[Federal Register Volume 71, Number 167 (Tuesday, August 29, 2006)]
[Proposed Rules]
[Pages 51360-51380]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-7207]



[[Page 51359]]

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Part III





Department of Transportation





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Federal Aviation Administration



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14 CFR Part 93



Congestion Management Rule for LaGuardia Airport; Proposed Rule

Federal Register / Vol. 71, No. 167 / Tuesday, August 29, 2006 / 
Proposed Rules

[[Page 51360]]


DEPARTMENT OF TRANSPORTATION




Federal Aviation Administration

14 CFR Part 93

[Docket No. FAA-2006-25709; Notice No. 06-13]
RIN 2120-AI70


Congestion Management Rule for LaGuardia Airport

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: The FAA is proposing a rule to address the potential for 
increased congestion and delay at New York's LaGuardia Airport 
(LaGuardia) when the High Density Rule (HDR) expires there on January 
1, 2007. The rule, if adopted, would establish an operational limit on 
the number of aircraft landing and taking off at the airport. To offset 
the effect of this limit, the proposed rule would increase utilization 
of the airport by encouraging the use of larger aircraft through 
implementing an airport-wide, average aircraft size requirement 
designed to increase the number of passengers that may use the airport 
within the overall proposed operational limits.

DATES: Send your comments on or before October 30, 2006.

ADDRESSES: You may send comments [identified by Docket Number FAA-2006-
25709] using any of the following methods:
    <bullet> DOT Docket Web site: Go to http://dms.dot.gov and follow 
the instructions for sending your comments electronically.
    <bullet> Government-wide rulemaking Web site: Go to http://www.regulations.gov and follow the instructions for sending your 
comments electronically.
    <bullet> Mail: Docket Management Facility; U.S. Department of 
Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, 
Washington, DC 20590-0001.
    <bullet> Fax: 1-202-493-2251.
    <bullet> Hand Delivery: Room PL-401 on the plaza level of the 
Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
    For more information on the rulemaking process, see the 
SUPPLEMENTARY INFORMATION section of this document.
    Privacy: We will post all comments we receive, without change, to 
http://dms.dot.gov, including any personal information you provide. For 
more information, see the Privacy Act discussion in the SUPPLEMENTARY 
INFORMATION section of this document.
    Docket: To read background documents or comments received, go to 
http://dms.dot.gov at any time or to Room PL-401 on the plaza level of 
the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 
a.m. and 5 p.m., Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Molly W. Smith, Office of Aviation 
Policy and Plans, APO-001, Federal Aviation Administration, 800 
Independence Avenue, SW., Washington, DC 20591; telephone (202) 267-
3275; e-mail <a href="/cdn-cgi/l/email-protection#7f12101313065108510c12160b173f191e1e51181009"><span class="__cf_email__" data-cfemail="d2bfbdbebeabfca5fca1bfbba6ba92b4b3b3fcb5bda4">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 

Comments Invited

    The FAA invites interested persons to participate in this 
rulemaking by submitting written comments, data, or views. We also 
invite comments relating to the economic, environmental, energy, or 
federalism impacts that might result from adopting the proposals in 
this document. The most helpful comments reference a specific portion 
of the proposal, explain the reason for any recommended change, and 
include supporting data. We ask that you send us two copies of written 
comments.
    We will file in the docket all comments we receive, as well as a 
report summarizing each substantive public contact with FAA personnel 
concerning this proposed rulemaking. The docket is available for public 
inspection before and after the comment closing date. If you wish to 
review the docket in person, go to the address in the ADDRESSES section 
of this preamble between 9 a.m. and 5 p.m., Monday through Friday, 
except Federal holidays. You may also review the docket using the 
Internet at the Web address in the ADDRESSES section.
    Privacy Act: Using the search function of our docket Web site, 
anyone can find and read the comments received into any of our dockets, 
including the name of the individual sending the comment (or signing 
the comment on behalf of an association, business, labor union, etc.). 
You may review DOT's complete Privacy Act Statement in the Federal 
Register published on April 11, 2000 (65 FR 19477-78) or you may visit 
http://dms.dot.gov. 
    Before acting on this proposal, we will consider all comments we 
receive on or before the closing date for comments. We will consider 
comments filed late if it is possible to do so without incurring 
expense or delay. We may change this proposal in light of the comments 
we receive.
    If you want the FAA to acknowledge receipt of your comments on this 
proposal, include with your comments a pre-addressed, stamped postcard 
on which the docket number appears. We will stamp the date on the 
postcard and mail it to you.

Availability of Rulemaking Documents

    You can get an electronic copy using the Internet by:
    (1) Searching the Department of Transportation's electronic Docket 
Management System (DMS) Web page (http://dms.dot.gov/search);
    (2) Visiting the FAA's Regulations and Policies Web page at http://www.faa.gov/regulations_policies/; or
    (3) Accessing the Government Printing Office's Web page at http://www.gpoaccess.gov/fr/index.html. 
    You can also get a copy by sending a request to the Federal 
Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence 
Avenue, SW., Washington, DC 20591, or by calling (202) 267-9680. Make 
sure to identify the docket number, notice number, or amendment number 
of this rulemaking.

Authority for This Rulemaking

    The FAA has broad authority under 49 U.S.C. 40103 to regulate the 
use of the navigable airspace of the United States. This section 
authorizes the FAA to develop plans and policy for the use of navigable 
airspace and to assign the use that the FAA deems necessary for its 
safe and efficient utilization. It further directs the FAA to prescribe 
air traffic rules and regulations governing the efficient utilization 
of the navigable airspace. The FAA interprets its broad statutory 
authority to ensure the efficient use of the navigable airspace to 
encompass management of the nationwide system of air commerce and air 
traffic control.
    In addition to the FAA's authority and responsibilities with 
respect to the efficient use of airspace, the Secretary of 
Transportation is required to consider several other objectives as 
being in the public interest, including: Keeping available a variety of 
adequate, economic, efficient, and low-priced air services; placing 
maximum reliance on competitive market forces and on actual and 
potential competition; avoiding airline industry conditions that would 
tend to allow at least one air carrier unreasonably to increase prices, 
reduce services, or exclude competition in air transportation; 
encouraging, developing, and maintaining an air transportation system 
relying on actual and potential

[[Page 51361]]

competition; encouraging entry into air transportation markets by new 
and existing air carriers and the continued strengthening of small air 
carriers to ensure a more effective and competitive airline industry; 
maintaining a complete and convenient system of scheduled air 
transportation for small communities; ensuring that consumers in all 
regions of the United States, including those in small communities and 
rural and remote areas, have access to affordable, regularly scheduled 
air service; and acting consistently with obligations of the U.S. 
Government under international agreements. See 49 U.S.C. 40101(a)(4), 
(6), (10)-(13) and (16), and 40105(b).

I. Background

A. The High Density Traffic Airports Rule at LaGuardia

    The FAA manages congestion and delay at LaGuardia by means of the 
HDR, which is codified under 14 CFR part 93, subpart K. The HDR took 
effect in 1969 as a temporary rule, but since it was effective in 
reducing congestion and delays, it became permanent in 1973.
    The HDR establishes limits on the number of take-offs and landings 
during certain hours at five airports, including LaGuardia.\1\ In order 
to operate during the restricted hours, a carrier needs a reservation, 
commonly known as a ``slot.'' Slots were initially allocated through 
airline scheduling committees, operating under then-authorized 
antitrust immunity, and the airlines would agree to the allocation. 
After the Airline Deregulation Act in 1978, new entrant airlines 
formed, and the pre-existing legacy carriers sought to expand their 
operations. This increased competition made it even more difficult for 
airlines to reach agreement, and the scheduling committees began to 
deadlock.
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    \1\ The limits at Newark were suspended in 1970 and were 
eliminated at Chicago O'Hare International Airport in July 2002.
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    In 1985, a new Subpart S was added to Part 93 by the Department of 
Transportation that established allocation procedures for slots, 
including Use-or-Lose provisions and permission to buy and sell slots 
in a secondary market (50 FR 52195, December 20, 1985). These 
procedures replaced the scheduling committees.
    On April 5, 2000, Congress enacted the Wendell H. Ford Aviation 
Investment and Reform Act of the 21st Century (AIR-21 or the Act). The 
Act phases out the HDR at three of the covered airports, with the rule 
scheduled to terminate at LaGuardia on January 1, 2007. Additionally, 
AIR-21 expanded existing operations at LaGuardia by directing the 
Secretary of Transportation to grant exemptions for certain flights 
from the HDR's operational limits prior to the HDR's termination at 
that airport. Specifically, AIR-21 authorized exemptions for flights 
operated by new entrant carriers or certain flights that would serve 
Small-Hub and Non-Hub Airports as long as the aircraft being used has 
fewer than 71 seats.
    In phasing out the HDR, Congress recognized the possibility that 
there could be an increase in congestion and delay at the affected 
airports. Therefore, under the section that phases out the rule, the 
Act states that ``[n]othing in this section * * * shall be construed * 
* * as affecting the Federal Aviation Administration's authority for 
safety and the movement of air traffic.'' 49 U.S.C. 41715(b).

B. Resurgence of Unacceptable Levels of Congestion at LaGuardia

    As a result of the AIR-21 legislation, the DOT approved more than 
600 exemption requests for flights at LaGuardia. By fall 2000, air 
carriers had added over 300 new scheduled flights at LaGuardia, with 
plans to operate more in the coming months.
    With no new airport infrastructure or air traffic control 
procedures, overall airport capacity remained the same while the number 
of aircraft operations and delays soared. The average minutes of delay 
for all arriving flights at LaGuardia increased 144%: From 15.52 
minutes in March 2000 (the month before AIR-21 was enacted) to 37.86 
minutes in September 2000.\2\ The increase in delay as a result of AIR-
21 was not limited to delays at LaGuardia. Flights that arrived and 
departed late at LaGuardia affected flights at other airports and in 
adjacent airspace as well, and by September 2000, flight delays at 
LaGuardia accounted for 25 percent of the nation's delays, compared to 
10 percent for the previous year.\3\
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    \2\ Source: FAA's Aviation System Performance Metrics (ASPM).
    \3\ Calculated from FAA's Air Traffic Operations Network 
Database (OPSNET).
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    Concerned about the accelerating levels of congestion, flight 
delays, and cancellations and the prospects of reaching gridlock, the 
Port Authority of New York and New Jersey (Port Authority) attempted to 
impose a temporary moratorium on new flights at LaGuardia and requested 
the assistance of the FAA. Using its authority under 49 U.S.C. 40103, 
and pending the development of a longer term solution, the FAA 
published a Notice of Intent in the Federal Register on November 15, 
2000, announcing its intention to temporarily cap AIR-21 slot 
exemptions at LaGuardia and to allocate them via a lottery (65 FR 
69126, November 15, 2000). The lottery, which was conducted on December 
4, 2000, was premised on the imposition of an airfield and airspace 
capacity management limit of 75 scheduled operations per hour (plus 6 
unscheduled operations primarily used by the general aviation 
community) beginning January 31, 2001 (65 FR 75765, December 4, 2000). 
This limit still allowed a significant increase in operations at the 
airport above the regulatory limits, thus serving Congressional 
objectives while stretching capacity to its practical limits. The 
number of AIR-21 slot exemptions at LaGuardia was restricted to a total 
of 159 a day between the hours of 7 a.m. and 9:59 p.m. As a result of 
the hourly restrictions, the average number of aircraft delays at 
LaGuardia fell from 330 per day in October 2000 to 98 per day in April 
2001.
    The December 4, 2000, limits on AIR-21 slot exemptions and the 
lottery allocation has been extended several times to allow the FAA to 
explore other options to control delay at the airport. Most recently, 
the FAA announced in the Federal Register a fourteen months extension 
to the current limits and allocation of slot exemptions at LaGuardia 
through December 31, 2006 (70 FR 36998, June 27, 2005).
    Because LaGuardia airport is relatively close to mid-town 
Manhattan, many travelers prefer it, and airlines wish to meet that 
demand by operating many flights to LaGuardia. LaGuardia Airport 
consistently has been one of most congested airports in the nation. 
These facts, coupled with the inability to expand the physical airspace 
and airfield capacity of the airport, makes LaGuardia one of the most 
constrained airports in our national system. Passenger demand for 
access to LaGuardia exceeds available airspace and airfield capacity at 
the airport. This proposed rule aims to maximize the utilization of 
this airport, without generating unacceptable congestion and delay.

C. Research Into Market-Based and Administrative Alternatives at 
LaGuardia

    Over the past several years, the FAA and the DOT's Office of the 
Secretary of Transportation (OST) have taken a number of steps to 
identify and develop a market-based mechanism to allocate limited 
capacity at LaGuardia.

[[Page 51362]]

    On June 12, 2001, the FAA published a variety of congestion 
management alternatives in the Federal Register, including the use of 
auctions, congestion pricing and administrative alternatives, and 
sought the public's views on the potential use of each of these 
mechanisms at LaGuardia (66 FR 31731). Due to the September 11, 2001, 
terrorist attacks, the immediate need to develop a solution at 
LaGuardia was tempered because of the corresponding decrease in 
passenger demand. The FAA still received a substantial number of 
comments. The comments varied--some supported market-based measures, 
such as congestion pricing, while others recognized that the best 
solution might incorporate administrative allocation mechanisms. The 
FAA and OST have evaluated the comments and considered them in our 
research initiatives. We also have incorporated the views of the 
industry in the development of both this proposal and the legislation 
we intend to seek that would permit a market-based means of controlling 
congestion and delay at LaGuardia.
1. Auction Roundtable
    In July 2004, the FAA held a roundtable to discuss the use of 
auctions to allocate capacity at LaGuardia. The purpose of the 
roundtable was twofold. First, the roundtable exposed senior FAA and 
OST officials to auctions and the issues surrounding their potential 
implementation at LaGuardia. Second, it served as an initial 
stakeholder meeting to seek comment on the possible use of auctions.
    Several participants pointed to issues that would need to be 
addressed prior to implementing an auction of take-off or landing 
authorizations at LaGuardia, including the notion of incumbency; 
associated property rights and their duration, if any; the impact that 
auctions may have on airport revenues; predictability of the auction 
outcome; the impact on small communities; and the financial impact on 
the air carriers and their customers. Because of these concerns, the 
air carriers that participated in the roundtable appeared largely 
unenthusiastic about the potential use of auctions at LaGuardia.
    However, several advantages to an auction also were noted. For 
example, auctions effectively allocate scarce resources under market 
conditions and thus seem less arbitrary in nature than allocating slots 
under an administrative solution (such as a lottery). Another benefit 
to auctions is that they rely on markets, which are more robust and 
responsive to industry changes than administrative regulations. These 
potential benefits have been echoed by the Department of Justice in its 
comments on another congestion management rulemaking involving 
operations at Chicago's O'Hare International Airport. In its comments, 
the Department stated that, ``a well-designed slot auction would both 
assign prices and allocate efficiently scarce airport resources, and 
limit the maintenance or accumulation of market power by individual 
carriers.'' \4\
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    \4\ Comments of the United States Department of Justice in 
Docket No. FAA-2005-20704. May 24, 2005, pp. 11-13.
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    Thus, if the complexities associated with implementing an auction 
at LaGuardia can be resolved, an auction could provide an economically 
efficient mechanism for allocating ``Operating Authorizations'' \5\ at 
the airport in the future.
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    \5\ As proposed, an Operating Authorization is the operational 
authority assigned to an air carrier by the FAA to conduct one 
scheduled IFR arrival or departure operation each week on a specific 
day of the week during a specific 15-minute period at LaGuardia.
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2. Congestion Pricing Forum
    The FAA arranged a forum in February 2005 to explore the use of 
congestion pricing at airports. The series of presentations addressed 
the applicability of congestion pricing to control aviation capacity, 
with a focus on LaGuardia, and included presentations on the 
Massachusetts Port Authority's (Massport) congestion pricing proposal 
for Logan International Airport, as well as highway and energy peak 
period pricing programs. Several participants believed that Massport's 
model could not be successfully deployed at LaGuardia because the level 
of demand at LaGuardia is perceived to be too high to implement a 
revenue-neutral congestion pricing policy, as adopted at Boston Logan 
Airport. However, other participants believed a congestion pricing 
mechanism was feasible and would provide benefits associated with 
allowing the market to allocate capacity without the need for 
government imposed slot restrictions.
3. National Center of Excellence for Aviation Operations Research
    The FAA and OST also contracted with the National Center of 
Excellence for Aviation Operations Research (NEXTOR) to conduct 
research on various proposals to implement at LaGuardia upon the 
expiration of the HDR. As part of that research, NEXTOR has conducted a 
number of strategic simulations with industry in an effort to design 
and assess the potential effectiveness of various allocation 
mechanisms. These mechanisms include auctions, congestion pricing, and 
various administrative measures.
    In November 2004, NEXTOR conducted a 2-day simulation of congestion 
pricing and various administrative measures at LaGuardia. The FAA, OST, 
several industry stakeholders and airlines attended the workshop. The 
simulation measured airline responses to a variety of congestion 
pricing fees and administrative rules.
    In February 2005, NEXTOR conducted a second strategic simulation in 
which it demonstrated how an auction model could be used to allocate 
capacity. The simulation was structured around a mock auction for 
arrival and departure slots at LaGuardia. The purpose of this 
simulation was to familiarize the relevant industry and government 
communities with auction processes and the specifics of modern slot 
auction design. The exercise also elicited views from industry and 
government representatives on the overall policy of using auctions to 
allocate arrival and departure capacity. The feedback gathered during 
this simulation exercise has generated further FAA and OST research on 
auctions. In particular, more work has been done to better anticipate 
the impact of aligning ``slots'' with necessary gate space. 
Additionally, the FAA and OST have worked with NEXTOR to develop 
auction rules that could incorporate exemptions for service to small 
communities.
    This information will also be incorporated in a legislative 
proposal to Congress that will seek authority to utilize market-based 
mechanisms at LaGuardia in the future. Such legislation would be 
necessary to employ market-based approaches such as auctions or 
congestion pricing at LaGuardia because the FAA currently does not have 
the statutory authority to assess market-clearing charges for a landing 
or departure authorization. If Congress approves the use of market-
based mechanisms as we plan to propose, a new rulemaking would be 
necessary to implement such measures at LaGuardia.

