60544 Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / Rules and Regulations 

1This slot program was not implemented under 

the HDR, but rather under SFAR 44 and was related 

to the limitations on air traffic control services 

resulting from the controller’s strike. 

2Commenters appear to have forgotten this 

rulemaking action when arguing that the 

withdrawal of slots for reallocation is 

unprecedented. 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 93 

[Docket No. FAA–2008–0517; Amdt. No. 93– 

88] 

RIN 2120–AJ28 

Congestion Management Rule for John 

F. Kennedy International Airport and 

Newark Liberty International Airport 

AGENCY: Federal Aviation 

Administration (FAA). 

ACTION: Final rule. 

SUMMARY: This rule establishes 

procedures to address congestion in the 

New York City area by assigning slots at 

John F. Kennedy (JFK) and Newark 

Liberty (Newark) International Airports 

in a way that allows carriers to respond 

to market forces to drive efficient airline 

behavior. The rule also extends the caps 

on the operations at the two airports, 

assigns to existing operators the 

majority of slots at the airports, and 

develops a robust secondary market by 

annually auctioning off a limited 

number of slots in each of the first five 

years of this rule. Auction proceeds will 

be used to mitigate congestion and delay 

in the New York City area. The rule also 

contains provisions for minimum usage, 

capping unscheduled operations, and 

withdrawal for operational need. The 

rule will sunset in ten years. 

DATES: This rule becomes effective 

December 9, 2008. 

FOR FURTHER INFORMATION CONTACT: For 

technical questions regarding this 

rulemaking, contact: Nan Shellabarger, 

Office of Aviation Policy and Plans, 

APO–1, Federal Aviation 

Administration, 800 Independence 

Avenue, SW., Washington, DC 20591; 

telephone (202) 267–7294; e-mail 

nan.shellabarger@faa.gov. For legal 

questions concerning this rulemaking, 

contact: Rebecca MacPherson, FAA 

Office of the Chief Counsel, 800 

Independence Ave., SW., Washington, 

DC 20591; telephone (202) 267–3073; email rebecca.macpherson@faa.gov. 

SUPPLEMENTARY INFORMATION: 

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. 

Table of Contents 

I. Background 

II Summary of the Final Rule 

III. Authority To Reallocate Capacity 

A. The FAA Is Legally Authorized To 

Allocate Slots Through an Auction 

Mechanism 

1. Slots Are a Form of Property That May 

Be Leased by the FAA to Others 

2. FAA Leases Are Not Covered by IOAA 

and This Rule Is Not in Violation of Any 

Current Appropriations Restrictions 

3. Leases Are Not Taxes 

4. The FAA’s Authority To Give Slots to 

Carriers Through Cooperative 

Agreements 

5. Leases That Terminate by Their Own 

Terms Are Not a ‘‘Taking’’ of Property 

6. The Draft Lease Terms Included in the 

NPRM Were For Illustrative Rather Than 

Probative Purposes 

7. International Obligations 

B. The FAA Has Authority To Retain the 

Amounts Received From the Lease and 

Disposal of Property and To Use Those 

Proceeds for Congressionally Authorized 

Purposes 

C. The Auction of Slots Does Not Affect the 

Proprietary Rights of the Port Authority 

D. The FAA Has Complied With the 

Administrative Procedure Act 

1. The Docket Contained Adequate 

Information for Meaningful Comment on 

the Rulemaking Proposal 

2. The Discussion of the Auction Process 

Provided Sufficient Detail for 

Meaningful Comment on the Rulemaking 

Proposal 

3. The FAA Adequately Considered 

Alternatives 

IV. Discussion of the Rule 

A. Allocation of Slots at JFK and Newark 

1. Proposed Alternatives 

2. Categories of Slots 

3. Initial Allocation of Slots 

4. Market-Based Reallocation of Slots 

a. Impact of Auctions on Competition 

b. Impact of Auctions on Carrier 

Investment 

c. Alternatives to Reallocation 

B. Secondary Trading 

C. Usage Requirements 

D. Unscheduled Operations 

E. Sunset Provision 

F. Other Issues 

1. Withdrawal for Operational Need and 

Future Reductions in the Cap 

2. Impact of the Final Rule on the Port 

Authority’s Ability To Run Its Airport 

3. Minimum Usage Requirements for Slots 

Acquired Through Sublease 

I. Background 

This final rule is the latest action in 

a history of congestion management at 

New York airports. Access to both John 

F. Kennedy (JFK) and Newark Liberty 

International (Newark) airports is highly 

sought after. These two factors have 

forced the FAA to address a dilemma: 

how can the agency reduce delays while 

providing some measure of access to 

carriers wishing to operate at the 

airport, thus ensuring competition? 

While there are many factors 

contributing to the delays and 

congestion at JFK and Newark, demand 

for the associated airspace has outstripped capacity. 

History of Congestion Management at 

JFK and Newark 

The FAA managed congestion during 

the five hours of peak transatlantic 

demand (3 p.m. through 7:59 p.m. 

Eastern Time) at JFK under the High 

Density Rule (HDR) from 1969 through 

2006. 14 CFR part 93 subparts K and S. 

However, not until deregulation of the 

airline industry did the FAA need to 

step in and provide for carrier access to 

the airspace immediately surrounding 

the airport. Prior to 1985, the carriers at 

JFK, operating under antitrust 

immunity, determined who would be 

allowed to operate and when. The 

FAA’s role was limited to determining 

how many operations air traffic control 

could reasonably handle during 

congested periods and enforcing 

operator compliance with the rules. The 

HDR divided the allowable operations 

(slots) by categories of users (i.e., 

carriers other than air taxis, scheduled 

air taxis, and others). 33 FR 17896 

December 3, 1968). In 1982, the FAA 

imposed a minimum usage requirement 

for the first time. 47 FR 7816 February 

22, 1982). Also in 1982, the FAA 

implemented an experimental buy-sell 

rule, under which approximately 190 

slots were transferred among carriers 

over six weeks of the program. 47 FR 

29814, July 8, 1982).1

The FAA established more permanent 

allocation procedures for slots under the 

HDR in 1985 when it adopted the Buy/ 

Sell Rule. 50 FR 52195, December 20, 

1985. In a companion rulemaking to the 

Buy/Sell Rule (SFAR 48), the FAA 

provided for the withdrawal of up to 

five percent of the slots at the slotconstrained airports through a reverse 

lottery so as to provide a pool of slots 

for new entrants and limited 

incumbents. SFAR 48, 51 FR 8630, 

March 12, 1986).2 The Buy/Sell Rule 

included use-or-lose provisions and, 

while explicitly stating that the slots 

were not the carriers’ property and did 

not constitute a proprietary right, the 

FAA allowed carriers to buy, sell or 

lease the slots on the secondary market. 


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3Under both level 2 and level 3, carriers notify 

the governmental entity designating the airport of 

their intended schedules for the affected season 

and, where possible, the two parties will attempt to 

resolve each others concerns. However, under a 

carrier is not obliged to accept the governing 

authority’s position at a level 2 airport. 

For the next 15 years the agency relied 

primarily on the secondary market 

authorized by the Buy/Sell Rule to 

address access issues at the airport. 

However, the Buy/Sell Rule created 

market distortions by creating categories 

of carriers entitled to preferential 

treatment under an administrative 

reallocation mechanism which severely 

limited access to these carriers other 

than on the open market. Affected 

carriers complained to the FAA that by 

grandfathering 95 percent of the slots at 

the slot-controlled airports to incumbent 

carriers, there was insufficient capacity 

available for reallocation. The Buy/Sell 

Rule also failed to foster a robust 

secondary market because it did not 

require any transparency. Accordingly, 

carriers were able to keep out 

competitors by arranging private 

transactions. This resulted in carriers 

interested in initiating or expanding 

service at the airports often being 

unaware that slots were potentially 

available for sale or lease. Some carriers 

also complained that they were 

effectively being denied access to the 

airport because their competitors 

refused to sell slots or provide 

meaningful lease terms. 

On April 5, 2000, Congress enacted 

the Wendell H. Ford Aviation and 

Investment Reform Act of the 21st 

Century (AIR–21 or the Act). The Act 

phased out the HDR at JFK effective 

January 1, 2007. The Act also preserved 

the FAA’s authority to impose flight 

restrictions by stating 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). 

Since the spring of 2006, U.S. air 

carriers serving JFK have significantly 

increased their domestic scheduled 

operations throughout the day. This 

change in use affected the manner in 

which the airport’s runways could be 

used. Historically, the air traffic 

controllers achieved maximum 

efficiency at JFK by using either two 

arrival runways and one departure 

runway, or two departure runways and 

one arrival runway, to facilitate the 

transatlantic traffic flows. The increase 

in domestic traffic—from the two largest 

operators at the airport, Delta Air Lines 

(Delta) and JetBlue—affected the 

efficient use of JFK’s four runways. 

As a result of the increase in 

scheduled operations at JFK, the 

summer 2007 demand exceeded the 

airport’s capacity during many periods 

of the day. In 2007 flight delays in the 

New York City metropolitan area 

soared. Delays impacted all three major 

commercial airports and cascaded 

throughout the NAS. The summer of 

2007 became the second worst on record 

nationally for flight delays. On 

September 27, 2007, the Secretary of 

Transportation announced the 

formation of the New York Aviation 

Rulemaking Committee (NYARC) to 

help the Department of Transportation 

(Department) and the FAA explore 

available options for congestion 

management and how changes to 

current policy at all three major 

commercial New York City airports 

would affect the airlines and the 

airports. 

By design, the NYARC provided 

ample opportunity for extensive input 

by aviation stakeholders, having 

members from every major air carrier in 

the United States as well as foreign 

carriers, passenger groups, and the Port 

Authority of New York and New Jersey 

(Port Authority). Through the ARC 

process, these stakeholders played a key 

role in exploring ideas to address 

congestion and ensuring that any 

actions contemplated by the Department 

and the FAA would be fully informed. 

In addition to holding weekly meetings 

of the full NYARC, five working groups 

regularly met to explore ways to address 

both congestion and allocation of the 

available airspace. The NYARC worked 

throughout the fall and submitted a 

report to the Secretary, dated December 

13, 2007, discussing its findings. A copy 

of the NYARC Report may be found at 

http://www.dot.gov/affairs/ 

FinalARCReport.pdf. 

While the NYARC process was 

underway, in September 2007, the FAA 

designated both JFK and Newark 

airports IATA Level 2, Schedules 

Facilitated Airports for the 2008 

summer season. 72 FR 57317 (Sept. 24, 

2007). The FAA thereby received 

summer scheduling information from 

the carriers for those airports. Based in 

part on this information, in September– 

October 2007, the FAA and the 

Secretary of Transportation decided that 

it was necessary to invoke the 

Department’s authority to convene a 

meeting of air carriers to discuss flight 

reductions at JFK, which was 

determined to have severe congestion 

during peak hours of operation. 49 

U.S.C. 41722. On October 25, 2007, the 

FAA designated JFK as an IATA Level 

3, Coordinated Airport for summer 2008 

in order to address any growth in 

operations at the airport by foreign-flag 

carriers.3 72 FR 60710. 

During the individual air carrier 

sessions, American Airlines (American), 

Delta, and JetBlue Airways, which 

account for over 75% of the total 

operations at JFK, withdrew their 

proposed peak-hour schedule increases, 

and retimed some operations, for the 

summer of 2008 during the afternoon 

and early evening peak hours at the 

airport. The FAA also received 

comments on the schedule reduction 

process through the public docket. 

Docket FAA–2007–29320. On January 

18, 2008, the FAA issued an Order 

temporarily capping scheduled 

operations at an average of 81 flight 

operations per hour at JFK and 

allocating those operations pursuant to 

the agreements reached at the schedule 

reduction meeting and after 

consideration of the comments in the 

public docket. 73 FR 3510. By its terms, 

the Order took effect March 30, 2008 

and was set to expire at 11 p.m. on 

October 24, 2009. The Order indicated 

that the FAA plans to lease any new 

capacity that becomes available and any 

allocated Operating Authorizations that 

are returned to the FAA, for a five year 

term. The leases would be pursuant to 

an auction and would be awarded to the 

highest responsive bidder. The FAA 

said it would provide additional 

information about leasing procedures 

and the relevant statutory authorities 

before conducting any auction. 73 FR 

3510, 3514. On February 14, 2008, the 

FAA amended the Order to modify the 

use-or-lose provisions so that they 

would correspond to those adopted by 

the International Air Transport 

Association (IATA) Worldwide 

Scheduling Guidelines (WSG). 73 FR 

8737. 

In the autumn of 2007, the FAA also 

found it necessary to informally discuss 

summer 2008 schedules with carriers 

operating at Newark, because it was 

concerned that the proposed operations 

would overtax the capacity of the 

airport system and that limiting 

operations at JFK would create a 

spillover effect at Newark. Although 

some carriers made modest revisions to 

their proposed schedules, it was clear to 

the FAA that demand would continue to 

exceed capacity unless the FAA took 

further actions. In order to be assured 

that carriers would not add flights to 

already oversubscribed hours at 

Newark, and would refrain from shifting 

flights from JFK to Newark, the FAA 

designated Newark as an IATA Level 3, 

Coordinated Airport effective the 

summer of 2008. 72 FR 73,418 (Dec. 27, 

2007). Some carriers, such as 


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4Note that some slots are not currently operated 

on a daily basis. In those situations carriers would 

be assigned common slots for only the days they are 

currently operated. 

Continental Airlines (Continental), 

Newark’s primary hub carrier, shifted 

flights from peak hours to off-peak 

hours. On March 18, 2008, the FAA 

proposed to issue an Order to limit 

hourly scheduled flight operations at 

Newark and to allocate them pursuant 

to its informal carrier discussions. 73 FR 

14552. The proposal’s preamble 

indicated the FAA’s plans to lease new 

capacity, allocated Operating 

Authorizations that are returned, and 

currently unallocated Operating 

Authorizations, by means of an auction. 

On May 21, 2008, the FAA adopted the 

general terms of the proposed Order, 

effective June 20, 2008, through October 

24, 2009. 73 FR 29550. The provisions 

regarding the use of the IATA WSG for 

use-or-lose, and the preamble 

information on the auctions of new and 

returned capacity, mirrored those in 

place for JFK. 

As indicated in the companion rule 

addressing congestion and delays at 

LaGuardia, the FAA determined that it 

was necessary to cap and allocate flight 

operations at the three major New York 

airports operated by the Port Authority. 

Recognizing the short-term nature of the 

caps imposed by the Orders for JFK and 

Newark, on May 21, 2008, the FAA 

published a notice of proposed 

rulemaking that sought to provide a 

longer-term solution and address a 

number of congestion-related issues. 73 

FR 29626. At both JFK and Newark, the 

FAA proposed to continue the hourly 

caps on flight operations, and to lease 

the majority of slots at each airport to 

the historic operators for non-monetary 

consideration under its cooperative 

agreement authority. The agency also 

proposed to develop a robust market 

and induce competition by annually 

auctioning off leases for a limited 

number of slots during the first five 

years of the rule. 

The FAA proposed two alternatives in 

the NPRM. Under the first alternative, 

each carrier operating, respectively, at 

JFK and Newark would receive a 

‘‘baseline’’ of up to 20 slots. At each 

airport, the FAA would auction off ten 

percent of the total number of slots 

(above the baseline) to any carrier 

serving or wishing to serve the airport 

and would use the proceeds to mitigate 

congestion and delay in the New York 

City area (after the FAA recouped the 

cost of the auction). Under the second 

alternative, the same auction procedure 

would apply to Newark as under the 

first alternative; at JFK, the FAA would 

conduct an auction of twenty percent of 

the slots (above the baseline) and the 

auction proceeds would go to the carrier 

holding the slot after the FAA recouped 

the cost of the auction. Given the 

significant international presence at 

both airports, the NPRM proposed to 

substitute IATA WSG procedures for 

auctions, in the event of new or 

returned capacity. Additionally, for both 

alternatives, the NPRM contained 

provisions for adoption of IATA WSG 

for use-or-lose, for historic rights, for 

unscheduled operations, and for 

withdrawal for operational need. The 

FAA proposed to sunset the rule in ten 

years. 

