FEDERAL AVIATION ADMINISTRATION 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

----------------------------------------------------------------------------------:X: 

UNITED AIRLINES, INC., 

Docket No. 

Complainant, F AA-16-14-13 

v. 

THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, 

Respondent. 

----------------------------------------------------------------------------------:X: 

MOTION OF RESPONDENT 

THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY 

FOR SUMMARY JUDGMENT DISMISSING THE COMPLAINT 

(VOLUME 1 OF 2) 

Communications with respect to this document should be addressed to:. 

Carlene V. Mcintyre 

Arnold D. Kolikoff 

Faith Tabafunda 

Law Department 

The Port Authority of New York and New Jersey 

225 Park Avenue South, 14th Floor 

New York, N.Y. 10003 

Telephone: (212) 435-3503 

Attorneys for Respondent 

The Port Authority of New York and New Jersey 
FEDERAL AVIATION ADMINISTRATION 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

----------------------------------------------------------------------------------)( 

UNITED AIRLINES, INC., 

Complainant, 

v. 

THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, 

Respondent. 

----------------------------------------------------------------------------------)( 

Docket No. 

FAA-16-14-13 

MOTION FOR SUMMARY JUDGMENT DISMISSING THE COMPLAINT 

Respondent The Port Authority of New York and New Jersey ("the Port Authority"), 

hereby moves for summary judgment dismissing the Complaint herein pursuant to 14 C.P.R. § 

16.26 (c) based upon the annexed Memorandum Of Points And Authorities In Support Of 

Motion To For Summary Judgment Dismissing Complaint, Statement Of Respondent The Port 

Authority Of New York And New Jersey Pursuant To 14 C.P.R.§ 16.26(c)(2) In Support Ofits 

Motion For Summary Judgment Dismissing The Complaint, and the Declarations of Joseph R. 

Garcia, Fred Longemecker and Carlene V. Mcintyre, and the Exhibits annexed thereto. 

Dated: February 10,2015 

Respectfully submitted, 

Arnold D. Kolikoff 

Faith Tabafunda 

Law Department 

The Port Au1hority of New York and New Jersey 

225 Park Avenue South, 14th Floor 

NewYork,N.Y. 10003 

Telephone: (212) 435-3503 

Attorneys for Respondent 

The Port Authority of New York and New Jersey 
TO: 

Office of the Chief Counsel 

Attention: FAA Part 16 Airport Proceedings Docket, AGC-600 

Federal Aviation Administration 

800 Independence Avenue, SW 

Washington D.C. 20591 

Keith J. Harrison 

Gerald F. Murphy 

Steven J. Seiden 

Crowell & Moring LLP 

I 00 I Pennsylvania Avenue, NW 

Washington, DC 20004 

(202) 624-2500 

RobertS. Span 

Alan K. Steinbrecher 

Sophy Chen 

Steinbrecher & Span LLP 

1155 F Street, N.W., Suite 1050 

Washington, DC 20004 

(202) 559-8680 

rspan@steinbrecherspan.com 

Attorneys for Complainant 

2 
BEFORE THE 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

UNITED AIRLINES, INC., 

Complainant, 

v. 

THE PORT AUTHORITY OF NEW YORK 

AND NEW JERSEY, 

Respondent. 

Docket FAA-16-14-13 

RESPONDENT PORT AUTHORITY'S MEMORANDUM OF POINTS AND 

AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT 

DISMISSING THE COMPLAINT 

Carlene V. Mcintyre 

Arnold D. Kolikoff 

Faith Tabafunda 

THE PORT AUTHORITY OF NEW YORK 

AND NEW JERSEY 

225 Park Avenue South 

New York, New York, 1 0003 

Telephone: 212.435.3503 
Table of Contents 

PRELIMINARY STATEMENT .................................................................................................... 1 

STATEMENT OF FACTS ........................................................................................................... 8 

ARGUMENT ................................................................................................................................ 12 

THE SUMMARY JUDGMENT STANDARD ....................................................................... 12 

I. THE FAA SHOULD NOT ENTERTAIN JURISDICTION OVER THE 

INSTANT COMPLAINT ..................................................................................................... 13 

II. THE COMPLAINT DOES NOT STATE SUFFICIENT GROUNDS TO 

WARRANT AN EXAMINATION AS TO WHETHER THE FLIGHT FEE 

VIOLATES GRANT ASSURANCES ............................................................................... 20 

A. Complainant Fails to Meet Its Burden of Proof ............................... 20 

B. The Flight Fee Is Not Unreasonable or Violative of Applicable Law ... 21 

Ill. THE FLIGHT FEES ARE NOT UNJUSTLY DISCRIMINATORY ..................... 33 

IV. THERE IS NO UNLAWFUL DIVERSION OF REVENUE ................................. 34 

CONCLUSION ............................................................................................................................ 37 

I 
Table of Authorities 

Page(s) 

CASES 

Aerodynamics of Reading, Inc. Complainant/Aerodynamics v. Reading Regional 

Airport Authority, 

(Docket FAA 16-00-03, 2001 WL 1085346 July 23 2001 ) ................................................ 5 

Air Canada v. Department of Transportation, 

148 F.3d 1142 (D.C. Cir. 1998) ........................................................................................... 30 

Brendan Airways, LLC, eta/., v. Port Authority, Instituting Order, Docket OST -05-

20407 

Order 2005-3-21, 2005 WL 4747012 (March 16, 2005) ........................................ 6, 26 

Continental Micronesia v. Commonwealth of the Northern Marianas Islands 

(Docket50191, Order95-4-14, 1995WL 156451 (D.O.T.1995) .............................. 19 

Delta Air Lines, Inc. v. Lehigh-Northampton Airport, (Docket OST-95-80, 

Order 95-5-8, 1995 WL 17057418) ........................................................................... 20 

Desert Wings Jet Center v. City of Redmond, 

(Docket FAA 16-09-07, 2010 WL 4723466 Nov. 10, 201 0) ........................................... 33 

Long Island Jet Center East, Inc. v. County of Suffolk, New York, 

(Docket FAA 16-04-05, 2005 WL 428889 Jan. 21, 2005) ............................................. 33 

Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) ............................................................. 12 

Northwest Airlines, Inc., Delta Airlines, Inc. AirTran Airways, Inc., Continental 

Airlines, Inc., Southwest Airlines, Inc., v. Indianapolis Airport Authority, 

Indianapolis International Airport, BAA-Indianapolis, 

(Docket FAA 16-07-04, 2009 WL 3976461 Aug. 19, 2008) ........................................ 2,14 

Northwest Airlines v. County of Kent, 

510 U.S. 355 (1994) ............................................................................................................. 30 

Penobscot Air Services, Ltd v. FAA, 

164 F.3d 713 (1 51 Cir. 1999) ............................................................................................. 3, 17 

Port Authority of New York & New Jersey v. Department of Transportation, 

479 F.3d, 21 D.C. Cir. 2007 ................................................................................................. 34 

Roadhouse Aviations, LLC v. City of Tulsa & The Tulsa Airports Improvement 

Trust, 

(Docket FAA 16-05-08,2007 WL 1966160 June 26, 2007) ........................................ 3,17 

11 
Union Flights, Inc. v. San Francisco International Airport, 

Docket FAA. 16-99-11, 2000 West law 311170 (Feb. 15, 2000) .................................... 18 

STATUTES 

49 U.S.C. 47129(b) ..................................................................................................................... 21 

49 U.S.C. § 47129 ....................................................................................................................... 19 

49 U.S. C.§ 47129(e) .................................................................................................................. 19 

49 U.S.C. § 47129 (e)(1 ) ............................................................................................................ 21 

Airport and Airway Improvement Act of 1982 ......................................................................... 29 

Airport and Airway Improvement Act of 1982, 49 U.S.C. 47107(b) .................................... 33 

Aviation Authorization Act of 1994 .................................................................................. 3 

Federal Aviation Authorization Act of 1994, § 113, 49 U.S.C. 47129 ........................... 17, 21 

OTHER AUTHORITIES 

14 C.F.R. Part 16 .................................................................................................................. 19, 22 

14 C.F.R. §16.29 ........................................................................................................................... 9 

61 Fed. Reg. 31994 (June 21, 1996) ................................................................................. 13, 21 

78 Fed. Reg. 55330 (Sept. 10, 2013) .............................................................................. passim 

Airport Compliance Manual (FAA Order 5190.68) ................................................................ 24 

111 
BEFORE THE 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

UNITED AIRLINES, INC., 

Complainant, 

v. 

THE PORT AUTHORITY OF NEW YORK 

AND NEW JERSEY, 

Respondent. 

Docket FAA-16-14-13 

RESPONDENT PORT AUTHORITY'S MEMORANDUM OF POINTS AND 

AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT 

DISMISSING THE COMPLAINT 

The respondent, The Port Authority of New York and New Jersey (the "Port 

Authority'' or "Respondent") respectfully submits this memorandum of law in support of 

its motion for summary judgment dismissing the complaint of United Airlines, Inc. 

("Complainant") with prejudice. 

PRELIMINARY STATEMENT 

1. Stripped of its excessive hyperbole, inapposite statements of fact and 

reliance on press clippings and other extraneous materials, Complainant makes one 

key assertion of law- that the Federal Aviation Administration ("FAA") should, pursuant 

to its authority under Part 16, investigate the flight fees Complainant pays at Newark 

Liberty International Airport ("Newark", "EWR" or "Newark Liberty") because the flight 

fee is "unreasonable", "discriminatory" and lacks transparency. (Complaint at pg. 55) 
Remarkably, what the Complaint does not do is come to grips with the fatal flaw in this 

assertion -that the flight fee is set pursuant to agreements to which United is a party. In 

fact, as conclusive evidence of Complainant's attempt to avoid this fundamental defect 

in its case, Complainant conspicuously fails to append any of those governing lease 

agreements (or any of their provisions) to its Complaint, despite appending forty exhibits 

(Complaint Exhs. A-NN). Under long-standing statutes and policy, Department of 

Transportation ("DOT") and FAA jurisdiction does not exist over an air carrier's 

challenge to the terms of an airport agreement to which the air carrier is a party. The 

current Rates and Charges Policy states unambiguously that "the Department will not 

entertain a complaint about the reasonableness of a fee set by agreement filed by a 

party to the agreement setting the disputed fee." 78 Fed. Reg. at 55332 (2013) 

(emphasis added). 

In fact, this point of the Rates and Charges Policy is grounded in the FAA's 

established position that rates and charges, including flight fees, should ideally be 

matters resolved by the airport and the airline through agreement. The FAA has, 

therefore, encouraged agreement between those parties as the preferred method of 

establishing such fees. /d. at 55331. 

Consistent with this position, the FAA has made plain on numerous occasions 

that the Part 16 proceeding is not intended to provide a mechanism for adjudicating the 

respective rights of the parties to a contractual fee dispute. Rather, "[s]uch issues are 

matters of state contract law and are not reviewable in a Part 16 proceeding". 

Northwest Airlines, Inc., Delta Airlines, Inc. AirTran Aitways, Inc., Continental Airlines, 

Inc., Southwest Airlines, Inc., v. Indianapolis Airport Authority, Indianapolis International 

2 
Airport, BAA-Indianapolis, (Docket FAA 16-07-04, 2009 WL 3976461 August 19, 2008), 

at * 37. (collecting cases); see also, Penobscot Air Services, Ltd v. FAA, 164 F.3d 713, 

726 (1st Cir. 1999). "[T]he grant assurances and the FAA compliance process are not 

devices by which a commercial aeronautical tenant can abrogate an otherwise valid 

commercial lease with a sponsor because the operations under the lease are less 

profitable than the tenant anticipated." Roadhouse Aviations, LLC v. City of Tulsa & 

The Tulsa Airports Improvement Trust, (Docket FAA 16-05-08, 2007 WL 1966160, *17, 

June 26, 2007). 

This statement of policy, which is clear and unequivocal, applies equally to 

claims brought under the expedited procedures of the Aviation Authorization Act of 1994 

or, as here, under Part 16 (78 Fed. Reg. at 55332), and mandates dismissal of the 

instant Complaint. Simply stated, the Complainant is party to the contractual 

agreements setting the fee, which is challenged in the Complaint. 

The Complainant was created in 2013 as a result of a merger between United 

Airlines Inc., ("United") and Continental Airlines Inc., ("Continental"), leaving Continental 

as the surviving corporation, which then changed its name to United Airlines, Inc .. 

(Longernecker Decl. at 1]12; Complaint at 1]13) 1 While Complainant argues that it never 

"negotiated" the "Master Lease" terms regarding the fees in dispute. /d. In fact, the 

undisputed record indicates that Continental time and time again extended its lease 

agreements at the airport, including the flight fee, as part of its successful efforts to 

obtain a dominant position at Newark and build its hub there. 

1 "Longernecker Decl." refers to the Declaration of Frederick Longernecker filed in support of 

Respondent's Motion for Summary Judgment. 