II. Continued Need To Limit Operations at LaGuardia

    Today's proposal anticipates the complete phase-out of the HDR at 
LaGuardia on January 1, 2007, as required by AIR-21. In response, the 
FAA could simply allow the HDR to expire and to let events run their 
course without FAA intervention. This approach would permit each 
individual airline to manage (and potentially

[[Page 51363]]

increase) its own flights. Air traffic control procedures and traffic 
management initiatives such as ground delay programs, miles-in-trail 
restrictions, and aircraft re-routing, would help to ensure that any 
additional flights did not affect air safety. However, the congestion 
and delays experienced in the wake of AIR-21 flight additions would 
likely recur if limitations on the hourly operations at LaGuardia were 
not adopted. Indeed, because the delays in late 2000 resulted from just 
two types of operations, it is likely that a complete expiration of the 
HDR would lead to even greater delays absent a regulation designed to 
avert precipitous growth in operations.
    Because the cost of delays is not fully internalized by any 
individual carrier, both experience and theory suggest that without any 
constraint, each carrier would, at least initially, continue adding 
flights despite an unacceptable level of congestion and delay. This was 
precisely the situation in 2000, and the airport cannot accommodate, 
nor can the FAA permit, such unrestrained growth at LaGuardia. Delays 
at LaGuardia have a significant detrimental impact on the rest of the 
national airspace system, leading to nationwide delay and inefficiency. 
Because simply allowing the HDR to expire is not a desirable option at 
LaGuardia, the FAA believes that some regulatory action to limit 
congestion at the airport is necessary.
    LaGuardia cannot realistically expand its runway infrastructure 
because it borders on Bowery Bay and Flushing Bay. Thus, an airport 
expansion project like that proposed for Chicago's O'Hare International 
Airport is not feasible. Because of these groundside constraints, air 
traffic management improvements such as airspace redesign or changes to 
separation standards would permit minimal capacity increases at most. 
Even if these efficiencies can be realized, operating constraints 
likely still will be needed at LaGuardia because of its physical 
limitations, including runway and taxiway constraints.
    The FAA is committed to ensuring that excessive delays and 
congestion do not return at LaGuardia after the HDR expires. The FAA 
and OST are evaluating appropriate market-based mechanisms, such as 
auctions or congestion pricing, for allocating capacity at LaGuardia 
over the long-term. The FAA currently does not have full legislative 
authority to employ such mechanisms at LaGuardia or at other airports, 
although the Port Authority could currently implement revenue-neutral 
congestion pricing or other mechanisms regarding operating rights so 
long as such changes did not require a fee or assessment by the Federal 
Government and the Port Authority's program otherwise would be 
reasonable, nonarbitrary and nondiscriminatory; would not create an 
undue burden on interstate or foreign commerce; would maintain the safe 
and efficient use of the navigable airspace; would not conflict with 
any existing Federal statute or regulation including Federal grant 
agreements; and would not create an undue burden on the national 
aviation system. As discussed above, Massport has developed a revenue-
neutral congestion pricing program for use at Boston's Logan airport; 
\6\ however, we do not believe that a revenue-neutral policy would be 
effective at LaGuardia. The demand for access at LaGuardia is so high 
that carriers may simply pay any fee imposed in a revenue-neutral model 
rather than changing their practices.
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    \6\ The FAA has not had the occasion to issue a final opinion on 
Massport's program since the program has not yet been implemented.
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    Consequently, we are seeking the legislative authority to conduct 
auctions or congestion pricing at LaGuardia in the future. If Congress 
approves the use of market-based mechanisms, a new rulemaking would be 
necessary to implement such measures at LaGuardia.
    The FAA has broad authority under 49 U.S.C. 40103 to regulate the 
use of the navigable airspace of the United States. This authority is 
exclusive to the FAA. Section 40103 authorizes the FAA to develop plans 
and policy for the use of navigable airspace and to assign the use that 
the FAA deems necessary to its safe and efficient utilization. It 
further directs the FAA to prescribe air traffic rules and regulations 
governing the efficient utilization of the navigable airspace. The FAA 
interprets its broad statutory authority to ensure the efficient use of 
the navigable airspace to encompass management of the nationwide system 
of air commerce and air traffic control. AIR-21, while phasing out the 
HDR, did not strip the FAA of its authority to place operating 
limitations on air carriers to preserve the efficient utilization of 
the National Airspace System (NAS). Indeed, the FAA has, out of 
necessity, restricted the number of exemptions to the HDR since 2001 at 
LaGuardia, and no one has challenged its authority to do so at that 
airport.
    In addition to the FAA's authority and responsibilities over the 
efficient use of airspace, the Secretary of Transportation is required 
to consider several other objectives as being in the public interest, 
including: Keeping available a variety of adequate, economic, 
efficient, and low-priced air services; placing maximum reliance on 
competitive market forces and on actual and potential competition; 
avoiding airline industry conditions that would tend to allow at least 
one air carrier unreasonably to increase prices, reduce services, or 
exclude competition in air transportation; encouraging, developing, and 
maintaining an air transportation system relying on actual and 
potential competition; encouraging entry into air transportation 
markets by new and existing air carriers and the continued 
strengthening of small air carriers to ensure a more effective and 
competitive airline industry; maintaining a complete and convenient 
system of scheduled air transportation for small communities; ensuring 
that consumers in all regions of the United States, including those in 
small communities and rural and remote areas, have access to 
affordable, regularly scheduled air service; and acting consistently 
with obligations of the U.S. Government under international agreements. 
See 49 U.S.C. 40101(a)(4), (6), (10)-(13) and (16), and 40105(b).

III. Summary of Proposed Rule

    The FAA proposes to cap hourly operations at LaGuardia. Under the 
proposed rule, the FAA would limit the number of scheduled flight 
arrivals and departures at LaGuardia Monday through Friday from 6:30 
a.m. to 9:59 p.m. and Sunday from noon to 9:59 p.m. Similar limits 
would be placed on unscheduled arrivals and departures, excluding 
helicopters, conducted under instrument flight rules (IFR). The FAA 
would create ``Operating Authorizations'' according to the hourly limit 
on operations of 75 scheduled operations and 6 ``Reservations'' for 
unscheduled operations. The Operating Authorizations would be allocated 
to carriers at the airport based on historic usage subject to 
adjustments required to meet the proposed limits. The Operating 
Authorizations would be allocated in 15-minute increments (i.e., 6:30 
a.m. through 6:44 a.m., 6:45 a.m. through 6:59 a.m.), with specified 
arrivals and departures, in order to minimize congestion from schedule 
peaking. The FAA believes that the relationship of schedule peaks and 
delays at LaGuardia is particularly significant since the current 
airport demand approaches the airport's optimal, good weather capacity. 
Reservations would be allocated on a half-hourly basis using a 
reservation system similar to the one currently in effect for 
unscheduled flights at the high density airports, Chicago O'Hare 
International Airport,

[[Page 51364]]

and at airports under special traffic management programs, whereby an 
operator may obtain a Reservation beginning 72 hours in advance of the 
proposed operation.
    To encourage efficient use of scarce airspace, holders of Operating 
Authorizations would be required to meet an airport-wide average 
aircraft size target annually. Passenger demand for access to LaGuardia 
airport exceeds the number of passengers being accommodated today. 
Although the airport cannot currently, or in the foreseeable future, 
accommodate a greater number of flight operations, the airport's 
terminal and other groundside facilities could accommodate a greater 
number of passengers on the existing number of flights.
    The use of commuter equipment (aircraft with fewer than 71 seats) 
arriving at LaGuardia from medium and large hub airports has increased 
by more than 50 percent since August 2001.\7\ This trend has resulted 
in the underutilization of airport facilities at LaGuardia.
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    \7\ Source: OAG, August 2001 and August 2005.
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    For example, on April 19, 2005, there were 16 flights to Baltimore, 
MD (a large hub) on aircraft with an average of 38 seats. Similarly, on 
the same day, there were 44 operations to Raleigh-Durham, NC (medium 
hub) on aircraft with an average of 50 seats, and 20 flights to 
Philadelphia, PA (large hub) on aircraft with an average of 58 seats. 
While we recognize that service to non-hub and Small-Hub Airports may 
only support commuter aircraft, serving medium and large hub airports 
repeatedly throughout the day with the smaller gauge aircraft does not 
maximize passenger throughput or the use of a constrained resource. For 
this reason, the proposed rule explicitly encourages the use of larger 
aircraft within the constrained operating environment.
    Through this rule the FAA therefore proposes to encourage airlines 
to use larger aircraft, on average, than are being operated at the 
airport now (and in the recent past) so that a larger share of consumer 
demand will be satisfied. Compliance with the airport-wide target would 
be enforced through a Use-or-Lose provision, which would require 
carriers to report the average number of seats offered on all non-
exempt Operating Authorizations each year.\8\ Each carrier's annual 
``average seat size'' would have to be equal to or greater than the 
airport-wide target or the FAA would withdraw Operating Authorizations 
from the carrier. The FAA first would withdraw the Operating 
Authorization(s) operated using the smallest aircraft. The number of 
Operating Authorizations withdrawn would depend on how far off the 
target the carrier's operations were over the preceding year. If 
removing one Operating Authorization was sufficient to raise the 
carrier's average seat size to the target level, only that Operating 
Authorization would be withdrawn. If more withdrawals were needed in 
order to meet the target, additional Operating Authorizations would be 
withdrawn until the target was met.\9\
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    \8\ Average seat size would be equal to the total number of 
seats offered over the year divided by the total Operating 
Authorization days in the year. For further detail on the average 
seat size calculation see the ``Use or Lose Requirements'' section 
in the pages below.
    \9\ For example, if the airport-wide target was 100, and a 
carrier's average seat size over all its Operating Authorizations 
was 99 seats then the air carrier would not have met the ``target'' 
and FAA would withdraw the Operating Authorization(s) that used the 
smallest aircraft. If one Operating Authorization was withdrawn and 
the air carrier's average aircraft size was re-calculated to equal 
100 seats or more, that carrier would only lose a single Operating 
Authorization. If the re-calculation did not result in an average 
aircraft size of 100 seats or more, the FAA would withdraw a second 
Operating Authorization. This process would be repeated until the 
carrier's average aircraft size was equal to or greater than the 
``target.''
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    While an important goal of this rule is to promote efficiency at 
LaGuardia, another objective is to avoid the elimination of service to 
the small and non-hub communities that rely on service at the airport. 
Accordingly, the FAA proposes that Operating Authorizations used for 
service to certain small and non-hub communities are exempt from the 
target aircraft size requirement.
    The proposed rule would assign expiration dates to all Operating 
Authorizations. Operating Authorizations would be allocated in 2007 
with expiration dates ranging from 2010 through 2019. As Operating 
Authorizations expire they would be reallocated with a renewed life 
span of ten years. Establishing a finite lives for Operating 
Authorizations can improve efficiency at LaGuardia over time by 
encouraging all airlines to maximize the use of a scarce resource and 
to maximize their investment at the airport. The authorization's finite 
life would influence carriers to recognize the present value of 
operating at LaGuardia because an Operating Authorization ultimately 
expires, at which point it would be worth nothing to the existing 
holder. If a carrier is not able to use an Operating Authorization 
profitably, the carrier may sell the authorization on the secondary 
market rather than hold the authorization and operate it at a loss. 
This incentive, coupled with the Use-or-Lose provision which enforces 
usage of Operating Authorizations, would promote efficient use of 
scarce airport resources because the carriers that value them the most 
will use the Operating Authorizations.\10\
---------------------------------------------------------------------------

    \10\ The FAA has also proposed a congestion management rule at 
Chicago O'Hare (Docket No. FAA-2005-20704). This proposed rule 
differs from that which was proposed at O'Hare because the 
operational characteristics at LaGuardia and O'Hare are 
significantly different. The primary differences between these two 
proposed rules are (1) that the rule at LaGuardia would not be 
temporary (as is anticipated at O'Hare) because increased capacity 
is not expected at LaGuardia, (2) Operating Authorizations at 
LaGuardia would expire and be reallocated, and (3) air carriers 
would be required to meet an airport-wide ``target'' aircraft size 
at LaGuardia.
---------------------------------------------------------------------------

IV. The Proposal To Limit Operations at LaGuardia

A. Initial Allocation of Operating Authorizations

    Upon expiration of the HDR on January 1, 2007, slots will no longer 
exist at LaGuardia. Under today's proposed rule, the FAA would place an 
hourly cap on operations at LaGuardia to prevent unacceptable delay 
that would impact the National Airspace System. The proposed number of 
operations is consistent with the cap that has been in place since 
January 2001--75 scheduled operations per hour. The FAA's procedures 
for allocating AIR-21 slot exemptions since January 31, 2001, 
accommodate some new entrant carriers' operations above the hourly 
limit. Under this proposed rule, these operations would be 
``grandfathered'' within the allocated hour. However, any Operating 
Authorizations that revert to the FAA in those hours would be moved to 
an hour with fewer than 75 operations prior to reallocation and 
assigned within the adopted 15 and 30 minute limits. Arrival and 
departure authorizations would be distributed in fifteen-minute time 
increments, and Reservations would be limited to six per hour.
    The existing cap at LaGuardia represents the FAA's estimate of the 
maximum number of operations that can be accommodated at the airport 
with its current configuration and without causing excessive additional 
congestion and delay. The FAA is not proposing to increase the cap at 
this time, because it is premised on favorable weather conditions. 
Furthermore, even with the existing cap of 75 scheduled and 6 
unscheduled operations per hour, LaGuardia has consistently been one of 
the top five delayed airports in the United States. In fiscal year 
2005, LaGuardia ranked as the third most delayed airport in the

[[Page 51365]]

nation, with only 71 percent of operations arriving on time.\11\
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    \11\ Source: ASPM. The Inspector General's FY 2006 Top 
Management Challenges also recently highlighted the fact that 
LaGuardia Airport is severely delayed. The report points out that in 
the summer of 2005 LaGuardia Airport ranked as the fifth most 
delayed airport in terms of percentage of delayed flights and had 
the longest average minutes of delay, with an average of 70.03 
minutes of delay (p. 23).
---------------------------------------------------------------------------

    Operating Authorizations and Reservations would not be required on 
Saturdays or Sunday mornings, as there is a significant drop in traffic 
on those days, and we have not experienced nor do we expect to 
experience excessive congestion during those times. However, the FAA 
would consider additional rulemaking to cap operations on those days if 
traffic and delays become unacceptable.
    Although operations would be kept at the current level of service 
at LaGuardia, the FAA would have the authority under this proposal to 
retain expired and returned Operating Authorizations, or to retime them 
to less congested periods, if necessary to reduce congestion and 
delays. Operational or navigational improvements could mitigate the 
need to retain or retime expired or returned Operating Authorizations, 
and the FAA believes that such efficiency enhancements may be possible. 
However, this authority would enable the FAA to take appropriate action 
against growing delay and to manage capacity over the life of this 
rule.\12\
---------------------------------------------------------------------------

    \12\ The FAA has determined that delays are not so excessive 
that it is necessary to reduce the hourly cap at the airport at the 
outset of this proposed rule but there would be some schedule 
depeaking required to meet the proposed 15-minute limits. If the FAA 
reduced hourly operations, this would impede current service levels 
and disadvantage the carriers as well as the traveling public.
---------------------------------------------------------------------------

