# Paul Hastings ATTORNI'YS

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(213) 683-6253 robertspan@paulhastings.com January 11, 2006

VJA FACSIMILEAND U.S. MAIL

Carlene V. Mcintyre, Esq. Chief, Opinions and Appeals Division The PortAuthority ofNewYork and NewJersey 225 ParkAvenue South, 15th Floor NewYork, 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 limitedinfo.tmation inresponse to my request onbehalfof Continental Airlines, Inc. ("Continental"), itis clear that the PortAuthority is refusing to provide most ofthe requested information. The Port Authority's position is not only disappointing; itis troubling for a number of reasons. Let us begin with the verybasic conceptthat the PortAuthoiity is a public agency, whose records should be available to the public. As the PortAuthority's Freedom oflnformation Policy states: government, including the activities and decisions ofthe PortAuthority ofNew York and NewJersey

... is the public's business and therefore the public should have access to the records ofthe PortAuthority

... Continental should not have to explain its reasons orbasis for requesting public info.tmation, as you have stated illyourletters. Nor does the PortAuthority have the right to pick and choose which information it

### will disclose and whichit will conceal from public sctutiny. On the contrary, where, as here, the requested information clearly does not fall within any exempt category under the PortAuthority's policies or under the laws ofNewJersey or NewYork, it should be produced promptly andwithout the need for extended debate.

LEGAL_us_w # 53141786.2 EXHIBITWWCarlene V. Mclntyre, Esq. Januaty 11, 2006 PageZ
Secondly, the Port. .Authority continues to rely on the existence ofa written lease agreement between Continental and the PortAuthority as somehow providing a litnitation on Continental's rights to information, as well as a litnitation on any inquiry into the reasonableness ofrat.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 EWRwas 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 ofsubsequentyearly fluctuations in certain cost components set forth for thebase year (as opposed to a fixed yearly number). The yearly flight fee rate was designed tovary based on actual costs and was not intended to return to the PortAuthority an amount greater than thePortAuthority's actual costs of providing the public aircraft facilities. However, Continental remains concerned that, notwithstandingthis apparent cost-based methodology to set the flight fee rate, in fact, the base year "cost" componentnumbers may have been .inflated to generate an additional retum, orprofit, to thePortAuthority over and above·the actual cost ofany components thatwere not .included in the base year calculation. Compounding the problemis the apparent fact that the aggregate cost ofcertain components, such as security costs (as you cite inyour 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 PortAuthority's position- relying exclusively on the 1994 Federal Aviation AuthorizationAct (the "1994 Act''), which establishedthe expeditedprocedure for challengingrates not set hy agreement- ignores the cleat statements oflaw and policy that the 1994Act did not abrogate existing law regarding reasonableness ofairportrates and charges. As the DOTPolicy Statementmakes clear:
In addition, the Department does notinterpret§ 47129 to repeal or narrow the scope ofthe basic requirement that fees imposed on all aeronautical users be reasonable and notunjustly 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 AirportImprovement Program ("AIP") grants.

LEGAL_US_W # 53141786.2Carlene V. Mcintyre, Esq. January 11, 2006 Page 3

The existence ofa written lease agreement docs not affect or diminish Continental's rights to reasonable (and notunjustly discriminato1y) rates. Thttd, in refusing to provide any information regarding revennes generated at EWR, the PortAuthority completely ignores the point- made in both my October 11, 2005 and November 11, 2005letters- that the existence ofa net surplus ofrevenue over expenses could indicate unreasonably high rates and charges. Continentalis 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 PortAuthority's refusal to provide such informationmakes 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 EWRgenerates a substantial annual surplus, and that 

### this surplus is used to support other Port Authority operationsraise significant questions about the propriety andreasonableness ofthe rates and charges atEWR, and whether aitport revenues are beingimproperly diverted. Continental is attempting to gather all the relevant facts as part ofa good faith effort to determine whether the rates and charges at EWR comply with the lease agreement and the law. 

### If the PortAuthority is confident that the rates and charges at EWRcomply with theletter and intent ofthe lease agreement and thelaw, 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 requestedinformationis unjustified and unsustainable nnder applicable law. Such refusal is contrary to the Port Authority's obligations as a public entity, contrary to thePortAuthority's Freedotn ofinformation Policy, and contrary to the requirements ofstate and federal law. I urge the Port Autl1ority to reconsider its position and to avoid burdening the Federal Aviation Administrationwith a legal action or a request for infonnal assistance or alternative dispute resolution tl1at Continental may have to lllldertake.

LEGAL_US_ W # 53141786.2Carlene 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. ·



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