On July 17, 2008, the FAA proposed 

to limit unscheduled operations at JFK 

and Newark, to two hourly reservations 

from 6 a.m. through 1:59 p.m., from 10 

p.m. through 10:59 p.m., and to one 

hourly reservation from 2 p.m. through 

9:59 p.m. at JFK. At Newark, the limits 

would be two hourly reservations from 

6 a.m. through 11:59 a.m. and from 10 

p.m. through 10:59 p.m., and one hourly 

reservation from 12 p.m. through 9:59 

p.m. 73 FR 41156. 

The comment period for the NPRM 

closed July 21, 2008. Despite numerous 

requests, the FAA decided against 

extending the comment period, 

although it noted that it historically has 

considered comments filed after the end 

of a comment period as long as such 

consideration did not lead to delay. In 

denying these requests, the FAA 

provided draft copies of the lease 

agreements that would result from the 

initial allocation and reallocation of 

slots in the final rule. The FAA 

reiterated that any auction would be 

conducted under the agency’s 

acquisition authority. The agency also 

reiterated that interested parties to the 

auction would be afforded the 

opportunity to comment on any 

proposed auction procedures within the 

context of the agency’s Acquisition 

Management System. 

Thirty-eight interested parties filed 

comments to the docket addressing the 

NPRM. The majority of comments were 

consistent in rejecting the proposal. 

Many commenters said that the FAA 

had failed to demonstrate how the 

proposal would achieve any significant 

relief from congestion. Rather, according 

to the commenters, the NPRM would 

impose an untested and unproven 

auction process on airlines that would 

not address the fundamental airspace 

congestion issues in the New York 

metro area. 

On September 30, 2008 the FAA’s 

Office of Dispute Resolution for 

Acquisition (ODRA) issued a decision 

responding to protests that had been 

filed by air carriers, the ATA, the Port 

Authority, and the New York Aviation 

Management Association challenging 

the FAA’s legal authority to conduct a 

proposed auction of two slots at 

Newark. ODRA concluded that the 

FAA’s statutory authority and its 

Acquisition Management System 

authorized agency disposal of property 

rights by way of a lease as well as the 

use of a competitive auction process to 

determine who the lessee should be. 

On the same day the Government 

Accountability Office (GAO) released an 

opinion letter in response to a 

congressional request that concluded 

that the FAA currently lacks authority 

to auction slots under either its property 

disposition authority or its user fee 

authority. The issues involved represent 

novel legal issues upon which 

reasonable people, and agencies, acting 

in good faith, have disagreed. The FAA 

disagrees with the GAO conclusions and 

has decided to proceed with the 

adoption of this final rule. 

II. Summary of the Final Rule 

In the NPRM, we proposed two 

alternatives for withdrawal and 

reallocation by auction of slots at JFK 

and Newark. The rule we are adopting 

follows the proposal for alternative 1. It 

will replace the Orders imposing 

operating limitations at JFK and Newark 

and establish a rule limiting 

unscheduled operations at those 

airports. As proposed, the starting date 

of leases under the Final Rule will be 

based on industry scheduling seasons. 

Leases obtained in the first auction will 

start on October 25, 2009 (the first day 

of the winter scheduling season), and 

will terminate on March 30, 2019. 

Leases obtained in subsequent auctions 

will begin on the first day of the 

relevant summer scheduling season and 

terminate on March 30, 2019. Although 

the preamble to the NPRM discussed the 

possibility of operations for the summer 

2009 season, slots awarded through the 

first auction may be operated by the 

acquiring carrier as of October 25, 2009, 

i.e., for the winter scheduling season of 

2009/2010. 

The other basic outlines of the rule 

are unchanged from our alternative 1 

proposal. A slot is defined as the right 

to land or depart during a 30-minute 

window. Limited and Unrestricted slots 

that are assigned or awarded under this 

rule will be for every-day operation.4

Although the FAA retains the right to 

change the cap, the rule provides for 81 

slots per hour for scheduled operations 

at both JFK and Newark. 

Carriers at JFK and Newark will 

initially be assigned their baseline 

operations, which is up to 20 slots per 


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Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / Rules and Regulations 60547 

5A federal agency’s power to dispose of property 

includes the power to lease that property, even 

without express Congressional authority. 

Ashwander v. Tennessee Valley Authority, 297 U.S. 

288, 331 (1936). 

6This section of law describes the policies that 

the Department of Transportation must take into 

consideration when carrying out its economic 

regulatory authority over the aviation industry. This 

section also is a clear statement by Congress of a 

valid public policy aim that the FAA is permitted 

to take into consideration. 

carrier. Ninety percent of each carrier’s 

slots above its baseline operations will 

be assigned to the carrier in a lease 

terminating March 30, 2019. The 

remaining 10 percent will be designated 

as limited slots and have shorter leases. 

Each carrier will identify half of the 

specific slots that will become its 

limited slots, and the FAA will select 

the remaining half. For the first five 

years of the rule, the FAA will auction 

one-fifth of the limited slots 

(approximately two percent of the total 

number of slots at each airport). Slots 

awarded through an auction will be 

designated unrestricted slots after 

reallocation. Unlike common and 

limited slots, unrestricted slots will not 

be subject to withdrawal by the FAA for 

operational purposes. Unrestricted slots 

will also not be subject to use-or-lose 

requirements, although the Office of 

Aviation Enforcement, within the Office 

of the Secretary of Transportation, will 

monitor any anti-competitive activity 

with respect to the acquisition and use 

of unrestricted slots. 

Carriers will be permitted to buy or 

sell their lease rights to all types of slots 

at JFK and Newark, and, as proposed, 

the final sales terms will be transparent, 

although actual negotiations will not be 

disclosed. The FAA intends this rule to 

provide a means by which the market 

value of slots can be made clear to all 

parties. That goal necessitates the 

disclosure of actual sale prices. The rule 

also permits the use of the FAA’s 

auction proceedings by any carrier 

wishing to sell a slot in that fashion. A 

carrier’s decision to use an FAAoperated auction to buy or sell a slot 

does not change the character of the slot 

itself. If, for example, a carrier chooses 

to sell a common slot through an FAA 

auction, the slot remains a common slot 

following the purchase. Only limited 

slots selected for auction by the FAA 

become unrestricted slots. 

We have decided to make final our 

proposal with respect to the allocation 

of any new or returned capacity. Any 

slots that become available in this 

fashion will be assigned under the 

procedures of the WSG. 

III. Authority To Reallocate Capacity 

The Air Transport Association of 

America (ATA), the International Air 

Transport Association (IATA), the Port 

Authority, American, Delta and United 

Airlines (United) asserted that the 

FAA’s proposed methods of allocating 

slots are not lawful for several reasons 

including: prior statements by 

Government officials indicating that the 

FAA would need additional legislation 

to be able to auction slots; the FAA 

cannot create property by exercising its 

regulatory power to regulate the use of 

navigable airspace; slots are not 

property when created and held by the 

Government but only become property 

when transferred to a carrier; the 

proposed lease of slots for fair market 

value would be a new user fee in 

violation of an appropriations 

restriction on using a particular 

appropriation to finalize or implement a 

regulation to establish a new user fee 

and in violation of the Independent 

Offices Appropriations Act (IOAA) (the 

latter of which it is asserted is the FAA’s 

only authority to charge for the lease of 

slots); the leases would be an 

unconstitutional usurpation of 

Congress’s authority to levy taxes; the 

return of slots to the Government at the 

end of the term of their leases would 

constitute an unconstitutional taking of 

property; the Federal Grants and 

Cooperative Agreements Act does not 

provide authority for the FAA to give 

slots to carriers through cooperative 

agreements; and the FAA lacks 

authority to retain the proceeds from the 

lease of slots and use those proceeds to 

improve capacity in the New York 

airspace area. 

In contrast to the criticisms to the 

proposed auctions, Virgin America, Inc. 

agreed with the FAA that it possesses 

legal authority to conduct auctions and 

to lease the slots to carriers. Virgin 

America asserted that the FAA may rely 

on its exclusive sovereignty over the 

airspace of the United States, under 49 

U.S.C. 40103, to withdraw and 

reallocate slots. The carriers have no 

current vested property interest in the 

slots. Virgin America further maintained 

that the FAA’s exclusive sovereignty 

over navigable airspace, coupled with 

its authority to lease property or dispose 

of an interest in property for adequate 

compensation, under 49 U.S.C. 

40110(a)(2), enables it to lease the slots 

and maintain the proceeds. 

The FAA has the authority to dispose 

of property interests under 49 U.S.C. 

40110(a)(2). The FAA also has the 

authority to ‘‘enter into and perform 

such contracts, leases, cooperative 

agreements, or other transactions as may 

be necessary to carry out the functions 

of the Administrator and the 

Administration.’’ 49 U.S.C. 106(l)(6).5

The FAA has determined that the 

allocation of a relatively small number 

of slots via the auction of a leasehold 

best effectuates the efficient allocation 

of slots, both through the initial 

allocation and through the development 

of a robust secondary market. 

An auction is intended simply to 

distribute slots to the air carriers who 

value them the most, thus encouraging 

their most efficient use. An auction also 

satisfies the direction of Congress to 

‘‘place maximum reliance on 

competitive market forces and on actual 

and potential competition * * * to 

provide the needed air transportation 

system. * * *’’ 49 U.S.C. 

40101(a)(6)(A).6 This section of law 

describes the policies that the 

Department must take into 

consideration when issuing economic 

regulations. This rule is not an 

economic regulation. However, the 

statutory provision is a clear statement 

by Congress of a valid public policy aim 

that the FAA is permitted to take into 

consideration when issuing regulations 

under section 40103. The FAA does not 

intend to set a reserve price on slots so 

as to assure itself that it recovers its 

costs associated with either the auction 

or with providing air traffic services. 

The FAA instead aims to allocate all of 

the slots put up for auction, thus 

allowing for possible new entrants to 

compete with the incumbent air carriers 

at JFK and Newark and to accommodate 

changes in the business strategies of air 

carriers using the airports. 

A. The FAA Is Legally Authorized To 

Allocate Slots Through an Auction 

Mechanism 

Several commenters quote a statement 

made in 1985 that the FAA did not 

propose an auction mechanism because 

legislation would be required for the 

collection and disposition of the 

proceeds (50 FR 52183 (December 20, 

1985)), and a more recent statement in 

the NPRM for the LaGuardia congestion 

management rulemaking that the FAA 

‘‘currently does not have the statutory 

authority to assess market-clearing 

charges for a landing or departure 

authorization’’. 71 FR 51360, 51362, 

51363 (August 29, 2006). 

In 1985, the FAA lacked clear 

authority to collect and dispose of the 

proceeds from an auction. Rather, any 

amounts collected by the agency would 

need to be deposited into the General 

Receipts account in accordance with 31 

U.S.C. 3302. Additionally, while the 

FAA had authority to dispose of an 

interest in property, it was not clear that 

such interests included leaseholds. 


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7The fact that Congress excluded insurance 

premiums and fees, which are not amounts assessed 

under chapter 453 of title 49, expresses Congress’ 

plain and unambiguous intent for the FAA to 

deposit all amounts it collects into this account, not 

just the amounts assessed under the user fee 

provisions of chapter 453. 

8The Regional Airline Association (RAA) makes 

a similar argument. In addition, RAA states that the 

FAA lacks the authority to regulate the types of 

aircraft and routes to be served in air transportation. 

The FAA disagrees with the premise of RAA’s 

position, since the FAA may rely on a rational basis 

to allocate the use of navigable airspace under 49 

U.S.C. 40103. Nevertheless, this rule does not 

attempt to regulate the type of aircraft or the routes 

served in any manner. 

9The Port Authority also uses the language in the 

preamble to the SNPRM as evidence that the slots 

are not property because the FAA stated that there 

was no Fifth Amendment Takings issue with the 

proposed slot auction. The FAA’s statement, in 

context, went to the fact that the air carriers have 

no property interests in the slots after expiration of 

the current Order until FAA provides them with 

new slots. It did not imply that the slots were not 

property; just that the air carriers possess no 

property interests beyond those accorded them 

under the Order. 

10Both OAs and slots represent property 

interests, but the FAA has deferred to common 

usage by reverting to the term ‘‘slots.’’ 

In the Air Traffic Management System 

Performance Improvement Act of 1996, 

Public Law 104–264, the FAA gained 

express authority to lease property to 

others. 49 U.S.C. 106(l)(6), 106(n). The 

same law also gave the FAA an 

exemption from 31 U.S.C. 3302, and an 

account was established specifically for 

all amounts the FAA collects other than 

the insurance premiums and fees that it 

is required to deposit into the Aviation 

Insurance Revolving Fund. 49 U.S.C. 

45303(c). This account is available not 

just for fees assessed under chapter 453, 

but for ‘‘all amounts’’ other than 

insurance premiums and fees.7 Thus, 

the statement made in 1985 is no longer 

correct. 

The commenters also refer to the fact 

that the FAA sought additional 

legislative authority to conduct 

auctions, as part of a comprehensive 

change to how the FAA would be 

financed and how market-based 

mechanisms would be used by both the 

FAA and congested airports. The FAA 

recognized that it did not have clear 

statutory authority to implement a wide 

array of market-based mechanisms and 

that absent authority beyond that 

contained in 49 U.S.C. 40103, any 

reallocation via a market-based 

mechanism could lead to a challenge 

that the FAA had violated the ‘‘user fee 

prohibition’’ attached to the agency’s 

annual appropriations legislation since 

1998. The FAA did not address the 

agency’s authority to dispose of 

property, as provided in the Air Traffic 

Management System Performance 

Improvement Act of 1996. Public Law 

No. 104–264, codified at 49 U.S.C. 

106(l)(n). The FAA’s proposed 

reauthorization package, the Next 

Generation Air Transportation System 

Financing Reform Act of 2007, would 

have substituted new user fees for 

passenger ticket taxes, permitted the 

airport operators Port Authority at 

constrained and delayed airports to 

assess market-based fees and would 

have also allowed the FAA, under 

certain circumstances, to impose 

market-based mechanisms. This 

legislative proposal, in giving authority 

directly to airport proprietors to assess 

and use market-based fees, was 

profoundly different from the terms of 

this final rule. This rule, by contrast, 

relies on the FAA’s Acquisition 

Management System authorities and 

does not require the FAA to use any of 

the proposed legislative provisions it 

sought. The FAA has authority to lease 

property to others, and to receive 

adequate compensation for this 

temporary disposal of property, 

including the authority to lease the slots 

at JFK and Newark. 

When it published the NPRM for 

LaGuardia the FAA initially believed 

that imposing a market-based 

reallocation mechanism as part of the 

regulation could be problematic. 

However, as delays soared in the region 

in 2007 and Congress failed to pass 

long-term reauthorization legislation, 

the FAA reevaluated its options. One 

option was to impose or continue orders 

at all three New York metropolitan 

airports that would last indefinitely. 

The agency rejected this option because 

the orders were never intended to be a 

long-term solution and they perpetuate 

the inefficiencies contained within the 

HDR. Likewise, the FAA could have 

initiated rulemaking that would 

establish an administrative reallocation 

mechanism, but the agency concluded 

that approach also failed to resolve the 

inefficiencies contained within the 

HDR. Finally, the FAA could revisit all 

of its statutory authorities and 

determine whether it had the ability to 

allocate slots under its existing legal 

authorities. 

