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Paul, Hastings, Janofsky & Walker LLP 

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(213) 683-6253 

robertspan@paulhastings.com 

January 11, 2006 

VJA FACSIMILE AND U.S. MAIL 

Carlene V. Mcintyre, Esq. 

Chief, Opinions and Appeals Division 

The Port Authority of New York and New Jersey 

225 Park Avenue South, 15th Floor 

New York, NY 10003 

Re: EWR Rates and Charges 

Dear Carlene: 

19978.00005 

Your letter dated December 23, 2005 is disappointing. While you have agreed to provide 

certain limited info.tmation in response to my request on behalf of Continental Airlines, 

Inc. ("Continental"), it is clear that the Port Authority is refusing to provide most of the 

requested information. 

The Port Authority's position is not only disappointing; it is troubling for a number of 

reasons. Let us begin with the very basic concept that the Port Authoiity is a public 

agency, whose records should be available to the public. As the Port Authority's Freedom 

oflnformation Policy states: 

government, including the activities and decisions of the 

Port Authority of New York and New Jersey ... is the 

public's business and therefore the public should have 

access to the records of the Port Authority ... 

Continental should not have to explain its reasons or basis for requesting public 

info.tmation, as you have stated ill your letters. Nor does the Port Authority have the 

right to pick and choose which information it will disclose and which it will conceal from 

public sctutiny. On the contrary, where, as here, the requested information clearly does 

not fall within any exempt category under the Port Authority's policies or under the laws 

of New Jersey or New York, it should be produced promptly and without the need for 

extended debate. 

LEGAL_us_w # 53141786.2 EXHIBITWW 
Carlene V. Mclntyre, Esq. 

Januaty 11, 2006 

PageZ 

Secondly, the Port. .Authority continues to rely on the existence of a written lease 

agreement between Continental and the Port Authority as somehow providing a litnitation 

on Continental's rights to information, as well as a litnitation on any inquiry into the 

reasonableness of rat.es and charges at Newark Liberty International Airport ("EWR''). 

For example, your December 23letter refers to a "rates and charges f01mula which 

Continental negotiated" and you suggest that Continental is trying to impmve on "their 

bargain." But, as you know, the flight fee formula and methodology at EWR was 

established long before Continental began setvice there. Continental did not negotiate 

this fol:lnula. As an additional matter, as you know, the written lease agreement sets forth 

only a flight fee rate for a base year and then sets forth a specific methodology to adjust 

that base year rate on account of subsequent yearly fluctuations in certain cost 

components set forth for the base year (as opposed to a fixed yearly number). The yearly 

flight fee rate was designed to vary based on actual costs and was not intended to return 

to the Port Authority an amount greater than the Port Authority's actual costs of 

providing the public aircraft facilities. However, Continental remains concerned that, 

notwithstanding this apparent cost-based methodology to set the flight fee rate, in fact, 

the base year "cost" component numbers may have been .inflated to generate an additional 

retum, or profit, to the Port Authority over and above·the actual cost of any components 

that were not .included in the base year calculation. Compounding the problem is the 

apparent fact that the aggregate cost of certain components, such as security costs (as you 

cite in your letter), has grown to a greater extent than other costs included in the base year 

calculation. Such a disproportionate increase yields an unfair and unreasonable result. 

In any event, more fundamentally, the Port Authority's position- relying exclusively on 

the 1994 Federal Aviation Authorization Act (the "1994 Act''), which established the 

expedited procedure for challenging rates not set hy agreement- ignores the cleat 

statements of law and policy that the 1994 Act did not abrogate existing law regarding 

reasonableness of airport rates and charges. As the DOT Policy Statement makes clear: 

In addition, the Department does not interpret§ 47129 to 

repeal or narrow the scope of the basic requirement that 

fees imposed on all aeronautical users be reasonable and 

not unjustly discriminatory or to narrow the obligation on 

the Secretaty to receive satisfactoty as.surances tlu;t, inter 

alia, airport sponsors will provide access on reasonable 

terms before approving Airport Improvement Program 

("AIP") grants. 

LEGAL_US_W # 53141786.2 
Carlene V. Mcintyre, Esq. 

January 11, 2006 

Page 3 

The existence of a written lease agreement docs not affect or diminish Continental's rights 

to reasonable (and not unjustly discriminato1y) rates. 

Thttd, in refusing to provide any information regarding revennes generated at EWR, the 

Port Authority completely ignores the point- made in both my October 11, 2005 and 

November 11, 2005letters- that the existence of a net surplus of revenue over expenses 

could indicate unreasonably high rates and charges. Continental is entitled to know the 

source and extent of any surplus revenues generated at EWR. 

Continental is also entitled to know how those revenues ate spent. The Port Authority's 

refusal to provide such information makes it impossible to determine whether the rates 

and charges paid by Continental ate being affected, and whether the requltements of 

federal law reg<ttcling revenue diversion are being met. As I have stated before, three facts 

-- that EWR has the highest flight fees in the country, that EWR generates a substantial 

annual surplus, and that this surplus is used to support other Port Authority operationsraise significant questions about the propriety and reasonableness of the rates and charges 

at EWR, and whether aitport revenues are being improperly diverted. Continental is 

attempting to gather all the relevant facts as part of a good faith effort to determine 

whether the rates and charges at EWR comply with the lease agreement and the law. If 

the Port Authority is confident that the rates and charges at EWR comply with the letter 

and intent of the lease agreement and the law, then it should welcome the opportunity to 

allay Continental's concerns and demonstl'ate such compliance. 

I will not repeat, but I do reiterate, the other points made in my prior letters. Suffice it to 

say that the Port Authority's refusal to provide the requested information is unjustified 

and unsustainable nnder applicable law. Such refusal is contrary to the Port Authority's 

obligations as a public entity, contrary to the Port Authority's Freedotn ofinformation 

Policy, and contrary to the requirements of state and federal law. I urge the Port 

Autl1ority to reconsider its position and to avoid burdening the Federal Aviation 

Administration with a legal action or a request for infonnal assistance or alternative 

dispute resolution tl1at Continental may have to lllldertake. 

LEGAL_ US_ W # 53141786.2 
Carlene V. Mcintyre, Esq. 

January 11, 2006 

Page 4 

With respect to the limited information the Port Aud10tity has agreed to provide, please 

let me know when it will be made available. · 

Sinc~~>jly, ~' 

~t·/ 1JAv 

RobertS. Sp n 

ofPAUL, HASTINGS,JANOFSKY &WALKERLLP 

RSS:mc 

LEGAL_ US_ W # 53141786.2