1. ``Grandfather'' Provision
    Operating Authorizations initially would be grandfathered to each 
carrier at LaGuardia operating slots and slot exemptions based on 
schedules as of October 1-6, 2006, provided that the published 
schedules are consistent with the 15 and 30 minute limits in this 
proposal. Since carriers are currently able to schedule flights anytime 
within the 30-minute slot window, these schedules may contribute to the 
current congestion and delays at the airport because this practice 
occasionally allows operations to exceed the airport's capacity. This 
is particularly apparent in the peak morning and early evening periods. 
Further, because we will use October 1-6, 2006, schedules, which are 
not currently finalized, there is potential for the 15-minute schedule 
peaks to increase. One objective of this rule is to improve operational 
performance at the airport, and we do not believe it would be prudent 
to grant historic status to schedule levels that are not realistic.
    While one way to improve performance would be to reduce the 
permitted number of hourly scheduled and/or unscheduled operations, we 
are proposing instead to spread demand in certain peak periods. If it 
is necessary to de-peak the October 1-6, 2006 schedules to meet the 15 
and 30 minute limits in this proposal, we do not propose to require any 
carrier to reduce overall hourly operations below its initial base or 
to operate in a different hour from the hour allocated under the HDR. 
To achieve the necessary de-peaking, the FAA proposes to call for 
voluntary measures to reallocate the grandfathered Operating 
Authorizations to less congested time periods within the same hour or 
proposes an administrative mechanism such as a lottery. We seek comment 
on these options.
    In the event that the HDR expires prior to the publication of a 
Final Rule, the FAA would continue to rely on the October 1-6, 2006 
timeframe as the basis for future grandfathering of aircraft Operating 
Authorizations. If a carrier were using a slot that is ``held'' by 
another carrier, the Operating Authorization would be grandfathered to 
the carrier that actually holds the slot.\13\ Alternatively, if a 
carrier were using a slot that is held by an entity that is not a 
certificated carrier, the operating carrier would be grandfathered the 
Operating Authorization. The FAA proposes grandfathering operating 
rights to carriers in an effort to preserve service to communities with 
existing service at LaGuardia and to minimize disruption at the airport 
and to the traveling public. Although the initial ``grandfathering'' of 
Operating Authorizations to incumbent carriers does not provide new 
entrant carriers with immediate access to the airport, other aspects of 
this rule, such as finite Operating Authorization lives, would give 
those carriers not already operating at LaGuardia access to the airport 
as Operating Authorizations expire and are reallocated.
---------------------------------------------------------------------------

    \13\ A slot ``holder'' is the air carrier that has operational 
authority, assigned by the FAA, to conduct scheduled arrival or 
departure operations at LaGuardia on a particular day of the week 
during a specific time of the day. Each FAA slot under the HDR has 
both a ``holder'' status and an ``operator'' status. The ``holder'' 
status typically reflects long-term slot rights and does not need to 
be an air carrier. The ``operator'' status reflects which particular 
carrier is authorized to utilize a slot on a particular day. 
Operator status commonly differs from holder status to reflect the 
assignment of slots to a commuter affiliate or partner airline, the 
lease or transfer of slots for a defined period of time, or one for 
one trades or swaps of slots with other carriers to accommodate 
schedule changes.
---------------------------------------------------------------------------

2. Finite Operating Authorizations
    Under the proposed rule, Operating Authorizations would have finite 
lives. Operating Authorizations would be allocated initially in 2007 
with an expiration date ranging from the year 2010 through 2019. The 
initial authorizations would be distributed based on actual operations 
and FAA slot allocation records for LaGuardia by scheduled carriers as 
of the week October 1-6, 2006. Operating Authorizations would then be 
divided into regular Operating Authorizations and Operating 
Authorizations that are exempt from the minimum airport seat targets. 
Each authorization would then be assigned an expiration date using the 
method discussed below (see ``Schedule of Expiration Dates for 
Grandfathered Operating Authorizations''). The method for determining 
when initial allocations expire would ensure that the expiration of 
Operating Authorizations is evenly distributed among all carriers so 
that no carrier loses a disproportionate number of Operating 
Authorizations at any one time.
    Operating Authorizations that are initially allocated in 2007 would 
be granted a life of three to thirteen years. The fourth year after the 
rule is in effect (2010), 10 percent of the authorizations would expire 
and be reallocated with a renewed ten-year life. Each year thereafter, 
10 percent of the Operating Authorizations would expire and be 
reallocated for 10 years.
    This reallocation approach should encourage dynamic access to air 
services at LaGuardia. Determining the percentage of capacity that 
should be subject to reallocation annually requires establishing a 
balance between exposing airport access to market forces, providing 
access for new entrants, and preserving stability at the airport. The 
first three years after the initial grandfathering in 2007 would 
provide incumbent carriers with a degree of certainty regarding 
operations at the airport. The FAA believes that after 2009, use of 
ten-year operating lives would strike an appropriate balance between 
very large annual withdrawals of Operating Authorizations (which could 
make it less attractive for carriers to develop service at the airport) 
and very slow (or no) turnover of Operating Authorizations (which could 
result in barriers to entry to the airport). Operating Authorizations 
need to expire at varying times so that air service at LaGuardia 
remains stable even as some authorizations are subject to reallocation. 
We expect that any

[[Page 51366]]

reallocation process adopted through subsequent rulemaking would 
provide sufficient lead time for an orderly schedule planning process 
by the impacted carrier(s). We invite comments and analysis on the 
appropriate lifespan of Operating Authorizations.
    If carriers were granted perpetual operating rights they may not 
have sufficient incentive to sell or lease Operating Authorizations on 
the secondary market to a competitor placing a higher value on their 
use. The expiration and reallocation of Operating Authorizations should 
drive carriers to maximize the value of their authorization because the 
authorization would no longer represent an infinite investment 
interest. The revolving allocation process also would provide new 
entrant airlines and incumbent airlines wishing to expand service at 
LaGuardia the opportunity to acquire Operating Authorizations at 
LaGuardia because there would be a new stock of authorizations 
available each year after 2010. Establishing finite life for Operating 
Authorizations also meets the Department's mandate of ``placing maximum 
reliance on the competitive market forces and on the actual and 
potential competition in airline markets.'' \14\
---------------------------------------------------------------------------

    \14\ Federal Register, Vol. 70, No. 57 page 15523: ``Congestion, 
Delay Reduction and Operating Limitations at Chicago O'Hare 
Airport.''
---------------------------------------------------------------------------

    The first Operating Authorizations would not expire at LaGuardia 
until 2010. The FAA is planning to seek legislative authority to 
provide the opportunity for market-based solutions to address 
congestion at LaGuardia. Should the agency receive this authority, a 
market-based process would be the agency's preferred reallocation 
methodology, and we would issue a proposed rule to implement measures 
for redistributing expired Operating Authorizations at that time.
3. Schedule of Expiration Dates for Grandfathered Operating 
Authorizations
    On January 1, 2007, when the Operating Authorizations initially are 
allocated to the carriers, the FAA also would establish a schedule for 
when each Operating Authorization would expire. This procedure for 
assigning rolling expiration dates would only occur one time, at the 
initial grandfathering of Operating Authorizations, because as the 
grandfathered Operating Authorizations expire each one would be 
reallocated with a 10-year life.
    All ``grandfathered'' Operating Authorizations would have a minimum 
life of 3 years. Beginning in 2010, 10 percent of the total Operating 
Authorizations allocated to all carriers would be withdrawn annually 
and then redistributed. The life of each ``grandfathered'' Operating 
Authorization, anywhere from three to 13 years, would be determined 
using the methodology explained below.
    Under the expiration schedule, each carrier's holdings of Operating 
Authorizations would satisfy two conditions: (1) The average ``life'' 
of the Operating Authorizations would be approximately the same for all 
carriers; and (2) expiration of Operating Authorizations would be 
staggered so that no carrier would lose a disproportionate number of 
Operating Authorizations in a given time period.
    In order to assign expiration dates to ``grandfathered'' Operating 
Authorizations the FAA would segregate each carrier's schedule. Non-hub 
and Small Community Operating Authorizations (service to Small-Hub or 
Non-Hub Airports) would be separated from the other Operating 
Authorizations. All Operating Authorizations would be assigned a 
scheduled expiration date, but segregating the authorizations should 
ensure that a disproportionate number of Small Community Operating 
Authorizations do not expire any given year.
    Each carrier would be entitled to authorization life (beyond 2009) 
on average equal to 5.5 years for the Operating Authorizations that 
they hold. The average life of Operating Authorizations would be equal 
to 5.5 years because that is the arithmetic mean between one and ten 
years of life beyond 2009. (If Operating Authorizations expired over 20 
years then 5 percent of the Operating Authorizations would expire each 
year and the average ``life'' of an Operating Authorization would be 
10.5 years.) \15\ The expiration dates of the authorizations in each 
quarter-hour would be assigned as follows:
---------------------------------------------------------------------------

    \15\ For 10 year Operating Authorizations the average ``life'' 
would be 5.5 years. The average ``life'' is calculated as follows: 
(Year 1*10%) + (year 2*10%) + (year 3*10%) + (year 4*10%) + (year 
5*10%) + (year 6*10%) + (year 7*10%) + (year 8*10%) + (year 9*10%) + 
(year 10*10%) = 5.5 years (the first Operating Authorizations expire 
in 2010 so their ``life'' after 2009 is zero years. The last 
Operating Authorizations to expire from the initial grandfathering 
will expire in 2019 so their ``life'' is ten years.
---------------------------------------------------------------------------

    (1) The number of Operating Authorizations is equal to the average 
number of ``slot and slot exemption'' operations held under the HDR in 
each quarter-hour time period;
    (2) The average remaining years of life (beyond 2009) for all 
authorizations is roughly 5.5 years; and
    (3) The total years of remaining life among all authorizations 
would be distributed so that 10 percent of the total Operating 
Authorizations at the airport expire each year.
    The following example illustrates how an individual carrier's 
Operating Authorizations would be assigned expiration dates in each 
quarter-hour time period.

                                       Allocation Carrier A's Commercial Operating Authorization Expiration Dates
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Time window                                     9:00-9:14                       . . .                      14:00-14:14
--------------------------------------------------------------------------------------------------------------------------------------------------------
Carrier A's Operating Authorization (OA)                         4 OAs                        .......                        2 OAs
 Holdings.
 
Expiration Dates.........................  OA 1--expiration in 2 years.                       .......  OA 1--expiration in 2 years.
                                           OA 2--expiration in 3 years.                                OA 2--expiration in 9 years.
                                           OA 3--expiration in 8 years.                                .................................................
                                           OA 4--expiration in 9 years.                                .................................................
                                           Average = 5.5 years.                               .......  Average = 5.5 years.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In this example, Carrier A has 4 slots in the 9:00 to 9:14 time 
period and 2 slots in the 14:00-14:14 time period. The carrier would 
initially be grandfathered these 6 operations (in the same time 
periods) as Operating Authorizations under this rule. On average, these 
new authorizations would have 5.5 years of life remaining after 2009. 
An equitable allocation for this carrier's 9:00-9:14 Operating 
Authorizations that would average 5.5 years of life would be the 
following years of remaining life beyond 2009: 2, 3, 8, and 9. In this 
case the four

[[Page 51367]]

operating authorizations would expire at the end of 2011, 2012, 2017, 
and 2018. Likewise, an equitable allocation for Carrier A's 14:00-14:14 
Operating Authorizations would be 2 years and 9 years; therefore these 
Operating Authorizations would expire in 2011 and 2018.\16\ It should 
be noted that the allocation in this case would depend on: (1) 
Satisfying this carrier's existing number of both arrival and departure 
authorizations in each quarter-hour of the day; (2) satisfying all 
other carriers' existing operations in that quarter-hour; and (3) 
ensuring that 10 percent of all authorizations expire each year. The 
FAA is developing a programming tool to solve this allocation 
process.\17\
---------------------------------------------------------------------------

    \16\ This illustration provides one possible distribution of 
expiration dates for the given Operating Authorizations although not 
the only possible expiration schedule; several combinations of 
expiration dates could generate the same ``remaining life'' outcome 
of 5.5 years.
    \17\ Anomalies could occur in order to balance these criteria. 
Rather than 10% of Operating Authorizations expiring in a particular 
quarter hour it might be 10% plus or minus 1% in order to get the 
proper total integrated number of Operating Authorizations.
---------------------------------------------------------------------------

    The same process would be repeated in order to assign expiration 
dates to the Non-hub and Small Community Operating Authorizations.
    The programming tool would use two objective functions to guide the 
allocation process. The first measures the discrepancy between the 
total of all authorization lifetimes allocated to each carrier in a 
quarter-hour and a presumed preferred distribution based on that 
carrier's current holdings. The second measures the discrepancy between 
the total of all authorization lifetimes allocated to each carrier over 
the entire day and the presumed preferred total for the day. By 
defining two objective functions the procedure is able to compensate in 
a later period for any discrepancies from the ideal in an earlier 
period.

B. Congestion Management Upgauging Rule at LaGuardia

1. Average Aircraft Size
    To encourage efficient use of scarce air traffic system capacity at 
LaGuardia, the FAA, in consultation with the Port Authority, intends to 
set an airport-wide target for the average aircraft size used by 
carriers on scheduled Operating Authorizations. The size of an aircraft 
would be measured by the number of seats that are offered for sale on 
the aircraft. The target for average fleet seat capacity would be based 
on a passenger throughput target for the airport, based on the 
limitations on various terminal and ground facilities to handle 
passengers. Thus, the target would be based on engineering measures of 
the capacities of the ground facilities. The target would be phased in 
so that carriers at LaGuardia would have sufficient time to make 
adjustments to their fleets and service routes. The target also needs 
to be consistent with safety issues associated with runway length, 
takeoff performance, and landing performance.
    The proposed target would range from 105 seats to 122 seats per 
aircraft depending on which alternatives for the proposed exemptions 
for Non-Hub and Small-Hub Airport services is adopted, as explained 
below in the discussion of more options. On January 1, 2008, one year 
after the Final Rule is in effect, carriers would have to report their 
use of Operating Authorizations over the preceding year.\18\ However, 
the ``target'' would not be enforced until the following year, January 
1, 2009. At that point, any carrier that fails to meet the ``target'' 
would be subject to the provisions outlined in the Use-or-Lose 
requirement. The FAA believes that this phase-in period provides 
carriers a sufficient amount of time after publication of the Final 
Rule to adjust their operations as necessary to meet the airport-wide 
target. An FAA required average aircraft size target would encourage 
efficient use of the airport facilities by increasing passenger 
throughput at LaGuardia and by providing incentives for more efficient 
use of the airport's physical infrastructure.
---------------------------------------------------------------------------

    \18\ Reporting requirements are discussed in the Use-or-Lose 
section in the pages below.
---------------------------------------------------------------------------

    The preference for larger aircraft is a special approach to a 
unique situation at LaGuardia. Demand at LaGuardia exceeds the 
airport's capacity for flight operations throughout the day, and there 
is no prospect for any significant increase in capacity for aircraft 
operations at the airport because of its physical limitations. On the 
other hand, the airport's groundside facilities can handle more 
passengers than now use the airport.\19\ Promoting larger aircraft is 
the only means to increase passenger access to LaGuardia. Accordingly, 
in these limited circumstances, the increase in passenger throughput 
can be considered as a measure of efficiency of the use of airspace, 
and is within the FAA's authority under 49 U.S.C. 40103(b) to establish 
regulations for the efficient use of airspace.
---------------------------------------------------------------------------

    \19\ According to the Port Authority's 2004 Airport Traffic 
Report, 24.5 million domestic and international passengers flew 
through LaGuardia in 2004. In various forums the Port Authority has 
indicated that approximately 28.5 million passengers could be 
accommodated at the airport on existing facilities and 
infrastructure.
---------------------------------------------------------------------------

    The upgauging policy proposed for LaGuardia is based on the FAA's 
authority for efficient management of airspace under 49 U.S.C. 40103. 
This limited application of an upgauging policy under the FAA's 
airspace management authority is unrelated to airport proprietary 
authority. The FAA's exercise of its statutory authority for efficient 
airspace management does not affect the obligation of airport sponsors 
under Airport Improvement Program (AIP) sponsor assurances to provide 
access to all types, kinds, and classes of aeronautical use on 
reasonable and not unjustly discriminatory terms.
    The average aircraft size target would be monitored on an annual 
basis, which would afford carriers the business flexibility to meet the 
overall average fleet goal with whatever combination of aircraft they 
determine is right for each route and service over the course of the 
year. Each year, carriers would be required to operate, on average, 
aircraft with at least as many seats as specified by the target 
aircraft size or they would lose one or more Operating Authorizations.
    Every twelve months, the FAA, after consultation with the Port 
Authority, would re-evaluate the target and modify it as necessary to 
account for changes in the airport's operations or modifications to the 
capacity at the airport. For example, if gate usage requirements change 
or airport infrastructure is developed that allows more efficient use 
(e.g., terminal modifications), the target could be adjusted upward. In 
fact, the effectiveness of this rule could be augmented by sponsor gate 
use policies that maximize the potential of the infrastructure. 
Alternatively, if the operations at the airport were negatively 
impacted due to an overly optimistic target, the FAA would have the 
ability to adjust the target downward. Because the target affects 
carrier planning of fleet mix, routes, staffing requirements, and gate 
usage, the FAA would limit target increases to no greater than a 3-seat 
increase in any year.\20\ On the other hand, a decrease in the 
``target'' would likely only occur if it were necessary to correct 
unforeseen problems that result from an inflated ``target.'' Carriers 
would not be penalized from operating aircraft that are larger than the 
airport-wide target, so a decrease in the target