This final approach was the one the 

agency pursued because the FAA 

believes it is both legal and best 

represents the interests of passengers 

flying in and out of the airport. The 

FAA also believes this approach best 

effectuates the FAA’s mandate to 

provide for the efficient use of the NAS, 

coupled with the Department’s mandate 

to consider competitive effects. The 

agency can either foster a market-based 

allocation mechanism and develop a 

robust secondary market, or it can walk 

away from the airport after imposing a 

cap and providing for a very limited 

administrative reallocation mechanism. 

It has decided to follow the more free 

market approach. 

The commenters also refer to the fact 

that the FAA sought additional 

legislative authority to conduct auctions 

which it has not yet received. The 

authority sought by the FAA was part of 

a comprehensive change to how the 

FAA would be financed and how 

market-based mechanisms would be 

used by both the FAA and congested 

airports. This rule, however, relies on 

the FAA’s Acquisition Management 

System authorities and does not require 

the FAA to use any of the proposed 

legislative provisions it sought. 

1. Slots Are a Form of Property That 

May Be Leased by the FAA to Others 

The Port Authority, the ATA and 

IATA submit that the FAA has no 

property rights in the slots the FAA 

proposes to auction.8 While the ATA 

and IATA do not question that the slots 

are property (they dispute ownership), 

the Port Authority states that the slots 

are ‘‘neither physical property, real 

property, intellectual property, nor an 

intangible property recognized in 

common law.’’ 9

The Port Authority is incorrect; slots 

are an intangible form of property that 

may be leased. On January 18, and May 

21, 2008, respectively, the FAA issued 

Orders limiting operations at JFK, and at 

Newark, pursuant to its broad authority 

to regulate the use of navigable airspace 

under 49 U.S.C. 40103(b). 73 FR 3510; 

73 FR 29550. Those Orders define an 

Operating Authorization 10 as ‘‘the 

operation authority assigned by the FAA 

to a carrier to conduct a scheduled 

arrival or a departure * * *’’ Id. at 

3516; 29554. The Orders expressly 

allow the trading and leasing of 

Operating Authorizations. Id. at 3516; 

29554. Although the Orders do not 

permit the permanent sale or purchase 

of Operating Authorizations, they 

permit any form of consideration to be 

used in the lease or trade of these 

Operating Authorizations. Id. at 3516; 

29554. 

These Orders reflect the FAA 

Administrator’s determination that 

Operating Authorizations are a form of 

property that may be leased or traded 

for consideration, and used as collateral. 

Those determinations have not been 

legally challenged, and the time period 

for filing such a challenge has expired. 

49 U.S.C. 46110. Indeed, the ATA’s and 

IATA’s own members have treated 

Operating Authorizations, and the HDR 


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11The airline commenters agree with ATA’s 

assessment that the slots are property of the airlines 

not of the FAA. See, Comments of US Airways 

Group, Inc. at 24. But see, Comments of American 

Airlines at 7 stating that the Port Authority holds 

the property interest. 

12The FCC, like the FAA, had a statutory 

preference for competition prior to the requirement 

that it conduct auctions. 

13Such as authorized access to particular radio 

frequencies and authorized use of intellectual 

property. 

14ATA also suggests that by finalizing or 

implementing this rule, the FAA would violate the 

Anti-Deficiency Act. The Anti-Deficiency Act 

would only be violated if the FAA obligated or 

expended funds in excess or in advance of an 

available appropriation, fund, apportionment or 

other applicable administrative subdivision of 

funds. 31 U.S.C. 1341, 1517. The FAA may not use 

its operations appropriation to finalize or 

implement a rule to promulgate a new user fee not 

specifically authorized by law, but this rule simply 

reduces the number of slots (lowers the cap) at JFK 

and Newark, defines the different types of slots, 

establishes a reversion of approximately 10 percent 

of the slots, and discusses the FAA’s intent to 

auction new or returned slots. This rule does not 

require or impose on any entity a requirement to 

pay the FAA to obtain a service or even a slot. If 

the FAA does conduct an auction as contemplated 

by this rule, it will do so using its pre-existing 

authorities and regulation. The use of its operations 

appropriation to finalize and implement this rule 

therefore does not violate the Anti-Deficiency Act. 

15American Airlines reads 49 U.S.C. 106 as more 

limited in scope regarding the types of property that 

fall under its purview. The statute does not limit 

its scope to any particular type(s) of property that 

fall under its purview. The FAA has for years, 

without challenge, interpreted its authority broadly 

under the statute in support of Congress’ intention 

of allowing the Administrator to acquire, lease, 

enter into cooperative agreements and other 

transactions as may be necessary to carry out the 

Agency’s functions. This interpretation is known to 

Congress, which has repeatedly reauthorized the 

FAA without making a change to this section. 

Another commenter raised the fact that the heading 

of section 106(l) refers to ‘‘Personnel and Services’’ 

which the commenter says means that 

subparagraph (6) of that section does not provide 

the FAA any contracting or leasing authority. It has 

been long recognized by the courts, however, that 

the headings of statutes have little if any weight in 

statutory interpretation. As other paragraphs of this 

section deal with personnel matters, the heading is 

not erroneous, but it does not in any way dilute the 

broad grant of contracting, leasing, cooperative and 

other transaction agreement authority Congress gave 

the FAA in paragraph (6). 

slots that predated them, as a form of at 

least intangible property: Leasing and 

trading them for consideration; using 

them as a form of collateral; and 

disclosing them as assets on their 

balance sheets. Bankruptcy courts have 

held that slots are property. 

The Port Authority cites Executive 

Order 13132 for the proposition that the 

FAA is ignoring the traditional role of 

States as sovereigns that can create 

property and has not closely examined 

the effect the rulemaking would have on 

the State instrumentality. The creation 

of property rights, however, is not the 

sole responsibility of the states. Federal 

law determines what constitutes 

property for the purpose of applying 

federal statutes. Ross L. Blair, et al. v. 

United States, Docket 2007–5049 (Fed. 

Cir. 2008), citing United States v. 

Kimbell Foods, Inc., 440 U.S. 715, 726 

(1979) and United States v. Craft, 535 

U.S. 274, 278–79 (2002). The United 

States Government, pursuant to 49 

U.S.C. 40103, has exclusive sovereignty 

over the navigable airspace, and the 

FAA exercises plenary powers over that 

airspace. 

Unlike the Port Authority, the ATA 

and IATA do not dispute that the slots 

constitute a property interest; rather 

they argue that the property interest is 

not the FAA’s, because it is created at 

or after the transfer to an air carrier.11

Section 40110(a)(2) does not speak to 

whether the FAA actually owns 

property that is being disposed of. It 

only speaks to the disposal of a property 

interest. Only the FAA has authority to 

assign the use of navigable airspace 

under section 40103. Even assuming 

that the property interest is created at 

the time of transference, it is still a 

property interest that falls within the 

FAA’s authority to dispose of under 

section 40110(a)(2). 

As with certain other valuable public 

property not expressly owned in fee by 

the U.S. Government, the Government 

may allow the use of public property 

and frequently does so using leases. In 

fact, the Government routinely 

‘‘licenses’’ and ‘‘permits’’ the use of 

property over which it exercises 

exclusive sovereignty. In doing so, 

unless otherwise specified by law, the 

Government charges market rates in 

accordance with OMB Circular A–25. 

For example, under 36 CFR 251.53— 

Authorities, the Chief of the Forest 

Service (USDA) issues special use 

authorizations (e.g., permits, term 

permits, leases) for National Forest 

System land. The USDA also issues 

grazing permits under the Taylor 

Grazing Act (TGA) of 1934 to allow the 

permit/lease holder to use publicly 

owned forage. The Federal 

Communications Commission licenses 

portions of the broadcast spectrum, and 

since 1993 (four years before Congress 

mandated the use of auctions) has 

frequently done so using auctions.12

The General Services Administration 

issues licenses and permits for the use 

of its buildings and property, see, e.g., 

41 CFR 101–47.901, 101–47.309; see 

also, GSA form 1582, ‘‘Revocable 

License for Non-federal Use of Real 

Property.’’ The FAA similarly uses 

‘‘licenses’’ to, in effect, lease its real 

property to non-federal users. See, 1.3.7 

of the FAA’s Real Estate Guidance, 

http://fast.faa.gov/realestate/index.htm. 

In short, licenses frequently are used 

to provide non-federal parties access to 

public property regardless of whether 

that property be real or personal 

(including intangible) 13 and whether 

the Government owns the property in 

the traditional sense or is simply its 

guardian. The FAA selected the word 

‘‘lease’’ rather than ‘‘license’’ to describe 

the documents that will transfer slots to 

air carriers because the FAA is 

conveying a longer term interest, with 

fewer rights by the Government to 

terminate that interest, than is usually 

done when the Government licenses a 

non-federal entity to use public property 

(licenses of property are usually 

terminable at will). 

2. FAA Leases Are Not Covered by 

IOAA and This Rule Is Not in Violation 

of Any Current Appropriations 

Restriction 

The ATA argues that the only 

authority by which the FAA may charge 

for the lease of slots is as a user fee 

under the Independent Offices 

Appropriations Act (IOAA) and that the 

only amount that could be charged is 

the cost of administering the lease. The 

ATA is incorrect on both points, but the 

issue is not relevant because the FAA 

does not rely on IOAA authority to 

conduct auctions but on its other 

authorities. 

The ATA similarly argues that this 

regulation falls within the parameters of 

an appropriation provision that 

prohibits the FAA from using funds 

from its operations appropriation to 

finalize or implement a regulation that 

establishes a new user fee not 

specifically authorized by law.14

Consolidated Appropriations Act, 2008, 

Public Law 110–161. The ATA and 

IATA also suggest that the wording of 

49 U.S.C. 106(l)(6) 15 means this 

authority may not be used because the 

FAA may only enter into leases using 

this authority if the leases ‘‘may be 

necessary to carry out the functions of 

the Administrator and the 

Administration.’’ 49 U.S.C. 106(l)(6). 

The ATA and IATA argue that the only 

necessary function is a regulatory 

function to assign airspace under 49 

U.S.C. 40103. However, there are several 

other statutory functions, such as using 

procedures that provide for an efficient 

air traffic system, 49 U.S.C. 44505, and 

the desirability of placing maximum 

reliance on competitive market forces 

and on actual and potential competition 

to provide the needed air transportation 

system, 49 U.S.C. 40101(a)(6), that make 

the use of the FAA’s commercial 

authority to lease property to others 

appropriate. See also, the legislative 

history and findings of Congress when 


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16The FAA implemented its regulation to lease 

its property to others on April 1, 1996, well prior 

to the first time a restriction was included in the 

FAA’s appropriation concerning the FAA’s ability 

to use the operations funds appropriated to develop 

or implement a new user fee. 

17As discussed in the general discussion of the 

auction procedures posted under the FAA’s 

Acquisition Management System, the FAA will set 

a reserve price to assure that, in the event only a 

single bid is received for a particular slot, the 

bidding carrier does not actually pay the bid price. 

In that instance, the winning bidder would pay only 

the reserve price. 

it granted the FAA the authority to lease 

property to others in Public Law 104– 

264. Having created slots, and 

determined the number of available 

slots should be limited because of the 

resulting strain on the NAS from the 

scheduling of more flights per hour than 

can be handled under current 

conditions at JFK and Newark, the 

function of disposing of its interest in 

the slots becomes applicable. 

Even if the only ‘‘necessary function 

of the Administrator or Administration’’ 

were a regulatory one, the FAA has not 

violated the appropriations restriction. 

Simply put, a lease is not a user fee. A 

user fee is imposed for a particular 

service the Government provides to a 

particular party. A lease on the other 

hand, is a transfer of a possessory 

interest in real, personal or intangible 

property that allows the lessee the use 

of that property to the exclusion of 

others including the lessor. In 

transferring slots to air carriers for 

defined periods of time, the FAA is not 

providing any air traffic or other service 

to the recipients. To the contrary, the 

FAA’s air traffic controllers will not be 

policing or otherwise cognizant of 

which air carrier owns which slot and 

will provide their services in 

accordance with the FAA’s Orders and 

policies (predominantly first come, first 

served). In transferring slots to air 

carriers, the FAA is allowing that air 

carrier to schedule or reserve access to 

that segment of navigable airspace that 

is necessary to take off or land an 

aircraft at the two airports during a 

particular half hour of time. In short, the 

FAA is leasing rather than providing a 

service to air carriers when it transfers 

slots to them. 

A user fee is calibrated to recover the 

cost to the government of providing a 

service or specific benefit to an 

identifiable recipient. See, e.g., United 

States v. Sperry Corp., 493 U.S. 52, 60 

(1989); Seafarers International Union of 

North America v. Coast Guard, 81 F.3d 

179, 182–83 (D.C. Cir., 1996). The 

assignment of a use of navigable 

airspace for scheduled flight operations 

is not a ‘‘user fee’’ under the principles 

articulated in those cases.16 The cost 

associated with purchasing a particular 

slot does not constitute a user fee. First, 

the cost associated with procuring a slot 

at auction is not associated with the cost 

of providing air traffic services for that 

particular take off or landing. Rather, air 

traffic services are paid for already 

through the Airport and Airway Trust 

Fund receipts. Second, the FAA is not 

creating assignments of the use of 

navigable airspace for scheduled flight 

operations (slots) for the purpose of 

raising revenue by leasing them to air 

carriers. More precisely, the FAA has 

imposed a cap and designated slots for 

the purpose of allocating the efficient 

use of navigable airspace. Most of these 

slots will be awarded to current 

operators to prevent disruption of air 

services into and out of JFK and 

Newark. The FAA is leasing a relatively 

small number of them, by means of an 

auction, to air carriers in order to draw 

in new entrant carriers and provide an 

opportunity for expansion by carriers 

already at the airport, thereby inducing 

airline competition at JFK and Newark 

and ensuring that airlines winning the 

slots make the highest and best use of 

them. The auction is also designed to 

assure that air carriers will rationalize 

the use of their slots in accordance with 

the value attached to them in the 

auctions, and ultimately, in the 

secondary market. In the end, the 

traveling public will benefit. 

3. Leases Are Not Taxes 

A tax is generally defined as an 

enforced obligation to support the 

government. See United States v. La 

Franca, 282 U.S. 568 (1931); see also 

United States v. Butler, 297 U.S. 1, 61 

(1937); Head Money Cases, 112 U.S. 

580, 596 (1884); Rural Telephone 

Coalition v. FCC, 8388 F.2d 1307, 1313 

(D.C. Cir., 1988); United States v. City of 

Huntington, 999 F.2d 71, 73 (4th Cir., 

1993). A lease acquired through a slot 

auction, however, is not a tax. It is not 

an amount being levied on all members 

of the industry nor is it a mandatory 

payment as a tax would be. Further, the 

lease is not ‘‘imposed’’ as a tax is, and 

is not designed for revenue-raising 

purposes. 

The auction of a limited number of 

slots at the airport was never designed 

to provide the FAA with a new source 

of revenue. Indeed, in the NPRM, one of 

the options proposed by the FAA was to 

allow the carriers at JFK to keep all 

revenue after covering the FAA’s costs 

in conducting the auction. Rather, the 

auction mechanism is intended to use 

market forces to best allocate this 

limited asset to those carriers who value 

it the most, placing the asset to its best 

and highest use. The FAA believes the 

slots auctions will inform the airlines of 

the market value of their slots so that 

slot utilization can be rationalized. 

While it is true that under today’s rule, 

that the FAA may realize some revenue 

from the auction, the agency has also 

committed to putting that revenue back 

into aviation capacity enhancement and 

delay mitigation projects in the New 

York metropolitan area. 

