' ' Continental 

Aidines 

t ,en ShannOn 

~~k.·J Pro~ideni 

Corporole Reo! Estote 

& Environmental Affairs 

Con!lnental Airlines, Inc. 

1600 Smith Street HQSVP 

Houston TX 77002 

Tel 713 324 2245 

Fox 713 324 6954 

April 7, 2003 

Mr. Michael DeCotiis, Esq. 

Chief Counsel 

Office of the Governor 

StateHouse 

125 W. State Street · 

Trenton, NJ 08625 

Mr. Anthony R. Coscia 

Windels, Marx, Lane & Mittendorf, LLP 

120 Albany Street Plaza 

New Brunswick, NJ 08901 

Dear Mike and Tony, 

Thank you for your time last week. We are grateful for your attention and that of 

Governor McGreewy. Pursuant to the Governor's request, we enclose a sununary of our 

proposals on rate relief initiatives that we hope the Port Authority will undertake in 

recognition ofthe extraordinary situation facing us. J h.ope the material is selfexplanatory and reflective of the direction we understood we needed to take on the 

specific proposals, We look forward to your response. · 

Tony, we do agree that the New York market should be a great one for us, but we want 

you to know that during the last 12 months, Continental and ExpressJet (formerly 

Continental Express) operations at Newark resulted in a net loss of $103 million. That 

was before the war in Iraq, which has reduced passenger demand even further. Even 

before the start of the war, Continental was forced to reduce the number of flights out of 

EWR to Europe, Tel Aviv and Sao Paulo, among others .. 

. I, along with Nene Foxhall, am available to answer any questions or provide further 

background as you may need. My phone numbers are 713-324-2245 (work), 713-501· 

4176 (cell) and hers are 713-324-SHO (work) and 832-978-5306 (cell). 

Sincerely, 

~~ 

Cc: JamieFox 

Jim Davy 

EXHIBIT PP 
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 initiatives for EWR · 

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ng and future. EWR Passenger Facility Charges (PFC) to rates 

ges currently paid at the airport. The PANYNJ and CO would 

peratively to allocate PFCs to existing project charges. 

 relief generated by using EWR PFCs is a win-win situation because: 

g EWR PFCs to EWR expenses does not negatively impact the State of New Jersey nor 

airports since these PFC funds are not available for their use today. The Newark lease 

 PFCs derived from that airport to be used exclusively at EWR. 

 PFCs to offset EWR rates does not reduce net operating income of the PANYNJ since 

e not included in general operating revenue. 

port has a unique use for its PFCs (e.g. JFK's AirTrain and LGA's modernization 

.) Because EWR has generated sufficient PFCs to pay for its existing projects and has 

 bonded many of the recent renovations through CO's Global Gateway program, EWR's 

e unencumbered and available for,application to existing airport expenses. 

ary capital projects undertaken in the future can be funded through private bonds or airport 

d charges. 

head coverage of up to 60% today to 15% for Security and Police 

 rise in direct Security and Police &Traffic costs post-September 11th has 

ntended effect of creating overhead allocations in excess of what is required to 

ct costs. 

n the increase in overtime wages and other direct costs between the years 2000 and 

verage collections for security alone have increased 44%, or $4.8MM, on a base of 

 We believe that the proposed 15% coverage factor is sufficient to pay for the indirect 

sociated with these services due to the increase in base spending. · 

 represents that the 60% level of coverage is unique to EWR. 

''~'"'' 

~,§ .,.,,a 

1 
Initiatives for EWR 

~~~ 

rtion of the EWR 2003-2007 Capita/Improvement Plan associated 

capacity expansion. This represents $340 million of the 

$870 million. 

ntal's expansion at EWR Terminal c·and subsequent relocation from Terminal 

city at EWR has increased significantly. This has Cieated sufficient growth 

both incumbent carriers and new entrants. 

se projects until they are truly necessary will have the added benefit of 

mands on PFC revenue which may be viewed as another funding source. 

verhead coverage on Airport Service Factor components of 

rges, O&M Expense, and the Manager's Office. 

on of the security overhead coverage highlights the potential for similar 

other cost items comprising the Airport Service Factor. 

of the last two years have taken the rate model in a direction not considered 

created in the early 1970s. 

atisfy the financial needs of the PANYNJ and the carriers serving EWR, each 

of the model must be reviewed for reasonableness. 

~ qz(;,) 

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