3 
Also during the same time period, Continental invested hundreds of millions of 

dollars in Terminal C at Newark and other facilities at the airport and negotiated its 

financial arrangements concerning such investments with the Port Authority - again, 

never choosing to do anything except continue to accept the very flight fee formula 

about which it now complains. As recently as December of 2012, Complainant 

committed to extend its Terminal C agreement and to the expenditure of more than one 

hundred and fifty million dollars in its hub operations at the airport. (Longernecker Decl. 

at ,-r32, ,-r 33). 

Both United and Continental had the opportunity to obtain relief from the 

operation of the flight fee formula during bankruptcy proceedings, but each chose not to 

do so. (Longernecker Decl.. at ,-r,-r 34-37). 

In short, the subject matter of the complaint is the product of agreements 

between sophisticated parties, which Complainant and its predecessor airlines 

confirmed again and again. Although under the applicable regulatory guidelines an 

airline may decide not to sign a fee agreement, and challenge any unilateral imposition 

of fees, an airline is not allowed to enter into and extend a fee agreement, and at the 

same time, challenge that agreement when the airline finds that it does not like the 

bargain it has struck. Accordingly, the Complaint should be dismissed. 

2. Alternatively, even if the agency decides to examine the allegations in the 

Complaint, it should dismiss the Complaint or issue a determination finding no merit to 

the Complaint because Complainant has not met its burden of proof. Complainant's 

claim is that the Newark flight fee "violates federal law" because it is "not reasonable", is 

not "transparent", and is "discriminatory" (Complaint at pgs. 53-71 ). A basic 

4 
requirement of Part 16 is that "a complainant show with evidence that the sponsor is 

violating its commitments to the Federal government to serve the interests of the public 

by failing to adhere to its grant assurances ... " Aerodynamics of Reading, Inc. 

Aerodynamics v. Reading Regional Airport Authority, (Docket FAA 16-00-03, 2001 WL 

1085346, *13 July 23, 2001 ). In the first instance, Complainant cannot begin to sustain 

its burden on these points, because it fails to include the lease Agreement language 

containing the flight fee in its Complaint or Exhibits, so it does not tie its arguments to 

the specific language in that formula. The Complainant's tactical decision to omit the 

governing lease agreements and flight fee provisions from its Complaint should not 

work in its favor, and the burden to prove its allegations should plainly rest and stay with 

Complainant. 

a. Complainant has not demonstrated that the flight fee formula violates the 

applicable grant assurances. First and foremost, the jurisdictional points set forth above 

also bear directly on the issue of reasonableness under the grant assurances. As 

noted, the Rates and Charges Policy encourages agreement between aeronautical 

users and airports on fees. 

Complainant focuses on what they characterize as an impermissible profit 

generated by the flight fee (Complaint ~ 132) to support their claim of 

unreasonableness. Although the Rates and Charges policy provides that "[r]evenues 

from fees imposed for the use of the airfield ('airfield revenues') may not exceed the 

cost to the airport proprietor of providing airfield services," the Policy goes on to state 

that such rule applies "unless ... [o]therwise agreed to by the affected aeronautical 

5 
users." In this case, the "affected aeronautical user" - Complainant - has "otherwise 

agreed." 

Complainant also overlooks that although the revenue produced by the flight fee 

exceeds certain costs upon which the flight fee is based, certain plainly reimbursable 

costs were simply left out of the formula. Such costs include numerous overhead costs, 

including the executive salaries and other Port Authority activities which support the 

public airfield as well as the rental payments the Port Authority pays to the City of 

Newark for the airport facilities. 

b. Equally unconvincing is Complainant's allegations that the flight fee is 

unreasonable because "it includes unreasonable expenditures." On this point it largely 

relies on the more recent costs related to the Aircraft Rescue and Fire Fighting functions 

implemented at the airport ("ARFF"). However, ARFF services which constitute the 

delivery of "emergency services" to the airfield are covered by the flight fee formula. 

Further, while the Complaint (at pgs. 28-33) argues at length about excessive 

labor costs at the Port Authority as a whole, it ignores the fact that the agreed-to 

Newark flight fee is based solely on designated Newark costs, and neither off-airport 

indirect overhead costs of operating Newark, such as executive salaries, nor any other 

Port Authority off-airport expenditures, has any effect on the flight fee formula. 

3. Complainant's emphasis on surplus revenues diverted from the airport to 

other Port Authority uses disregards the fact that flight fees are only one revenue source 

for the airport as a whole. Many non-flight fee revenues are those for which, under 

longstanding rates and charges policy, airlines have no right to claim credit, under any 

circumstances. See, Brendan Airways, LLC, eta/., v. Port Authority, (Docket OST-05-

6 
2040, 2005 WL 4747012, *21 Instituting Order, March 16, 2005). To the extent that the 

claim is that the flight fee is unreasonable because the airport as a whole is generating 

excessive surpluses (Complaint at pgs. 15-18), the issue of accumulated surpluses is 

one which the FAA and DOT will examine in the context of reviewing complaints 

concerning revenue diversion. Brendan Airways, LLC, eta/., supra, at *22. However, in 

this context, such allegations are: 1) irrelevant to Complainant's challenge to the flight 

fee, and 2) Complainant has not demonstrated in any event that the Port Authority has 

unlawfully diverted revenue. 

4. The allegation in the complaint that the flight fee violates federal law 

because its calculations are not transparent (Complaint at pgs. 68-70) is wrong both 

factually and as a matter of law. The Complaint relies on Rates and Charges Policy 

provisions, which govern disclosure of information in negotiation over rates between 

airports and aeronautical users and challenges to rates and charges which are 

unilaterally imposed. (Complaint at pgs. 68-70). Moreover, the Complainant fails to 

mention the fact that it participates in meetings with the airport during the year in which 

the flight fee costs and estimates are discussed and extensive financial information is 

shared with airlines serving the airport. (Garcia Decl. at 111134-38). 

5. Finally, Complainant's claims of the Port Authority's exercise of 

"monopoly" power is another red herring. This Complaint is about the reasonableness 

of charges in the flight fees charged to the Complainant that is the product not of 

unilateral imposition of a fee by the Respondent but rather, of an agreement between 

the parties. 

7 
However, in all events, Complainant's protests about monopoly power ring 

hollow. Those protests should be evaluated and measured against the decision of the 

predecessor, Continental to invest hundreds of millions of dollars to increase and 

sustain its operations at the airport to the point where it is now one of the largest airlines 

in the New York and New Jersey region and its well documented use of slots or 

operational limitations to sustain its dominant market share at the airport (Mcintyre Decl. 

Exh.1 ). Rather than an airline who, as the Complaint would have it, is held hostage by 

the practices of a monopoly airport, what comes across from Complainant's history at 

the airport is an airline which in its own words, has "built on a commitment nearly three 

decades old to expand and modernize Newark Liberty and establish a hub operation 

that would attract passenger revenue and economic growth to the region." 

(Longernecker Decl. Exh. W). 

STATEMENT OF FACTS 

The Port Authority is a bi-state entity created in 1921 by Compact between the 

States of New York and New Jersey, consented to by Congress. The Port Authority 

operates several facilities of commerce in the bi-state Port District, including Newark 

Liberty, John F. Kennedy International Airport, LaGuardia Airport, Teterboro Airport as 

well as Stewart International Airport. It has also entered into an agreement to perform 

certain management services under the direction of the South Jersey Transportation 

Authority for Atlantic City International Airport. 

Complainant is United Airlines, Inc., a corporation organized under the laws of 

the State of Delaware having a principal place of business in Chicago, Illinois. 

Complainant was created on March 31, 2013, after Continental merged with United 

8 
leaving Continental as the surviving corporation, which then changed its name to United 

Airlines, Inc. (Statement at 11 2). 2 In this motion, Respondent will refer to the merged 

entity as Complainant, and as United and Continental respectively when discussing 

each entity's history with the Respondent prior to the merger. 

Newark is a public-use airport operated by the Port Authority, as airport sponsor, 

pursuant to a lease agreement with the City of Newark, New Jersey. (Statement at 11 6, 

11 7). Complainant currently operates out of all three terminals that comprise Newark. 

(Statement at 1111 9, 1 0) Newark is comprised of three terminals designated A, B and C. 

Terminals A, B and C are each sub-divided into three sub-terminals which are 

designated A-1, A-2, A-3, B-1, B-2, B-3, C-1, C-2 and C-3. (Statement at 118). 

Complainant operates out of sub-terminals A-1 and A-2 in Terminal A in 

accordance with Leases AN-535 and ANB-056, and sub-terminals C-1, C-2 and C-3 in 

Terminal C in accordance with Lease ANA-170. (Statement at 119). Complainant refers 

to Lease ANA-170 as the "Master Lease." (Com pl. at 1133). Complainant also operates 

out of Terminal B, which is the designated terminal for international flight arrivals. 

(Statement at 111 0). 

Prior to the merger creating Complainant, United and Continental each entered 

into lease agreements with Respondent to operate out of Newark. United entered into 

Lease AN-535, which became effective as of October 7, 1969. (Statement at 11 13). 

Continental began operating out of Newark effective as of August 15, 1987, when it 

accepted Lease ANA-170 from People Express Airlines, Inc., pursuant to an 

Assignment and Assumption of Lease ANA-170 agreement ("Assignment and 

2 "Statement" refers to Statement Of Respondent The Port Authority Of New York And New Jersey 

Pursuant To 14 C.F.R. § 16.26(C)(2) In Support Of Its Motion For Summary Judgment Dismissing The 

Complaint filed with this Motion. 

9 
Assumption"). People Express Airlines, Inc., entered into Lease ANA-170 with 

Respondent for a 25-year term effective as of January 11, 1985. (Statement at ,m 17, 

18). Once the Assignment and Assumption was effective, Continental began operating 

out of Newark in accordance with Lease ANA-170's provisions. 

United's Lease AN-535 and Continental's Lease ANA-170 each contains a 

requirement to pay flight fees, the basis for Complainant's instant action. Leases AN535 and ANA-170 each contains a description of the two components of the flight fee 

and a Schedule C that sets forth the methodology for calculating the flight fee charged 

to United and Continental, respectively. The flight fee formula, except for the addition of 

the Phase 1A Charge Factor (as discussed more fully below), has remained unchanged 

since the effective dates of Lease AN-535 and Lease ANA-170. 

Both Leases ANA-170 and AN-535 set a specific expiration date for the flight fee 

and its formula. 3 Both United and Continental entered into multiple supplements that 

specifically extended the application of the flight fee formula without ever modifying the 

formula or its components other than adding the Phase 1A Charge Factor. (Statement 

at 111114, 15, 21, 22, 25). 

United extended the application of the flight fee formula twice by entering into 

Supplement Nos. 4 and 24 effective on March 1, 1972 and April 18, 1995, respectively. 

3 In Supplement No. 17 to ANA-170 Continental agreed that the flight fee provisions contained in 

Schedule C would remain in effect through December 31, 2018. Under Supplement 17, after that time, 

Continental and Port Authority agreed to negotiate in "good faith to establish provisions covering the 

determination of flights fees payable by the Lessee." In the event the parties could not reach an 

agreement Continental agreed that it "shall pay flight fees in accordance with the Port Authority's 

Schedule of Charges[ ... ] commencing January 1, 2019." (Longernecker Decl. at 1]1]26-27). Supplement 

No. 24 to Lease ANA-170 set the lease term expiration forT erminals C-1 and C-2 for March 31 , 2033 and 

Terminal C-3 is set to expire on March 31, 2028. (Longernecker Decl. at 1]1]32-33). In Supplement No. 

24 to Lease AN-535 for Terminal A United agreed to have the lease terms and provisions including those 

regarding the payment of flight fees expire on December 31, 2018. (Longernecker Decl. at 11 20). In 

Lease ANB-056 for Terminal A Continental agreed to have the lease term and the provisions regarding 

payment of flight fees expire on December 31, 2018. (Longernecker Decl. at 1]29). 

10 
In Supplement No. 24, United agreed to add the Phase 1A Charge Factor to the flight 

fee without modifying any other provisions of the flight fee. Supplement No. 24 also 

added the separate Monorail Fee and extended the term of the lease. (Statement at ~~ 

14, 15,16). 

Continental extended the application of the flight fee formula twice with 

Supplement Nos. 15 and 17, effective January 1, 1995 and September 1, 1999. With 

Supplement No. 15, Continental also agreed to add the Phase 1A Charge Factor to the 

flight fee and the separate Monorail Fee for the costs associated with the Newark Air 

Train. (Statement at~ 24). 

Supplement No. 17 is especially significant because it reflects the extensive 

construction and expansion program for Terminal C that Continental in part financed in 

cooperation with Respondent through a bond issuance that raised approximately 

$730,360,000. (Statement at~ 30). Not only did they extend the flight fee formula when 

Continental expanded its operations to include space within Terminal A with Lease 

ANB-056 in 1999, it agreed again to abide by the flight formula contained in Lease ANA170. (Statement at~ 27). 