Unlike a tax, which imposes an 

obligation on affected citizens or 

consumers to pay money to the state, 

the slot auction imposes no burden on 

a carrier based on its citizenship or use 

of the airport. The slot auction lease 

payments are voluntary: The FAA does 

not require a carrier to participate in an 

auction in order to serve JFK or Newark. 

Carriers serving the airports presently 

will be given slots through cooperative 

agreements and slightly less than ten 

percent of the total number of slots at 

the airport will be auctioned. Only the 

carriers winning the bids at the slot 

auctions will pay for the lease, and that 

amount of money will have been 

determined by the free market. The FAA 

will not have pre-determined a lease 

amount and will not attempt to cover its 

costs in conducting the auction by 

setting a reserve price.17

4. The FAA’s Authority To Give Slots to 

Air Carriers Through Cooperative 

Agreements 

A few commenters stated that the 

Federal Grants and Cooperative 

Agreements Act does not provide the 

FAA authority to give slots as 

cooperative agreements. The Federal 

Grants and Cooperative Agreements Act 

defines when a cooperative agreement is 

to be used. The FAA’s broad authority 

to award cooperative agreements, was 

given to the FAA in the Air Traffic 

Management System Performance 

Improvement Act of 1996, and codified 

as 49 U.S.C. 106(l)(6). This Act 

expressly confers on the FAA 

Administrator the authority to ‘‘enter 

into and perform such * * * 

cooperative agreements, and other 

transactions as may be necessary to 

carry out functions of the Administrator 

and Administration. The Administrator 

may enter into such * * * cooperative 

agreements, and other transactions with 

* * * any person, firm, association, 

corporation * * * on such terms and 

conditions as the Administrator may 

consider appropriate.’’ 49 U.S.C. 

106(l)(6). There are several functions of 

the Administrator for which it may be 

‘‘necessary’’ to enter into a cooperative 

agreement. One such function is to 

encourage the development of civil 

aeronautics. 49 U.S.C. 40104. By giving 


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18The preamble to the LaGuardia NPRM also 

addresses this issue and provides the Supreme 

Court decisions supporting the FAA’s position. 73 

FR 20846, 20850–20854 (April 17, 2008). 

19Perhaps more accurately, the determination of 

which of these slots have which of the specified 

termination dates will follow the process described 

in this rule. 

20U.S. Airways Group’s main contention is that 

the slots are property of the airlines because they 

have held them ‘‘more or less continuously’’ for 40 

years. 

21The slots that will be awarded as the result of 

an auction have a firm term of up to ten years, with 

little right by the FAA to terminate prior to the end 

of that term. Most of the cooperative agreements 

will similarly have a ten year firm term. 

up to 20 slots to all air carriers currently 

operating at the airport, and 90 percent 

of the remaining slots to the air carriers 

currently operating at JFK and Newark 

in proportion to their current 

operations, the FAA is encouraging 

those carriers to continue their 

development of civil aeronautics at the 

airport and in the routes served to and 

from that airport. As several 

commenters noted, there is substantial 

economic value both to New York and 

the communities served by flights from 

JFK and Newark. 

American Airlines raised an 

additional concern about the use of 

cooperative agreements, based upon the 

language in 49 U.S.C. 40110(a)(2) that 

requires the FAA to receive ‘‘adequate 

compensation’’ for the disposal of 

property interests. The FAA finds that it 

is receiving ‘‘adequate compensation’’ 

through the minimum slot usage 

requirements. In addition, the slots are 

being given in order to promote civil 

aeronautics. 

5. Leases That Terminate by Their Own 

Terms Are Not a ‘‘Taking’’ of Property 

The ATA and the carriers argue that 

the proposed auctions constitute a 

taking by the government and that the 

taking is prohibited for several reasons 

including that it is not for a legitimate 

purpose, it lacks due process, and fair 

value is completely absent in the 

proposed alternative 1 (as applied to 

JFK and Newark) and inadequate in 

alternative 2 (as applied to JFK). The 

FAA strongly disagrees with the 

contention that the slot auctions 

contemplated in this rule are in any way 

an impermissible taking.18 First and 

foremost, in order to be a taking, the 

carriers would need to have a 

possessory interest in the slots and they 

do not. For bankruptcy purposes, 

carriers may have acquired a property 

interest in slots, as discussed above, but 

as also cited in those cases, if that 

interest expires under the terms under 

which it was granted, then there has 

been no property right taken. The 

Orders establishing Operating 

Authorizations at JFK and Newark are of 

a fixed duration and any rights the 

carriers might have had in those 

operating authorizations will terminate 

when the orders end or are superseded. 

By virtue of today’s rule superseding the 

Orders, the carriers holding the OAs 

now hold slots and have the same 

interests and responsibilities in the slots 

as they did in the OAs. Under today’s 

rule, those carriers whose slot baselines 

at either Newark or JFK, or both, exceed 

20 at either airport, will have a modest 

portion of their slots designated as 

Limited Slots and subsequently 

auctioned Unrestricted Slots. As of 

October 25, 2009, carriers may begin to 

operate the Unrestricted acquired at 

auction. 

Slots transferred to carriers using 

cooperative agreements or leases 

awarded as the result of auctions will 

similarly have express automatic 

termination provisions. For slots 

transferred using cooperative 

agreements, the carriers’ property 

interest would automatically terminate 

if the specified ‘‘use-or-lose’’ provisions 

are not met or one of the other 

conditions specified in the cooperative 

agreements arises. If those provisions 

are satisfied, then most of these slots 

will terminate in 10 years. A few will 

have varying termination dates as 

agreed upon by the FAA and each 

carrier.19 When the termination date 

arrives, any property interest the carrier 

may have in the slot similarly 

automatically ends. There is no more a 

taking of carrier property than there 

would be in the eleventh year of a ten 

year lease of FAA real property to a 

carrier. 

The ATA and the carriers provide 

little support for the proposition that 

Operating Authorizations or slots 

awarded to carriers under an order with 

a fixed duration results in entitlement to 

those slots in perpetuity.20 To the extent 

that these commenters allege harm 

(such as having made investments in 

airport infrastructure) based on the 

unreasonable assumption that the status 

quo would remain forever even though 

the Order explicitly said it would 

expire, that harm is the responsibility of 

the carriers. These carriers took a risk, 

for which they have received a return on 

their investment based on their use of 

the Operating Authorizations for the 

period specified in the Order. If these 

commenters do not wish to incur a 

significantly smaller risk 21 for a 

relatively small percentage of the slots 

that will be initially be transferred to 

them through cooperative agreements, 

and then returned to the FAA as those 

agreements expire in order to be 

auctioned, the carriers are free not to 

apply for these cooperative agreements. 

The ATA, IATA, and the carriers rely 

on what they perceive as a three 

pronged test established in Penn Central 

Transp. Co v. New York City, 438 U.S. 

104 (1978). In Penn Central the Court 

found that there was no compensable 

taking when the City’s Landmarks 

Preservation Law would not allow 

additional stories to be added to Grand 

Central Station. Even using the three 

prong test articulated by the 

commenters, for the reasons stated 

above, the activities described in this 

rule would not constitute a Fifth 

Amendment taking. 

The ATA and IATA also overstate the 

extent of the alleged harm. Under the 

alternative selected in this rule, carriers 

will get to keep, at a minimum, more 

than 90 percent of their current slots. 

Only seven carriers will lose any slots 

under this rule and only American, 

Delta and United will lose slots at both 

airports. 

The Port Authority cites to Air 

Pegasus of D.C., Inc. v. United States, 

424 F.3d 1206 (Fed. Cir. 2005), for the 

proposition that the Federal 

Government’s sovereignty over airspace 

is not ownership in fee, but rather 

navigational servitude. Air Pegasus, 

however, stands for the proposition that 

there is no private property right of 

access to navigable airspace. If the FAA 

legitimately exercises this authority to 

prohibit the use of a segment of 

navigable airspace, there is no property 

taken for Fifth Amendment purposes. In 

Air Pegasus a heliport operator was 

found to have no private property rights 

in its facility even though it lost all 

opportunity to generate revenue (and 

went out of business) after the FAA shut 

down much of the airspace around 

Washington, D.C. following the attacks 

of September 11, 2001. 

6. The Draft Lease Terms Included in 

the NPRM Were for Illustrative Rather 

Than Probative Purposes 

The ATA also uses the draft Lease 

agreement as evidence that the FAA 

does not have the authority to lease the 

slots. The ATA places far too much 

reliance on an early draft document that 

was provided to give commenters some 

idea of the type of lease the FAA was 

considering. For example, the standard 

clauses in the FAA’s Acquisition 

Management System (AMS) use the 

word ‘‘contract’’ instead of ‘‘lease’’ 

because leases are a form of contract. 

The AMS, however, by its explicit terms 

applies to the acquisition and lease of 

property. See, Section 4.2 of the 

Acquisition Management System, and 


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60552 Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / Rules and Regulations 

22Commenters supporting IATA’s submission 

include: Association of European Airlines (AEA); 

KLM Royal Dutch Airlines, N.V. (KLM); Malaysia 

Airlines (Malaysia); Singapore Airlines; Swiss 

International Air Lines, Ltd.; Deutsche Lufthansa 

AG (Lufthansa); Air France; All Nippon Airways 

Co., Ltd.; and, Delta Airlines, Inc. 23For purposes of discussing our international 

obligations, we will assume arguendo that auction 

proceeds are ‘‘user charges’’. 

Real Estate Guidance, http:// 

fast.faa.gov/realestate/index.htm and 

T3.8.1 of the FAA’s Procurement 

Guidance, also located at http:// 

fast.faa.gov The FAA acknowledges that 

some of the terms in the sample lease 

that the FAA provided for illustration 

were not appropriate for a lease of slots, 

and will modify any proposed leases 

accordingly. An additional opportunity 

to comment on these terms will be 

provided prior to any auction. These 

sample terms, however correct or 

incorrect, have no bearing on whether 

the FAA has the authority to enter into 

leases. Similarly, because Attachment A 

was not included in the sample lease, 

the ATA and IATA argue that is 

evidence that there is no property the 

FAA can lease. Attachment A will be 

the particular slots each carrier receives. 

Each Attachment A will be unique for 

each particular airline. Before the slots 

are given or auctioned, there is no way 

to tell what any particular Attachment 

A will look like, therefore no 

Attachment A was provided. Instead the 

sample lease simply provided notice 

that there will be an attachment that 

will describe which slots the lessee (or 

cooperative agreement holder) will 

have. 

7. International Obligations 

In spite of the FAA’s authority to 

lease slots and this proposal to use the 

WSG to award all new and returned 

capacity at JFK and Newark, the IATA, 

ATA, and numerous carriers assert that 

the FAA’s proposal violates the 

international obligations of the United 

States. Specifically, IATA and the 

airlines 22 make the following 

assertions: that the slot auction is 

actually a user charge in violation of 

bilateral air services agreements; the slot 

auction is discriminatory in violation of 

bilateral air services agreements; and, 

the short comment period did not afford 

an opportunity for foreign governments 

to consult with the United States 

Government on this proposal. 

In support of their contention that the 

slot auction is a user charge 23 that is 

inconsistent with our bilateral 

obligations, IATA and the carriers cite 

the recent U.S.–EU air services 

agreement, which states (article 12) that 

user charges must be ‘‘equitably 

apportioned among categories of users.’’ 

They assert that the costs recovered by 

auction proceeds are not equitably 

apportioned. We disagree. We are 

maintaining the use of WSG procedures, 

which these commenters support, for all 

new and returned capacity. Only a 

select number of slots—the slots that are 

being withdrawn—will be auctioned. 

For that category of foreign carrier users 

that choose not to participate in the 

auction, the regime that they favor will 

continue unchanged—the FAA will 

assign slots from new and returned 

capacity under the procedures set out in 

the WSG and they will be able to buy, 

sell or trade slots in the secondary 

market. For that category of foreign 

carrier users that wish to participate in 

the slot auction, they will be making the 

business decision that such slots have 

additional value to them. We do not 

believe that foreign carriers choosing to 

participate in an auction, and thereby to 

have access to slots to which they 

would not have access under the WSG, 

are being treated inequitably. 

IATA and the carriers also claim that 

we are not following the requirement in 

the same bilateral section that user 

charges ‘‘may reflect, but shall not 

exceed, the full cost to the competent 

charging authorities or bodies of 

providing the appropriate airport, 

airport environmental, air navigation, 

and aviation security facilities and 

services at the airport or within the 

airport system.’’ To the contrary, the 

proceeds of these auctions will be 

deposited into a receipt account, and 

those funds will be dedicated to be used 

for improvements to New York’s 

airspace and airport system. The 

proceeds will be used for the airport 

system they were derived from, and will 

not go to the general fund. This is not 

in violation of our bilateral agreements, 

as the costs are directly related to 

improving the airport system for which 

the slots will be used. 

Singapore Airlines argues that the 

auction would affect its ability to 

exercise the ‘‘fair and equal’’ 

opportunity to compete clause in the 

bilateral air services agreement. All 

carriers are afforded fair and equal 

opportunity to compete, regardless of 

nationality, because they have the 

ability to bid for slots under the auction 

mechanism. There is no guarantee that 

the slots will be awarded to either a 

domestic or foreign carrier. Foreign 

carriers have the same opportunity as 

domestic carriers to compete for the 

available slots. Singapore Airlines is 

also free to participate in the WSG 

process for allocating new or returned 

slots, and to participate in the secondary 

market, just as domestic and other 

foreign carriers are. 

Next, IATA and the carriers argue that 

the imposition of the slot auction will 

be discriminatory. The foreign carriers 

argue that the auction discriminates 

against them because the domestic 

carriers are permitted to keep many 

more slots, and will have an advantage 

over them. The ATA, United Airlines, 

and Delta argue that we are being 

discriminatory against domestic carriers 

because the foreign carriers have all of 

their slots preserved and will not be 

subject to the same withdrawal as the 

domestic carriers, and that domestic 

carriers will be forced to pay large sums 

of money to maintain their current 

international service, whereas the 

foreign carriers will not incur the same 

costs. 

Both groups of carriers are incorrect— 

the Department is acting in a nondiscriminatory manner. Because up to 

twenty slots for each carrier (domestic 

or foreign) are being preserved, no 

carrier (domestic or foreign) is in danger 

of losing access to JFK or Newark. No 

carrier is being forced to participate in 

the auction if it chooses not to 

participate. All new and returned 

capacity will be allocated by the FAA 

under WSG procedures. The domestic 

carriers similarly are not required to 

participate in the auction, and in most 

cases, only a select number of slots will 

be withdrawn. Domestic carriers at JFK 

and Newark will still have the ability, 

and available slots, to continue to 

maintain their international service 

without necessarily participating in the 

slot auction. Finally, IATA makes the 

argument that the comment period was 

too short to allow for foreign 

government consultation on the 

proposal. The proposal, like all 

proposed rulemakings, was published in 

the Federal Register and all interested 

parties had ample opportunity to review 

and comment, and afforded a 60-day 

comment period to all interested parties. 

We believe this is a sufficient period for 

foreign governments, their agencies, or 

Embassies to provide formal comments 

or request consultations. In this case, no 

foreign government has contacted us 

with either comment or a request for 

consultations. The consultation 

language in our bilateral air services 

agreements does not oblige the United 

States Government to seek out foreign 

government comments for every 

proposal. Rather, the onus is on any 

foreign government that wishes to 

consult to make such a request. 


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24Section 45303(a) directs that all fees imposed 

and amounts collected under chapter 453 are 

payable to the Administrator of the FAA. 

25Fees collected under the authority of 49 U.S.C. 

45302, namely fees for issuing airmen certifications 

and registration of aircraft, in accordance with the 

express language in that section and language that 

historically has been in each appropriation, are 

credited to FAA’s operations appropriation. 

