BEFORE THE FEDERAL AVIATION ADMINISTRATION

WASHINGTON, D.C.

------------------------------------------------------------------------ : UNITED AIRLINES, INC., : : Complainant, : v. : Docket No. FAA

- 16

- 14

- 13 : THE PORT AUTH ORITY OF NEW YORK : AND NEW JERSEY, : : Respondent. : :

------------------------------------------------------------------------

UNITED AIRLINES, INC.’S STATEMENT OF MATERIAL FACTS IN SUPPORT OF ITS ANSWER TO THE PORT AUTHORITY OF NEW Y ORK AND NEW JERSEY’S

MOTION FOR SUMMARY JUDGMENT Communications with respect to this document should be addressed to: Marc L. Warren Keith J. Harrison Gerald F. Murphy Steven J. Seiden CROWELL & MORING LLP 1001 Pennsylvania Avenue, NW Washington, DC 20 004 (202) 624

- 2500 mwarren@crowell.com Robert S. Span Alan K. Steinbrecher Sophy Chen STEINBRECHER & SPAN LLP 1155 F Street, NW, Suite 1050 Washington, DC 20004 (202) 559

- 8680 rspan@steinbrecherspan.com

Counsel for United Airlines, Inc.1 STATEM ENT OF MATERIAL FACTS In support of its Answer to the Motion f or Summary Judgment and pursuant to 14 C.F.R. § 16.26 (c) (3), C omplainant United Airlines, Inc. (“United”) 1 submits the following material facts as to which C omplainant contends there is a genui ne issue. Each fact is followed by a citation to evidence supporting that fact. 2 BACKGROUND
1. At EWR, as at JFK, airlines are charged a “Flight Fee,” which is based on take

- off weight rather than landing weight, for use of the airfield facilities. Decl. of Gavin Molloy, ¶ 2

. 2. Due to fuel burn, landing weight is, on average, approximately 18% less than take

- off weight. Accordingly, to compare the EWR Flight Fee with the more traditional landing fee charged at other airports, it is necessary to multiply the EW R Flight Fee by a factor of 1.18. Decl. of Gavin Molloy, ¶ 3

. 3. In 2014, the EWR Flight Fee , including the charge for the AirTrain,
average d $9.98 per 1,000 pounds of take

- off weight, equivalent to a landing fee of $11.77.

1 The corporate merger that resulted in Cont inental Airlines, Inc. and United Air Lines, Inc. being owned by the then newly

- formed United Continental Holdings, Inc. took place on October 1, 2010. On March 31, 2013, the merger and integration process was completed with the formation of a single lega l entity that is now known as United Airlines, Inc. References herein to “United” will include Continental Airlines, Inc.

2 Because the parties have submitted voluminous evidence, much of which supports more than one fact, and to avoid duplication, United will not list all evidence supporting each fact.2

Decl. of Gavin Molloy, ¶ 4

. 4. In 2014 , projected average landing fees at major US airports were : AIRPORT 2014 PROJECTED AVERAGE LANDING FEE EWR $11.77* LGA 9.28 CHICAGO O’HARE (ORD) 7.42 JFK 6.71* DENVER (DEN) 4.67 BOSTON LOGAN (BOS) 4.60 LOS ANGELES (LAX) 4.54 SAN FRANCISCO (SFO) 4.50 WASHINGTON DULLES (IAD) 3.86 WASHINGTON NATIONAL (DCA) 3.60 PHILADELPHIA (PHL) 3.52 HOUSTON (IAH) 2.99 DALLAS/FORT WORTH (DFW) 2.64 MIAMI (MIA) 1.76 ATLANTA (ATL) 0.82 *EWR and JFK Fees converted to equivalent landi ng fee by multiplying by 1. 18. Decl. of Gavin Molloy, ¶ 5

. 5. Under the Master Lease, the EWR Flight Fee is comprised of four components: (1) a Public Aircraft Facilities Charge Factor (the “PAF Charge Factor”); (2) an Airport Services Charge Factor (the “ASF”); (3) a Phase 1A Road way3