As recently as December 2012, during the merger process with United, 

Continental extended the lease term for Terminals C-1 and C-2 and provided for an 

investment of $150,000,000 in those terminals with Supplement No. 28. (Statement at 

~~ 31' 32). 

Not once during the forty years of operating at EWR, and the many times each 

airline supplemented its respective lease agreements with Respondent, did Continental 

or United ever seek to modify the flight fee formula other than adding the Phase 1A 

11 
Charge Factor. Rather, Continental and United each chose to continue to repeatedly 

extend the flight fee formula. 

Even in bankruptcy, when both Continental and United could have rejected their 

leases with Respondent, they chose to reaffirm those leases and modified other 

components such as rental terms, surrender of space or assignment of their interest to 

another airline. (Statement at~~ 35, 36, 38, 39). 

Over the course of the last forty years of operating at EWR, both Continental and 

United, as separate entities and then as a merged company, entered into significant 

supplements to Leases ANA-170, ANB-056 and AN-535 that never modified the flight 

fee formula. Now Complainant asserts in the instant action that the very same flight fee 

formula, contained in those Leases ANA-170, ANB-056 and AN-535, is unreasonable 

and violates grant assurances. 

ARGUMENT 

THE SUMMARY JUDGMENT STANDARD 

This motion is filed under Section 16.26(c) of the Rules of Practice on the 

grounds that there is no genuine issue of material fact for adjudication and the 

complaint when viewed in the light most favorable to complainant should be dismissed 

as a matter of law. That dismissal should be with prejudice. To survive summary 

judgment, a complainant is obligated to provide specific grounds supporting its 

entitlement to relief that are more than mere allegations, conjecture and speculation. 

Lujan v. Defenders of Wildlife, 504 U.S. 555,561 (19927) 4 

4 Respondent submits that this matter should be dismissed for the reasons stated -there is no jurisdiction 

to review a claim concerning the reasonableness of a flight fee set by agreement when such claim is filed 

by a party to the agreement. Accordingly, a Motion to Dismiss would have been entirely adequate to 

12 
I. THE FAA SHOULD NOT ENTERTAIN JURISDICTION OVER THE 

INSTANT COMPLAINT. 

The FAA's longstanding position that it will not entertain a challenge to an airport 

fee to which an airline has agreed is a principle underpinning the FAA Rates and 

Charges Policy. On June 21, 1996, the FAA "Policy Regarding Airport Rates" ("the 

Policy") was published in the Federal Register. The current Rates and Charges Policy 

states unambiguously "the Department will not entertain a complaint about the 

reasonableness of a fee set by agreement filed by a party to the agreement setting the 

disputed fee." 78 Fed. Reg. at 55332 (2013) (emphasis added}. In fact, as originally 

promulgated, the airport Rates and Charges Policy listed as the first of five fundamental 

principles - "the Department's preference for direct negotiation and resolution" of rates 

and charges issues. 61 Fed. Reg. 31994 (June 21, 1996}. 

The current Policy was issued and republished in the Federal Register on 

September 10, 2013, to reflect the 1997 vacatur of portions of the Policy by the United 

States Court of Appeals for the District of Columbia Circuit, and 2008 amendments to 

the Policy issued by the FAA. 78 Fed. Reg. 55330. However, there was no change 

effected in this fundamental point and the current policy states that "[i]t is the 

fundamental position of the Department that the issue of rates and charges is best 

addressed at the local level by agreement between users and airports." In fact, the 

policy also indicates that its chief purpose is to provide guidance to airports and 

aeronautical users to enable them to enter into agreements. 78 Fed. Reg. 55331 

(2013). 

demonstrate that dismissal with prejudice should be granted in this instance. However, additional 

materials are presented in this motion in order to provide a complete record supporting dismissal. The 

factual points that are presented and are pertinent to the claims herein are undisputed and so summary 

judgment should be granted. 

13 
The decisions issued by the FAA under procedures governing airport compliance 

confirm that the agency will not intervene in a dispute regarding rates and charges 

where there is a written agreement governing such issues, nor will it relieve an 

aeronautical user from the terms of an agreement which it struck which that user has 

come to believe is no longer beneficial to it. Northwest Airlines, Inc., Delta Airlines, Inc., 

AirTran Aitways, Inc., Continental Airlines, Inc., Southwest Airlines, Inc. v. Indianapolis 

Airport Authority, Indianapolis International Airport, BAA-Indianapolis, (Docket FAA 16-

07-04, 2009 WL 3976461 August 19, 2008) (collecting cases) is illustrative. In that 

case, several airlines filed a Part 16 Complaint challenging the airport's agreement to 

provide FedEx a rental credit on certain apron rent and alleged that the credit would 

result in an increase in the landing fees paid by those airlines for the benefit of Fed Ex's 

exclusive facilities. In rejecting the airlines' challenge, the FAA relied on the fact that 

the Lease Agreements between the airlines and the airport provided that at least until 

the Lease Agreements expiration, the deal struck with Fed Ex would have no impact on 

the complaining airlines. The decision also determined, in language equally applicable 

here, that: 

Once the Lease Agreement expires and assuming it is not renegotiated, if 

the Authority were to unilaterally impose the cost of the Credit on the 

Airlines serving the Airport, those Airlines could then seek relief under the 

Rates and Charges Policy because their rates and charges would no 

longer be set by a written agreement, and the Credit would then be 

subject to the Policy. The Rates and Charges Policy offers the airlines two 

significant protections: an airport may not without written agreement 

include exclusive use facilities in its rate base, and limits costs that can be 

included in its common use rate base. In addition, the Complainants may 

have recourse in other venues to adjudicate disputes arising out of the 

Lease Agreement. 5 

5 The "other venues" included "civil proceedings" and stipulations in the Lease agreement incorporating 

federal and state law. /d. 

14 
/d. at *37 (footnotes omitted). 

Here, the Complainant seeks to challenge the impact of a flight fee formula which 

they argue is unreasonable. The Complainant, and each of its predecessors, however, 

agreed to that formula years ago, and through the years, have agreed to extend it over 

and over again. 

The history of the lease agreements between the Port Authority, and 

Complainant merger partners United and Continental are set forth at length in the 

Declaration of Mr. Frederick Longernecker. A summary of that history is set forth below: 

Continental's history: 

o The Lease Agreement (ANA-170) for Terminal Cat EWR was assigned to 

and assumed by Continental in 1987 (Longernecker Decl. at~ 22, 23) and 

contains Schedule C, the "Master Lease" provisions (including the flight 

fee formula provisions). ANA-170 has been supplemented and amended 

27 times (Longernecker Decl. at~ 23). 

o ANA-170 set the expiration of the flight fee formula for December 31, 

1998 (Longernecker Decl. at~ 24 ). 

o In Supplement No. 15, effective as of January 1, 1995, Continental agreed 

to extend the flight fee methodology in Schedule C to March 31, 2013 and 

to add a new Phase 1A Charge Factor to the flight fee to recover costs 

associated with certain airport roadways (Longernecker Decl. at~ 25). 

o In Supplement No. 17, effective as of September 1, 1999, Continental 

again agreed to extend the flight fee provisions set forth in Schedule C, 

from March 31, 2013 to December 31, 2018 (Longernecker Decl. at 1']26). 

o In 1989, Continental added Terminal C-3 to their leasehold and in the 

1990's embarked on a major expansion project for Terminal C-3. To 

finance such expansion, Continental pledged its revenues from such 

expansion to cover the issuance of over $730 million in bonds 

(Longernecker Decl. at~ 31 ). 

o In 1992, Continental assumed its lease agreement and reaffirmed and 

extended ANA-170, containing the flight fee formula complained of here, 

as part of its reorganization under Chapter 11 of the Bankruptcy Code, 

15 
without modification of the flight fee provisions (Longernecker Decl. at 1111 

34-35). 

o Continental's investment in its operations at EWR more recently continued 

when it invested another $150 million in Terminal C to further expand and 

update its facilities (Longernecker Decl. at 1133). 

United's history: 

o United executed an agreement for operation in Terminal A at EWR in 

1969 under AN-535, which has been supplemented or extended 29 times 

(Longernecker Decl. at 1119). That agreement contains the same "Master 

Lease" flight fee formula as Schedule C set forth in Continental's 

agreement- ANA-170 (Longernecker Decl. at 1115, 1120). 

o In Supplement No. 4, effective March 1, 1972, United extended the term of 

AN-535 and use of the flight fee formula from December 31, 1996 to 

December 31, 1998 (Longernecker Decl. at 1120). 

o Effective as of January 1, 1995, United entered into Supplement 24 to AN535 extending the flight fee formula to December 31, 2018 (Longernecker 

Decl. at 111120, 21 ). At the same time it agreed to add a Phase 1A Charge 

Factor to the flight fee to recover certain airport roadway costs and add a 

Monorail Fee to recover costs for the EWR Air Train. (!d.). 

o In 2005, United, in connection with its reorganization under Chapter 11 of 

the Bankruptcy Code, partially assigned certain facilities under Lease AN535 to Air Canada, reflecting their decision to assume certain leases 

including AN-535 (Longernecker Decl. at 111136, 37). 

On September 20, 2010, Continental requested that the Port Authority confirm 

in writing that its contemplated the merger with United would not trigger termination of 

certain agreements including lease agreements with the Port Authority for Newark. 

(Longernecker Decl. at 1114) 

Beyond cavil, this history demonstrates that the flight fee formula is the product 

of an agreement between the Complainant and Respondent, which has been affirmed 

again and again by Complainant's predecessor airlines. 

16 
If the Port Authority were to unilaterally impose the flight fee formula on 

Complainant after its expiration, then, and only then, could the airline seek relief under 

the Rates and Charges Policy "because their rates and charges would no longer be set 

by a written agreement" and the formula would then be subject to the policy. As stated 

in Roadhouse Aviations, LLC v. City of Tulsa, (Docket 16-05-08, 2007 WL 1966160 

June 26, 2007), "the grant assurances and the FAA compliance process are not devices 

by which a commercial aeronautical tenant can abrogate an otherwise valid commercial 

lease with a sponsor because the operations under the lease are less profitable than 

the tenant anticipated." *17; see also, Penobscot Air Services, Ltd v. FAA, 164 F.3d 

713, 726 (1 51 Cir. 1999) (finding that the aeronautical user's agreement to new lease 

terms governing the fees which were the subject of its Complaint formed a sufficient 

independent basis to uphold the FAA's determination that the disparity in fees were not 

unjustly discriminatory). 

To be clear, Section 113 of the Federal Aviation Authorization Act of 1994, 49 

U.S.C. 47129, provides for the DOT's review of the reasonableness of certain fees 

imposed on air carriers by an airport proprietor as long as those fees are not imposed 

by written agreement. And while the Rates and Charges policy indicates that Part 16 

proceedings such as this one, which is not lodged under those expedited review 

procedures, will be processed under procedures applicable to airport compliance 

matters, it also makes clear that such compliance proceedings are "not intended to 

provide a mechanism for adjudicating the respective rights of the parties to a fee 

dispute" 78 Fed. Reg. at 55331-32. 

17 
In doing so, the Policy recognizes that agreements struck between an airport and 

an aeronautical user may not follow the Rates and Charges Policy; but rather, for many 

reasons, two sophisticated parties may agree to a fee methodology which does not 

conform to the Policy pursuant to a compromise, which serves both of their interests. At 

the same time, once the agreement has been struck and the parties agree, the fact that 

the agreement may no longer be advantageous to the aeronautical user does not mean 

that the agreement is unreasonable. See Roadhouse Aviations, LLC, supra. 

While Complainant maintains, despite the clear statements to the contrary in the 

Policy, that the FAA will exercise authority under Part 16 to investigate a complaint with 

respect to airport rates established by a written agreement brought by a party to the 

agreement, the administrative decisions it cites do not support that proposition. Those 

decisions in fact support the contrary proposition, i.e., that the FAA will not take 

jurisdiction under Part 16 to adjudicate a complaint regarding a fee established by 

agreement brought by a party to the agreement. 

In Union Flights, Inc. v. San Francisco International Airport, (Docket 

No. 16-99-11, 2000 WL 311170 Feb. 15, 2000), an air carrier claimed that an airport 

violated its federal obligations by imposing a landing fee schedule which was 

unreasonable and excessive and discriminatory. Union Flights did not concern a fee 

established by an agreement to which the air carrier was a party. Rather, "Union Flights 

[was] not a signatory to the SFO Airport-Airline Lease and Use Agreement and [was] 

charged the minimum landing fee for its use of the airport." /d. at *7 (emphasis added). 

