September 26, 2014 

Mr. Brett J. Hatt 

Executive Vice President and 

General Counsel and Secretary 

United Airlines 

233 South Wacker Drive 

Chicago, IL 60606 

Dear Mr. Hart: 

I am responding to your letter dated September 151h to Mr. Buchbinder. Your letter complains 

about the rates and charges United Airlines (UAL) pays at Newark International Airp01t (EWR) 

and advises that UAL is prepared to initiate a formal proceeding with the FAA to challenge those 

rates and charges, should one final effmt between UAL and the Port Authority fail to result in an 

alteration of the rates at EWR. 

The Port Authority remains willing to continue its dialogue with UAL on EWR rates and charges. 

UAL is EWR's largest tenant with 70% market share and, as we understand, UAL's most 

profitable market in the US. Therefore, we recognize the importance of EWR to UAL and, of 

course, the Pmt Authority. Additionally, as has been previously related to UAL business 

representatives, the Port Authority takes seriously its federal obligations as airport sponsor. 

However, before this dialogue continues, it is impmtant to recognize the federal ground rules 

which govem rates and charges - rules which govem the issues raised in your letter but which are 

simply ignored. 

Your letter states that the rate-making at EWR "violates federal law and results in unreasonable 

and discriminatory charges. . ." As you may know, in 2005 and 2006, prior to the 

VAL/Continental Airlines merger, Continental Airlines raised with the Port Authority virtually 

the same issues that are set fmth in your recent letter, including complaints that EWR's flight fee 

is the highest in the country, that EWR generates substantial revenue surpluses and that such 

surpluses are being used for non-aeronautical purposes. In responding to these claims, the Pott 

Authority reminded Continental that the rates and charges which were the subject of its inquiry 

were the result of a long-standing written agreement between Continental and the Pmi Authority, 

entered into willingly, containing fmmulas and a methodology for the computation of those fees. 

As such, we noted that under Depatiment of Transportation Rates and Charges Policy, 

Continental was bound by the agreement struck with the Pmt Authority and its protestations 

about the perceived inequity of that formula did not change that fact. 
violate federal law, and threaten to ask the FAA to investigate those rates and charges, ignoring 

the fact that UAL is bound by this written agreement which sets those rates. In fact, in 2013, the 

FAA restated the policy referred to in our prior correspondence, and clearly restated that - "[T]he 

Depa11ment will not entertain a complaint about the reasonableness of a fee set by agreement 

filed by a pat1y to the agreement setting the disputed fee." 78 Fed. Reg. 55330, 55332 

(September 10, 2013). compare, 61 Fed. Reg. 31994,32018 (June 21, 1996). 

Your company appears to take the position that the federal govemment has left open the option 

of a grant assurance challenge to rates and charges by an air canier before the FAA as long as 

such challenge bypasses the Depru1ment of Transpm1ation expedited rates and charges 

proceedings under Section 113 of the Federal Aviation Authorization Act of 1994, 49 USC 

47129. However, that position is simply incorrect. The Rates and Charges Policy notes that the 

Authorization Act expressly excludes challenges to fees imposed pmsuant to a written agreement 

with air carriers. The Rates and Charges Policy also makes clear that an "FAA proceeding is not 

intended to provide a mechanism for adjudicating the respective rights of the pa11ies to a fee 

dispute" and while, the Department might entertain a complaint about "reasonableness of a fee 

set by agreement filed by an aeronautical user who is not a party to the agreement", as noted 

above, it plainly states that it "will not entertain" a complaint by one who is a pa11y to such a 

written agreement. 78 Fed. Reg. at 55332. 

Further, while the Pm1 Authority stands ready to continue to communicate with you about the 

issues raised in your letter, some comments on the points you raise are warranted. 

Your letter refers to a "hidden 'cost-plus' f01mula" that creates a mark up in the EWR flight fee 

and results in a higher fee than paid by carriers at New York aitports. It would appear that you 

are referencing the methodology for calculating flight fees that appears in your agreement. That 

methodology provides for a factor on direct costs to cover indirect costs, which are not otherwise 

reimbursed at EWR. Such costs are recovered directly at the New York ailports. 

As to the accumulation of surpluses, the amounts referenced in your letter would appear to 

include non-aeronautical revenues. However, the Rates and Charges Policy makes clear that an 

aeronautical user is not entitled to shru·e in non-aeronautical revenues, absent an agreement with 

the airp011 proprietor to do so. Id. at 55333. 

As to UAL's asse11ion that the EWR rate base includes excessive costs due to the Port 

Authority's failure to control operating expenses, including security costs, the Pm1 Authority 

would note that from 2010 through 2013 flight fee-related fixed charges, the largest component 

of that factor, have remained flat as have the agency's general administrative charges. As the 

trave1ling public knows well, increased security costs have been an unfortunate outgrowth of the 

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Finally, UAL refers to increased costs due to the Port Authority's implementation of the Aircraft 

Rescue and Fire Fighting (ARFF) Cadre. At the same time, by requesting a re.vision to the 

carriers' leases to mitigate the effect of these charges, UAL appears to acknowledge that the 

resulting rates and charges are an outgrowth of the fee structure in the lease agreement. In recent 

discussions, the P01t Authority has acknowledged that the creation and implementation of the 

ARFF Cadre, as required by the FAA, has led to an increase in costs to EWR airlines that wanants the exploration of methods to lessen this impact. 

The P01t Authority stands ready to meet with UAL and looks forward to a more productive 

dialogue on these matters, but emphasizes its belief that for the reasons stated, such a dialogue, 

rather than the pursuit of the meritless adminish·ative litigation mentioned in your letter, is the 

appropriate course. 

1/ 

Carlene V. Mcintyre 

Assistant General Counsel 

cc: Darrell Buchbinder, Esq. 

Robe1i S. Span, Esq. 

Marc L. Warren, Esq. 

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