Charge Factor; and (4) the EWR AirTrain factor. These four factors produce an aggregate Flight Fee rate that is assessed for every 1 , 000 lbs. of maximum take

- off weight. Decl. of Gavin Molloy, ¶ 6

. 6. The PAF Charge Factor and ASF portions of the EWR Fli ght Fee formula have remained unchanged since 1969. Decl. of Joseph Garcia, ¶ 12

. 7. All signatory airlines at EWR pay Flight Fees based on the same formula. Decl. of Joseph Garcia, ¶ 13

. 8. T he same formula is used for calculating the EWR Flight Fee for all ai rlines operating at EWR. Decl. of Joseph Garcia, ¶ 13

. 9. T he formula was in the lease that Continental Airlines, Inc. (“Continental”) assumed when it began operating at EWR in 1987. Decl. of Joseph Garcia, ¶ 12

. 10. United ’s attempts to negotiate changes to the formula were repeatedly rebuffed by the Port Authority. Exhibits OO

– DDD.
11. United ’s attempts to obtain details of the EWR Flight Fee calculation and the revenue surpluses at EWR were repeatedly rebuffed by the Port Authority. Exhibits OO

– DDD.4

PORT AU THORITY
12. In August 2011, the governors of New Jersey and New York ordered the Port Authority to obtain a comprehensive review and audit of the entire agency, including its finances, operations, and ten

- year capital plan. Exhibit M.
13. In 2012 , the primary cons ultant that undertook this review , Navigant Consulting, Inc. (“Navigant”), issued two reports

– Phase I Interim Report (“Navigant I Report”) and Phase II Report (“Navigant II Report”)

– detailing its findings. Exhibits M, N.
14. According to the Port Authori ty, the Navigant I Report constitute d a “thorough assessment of the Port Authority’s current business model, finances, and operations” with “corrective recommendations and measures.” Exhibit O , p. 1.
15. According to Navigant, the Port Authority “has expande d beyond its stated mission as a transportation infrastructure organization and, by fate or design, has also become a major real estate developer and asset owner with investments that dwarf its past holdings . . . with its own . . . police force numbering over 1700 employees.” Exhibit M , pp. 7, 15.
16. This expansion, according to the Port Authority’s consultant, has been grossly deficient in “planning and execution.” Exhibit M, p. 7.5

17. The Port Authority has seen its net costs for the World Trade Center proj ect (“WTC”) balloon from $3.5 billion in 2006 to $7.7 billion in 2012, “representing approximately $14.8 billion of total gross costs, less approximately $7.1 billion in reimbursements by third parties and [other] funding [sources].” Although some of this increase was driven by natural cost growth from the original scope of the WTC, most of it was attributable to timing, planning, execution , and management related to the Port Authority. Exhibit M , pp. 36

- 43.
18. From 2007 through 2011, the Port Authority gen erated cash from the following: airports (JFK $990 million, LGA $273 million, and EWR $1.3 billion), the George Washington Bridge ($1.3 billion), the Lincoln Tunnel ($167 million) and the Holland Tunnel ($141 million). During that same period, it sustain ed losses from most of its other assets, including: heliports/Teterboro/Stewart ($65 million loss), the Port Authority Bus Terminal ($479 million loss), PATH ($2.3 billion loss), Port Newark ($317 million loss), Port Jersey ($184 million loss), Howland Hoo k ($160 million loss), Brooklyn Marine Terminal ($27 million loss) and WTC ($3.1 billion loss). Exhibit N , p. 14.
19. T he Port Authority’s exposure to debt “has more than doubled over the past ten years, from approximately $9.1 billion in 2001 to approxima tely $19.5 billion at the end of 2011.” Exhibit M , p. 7.6