United Flights does not state even in dicta that the FAA will entertain a challenge to a 

fee agreement brought by an airline who is party to the agreement. In fact, to the 

18 
contrary, United Flights states that a party to an agreement establishing a fee is 

precluded from challenging that fee: 

When the airport proprietor uses a cost-based methodology, aeronautical 

fees imposed on any aeronautical user or group may not exceed the costs 

allocated to that user or user group under a cost allocation methodology 

adopted by the airport proprietor that is transparent, reasonable and not 

unjustly discriminatory, unless aeronautical users specifically agree 

otherwise. 

/d. at *5 (emphasis added). 

In Continental Micronesia v. Commonwealth of the Northern Marianas Islands 

and Commonwealth Ports Authority, (Docket50191, 1995 WL 156451 Order95-4-14, 

(D.O.T. 1995)), the DOT dismissed an airline challenge to a fee established by 

agreement under the expedited procedures established by 49 U.S.C. § 47129 on the 

grounds that 49 U.S.C. § 47129 (e)(1) excludes from consideration under those 

expedited procedures a complaint challenging a fee established by agreement brought 

by a complainant who is party to that agreement. /d. at *1 0. 

Further, contrary to the assertion of the Complainant, see Complaint at 11 16, 

Continental Micronesia does not state that the complainant had the option of 

challenging the fees set forth in the agreement under the predecessor to the current 

14 C.F.R. Part 16 even though that the complainant was a party to the agreement. 

Rather, Continental Micronesia states that among the alternatives open to the 

complainant to challenge the fee in question prior to becoming a party to the agreement 

was filing a complaint under the predecessor to the current 14 C.F.R. Part 16, /d. at *10. 

Continental Micronesia does not state that the complainant had the same option after 

becoming a party to that agreement. 

19 
inally, Delta Air Lines, Inc. v. Lehigh-Northampton Airport, (Docket OST-95-80, 

Order 95-5-8, 1995 WL 17057418 (D.O.T. 1995)), also concerned dismissal of a 

challenge to a fee established by agreement brought by an airline that was party to that 

agreement under the expedited procedures established by 49 U.S.C. § 47129 because 

of the exclusion in 49 U.S.C. § 47129(e). 

Contrary to Complainant's assertion herein, see Complaint at~ 16, Delta Airlines 

does not state that the challenge to the fee established by the agreement would be 

referred to the FAA for determination under the predecessor to 14 C.F.R. Part 16. 

Rather, the issue referred to the FAA was a different one, namely, the legality of air 

carrier subsidies paid by the airport authority to airlines other than Delta. /d. at *1. 

The air carrier subsidy program concerned payments to a number of different 

airlines, not including the complainant, Delta. /d. at *4 to*5. The fee dispute, which was 

not referred to the FAA under the predecessor to 14 C.F.R. Part 16, concerned the 

schedule of landing fees and lease rental rates, set forth in the agreement to which the 

complainant was a party. /d. at *5. The obvious inference to be drawn from the 

disparate treatment of the airline subsidy issue, which was referred to the FAA for 

determination under the predecessor to 14 C.F.R. Part 16, and the fee issue, which was 

simply dismissed, is that there is no Part 16 jurisdiction over a complaint challenging a 

fee set by an agreement brought by a complainant which is a party to that agreement. 

II. THE COMPLAINT DOES NOT STATE SUFFICIENT GROUNDS TO 

WARRANT AN EXAMINATION AS TO WHETHER THE FLIGHT FEE 

VIOLATES GRANT ASSURANCES. 

A. Complainant Fails to Meet Its Burden of Proof 

20 
Complainant's lengthy submission does not mask the fact that the central issue 

raised by the Complaint may be reduced to its contention (Complaint at pg. 55) - that 

the Newark Liberty flight fee violates federal law. Complainant however, is not able to 

meet its burden of proof on this claim because it has agreed to the formula about which 

it now complains and the rates and charges guidance and policies it relies upon 

presumes that parties will take into account those policies and guidance when they 

reach an agreement. 

Moreover, even if they are able to overcome this impediment to their claims, the 

burden of proving a violation of the grant assurances which would warrant investigation 

rests solidly on the shoulders of the Complainant. It is difficult to see how Complainant 

could ever be determined to have met that burden when Complainant does not even 

bother to include the agreements in its Complaint and so, cannot connect its arguments 

to the language in those agreements. A basic requirement of Part 16 is that a 

complainant bears the burden of proof. In essence "[a] complainant, as initiator of an 

action, becomes the proponent of an order from the FAA when [it] files the Part 16 

complaint" Aerodynamics of Reading, Inc., supra at *14. However, in order to put these 

claims to rest, Respondent will address each of Complainant's assertions. 

B. The Flight Fee is Not Unreasonable or Violative of Applicable 

Law. 

Complainant asserts that the flight fee is not reasonable because: 1) it generates 

a profit; 2) it includes unreasonable expenditures; 3) it is the result of the Port 

Authority's monopoly power; 4) it is unjustifiably high compared to other airports; and 5) 

it is excessive when compared to the benefits conferred (Complaint at pgs. 56-68). We 

will address each point in turn. 

21 
1. Complainant asserts that the flight fee is not reasonable "because it 

generates a profit." (Complaint at pg. 56). "Under the terms of grant agreements 

administered by FAA for airport improvement, all aeronautical users are entitled to 

airport access on fair and reasonable terms without unjust discrimination." (Rates and 

Charges Policy, 78 Fed. Reg. at 55331). When Congress promulgated Section 113 of 

the Federal Aviation Authorization Act of 1994, it directed the Secretary of the DOT to 

promulgate "regulations, policy statements, or guidelines establishing ... the standards 

or guidelines that shall be used by the Secretary in determining ... whether an airport 

fee is reasonable." 49 U.S.C. 47129(b). In 1997, the DOT promulgated a Rates and 

Charges policy which provided detailed guidance as to how fees should be established 

and how costs were to be determined and applied to fees. 61 Fed. Reg. 31994 (June 

21, 1996). Notably, the DOT set forth its decision "not to consider complaints about the 

reasonableness of fees set by agreement if filed by parties to the agreement." /d. at 

31998. The Rates and Charges Policy was republished in 2013. 78 Fed. Reg at 

55330. 

While Complainant asserts a violation of the Policy prescriptions that fees should 

be reasonable and are not reasonable if the airport derives a "profit", the Policy provides 

not only that challenges by parties to a fee agreement are jurisdictionally defective, but 

that the standards set forth in the Policy to determine reasonableness do not apply 

where there is agreement. Speaking directly to flight fees and cost recovery, the Policy 

states: 

2.2 Revenues from fees imposed for the use of the airfield ("airfield 

revenues") may not exceed the costs to the airport proprietor of providing 

airfield services and airfield assets currently in aeronautical use unless: 

22 
(a)Otherwise agreed to by the affected aeronautical users. 

* * * * 

78 Fed. Reg at 55333; see also FAA Airport Compliance Manual (FAA Order 5190.6B) 

("Unless users agree otherwise, airfield fees generally may not exceed the airfield 

capital and operating costs of existing airfield facilities and services ... ")(emphasis 

added). (quoted at Complaint at ,-r128)), cf, Rates and Charges Policy, 78 Fed. Reg. 

55334, § 2.6.1 ("Reasonable methodologies may include, but are not limited to, historic 

cost valuation, direct negotiation with aeronautical users, or objective determination of 

fair market value). (emphasis added). 

In essence, the bar against a challenge to a flight fee for use of a public airfield 

set by agreement is not simply a matter of jurisdiction, but much more - it provides the 

answer as to whether such an agreement will be determined to have violated law, as set 

forth in governing policy. So while Complainant asserts that the flight fee formula 

recovers revenues that exceed the costs in violation of the law, their ability to prove that 

such an outcome violates law is cut short by their agreement to such charges consistent 

with the law on which they rely. 6 

Here the Declaration of Joseph Garcia and the Declaration of Fred 

Longernecker, demonstrate that the fees about which the Complainant would have the 

6 Seeking to bolster its argument that revenues have been diverted from the airport and have been used 

to support other "losses" (Complaint at pg. 26), the Complaint, quoting from a Report to a Special 

Committee of the Port Authority's Board Commissioners, states that "draining of revenue from airports is 

causing" "the hampering of 'runway safety areas at both ends of every runway ... Ten of the Port 

Authority airports' 26 runways ends still must be made complaint [with safety regulations]". What the 

Complainant fails to include is the statement in the Report indicating that: "The Aviation Department 

expects to invest nearly $500 million system-wide to meet Part 139 criteria for RSAs by the FAA's 2015 

deadline" (Complaint Exh. N at 38). 

23 
FAA investigate are the subject of an agreement between Complainant and the 

Respondent. 

The Newark Liberty flight fee formula as originally set forth in Continental's Lease 

ANA-170 and in United's Lease AN-535 has two components: A Public Airport Facilities 

Charge Factor ("PAF Factor") and an Airport Services Charge Factor ("Airport Services 

Factor"). The two factors are combined and multiplied by an airline's total maximum 

take-off weight of aircraft for a year, in thousands of pounds, to determine that airline's 

flight fee for the year. (Garcia Decl. at~ 12). The PAF Factor and Airport Services 

Factor continue to be components of the flight fee to this day (Longernecker Decl. at ~ 

15). 

An additional factor was added to the flight fee calculation effective in 1995 

pursuant to Lease ANA-170 Supplement No. 15, dated March 20, 1995, and agreed to 

by other EWR airlines pursuant to similar lease and agreement supplements and 

amendments.7 This factor, known as the Phase 1A Charge Factor, recovers costs 

associated with the construction of certain Newark Liberty roadways. The Phase 1 A 

Charge Factor has minimal impact on the flight fee. For example, in 2013, the last year 

for which the flight fee was calculated with actual, rather than projected, data, the PAF 

Factor was $3.1248 per thousand pounds of maximum take-off weight, the Airport 

Services Factor was $3.6582, and the Phase 1A Charge Factor was $0.0605 (Garcia 

Decl. at~~ 13-14). 

7 United itself agreed to payment of this component of the flight fee in Lease No. AN-535, Supplement No. 

24, dated April, 18, 1995. Other leases for EWR airport terminal property and in flight fee agreements 

with airlines that do not lease space at EWR were also amended to provide for payment of the Phase 1A 

Charge Factor. See accompanying Declaration of Frederick Longernecker. 

24 
Airlines that pay flight fees are also given a credit for revenues received from the 

collection of aircraft parking fees. This credit against the PAF Factor is issued to 

airlines that pay flight fees because aircraft parking fees are Port Authority revenue 

directly related to the operation of the Public Aircraft Facilities whose direct costs are 

reflected in the PAF Factor (Garcia Decl. ~ 15). 

The annual flight fee for each airline per number of thousand pounds of 

maximum take-off weight of that airline for a calendar year is equal to: PAF Factor -

airport parking fees credit+ Airport Services Factor+ Phase 1A Charge Factor. (Garcia 

Decl. ~ 16). As set forth in the Garcia Declaration, the flight fee has varied over time, 

increasing from year to year at times, and decreasing from year to year at other times. 

Such fluctuations are the result of changes in the costs upon which it is based and on 

the volume (by weight) of traffic at Newark Liberty (Garcia Decl. ~~ 18-19). 

As for the contention that the flight fee "reaps a 38% profit on many costs, and a 

14% profit on others" (Complaint at pg. 60, para 132), Complainant does not explain or 

substantiate how it comes to this conclusion (Garcia Decl. 24 ). A computation of the 

difference between the revenue from the PAF factor (less credits issued to the airlines 

from parking fees) and the costs included in the PAF Factor for 2013 does derive a 

ratio of 28.14% (Garcia Decl. at~ 25). 

However, as Complainant knows, the flight fee formula does not recover all 

allowable costs attributable to the PAF. For example, the formula does not include 

reimbursement for off-airport indirect overhead costs, including the costs of the Aviation 

Department services, the Executive Director's Office, the Secretary's office, Comptroller 

Department, Law Department, Treasury Department, Human Resources Department, 

25 
and Engineering Department. Further, and significantly, it does not include any portion 

of the rent paid by the Port Authority to the City of Newark (Garcia Dec!. at~ 28). 

Complainant seeks to bolster its claims challenging the flight fee by arguing that 

surplus revenues are diverted from the airport to other Port Authority uses. However, 

flight fees constitute but 27% of the airport's revenue (Garcia Dec!. at~ 32). Such other 

airport revenue includes food, beverage and retail revenues, telecommunication fees, 

advertising rentals and vehicular parking. (Garcia Dec!. at ~ 31 ). Under rates and 

charges policy airlines have no right (absent agreement) to credits for such revenues. 

See, Brendan Airways, LLC, eta/., v. The Port Authority, 2005 WL 4747012 (Docket 

OST-05-20407 at *21; Instituting Order, March 16, 2005), see also, Rates and Charges 

Policy, 78 Fed. Reg. at 55333, 2.1.1 ("Aeronautical users may receive a cross-credit of 

nonaeronautical revenues only if the airport proprietor agrees") (emphasis added}. 

To the extent that the Complainant charges that the flight fee is unreasonable 

because the airport as a whole is generating excessive surpluses (Complaint at. pgs. 