[[Page 51368]]

is not expected to have a negative impact on carriers.
---------------------------------------------------------------------------

    \20\ An annual increase to the target aircraft size of up to 3 
seats per year provides sufficient flexibility to adjust the target, 
if necessary. If it were determined that a more significant target 
increase were appropriate in any given year, FAA would publish the 
proposed target increase in the Federal Register and seek comments 
on the proposed target.
---------------------------------------------------------------------------

    To assess the impact of upgauging at LaGuardia, NEXTOR has 
conducted simulations that examine the behavior of the airport runway, 
taxiway, and gate operations in the presence of a ``high-demand'' 
schedule when 25 percent of the regional jets are upgauged to narrow-
body jets. By extending several Official Airline Guide (OAG) schedules 
to a representative ``high-demand'' arrival and departure schedule, 
NEXTOR analyzed the impact of upgauging using Total Airport & Airspace 
Modeler (TAAM) for LaGuardia. Experts from the FAA air traffic control 
tower and representatives from the Port Authority validated the 
operational assumptions regarding gate, taxiway, and runway utilization 
parameters used in the TAAM simulation model. Results show that 
representative upgauging by the airlines from regional jets to narrow-
body jets could result in increased passenger throughput without 
negative impact on LaGuardia airport operations, flight delays or 
passenger delays.
2. Services Not Subject to the Average Aircraft Size Target
    a. Baseline Operations. Each carrier would be granted a 
``baseline'' of up to 10 Operating Authorizations per day that would 
not be subject to the target aircraft size requirement in this proposed 
rule.\21\ The FAA has tentatively determined that each carrier should 
be assessed a minimum number of takeoffs and landings that are not at 
risk should its overall operations not meet the airport-wide target. 
While that number should be sufficiently large to permit minimal fleet 
and route flexibility, it should not overshadow the goal of increased 
throughput. A baseline of 10 Operating Authorizations per day should 
provide carriers with a stable base of operations, minimizing the 
disruption on carrier schedules and operations at the airport while not 
compromising the goal of increased passenger throughput at the airport. 
Each year, carriers would notify FAA which of their Operating 
Authorizations they intend to designate as ``baseline'' operations, and 
these operations would not be subject to the target and Use-or-Lose 
provisions of the rule based on average aircraft size target.
---------------------------------------------------------------------------

    \21\ Carriers that have 10 or fewer Operating Authorizations 
would not be subject to the airport target since all their Operating 
Authorizations would be considered ``baseline'' operations.
---------------------------------------------------------------------------

    A baseline is particularly important for carriers that have 
operated at LaGuardia for decades and developed their networks to 
include service at the airport. Similarly, carriers with limited 
ability to adjust their fleet size would be assured that their baseline 
operations would not be at risk of being withdrawn for non-compliance 
with the target aircraft size requirement. New entrants and carriers 
with a limited number of Operating Authorizations at LaGuardia may not 
have much fleet versatility at the airport, particularly if they do not 
have excess over-night parking and gate space that can be used to 
interchange aircraft. Although the airport target would not bind 
baseline operations, carriers would not be restricted from operating 
aircraft equal to or larger than the target aircraft size with these 
baseline Operating Authorizations.
    b. Non-Hub and Small-Hub Airport Services. While a primary goal of 
this rule is to promote efficient use of the airport, the DOT's mandate 
to consider the public interest requires us to encourage the 
maintenance of scheduled services to small communities. Congress 
recognized this public interest when it required exemptions from the 
HDR in AIR-21 for small community service. Because regular demand to 
and from LaGuardia from these communities may not be sufficient for a 
carrier to meet the airport-wide target,\22\ some type of relief may be 
needed.
---------------------------------------------------------------------------

    \22\ Operations to these communities are typically on smaller-
sized aircraft.
---------------------------------------------------------------------------

    In an effort to preserve service to these communities, the FAA is 
proposing to create a separate pool of Operating Authorizations, to be 
used to provide service to non-hub and small-hub communities, that 
would be excepted from the target aircraft size requirement. Unlike the 
HDR or the AIR-21 slot exemption provisions, air carriers would not be 
limited to operating aircraft of a certain size.\23\ Instead, carriers 
with Non-Hub and Small-Hub Airport operations would have the 
flexibility to fly aircraft of whatever size they want to these 
communities.
---------------------------------------------------------------------------

    \23\ There are several HDR slot categories that limit aircraft 
size. For example, Commuter Turboprop Slots require aircraft with 
less than 75 seats; Commuter Turbojet Slots limit seats to 55 or 
less; and AIR-21Small Hub/Non-Hub Airport exemptions require 
aircraft with 70 seats or less.
---------------------------------------------------------------------------

    The FAA requests comments on the relative merits of three non-hub 
and small-hub options, as well as any combination of the three:
    (1) The FAA would create a pool of Operating Authorizations for 
service to Non-Hub Airports. These Operating Authorizations would be 
excused from the target aircraft size requirement. The pool of non-hub 
Operating Authorizations would be based on the service level to Non-Hub 
Airports during the week of October 1-6, 2006; although any Non-Hub 
Airport would be eligible for service under this target exemption.\24\
---------------------------------------------------------------------------

    \24\ A Non-Hub Airport is a commercial service airport that has 
more than 10,000 annual passenger boardings but less than 0.05% of 
the total United States annual passenger boardings.
---------------------------------------------------------------------------

    (2) The FAA would create a pool of Operating Authorizations for 
service to Non-Hub Airports and all Small-Hub Airports within 300 miles 
of LaGuardia \25\ (``Local Small Communities''). These Operating 
Authorizations would not be subject to the target aircraft size 
requirement. The pool of Non-Hub and Local Small Community Operating 
Authorizations would be based on the service level to Non-Hub and Local 
Small Communities during the week of October 1-6, 2006. However, any 
Non-Hub Airport Small-Hub Airport within 300 miles of LaGuardia would 
be eligible for service under this target exemption.
---------------------------------------------------------------------------

    \25\ Small-Hub Airports are locations with at least .05%, but 
less than .25% of annual passenger boardings. Small Hub Airports 
that are within 300 miles of LaGuardia and have existing service 
include: Albany, Burlington, Portland, Richmond, Rochester, 
Syracuse, and Newport News/Williamsburg. Source: T-100 Data, April 
2004-March 2005.
---------------------------------------------------------------------------

    (3) The FAA would create a pool of Operating Authorizations for 
service to Non-Hub Airports, Small-Hub Airports that have existing 
service at LaGuardia, and Small-Hub Airports within 300 miles of 
LaGuardia (``Local Small Communities''). The pool of Non-Hub and Local 
Small Community Operating Authorizations would be based on the service 
level to Non-Hub and Small-Hub Airports during the week of October 1-6, 
2006. However, any Non-Hub Airport or Small-Hub Airport would be 
eligible for service under this target exemption.
    Under the first option, the FAA would exclude operations arriving 
and departing from Non-Hub Airports from the proposed target aircraft 
size requirement. The number of Operating Authorizations that would be 
excluded from the target for Non-Hub Airport service would be based on 
level of operations to non-hub cities during the week of October 1-6, 
2006.\26\ Although we cannot fully anticipate what may be the level of 
operations for October 1-6, 2006, we believe the levels during the 
twelve month period of April 2004 through March 2005 are 
representative. Over the twelve-month period of April 2004 through 
March 2005 there was an

[[Page 51369]]

average of forty-five operations arriving and departing to Non-Hub 
Airports per day.\27\ Although the pool of Operating Authorizations 
that would be excluded from the target aircraft size requirement would 
remain fixed, any Non-Hub Airport could be served through these target 
exclusions. Additional flights to or from these non-hub cities (beyond 
the fixed number of Operating Authorizations that are excluded from the 
target) would be subject to the target aircraft size requirement. This 
approach maintains a level of service to Non-Hub Airports (that 
typically do not support operations on large aircraft) while preserving 
the possibility for other Non-Hub Airports that do not currently have 
service at LaGuardia to gain this same access to the airport.
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    \26\ Nantucket, Bangor, Charlottesville, Hyannis, Wilmington, 
Ithaca, Lebanon, and Martha's Vineyard are Non-Hub Airports with 
existing service at LaGuardia. Source: T-100 Data, April 2004-March 
2005.
    \27\ Source: T-100 Data, April 2004-March 2005.
---------------------------------------------------------------------------

    The pool of Operating Authorizations that would be excluded from 
the target for service to non-hub communities would be allocated in the 
same manner as the other Operating Authorizations. Air carriers 
currently providing service to non-hub communities would be allocated 
Operating Authorizations for ``Non-hub'' service at the October 1-6, 
2006, level. If an air carrier with a Non-hub Operating Authorization 
wanted to sell or lease the Operating Authorization in the secondary 
market, it could do so, but the Operating Authorization would have to 
be sold or leased as a ``Non-hub'' Operating Authorization. Therefore, 
the pool of ``Non-hub'' exemptions would remain fixed throughout the 
life of the rule.
    The second option is similar to the first; however, it provides a 
larger pool of Operating Authorizations that would be excused from the 
average aircraft size target. The pool of Operating Authorizations in 
this option would be equivalent to the October 1-6, 2006, level of 
service to Non-Hub Airports and to Small-Hub Airports within 300 miles 
of LaGuardia.\28\ Over the twelve-month period of April 2004 through 
March 2005 there was an average of 121 operations arriving and 
departing to these airports per day.\29\ Although the pool of exempt 
Operating Authorizations would be fixed to October 1-6, 2006, level of 
service, air carriers could use these Non-hub and Local Small Community 
Operating Authorizations to provide service to any Non-Hub Airport or 
any Small-Hub airport within 300 miles of the airport; they would not 
be restricted to serving just the non-hub and small-hub cities that 
have service at LaGuardia as of October 1-6, 2006.\30\
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    \28\ Small Hub Airports that are within 300 miles of LaGuardia 
and have existing service include: Albany, Burlington, Portland, 
Richmond, Rochester, Syracuse and Newport News/Williamsburg. (Non-
Hub Airports with existing service are listed in footnote above). 
Source: T-100 Data, April 2004-March 2005.
    \29\ Source: T-100 Data, April 2004-March 2005.
    \30\ FAA believes that there is merit in preserving nonstop 
service to non and small hub cities within 300 miles of LaGuardia. 
If passengers in these cities had to make a connection in order to 
fly into LaGuardia, they likely would fly further away from 
LaGuardia to reach the connecting airport.
---------------------------------------------------------------------------

    However, as under the first option, the number of target-exempt 
flights to Non-hubs and Local Small Communities would be limited to the 
number of Operating Authorizations in the Non-hub and Local Small 
Community pool. Additional flights to or from these cities would be 
subject to the seat size requirement of this rule.
    Because the pool of Non-hub and Local Small Community Operating 
Authorizations would remain fixed, if an air carrier wanted to start 
new service to a qualified Small or Non-Hub Airport it could do so 
using these excluded Operating Authorizations, but it would have to 
forego another Non-Hub or Small-Hub Airport. As a result, the amount of 
service to or from a particular non-hub or small-hub community might 
vary over time, but the total number of exempt operations to such 
communities would remain the same.\31\
---------------------------------------------------------------------------

    \31\ Non Hub and Small Hub Operating Authorizations could only 
be used for service to qualifying airports; service to medium and 
large hubs would not be permitted with this pool of Operating 
Authorizations.
---------------------------------------------------------------------------

    Operating Authorizations for service to non-hub and Local Small 
Communities would be allocated in the same manner as described in the 
first option. Similarly, if an air carrier wishes to sell or lease a 
Non-hub and Small Community Operating Authorization on the secondary 
market, it would be leased or sold as such.
    The third exemption option would provide the greatest number of 
exemptions to small and non-hub communities. The FAA would exempt 
flights to all Non-Hub Airports, all Small-Hub Airports that have 
service at LaGuardia as of October 1-6, 2006, and any Small-Hub 
Airports within 300 miles of LaGuardia.\32\ Operating Authorizations 
would be ``grandfathered'' to carriers that provide service to these 
airports as October 1-6, and the transfer of these Non-hub and Local 
Small Community Operating Authorizations in the secondary market would 
be subject to the same type of restrictions as described in the two 
previous alternatives. The total number of such exemptions would be 
fixed but the number of operations to any one Non-Hub or Small-Hub 
Airport might vary over time.
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    \32\ The following non hub and small hub airports have existing 
service to and from LaGuardia: Nantucket, MA; Bangor, ME; 
Charlottesville, VA; Hyannis, MA; Wilmington, NC; Ithaca, NY; 
Lebanon, NH; Martha's Vineyard, MA; Albany, NY; Burlington, VT; 
Portland, ME; Richmond, VA; Rochester, NY; Syracuse, NY; Newport 
News/Williamsburg, VA; Birmingham, AL; Columbia, SC; Akron/Canton, 
OH; Charleston, SC; Dayton, OH; Greensboro, NC; Greenville-
Spartanburg, SC; Lexington Blue Grass, KY; Myrtle Beach, SC; 
Roanoke, VA; Savannah, GA; Knoxville, TN; and Fayetteville, AR. 
Source: T-100 Data, April 2004-March 2005.
---------------------------------------------------------------------------

    The pool under this third exemption option would be equal to the 
October 1-6, 2006, level of service from LaGuardia to Non-Hub and 
Small-Hub Airports. Over the twelve-month period of April 2004 through 
March 2005 there was an average of 200 operations arriving and 
departing to these airports per day.\33\ This approach would maximize 
service to small communities, but could remove as much as 30 percent of 
the overall fleet from the population of aircraft required to meet a 
minimum average seat size.\34\ In order to increase passenger 
throughput, the airport-wide target may be so large as to be 
impractical because the higher the airport-wide target, the more gate 
limitations (certain gates can only accommodate small to medium sized 
aircraft). Additionally, the FAA is aware that fewer markets support 
operations on large aircraft than on small-medium sized aircraft.
---------------------------------------------------------------------------

    \33\ Source: T-100 Data, April 2004-March 2005.
    \34\ This Non Hub and Small Hub option would provide the 
greatest number of target-exemptions for service to small 
communities (approximately 200 per day). These Non Hub and Small 
Community Operating Authorizations combined with the target-
exemptions for ``baseline'' operations would equate to approximately 
30% of the Operating Authorizations at the airport.
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    The FAA seeks comment on the merits and practicality of the three 
non-hub and small-hub exemption alternatives outlined above. We want to 
make clear in any event that we are not proposing to limit service to 
non-hub or small communities with aircraft meeting the targeted size.
3. Calculation of the Average Aircraft Size Target
    The airport-wide target for the average aircraft size at LaGuardia 
is dependent on which of the Non-hub and Small-hub alternatives is 
ultimately adopted in the Final Rule. The target would vary because the 
number of exempt Operating Authorizations is different in each 
scenario. The first scenario, which only provides target exemptions for 
Non-Hub Airports, would produce the lowest airport-wide target since 
there would only be a limited number of

[[Page 51370]]

Operating Authorizations exempt from the target. Alternatively, the 
third scenario, which would also exempt all Small-Hub Airports that 
have existing service at LaGuardia and Local Small Communities, 
produces the largest target because roughly 30 percent of the daily 
operations would be removed from the target requirement at the airport. 
The targets under each of these three scenarios are presented in the 
table below.
    The FAA computed the target aircraft size for LaGuardia using an 
airport passenger throughput target, as determined by the Port 
Authority, of 28.5 million passengers per year.\35\ T-100 data from 
April 2004 through March 2005 reports roughly 372,000 commercial 
operations over the twelve-month period.\36\ In order to calculate the 
target size, the FAA assumed the number of commercial operations at 
LaGuardia would remain constant at 75 per hour. Using T-100 data to 
track historic usage patterns and service routes, the FAA has 
tentatively determined that the following airport-wide targets are 
appropriate, depending on which small community exemption alternative 
is ultimately adopted. Currently, aircraft operating at LaGuardia have 
98 seats, on average.