20. Navigant recommended that the Port Authority “align its capital strategy with its mission and objectives” and “deploy its capital with proper attention to preservation of its [transportation] inf rastructure.” Exhibit M , pp. 7, 17.
21. A ccording to Navigant, the diversion of revenue from airports is causing:

a. a “historical[ ] struggle[ ] to fix [operational and safety]

violations in a timely manner, primarily as a result of budgetary constraints lea ding to insufficient maintenance staff, and a lack of inventory of the necessary parts, such as lights and signs.”

b. the hampering of “runway safety areas at both ends of every runway . . . Ten of the Port Authority airports’ 26 runway ends still must be m ade compliant [with safety regulations].”

c. “the airports to rank among the worst in the country in terms of customer satisfaction. Buildings are nearing obsolescence, infrastructure is deteriorating, and maintenance needs are mounting.” Exhibit N, p. 38.
22. Navigant concluded, “ Over the past five years, the Aviation line department has been the only positive free cash flow contributor to the Port Authority but now has some of the largest upcoming capital expenditure needs , ” which cannot be met due to “budgeta ry constraints.” Exhibit N, pp. 5, 38.7

23. A pproximately 60% of Port Authority employees are in the highest four salary band categories (“Service A,” Senior Executive Management, Executive Management and Middle Management). Exhibit M , p. 28.
24. Navigant concl uded that t his top

- heavy structure means there are too many decision makers with a too

- limited span of control. As a result, the Port Authority “is a challenged and dysfunctional organization” that is “inherently resistant to change, lacks effective colla boration between its strategic businesses” and “must conduct a meaningful, top

- to

- bottom organizational redesign focused on operating efficiencies and rooted in clearly defined roles and responsibilities, transparency, accountability and aligned incentives .” Exhibit M, p. 5. UNREASONABLE RATES & CHARGES
25. EWR generates huge surplus revenues, which the Port Authority then uses to subsidize its non

- aeronautical operations. Exhibit N, p. 14

. 26. In 2014, the Public Airport Facilities component of the EWR Flight Fee included a mark

- up of 38% above actual costs. Decl. of Robert S. Span, ¶ ¶ 22

- 23

. 27. In 2014, the AS F component of the EWR Flight Fee included a mark

up of 14 % above actual costs. Decl. of Robert S. Span, ¶ 24

. 28. In the five

- year period 2007

- 2011, EWR gave the P ort Authority $1.6 billion in operating cash flow.8

Exhibit M, p. 14

. 29. T he Port Authority staffs ARFF with airport police, trained as firefighters, each of whom cost the Port Authority in 2014 an average of $242,000 in compensation, overtime, and benefits.
E xhibit L

. 30. The Port Authority’s budget for the 2014 ARFF costs include d overtime expense that total ed 42% of straight

- time expense. Exhibit L

. 31. The entire cost of the ARFF at EWR is included in the PAF Factor in the EWR rate base. Exhibit 2 to Garcia Decl.
32. N on - ARFF security costs included in the 2014 EWR Flight Fee total more than $37 million. As part of the ASF, t he se costs were then marked up by 14% in the EWR Flight Fee calculation

. Exhibit 2 to Garcia Decl.
33. EWR’s operating revenues and profits for 2009 t hrough 2013 were:

2009 2010 2011 2012 2013 Revenue $729,120,000 748,973,000 772,987,000 780,081,000 799,553,000 Operating Profit 214,555,000 218,009,000 245,619,000 241,672,000 239,923,000 Operating Margin 29% 29% 32% 31% 31%

Decl. of Gavin Molloy, ¶ 7

.9

34. In contrast, while JFK and LGA showed operating profits as well, the levels were much lower:

2009 2010 2011 2012 2013 JFK Operating Margin 20% 23% 22% 23% 22% LGA Operating Margin 15% 15% 15% 13% 8%

Decl. of Gavin Molloy, ¶ 8

. 35. A document created by the Port Authority in July 2013 states t hat the ARFF charges at EWR would be “recoverable at 130 percent” from the airlines. Exhibit L, p. 1.
36. In fact, however, the ARFF charges at EWR are recovered at 138 percent from the airlines through the EWR Fli ght Fee. Decl. of Robert S. Span, ¶ ¶ 22, 23