B. The FAA Has Authority To Retain the 

Amounts Received From the Lease and 

Disposal of Property and To Use Those 

Proceeds for Congressionally 

Authorized Purposes 

The commenters assert that the FAA 

has no authority to retain the amounts 

received from the lease of slots, and that 

31 U.S.C. 3302 requires all amounts 

received by an agency be deposited into 

the General Receipts account. The FAA, 

however, has an express exemption 

from 31 U.S.C. 3302 that it was given in 

section 276 of the Air Traffic 

Management System Performance 

Improvement Act of 1996, Public Law 

104–264, codified at 49 U.S.C. 45303(c). 

Section 276 states that 

‘‘Notwithstanding section 3302 of Title 

31, all fees and amounts collected’’ by 

the FAA, except for a few specified 

exceptions such as insurance premiums, 

‘‘shall be credited to a separate account 

established in the Treasury and made 

available for Administration activities; 

* * *’’ 49 U.S.C. 45303(c). These 

amounts are available immediately for 

expenditure for Congressionally 

authorized purposes and remain 

available until expended. Id. 

This paragraph of section 45303, by 

its unambiguous terms, applies to all 

amounts collected by the FAA, whether 

or not they are amounts from fees 

established under chapter 453. This is 

in contrast to the first paragraph of this 

section of law, which only applies to 

fees and amounts collected under 

chapter 453.24 Fees collected under 

chapter 453 include fees for air traffic 

control services provided to planes that 

neither take off from nor land in the 

United States (overflight fees), and fees 

for airmen certificates and registration 

of aircraft.25 The FAA, however, collects 

amounts under authorities contained in 

other chapters of law, such as insurance 

premiums and other amounts which are 

collected under chapter 443 of Title 49, 

amounts from the disposal of an interest 

in property for adequate consideration 

under chapter 401, and amounts 

provided from other air traffic service 

providers also under chapter 401, as 

well as federal, state and local 

governments and private entities under 

chapter 1 of Title 49. 

It is a well established principle of 

statutory interpretation that laws ought 

‘‘to be so construed that, if it can be 

prevented, no clause, sentence, or word 

shall be superfluous, void, or 

insignificant.’’ TRW Inc. v. Andrews, 

534 U.S. 19, 32 (2001). Interpretations of 

statutes should ‘‘give effect, if possible, 

to every clause and word of a statute.’’ 

United States v. Menasche, 348 U.S. 

528, 538–39 (1955) (citing Inhabitants of 

Montclair Tp. v. Ramsdell, 107 U.S. 147, 

152 (1883)). Using this principle, effect 

must be given, if possible, to the words 

‘‘all fees and amounts’’ except for those 

specifically excluded, should be 

deposited into the account established 

by 49 U.S.C. 45303(c). The only 

amounts the FAA is expressly 

authorized under this paragraph to 

exclude from this account are the 

insurance premiums and related fees it 

collects and deposits into the Aviation 

Insurance Revolving Fund. A plain 

meaning interpretation which gives 

effect to all the words in that paragraph 

is that all fees and other amounts 

collected by the FAA under authorities 

contained in other chapters of Title 49 

or other titles should be deposited into 

the account established by section 

45303(c). This would include any 

amounts collected from the lease of 

FAA property under the authority of 49 

U.S.C. 106(n) and 49 U.S.C. 40110(a)(2). 

C. The Auction of Slots Does Not Affect 

the Proprietary Rights of the Port 

Authority 

Similarly, both the Port Authority and 

the Airports Council International— 

North America (ACI–NA) as well as 

American believe that the NPRM 

impinges on the proprietary rights of the 

Port Authority. The ACI–NA believes 

that the FAA’s powers under 49 U.S.C. 

Section 40103 do not allow us to 

auction slots. In support of its position, 

the ACI–NA also cites to Western Air 

Lines v. Port Authority of New York and 

New Jersey, 658 F. Supp. 952, 956–57 

(S.D.N.Y. 1986), aff’d, 817 F.2d 222 (2nd 

Cir. 1987), cert. denied, 485 U.S. 1006. 

The FAA maintains that Western 

supports its position more than that 

proffered by the ACI–NA. Western 

concluded that the perimeter rule 

established by the Port Authority was a 

valid restraint exercised in accordance 

with the Port Authority’s proprietary 

interest. Western did not suggest that 

the proprietary interests of the Port 

Authority take precedence over FAA 

regulation; instead Western explicitly 

states that ‘‘[t]his Court concludes that, 

in the absence of conflict with FAA 

regulations, a perimeter rule, as 

imposed by the Port Authority to 

manage congestion in a multi-airport 

system, serve an equally legitimate local 

need and fits comfortably with that 

limited role, which Congress has 

reserved to the local proprietor.’’ Id. at 

958. Therefore, even if there was a 

conflict between the proposed rule and 

the Port Authority’s proprietary rights, 

the FAA’s rule would prevail under 

Western. 

The establishment of slots under 

section 40103 is consistent with the 

authority that the FAA has exercised at 

JFK, LaGuardia, Chicago O’Hare, and 

other airports, for the past several 

decades. Western is easily 

distinguishable from the current 

rulemaking in that this rulemaking does 

not affect in any way how the Port 

Authority deals with its airport 

including use of its terminals. In fact, 

there will be 100 percent of the air 

traffic coming into JFK and Newark 

during the same time periods as 

currently exist at the respective airports. 

The Port Authority’s assertion is that 

changing the airlines that come in or the 

number of flights interferes with its 

proprietary interests. However, through 

its regulatory process in certifying 

airlines or capping arrivals and 

departures, the FAA can and has 

affected the air traffic in and out of JFK 

and Newark, and neither the Port 

Authority nor any other entity has 

challenged the FAA’s responsibility to 

issue certifications or control the flow of 

air traffic, much less suggested it affects 

the proprietary rights of airport 

authorities. Additionally, the Port 

Authority has always had to 

accommodate carriers under the HDR by 

accommodating airlines that leased, 

purchased, or traded slots under the 

HDR; that received slots through FAArun lotteries; or that were granted slot 

exemptions under 49 U.S.C. 47174 and 

41716. Furthermore, the Port Authority 

is obliged to file competitive access 

reports to the Secretary if it denies 

access to a requesting carrier at JFK and 

Newark. With respect to Newark, the 

FAA must ensure that the Port 

Authority successfully implements its 

competition plan to enhance 

opportunities for airline competition 

and accommodate requesting airlines 

there. 49 U.S.C. 40117(k), 47106(f). 

http://www.panynj.gov/ 

CommutingTravel/airports/html/ 

ewr_comp_plan.html. (last visited 

September 6, 2008). Accordingly, the 

Port Authority may not claim that the 

fact that a slot is acquired through an 

auction presents any unusual 

accommodation issues that it has not 

routinely dealt with in the past. 


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D. The FAA Has Complied With the 

Administrative Procedure Act 

1. The Docket Contained Adequate 

Information for Meaningful Comment 

on the Rulemaking Proposal 

Several commenters also claimed the 

FAA failed to meet the requirements of 

the Administrative Procedure Act (APA) 

(5 U.S.C. 551, et seq.). The Port 

Authority claimed that relevant 

documents either were not submitted to 

the docket at all, or in a form and time 

insufficient to permit adequate analysis 

by interested parties. In particular, the 

Port Authority suggested the draft lease 

documents were submitted to the docket 

well after the initiation of the comment 

period, contained vague terms, and did 

not adequately set forth the conditions 

for default. The Port Authority 

maintained the default conditions are 

critical because of the impact of a 

default on the Port Authority’s gate 

leasing agreements. 

The ATA commented that the 

technical report explaining how slots 

would initially be allocated and 

designated does not adequately describe 

how the FAA intends to choose which 

Common Slots would be designated as 

Limited Slots. 

The FAA believes the docket 

submissions provided interested parties 

with sufficient information to 

meaningfully comment on the proposal. 

The draft lease agreement for 

Unrestricted Slots, is directly related to 

the FAA’s potential auctioning of the 

slots under its acquisition authority. 

The draft cooperative agreement, which 

would govern the lease terms of the 

Common and Limited Slots, is arguably 

more directly related to the instant 

rulemaking since they will initially be 

allocated to carriers under this rule. 

While the Port Authority questions the 

comprehensiveness of these draft leases, 

they are in fact, largely complete. The 

FAA is intentionally placing only 

limited constraints on the slots. The 

goal of this rulemaking is not to impose 

complicated and intrusive constraints 

on the slots. Rather it is to allow for a 

more efficient air traffic system in and 

around JFK and Newark while 

permitting some access to new entrants 

and stimulating the free market. In order 

to maximize efficiencies, the FAA must 

assure that the majority of the slots have 

a usage requirement. That requirement, 

which is mandated by today’s rule, is 

the primary restriction on the Common 

Slots. Limited Slots are granted for a 

shorter period of time, but otherwise 

largely mimic the Common Slots. The 

Unrestricted Slots are even less 

constrained with no usage requirement. 

2. The Discussion of the Auction 

Process Provided Sufficient Detail for 

Meaningful Comment on the 

Rulemaking Proposal 

US Airways Group (US Airways) 

argued the FAA provided insufficient 

time to comment on the details of the 

auction process. United claimed that the 

NPRM should have proposed dates as to 

when the auctions would be conducted 

and should have committed to 

providing a certain amount of advance 

notice. The ATA claimed that the FAA 

violated the APA by failing to account 

for carrier’s costs in participating in an 

auction. 

In the NPRM the FAA provided only 

a general discussion of the procedures 

that would govern any future auction. 

This general discussion was provided 

only to give interested parties a context 

for the rulemaking. The FAA decided to 

provide a general description of the 

likely auction procedures to encourage 

meaningful comment on the underlying 

proposal, which is that after imposing a 

ten-year cap to address congestion, a 

certain number of slots would revert to 

the FAA for reallocation. The FAA has 

provided a more detailed discussion of 

the procedures that would be used in an 

auction. 73 FR 53477 (September 16, 

2008). The agency provided for a 15-day 

comment period which closed on 

October 1, 2008. Based on the comment 

submissions, the FAA may decide to 

refine any final auction procedures. 

That refinement, however, does not 

impact this rule. 

Some commenters claimed that 

because the FAA has not fully 

developed the auction process, the FAA 

cannot finalize the proposed rule. Like 

the ATA’s comments on the draft lease 

documents, these commenters place far 

too much reliance on procedures 

unrelated to the rulemaking. The NPRM 

discussed in detail the process for 

providing slots at JFK and Newark: 

Between 80 and 90 percent of them will 

be provided to incumbent carriers 

operating at the respective airports 

through cooperative agreements and the 

remaining ones will be transferred via 

lease. The particulars of the auction 

process (e.g., will it all be via the 

Internet or will paper bids be allowed, 

will the help desk be available 24/7 or 

only during normal business hours, the 

exact day when the auction will take 

place, whether successive rounds of 

bidding will be allowed, whether 

multiple bids from the same carrier will 

be permitted) are not relevant to this 

rule. The FAA will, in accordance with 

its Acquisition Management System, 

continue to provide adequate notice of 

its planned auction procedures and 

solicit comment on those procedures 

prior to conducting any auction. 

The ATA’s claim that not ascribing 

the costs of the auction to the rule 

violates the APA likely stems from 

unclear drafting on the part of the FAA. 

We have included the auction costs and 

reallocation benefits in the final 

regulatory evaluation for this rule. 

3. The FAA Adequately Considered 

Alternatives 

Despite the fact that the FAA has 

proposed two different allocation 

methods at JFK in this rulemaking, 

several commenters claimed that the 

agency failed to adequately explore 

additional alternatives in violation of 

the APA. An agency is not required to 

consider all possible alternatives when 

engaging in rulemaking. The fact that 

the commenters dislike the alternatives 

considered does not mean that the FAA 

has pre-decided the outcome by failing 

to recognize that there may be other 

alternatives. In fact, the agency 

proposed multiple options. In addition, 

it has considered many of the 

alternatives that the commenters 

recommended in response to the NPRM. 

As discussed later in this document, the 

FAA has decided against adopting these 

approaches in lieu of proceeding with a 

final rule. However, aspects of many of 

these recommendations have been 

incorporated into the rule or are being 

addressed elsewhere. 

IV. Discussion of Final Rule 

A. Allocation of Slots at JFK and 

Newark 

The FAA believes that at least for the 

next several years, JFK and Newark will 

likely be oversubscribed in terms of 

their physical ability to handle aircraft. 

Accordingly, extending the caps on 

operations at the airports is necessary to 

provide for the efficient use of the NAS. 

American argues for a lower cap at 

both airports, stating that ‘‘[w]hile JFK 

and Newark may be able to handle 81 

operations per hour in ideal conditions, 

this limit significantly overstates both 

airports’ optimal capacity. Thus, the 

FAA should revisit the issue of how 

many operations at JFK and Newark can 

be accommodated safely and 

dependably and then set a cap at that 

level * * *’’ [Emphasis in original.] 

Although American believes 81 

operations is above optimal 

performance, it has failed to identify 

what it believes to be the appropriate 

number of slots per hour during 

restricted periods. Under no 

circumstances would we allow the 

number of operations to exceed a safe 

level. Beyond that, the levels as set in 


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Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / Rules and Regulations 60555 

this rule represent the FAA’s best 

judgment about a reasonable balance 

between maximizing capacity and 

minimizing delays. Of course, we have 

made it clear that we continue to review 

the caps, and we may withdraw 

common slots if necessary, or we may 

increase capacity as circumstances 

allow. 

The dispute surrounding this 

rulemaking revolves around the FAA’s 

proposal to reallocate slots at the 

airport. Simply put, incumbents at the 

airport are largely satisfied with the 

status quo. The vast majority of carriers 

opposed any measure that would result 

in a carrier holding fewer slots under 

the final rule than it held under the 

capping Orders. 

The Port Authority states in its 

comment ‘‘The slot retirement system 

has not been explained with respect to 

the [sic] specific criteria the FAA will 

use to choose slots to be withdrawn, and 

whether, or how, gate-leasing 

assignments will be taken into account 

in this process.’’ This rule does not 

provide for any ‘‘retirement’’ and we 

assume that the Port Authority is 

referring to Section 93.167 which states 

that the FAA may withdraw limited or 

common slots as necessary for 

operational needs. Withdrawal for 

airport operational needs is not a new 

concept, and the same idea has applied 

in our rules for years. The only really 

new principle that has been added by 

this rulemaking is that we have 

committed not to withdraw unrestricted 

slots. Once they are purchased at an 

auction, the carrier is assured that they 

can be used for the life of this rule. In 

other respects, our procedures and 

criteria remain the same as they have 

always been. 

Several commenters including the 

carriers, their associations and the Port 

Authority noted that the FAA has 

asserted that the proposed measures 

were designed to address severe delays, 

preserve consumer choice, maintain 

airline competiveness and preserve the 

affordability of airfares. Most 

commenters agreed, in some form, with 

the Port Authority’s assessment that the 

proposal achieved none of these 

objectives. Rather, most commenters 

noted that the reallocation mechanism 

did nothing to address congestion and 

could have the unintended consequence 

of harming competition and restricting 

passenger access because of the loss of 

service to small communities. 

Some carriers and their associations 

argued that rather than encouraging a 

market-based allocation method with a 

robust secondary market, the proposal 

would have the opposite effect— 

imposing a new and more marketintrusive regulatory scheme. 

Not only is the FAA required to 

ensure the efficient use of the NAS, but 

it must do so in a manner that does not 

penalize all potential operators at the 

airport by effectively shutting them out 

of the market. The FAA cannot simply 

walk away from an airport once it has 

imposed caps, but rather should take 

steps to ensure that there are, in fact, 

competitive market forces and actual 

and potential competition. Competition 

at an airport benefits the flying public 

by providing price competition and 

expanded service. The ability of carriers 

to initiate or expand service at the 

airports is hindered, in large part, by the 

imposition of the cap. Accordingly, the 

FAA believes it must strike a balance 

between (1) promoting competition and 

permitting access to new entrants and 

(2) recognizing historical investments in 

the airport and the need to provide 

continuity. It is not the role of the 

Government either to dictate particular 

business models or to constrain a 

market and provide no means for others 

to enter that limited market. 

