N.Y., N.J. governors oppose slot auctions

updated 3:17 p.m. ET Aug. 20, 2008

NEW YORK - The governors of New York and New Jersey asked federal officials Tuesday to abandon a planned auction of prime takeoff and landing slots at New York City-area airports, arguing that it could result in higher ticket prices.

Officials with the U.S. Department of Transportation say that, with the airports capable of handling a limited number of flights per hour, auctions are the fairest way to decide who gets those slots.

But with the first auction planned next month for Newark Liberty International Airport, Govs. David Paterson of New York and Jon Corzine of New Jersey said in a letter to Transportation Secretary Mary Peters that the plan is a mistake.

The governors said ticket prices could rise 12 percent as airlines absorb the cost of acquiring slots. They also predicted that airlines, having paid top dollar for a slot, would be most likely to fill it with a big jet flying to a lucrative long-distance destination, rather than a smaller city like Buffalo or Ithaca, N.Y.

"This misguided policy will increase ticket prices for consumers and hurt struggling small-market airports while doing nothing to relieve or mitigate delays" and congestion in the region, their letter said.

D.J. Gribbin, the top lawyer for the agency, disputed those predictions.

"Auctions will encourage competition and lower ticket prices," he said. He said there was also "no evidence" to suggest that auctions would hurt smaller airports.

Auctions were proposed last year, when over-scheduling led to too many planes arriving at once. Some economists have called on the government to impose auctions for years, saying it would encourage the airlines to schedule flights more responsibly.

The Port Authority of New York and New Jersey, which operates the three major airports serving New York City, has said it would try to stop the auction either in courts or Congress, and the Air Transport Association of America — the trade organization for U.S. airlines — sued the Federal Aviation Administration last week.

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