. 37. The average base salaries of Port Authority employees “are among the highest relative to peer group”; the total cost of compensation and benefits for the average Port Authority employee is estimated to exceed $1 43,000 annually. “Add

on” compensation, such as pay based on overtime, vacation exchanges , and longevity programs, constituted an exorbitant 70% of base salaries. Exhibit M , p. 23.
38. The Navigant I Report found that the average salary in the Port Author ity’s Aviation Department was highest among its peer group of major airports in the country.10

Exhibit M , p. 25.
39. Data made public by the Port Authority reveal that the seven highest

paid employees in the Aviation Department in 2013 were non

- exempt workers wh ose total compensation was 209% of their base pay. www.PANYNJ.gov/corporate

- information/employee

- payroll

- information

2013.cfm.
40. A verage pay levels for Port Authority employees greatly exceed market rates, even in the expensive New York metropolitan area

. Exhibit GG.
41. In 2006, the Port Authority paid an international management consultant $435,000 to evaluate police staffing practices that had led to a 12% jump over the prior year’s already excessive police overtime costs. Exhibit T.
42. The c onsultant concluded that the absence of any overtime cap, “archaic” record

- keeping and “lenient” sick time and disciplinary polic i es were the cause of overtime excesses and required aggressive correction. Exhibit T.
43. In 2007, police overtime costs increased by another 14%, with the average officer logging in more than 500 hours of overtime. Exhibit T.
44. In 2009, the Office of the New York State Comptroller initiated a multiple

- year audit of the Port Authority. The audit results, issued in August 2011, found that ( a ) the Po rt Authority’s overtime costs as a percentage of base salaries was actually double its self

- declared benchmark of 15%; ( b ) the Port Authority’s11

2010 budget goal of reducing overtime “was not communicated or implemented within the Authority” ; and ( c ) there was “no documented justification explaining why the work performed on an overtime basis [by Port Authority police] could not have been performed during the employees’ regularly scheduled work hours.” Exhibit U, pp. 8, 17.
45. The New York State Comptroller fou nd that Port Authority mismanagement was responsible for excessive overtime costs and recommended that “Authority officials . . . take a much more proactive approach to the management and control of overtime.” Exhibit U, pp. 8, 17.
46. In response, the Port Au thority stated that it had “taken a number of actions to further enhance controls over the use and management of overtime across the agency.” Exhibit V , p. 1.
47. Navigant similarly reported o vertime mismanagement at the Port Authority and recommended that the Port Authority make “overtime reduction . . . [its] policy focus.” Exhibit M , p. 29.
48. Since 2012 , the Port Authority’s overtime costs have continued to skyrocket to even higher levels. Exhibit s W, X, Y.
49. In 2014, t he Port Authority implemented a new ARFF cadre

. The Port Authority plans to maintain the same number of police officers who were providing12

both police and firefighting services prior to the implementation of the new ARFF cadre and add 280 dedicated firefighting policemen to the payroll. Exh ibit L.
50. T he Port Authority’s plan to hire existing Port Authority Police Department members for the ARFF cadre rather than hire new employees at lower compensation rates greatly in creases the cost of the ARFF cadre. Exhibit L.
51. The ARFF cadre is staffed wit h Port Authority Police who are paid even higher than their colleagues performing police duties. Their mean total compensation in 2013 was $153,000 vs. $133,000 for the other Port Authority officers. Exhibit GG , ¶ 20.
52. T he Port Authority’s compensation and benefit package for the ARFF staffers is higher than market. The ARFF staffers are paid significantly more than New York metropolitan area firefighters. They are paid 40% more than FDNY firefighters and up to 70% more than other New York metro politan ar ea firefighters. Exhibit GG, ¶¶ 19

