If finalized after a six week public comment period, the proposal would move airports away from the decades-old practice of charging landing fees based on aircraft weight. Instead, airports would have the flexibility to vary charges based on the time of day and the volume of traffic.

The change, regulators believe, would allow airports to even out traffic and allow airports to handle more passengers. Airlines often stack flights during busy morning and evening hours, aggravating congestion problems.

The extra fees also could be structured in a way that would allow airports to apply them up front for runway construction and other capital projects, reducing borrowing costs to airports.

Transportation planners are in the process of capping the number of flights during busy hours at New York's John F. Kennedy Airport and New Jersey's Newark Airport in another attempt to reduce delays and congestion.

Flight delays worsened significantly in 2007 in part due to congestion in New York. More than a third of US air traffic arrives, departs or flies over New York-area airports.