The FAA believes that it is well 

within the agency’s authority in 49 

U.S.C. 40103 to provide some 

mechanism for reallocation. The 

capping Orders at JFK and Newark 

provide for auctions of new and 

returned capacity but do not provide for 

the reallocation of capacity that is 

actively being used. The FAA believes 

this allocation method may be justified 

as a short-term measure, but it is 

inadequate for any cap intended to last 

for more than a couple of years. Indeed, 

Congress appears to have shared similar 

concerns when it allowed for slot 

exemptions in AIR–21. Today’s 

proposal attempts to strike the 

appropriate balance by actively 

developing a robust secondary market 

that properly values the limited asset 

that the FAA created. 

1. Proposed Alternatives 

The FAA proposed two different 

alternatives for allocating slots in the 

NPRM. Under both alternatives the vast 

majority of slots would have been 

grandfathered to existing carriers at the 

airports, with a relatively small minority 

auctioned off in the free market. Both 

alternatives allowed for a carrier 

baseline operations for which up to 20 

slots would be automatically allocated 

to the carrier as Common Slots. These 

slots would not count toward the 

calculation of slots that would revert to 

the FAA for retirement or reallocation. 

Under alternative 1, the FAA 

proposed to withdraw 10 percent of the 

Carriers’ slots above its baseline 

operations. The FAA would auction the 

reverting Limited Slots, with the FAA 

retaining proceeds of the sale. After 

recouping its costs, the FAA planned to 

spend the remainder of the proceeds on 

aviation congestion and delay 

management initiatives in the New York 

City area. Under alternative 1, any 

Carrier could bid on a slot in an auction 

blind to the participants and it would be 

awarded in the form of an Unrestricted 

Slot to the highest responsive bidder. 

The winning Carrier could commence 

operations using the newly acquired slot 

at the beginning of the next summer 

scheduling season, except that October 

25, 2009, will be the commencement 

date for slots acquired in the first 

auction. 

Alternative 2 proposed a different 

auction procedure for JFK that provided 

that the holder of a Limited Slot would 

retain the proceeds of its sale in the 

auction. The only deduction from the 

sale price would be for the FAA’s costs 

associated with conducting the auction. 

Under this alternative, the FAA would 

withdraw 20 percent of the Carriers’ 

slots above the baseline operations at 

JFK. 

The FAA continues to believe that 

under either alternative a sufficient 

number of slots would be available for 

reallocation to permit access to the 

airports and establish a fair market 

value for slots that could then translate 

into a robust secondary market. 

Although alternative 2 allowed for an 

even greater number of available slots, 

it also had the potential to prevent the 

most interested carrier, i.e., the one 

initially allocated the slot, from bidding 

on it. While the FAA anticipated that a 

carrier could obtain a comparable slot, 

either through the FAA auction or on 

the secondary market, there was no 

guarantee that would happen. This 

concern was raised by several 

commenters who noted that the 

inability for the carrier to bid on its 

previously held slots is even more 

troubling because that carrier may have 

the greatest incentive to retain the slot 

based on established service. 

As noted above, the FAA believes 

either approach would help stimulate a 

secondary market and would lead to a 

proper assessment of the slots’ true 

value. The agency also believes that 

either approach would have a minimal 

impact on operations at the airport. 

However, the agency is persuaded that 

alternative 1 maximizes the efficiency of 

the slot because the carrier who may 

value it the most may be the one who 

held it initially. 


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2. Categories of Slots 

Under today’s rule, the FAA will lease 

property interests in slots to carriers for 

a period of up to ten years, the date the 

rule sunsets. There will be three 

categories of slots: Common Slots, 

Unrestricted Slots, and Limited Slots. 

Common Slots are those slots 

grandfathered to carriers currently at the 

airport. They will be awarded to the 

carriers under a cooperative agreement 

for the duration of the rule. The 

cooperative agreement will provide 

carriers with a ten-year leasehold 

interest. Once the rule sunsets, all 

interests will revert to the FAA. Unlike 

slots allocated under the HDR at JFK, 

carriers will be granted clear property 

rights to Common Slots, which could be 

collateralized or subleased to another 

carrier for consideration. These property 

rights, however, will not be absolute. 

Common Slots will be subject to 

reversion to the FAA under the rule’s 

minimum usage provision, may be 

temporarily withdrawn for operational 

reasons, should the FAA need to reduce 

the caps. 

Those slots not categorized as 

Common Slots will be categorized 

initially as Limited Slots and then as 

Unrestricted Slots once they are 

reallocated. 

Unrestricted Slots are slots that a 

carrier would acquire as a leasehold. 

Unlike slots allocated under a 

cooperative agreement, these slots will 

require monetary consideration to the 

FAA. Since a carrier leasing an 

Unrestricted Slot will be required to do 

so because of government action, these 

slots will not be withdrawn by the FAA 

under the use-or-lose provisions, for 

operational reasons or to further reduce 

the cap should such reductions be 

necessary. As with Common Slots, 

Unrestricted Slots will expire when the 

rule sunsets. 

Limited Slots are slots that are 

identified for auction. Those Limited 

Slots identified for auction will be 

leased to the carriers under a 

cooperative agreement for a period of 1– 

4 years so that they can be reallocated 

after that period of time. Limited Slots 

will convert to Unrestricted Slots as a 

result of the auction. As with Common 

Slots, Limited Slots may be withdrawn 

under the proposed use-or-lose 

provision, or for operational reasons. 

3. Initial Allocation of Slots 

No later than this rule’s effective date, 

the FAA will notify all carriers which 

slots they will initially be allocated 

under the rule. The FAA will make this 

determination based on the operating 

rights held by carriers under the Order 

limiting operations at JFK or the Order 

limiting operations at Newark as 

evidenced by the FAA’s records. 

Carriers will be assigned corresponding 

slots in 30-minute periods consistent 

with the limits under § 93.163 (b) and 

its summer and winter season schedules 

as approved by the FAA. 

Upon the rule’s effective date, each 

carrier at JFK and Newark will 

automatically be awarded up to 20 

Common Slots, which will constitute 

the carrier’s baseline operations. The 

FAA believes this is a rational approach 

to assuring that no carrier is impacted 

at a level that could seriously disrupt its 

existing operations. Ninety percent of 

the remaining slots will also be 

grandfathered as Common Slots to the 

carrier holding the corresponding 

Operating Authorization under the JFK 

or Newark order. The FAA has decided 

to grandfather the majority of slots at the 

airport in order to minimize disruption 

and to recognize the carriers’ historical 

investments in both the airport and the 

community. 

As noted above, the remaining slots 

will be categorized as Limited Slots and 

will be reallocated via auction over a 

five-year period. The number of slots 

that a particular carrier will have 

classified as Limited Slots is based 

proportionally on the carrier’s presence 

at the airport, taking into consideration 

each carrier’s baseline operations. The 

FAA will inform all carriers that will be 

awarded Limited Slots how many 

Limited Slots they will have no later 

than the rule’s effective date. 

An affected carrier will have ten days 

to identify 50 percent of the total 

number of Limited Slots. During the 

following ten days, the FAA will 

determine through a randomized 

process the remainder of slots that will 

be categorized as Limited Slots, taking 

into account the need to have capacity 

available for reallocation throughout the 

day. 

In determining which slots should be 

designated as Limited Slots, the FAA 

will initially exclude from consideration 

slots held during all hours where 

carriers have collectively determined 

two or more slots should be Limited 

Slots. This approach will assure slots 

will be available for auction throughout 

the day. The FAA will also determine in 

what year (0–4) each Limited Slot will 

revert to the FAA for reallocation, In 

this way, all carriers will know within 

20 days of the rule’s effective date what 

slots will become available for purchase 

and when. 

The time windows for the Limited 

Slots will be evenly distributed over the 

day to the extent possible. The duration 

of each Limited Slot will be assigned by 

a fair allocation process such that each 

affected carrier’s aggregate lease 

duration will be approximately equal to 

that of the other affected carriers. 

British Airways asserted that it is 

overly burdensome to require carriers to 

track slots and volunteer slots for 

redistribution each year, and states that 

such a program is used nowhere else in 

the world. The FAA believes that the 

carriers using the system are 

sophisticated entities capable of 

tracking the classification of their slots. 

Furthermore, the requirement that 

carriers volunteer slots for redistribution 

is only required one time, at the outset 

of the rule. It also only affects the seven 

carriers that will lose slots. Initially 

FAA considered selecting 100% of the 

slots for withdrawal but later decided it 

would benefit carriers and their 

networks to allow them to select 50% of 

the slots themselves. 

Although most commenters are 

opposed to any slots being reallocated 

by auction, Virgin America urged the 

FAA to expand the number of slots 

available via auction. The FAA 

recognizes that the overall number of 

slots that will be auctioned is relatively 

small, and a larger auction would not 

only have assured greater access to the 

airports, but would arguably maximize 

the efficiency of the system, assuming 

no other constraints. However, the FAA 

understands that the carriers would in 

fact face other constraints. 

The ATA claimed that carriers need to 

know which of its slots are Limited 

Slots 90 days before the effective date of 

the rule in order to be compliant with 

the rule on the effective date. While the 

rule becomes effective on December 9, 

2008, carriers can continue their 

operations without change until October 

25, 2009, the first day of the winter 

scheduling season. Accordingly, the 

FAA believes carriers will have no 

problems setting a compliant schedule 

well in advance of the winter 

scheduling season. 

The Port Authority, American 

Association of Airport Executives 

(AAAE) and the ATA also express 

concern about what they consider to be 

inadequate information regarding the 

slot auction methodology. The Port 

Authority says that the terms of the 

planned slot leases have not been set 

forth in any meaningful detail, which, it 

argues, has important effects on their 

management of airport gates. We agree 

that it is important for all interested 

parties to have full information about 

auction procedures before any auction is 

conducted. That information will be 

provided in the appropriate form. This 

rulemaking, which merely establishes 

the principles under which slots will be 


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Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / Rules and Regulations 60557 

26Cf., DotEcon Ltd., Auctioning Airport Slots—a 

Report for HM Treasury and the Department of the 

Environment, Transport and the Regions, April 

2001; Whalen and Carlton, Economic Analysis 

Group Discussion Paper—Proposal for a MarketBased Solution to Airport Delays, October 2007; 

Brueckner, Slot-Based Approaches to Airport 

Congestion Management, May 2008. 

leased, is not intended to incorporate 

the technicalities of the auction 

procedures, a fact that the FAA 

emphasized in the NPRM. 

4. Market-Based Reallocation of Slots 

As discussed earlier, the FAA 

proposed two separate alternatives for 

reallocating slots at JFK and Newark. 

The FAA has decided to adopt 

alternative 1. The commenters have 

largely combined the two goals of this 

rulemaking, to address congestion and 

to provide for a more equitable and 

efficient allocation of capacity, into a 

single goal. Many commenters, 

including carriers (American, British 

Airways, Continental, Delta, Emirates, 

and US Airways) and industry 

associations (AAAE and ATA) said that 

it is the cap on hourly operations and 

not auctions that will reduce delays at 

JFK and Newark. Furthermore, they 

contended that the cap and the auction 

are distinct proposals, with distinct 

costs and benefits; while a cap may 

reduce delays, an auction will merely 

add costs to carriers. Some carriers and 

the ATA claimed that the only 

congestion-related measure included in 

this proposal is the cap on operations, 

which is already in place under the 

capping orders at JFK and Newark. It 

also argued that the FAA has not 

articulated how its auctions will 

translate into delay mitigation or why 

the high costs of auctions are worth the 

burden and risk. 

The FAA fully agrees that the 

reallocation method, regardless of what 

it is, will not have a direct impact on 

controlling delays. That type of control 

is achieved by extending the cap beyond 

the JFK and Newark Orders. The FAA 

believes that the reallocation 

mechanism may lead to an air 

transportation system that is more 

efficient for the traveling public, even 

though that mechanism does not reduce 

the number of aircraft flying in and out 

of the airport. It is possible that carriers 

may decide, at least on some routes, to 

increase the size of the aircraft they are 

using. While nothing in today’s rule 

dictates this result, it is certainly at least 

generally foreseeable. 

While most of the carriers were 

categorically opposed to a market-based 

reallocation mechanism, that opposition 

was not universal. The FTC argued in 

favor of an auction mechanism, 

recognizing the value associated with 

providing a carrier with a direct 

financial incentive to maximize the 

value of a slot. 

The FAA has decided to finalize its 

proposal because it believes that a 

market-based mechanism such as an 

auction is the best way to assure that 

this scarce resource is allocated to the 

user who values it the most. As a 

steward of public property, the FAA has 

an obligation to strive toward getting the 

best value for that property. Other 

Federal agencies have used auctions to 

determine who values Federal property 

the highest. In addition, a number of 

papers regarding the societal value of 

allocating slots via an auction have been 

published over the past several years.26

Simply put, a carrier who is required to 

purchase a slot, will value it more 

highly than a carrier who received the 

slot at no cost. Accordingly, the carrier 

will ensure the slot’s best economic use, 

i.e., putting it to the use valued most 

highly by the traveling public. If the 

carrier cannot profitably use the slot, it 

will presumably sublease the slot to 

another carrier who can maximize its 

efficient use. In addition, a carrier 

wishing to gain a presence at an airport 

can purchase the lease from the 

government directly rather than 

attempting to obtain slots solely from its 

competitors, increasing competition at 

the airport. 

The value associated with allocating a 

scarce government resource via an 

auction was also recognized by Congress 

in the telecommunications context 

when it passed the Licensing 

Improvement Act of 1993. In the 

section-by-section analysis of the 

statute, the committee report 

specifically references promotion of 

efficient and intensive use of the 

electromagnetic spectrum as one of the 

objectives the committee believed the 

new legislation would achieve. 1993 

USCCAN at 580. 

As noted earlier, the agency’s own 

experiences with slot-controlled airports 

under the HDR are consistent with the 

observations made in the literature. 

Under the Buy/Sell Rule, carriers 

wishing to enter the market complained 

they were unable to gain market-share, 

and the underutilization of those slots 

allocated to the carriers at no cost forced 

the agency to impose a usage 

requirement. 

The auction process contemplated by 

today’s rule will guarantee carriers 

wishing to initiate or extend operations 

at the airport an opportunity to acquire 

slots. In January 2009 there will be 

approximately 18 slots available for 

auction at JFK and 18 slots available at 

Newark airports. Carriers typically 

require pairs of slots, so today’s rule 

will provide the equivalent of 

approximately 9 round trips per day at 

both airports. In the following four years 

there will be at least 18 slots available, 

as well. Assuming a minimum 

competitive pattern of service is 

between two and three round-trips per 

day, the equivalent of three to four 

routes would be available per year. 

Carriers would be free to supplement 

their holdings in the secondary market, 

which the agency believes will be 

stimulated by this rule. 

The FAA intends to auction off 20 

percent of the Limited Slots annually for 

the first five years of the rule. Any 

carrier may bid on the slot, and it will 

be awarded to the highest responsive 

bidder. The winning parties may 

commence operations using the newly 

acquired slots on the first day of the 

subsequent summer scheduling season, 

except for the slots acquired in the first 

auction. In the unlikely event no bids 

are received, the FAA will retire the slot 

until the next auction. Allowing the 

carrier holding the Limited Slot to retain 

it, as suggested by some commenters, 

could encourage the carrier to simply 

not bid on the slot. The FAA will retain 

all auction proceeds. After recouping its 

costs, the FAA intends to spend the 

remainder of the proceeds on congestion 

and delay management initiatives in the 

New York City area. The FAA has 

already established a receipt account for 

these proceeds. 