- 22.
53. All labor costs for the ARFF at EWR are included in the PAF Factor in the EWR Flight Fee. Exhibit 2 to the Decl. of Joseph Garcia.
54. By agreement between the FAA and the Port Authority, the n ew

“ ARFF Cadre Firefighter s will perform only ARFF duties and no collateral duties as Police Officers.”13

Exhibit FF

. 55. By agreement between the FAA and the Port Authority, the new ARFF cadre officers are prohibited from performing non

- ARFF duties, including police duties, and may no t perform overtime for police duties or any non

- ARFF function. Exhibit FF.
56. T he Port Authority will continue to cross - train police officers for both firefighting and police duties, paying mandatory overtime for this additional training, regardless of the du ty to which the officer is assigned. No other major airport structures its ARFF function i n this manner

. Decl. of Gavin Molloy, ¶ 9

. 57. The Port Authority’s staffing plan for the ARFF cadre increase d the airlines’ costs at the New York area airports by $58 m illion in 2014 , a 272% increase in one year. Exhibit L.
58. 41% of the total of the new ARFF cost s is allocated to EWR , compared to 33% at JFK

. Exhibit L.
59. T he increase in ARFF costs from the 2012 actual to the 2014 budgeted ARFF is 137% at JFK and 237% a t LGA, and 510% at EWR. Exhibit L.
60. The Port Authority did not consult with United before deciding on how to implement the changes to the ARFF in 2013. Decl. of Gavin Molloy, ¶ 10

.14

61. The EWR Flight Fee includes a cost component related to police and
tra ffic functions at the airports other than terminal security and emergency services, such as the ARFF. Decl. of Gavin Molloy, ¶ 11

. 62. Since 2010, this cost item has increased by more than 40%, from approximately $27 million to approximately $38 million in 201 4 . Further, due to the mark

- up contained in the EWR Flight Fee formula, these police costs generated an additional $3.8 million in revenue for the Port Authority at EWR in 2013. Decl. of Gavin Molloy, ¶ 12

. 63. Port Authority police logged 384,000 hours more overtime than budgeted in 2013

. Exhibit W.
64. 1 87 Port Authority police officers and supervisors earned more than $200,000 in wages in 2013 , often doubling their base salaries through overtime and other compensation. Port Authority of New York & New Jersey, Employee Payroll Information

– As of March 31, 2014, available at www.PANYNJ.gov/corporate

information/employee

- payroll

- information

- 2013.cfm

. 65. Eight members of the force made more than $300,000 in wages, including one officer who earned about $331,000, inc luding almost $215,000 in overtime, making him the highest

- paid Port Authority employee. Port Authority of New York & New Jersey, Employee Payroll Information

– As of March 31, 2014, available at www.PANYNJ.gov/corporate

information/employee

- payroll

- inform ation

- 2013.cfm

.15

66. Port Authority Police are paid significantly more than NYPD officers. Including overtime, mean annual total compensation for Port Authority officers in 2013 was $124,000 vs. $83,000 for NYPD

– 49% higher. For sergeants, the Port Authority mean compensation was 57% higher. Port Authority Police are also paid significantly more than police in the New York metropolitan area (including

n orthern N ew J ersey ). In 2013, Port Authority officers received 65% more pay, while sergeants were paid 76% more. Exhibit GG, ¶ 18.
67. At EWR, United is charged for terminal police on the basis of a cost per “tour.” At Terminal C, which is occupied exclusively by United, there are five police tours per day. At Terminal A, where United operates along with other airlines, there are three police tours per day. Decl. of Gavin Molloy, ¶ 13

. 68. Since 2010, the average annual cost per tour charged by the Port Authority at EWR has increased by more than 120 %. This increase is a result of the Port Authority’s above

- marke t wages, benefits , and overtime. Decl. of Gavin Molloy, ¶ 14 ; Exhibit GG.
69. T he Citizens Budget Commission concluded that compared to officers in Jersey City, New York City, and Newark, Port Authority officers’ base pay is 17% to 29% more at two years of s ervice, 22% to 52% more at six years, and 21% to 28% more at twenty