    \35\ The Port Authority has indicated that passenger demand for 
access to the airport is forecasted at 30 million annual passengers 
(FAA's Terminal Area Forecast (TAF) concurs that passenger demand at 
LaGuardia will reach 30 million annual passenger in the next couple 
of years). However, landside limitations on the terminals and 
roadways of the airport restrict passenger throughput to 
approximately 28.5 million passengers per year.
    \36\ Part 121 and scheduled Part 135 departure data is submitted 
by carriers to the Office of Airline Information (OAI) within the 
Bureau of Transportation Statistics (BTS) under 14 CFR Parts 241 and 
298, respectively. The airlines submit the data on Form 41, Schedule 
T-100 `` U.S. Air Carrier Traffic and Capacity Data By Nonstop 
Segment and On-flight Market and Form 41, Schedule T-100 (f)--
Foreign Air Carrier Traffic and Capacity Data by Nonstop Segment and 
On-flight Market.
---------------------------------------------------------------------------

Option 1: Non-Hub Airports and up to 10 Baseline Operations per Carrier 
would be Exempt
    Target Average Aircraft Size = 105 Seats
Option 2: Non-Hub Airports, Small-Hub Airports < 300 Miles and up to 10 
Baseline Operations per Carrier would be Exempt
    Target Average Aircraft Size = 116 Seats
Option 3: Non-Hub Airports, Small-Hub Airports with Existing Service, 
Small-Hub Airports < 300 Miles and up to 10 Baseline Operations per 
Carrier would be Exempt
    Target Average Aircraft Size = 122 Seats

    The FAA seeks comments on each of the non-hub and small-hub 
exemption alternatives and the corresponding airport-wide targets.
4. Use-or-Lose Requirements 
    a. Use-or-Lose Requirement Based on Average Aircraft Size. The FAA 
is proposing a requirement to obtain compliance with the ``target'' 
aircraft size requirement at the airport. The FAA would administer the 
requirement on an annual basis. Carriers would be required to submit 
annual reports of usage, including a record of (1) the FAA assigned 
priority number, time, and arrival or departure designation; (2) the 
operating carrier; (3) the aircraft-type; (4) the number of passenger 
seats on the aircraft for each operation; (5) the date and time of each 
of its operations using an Operating Authorization, including flight 
number, and origin/destination; and (6) the average number of seats 
flown for all operations over the year. Statistics on the use of 
baseline authorizations and target exclusions for service to Non-Hub 
and Small-Hub Airports would be required in the report, although the 
number of seats flown on these operations would not be included in the 
carrier's average seat size calculation. The annual report would be due 
to the FAA no later than March 1st of each year, starting March 1, 
2008.
    The average seat size would be computed by totaling the number of 
seats flown over the year (on each Operating Authorization, excluding 
baseline operations and operations that serve Non-Hub and Small-Hub 
Airports), divided by the total number Operating Authorization 
days.\37\ Operating Authorizations that are not used on any given day 
would be presumed to have a zero seat capacity.\38\ A carrier's average 
number of seats on all Operating Authorizations combined during the 
year must meet the annual airport-wide for the carrier to be in 
compliance with the utilization requirement.\39\
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    \37\ Operating Authorization days would be Monday through Friday 
and Sunday afternoons.
    \38\ Because unused Operating Authorizations must be included in 
the average seat size calculation the Use-or-Lose requirement 
ensures Operating Authorizations are used and not sitting idle.
    \39\ The following example illustrates the average seat size 
computation for an air carrier that holds three evening Operating 
Authorizations that are not excluded from the target.
    Each year there would be approximately 313 Operating 
Authorization days for each of the Operating Authorizations (365 
days -52 Saturdays).
    *If the carrier offered a total of 33,000 seats over the year on 
the first Operating Authorization the average seat size on that 
Operating Authorization would be: 33,000/313 days = 105 seats per 
aircraft;
    *If the carrier offered a total of 40,000 seats over the year on 
the second Operating Authorization the average seat size on that 
Operating Authorization would be: 40,000/313 days = 128 seats per 
aircraft; and
    *If the carrier offered 27,000 seats over the year on the third 
Operating Authorization the average seat size on that Operating 
Authorization would be: 27,000/313 days = 86 seats per aircraft.
    *The air carrier's average seat size over all three Operating 
Authorizations would be equal to: 100,000 seats/939 Operating 
Authorization Days = 107 seats per aircraft.
---------------------------------------------------------------------------

    If a carrier fails to meet the average seat size requirement for 
the year, it would be required to give up sufficient Operating 
Authorization(s) beginning with those that use the smallest average 
aircraft size until the remainder meet the target from the preceding 
year. (If two or more Operating Authorizations have the same average 
aircraft size and are tied as having the smallest average seat size, 
the carrier could chose which of those Operating Authorization(s) would 
be withdrawn unless the FAA determines that there is an operational 
need to withdraw one Operating Authorization over another.) The FAA 
would provide 45 days notice to the carrier prior to withdrawing 
Operating Authorization(s). The Use-or-Lose requirement would be waived 
during the Thanksgiving, Christmas, and New Year's holiday periods. The 
Use-or-Lose requirement could also be waived during a strike, or in 
other circumstances outside a carrier's control, as determined by the 
FAA.
    b. Use-or-Lose Requirement for ``Baseline'' and `` Small 
Community'' Operating Authorizations. The FAA believes that a minimum 
usage requirement is appropriate for Operating Authorizations excluded 
from the target aircraft requirement. Although these operations are not 
subject to the upgauging aspect of the rule, these resources should be 
used effectively. Depending on which non-hub and small-hub exemption 
scenario is selected in the final rule, a significant number of 
Operating Authorizations may not be subject to the airport-wide target. 
Therefore, the omission of a Use-or-Lose requirement on these exempt 
Operating Authorizations as well as the Baseline Operations would pose 
a risk that a sizable number of Operating Authorizations could be used 
inadequately.\40\
---------------------------------------------------------------------------

    \40\ It should be noted that several airlines that responded to 
the Chicago O'Hare Notice of Proposed Rulemaking (Docket No. FAA-
2005-20704) supported a Use-or-Lose requirement at O'Hare when 
presented with the option of not having a usage requirement at the 
airport. It was generally suggested that a minimum usage requirement 
should be included to prevent carriers from retaining Arrival 
Authorizations for which they have no use.

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[[Page 51371]]

    The FAA proposes to adopt a Use-or-Lose provision that would 
require air carriers to utilize each authorization they hold at least 
80 percent of the time over a two-month reporting period. Any Operating 
Authorization used less frequently would be withdrawn after notice to 
the holder. Under this alternative, the 80 percent usage requirement 
would apply only during the restricted hours (i.e. Saturdays and Sunday 
mornings would be excluded from the usage requirement). The 
Thanksgiving, Christmas, and New Year's holiday periods could also be 
excluded. The Use-or-Lose requirement would also be waived during a 
strike, or in other circumstances as determined by the FAA.
    This proposed Use-or-Lose requirement mirrors one of the minimum 
usage alternatives presented in the Chicago O'Hare NPRM and widely 
supported by the commenters. Nevertheless, FAA seeks comment regarding 
the appropriate minimum usage requirement for Operating Authorizations 
that are not subject to the aircraft size target at LaGuardia.
5. Lottery for the Reallocation of Certain Operating Authorizations
    The FAA is proposing to implement a weighted lottery for 
reassigning authorizations that are returned to the FAA, withdrawn as a 
result of failing to meet the usage requirements under the Use-or-Lose 
provision of the rule, or not assigned by the FAA as part of the 
initial allocation. Under this system, each carrier's weight in the 
lottery would be inversely proportional to the carrier's share of total 
operations at LaGuardia. If a potential new entrant wishes to 
participate in the lottery, its weight would equal that of a carrier 
with a single roundtrip flight at the airport.
    An inversely weighted lottery would provide preferences to carriers 
that do not have a presence at LaGuardia and to those carriers with a 
limited number of Operating Authorizations at the airport.\41\ This 
approach meets the Secretary of Transportation's public interest 
objectives by keeping available a variety of adequate, economic, 
efficient, and low-priced air services; placing maximum reliance on 
competitive market forces and on actual and potential competition; 
encouraging entry into air transportation markets by new and existing 
air carriers; and continuing to strengthen small air carriers to ensure 
a more effective and competitive airline industry. See 49 U.S.C. 
40101(a)(4), (6), (10)-(13) and (16), and 40105(b). To further these 
goals and to assure efficient and effective use of the authorizations, 
Operating Authorizations obtained through a weighted lottery may not be 
bought, sold, leased, or otherwise transferred until one year has 
elapsed from their assignment.
---------------------------------------------------------------------------

    \41\ This lottery differs from that which was proposed in the 
congestion management rule at Chicago's O'Hare. The lottery to 
reallocate withdrawn operations at O'Hare would consist of two 
rounds. In the first round, only new entrants and limited incumbents 
would be permitted to participate. In the second round any remaining 
Arrival Authorizations would be assigned by lottery to incumbent 
carriers at O'Hare.
    The lottery proposed herein for LaGuardia also provides a 
preference for limited incumbents and new entrants, but does not 
preclude incumbent carriers from participating in the first round of 
the lottery. Since this proposed rule is expected to have a longer 
duration than that which was proposed at O'Hare, the FAA determined 
that it is important to implement a lottery that provides all 
carriers access to reallocated/withdrawn Operating Authorizations.
---------------------------------------------------------------------------

    An inverse lottery disadvantages those carriers with the largest 
presence at LaGuardia because they will always be less likely to win an 
Operating Authorization than other carriers with a smaller presence. 
However, an inverse lottery is appropriate in this limited circumstance 
because under our proposal the incumbent carriers at the airport would 
have already received numerous Operating Authorizations in the initial 
allocation process.
    This lottery approach is limited to Operating Authorizations that 
are lost via the Use-or-Lose provision or are otherwise returned to the 
FAA for non-use and to any Operating Authorizations that are not 
assigned by the FAA as part of the initial allocation. Those Operating 
Authorizations that revert back to the FAA as a function of the 
Operating Authorizations' finite life are not impacted by this lottery. 
The method for reallocating expired Operating Authorizations has not 
been decided; however, the FAA preliminarily finds that an inverse 
lottery would not be appropriate for reallocation. The FAA believes it 
may be unfair to impose an inverse lottery on those withdrawals because 
the incumbent carriers would repeatedly be penalized as the lowest 
weighted lottery participant.
    The following provides an illustration of how weights would be 
assigned to each carrier in the lottery if there were three carriers 
participating in the lottery. Assume Carrier A has 50 Operating 
Authorizations, Carrier B has 20 Operating Authorizations, and Carrier 
C has 10 Operating Authorizations, for a total of 80 Operating 
Authorizations.

Carrier A's share is 50/80 = 0.600
Carrier B's share is 20/80 = 0.250
Carrier C's share is 10/80 = 0.125

    The inverse of each carrier's market share determines each 
carrier's weight in the lottery. Thus:

Carrier A's weight in the lottery is: 1 / 0.6 = 1.67
Carrier B's weight in the lottery is: 1 / 0.25 = 4.0
Carrier C's weight in the lottery is: 1 / 0.125 = 8.0

    Each carrier's odds of winning the lottery are a function of their 
weight in the lottery. In this example, Carrier A holds the greatest 
number of Operating Authorizations at LaGuardia, and therefore has the 
lowest odds of winning the lottery. The odds that each carrier would 
win are as follows:

Carrier A's chances of winning are 1.67 / 13.67 = 12.22%
Carrier B's chances of winning are 4 / 13.67 = 29.26%
Carrier C's chances of winning are 8 / 13.67 = 58.52%

    If a new entrant carrier, Carrier D, also enters the lottery it 
would be assigned a weight as if it had one round trip flight (2 
Operating Authorizations) at the airport. The odds that each carrier 
would win are adjusted as follows:
    Total weight in the lottery would be increased to 13.67 + 40 = 
53.67 \42\, so:

    \42\ Carrier D's weight in the lottery is calculated as follows:
    Carrier D's share = 2 Operating Authorizations/80 Operating 
Authorizations = .025.
    Carrier D's weight in the lottery = 1/.025 = 40.

A's chances of winning are 1.67 / 53.67 = 3.1%
B's chances of winning are 4 / 53.67 = 7.5%
C's chances of winning are 8 / 53.67 = 14.9%
D's chances of winning are 40 / 53.67 = 74.5%

    Alternatively, the FAA is considering permitting the sale of 
Operating Authorizations that would otherwise be withdrawn or returned 
in a blind secondary market. This approach has the benefit of not 
penalizing, even marginally, carriers with sizeable Operating 
Authorizations because their acquisition opportunity would not be 
hampered by their existing holdings. However, this mechanism would not 
provide any advantage for new carriers or for those carriers with only 
a few Operating Authorizations.
    Under the blind secondary market scenario, if a carrier did not 
meet the target aircraft size requirement, the FAA would provide 45 
days advance notice to the carrier that it has failed to meet the usage 
requirement and an Operating Authorization(s) was to be withdrawn. The 
Operating Authorization would then be posted for sale in the blind

[[Page 51372]]

auction (see details of Alternative 1 in the Secondary Market 
discussion below). Proceeds of a sale would go to the airline that lost 
the Operating Authorization and any unsold Operating Authorizations 
would revert to the FAA and be reallocated in a lottery.
    The FAA requests comments on the relative merits of these two 
reassignment methodologies for withdrawn Operating Authorizations.

C. Commercial Options for Carriers

1. Secondary Market
    Under the HDR, the Department received complaints about the buy/
sell process as it was implemented. The rule permitted the buyer and 
seller to deal directly with each other. Incumbent carriers would 
refuse to sell to a new entrant or a competitive airline according to 
the reports received by the Department, raising concerns with the 
``transparency'' \43\ of the existing secondary market. There was no 
requirement for the seller to advise parties that slots were available, 
limiting opportunity for other carriers to make an offer for the slot. 
Finally, the terms of a transaction were not disclosed making it more 
difficult to develop future bidding strategies, which may have included 
cash and non-cash assets.
---------------------------------------------------------------------------

    \43\ ``Transparency means that the identity of buyers and 
sellers is known. Transparency in the secondary market permits 
strategic sales, leases, and purchases by incumbents to prevent new 
entry.'' Comments of the United States Department of Justice in 
Docket No. FAA-2005-20704. May 24, 2005, pp. 5-9.
---------------------------------------------------------------------------

    The Department of Justice submitted comments in the O'Hare 
rulemaking, which supported the use of a blind market or a non-
transparent market, because the secondary markets at LaGuardia and 
O'Hare under the HDR have not been ``sufficiently liquid.'' \44\ A 
blind secondary market effectively eliminates non-cash assets to be 
bid. We acknowledge that a proposal to prohibit the use of non-monetary 
considerations in transactions involving Operating Authorizations may 
be unpopular.\45\ Cash equivalent consideration allows the buyer of an 
Operating Authorization to offer items that may be mutually beneficial 
and less ``cost'' than cash. Perhaps, given the industry's liquidity 
problems and the operational needs of carriers at various airports, an 
airline selling or buying an Operating Authorization ought to be able 
to accept or offer non-monetary consideration (i.e. services, ground 
handling) as part of the bid. By opening the auction to pledges of 
assets other than money, we would widen the auction market to cash-
strapped airlines.
---------------------------------------------------------------------------

    \44\ Id.
    \45\ We learned under the O'Hare rulemaking that most commenters 
believe that each carrier should be allowed to consider the value of 
specific gates, baggage handling, marketing arrangements, and other 
potential offers in lieu of cash.
---------------------------------------------------------------------------

    Nevertheless, we are concerned that the uniqueness of non-monetary 
assets, such as baggage handling and marketing arrangements, would 
effectively undermine any form of a ``blind'' secondary market. The 
inclusion of non-monetary assets would make it virtually impossible to 
hide identities during the bid evaluation process. In order for the 
buyer to put together an attractive package and assign a value to non-
cash assets, the seller must be known. Similarly, a seller cannot 
assess the value of an asset if it does not know who is specifically 
offering the asset and how the asset would be transferred. Furthermore, 
if non-cash assets are pledged, the parties would want to negotiate 
terms, including but not limited to, the terms of any warranties, 
approval and agreement enforceability, and damages for any breach of 
the agreement. It is unreasonable to assume that the FAA, or any other 
entity, could independently appraise the value of a package for the 
buyer or seller. In fact, the FAA would not be in a position to judge 
the value of an offer to the selling carrier since that involves access 
to the carrier's strategic plan and internal documents that would not 
be readily available.
    We are seeking comment on three alternative secondary market 
provisions for this proposed rule. Differences under each proposed 
alternative include whether the sale or lease is blind and whether non-
cash assets could be included in the buyers' bids.
    <bullet> Alternative 1 would be a blind, cash-only secondary 
market. The identity of the seller and the bidders would be maintained 
until the seller accepts the highest bid at the close of the auction. 
Sellers would be expected to close the sale in good faith regardless of 
whom the buyer may be.
    <bullet> Alternative 2 would permit non-cash assets to be bid, and 
the parties identities would be known throughout the process. When the 
FAA posted notice of the sale of an Operating Authorization, the seller 
would be identified. As each bid was posted, the identity of the 
bidders would be disclosed. Consideration for the transaction could be 
any combination of money, real property and non-monetary assets. An 
estimated value of these assets would have to be provided under each 
bid. Because the FAA would not be in a position to deem what bid is of 
highest value to the seller, all bids would be posted at the close of 
each day. Within five business days of the close of the auction, the 
seller, in good faith, would have to identify to the FAA which bid is 
most competitive. The seller and buyer then would have 10 business days 
to negotiate the provisions of the sale.
    <bullet> Alternative 3 is a hybrid of the first two alternatives 
described above. This option provides for up-front anonymity and cash-
only bids, but it would eventually allow the parties to negotiate non-
cash terms. During the posting of the sale or lease and the subsequent 
bidding of an Operating Authorization, the party's identities would not 
be known. Once the auction closed, the FAA would forward the highest 
bid to the seller without any bidder identification. The seller would 
have three business days to accept the bid. The parties' identities 
would then be revealed, and they would have 10 business days to 
negotiate the possibility of non-cash assets in lieu of money as 
consideration for the sale or lease. If, however, the parties did not 
come to agreement on the non-cash assets, sale or lease of the 
Operating Authorization would have to proceed on a cash-only basis.
    The advantage of Alternative 3 is that it responds to concerns that 
the buy/sell arrangements that currently occur under the HDR are too 
transparent; thereby allowing incumbent carriers to fence out new 
entrants or other airlines that could pose a competitive threat. At the 
same time, it releases restrictions on the use of non-monetary 
considerations. Again, because of the uniqueness of non-monetary 
assets, the identity of the buyer and seller eventually have to be 
disclosed so that they can come to terms on the possible non-cash 
aspects of the package. If, however, the parties cannot come to 
agreement on non-monetary consideration, both parties are fully 
expected to follow through on the transaction on a cash-only basis. 
While this may mean that cash-strapped carriers without the credit-
worthiness to obtain liquidity on a secured or unsecured basis would 
not be able to participate in the process because they risk having to 
come up with 100% cash, it does allow for some flexibility.
    Under either Alternatives 2 or 3, we would preclude the direct 
trading in gate leasehold interests. Under the terms of the FAA-airport 
grant assurances, airports have agreed to make their facilities 
available for public use under reasonable terms and conditions.\46\ 
This assurance obligates an airport to make its facilities available to 
a requesting carrier, whether an incumbent carrier that is seeking to 
expand at the airport