The FAA will not reallocate slots after 

the first five years (other than those 

returned under the rule’s use-or-lose 

provisions) because it believes that 

ideally slots should transfer from one 

carrier to another through the secondary 

market. The FAA has decided to be 

involved in a limited number of slot 

transactions during the first five years of 

the rule to help establish that market. 

Not only will the auctions help create a 

market for slots, but all carriers will be 

able to assess the true market value of 

a slot. Armed with information on how 

much a given slot is likely to be worth 

on the open market, carriers (and their 

shareholders) will be in a better position 

to determine whether to continue 

operating marginally-performing flights 

or to sublease the corresponding slot. 

The FAA believes that merely relying 

on the secondary market to accurately 

establish the value of slots, as some 

commenters have suggested, is 

problematic. A fundamental problem 

with the secondary market cannot be 

addressed without first addressing the 

primary market. Incumbents have 

significant incentives not to sell or lease 

out slots to airlines that will compete 

with their networks to a substantial 


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degree. Thus, incumbents rationally 

foreclose entry both to other incumbents 

and to new entrants. One of our 

objectives in this rule is to change those 

incentives and reduce the likelihood 

that incumbents can foreclose entry and 

potential competition indefinitely. 

In addition, in the secondary market 

a carrier may rely on tangible assets that 

do not have the same monetary value for 

all carriers or even non-tangible assets, 

such as goodwill or a pre-existing 

relationship, when evaluating whether 

to lease a slot. Thus, while the slot may 

have a real value for the carriers 

engaged in the negotiations, that value 

cannot be translated into a ‘‘fair market 

value’’ that can be relied on throughout 

the industry as a reasonable valuation of 

the slot. The agency believes that it 

should not take more than five years for 

a robust secondary market to develop. 

Given the carriers’ ability to sublease 

slots if the operations associated with 

the slots are not financially productive, 

the FAA anticipates that there will be 

little new or returned capacity for most 

of the time the rule is in effect. With the 

advent of NextGen technology, there 

may be new capacity in the later years 

of the rule. To the extent there is any 

new or returned capacity, the FAA will 

award that capacity in keeping with the 

WSG. 

Although a number of commenters 

expressed specific support for the use of 

WSG procedures in assigning new or 

returned capacity, the National Air 

Carrier Association (NACA) opposed 

that approach. It believes that the WSG 

procedures would not allow new 

entrant carriers to establish their 

presence at the airports. Contrary to that 

assertion, the WSG provides for a 

preference for new entrants; by 

providing for withdrawal and auction of 

additional slots, new entrants will have 

an even greater opportunity to establish 

a market presence. 

Lufthansa objected to the NPRM’s 

definition of a new entrant as a carrier 

that has been administratively allocated 

up to 8 slots during controlled hours. 

Lufthansa states that the WSG gives new 

entrant status to airlines ‘‘with less than 

2 arrivals and departures’’ and makes no 

separate provision for slots acquired by 

auction. It argued that the proposal was 

‘‘contradictory’’ to the WSG process. We 

are adopting the definition as proposed. 

As we discussed in the NPRM, the FAA 

understands that in order to maintain 

viable operations at JFK or Newark, a 

carrier would need four to six slots for 

domestic operations, and at least two 

slots for an international operation. The 

five slots contemplated under the WSG 

provide little opportunity for a new 

entrant carrier to establish its operations 

before losing new entrant status and 

thereafter being able to expand in the 

New York market only through the 

purchase of a lease. Setting a limit of 

eight slots administratively assigned by 

the FAA as the cut-off for new entrant 

status allows a carrier to maintain its 

operations and provides some ability to 

grow without jeopardizing the carrier’s 

access to slots through the WSG. 

Furthermore, we note that our decision 

here to allow carriers with up to 8 slots 

to retain new entrant status is consistent 

with our approach at Chicago O’Hare. 

a. Impact of Auctions on Competition 

The NPRM assumed that auctions will 

lead to efficient airline behavior. The 

Port Authority, ACI–NA, NACA and 

some carriers suggest that auctions may 

harm competition and could lead to 

reduced opportunities for new entrant 

and limited incumbent airlines to enter 

the airport. They claimed that the large 

incumbent carriers with the majority of 

slots at JFK and Newark could use their 

relatively stronger balance sheets to 

outbid the smaller, non-legacy airlines 

that help stimulate competition. The 

ATA and others suggest that a carrier 

could obtain a slot through auction and 

then chose not to operate for anticompetitive purposes. 

Offering a different view, American 

suggests that because the New York 

market is already sufficiently 

competitive as a result of the presence 

of three comprehensive and competing 

networks, hubs at JFK and Newark, 

presence of low-cost carriers, and 

presence of a greater number of foreign 

flag carriers serving the area than any 

other area of the country this rule is 

unnecessary. 

The FAA disagrees with the assertion 

that the limited number of auctions 

contemplated in this rule will reduce 

competition at the airport. At JFK, the 

HDR was criticized for not providing 

sufficient opportunity for new entrant or 

limited incumbent carriers to enter or 

expand service at the airport. We 

believe there is merit to these criticisms. 

This rule will provide additional 

opportunities for new entry at JFK and 

Newark. 

To encourage greater competition and 

expand opportunities for entry at the 

airport, the FAA intends to reallocate by 

auction a portion of existing slots from 

those carriers who held the majority of 

slots at JFK and Newark. The auction is 

designed to provide greater competition 

at the airport because it uses the market 

to reallocate limited resources to those 

who value the asset most. 

We understand the concerns of some 

persons that carriers may attempt to use 

Unrestricted Slots which are not subject 

to a usage requirement to monopolize 

operations at an airport. The 

Department has the authority to ensure 

that carriers do not use their ability to 

permit such slots to remain idle to 

unlawfully restrict competition. The 

Department’s mandate under 49 U.S.C. 

41712 to prohibit unfair methods of 

competition authorizes it to stop carriers 

from engaging in conduct that can be 

characterized as anticompetitive under 

antitrust principles. If the Department is 

presented with clear and convincing 

evidence that a carrier is hoarding slots 

to monopolize operations at an airport 

it will pursue enforcement action 

against the carrier. 

b. Impact of Auctions on Carrier 

Investment 

The ATA, Cathay Pacific Airways, 

Continental, KLM and U.S. Airways 

noted that carriers have invested in 

terminal facilities, gates, servicing 

facilities, aircraft and promotion of 

flights out of JFK and Newark, with the 

expectation that they would continue to 

operate from those airports. They 

suggest that under this rule, their 

presence at the airports is threatened. 

KLM and U.S. Airways further state that 

airlines that have already significantly 

invested in their operations at these 

airports will be, in effect, penalized by 

having to pay for the privilege a second 

time. 

It is our view that nothing in this rule 

prejudices the carrier’s invested 

presence at the JFK and Newark. 

Nothing in this rule bars carriers from 

providing services to the New York area. 

To the extent that a carrier may have 

slots subject to withdrawal, it has equal 

opportunity to maintain or expand its 

service through the auction mechanism. 

We also disagree with the assertion that 

carriers are being asked to pay a second 

time for the privilege of serving JFK or 

Newark because the investments that 

carriers have made in the airport and 

near-by services are for the benefit of all 

flights they offer, not just those that may 

be subject to reallocation. 

c. Alternatives to Reallocation 

Many commenters said that the FAA 

should use other approaches instead of 

auctions to reduce delays at JFK and 

Newark. In particular, the FAA should 

focus on implementing operational 

procedures and investments to enhance 

capacity. The AAAE, ACI–NA, the 

Asociacion de Latinoamericano de 

Trasporte Aero (ALTA), and the 

Regional Airline Association (RAA), 

Boeing, and several carriers said that the 

FAA should proceed with implementing 

advanced air traffic control technologies 

and should focus on completing 


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27See United Airlines, Inc. v. Civil Aeronautics 

Board, 766 F. 2d 1107, 1112, 1114 (7th Cir. 1985) 

and cases cited therein; see also H.R. Rep. No. 98– 

793, 98th Cong., 2d Sess. (1984) at 4–5, Order 2002– 

9–2, Complaint of the American Society of Travel 

Agents, Inc., and Joseph Galloway against United 

Air Lines, Inc, et al. (Docket No. OST–99–6410) and 

Complaint of The American Society of Travel 

Agents, Inc., and Hillside Travel, Inc. against Delta 

Air Lines, et al. (Docket No. OST–02–12004) 

(September 4, 2002) at 22–23. 

NextGen. Similarly, the ATA suggests 

that the FAA continue to implement the 

77 New York Aviation Rulemaking 

Committee improvements and continue 

implementing NextGen. 

The IATA and the ATA and their 

member airlines expressed their 

preference for use of the IATA WSG 

instead of an auction approach at JFK 

and Newark. Delta supports WSG 

because it is a tested process that can be 

applied fairly without harming U.S. 

carriers in comparison to other carriers. 

The IATA asserts that a WSG approach 

because it is a ‘‘fair, transparent nondiscriminatory’’ mechanism that is a 

widely recognized and accepted for 

distribution of slots at congested 

airports. 

As to the suggestion that the FAA 

focus on the various technological and 

physical improvements identified by the 

NYARC, many of these initiatives are 

already underway. However, we do not 

believe that they will address the 

congestion issues at JFK and Newark 

sufficiently to merit lifting the caps on 

operations. It is the caps that create the 

need for reallocation and the 

Administration supports a market-based 

mechanism to soften the impact on the 

market created by the caps. In the 

process we will foster the development 

of a robust secondary market and ensure 

the opportunity for new entry into the 

New York area. 

The commenters are correct in stating 

that WSG is a widely recognized and 

accepted mechanism for distribution of 

slots at congested airports. As discussed 

above, we will use WSG to award any 

new or returned capacity at JFK and 

Newark, to the extent it does not 

conflict with U.S. rules, to ensure that 

even carriers that do not choose to 

participate in the auctions have another 

means to access the restricted market. 

However, the number of slots likely to 

be available for reallocation from new or 

returned capacity would be insufficient 

to stimulate a secondary market or 

create enough opportunity for new 

carriers to enter the market. Withdrawal 

and reallocation of slots via auction 

ensures the opportunity for new entry 

and an efficient allocation of slots 

among all carriers at the airports, such 

that each slot is allocated to the user 

who values it the most highly. 

B. Secondary Trading 

All slots will have value in the 

secondary market. To the extent that the 

secondary market is not mature and the 

value of slots is not well-known, the 

auction should inform potential buyers 

of the value of these slots and stimulate 

the secondary market. The FAA believes 

that ultimately the best way to 

maximize competition is with the 

development of a robust secondary 

market. To that end, the agency did not 

propose a system of set-asides and 

exemptions that would be available to 

new entrants and limited incumbents. 

We believe some measures must be 

taken to assure access to the secondary 

market. The system of preferences and 

exemptions developed under the HDR 

and AIR–21 at JFK may have 

significantly diluted the viability of the 

secondary market ostensibly created 

under the HDR’s Buy/Sell Rule as 

several commenters claim, but we do 

not believe that was the sole culprit. 

The Buy/Sell Rule permitted 

transactions that were never advertised 

and the terms of which were never 

monitored for anti-competitive 

behavior. 

We believe all carriers interested in 

initiating operations at JFK or Newark, 

or increasing their operations there, 

should have an opportunity to 

participate in any transactions. 

Accordingly, the FAA will permit 

carriers to include Common Slots for 

sale in the auction organized by the 

FAA. If a carrier wishes to include some 

of its Common Slots in the auction, 

these slots will be treated in the same 

manner as other slots being auctioned 

by the FAA. The carrier would be able 

to specify a minimum price for these 

slots so that it need not give up the slots 

unless they command a price that the 

carrier is willing to accept and it would 

retain the proceeds. 

In addition, the FAA will establish a 

bulletin-board system whereby carriers 

seeking to sublet slots outside the 

auction process, or to acquire such 

subleases, would notify the FAA, which 

would then post the relevant 

information on its website. The FAA 

will post a transaction within two 

business days of receipt and verification 

of the request and post the transaction 

for ten business days. The FAA has 

decided that transactions via the 

bulletin-board-system do not have to be 

blind, and the transaction may include 

both cash and non-cash payments. 

Some carriers noted that the 

secondary market should be as 

transparent as possible since even a 

hybrid system, whereby the lessor 

would accept the highest cash bid and 

then negotiate the value of nonmonetary assets after the bid was 

accepted, would close interested lessees 

out of the transaction. 

We continue to have reservations 

about the adequacy of the value 

associated with non-monetary assets 

when the leasing carrier is not a direct 

competitor versus when the potential 

lessee competes directly against the 

carrier offering to lease the slot. 

However, we also believe non-cash 

transactions should result in both more 

bidders and potentially higher bids. 

Since the non-cash aspect of a 

transaction would require direct 

negotiating, parties would need to be 

disclosed. 

In order to preclude the type of 

collusion that appears to have been 

present, at least some of the time, under 

the Buy/Sell Rule, the Department will 

monitor trades on the secondary market. 

The Department already has the 

authority under 49 U.S.C. 41712 to 

investigate, prohibit, and impose 

penalties on an carrier for an unfair or 

deceptive practice or an unfair method 

of competition in air transportation or 

the sale of air transportation. The 

Department has consistently held that 

this authority empowers it to prohibit 

anticompetitive conduct (1) that violates 

the antitrust laws, (2) that is not yet 

serious enough to violate the antitrust 

laws but may do so in the future, or (3) 

that, although not a violation of the 

letter of the antitrust laws, is close to a 

violation or contrary to their spirit.27

Today’s rule requires carriers to file 

with the Department a detailed 

breakdown of all lease terms and asset 

transfers for each transaction, and the 

subletting carrier must disclose all bids 

submitted in response to its solicitation. 

Lufthansa objects to our plan to publish 

the sales price for subleases of slots 

between carriers. It believes that slot 

lease sales should be conducted in the 

same way as aircraft sales, i.e., as a 

private matter between two parties. We 

hope and expect that transparency in 

the sublease process will encourage 

efficiency in the utilization of airport 

capacity. Lufthansa has not explained 

any alternative way to create this market 

information, and we will adopt this 

provision as proposed. The requirement 

is also needed so that the Department 

can adequately monitor the secondary 

market. 

The slot may not be operated by the 

acquiring carrier until all 

documentation has been received, and 

the FAA has approved the transfer. The 

approval process is required to assure 

the FAA has up-to-date information on 

who is operating the flight. The FAA 

will not limit its approval based on any 


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28Unrestricted Slots could potentially have a 

higher value in the secondary market than Common 

or Limited Slots because they are not subject to the 

same restrictions. 

substantive provisions in the document. 

Although the ATA claimed the 

provisions governing the secondary 

market are unduly intrusive and 

chilling, the FAA believes that even in 

a robust market it needs to track and 

provide oversight of the market. This 

oversight will ensure access remains 

available to all interested parties and the 

slots are actually being used in the 

manner represented to the FAA. Since 

Common and Limited Slots may be 

transferred in the secondary market, the 

underlying policy considerations 

supporting the FAA’s decision to award 

them under a cooperative agreement 

rather than for monetary consideration 

remain, even if the operating carrier has 

changed. 

Trades among marketing carriers and 

one-for-one trades do not have to be 

advertised. Marketing carriers should 

not have to open up transactions to the 

carrier community as a whole any more 

than a single carrier should have to 

disclose its scheduling decisions to 

other carriers. The FAA will approve 

these transactions, as it has done 

historically. As is the case with longerterm transfers among different carriers, 

the FAA only approves the transaction 

to maintain accurate information on 

which carrier is operating a particular 

slot. 