15-18), the issue of accumulated surpluses is one, which the FAA and DOT will 

examine in the context of reviewing complaints concerning revenue diversion. /d. at 

*22. However, in this context, such allegations are: 1) irrelevant to its complaint about 

the flight fee and 2) Complainant has not demonstrated in any event that the Port 

Authority has unlawfully diverted revenue. 

2. Complainant supports its claim of an unreasonable level of expenditures 

not by arguing that certain airport charges should not be included in the flight fee 

formula, but rather, that the level of those airport charges are too high (Complaint at 

pgs. 61-64 ). 

26 
Objecting to the level of charges to recover the costs of implementation of the 

ARFF cadre, the Complaint takes aim at the levels of staffing, the training provided and 

the salaries paid (Complaint at pgs. 62-63). It makes similar claims as to the staffing 

levels for certain security costs (id. at pg. 63), costs which have increased at least in 

part due to increased security demands in the New York/New Jersey region post-9/11. 

Significantly though, it is not able to show that any of these costs are not recoverable 

under the flight fee formula. Indeed, they are explicitly recoverable. ARFF services are 

encompassed under the recovery of costs for "emergency services" in the formula. 

(Garcia Decl. ~ 20). Moreover, Complainant is not able to demonstrate that there are 

any caps or other limits on the recovery of these types of costs in their existing 

agreement, and so Complainant's claim about the levels of recovery once more comes 

down to one about the formula to which they agreed. 

Further, the staffing and training for those individuals serving in the ARFF cadre 

should be placed in the appropriate context. The settlement agreement between the 

FAA and the Port authority established certain parameters for the ARFF cadre and 

provided that "the FAA and the [Port Authority] agree[ d) that it [was] in the best interest 

of safety and the public interest for the [Port Authority] to implement certain additional 

corrective measures identified in [the Settlement Agreement]" to implement the AARF 

cadre. (Complaint at Exh. FF. at pg. 2). Thus while Complainant complains about the 

levels of staffing, training and the amount of costs for the ARFF cadre, the cadre was 

implemented to make sure that going forward the aircraft fire and rescue functions 

served those vital public interests. 

27 
3. Complainant also misfires when it contends that the flight fee is the result 

of the exercise of monopoly power (Complaint at pg. 64}. Such claims overlook the fact 

that Complainant itself has a dominant market share of EWR traffic and itself exercises 

dominant market power at the airport. It bears re-emphasis that this argument should 

be measured against Continental's decision to stake out a dominant market share at 

this airport and its decision to invest millions of dollars to support that decision. In fact, 

while the Complainant argues that the Port Authority has exploited its monopoly power 

at all the airports it operates in support of its claim, on the other hand it cites to a lower 

flight fee at the New York Airports - a product of a more recent agreements negotiated 

by airlines serving those airports. (Complaint Exh. D at pg. 11-19). 

Further, commercial airports were traditionally considered natural monopolies 

with high barriers to entry and significant economies of scale. However, the dynamics 

of the civil air transport industry changed substantially in the 21st Century creating a shift 

in the economics of civil aviation. This shift highlights that airports differ from natural 

monopolies and that airlines enjoy considerable market strength. First, large airports 

quickly lose economies of scale because airport costs are largely fixed and not directly 

scalable to traffic or demand. Next, airlines enjoy substantial and real market strength 

against airports (Mcintyre Decl. Exh. 1 ("Report")). In fact, Complainant, with more than 

70 percent of the traffic at Newark, exercises real market strength at Newark. 

Further evidence of Complainant's exercise of market dominance lies in its 

utilization of slots at EWR. Complainant controls an average of 73% of all arrival and 

departure slots at the airport, with the next largest slot holders - Delta Airlines holding 

28 
5% and American holding 4% -far behind (Report at pgs. 10-11 )a Complainant also 

"babysits" 1 0% of the slots it holds, thereby prohibiting their use by other carriers (/d. at 

pg. 11 ). United schedules 796 flights during the effective slot hours while holding all 

slots, thereby not using 13% of their allocated slots. ld. Moreover, the Complainant's 

use of market power has a real impact on consumer pricing at the airport, with it being 

reported by DOT, Bureau of Transportation Statistics, that passengers who use Newark 

Liberty pay some of the highest fares in the country.e Finally, Complainant's argument 

that the flight fee has left them at a "competitive disadvantage" (Complaint at 1111 70-76) 

should be measured against the fact that from 1996 through 2013, landing fees and 

other rents average 6.2% of Complainant's (formerly Continental's) key operating costs, 

the other such costs being salaries and aircraft fuel (Report at pg, 1 0). Complainant 

exercises significant dominant market power at Newark Liberty. 

4. Faring no better are Complainant's assertions about the level of labor 

costs and expenditures on other non-airport facilities incurred by the Port Authority 

(Complaint at pgs. 28-32, 66-67). Focusing on the facts relevant to this matter, rather 

than the litany of newspaper articles and headlines, the simple fact is that off-airport 

indirect overhead costs of operating Newark, such as executive salaries and any other 

off-airport expenditures, such as for bridges, tunnels or PATH, do not have any effect on 

the flight fee calculation (Garcia Decl. 111110, 28-30). 

For this reason, and reasons previously stated, the Complainant's related point 

that the flight fee is unreasonable because it is excessive in relation to the benefits 

8 See also, Notice of Proposed Rulemaking, Slot Management and Transparency; LaGuardia, John F. 

Kennedy International and Newark Liberty Airports, 80 Fed. Reg. 1274 (Jan. 8, 2015). Section II. 

29 
conferred (Complaint at pg. 65) in reliance on dormant Commerce Clause jurisprudence 

is misplaced. First, the flight fee does not include costs for such expenditures in its 

flight fee formula as noted above. Further, the fact that a user fee generates a surplus 

does not make it per se unreasonable much less violative of the Commerce Clause. As 

to this issue, the Complainant's reliance on the Supreme Court's decision in Northwest 

Airlines v. County of Kent, 510 U.S. 355 (1994) provides no support for their argument. 

In that case, the Supreme Court affirmed the lower court's finding that the airport user 

fees at issue were for the most part not unreasonable (under the Anti-Head Tax Act 

(AHTA}) and discriminatory (even assuming the dormant Commerce Clause applied}. 

Significantly, in so doing, the Court noted that it was open to the Secretary "utilizing his 

Department's capacity to comprehend the details of airport operations across the 

country, and the economics of the air transportation industry" to determine whether user 

fees are reasonable under the Anti-Head Tax Act. /d. at n. 14. Of course, this is exactly 

what the Secretary did when promulgating the Rates and Charges Policy. Air Canada 

v. Department of Transportation, 148 F.3d 1142 (D.C. Cir. 1998). 

As noted, Complainant, having agreed to the flight fee formula, has not met its 

burden of demonstrating that the surplus generated by the flight fee violates this policy. 

Moreover, Complainant's argument also fails because Congress has seen fit to provide 

carefully crafted exemptions from the airport revenue diversion requirements requiring 

that all airport revenues be expended on local facilities substantially related to the 

airport. It follows therefore, that there is no statutory or dormant Commerce Clause 

impediment to the generation of some surplus revenues by a grandfathered airport 

when crafting an aeronautical fee. See, Northwest Airlines, 510 U.S. at 372 (resisting 

30 
an inference of a limit on airport surpluses from the AHTA because the statute does not 

mention surpluses - rather such surpluses are directly addressed by the revenue 

diversion provisions in the Airport and Airway Improvement Act of 1982 (AAIA)). 

5. Also untenable is Complainant's position that the flight fee lacks 

transparency. Yet again, the Complainant emphasizes the principles that apply when 

an airline unilaterally imposes fees after consultation with an aeronautical user 

(Complaint at 11160), including where airports and airlines attempt to negotiate fees, and 

an airport imposes fees after such negotiations reach impasse. In such cases, the 

Rates and Charges Policy clearly provides guidelines for the imposition of fees. See 78 

Fed. Reg. 55336 (Appendix 1 to the Rates and Charges Policy which provides 

information which the Department "ordinarily expects" "to be available to aeronautical 

users in connection with consultations over changes in airport rates and charges 

including "Historic Financial Information"; "Justification" for the changes"; "Traffic 

Information"; "Planning and Forecasting Information"). When as is the case here, 

airlines and an airport agree to the flight fee formula, the logical presumption is that they 

do so only after having shared such information to ensure that the parties are in accord 

with the deal they are making. 

Further, as set forth in the Longernecker Declaration, Continental and United 

agreed to the flight fee formula and repeatedly agreed to extend that formula to its 

present expiration, foregoing obvious opportunities to walk away from the formula, 

including those opportunities presented by the airlines' respective reorganizations under 

the bankruptcy laws. Additionally, of particular note, is "Continental's decision in 1999 

to issue[] over $700 million in bonds to fund the construction of C-3, and new 

31 
international concourse at Terminal C." Port Authority v. Department of Transportation, 

479 F.3d at 207 (Longernecker Dec!. ,m 31 ,32; Longernecker Dec!, Exh. U, excerpts 

from Offering Statement for New Jersey Economic Development Authority Issuance of 

Special Facility Revenue Bonds in connection with the issuance of $730,360,000 to 

support the development of Continental's Global Gateway Development project 

including the construction of a new Terminal C concourse at EWR.). 

Continental therefore decided to develop and expand its operations at Newark 

Liberty with an original goal of making it "the only carrier with a New York-area hub."10 

In so doing, Continental made a deliberate business decision to build a dominant 

market share at Newark Liberty, and therefore exercise market power at the airport. It 

defies credulity to conclude that the flight fee formula is, as Complainant now contends, 

an impediment to its ability to compete and that Complainant made such significant 

business and investment decisions, without understanding that formula. 

Further, undermining Complainant's allegations that it does not understand the 

"opaque" flight fee formula because of a lack of transparency, as stated in the Garcia 

Declaration, the airlines at Newark Liberty are provided with detailed information each 

year supporting the flight fee calculations (Garcia Dec!. at 111133-39). The estimated and 

final calculations supporting the flight fee formula are provided to the airlines in writing 

and in person four times a year, twice in the Spring and twice in the Fall. In each Fall 

presentation, detailed information concerning the projections upon which the flight fee 

will be charged in the next calendar year is presented. (Garcia Dec!. at 11 34 ). In each 

Spring presentation, detailed information concerning the actual costs figures and the 

actual total maximum take-off for Newark upon which the prior year adjustments are 

10 See Exhibit 1 to Mcintyre Declaration at Fn. 28. 

32 
based is shared with the airlines. (Garcia Decl. at 11 35). The detailed financial 

information shared with the airlines concerning revenues and costs at Newark (over 45 

pages long) is appended to the Declaration. (Garcia Decl. at 1111 36-37). Additionally, 

upon request airlines are provided with underlying Excel spreadsheets which form the 

basis for the financial documents shared with the airlines. (Garcia Decl. at 11 38). 

Finally, airport staff responds to airline questions regarding the information presented at 

these sessions. (Garcia Decl. at 1139). 

Ill. THE FLIGHT FEES ARE NOT UNJUSTLY DISCRIMINATORY. 

In addition to its contention that the flight fee charged at Newark is not 

reasonable, Complainant argues that it is unjustly discriminatory because it differs from 

the flight fee charged at the New York airports operated by the Port Authority. This 

argument once again ignores the history of the agreements, since the flight fee for the 

New York airports, as is the case for the fee at Newark Liberty, was the subject of 

negotiation, negotiations in which United participated. It has long been recognized that 

"an airport sponsor is not assumed to have engaged in unjust discrimination simply by 

adjusting its rates or terms over time, even when that adjustment results in imposing 

different lease rates and terms at different points to otherwise similarly situated tenants." 

Long Island Jet Center East, Inc. v. County of Suffolk, New York, 2005 WL 428889 *22 

(FAA Docket No. 16-04-05; Jan. 21, 2005); Desert Wings Jet Center v. City of 

Redmond, 2010 WL 4723466 (Docket FAA 16-09-07; November 10, 2010). Moreover, 

Complainant is unable to make out a claim of unjust discrimination because it has not 

met its burden of demonstrating that the tenants at the New York airports and at Newark 

are similarly situated. See, Port Authority of New York and New Jersey v. Department 

33 
of Transportation and Brendan Airways, LLC, 479 F.3d 21 (holding that airlines failed to 

carry their burden of persuasion concerning the degree to which fees at Newark 

Terminal B and Terminal C could reasonably differ when they put forward "no evidence 

detailing the value to the Port of Authority of Continental's signatory or lessee status" at 

Terminal C). Federal law does not require that airlines serving Newark, be given the 

New York agreement. 11 

IV. THERE IS NO UNLAWFUL DIVERSION OF REVENUE. 

In one of the longest stretches in its Complaint, Complainant claims that the Port 

Authority illegally diverts aeronautical revenues because it uses surplus revenues to 

fund what it terms "Non-Port Authority facilities" (Complaint at pg. 72). This argument 

fails because it is based on a misunderstanding of the applicable statutory language 

and a mischaracterization of the expenditures it challenges. 