[[Page 51373]]

or a new entrant seeking access. By facilitating requested 
accommodations, an airport is able to provide opportunities for airline 
competition and thereby confer benefits on the traveling public and 
help to stimulate economic growth. Since gates are a necessary part of 
access, the FAA expects airports to assert and maintain control over 
each airline's use of and leasehold interests in the gates and to 
notify all interested carriers when a gate is underutilized or 
otherwise becomes available. Implementing fair and transparent 
procedures for gate access assures that dominant carriers do not 
control access to the airport to the exclusion of competitors. We 
believe that permitting a carrier to trade its gate leasehold rights 
for an operating authorization at LaGuardia would diminish the control 
of the airport operator over its facilities and could denigrate 
competitive opportunities at the airport served by the bidding airline.
---------------------------------------------------------------------------

    \46\ 49 U.S.C. 47107(a).
---------------------------------------------------------------------------

    The general process under any of the alternatives would be as 
follows:
    The FAA would serve as the clearinghouse through which sales and 
leases of Operating Authorizations are completed, which would address 
complaints by some airlines and other entities that under the HDR, they 
were not even aware of opportunities to purchase or lease slots.\47\ A 
carrier wishing to sell, lease or buy an Operating Authorization would 
notify the FAA of the relevant details--the Operating Authorization 
number, time, frequency, expiration date and effective date the 
Operating Authorization would transfer to the winning bidder--and the 
FAA would post advance notice of the opening and closing dates for bids 
to all airlines and afford all airlines an equal opportunity to bid. A 
Small Community Operating Authorization must be sold, bought and leased 
as a Small Community Operating Authorization. Selling carriers may also 
provide the FAA with a minimum bid price, which the FAA would post.
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    \47\ The DOT has docketed three petitions on this subject in 
recent years. Dockets OST-2004-18586, OST-2002-13650, and FAA-2001-
9156. The petitions are available for review on the DOT's Web site.
---------------------------------------------------------------------------

    Carriers would be permitted to continue bidding until the closing 
date of the auction. To insure against participants bidding at the last 
moment (known as ``bid-sniping''), the ``winning'' bidder must 
participate in the bidding from the first day of the auction, rather 
than submitting a bid in the final minutes before the bidding is 
closed.\48\ In order to qualify, bids must meet the minimum price if 
one is specified. The FAA proposes that each auction would last for 3 
business days. Upon acceptance of a bid and ratification of the sale or 
lease, both airlines would have to submit the necessary information to 
the FAA for transfer of the Operating Authorization in a timely manner. 
A record of each sale and lease would be kept on file by the FAA and be 
available to the public upon request. Only airlines would be allowed to 
participate in this market. The FAA welcomes comments from the public 
on these or other appropriate auction design features.\49\
---------------------------------------------------------------------------

    \48\ Requiring the winning bidder to participate in all rounds 
of the auction encourages sincere bidding.
    \49\ The secondary market that is being proposed for use at 
LaGuardia differs somewhat from the blind secondary market that was 
proposed at Chicago O'Hare because the proposed rule at LaGuardia 
will be permanent and the O'Hare rule is scheduled to sunset in 
2008. We believe that it is appropriate to implement a more 
sophisticated auction-style secondary market at LaGuardia 
considering the long-term nature of the rule.
---------------------------------------------------------------------------

2. One-for-One Trades
    In addition, the proposed rule would permit the one-for-one 
exchange of Operating Authorizations between airlines so long as no 
additional consideration was provided. Under the proposal, these 
exchanges must be publicly disclosed and could take place outside of 
the secondary market because many of these arrangements are for 
operational reasons and could be accomplished only through multi-
carrier trades. Such exchanges would be an effective way to deal with 
variations in seasonal demand and airline business strategies. The 
authorizations could not be used until written confirmation of the 
transaction is received from the FAA. Both parties would have to attest 
that no other consideration or promise of consideration was provided by 
either party to the trade.

D. Unscheduled Operations

    The FAA is proposing to implement a Reservation system for 
unscheduled operations to ensure that demand is spread reasonably 
throughout the day to support the FAA's established operational cap for 
scheduled and unscheduled flights.\50\ Therefore, the FAA proposes a 
limit of 6 unscheduled operations per hour between the hours of 6:30 
a.m. and 9:59 p.m. The FAA recognizes that there is often greater 
flexibility in the timing of these flights and there are many factors 
that impact the proposed time of these unscheduled flights. The FAA 
believes that a half-hour allocation period would be appropriate and 
proposes to limit Reservations in each half-hour period to no more than 
3 operations (arrivals and departures).
---------------------------------------------------------------------------

    \50\ Unscheduled operations are operations other than those 
regularly conducted by a carrier between LaGuardia and another 
service point. The unscheduled operations include general aviation, 
public aircraft, military, charter, ferry, and positioning flights. 
(An air carrier also could use an Operating Authorization for a 
ferry, positioning, or other non-revenue flight. An air carrier may 
choose to do so if a Reservation is not available.) Helicopter 
operations are excluded from the reservation requirement. 
Reservations for unscheduled flights operating under visual flight 
rules (VFR) are granted when the aircraft receives clearance from 
air traffic control to land or depart LaGuardia. Reservations for 
unscheduled VFR flights are not included in the limits for 
unscheduled operators.
---------------------------------------------------------------------------

    The allocation mechanism for unscheduled operations proposed in 
this NPRM is similar to the procedures the FAA currently follows in 
allocating unscheduled reservations for airports subject to the 
provisions of the HDR (particularly LaGuardia Airport and John F. 
Kennedy International Airport). The proposed procedures are also 
similar to the measures that were implemented at Chicago O'Hare in 
Special Federal Aviation Regulation (SFAR) 105.
    A Reservation would be allocated on a 30-minute basis during the 
peak hours for which the restrictions would be in place. The FAA's 
Airport Reservation Office (ARO) would receive and process all 
Reservations. The Reservations would be allocated on a first-come, 
first-served basis, determined by the time the request is received by 
the ARO. Operators can obtain a Reservation: (1) through the Internet; 
or (2) by calling the ARO's interactive computer system via touch-tone 
telephone. Operators would provide the date and time of the proposed 
operation and other identifying information concerning the aircraft and 
the intended flight. Reservations could be made no more than 72 hours 
in advance of the proposed flight time. The assigned Reservation number 
would be included in the ``Remarks'' section of the flight plan. 
Reservations must be cancelled if they will not be used as assigned so 
that another operator has an opportunity to operate to or from the 
airport. The FAA would not permit a secondary market in Reservations in 
order to prevent abuse of the system or the bundling of airport 
Reservations with other flight-related services.
    The FAA is not proposing to include a limited exception to the 72-
hour window for public charter operators to obtain a Reservation, as 
was adopted under SFAR 105 for Chicago's O'Hare International Airport. 
There is more connecting and international passenger

[[Page 51374]]

traffic at O'Hare than at LaGuardia, which has more point-to-point, 
short-haul traffic. Therefore, it is important that public charter 
operations flying into O'Hare be able to connect to commercially 
scheduled flights (domestic or international) and arrive at O'Hare at 
their intended arrival time so passengers can make their flight. Also, 
many of these public charter flights at O'Hare operate to international 
destinations, representing key access for service to those points from 
the Chicago area. However, charter operations that fly to the New York 
City area to connect to international or long-haul domestic flights, or 
to serve international destinations more on a origin/destination basis, 
are more likely to fly into Newark Liberty International or John F. 
Kennedy International (which house those operations in the New York 
area), rather than LaGuardia. Consequently, the nature of public 
charter operations at LaGuardia does not warrant treatment different 
than any other unscheduled operation.
    The allocation of a Reservation does not constitute an Air Traffic 
Control clearance nor does it replace the need to file an IFR flight 
plan. The FAA would accommodate declared emergencies without regard to 
reservations. Non-emergency flights in direct support of national 
security, law enforcement, military operations, or public-use aircraft 
operations may be accommodated above the reservation limits with the 
prior approval of the FAA. The FAA may authorize additional 
Reservations for unscheduled operations if permitted by operating 
conditions or if there are temporarily available Operating 
Authorizations.

E. Administrative Reversion of Operating Authorizations

    Operating Authorizations are temporary operating privileges. As 
such, they remain subject to FAA control. We propose allowing them to 
be bought and sold, subject to FAA secondary market restrictions, in 
order to promote their most efficient use. However, they may be 
withdrawn at any time to fulfill operational needs such as eliminating 
operations due to reduced capacity. If the FAA determines that capacity 
must be reduced for a specified period of time, for example if a runway 
were temporarily closed, Operating Authorizations would be withdrawn. 
Once the capacity is resumed, the withdrawn Operating Authorizations 
would be returned to the carriers from which they were withdrawn 
provided they continued to conduct scheduled service at the airport. 
The FAA would assign, by random lottery, priority numbers for 
withdrawal of Operating Authorizations, if necessary to reduce capacity 
for operational reasons. If it was necessary to withdraw Operating 
Authorizations, they would be withdrawn in the specified 15-minute time 
periods in accordance with the priority list. Carriers with a limited 
presence at the airport would be protected from the withdrawal of 
Operating Authorizations. Carriers with fewer than 10 Operating 
Authorizations would not have authorizations withdrawn from them under 
these provisions of the rule.
    The proposal also provides that all of the Operating Authorizations 
held by any carrier would revert to the FAA if that carrier ceases all 
operations at LaGuardia for any reason other than a strike or labor 
dispute.\51\
---------------------------------------------------------------------------

    \51\ An air carrier could sell off its Operating Authorizations 
as part of a liquidation strategy, if it does so before failing to 
meet the Use-or-Lose requirements of the rule. However, if an air 
carrier ceases all operations and subsequently fails to meet the 
Use-or-Lose requirement, the Operating Authorizations would revert 
to the FAA and they could not be sold.
---------------------------------------------------------------------------

Paperwork Reduction Act

    This proposal contains the following new information collection 
requirements. As required by the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)), the FAA has submitted the information requirements 
associated with this proposal to the Office of Management and Budget 
for its review.
    Title: Congestion Management Rule for LaGuardia Airport.
    Summary: The FAA is proposing a new rule to address the potential 
for increased congestion and delay at New York's LaGuardia Airport 
(LaGuardia) when the High Density Rule (HDR) expires there on January 
1, 2007. The rule, if adopted, would establish an operational limit on 
the number of aircraft landing and taking off at the airport. To offset 
the effect of this limit, the proposed rule would increase utilization 
of the airport by encouraging the use of larger aircraft through 
implementing an airport-wide, average aircraft size requirement 
designed to increase the number of passengers that may use the airport 
within the overall proposed operational limits.
    Use of: The information is reported to the FAA by operators holding 
Operating Authorizations. The FAA logs, verifies, and processes the 
requests made by the operators.
    This information is used to allocate, track usage, withdraw, and 
confirm transfers of Operating Authorizations among the operators and 
facilitates the buying and selling of Operating Authorizations in the 
secondary market. The FAA also uses this information in order to 
maintain an accurate base of operations to ensure compliance with the 
operations permitted under the rule and those actually conducted at the 
airport.
    Respondents (including number of:) The likely respondents to this 
proposed information requirement are scheduled carriers with existing 
service at LaGuardia, carriers that plan to enter the LaGuardia market 
(and participate in the lottery or secondary market), and carriers that 
enter the LaGuardia market in the future. There are currently fourteen 
(14) carriers with existing scheduled service at LaGuardia.
    Frequency: The information collection requirements of the rule 
involve scheduled carriers notifying the FAA of their use of Operating 
Authorizations. The carriers must notify the FAA of: (1) Requests to be 
included in a lottery for available Operating Authorizations; (2) 
requests for confirmation of one-for-one Operating Authorization 
trades; (3) usage of Operating Authorizations that are subject to the 
airport-wide upgauging target, and compliance with that target (on an 
annual basis); (4) usage of Operating Authorizations that are not 
subject to the airport-wide target (on a bi-monthly basis); and (4) 
participation in the secondary market.
    Annual Burden Estimate: The annual reporting burden for each 
subsection of the rule is presented below.
    The reporting burden was calculated by the following formula:

Annual Hourly Burden = (<greek-i> of respondents) * (time involved) * 
(frequency of the response).

Section 93.67(c) Sale and Lease of Operating Authorizations

(16 carriers) * (1.5 hours per submittal) * (4 occurrences per year) = 
96 hours

    We assumed that the 16 marketing carriers operating at LaGuardia 
expend one and one half hours for each occurrence of a sale or lease of 
an Operating Authorization. For each operator, we assumed that a sale 
or lease of an Operating Authorization would occur quarterly.

Section 93.68(b) One-for-One Trades of Operating Authorizations

(16 carriers) * (1.5 hours per submittal) * (4 occurrences per year) = 
96 hours

    We assumed that the 16 marketing carriers operating at LaGuardia 
expend one and one half hours for each occurrence of a one-for-one 
trade of an Operating Authorization. For each

[[Page 51375]]

operator, we assumed that a one-for-one trade of an Operating 
Authorization would occur quarterly.

Section 93.72(a) Reporting Requirements

(16 carriers) * (1.5 hours per submittal) * (1 occurrence per year) = 
24 hours

    We assumed that the 16 marketing carriers operating at LaGuardia 
expend one and one half hours for each annual occurrence of the data 
required in Sec.  93.72(a)(1) and Sec.  93.72(a)(2).

Section 93.72(b) Reporting Requirements

(16 carriers) * (1.5 hours per submittal) * (6 occurrences per year) = 
144 hours

    We assumed that the 16 marketing carriers operating at LaGuardia 
expend one and one half hours every two months of the data required by 
Sec.  93.72(b).

Section 93.72(c) Reporting Requirements

(16 carriers) * (1.5 hours per submittal) * (1 occurrence per year) = 
24 hours

    We assumed that the 16 marketing carriers operating at LaGuardia 
expend one and one half hours for each annual occurrence of the data 
required in Sec.  93.72(c).

Section 93.73(d) Weighted Lottery

(16 carriers) * (1.5 hours per submittal) * (4 occurrence per year) = 
96 hours

    We assumed that the 16 marketing carriers operating at LaGuardia 
expend one and one half hours every quarter for participation in a 
lottery for an Operating Authorization.

Section 93.74(d) Administrative Provisions

(16 carriers) * (1.5 hours per submittal) * (4 occurrence per year) = 
96 hours

    We assumed that the 16 marketing carriers operating at LaGuardia 
expend one and one half hours every quarter for administrative 
provisions.

Summary--Total Annual Hourly Reporting Burden--576 Hours

    The agency is soliciting comments to--
    (1) Evaluate whether the proposed information requirement is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology.
    Individuals and organizations may submit comments on the 
information collection requirement by October 30, 2006, and should 
direct them to the address listed in the ADDRESSES section of this 
document. Comments also should be submitted to the Office of 
Information and Regulatory Affairs, OMB, New Executive Building, Room 
10202, 725 17th Street, NW., Washington, DC 20053, Attention: Desk 
Officer for FAA.
    According to the 1995 amendments to the Paperwork Reduction Act (5 
CFR 1320.8(b)(2)(vi)), an agency may not collect or sponsor the 
collection of information, nor may it impose an information collection 
requirement unless it displays a currently valid OMB control number. 
The OMB control number for this information collection will be 
published in the Federal Register, after the Office of Management and 
Budget approves it.

International Compatibility

    In keeping with U.S. obligations under the Convention on 
International Civil Aviation, it is FAA policy to comply with 
International Civil Aviation Organization (ICAO) Standards and 
Recommended Practices to the maximum extent practicable. The FAA has 
determined that there are no ICAO Standards and Recommended Practices 
that correspond to these proposed regulations.