- five years. Exhibit HH , pp. 12

- 15

. 70. T he Citizens Budget Commission further concluded that the hourly pay of Port Authority police officers is anywhere between 23% and 215% higher16

than t hat of similarly situated federal agents at the Bureau of Alcohol, Tobacco, Firearms and Explosives. Exhibit HH, pp. 24

- 27.
71. The Citizens Budget Commission concluded that Port Authority police compensation is excessive and should be closer “to the pay rec eived by officers in other large urban departments in the region.” Exhibit HH, p. 28.
72. C ompensation paid to employees in the Port Authority Aviation Department is well over market. Most job titles receive median pay ranging from 50% to 160% more tha n comparable workers in the New York metro politan area. Exhibit GG , ¶¶ 23

- 24.
73. On July 19, 2013, after the Port Authority announced the huge increase in ARFF fees for EWR, JFK , and LGA, United and the other airlines wrote to the Port Authority, expressing concern at the 284% fee increase and disappointment that the Port Authority’s Aviation Department staff was purportedly not “authorized” to provide the detailed back

- up information the airlines had requested. Exhibit JJ.
74. On September 10, 2013, United wr ote to the Port Authority, protesting the ARFF fee increase and again requesting information upon which to base a determination whether or not the increase was reasonable. Exhibit KK.
75. United never agreed

– in writing or otherwise

– to the ARFF charges

. D ecl. of Gavin Molloy, ¶ 15 ; Exhibits KK and LL

.17

76. United never agreed

– in writing or otherwise

– to the unreasonable security and administrative costs described in the Complaint. Decl. of Gavin Molloy, ¶ 16 ; Exhibits KK and LL

. UNJUST DISCRIMINATION
77. In 2014 , t he Port Authority charge d higher Flight Fees at EWR than it d id at JFK and LGA

. Decl. of Gavin Molloy, ¶ 17

. 78. T he Port Authority’s cost per enplanement is higher at JFK than at EWR. Exhibit EE.
79. In 2014, the difference between the Flight Fee at EWR and th e Flight Fee at JFK meant that United paid more than $80 million more in flight fees than it would have paid if it flew its EWR schedule at JFK. (United’s total take

- off weight at EWR in 2014 multiplied by the difference between the EWR and JFK rates.) De cl. of Gavin Molloy, ¶ 18

. 80. If the Flight Fee methodology currently used at JFK were to be used at EWR, the airlines operating a t EWR would pay a total of $52 million less annually than they currently pay. Decl. of Gavin Molloy, ¶ 19

. 81. The Port Authority’s i mposition of a higher Flight Fee at EWR than at JFK and LGA puts United at a significant competitive disadvantage. United has approximately 135,000 scheduled departures from EWR annually, in contrast to its 12,500 scheduled flights from LGA and its 5,500 scheduled flights from JFK.18

Decl. of Gavin Molloy, ¶ 20

. 82. Because JFK, LGA , and EWR are “slot

- constrained” airports operating at full capacity throughout most of the day, it would not be possible for United to secure sufficient slots at either JFK or LGA to relocate its hub from EWR in order to take advantage of the lower landing fees at those airports. Exhibit EE, ¶ 29.
83. Likewise, there are no other airports in the New York metro politan area that have the capacity ( i.e., terminals, gate facilities , and ru nway length) to accommodate the hubbing operations of a large network carrier such as United. Exhibit EE, ¶ 29.
84. F or a typical domestic flight operated using a 737

- 800 aircraft, the landing fee per enplaned passenger at EWR is 75% higher than at JFK and 2 1% higher than at LGA. Exhibit EE, ¶ 29.
85. Because United has no practical alternative to EWR for its hub in the New York metro politan area, it has no choice but to pay the excessive fees the Port Authority charges for access to EWR, even though these fees p ut United at a disadvantage vis