Starting with the statute, the Airport and Airway Improvement Act of 1982, 49 

U.S.C. 471 07(b) provides as follows: 

(b) Written assurances on use of revenue - (1) The Secretary of 

Transportation may approve a project grant application under this 

subchapter for an airport development project only if the Secretary 

receives written assurances, satisfactory to the Secretary, that local taxes 

on aviation fuel (except taxes in effect on December 30, 1987) and the 

revenues generated by a public airport will be expended for the capital or 

operating costs of11 Complainant also contends that the flight fee is not reasonable because it is unjustifiably high when 

compared to the landing fees charged by airports outside of New York/New Jersey (Complaint at pgs. 13, 

64-65). However, even where there is no written agreement, and there is jurisdiction to review such fees, 

whether fees are higher or lower than those charged at other airports has been held to be "irrelevant" 

because the issue is whether the fees being challenged are reasonable. Los Angeles International 

Airport Rates Proceeding" Order 95-4-5, at 25 (April 3, 1995); see also, Brendan Airways, LLC, et a/., v. 

Port Authority, Instituting Order, supra at *22 (In determining whether certain charges imposed on carriers 

using Terminal B at Newark are reasonable, the ALJ need not examine whether "the Port Authority fees 

at EWR are higher or lower than those charged at other airports"). Even Complainant's flight fees were 

not governed by a written agreement, Complainant could not meet its burden by showing that flight fees 

in Newark are higher than flight fees at other airports. 

34 
(A) the airport; 

(B) the local airport system; or 

(C) other local facilities owned or operated by the airport owner 

or operator and directly and substantially related to the air transportation 

of passengers or property. 

(2) Paragraph (1) of this subsection does not apply if a provision 

enacted not later than September 2, 1982, in a Jaw controlling financing by 

the airport owner or operator, or a covenant or assurance in a debt 

obligation issued not later than September 2, 1982, by the owner or 

operator, provides that the revenues, including local taxes on aviation fuel 

at public airports, from any of the facilities of the owner or operator, 

including the airport, be used to support not only the airport but also the 

general debt obligations or other facilities of the owner or operator. 

Complainant does not deny that the Port Authority falls within Paragraph (2) of 

the statute and is, therefore, grandfathered. What the Complainant does allege is that 

the Port Authority is expending monies on projects which exceed the limits of the 

grandfather provision because it does not own or operate those projects (Complaint at 

,m 17s, 176). 

First, the language in Paragraph (2) plainly anticipates that expenditures of 

"grandfathered" airports include those "used to support ... other facilities of the owner 

or operator" 49 U.S.C. 47107(b) (emphasis supplied). 

Second, neither sets of examples of expenditures Complainant cites support its 

claims because those expenditures, as made by Respondent, were related to or in 

support of Port Authority facilities and/or operations. Complaint Exh. D at 11-11; 11-13, 

Preliminary Official Statement for 183'd Consolidated Bond Series) (describing Port 

Authority facilities in its Interstate Transportation Network and explaining Lincoln Tunnel 

Access Infrastructure Improvements included work on Route 1&9, Pulaski Skyway, the 

Wittpenn Bridge "[i]n recognition of the ongoing needs of the Port Authority's facilities for 

35 
efficient transportation access and egress for goods and people"); (Complaint Exh. D, 

supra at 11-46; Complaint Exh. K) (Other expenditures mentioned in Complaint12 were 

part of the Regional Economic Development Program undertaken in support of Port 

Authority facilities or operations at "the request of the respective Governors consistent 

with existing legislation."): see also, Complaint Exh. K at 2; (Jersey City Medical Center 

states that funding "was helpful in establishing a regional trauma center that services 

Port Authority facilities in the region.") 

12 New Brunswick Civic Center, Stevens Institute of Technology, the Jersey City Medical Center and 

Independence Park (Complaint at~ 176). 

36 
CONCLUSION 

For these reasons, it is respectfully sulmlitted that the ~mplaint should 

be dismissed in its entirety, with prejudice. 

February 10, 2015 

37 

Carlene 

~ V. Mcintyre 

f&dt~-- Arnold D. Kolikoff 

Faith Tabafunda 

THE PORT AUTHORITY OF NEW YORK 

AND NEW JERSEY 

225 Park Avenue South 

New York, New York, 1 0003 

Telephone: 212.435.3503 
FEDERAL AVIATION ADMINISTRATION 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

----------------------------------------------------------------------------------)( 

UNITED AIRLINES, INC., 

Complainant, 

v. 

THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, 

Respondent. 

----------------------------------------------------------------------------------)( 

Docket No. 

FAA-16-14-13 

STATEMENT OF RESPONDENT THE PORT AUTHORITY OF NEW YORK AND 

NEW JERSEY PURSUANT TO 14 C.F.R. § 16.26(c)(2) IN SUPPORT OF ITS MOTION 

FOR SUMMARY JUDGMENT DISMISSING THE COMPLAINT 

Pursuant to 14 C.F.R. § 16.26( c)(2), Respondent The Port Authority of New York and 

New Jersey ("the Port Authority") respectfully submits this statement of material facts as to 

which the Port Authority contends there is no genuine issue of material fact. 

A. COMPLAINANT 

1. Complainant United Airlines Inc., is a corporation organized under the laws of the 

State of Delaware having a principal place of business at 233 South Wacker Drive, Chicago, 

Illinois 60606. 

Ex. D,1 Form 8-K United Continental Holdings Inc., Report March 31,2013. 

2. Complainant was created on March 31, 2013, when Continental Airlines Inc. 

("Continental"), merged with United Airlines Inc. ("United") leaving Continental as the 

surviving corporation which then changed its name to United Airlines Inc. 

Complaint~ 33; Ex. D, Form 8-K United Continental Holdings Inc., Report March 31, 

2013. 

1 References to "Ex. [Letter]" are to Exhibits to the Declaration of Frederick 

Longemecker, dated February 9, 2015, annexed hereto. 
B. RESPONDENT 

3. The Port Authority is a bi-state governmental agency created by a 1921 Compact 

between the States ofNew York and New Jersey with the consent of Congress of the United 

States. 

Complaint'1[ 18; 42 U.S. Stat. 174 (1921), consenting to 1921 N.J. Laws Ch. 151 

(codified at N.J. Stat. Ann. §§32:1-1 to -24 (West 2015)) and 1921 N.Y. Laws Ch. 154 

(codified at N.Y. Unconsol. L. §§6401-6423 (McKinney 2014)). 

4. Pursuant to the 1921 Compact and subsequent bi-State legislation, the Port 

Authority owns and/or operates thirty-three (33) such facilities, including airports, bus depots, 

marine terminals, interstate bridges and tunnels and, through its wholly-owned subsidiary, the 

Port Authority Trans-Hudson Corporation (PATH), an interstate railway. 

Garcia Dec!. '1[ 4. 

5. The Port Authority operates the following air terminals pursuant to bi-state 

legislation: John F. Kennedy International Airport, LaGuardia Airport, Newark Liberty 

International Airport, and Stewmt International Airport and Teterboro Airport. 

Complaint '1[ 18; N.Y. Unconsol. Law §§6631 et seq. (McKinney 2014); N.J. Stat. Ann. 

§32:1-35.1 et seq., (West 2015). 

C. NEW ARK INTERNATIONAL AIRPORT 

6. Newark Liberty International Airport ("EWR") is leased to the Port Authority by 

the City of Newark, New Jersey. 

Complaint '1[ 19; Garcia Dec!. '1[ 5. 

7. The Port Authority is the "sponsor" for EWR within the meaning of 14. C.F.R. 

§ 16.3. The Port Authority receives federal financial funds for EWR. 

Complaint '1[ 20. 

2 
8. EWR is comprised of three terminals designated A, B, and C. Terminals A, B 

and Care each sub-divided into three terminals which are designated A-1, A-2, A-3, B-1, B-2, 

B-3, C-1, C-2 and C-3. 

Garcia Dec!. ~ 6. 

9. Complainant operates out of sub-terminals A-1 and A-2 in Terminal A in 

accordance with Lease AN-535 and ANB-056, and sub-terminals C-1, C-2, C-3 in Terminal C in 

accordance with Lease ANA-170. Complainant refers to Lease ANA-170 as the "Master Lease." 

Complaint~ 33; Longemecker Dec!.~~ 8-10; Garcia Dec!.~~ 6-7. 

10. Complainant also operates out of Terminal B. Terminal B is the designated 

terminal for international flight arrivals. 

Complaint~ 33; Longernecker Dec!.~~ 8-10; Garcia Dec!.~~ 6-7. 

11. Complainant operates out of Terminals A, Band C pursuant to lease agreements 

with the Port Authority bearing the following numbers ANA-170 (Terminal C), ANB-056 

(Terminal A), AN-535 (Terminal A) and space permit Space Permit ANC-184 (Terminal B). 

Ex. A- Lease ANA-170; Ex. B -Lease ANB-056; Ex. C, Lease AN-535; Longemecker 

Dec!. ~ 11 ; Garcia Dec!. ~7. 

12. Each lease agreement includes a description of the two components of the flight 

fee and a Schedule C that sets forth the methodology for calculating the flight fee charged to 

Complainant. 

Longemecker Dec!.~~ 15,16, 20, 24, 29; Garcia Dec!. ~8. 

D. COMPLAINANT'S LEASE AGREEMENTS AT EWR 

1. United's Lease for EWR Terminal A 

13. United entered into Lease AN-535 made as of October 7, 1969, with the Port 

Authority for use of Terminal A facilities at EWR. December 31, 1996 was the scheduled 

3 
expiration date for Lease AN-535 and the obligation to pay flight fees. Effective as of March I, 

1972, with Supplement No.4, United extended the term of the lease and the flight fee formula 

from December 31, 1996 to December 31, 1998. 

Ex. F, Lease AN-535 § 16 and Schedule C; and See Ex. G, Lease AN-535 § 7(b ); Ex. H, 

Lease AN-535, Supplement No.4 § 5 (03/1/1972); Longemecker Dec!.~ 20. 

14. Effective as January I, 1995, United entered into Supplement No. 24 to AN-535, 

which extended the term of the lease, modified base rentals, added two new fees and extended 

the applicability of the flight fee formula from its expiration of December 31, 1998 to December 

31,2018. 

Ex. I, Lease AN-535, Supplement No. 24 § 13 (04/18/1995); Longernecker Dec!.,~ 20. 

15. Supplement No. 24 added the Phase lA Charge Factor to the flight fee permitting 

the Port Authority to recover costs associated with construction of certain EWR roadways. 

Ex. J, Lease AN-535 Supplement No. 24 §§ 2, 6 (a), 9 (a), Schedule M Part I, 

(04/18/1995); Longemecker Dec!.,~ 21; Garcia Dec!.~~ 14-15. 

16. Supplement No. 24 also added the separate EWR Monorail Fee permitting the 

Port Authority to recover the costs of constructing the EWR Air Train. 

Ex. J, Lease AN-535, Supplement No. 24 §§ 2, 6 (a), 9 (a), Schedule M Part I 

(04/18/1995); Longernecker Dec!.~ 21; Garcia Dec!.~ 15 n. 9. 

2. Continental's Lease for EWR- Terminals C, B and A 

a. Terminal C 

17. Effective as of January 11,1985, People Express Airlines Inc. ("People Express") 

entered into Lease ANA-170 with the Port Authority for a term of(25) twenty-five years for its 

operations out of Areas C-1 and C-2 of Terminal C. 

Complaint~33; Ex. A, Lease ANA-170; Longemecker Dec!.~ 22. 

4 
18. People Express assigned its lease to Continental, which executed the Assignment 

and Assumption of Lease ANA-170, made as of August 15, 1987 (Assignment and Assumption) 

with the Port Authority consenting. 

Ex. K, Lease ANA-170 Assignment and Assumption of Lease ANA-170 (08/15/1987); 

Longemecker Dec!. ~ 22. 

19. Continental operated out of EWR pursuant to Lease ANA-170 for over twentyyears before it merged with United. 

Longemecker Dec!. ~ 23. 

20. The Port Authority and Continental have amended (or "supplemented") Lease 

ANA-170 twenty-seven times during the past twenty-years. 

Ex. L, Lease ANA-170 Supplement No.6§§ 4, 5 (a), 8 (a)-( c), 13 (08/15/1987); 

Longemecker Dec!. ~ 23. 

21. Section 53 of ANA-170 describes the flight fee and incorporates by reference 

Schedule C that describes flight fee formula's calculation. Section 53 of ANA -170 set the 

expiration for the flight fee formula for December 31, 1998. The parties agreed to negotiate in 

good faith for "the establishment of provisions covering the determination of flight fees" payable 

on January I, 1999. 

Ex. M, Lease ANA-170 § 53 and Schedule C; Longemecker Dec!.~ 24; Garcia Dec!. 