Economic Assessment, Regulatory Flexibility Determination, Trade Impact 
Assessment, and Unfunded Mandates Assessment

    Changes to Federal regulations must undergo several economic 
analyses. First, Executive Order 12866 directs that each Federal agency 
shall propose or adopt a regulation only upon a reasoned determination 
that the benefits of the intended regulation justify its costs. Second, 
the Regulatory Flexibility Act of 1980 requires agencies to analyze the 
economic impact of regulatory changes on small entities. Third, the 
Trade Agreements Act (19 U.S.C. 4 2531-2533) prohibits agencies from 
setting standards that create unnecessary obstacles to the foreign 
commerce of the United States. In developing U.S. standards, this Trade 
Act requires agencies to consider international standards and, where 
appropriate, to be the basis of U.S. standards. Fourth, the Unfunded 
Mandate Reform Act of 1995 (Public Law 104-4) requires agencies to 
prepare a written assessment of the costs, benefits, and other effects 
of proposed or final rules that include a Federal mandate likely to 
result in the expenditure by State, local, or tribal governments, in 
the aggregate, or by the private sector, of $100 million or more 
annually (adjusted for inflation).
    In conducting these analyses, FAA has determined this proposed rule 
(1) has benefits that justify its costs, is a ``significant regulatory 
action'' as defined in section 3(f) of Executive Order 12866, and is 
``significant'' as defined in DOT's Regulatory Policies and Procedures; 
(2) would not have a significant economic impact on a substantial 
number of small entities; (3) would not adversely affect international 
trade; and (4) would not impose an unfunded mandate on State, local, or 
tribal governments, or on the private sector. These analyses, set forth 
in this document, are summarized below.

Total Costs and Benefits of This Rulemaking

    FAA estimates that this proposed rule would result in about a 37% 
decrease in the average delay per operation at LaGuardia. Present value 
net benefits are estimated at $4.3 billion from 2007-2019; net benefits 
over an infinite time horizon total about $7.5 billion. The benefits 
are estimated by comparing the no-rule scenario (similar to the 
situation at LaGuardia in 2001) with the proposed upgauging scenario.
    There are almost no costs associated with the proposed rule. The 
only exception is for the cost of designing and carrying out periodic 
lotteries that may be required to assign unused operating 
authorizations. These present value costs total about $11.3 million 
through 2019, and $19.4 million over an infinite time horizon.

Who Is Potentially Affected by This Rulemaking

    <bullet> Operators of scheduled and non-scheduled, domestic and 
international flights, and new entrants who do not yet operate at New 
York's LaGuardia Airport (LaGuardia).
    <bullet> All communities, including small communities with air 
service to LaGuardia.
    <bullet> Passengers of scheduled, domestic flights to LaGuardia.
    <bullet> New York and New Jersey Port Authority.
    <bullet> FAA Air Traffic Control.

Key Assumptions

    <bullet> Base Case Flight Operations and Delay-Adjusted Official 
Airline Guide (OAG) Schedule, December 2000 (1,373 daily operations).

[[Page 51376]]

    <bullet> Current Scenario Case Flight Operations and Delay--OAG 
Schedule, April 19, 2005 (1,194 daily operations).
    <bullet> Delay improvements are about 9.2 minutes per flight, 
equivalent to a 37% improvement in delay. This delay improvement 
estimate was derived from GRA's \52\ Delay Model.
---------------------------------------------------------------------------

    \52\ GRA Inc. of Jenkintown, Pennsylvania.
---------------------------------------------------------------------------

    <bullet> For this evaluation, the proposed rule's effective date is 
January 1, 2007.

Other Important Assumptions

    <bullet> Discount Rate--7%.
    <bullet> Period of Analysis--2007 through 2019.
    <bullet> Assumes 2005 Current Year Dollars.
    <bullet> Passenger Value of Travel Time--$30.86 per hour.\53\
---------------------------------------------------------------------------

    \53\ ``Draft Economic Value for FAA Investment and Regulatory 
Decisions, A Guide'' December 31, 2004, weighted using LaGuardia 
shares of 51% leisure and 49% business travel.
---------------------------------------------------------------------------

    <bullet> For this evaluation, all flights to Non-Hub Airports with 
existing service at LaGuardia, as well as a baseline exemption of 10 
flights for each carrier would be exempt from the aircraft upgauging 
target.

Alternatives We Have Considered

    <bullet> Alternative <greek-i>1--This alternative would have let 
the High Density Rule order expire on January 1, 2007. Based on 
history, under this alternative, we expected operators would most 
likely continue to expand operations, and therefore further worsen 
airport delays. We are presenting this alternative as the base case for 
calculation of costs and benefits associated with this rulemaking.
    <bullet> Alternative <greek-i>2--This alternative would exempt 
operations to Non-Hub Airports with existing service at LaGuardia from 
the target aircraft size calculation.
    <bullet> Alternative <greek-i>3--This alternative would exempt 
operations to Non-Hub Airports with existing service at LaGuardia and 
Small-Hub Airports within 300 miles of LaGuardia from the target 
aircraft size calculation.
    <bullet> Alternative <greek-i>4--This alternative would exempt 
operations to Non-Hub Airports with existing service at LaGuardia, 
Small-Hub Airports within 300 miles of LaGuardia, and Small-Hub 
Airports with existing LaGuardia service from the target aircraft size 
calculation.
    We are seeking comment from industry on alternatives <greek-i>2 
through <greek-i>4 to promote efficient use of the airspace through 
equipment type upgauging, but not at the expense of removing service to 
small and non-hub communities.

Benefits of This Rulemaking

    The primary benefits of this rule would be the airline and 
passenger delay cost savings. The benefits reflect a prorating of the 
5.5 days per week the operational limits are in effect. The total 
estimated net benefits in present value dollars are about $4.3 billion 
when compared to 2001 delays over the 13-year analysis interval.

Costs of This Rulemaking

    The major costs of this proposed rule cover the costs of 
implementing a lottery system for unutilized operating authorizations. 
The estimated present value cost of this final rule is about $11.3 
million over the 13-year analysis interval.

Regulatory Flexibility Determination

    The Regulatory Flexibility Act of 1980 (RFA) establishes ``as a 
principle of regulatory issuance that agencies shall endeavor, 
consistent with the objective of the rule and of applicable statutes, 
to fit regulatory and informational requirements to the scale of the 
business, organizations, and governmental jurisdictions subject to 
regulation''. To achieve that principle, the RFA requires agencies to 
solicit and consider flexible regulatory proposals and to explain the 
rationale for their actions. The RFA covers a wide range of small 
entities, including small businesses, not-for-profit organizations, and 
small governmental jurisdictions.
    Agencies must perform a review to determine whether a proposed or 
final rule would have a significant economic impact on a substantial 
number of small entities. If the agency determines that it would, the 
agency must prepare a regulatory flexibility analysis as described in 
the Act.
    However, if an agency determines that a proposed or final rule is 
not expected to have a significant economic impact on a substantial 
number of small entities, section 605(b) of the 1980 RFA provides that 
the head of the agency may so certify and a regulatory flexibility 
analysis is not required. The certification must include a statement 
providing the factual basis for this determination, and the reasoning 
should be clear. The basis for such FAA determination follows.
    The proposed rule affects all scheduled operators at LaGuardia. A 
review of the number of employees for each operator shows that the 
following are ``small entities'' (defined as firms with 1,500 or fewer 
employees):

------------------------------------------------------------------------
                          Carrier                             Employees
------------------------------------------------------------------------
Commutair..................................................          340
Colgan Air.................................................          546
------------------------------------------------------------------------

    Under the proposed rule, all operators' Operating Authorizations 
would be ``grandfathered'' for at least three years. Further, service 
to Non-Hub Airports would be exempt from the upgauging incentive where 
smaller entities are operating. Thus most of the LaGuardia markets 
operated by existing small entities would be exempt from upgauging.
    The FAA has also reviewed whether there would be interruptions to 
service to communities with a population of less than 50,000. Because 
of the exemption from the upgauging incentive Non-Hub Airports would 
receive, only one such community is exposed. Burlington, Vermont has a 
population less than 50,000, but because it is a small-hub community 
\54\ it would not be eligible for the exemption. But, Burlington is a 
dynamic economy, has existing service from both Newark and JFK 
airports, and service from LaGuardia may well be viable at this airport 
even without the exemption.
---------------------------------------------------------------------------

    \54\ http://www.faa.gov/arp/planning/stats/index.cfm?nav=cargo#apttype.
---------------------------------------------------------------------------

    Therefore, the FAA certifies that this proposed rule would not have 
a significant economic impact on a substantial number of small 
entities.

International Trade Impact Assessment

    The Trade Agreements Act of 1979 prohibits Federal agencies from 
establishing any standards or engaging in related activities that 
create unnecessary obstacles to the foreign commerce of the United 
States. Legitimate domestic objectives, such as safety, are not 
considered unnecessary obstacles. The statute also requires 
consideration of international standards and, where appropriate, that 
they be the basis for U.S. standards. The FAA has assessed the 
potential effect of this proposed rule and determined that it would 
impose the same costs on domestic and international entities and thus 
have a neutral trade impact.

Unfunded Mandate Assessment

    The Unfunded Mandate Reform Act of 1995 (the Act) is intended, 
among other things, to curb the practice of imposing unfunded Federal 
mandates on State, local, and tribal governments. Title II of the Act 
requires each Federal agency to prepare a written statement assessing 
the effects of any Federal mandate in a proposed or final agency rule 
that may result in an expenditure of $100 million or more (adjusted 
annually for inflation)

[[Page 51377]]

in any one year by State, local, and tribal governments, in the 
aggregate, or by the private sector; such a mandate is deemed to be a 
``significant regulatory action.'' The FAA currently uses an inflation-
adjusted value of $128.1 million in lieu of $100 million. This final 
rule does not contain such a mandate. The requirements of Title II do 
not apply.

Executive Order 13132, Federalism

    The FAA has analyzed this proposed rule under the principles and 
criteria of Executive Order 13132, Federalism. We determined that this 
action would not have a substantial direct effect on the States, on the 
relationship between the National Government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government, and therefore would not have federalism implications.

Environmental Analysis

    FAA Order 1050.1E, Environmental Impacts: Policies and Procedures, 
identifies FAA actions that are categorically excluded from preparation 
of an environmental assessment or environmental impact statement under 
the National Environmental Policy Act in the absence of extraordinary 
circumstances. The FAA has determined this rulemaking action qualifies 
for the categorical exclusion identified in paragraph 312d ``Issuance 
of regulatory documents (e.g., Notices of Proposed Rulemaking and 
issuance of Final Rules) covering administration or procedural 
requirements (does not include Air Traffic procedures; specific Air 
Traffic procedures that are categorically excluded are identified under 
paragraph 311 of this Order.)''. It has been determined that no 
extraordinary circumstances exist that may cause a significant impact 
and therefore no further environmental review is required.

Regulations That Significantly Affect Energy Supply, Distribution, or 
Use

    The FAA has analyzed this NPRM under Executive Order 13211, Actions 
Concerning Regulations that Significantly Affect Energy Supply, 
Distribution, or Use (May 18, 2001). We have determined that it is not 
a ``significant energy action'' under the executive order because it is 
not a ``significant regulatory action'' under Executive Order 12866, 
and it is not likely to have a significant adverse effect on the 
supply, distribution, or use of energy.

List of Subjects in 14 CFR Part 93

    Air traffic control, Airports, Alaska, Navigation (air), Reporting 
and recordkeeping requirements.

The Proposed Amendment

    In consideration of the foregoing, the Federal Aviation 
Administration proposes to amend Chapter I of Title 14, Code of Federal 
Regulations, as follows:

PART 93--SPECIAL AIR TRAFFIC RULES

    1. The authority citation for part 93 continues to read as follows:

    Authority: 49 U.S.C. 106(g), 40103, 40106, 40109, 40113, 44502, 
44514, 44701, 44719, 46301.

    2. Subpart C is added to read as follows:
Subpart C--Performance Based Upgauging Rule for New York LaGuardia 
Airport
Sec.
93.61 Applicability.
93.62 Definitions.
93.63 Operating Authorizations for Scheduled Arrivals and 
Departures.
93.64 Initial Allocation and Reallocation of Operating 
Authorizations.
93.65 Duration of Operating Authorizations.
93.66 Reversion and Withdrawal of Operating Authorizations.
93.67 Sale and Lease of Operating Authorizations.
93.68 One-for-One Trades of Operating Authorizations.
93.69 Average Aircraft Size Target.
93.70 Minimum Usage Requirements for Small and Community and 
Baseline Operating Authorizations.
93.71 Unscheduled Operations.
93.72 Reporting Requirements.
93.73 Weighted Lottery.
93.74 Administrative Provisions.

Subpart C--Performance Based Upgauging Rule for New York LaGuardia 
Airport


Sec.  93.61  Applicability.

    (a) This subpart prescribes the air traffic rules for the arrival 
and departure of aircraft, other than helicopters, operating at New 
York's LaGuardia Airport (LaGuardia).
    (b) This subpart also prescribes procedures for the assignment, 
transfer, sale, lease, reversion and withdrawal of Operating 
Authorizations issued by the FAA for Scheduled Operations by Carriers 
at LaGuardia.
    (c) The provisions of this subpart apply to LaGuardia during the 
local hours of 6:30 a.m. through 9:59 p.m., Monday through Friday, and 
12 p.m. through 9:59 p.m. on Sunday. No person shall conduct a 
Scheduled Operation to or from LaGuardia during such hours without 
obtaining an Operating Authorization. No person shall conduct an 
Unscheduled Operation to or from LaGuardia during such hours without 
obtaining a Reservation.
    (d) Carriers that have Common Ownership shall be considered a 
single U.S. air carrier or foreign air carrier for purposes of this 
subpart.


Sec.  93.62  Definitions.

    For purposes of this subpart the following definitions apply:
    Airport Reservation Office (ARO) is an operational unit of the 
FAA's David J. Hurley Air Traffic Control System Command Center. It is 
responsible for the administration of Reservations for Unscheduled 
Operations at LaGuardia.
    Average Aircraft Size Target is the required average number of 
passenger seats per aircraft offered for sale for each Scheduled 
Operation at LaGuardia. The target is calculated as the annual 
passenger seats divided by the total number of Operating Authorizations 
held over the year excluding all Baseline Operations and Small 
Community Operating Authorizations.
    Baseline Operations are Operating Authorizations excluded from the 
Average Aircraft Size Target. Annually, each Carrier may designate up 
to 10 Operating Authorizations per day as its Baseline Operations.
    Carrier is a U.S. air carrier or foreign air carrier with authority 
to conduct scheduled service at LaGuardia under Parts 121, 129, 135 of 
this Chapter and has economic authority to operate scheduled service 
under 14 CFR chapter II and 49 U.S.C. chapter 411.
    Carrier's Average Aircraft Size is the total number of passenger 
seats offered under all Operating Authorizations (excluding Baseline 
Operations and Small Community Operating Authorizations) over the 
calendar year, divided by the total number of Operating Authorizations 
held over the year.
    Common Ownership with respect to two or more air carriers or 
foreign air carriers means having in common at least 50 percent 
beneficial ownership or control by the same entity or entities.
    Enhanced Computer Voice Reservation System (e-CVRS) is the system 
used by the FAA to make arrival and/or departure Reservations for 
Unscheduled Operations at LaGuardia and other designated airports.
    Non-Hub Airport is a commercial service airport that has more than 
10,000 annual passenger boardings but less than 0.05% of the total 
annual United States passenger boardings.
    Operating Authorization is the operational authority assigned by 
the FAA to a Carrier to conduct one

[[Page 51378]]

scheduled instrument flight rules (IFR) arrival or departure operation 
at LaGuardia on a particular day of the week during a specific 15-
minute period during the hours of 6:30 a.m. through 9:59 p.m., Monday 
through Friday, and 12 p.m. through 9:59 p.m. on Sunday.
    Reservation is an authorization received by a Carrier or other 
operator of an aircraft, excluding helicopters, in accordance with 
procedures established by the FAA to operate an unscheduled arrival or 
departure to or from LaGuardia on a particular day of the week during a 
specific 30-minute period during the hours of 6:30 a.m. through 9:59 
p.m., Monday through Friday, and 12 p.m. through 9:59 p.m. on Sunday.
    Scheduled Operation is the arrival or departure segment of any 
operation regularly conducted by a Carrier between LaGuardia and 
another point regularly served by that Carrier.
    Small Community Operating Authorizations are the designated 
Operating Authorizations excluded from the Average Aircraft Size Target 
but subject to the minimum usage requirement. These Operating 
Authorizations are designated by the FAA effective January 1, 2007 and 
may only be used to operate to a Non-Hub and Small-Hub Airports.
    Small-Hub Airport is a commercial service airport with at least 
0.05% but less than .25% of total annual United States passenger 
boardings.
    Unscheduled Operation is an arrival or departure segment of any 
operation that is not regularly conducted by a Carrier or other 
operator of an aircraft, excluding helicopters, between LaGuardia and 
another service point. The following types of Carrier operations shall 
be considered Unscheduled Operations for the purposes of this rule: 
Public, on-demand, and other charter flights; hired aircraft service; 
extra sections of scheduled flights; ferry flights; and other non-
passenger flights.
    Weighted Lottery is a lottery conducted by the FAA to reassign to 
Carriers' Operating Authorizations that are initially unassigned, 
returned to the FAA or withdrawn as a result of the Average Aircraft 
Size Target requirements or minimum use requirements. A weighted 
lottery assigns Operating Authorizations to a Carrier based on its 
inverse proportion of the Carrier's share of total Operating 
Authorizations at LaGuardia.