- à

- vis other carriers

– particularly Delta, American , and JetBlue

– that are competing for many of the same passengers via their hubs at JFK and/or LGA. Exhibit EE, ¶ 29.
86. As a further example, for a typical long

- haul intern ational flight operated using a 777

- 200 aircraft, the landing fee per enplaned passenger at EWR is 75% higher than at JFK. This puts United at a competitive disadvantage vis

- à

-19

vis Delta and American, and a variety of foreign carriers that use JFK as the b ase of their long

- haul international services to/from the New York metro politan area. Exhibit EE, ¶ 31.
87. D elta, American , and JetBlue each operate hubs at New York
metro politan area airports with lower costs than EWR. Exhibit EE, ¶ 32.
88. There are more than 1 00 destinations worldwide that United serves from the New York metro politan area exclusively from EWR in competition with U.S. carriers serving the same destinations from JFK and/or LGA. Exhibit EE, ¶ 32.
89. Any cost disadvantage United confronts because it o perates its New York metropolitan area hub at EWR is magnified for passengers making connections, since for each round

- trip passenger United connects via EWR, United is effectively required to pay the Port Authority’s landing fees per passenger twice (once on their outbound flight and again when they return to their destination). Exhibit EE, ¶ 33.
90. United competes with both American and Delta (as well as a host of foreign carriers) for many of the same international connecting passengers that use the New Yor k metropolitan area ( i.e ., EWR or JFK) as their connecting gateway. Exhibit EE, ¶ 33.
91. For example, a substantial proportion (26% overall) of all transoceanic international connecting passengers originating from or destined to points in the eastern U nited S tates use either EWR or JFK as their international gateway. Exhibit EE, ¶ 34.20

92. Because United (via EWR) competes directly with American and Delta (via JFK) for many of the same transoceanic connecting passengers that use a New York metropolitan airport as their connecting point, the higher costs at EWR vis

- à

vis JFK (which are magnified for connecting passengers as mentioned above) put United at a further competitive disadvantage. Exhibit EE, ¶ 34.
93. The increased ARFF costs for EWR for 2014 are over $33 mil lion. United ’s share of the ARFF costs for 2014 is nearly $25 million, while Delta’s share is $7 million, American’s $5 million , and JetBlue’s $3 million. Exhibit KK.
94. Air carriers operating out of JFK and LGA, on the one hand, are making similar use of th e New York area airport system as those air carriers operating out of EWR, on the other hand. Decl. of Gavin Molloy, ¶ 21

. REVENUE DIVERSION
95. The Port Authority currently plans to spend $1.8 billion over a ten

year period to improve roads and bridges it doe s not own or operate. Exhibit A , p.13

. 96. In 2014 alone, the Port Authority spen t $181 million to repair the Pulaski Skyway and $60 million on the Wittpenn Bridge, structures owned and operated by the State of New Jersey. Exhibit A , p. 106

. 97. Net income from EW R help s pay for those Port Authority facilities that operate at a loss.21

Exhibit A, p. 10.
98. I n the six year period 2005

- 2010 , the Port Authority diverted a total of more than $1.7 billion in airport revenues to non

- airport uses, an average of almost $300 million annually. Exhibit B, p. 4.
99. This total was almost ten times higher than the amounts diverted by SFO and ORD, the grandfathered airports with the next highest totals. Exhibit B, p. 4.
100. A recent press release from the Port Authority reveals that i t has allocated $1.8 billion for the 2011

- 2021 period for the “Lincoln Tunnel Access Program,” which consists of “the rehabilitation of the Pulaski Skyway, the Wittpenn Bridge and the Routes 1 and 9 truck route connecting Tonnelle Circle in Jersey City
to Interstate 495.” Exhibit C, p. 2 ; Exhibit D, p. II

- 54.
101. None of the facilities involved in the “Lincoln T unnel Access Program,” is actually owned or operated by the Port Authority. Exhibit A, p. 74