F 

22. Effective as of January 1, 1995, Continental entered into Supplement No. IS to 

Lease ANA-170. Supplement No. 15 extended the effective date of Schedule C to March 31, 

2013. 

Ex. O,LeaseANA-170 SupplementNo.15 §§2, 8 (a)-(d), 16(a),(b) ScheduleM(I), 

(03/20/1995); Longemecker Dec!.~ 25. 

5 
23. Supplement No. 15 also extended the lease term for Area C-3, included new base 

rentals, added the EWR Monorail Fee permitting the Port Authority to recover the costs of 

construction for the EWR Air Train and also added the new charge Phase !A Charge Factor to 

recover costs associated with the construction of certain EWR roadways. 

Ex. 0, Lease ANA-170 Supplement No. 15 §§ 2, 8 (a)-(d), 11, 16(a),(b) Schedule M Part 

I (03/20/1995); Longemecker Dec!. ~ 25; Garcia Dec!. ~ 13-14. 

24. Continental entered into Supplement No. 17 to Lease ANA-170 effective as of 

September 1, 1999. Supplement No. 17 extended the lease term for Area C-3, and modified base 

rentals. 

Ex. P, Lease ANA-170 Supplement No. 17 § 30 (09/0111999); Ex. T, ANA-170 § 2(a), 

Longemecker Dec!. ~ 26; Garcia Dec!. ~ 8, n. 2. 

25. Supplement No. 17 also extended the expiration of the flight fee Schedule C from 

March 31,2013 to December 31,2018. 

Ex. P, Lease ANA-170 Supplement No. 17 § 30 (09/01/1999); Longemecker Dec!.~ 27. 

b. Terminal B 

26. Terminal B is the terminal designated for international arrivals at EWR. In 

Supplement No. 17 Continental reserved the right to use its slots at Terminal B. Continental also 

has a permit with the Port Authority allowing it to use space in connection with its operations 

within that terminal. Complainant submits its Terminal B operations to the Port Authority in a 

monthly activity report and the corresponding flight fees are calculated and paid in accordance 

with the provisions of Leases ANB-056 and ANA-170. 

Ex. R, Lease ANA-170 Supplement No. 17 § 49 (b) (09/01/1999); Longemecker Decl.,n 

10, 30. 

6 
c. Terminal A 

27. Effective as of August 1, 1999, Continental entered into Lease ANB-056 and 

agreed to lease five (5) gates and accompanying space within Terminal A. Lease ANB-056 

expires on December 31,2018. 

Ex. Q, Lease ANB-056 §7, § 14 and Schedule C; Longernecker Dec!.-,[ 29. 

3. Continental and United's Investment in EWR 

28. With Supplement No. 8 dated June 2, 1989, Continental added Area C-3 to 

Terminal C renamed Terminal C-3. 

Ex. S, Lease ANA-170 Supplement No. 8 (06/02/1989) §§ 1-2; Longemecker Dec!. -,[ 31. 

29. Supplement No. 17 to Lease ANA-170 describes the extensive construction 

program for developing Terminal C-3. 

Ex. T, Lease ANA-170 Supplement No. 17 §§ 6 (a), (b) (I) (i)-(xiii) (09/01/1999); 

Longernecker Dec!. -,[ 3 2. 

30. Supplement No. 17 also describes Continental's financial investment in 

developing Terminal C-3. This includes an investment of approximately $730,360,000.00. 

Ex. U, New Jersey Economic Development Authority Special Facility Revenue Bonds 

(Continental Airlines Inc., Project) Series 1999 09/15/1999, at 1-8; Longemecker Dec!. 

-,[ 32. 

31. With Supplement No. 28, effective as of December 2012, Continental made a 

commitment to invest another $150,000,000 in Terminals C-1 and C-2. 

Ex. V, Lease ANA-170 Supplement No. 28 §§ 1, 3 (a)(l2/31/2012); Ex. W United 

Extends Newark Agreement, commits $150M to its Hub; Longernecker Dec!. -,[ 33. 

32. Supplement No. 28 provided for upgrading facilities in Terminals C-1 and C-2. 

Supplement No. 28 also extended the terms of Terminal C-1 and C-2 until March 31,2033. 

Ex. V, Lease ANA-170 SnpplementNo. 28 §§ 1, 3 (a) (12/31/2012); Longernecker Dec!. 

-,[ 33. 

7 
4. Continental's Treatment Of Leases in Bankruptcy 

3 3. On April l, I992, Continental was under reorganization under Chapter II of the 

United States Bankruptcy Code. 

Ex. X, Lease ANA-I70, Supplement No. 10 (04/0l!I992) §§ 1 (a), (b), 4 (a), (b), 5(a); 

Longemecker Dec!. '1[ 34. 

34. In Supplement No. 10 Continental reaffirmed Lease ANA-170. Supplement No. 

10 also extended the lease, surrendered certain leases (AN-541), modified rentals and extended 

the lease term for certain areas under the lease. Supplement No. 10 did not modify the flight fee 

components or Schedule C. 

Ex. X, Lease ANA-170, Supplement No. IO (04/01/1992) §§ 1 (a), (b), 4(a), (b), 5(a); 

Longemecker Dec!. '1[ 34. 

3 5. On June 1, 1993, Continental and Port Authority entered into a stipulation 

addressing Continental's assumption under Section 362 of the Bankruptcy Code of certain leases 

for its operations at EWR and LaGuardia Airports. 

Ex. Y Stipulation Between Continental Airlines, Inc., and the Port Authority ofNew 

York and New Jersey for the Assumption of Certain Unexpired Leases and Executory 

Contracts (611/1993); In re Continental Airlines, Inc., et al.. Chapter 11 Case No. 90-932 

through 90-984, Order Pursuant to 11 U.S.C. § 365 Approving Assumption of Certain 

Executory Contracts and Unexpired Leases Upon the Effective Date of the Plan of 

Reorganization and Approving Certain Stipulations with Lessors (10/1/1993); 

Longemecker Dec!. '1[ 3 5. 

36. In this stipulation, Continental assumed Lease ANA-170, while rejecting others, 

such as Lease ANA-093 for portions of the North Terminal at EWR. On October 1, 1993, the 

United States Bankruptcy Court for the District of Delaware entered its order approving 

Continental's motion for the assumption of certain agreements and the corresponding 

stipulations including the June 1, 1993 stipulation between the Port Authority and Continental. 

8 
Ex. Y Stipulation Between Continental Airlines, Inc., and the Port Authority of New 

York and New Jersey for the Assumption of Certain Unexpired Leases and Executory 

Contracts (6/1/1993); In re Continental Airlines, Inc., et al., Chapter 11 Case No. 90-932 

through 90-984, Order Pursuant to 11 U.S.C. § 365 Approving Assumption of Certain 

Executory Contracts and Unexpired Leases Upon the Effective Date of the Plan of 

Reorganization and Approving Certain Stipulations with Lessors (1 0/1/1993); 

Longernecker Dec!.~~ 34,35. 

5. United's Treatment Of Leases in Bankruptcy 

37. On June 17, 2005, United was under reorganization under Chapter 11 of the 

United States Bankruptcy Code. 

Ex. Z, Partial Assigmnent under Letter Agreement with Assumption and Consent Lease 

Agreement No. AN-535 (6/17/2005); Longernecker Dec!.~ 36. 

38. On June 17, 2005, the Port Authority, United and Air Canada executed a partial 

assigmnent of certain facilities under Lease AN-535 with assumption and consent 

("Assigmnent"). This Assigmncnt reflected United's proposed action to assume certain leases 

with the Port Authority, including AN-535, subject to the bankruptcy's court approval. The 

modification included a surrender of space and changes to fees and rentals, but did not include a 

modification to the flight fee formula. 

Ex. Z, Partial Assigmnent under Letter Agreement with Assumption and Consent, Lease 

Agreement No. AN-535 (6117/2005); Longernecker Dec!.~ 36. 

39. This document provided for payments of credits to United by the Port Authority 

for investment by United in the tenninals, and included an agreement for assigmnent of certain 

gates, and tennination of certain rentals, rates and fees for the space assigned. 

Ex. AA, In re UAL Corporation, et al., Chapter 11 Case No. 02 B-48191, Stipulation 

order Assuming Certain Unexpired Leases of Non-Residential Real Property and Partial 

Assigmnent Thereof with respect to Newark Liberty International Airport Pursuant to 

Section 365(a) of the Bankruptcy Code; Longernecker Dec!.~ 37. 

9 
E. EWR FLIGHT FEE 

1. EWR Flight Fee In General 

40. The flight fee charged to Complainant for use ofEWR is established by Schedule 

C of Leases ANA-170, ANB-056 and AN-535. 

Garcia Dec!. 'j[ 8; Ex. F, Lease AN-535 § 16 and Schedule C; Ex. M Lease ANA-170 'j[53, 

'j[51 and Schedule A, Section I Schedule C; Longernecker Dec!. 'lf'lf 20, 24. 

41. The same Schedule C is in other leases for EWR airport terminal property and in 

flight fee agreements with airlines that do not lease space at EWR. 

Garcia Dec!. 'If 8. 

42. The flight fee is separate from payment of rent for the use of! eased space. 

Garcia Dec!. 'If 8. 

43. The flight fee is separate from the EWR Monorail Fee. The EWR Monorail Fee 

fee recovers capital and operating costs that the Port Authority incurred and incurs in 

constructing, maintaining and operating the EWR Air Train. 

Garcia Dec!. 'If 8; Ex. J Lease AN-535 Supplement No. 24 §§ 2, 9 (a), 6(a) (04/18/1995), 

Schedule M Part I; Ex. P, Lease ANA-170 Supplement No. 17 § 30 (09/01/1999); 

Longernecker Dec!. ,['1[21, 26. 

44. The EWR flight fee formula as originally set forth in Lease ANA-170 has two 

components: A Public Airport Facilities Charge Factor ("PAF Factor") and an Airport Services 

Charge Factor ("Airport Services Factor"). The two factors are combined and multiplied by an 

airline's total maximum take-off weight of aircraft for a year, in thousands of pounds, to 

determine that airline's flight fee for the year. The PAF Factor and Airport Services Factor 

continue to be components of the flight fee. 

Garcia Dec!. 'If 12; Longernecker Dec!. 'If 24. 

10 
45. An additional factor, known as the Phase !A Charge Factor, was added to the 

flight fee calculation effective in 1995 pursuant to Lease ANA-170 Supplement No. 15, dated 

March 20, 1995, and effective in 1995 pursuant to Lease AN-535 Supplement No. 24 dated April 

18, 1995 and agreed to by other EWR airlines pursuant to similar lease and agreement 

supplements and amendments. 

Garcia Dec!.~~ 13-14; Ex. J, Lease AN-535 Supplement No. 24 §§ 2, ~6(a), 9(a) 

(04/1811995), Schedule M, Part I; Ex. 0, Lease ANA-170 Supplement No. 15 §§ 2, 8 (a)-

(d), 16(a),(b), Schedule M, Part I (03/20/1995); Longemecker Dec!. ~~21, 25. 

46. The Phase !A Charge Factor recovers costs associated with the construction of 

certain EWR roadways. 

Garcia Dec!.~ 14; Longernecker Dec!.,~ 21. 

47. The Phase !A Charge Factor has minimal impact on the flight fee. For example, 

in 2013, the last year for which the flight fee was calculated with actual, rather than projected, 

data, the P AF Factor was $3.1248 per thousand pounds of maximum take-off weight, the Airport 

Services Factor was $3.6582, and the Phase !A Charge Factor was $0.0605. 

Garcia Dec!. ~ 14. 

48. Airlines that pay flight fees are also given a credit for revenues received from the 

collection of aircraft parking fees. This credit against the P AF Factor is issued to airlines that 

pay flight fees because aircraft parking fees are Port Authority revenue directly related to the 

operation of the Public Aircraft Facilities whose direct costs are reflected in the PAF Factor. 

Garcia Dec!. ~ 15. 

49. Algebraically, the annual flight fee for each airline per number of thousand 

pounds of maximum take-off weight of that airline for a calendar year is equal to: P AF Factorairport parking fees credit+ Airport Services Factor+ Phase !A Charge Factor. 

11 
Garcia Dec!.~ 16. 

50. The total flight fee charge for any one airline during a calendar year is that year's 

flight fee times the total maximum take-off weight of that airline for the calendar year divided by 

1,000. 

Garcia Dec!. ~ 17. 

2. PAF Factor Cost Basis 

51. The P AF Factor is based on the costs ofall investment in the EWR Public 

Aircraft Facilities and all operating costs of the EWR Public Airport Facilities. These costs 

include "the Port Authority's snow removal operations and provision, operation, maintenance, 

servicing, repair and replacement of and to the Public Aircraft Facilities and Airport emergency 

services." "Airport emergency services" include Aircraft Rescue and Firefighting ("ARFF") 

services for the EWR Public Airport Facilities. 