Sec.  93.63  Operating Authorizations for Scheduled Arrivals and 
Departures.

    (a) During the hours of 6:30 a.m. through 9:59 p.m., Monday through 
Friday, and 12 p.m. through 9:59 p.m. on Sunday, no person may operate 
an aircraft other than a helicopter, as a Scheduled Operation to or 
from LaGuardia unless he or she has received an Operating Authorization 
for that operation.
    (b) Seventy-five (75) Operating Authorizations are available per 
hour at LaGuardia. The number of Operating Authorizations may not 
exceed 19 in any 15-minute period; 38 in any 30-minute period; and 75 
in any 60-minute period. The number of arrival and departure Operating 
Authorizations in any period may be adjusted by the FAA if necessary 
based on the actual or potential delays created by such number or other 
considerations relating to congestion, airfield capacity and the air 
traffic control system.


Sec.  93.64  Initial Allocation and Reallocation of Operating 
Authorizations.

    (a) Except as provided for under paragraphs (b) and (c) of this 
section, any Carrier allocated operating rights under 14 CFR part 93, 
subpart K, and 49 U.S.C. 41716 during the week of October 1-6, 2006, as 
evidenced by the FAA's records, will be assigned corresponding 
Operating Authorizations, by hour, effective January 1, 2007. The FAA 
will assign Operating Authorizations in 15-minute periods consistent 
with the limits under Sec.  93.63(b) of this section. If necessary, the 
FAA may utilize administrative measures such as voluntary measures or a 
lottery to re-time the grandfathered Operating Authorizations within 
the same hour to meet the 15-minute and 30-minute limits under Sec.  
93.63(b) of this section. The FAA Vice President, System Operations 
Services, is the final decision-maker for determinations under this 
section.
    (b) If a carrier was allocated operating rights under 14 CFR part 
93, subpart K, and 49 U.S.C. 41716 during the week of October 1-6, 
2006, but the operating rights were held by another carrier, then the 
corresponding Operating Authorizations will be assigned to the carrier 
that held the operating rights for that period, as evidenced by the 
FAA's records.
    (c) If a carrier was allocated operating rights under 14 CFR part 
93 during the week of October 1-6, 2006, and those operating rights 
were held by an entity other than a certificated carrier, then 
corresponding Operating Authorizations will be assigned to the 
operating carrier, as evidenced by the FAA's records.
    (d) Any Operating Authorizations that are returned to the FAA or 
withdrawn as a result of the Average Aircraft Size Target requirement 
under Sec.  93.69 of this subpart or the minimum use requirement for 
Operating Authorizations to or from Non-Hub and Small-Hub Airports 
under Sec.  93.70 of this subpart will be reallocated by a Weighted 
Lottery.


Sec.  93.65  Duration of Operating Authorizations.

    (a) Operating Authorizations initially assigned to Carriers on 
January 1, 2007, have a minimum term of three years unless withdrawn or 
returned in accordance with this subpart.
    (b) By January 1, 2007, the FAA will establish the expiration 
schedule for all Operating Authorizations assigned to Carriers on 
January 1, 2007. Ten percent of these Operating Authorizations will 
expire annually beginning on December 31, 2009.
    (c) Each expired Operating Authorization will be reallocated and 
thereafter shall carry a 10-year operating term.


Sec.  93.66  Reversion and Withdrawal of Operating Authorizations.

    (a) A Carrier's Operating Authorizations revert automatically to 
the FAA 30 days after the Carrier has ceased all operations at 
LaGuardia for any reasons other than a strike.
    (b) The FAA may retime, withdraw or temporarily suspend Operating 
Authorizations at any time to fulfill operational needs.
    (1) Operating Authorizations will be withdrawn in accordance with 
the priority list established under Sec.  93.74 of this subpart.
    (2) Except as otherwise provided in paragraph (a) of this section, 
the FAA will notify the affected Carrier before withdrawing or 
temporarily suspending an Operating Authorization and specify the date 
by which operations under the authorizations must cease. The FAA will 
provide at least 45 days' notice unless otherwise required by 
operational needs.
    (3) Any Operating Authorization that is temporarily withdrawn under 
this paragraph will be reassigned, if at all, only to the Carrier from 
which it was withdrawn, provided that the Carrier continues to conduct 
Scheduled Operations at LaGuardia.
    (c) The FAA shall not withdraw or temporarily suspend any Operating 
Authorizations under paragraph (b) of this section from any Carrier if 
the result would reduce the Carrier's total number of Operating 
Authorizations below ten per day.


Sec.  93.67  Sale and Lease of Operating Authorizations.

    (a) Carriers may buy, sell or lease Operating Authorizations in 
accordance with this section.

[[Page 51379]]

    (b) Only monetary consideration may be provided in any transaction 
conducted under this section.
    (c) A Carrier must provide notice to the FAA to sell or lease an 
Operating Authorization. Such notice must contain: the Operating 
Authorization number and time, effective dates and, if appropriate, the 
duration of the lease and the minimum size aircraft that must be used 
for the operation. The Carrier also may provide the FAA with a minimum 
bid price.
    (d) The FAA will post a notice of the sale or lease of the 
Operating Authorization and relevant details on the FAA Web site at 
http://www.faa.gov. An opening date, closing date and time by which 
bids must be received will be provided. Information identifying the 
seller or lessor of the Operating Authorization will not be released 
until after the transfer of the Operating Authorization.
    (e) The FAA must receive all bids electronically, via the FAA Web 
site, by the closing date and time. Eligibility requires a bidding 
Carrier to participate on the first day of the bidding process. Late 
bids will not be considered. All bids will be held confidential, with 
each bidder certifying to the FAA that its bid has not been disclosed 
to any person.
    (f) The FAA will forward the highest bid to the seller or lessor 
without any information about the identity of the bidder. The seller or 
lessor has three business days to accept or reject the bid.
    (g) Upon acceptance, the FAA will notify the buyer/lessee.
    (h) Written evidence of each Carrier's consent to the transfer must 
be provided to the FAA, and each Carrier must certify that only 
monetary consideration will be exchanged.
    (i) The Operating Authorization may not be used until the 
conditions of paragraph (h) of this section have been met, and the FAA 
provides notice of its approval of the transfer.
    (j) A Carrier may transfer an Operating Authorization to another 
Carrier that conducts operations at LaGuardia solely under the 
transferring Carrier's marketing control, including the entire 
inventory of the flight. Each party to such transfer must provide 
written evidence of its consent to the transfer. The FAA Vice 
President, System Operations Services, is the final decision maker for 
any determinations under this subsection. The recipient Carrier of the 
transfer may not use the Operating Authorization until the FAA has 
provided written confirmation.


Sec.  93.68  One-for-One Trades of Operating Authorizations.

    (a) A Carrier may trade an Operating Authorization with another 
Carrier on a one-for-one basis.
    (b) Written evidence of each Carrier's consent to the transfer must 
be provided to the FAA.
    (c) The recipient of the transfer may not use the Operating 
Authorization until written confirmation has been received from the 
FAA.
    (d) Carriers participating in a one-for-one transfer must certify 
to the FAA that no consideration or promise of consideration was 
provided by either party to the trade.


Sec.  93.69  Average Aircraft Size Target.

    (a) On an annual basis, beginning in 2008, each Carrier's Average 
Aircraft Size must meet or exceed the Average Aircraft Size Target 
established by the FAA for LaGuardia. The FAA will publish the target 
in the Federal Register at least 90 days before the beginning of the 
calendar year.
    (b) Baseline Operations and Small Community Operating 
Authorizations are excluded from the Carrier's Average Aircraft Size 
calculation.
    (c) Beginning January 1, 2009, if a Carrier's Average Aircraft Size 
does not meet the Average Aircraft Size Target over the preceding year, 
the FAA will withdraw Operating Authorization(s) from the Carrier until 
the target is met.
    (1) The FAA will withdraw the Operating Authorization(s) that used 
the aircraft with the smallest seating capacity.
    (2) Unless there is an operational need identified by the FAA, the 
Carrier may designate which Operating Authorization is withdrawn.
    (d) Paragraph (a) of this section does not apply to Operating 
Authorizations that are not used by a Carrier because of a strike.
    (e) The FAA may waive the requirements of paragraph (a) of this 
section in the event of a highly unusual and unpredictable condition 
that is beyond the control of the Carrier and that persists for a 
period of 5 consecutive days or more. Examples of conditions which 
could justify a waiver under this paragraph are weather conditions that 
result in the restricted operation of an airport for an extended period 
of time or the grounding of any aircraft type.
    (f) Paragraph (a) of this section does not apply to Operating 
Authorizations that are held by a Carrier on Thanksgiving Day, the 
Friday following Thanksgiving Day, and the period from December 24 
through the first Sunday in January.
    (g) Paragraph (a) of this section does not apply to the first 90-
day period after assignment of Operating Authorizations obtained in a 
Weighted Lottery or through a sale.


Sec.  93.70  Minimum Usage Requirements for Small Community and 
Baseline Operating Authorizations.

    (a) Any Small Community or Baseline Operating Authorization that is 
not used at least 80 percent of the time over a consecutive two-month 
period will be withdrawn by the FAA.
    (b) Paragraph (a) of this section does not apply to the first 90-
day period after assignment of Operating Authorizations obtained in a 
Weighted Lottery or through a sale.
    (c) Paragraph (a) of this section does not apply to Operating 
Authorizations that are not used by a Carrier because of a strike.
    (d) The FAA may waive the requirements of paragraph (a) of this 
section in the event of a highly unusual and unpredictable condition 
that is beyond the control of the Carrier and that persists for a 
period of 5 consecutive days or more. Examples of conditions which 
could justify a waiver under this paragraph are weather conditions that 
result in the restricted operation of an airport for an extended period 
of time or the grounding of any aircraft type.
    (e) The FAA will treat as used any Operating Authorization held by 
a Carrier on Thanksgiving Day, the Friday following Thanksgiving Day, 
and the period from December 24 through the first Sunday in January.


Sec.  93.71  Unscheduled Operations.

    (a) During the hours of 6:30 a.m. through 9:59 p.m., Monday through 
Friday, and 12 p.m. through 9:59 p.m. on Sunday, no person may operate 
an aircraft other than a helicopter to or from LaGuardia unless he or 
she has received, for that Unscheduled Operation, a Reservation that is 
assigned by the Airport Reservation Office (ARO). Additional 
information on procedures for obtaining a Reservation will be available 
on the Internet at http://www.fly.faa.gov/ecvrs.
    (b) Six (6) Reservations are available per hour. The ARO will 
assign Reservations on a 15-minute basis.
    (c) The ARO will receive and process all Reservation requests for 
unscheduled arrivals and departures at LaGuardia. Reservations are 
assigned on a ``first-come, first-served'' basis determined by the time 
the request is received at the ARO. Reservations must be cancelled if 
they will not be used as assigned.
    (d) The filing of a request for a Reservation does not constitute 
the

[[Page 51380]]

filing of an IFR flight plan as required by regulation. The IFR flight 
plan must be filed only after the Reservation is obtained, include the 
Reservation number in the ``Remarks'' section, and be filed in 
accordance with FAA regulations and procedures.
    (e) Air Traffic Control will accommodate declared emergencies 
without regard to Reservations. Non-emergency flights in direct support 
of national security, law enforcement, military aircraft operations, or 
public-use aircraft operations may be accommodated above the 
Reservation limits with the prior approval of the Vice President, 
System Operations Services, Air Traffic Organization. Procedures for 
obtaining the appropriate waiver will be available on the Internet at 
http://www.fly.faa.gov/ecvrs.
    (f) Notwithstanding the limits in paragraph (b) of this section, if 
the Air Traffic Organization determines that air traffic control, 
weather and capacity conditions are favorable and significant delay is 
not likely, the FAA may determine that additional Reservations may be 
accommodated for a specific time period. Unused Operating Authorities 
may also be temporarily made available for Unscheduled Operations. 
Reservations for additional operations must be obtained through the 
ARO.
    (g) Reservations may not be bought, sold, or leased.


Sec.  93.72  Reporting Requirements.

    (a) Carrier's Aircraft Size Target. (1) Annually, beginning March 
1, 2008, each Carrier holding an Operating Authorization must report, 
in a format specified to the FAA, the following information for each 
Operating Authorization held during the previous calendar year:
    (i) The Operating Authorization number, time, and arrival or 
departure designation;
    (ii) The operating Carrier;
    (iii) The aircraft-type;
    (iv) The number of passenger seats offered on the aircraft for each 
operation; and
    (v) The date and time of each of its operations using an Operating 
Authorization, including flight number, and origin/destination.
    (2) Annually, beginning March 1, 2008, each Carrier holding an 
Operating Authorization must report, in a format specified by the FAA, 
the average number of seats flown over all Operating Authorizations 
that are subject to the Average Aircraft Size Target.
    (b) Minimum Usage Requirements for Small Community and Baseline 
Operating Authorizations. Each Carrier holding a Small Community or 
Baseline Operating Authorization must, within 14 days after the last 
day of the 2-month period beginning January 1, 2007, and every 2 months 
thereafter report, in a format acceptable to the FAA, the following for 
each Operating Authorization held:
    (1) The Operating Authorization number, time, and arrival or 
departure designation;
    (2) The operating Carrier;
    (3) The aircraft-type;
    (4) The number of passenger seats offered on the aircraft for each 
operation; and
    (5) The date and time of each of its operations using an Operating 
Authorization, including flight number, and origin/destination.
    (c) Annually, by March 1, 2008, each Carrier must designate ten 
Operating Authorizations as its Baseline Operations and report to the 
FAA the Operating Authorization number, time, and arrival or departure.
    (d) The FAA may withdraw the Operating Authorizations of any 
Carrier that does not report its utilization of Operating 
Authorizations in accordance with this section.


Sec.  93.73  Weighted Lottery.

    (a) The FAA will reassign by Weighted Lottery Operating 
Authorizations not assigned by the FAA as part of the initial 
allocation and those returned to the FAA or withdrawn, as described 
under Sec.  93.66 of this subpart or withdrawn under Sec.  93.69 and 
Sec.  93.70 of this subpart.
    (b) Each Carrier's weight in the lottery is inversely proportional 
to its share of total Operating Authorizations at LaGuardia. Any 
Carrier that does not hold or operate Operating Authorizations under 
its own name as of the announced date of a Weighted Lottery, and has 
not held or operated Operating Authorizations at LaGuardia since 
[EFFECTIVE DATE OF FINAL RULE], its weight is equal to that of a 
Carrier with two Operating Authorizations (a single roundtrip flight).
    (c) The FAA will publish a notice in the Federal Register 
announcing the lottery dates and any special procedures for the 
lotteries.
    (d) Any Carrier seeking to participate in a lottery must notify the 
FAA in writing, and such notification must be received by the FAA 15 
days prior to the lottery date. The Carrier must report--
    (1) If it currently operates scheduled service at LaGuardia or has 
operated scheduled service at LaGuardia since [EFFECTIVE DATE OF FINAL 
RULE];
    (2) The number of Operating Authorizations it holds (if any); and
    (3) If there is common ownership with any other Carrier, and if so, 
the identify of such Carrier.
    (e) Operating Authorizations obtained under this section may not be 
bought, sold, leased, or otherwise transferred until one year has 
elapsed from their assignment.


Sec.  93.74  Administrative Provisions.

    (a) The FAA will assign priority numbers by random lottery for 
Operating Authorizations at LaGuardia. Each Operating Authorization 
will be assigned a withdrawal priority number, and the 15-minute time 
period for the Operating Authorization, frequency, and the arrival or 
departure designation.
    (b) If FAA determines that operations need to be reduced for 
operational reasons, the lowest assigned priority number Operating 
Authorization will be the last withdrawn.
    (c) Any Operating Authorizations available on a temporary basis may 
be assigned by the FAA to a Carrier on a non-permanent, first-come, 
first-served basis subject to permanent assignment under this subpart. 
Any remaining Operating Authorizations may be made available for 
Unscheduled Operations on a non-permanent basis and will be assigned 
under the same procedures applicable to other Operating Reservations.
    (d) All transactions under this subpart must be in a written or 
electronic format approved by the FAA.

    Issued in Washington, DC on August 23, 2006.
Nan Shellabarger,
Director of Aviation Policy and Plans.
[FR Doc. 06-7207 Filed 8-25-06; 9:00 am]
BILLING CODE 4910-13-P


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