. 102. The Pulaski Skyway is a roadway consisting of a brid ge and causeway that connects Jersey City and Newark (near the Holland Tunnel, not the Lincoln Tunnel) and is owned and operated by the State of New Jersey. Exhibit E

. 103. The Wittpenn Bridge and Routes 1 and 9 also fall within the ambit of the New Jersey De partment of Transportation. Exhibits F

- H.22

104. T he Port Authority’s own in

- house counsel noted in an internal memorandum that the Port Authority lacks authority to build or repair access roads to the Holland Tunnel. Exhibit I , p. 2

. 105. As of December 31, 2013, the Port Authority had already spent $121 million on the Lincoln Tunnel Access Program. Exhibit D, p. II

- 54.
106. The Port Authority has expended tens of millions of dollars in recent years on the New Brunswick Civic Center, the Stevens Institute of Technolo gy (a private college in Hoboken), the Jersey City Medical Center and Independence Park, a Newark space run by Essex County, New Jersey , and other regional projects

. These facilities are neither owned nor operated by the Port Authority. Exhibit K.
107. The Por t Authority spen t an additional $48 million on regional projects in 2014. Exhibit A, p.11.
108. According to Steven Berger, the Port Authority’s former executive director, “[t]he Port Authority has been a money tree, an ATM machine

. . . a place [the governor s of New York and New Jersey] can go to do projects that they can’t get through their budgets.” Exhibit R.
109. In the five year period 2007

- 2011, EWR gave the Port Authority $1.6 billion in operating cash flow. Exhibit M , p. 14.23

PORT AUTHORITY MONOPOLY POW ER
110. T he Port Authority has monopoly power with respect to the airports in the New York metropolitan area, the most important market in the United States. Exhibit EE, ¶¶ 8

- 9.
111. The New York metropolitan area is the largest airline market in the United States, both for domestic and international travel. Exhibit EE, ¶¶ 8

- 9.
112. In 2013, over 61 million domestic passengers traveled to or from the New York metropolitan area, approximately 50% more than Los Angeles, the second largest domestic airline market in the United States. Exhibit EE, ¶¶ 8

- 9.
113. In terms of airline revenue, the New York metropolitan area accounted for approximately $13.3 billion

– 55% more than second

- ranked Los Angeles

– and 7.2% of all domestic origin and destination revenue nationwide in 2013

. Exhibit EE, ¶¶ 8

- 9.
114. For international air travel, the New York metropolitan area is the largest market in the United States by an even wider margin. The New York metropolitan area accounted for over 13.7 million international passengers in 2013 (approxi mately twice that of Miami, the second largest market for international passenger traffic). Exhibit EE, ¶¶ 8

- 9.
115. In terms of origin and destination airline revenue, international travel to and from the New York metropolitan area accounted for $7.2 billion i n 2013

– as24

much as San Francisco, Los Angeles and Chicago combined

– and approximately 15% of all U.S. carrier international revenues. Exhibit EE, ¶¶ 8

- 9.
116. The Port Authority operates the three major New York metropolitan area airports

– EWR, JFK and LGA

– plus Stewart International Airport. The Port Authority

- controlled airports account for over 96% of all air travel to or from the New York metropolitan area. Exhibit EE, ¶ 17.
117. EWR, JFK , and LGA compete for th e same New York metropolitan air travelers

. Ex hibit EE, ¶ 15.
118. There is no realistic possibility that a fourth major airport will open in the New York metropolitan area to compete with EWR, LGA and JFK.
119. The market for commercial airport services in general, and in the New York metropolitan area in pa rticular, is characterized by exceptionally high barriers to entry. Exhibit EE, ¶¶ 11

- 12.
120. The Flight Fee charged at EWR is far higher than the fees charged at other non - New York airports. The Flight Fee for a Boeing 737

- 800 at EWR, for example, is more than double the Flight Fee at comparably

- sized airports in other cities such as San Francisco International (“SFO”) or Boston Logan International (“BOS”). Exhibit EE, ¶ 20.