Garcia Dec!. ~ 20; Ex. M to Longemecker Dec!., Lease No. ANA-170, Schedule C, Part 

I, § (1), at 1. 

52. "Public Aircraft Facilities" is defined in Section 51 of Lease No. ANA-170 as 

follows: 

For the purposes of this Agreement, the term "Public Aircraft Facilities" 

shall include such of the following facilities as now exist and shall, from 

time to time be constructed, provided and maintained by the Port 

Authority at the Airport for public and common use including without 

limitation thereto, use by Airline Lessees (including the Lessee) of the 

Central Terminal Area Complex and Aircraft Operators, other than said 

Airline Lessees for the following purposes regardless of whether or not 

they are actually used or usable in whole or in part by the Lessee (except 

that such facilities shall not be deemed to include any area or areas as to 

which the Lessee is granted rights pursuant to Section I or 3 of this 

Agreement): 

(a) Public Ramp and Apron Space- by which is meant space 

for the purpose of loading and unloading passengers, baggage, mail and 

supplies to or from aircraft, for the purpose of servicing aircraft with fuel 

and lubricants, for the purpose of performing the operations commonly 

12 
known as "ramp service" and for the purpose of performing inspection, 

minor maintenance and other services upon or in connection with aircraft 

incidental to performing "ramp service" and for the purpose of parking of 

mobile equipment actively used in connection with such operations. 

(b) Runways - by which is meant the runways (including aerial 

approaches and buffer zones and additionally anything required for the 

effective and safe operation of aircraft as required by the Federal Aviation 

Administration) at the Airport for the purposes of landing and taking off of 

aircraft; 

(c) Aircraft Parking and Storage Space - by which is meant 

those public areas of the Airport which are designated by the Port 

Authority from time to time for use by an Aircraft Operator for the 

parking or storage of an aircraft. 

(d) Taxiways- by which is meant taxiways at the Airport for 

the purpose of the ground movement of aircraft to, from and between the 

runways, the Public Ramp and Apron Space, the Aircraft Parking and 

Storage Space, aircraft maneuvering areas, and other portions of the 

Airport, not including, however, any taxiways or portions thereof that are 

within the Lessee's premises. 

(e) Facilities incidental to the runways, the Public Ramp and 

Apron Space, the Aircraft parking and Storage Space and Taxiways- by 

which is meant facilities and equipment for the monitoring of aircraft 

noise decibels and facilities for the purpose of controlling or assisting 

arrivals, departures and operations of aircraft using the Airport, such as 

control towers, signals, beacons, wind indicators, floodlights, landing 

lights, boundary lights, construction lights, radio and electronic aids or 

other aids to operations, navigation or ground control of Aircraft whether 

or not of a type herein mentioned and even though located at sites located 

away from the other Public Aircraft Facilities or outside the Airport. 

Garcia Dec!. 'j21; Ex. M, Lease ANA-170 § 51. 

3. Airport Services Factor Cost Basis 

53. The Airport Services Factor is based upon the ratable portion of expenditures of 

the Port Authority performed for the benefit ofEWR as a whole, which are attributable to the 

Public Aircraft Facilities based on geographical area, including investment in non-revenue 

producing areas, and costs of operation, maintenance and administration of non-revenue 

producing areas by Port Authority staff, including Port Authority police, and Port Authority 

contractors. 

13 
Garcia Dec!.~ 22; Ex. M, Lease ANA-170 §§ 51, 53, Schedule A, Part I. 

4. P AF Factor Calculation 

54. The PAF Factor is calculated as the product of$0.3130 times two ratios: 

(a) First, the ratio of the sum of the Port Authority's fixed charges on 

investment in, and annual direct costs for, maintaining the Public Airport Facilities to the amount 

of that investment and costs in the first year of Lease ANA-170. 

(b) Second, the ratio of the total maximum weight for take-off of all aircraft at 

EWR in the first year of Lease ANA-170 to the.total maximum weight for take-off of all aircraft 

at EWR in the current year. 

(c) Algebraically, the PAF factor is expressed as: 0.3130 X ((fixed charges 

on Public Aircraft Facilities investments+ Public Aircraft Facilities maintenance and operation 

costs) 7 $4,0 10,000) X (17, 734,000,000 7 total scheduled maximum take-off weight for 

calendar year). 

Garcia Dec!. ~ 23; Ex. M, Lease ANA-170, Schedule C, § II (A), at 1-2. 

55. In 2013, the ratio of the difference between revenue from the PAF Factor less 

credits issued to airlines from aircraft parking fees, and the costs included in calculating the P AF 

Factor was 28.14 percent. 

Garcia Dec!. ~ 25. 

5. Airport Services Charge Factor Calculation 

56. The Airport Services Charge Factor is calculated as the product of $0.3370 times 

three ratios. 

(a) First, the ratio of the current ratable portion of the investment in nonrevenue producing areas of the entire airport and costs of maintenance, operation and 

14 
administration of the non-revenue producing areas of EWR to that sum for the first year of the 

lease. 

(b) Second, the ratio of the total scheduled maximum take-off weight of 

aircraft at EWR for the first year of Lease ANA -170 to the total scheduled maximum take-off 

weight of aircraft at EWR for the current year. 

(c) Third, the ratio of the percentage of the total developed land area at EWR 

during the calendar year occupied by the Public Aircraft Facilities during the current year to 

66.47%, which was percentage of the total developed land area at EWR occupied by the Public 

Aircraft Facilities during the first year of the Lease ANA-170. 

Garcia Dec!., 26; Ex. M, Lease ANA-170, Schedule C, Part II,§ (B), at2-3. 

57. Algebraically, the Airport Services Charge Factor is expressed as: 0.3370 X (the 

current ratable portion of the investment in non-revenue producing areas of the entire airport and 

costs of maintenance, operation and administration of the non-revenue producing areas ofEWR 

+ 4,625,000) X (17,734,000,000 +the total scheduled maximum aircraft take-off weight at EWR 

for the current year) X (the percentage of the total developed land area at EWR during the 

calendar year by the Public Aircraft Facilities during the current year+ 66.47%). 

Garcia Dec!., 27; Ex. M, Lease ANA-170, Schedule C, Part II,§ (B), at 2-3 

15 
6. Flight Fee History 

58. The flight fee, its components and adjustments for the period 2003 through 2013 

were: 

Flight Fee Components Adjustments 

Airport Phase Over/Under PFC 

Year PAF Parking Airport lA Reported Imputed Flight 

Services Weights- Carrying Fee Factor Fees Factor Charge Prior Costs3 

Credit Factor Years2 

2013 $3.1248 ($0.1958) $3.6582 $0.0605 (0.0073) $6.6404 

2012 $2.8507 ($0.1954) $3.4856 $0.0599 (0.0026) $6.1982 

2011 $3.2053 ($0.1079) $3.2574 $0.0591 (0.0121) $6.4018 

2010 $2.9705 ($0.0816) $3.3536 $0.0618 (0.0012) $6.3031 

2009 $2.8290 ($0.0900) $3.2873 $0.0606 $6.0869 

2008 $2.3740 ($0.0868) $2.8967 $0.0558 $5.2397 

2007 $2.3408 ($0.0790) $2.6839 $0.0550 (0.0021) $4.9986 

2006 $2.1581 ($0.0791) $2.4977 $0.0557 (0.0063) 0.0119 $4.6380 

2005 $2.3990 ($0.0713) $2.8259 $0.0584 (0.0123) 0.1406 $5.3403 

2004 $2.3221 ($0.0689) $2.6993 $0.0578 0.0931 $5.1034 

2003 $2.4736 ($0.0777) $2.6130 $0.0597 $5.0686 

Garcia Dec!.~ 18. 

59. The flight fee has varied over time. At times, the flight fee has increased from 

year to year, and at other times has decreased from year to year. These fluctuations are the result 

of changes in the EWR costs upon which the flight fee is based, in EWR air traffic volume, and 

in the proportion of EWR occupied by the Public Airport Facilities, and the revenue from airport 

parking fees. 

Garcia Dec!.~ 19. 

2 Adjustment made to reflect incorrect reporting of aircraft weights by airlines. 

3 Adjustment made to reflect opportunity costs incurred by the Port Authority in funding 

of Passenger Facility Charge eligible projects whose capital costs were not included in fixed 

charges for flight fee calculation purposes. 

16 
F. RELATIONSIDP OF FLIGHT FEE REVENUE TO EWR OVERHEAD COSTS 

60. The flight fee calculations do not include certain on-airport and off-airport 

overhead costs incurred by the Port Authority in operating EWR. 

(a) The on-airport overhead costs in operating EWR which are not included in 

the flight fee, including rental payments made by the Port Authority to the City of Newark 

pursuant the lease for EWR and on-EWR police, maintenance and operation administrative and 

clerical costs. 

(b) The off-airport indirect overhead costs of operating EWR which are not 

included in the flight fee include: the costs of the Aviation Department's services for all Port 

Authority airports, and the costs of operating the Executive Director's Office, the Secretary's 

Office, Comptroller Department, Law Department, Treasury Department, Human Resources 

Department, and Engineering Department, and all other Port Authority activities of the Port 

Authority located off ofEWR that support EWR operations. 

Garcia Dec!. ~ 28. 

61. The actual amounts of these overhead costs of operating EWR have no effect on 

the flight fee because the flight fee is based on the operation of the formula agreed to between 

the Port Authority and the signatory airlines, which is based solely on those EWR expenditures 

that are enumerated in the calculation of the components of the flight fee, the portion of the 

airport used as Public Aircraft Facilities, and the level ofEWR flight activity for the year in 

which the flight fee is established, as set forth in the relevant agreements. 

Garcia Dec!.~ 29. 

17 
62. Similarly, the flight fee in any one year would be the same irrespective of the 

amount of all Port Authority off-EWR expenditures, whether for -airport overhead costs of 

operating EWR, or for bridges, tunnels, PATH, or any other off-EWR expenditures. 

Garcia Dec!. 1 30. 

G. EWR REVENUE OTHER THAN THE FLIGHT FEE REVENUE. 

63. The Port Authority derives revenue at EWR other than from the flight fees 

collected from scheduled airlines and other aircraft using the PAF. Revenue is derived from 

telecommunications fees, food and beverage rentals, retail percentage rentals, advertising fees 

and rentals, hotel rentals, rental car rentals, cargo handling permit fees, public vehicular parking, 

and aviation fuel gallonage fees. 

Garcia Dec!. 1 31 . 

64. In 2013, flight fees from scheduled aircraft using EWR produced $215,829,770 in 

revenue, but total EWR revenue was $799,553,000. Thus, scheduled aircraft flight fee revenue 

constituted only 27 percent of total EWR revenue. 

Garcia Dec!. 132. 

H. EWR FINANCIAL INFORMATION PROVIDED TO AIRLINES 

65. The flight fee during a calendar year is based on a projection for that year of the 

costs upon which the P AF Factor and the Airport Services Factor are based and a projection of 

the total maximum take-off weight for EWR for that year. As of April30 of the following year, 

the actual costs and the actual total maximum take-off weight for EWR for the previous year are 

calculated, and credits or assessments are issued to the extent required based upon the actual 

costs and flight activity. 

Garcia Dec!. 133. 

18 
66. The estimated and fmal calculations ofEWR flight fees are presented to the EWR 

airlines in writing and in person four times a year: twice in the Spring, and twice in the Fall. 

The first presentation in each Spring and Fall is to the Finance Committee of the EWR airlines, 

and the second presentation, given one month later, is to the EWR airline community at large at 

the EWR Airport Affairs meeting. 

Garcia Dec!. ~ 34. 

67. In each Fall presentation, detailed information concerning the projections up 

which the flight fee will be charged in the next calendar year are presented to affected airlines. 

In each Spring presentation, detailed information concerning the actual cost figures and actual 

total maximum take-off weight for EWR upon which the adjustment for the prior year is based is 

shared with affected airlines. The information presented in these documents includes the 

following: calculations of components of the EWR flight fee; calculations of the separate EWR 

Monorail Fee; and detailed description of cost components of the EWR flight fee, and of the 

separate EWR Monorail Fee. Information regarding Passenger Facility Charge revenues and 

expenditures at EWR and other Port Authority airports is also provided. 

Garcia Dec!. n 35-38; Garcia Dec!. Exs. 1 and 2. 

19 
68. Port Authority staff members respond to questions from airline representatives 

regarding the information presented at the Spring and Fall presentations, and, if necessary, at 

other times during the year. 

Garcia Dec!.~ 39. 

Dated: February 10,2015 

Respectfully submitted, 

Carlene V. Mcintyre 

Arnold D. Kolikoff 

Faith Tabafunda 

Law Department 

The Port Authority of New York and New Jersey 

225 Park Avenue South, 14th Floor 

NewYork,N.Y. 10003 

Telephone: (212) 435-3503 

Attorneys for Respondent 

The Port Authority of New York and New Jersey 

20