Same day trades among marketing 

carriers that address emergency 

situations such as maintenance 

problems or other unforeseen 

operational issues may take place 

without prior approval by the FAA, but 

carriers must notify the FAA of the trade 

within five business days. One-for-one 

trades among carriers will not be subject 

to the restrictions of the secondary 

market because they enhance the 

operational efficiency of the airport. 

However, the exchange of slots on a 

one-for-one basis cannot be for 

consideration, since they would then 

take on the characteristics of lease 

agreements negotiated in the secondary 

market. Nonetheless, carriers must 

notify the FAA of all such trades so that 

the agency can maintain accurate 

information on which carrier is 

operating a particular slot. 

United Parcel Service (UPS) 

expressed its concern that the 

provisions of section 93.168 must be 

flexible enough to accommodate its 

demand peak during the period between 

Thanksgiving and Christmas. It notes 

that slot trades among U.S. air carriers 

with unified marketing control do not 

need to be advertised, because the 

carriers are considered to be a single 

unit for the purposes of this rule. Since 

UPS enters into contracts with other 

cargo carries to handle its increased 

volume, it would like to receive similar 

treatment for these arrangements. UPS 

appears to misunderstand the rationale 

for our proposal. Trades between 

carriers under the same marketing 

control are not lease transfers within 

any common-sense meaning of the term. 

There is, for these purposes, only a 

single carrier with multiple operations. 

That is quite different from the situation 

UPS describes for its peak period, where 

it enters into contracts with separately 

owned and operated carriers that, for 

much of the year, are its competitors. In 

any event, our rule should not affect 

UPS’s ability to contract with other 

carriers to handle its additional cargo, 

and we believe that no change to the 

rule language is necessary. Although a 

carrier seeking to sublet or transfer a slot 

will be required to post the bid through 

the FAA Web site, we believe that any 

additional burden is minimal and 

outweighed by the value of the of the 

transparency of the process. In addition, 

the transaction is not blind; and the 

carrier is not required to accept the 

highest submitted bid. 

C. Usage Requirements 

The FAA is adopting the usage 

requirements proposed in the NPRM. 

Specifically, Common and Limited Slots 

must be used 80 percent of the time over 

a season unless the FAA waives the 

usage requirements due to unusual and 

unforeseeable circumstances beyond the 

carrier’s control. The impact of these 

events must extend beyond five 

consecutive days. Unrestricted Slots 

will not be subject to the usage 

requirements. 

Under this rule each slot will be 

assigned a corresponding scheduled 

operation. Carriers will be required to 

report a series of flights under a single 

slot number rather than in the aggregate. 

In this way the FAA will be able to more 

accurately track a slot’s usage with the 

flight it was scheduled against. Carriers 

will be permitted to operate a charter, 

maintenance, or ferry operation in lieu 

of a scheduled operation and not have 

that operation discounted as long as 

they do not abuse the privilege. 

Several commenters, including the 

ATA, the Port Authority, and several 

carriers noted that the proposal to 

exclude Unrestricted Slots from the 

usage requirement is inconsistent with 

the current practice of requiring all 

slots, even those purchased in the 

secondary market, to be subject to the 

use-or-lose requirements. These 

commenters suggested that all slots 

should be subject to usage requirements. 

The Port Authority also suggested that 

the proposal to exclude Unrestricted 

Slots from the usage requirement could 

lead to the dominant carriers placing 

bids with the effect of driving away or 

blocking new entrants and limited 

incumbents from JFK and EWR. The 

price of a slot could be determined by 

the value that a dominant carrier would 

assign to eliminating competitors rather 

than from the use of the slot itself, as 

there is no usage requirement. The Port 

Authority added that this could lead to 

a decrease in the number of airlines and 

destinations served at an airport, 

resulting in higher fares. 

We understand the concerns of some 

persons that carriers may attempt to use 

Unrestricted Slots which are not subject 

to a usage requirement to monopolize 

operations at an airport. We do not 

believe this risk is sufficiently large to 

attach a usage requirement on 

Unrestricted Slots. Since the FAA 

wishes to introduce a market-based 

means of addressing slot allocation, 

both initially and in the secondary 

market, the agency believes the 

Unrestricted Slot should be just that— 

unrestricted. Furthermore, slots 

acquired at auction will have a known 

and provable market value. That fact 

will be clear to the carriers’ management 

and stockholders, who are both likely to 

resist the waste of a valuable (and 

salable) company asset. Our rule should 

encourage the use of slots at JFK and 

Newark for their highest and best 

purpose. The FAA does not believe 

there is a need to treat all slots equally 

when they are not all allocated under 

the same terms and conditions.28

The Department has the authority to 

ensure that carriers do not use their 

ability to permit such slots to remain 

idle to unlawfully restrict competition. 

The Department’s mandate under 49 

U.S.C. 41712 to prohibit unfair methods 

of competition authorizes it to stop 

carriers from engaging in conduct that 

can be characterized as anticompetitive 

under antitrust principles. If the 

Department is presented with clear and 

convincing evidence that a carrier is 

hoarding slots to monopolize operations 

at an airport it will pursue enforcement 

action against the carrier. In order to 

assist the Department in determining 

whether a carrier is engaging in 

anticompetitive behavior, we are 

expanding the requirement in the 

regulatory text to report usage to include 

Unrestricted Slots as well as Common 

and Limited Slots. While a carrier 

would not risk losing an Unrestricted 

Slot for failure to report, the FAA could 

take civil enforcement action consistent 


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Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / Rules and Regulations 60561 

with its authority to take enforcement 

action for any violation of a regulatory 

requirement. 

D. Unscheduled Operations 

As proposed in the NPRM, 

unscheduled operations at JFK and 

Newark will be restricted. Two 

unscheduled operations will be 

permitted at Newark between 6 a.m. and 

11:59 a.m. and between 10 p.m. and 

10:59 p.m.; one operation per hour will 

be permitted between 12 noon and 9:59 

p.m. At JFK, there will be two 

unscheduled operations permitted per 

hour between 6 a.m. and 1:59 p.m. and 

between 10 p.m. and 10:59 p.m. 

Between 2 p.m. and 9:59 p.m., the limit 

is one unscheduled operation. Under 

today’s rule, reservations are required to 

use the airport (except for emergency 

operations) and may be obtained up to 

72 hours in advance. The reservations 

will be available on an hourly, rather 

than half-hourly, basis. This will 

provide additional flexibility with 

minimal operational impacts overall. 

To the extent Air Traffic Control 

(ATC) can handle additional requests 

(for example in good weather), it will do 

so without regard to the reason for the 

request. In addition, ATC may decide 

special circumstances justify an 

additional flight. However, there is no 

guarantee that the FAA will accept more 

than one or two reservations per hour, 

and the determination to handle more 

traffic would likely be made on that day. 

Reservations for all non-emergency 

flights would still be required. The FAA 

will allow public charter operators to 

reserve up to 25 percent of available 

allowable afternoon and evening 

reservations up to six months in 

advance. If more than one public charter 

operation is desired for a given hour, the 

public charter operator without the 

advance reservation could attempt to 

secure a reservation within the threeday window that is available for all 

other unscheduled operations. 

A large portion of the unscheduled 

operations comes from general aviation, 

and Aircraft Owners and Pilots 

Association (AOPA) stated in its 

comments that our rule will cause an 

increase in the number of operations at 

airports elsewhere in the region, to 

levels beyond the capacity of those 

airports. While we agree that there may 

be some increased demand for other 

airports, we are aware of no reason to 

believe this demand will exceed the 

capacity available. We note that no 

other airports in the region have 

expressed any such concerns in 

comments to this rulemaking. 

The FAA does not believe that public 

charter operators and on demand 

charter operators should be treated 

similarly. Unlike on demand charters, 

public charters may not be marketed 

until prospectuses are filed with the 

Department and they are marketed to 

individual consumers long in advance 

of the dates of operation. Public charters 

are also generally limited to operating 

from larger airports. Thus, in the New 

York area, public charters cannot be 

operated from many of the local 

airports, such as Teterboro, that are 

available to on demand charter flights. 

For these reasons, we believe public 

charter operators should have a 

significantly earlier opportunity to 

obtain slots for their operations under 

this rule than on demand charters. 

Additionally, unscheduled flights 

produce roughly the same delay costs as 

scheduled flights at the same time. 

However, unscheduled flights can be 

accommodated if operators are flexible 

in their arrival or departure times. In 

response to public comment we have 

assessed the impact on business if 

unscheduled flights are restricted based 

upon the FAA’s record of actual 

operations in the agency’s Enhanced 

Traffic Management System (ETMS) for 

year ended May 31, 2008. FAA has 

indicated that it should be able to 

accommodate more unscheduled 

operations in visual meteorological 

conditions (VMC) (capacity permitting). 

In the analysis of ETMS, FAA assumes 

that unscheduled flights would be 

accommodated in VMC weather or if 

there is available capacity in an adjacent 

hour (one hour either side of the actual 

hour of operation in the data.) based on 

the year June 1, 2007 through May 31, 

2008, ETMS data show the number of 

unscheduled operations per year where 

there was insufficient capacity in the 

adjacent two hours to handle demand 

beyond the levels specified in today’s 

rule was 87 at Newark and 23 at JFK. 

This represents well below one 

operation per day. These flights may 

have to divert to another airport, change 

their time of arrival or departure by 

more than one hour or be cancelled. The 

concern about peak seasonal demand 

expressed above by UPS also was raised 

by comments to this portion of the 

NPRM. NACA, the Cargo Airline 

Association, and four carriers believe 

that the limits in the rule are 

insufficient to meet demand in the 

period leading up to the Christmas 

holiday. With only one reservation per 

hour during certain hours, Polar and the 

Cargo Airline Association (CAA) also 

argue that the rule effectively prohibits 

any unscheduled cargo flights. Although 

there are other airports in the region, 

NACA claims that they do not offer a 

viable alternative for a commercial 

service operation. 

While we sympathize with these 

concerns, we do not believe that they 

will materialize in the dire manner 

predicted. The FAA has reviewed cargo 

operations at JFK and Newark during 

the peak holiday season, and we believe 

that capacity exists on various days or 

through temporary returns by other 

carriers to accommodate some flights 

above historically operated levels. 

ETMS data collected during the holiday 

period November 26, 2007 through 

December 31, 2007 shows that at 

Newark 75 percent of the controlled 

hours had available capacity for 

unscheduled operations (i.e., at least 

one available reservation ) and at JFK 82 

percent of the controlled hours had 

available capacity for unscheduled 

operations. In addition, most cargo 

operators have already received 

temporary slot allocations from the FAA 

for the November-December 2008 period 

under the existing orders and there is no 

reason to believe this would not remain 

a viable option under today’s rule. 

Demand for passenger flights is lower in 

portions of November and December, 

and the rule allows carriers to return 

slots to the FAA for a portion of a 

scheduling season without subjecting 

the slots to the use-or-lose requirements 

if they provide notice prior to the 

commencement of the applicable 

scheduling season. Additionally, the 

unscheduled reservation system for JFK 

and Newark grants authority to the Vice 

President, System Operations Services, 

to allow additional reservations for 

unscheduled operations. These can be 

authorized if there are available carrier 

slots, such as those temporarily returned 

to the FAA, or based on a finding that 

additional flights would not 

significantly increase delay. The FAA 

will regularly assess operations on a 

daily basis to determine if additional 

reservations could be made available for 

unscheduled operations. We note as 

well that, under the previous rules at 

JFK and Chicago O’Hare, cargo and 

passenger carriers routinely requested 

slots for additional operations. Carriers 

often have scheduling flexibility, and 

the FAA has worked with them when 

possible to time flights during periods of 

minimal operational impact. Our rule 

here will provide additional flexibility 

to carriers, by making it easier for them 

to purchase or sublease slots to 

supplement any direct slot allocation 

from the FAA. Short-term slot trades 

and leases are common at U.S. slot 

controlled airports and are often used to 

accommodate different scheduling 

patterns by carriers. Therefore, we do 


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not believe that there is any need to 

include any special provisions for 

holiday operations. 

E. Sunset Provision 

This rule terminates at 11 p.m. on 

March 30, 2019. As we stated in the 

NPRM, this approach will allow for 

future determinations by the FAA as to 

whether a cap is still needed and, if so, 

whether changes are needed to more 

efficiently manage the scarce resource. 

When the New York/New Jersey/ 

Philadelphia Metropolitan Area 

Airspace Redesign project and NextGen 

technologies are fully implemented, we 

expect they will significantly alleviate 

delays and improve air traffic efficiency. 

When we see the impact of these 

improvements over the next ten years, 

we will take that into account along 

with our experience with effectiveness 

of the rule on the distribution of slots 

and entry into JFK and Newark. 

This rule will expire in ten years. One 

of the criticisms of the HDR was that it 

was a temporary rule that has lasted 

almost 40 years. As such, it became 

difficult to manage, particularly as it 

was amended to address changes in 

business models. We believe the public 

interest is better served by directly 

providing the rule will sunset in ten 

years. This approach will allow for 

future determinations by the FAA as to 

whether a cap is still needed and, if so, 

whether changes are needed to more 

efficiently allocate and constrain the 

scarce resource. At present it is 

impossible to determine what changes 

in business models may occur over the 

next ten years. In addition, full 

implementation of the New York/New 

Jersey/Philadelphia Metropolitan Area 

Airspace Redesign project and NextGen 

technologies are expected to mitigate 

and improve air traffic efficiency within 

the next ten years, and we should not 

prejudge the market response. 

The ATA questioned why this rule is 

implemented on a temporary basis if the 

agency believes it represents the best 

solution for the airport. Additionally, 

several commenters noted that 

temporary slot lives reduce the value of 

slots. They argued the short-term nature 

of the proposal and the uncertainty of 

future slot operations at JFK and 

Newark would have a chilling effect on 

the value given to slots and gates in 

relation to capital flow and 

collateralization. Several carriers were 

concerned that financial institutions 

would lose confidence in slots as 

collateral and reduce or eliminate a 

carrier’s ability to fully collateralize the 

asset. 

The FAA believes providing a date 

certain through which slots will be 

awarded actually increases the certainty 

of the holding. The assumption seems to 

be that regulatory inactivity is the 

solution to all the carriers’ concerns, 

and that therefore, the FAA should just 

maintain the status quo. This is not an 

acceptable solution. The capping orders 

at JFK and Newark temporarily froze the 

slot allocations at the airports to serve 

as temporary solutions. The FAA 

believes it is important for carriers and 

those who provide financing to realize 

that slots at a constrained airport are not 

intended to be a permanent response to 

solving congestion, with the incumbents 

being afforded unlimited rights. 

F. Other Issues 

1. Withdrawal for Operational Need and 

for Future Reductions in the Cap 

The FAA is adopting its proposal to 

retain the right to temporarily withdraw 

Limited and Common Slots for 

operational need. We requested 

comment on whether the FAA should 

establish a level of slots that would not 

be subject to withdrawal or temporary 

suspension to fulfill operational needs. 

We were concerned about the 

possibility of marginalizing or excluding 

small operators from the airport. No 

comments were received on this issue. 

For that reason, we conclude that it is 

not necessary to establish such a 

reserve. 

The FAA has historically retained the 

right to withdraw slots for operational 

need, although it has rarely, if ever, 

been exercised. This provision is 

included to allow the FAA to 

immediately address a situation where 

it cannot handle the usual amount of 

traffic on a temporary basis. This 

provision would typically be invoked 

because of problems with the landside 

infrastructure, such as a closed runway 

or terminal, or changes to air traffic 

control procedures that would result in 

sustained capacity reductions. 

The FAA is also retaining the right to 

further reduce the cap on operations 

should the airport remain unduly 

delayed and the Administrator 

determines that the cap on operations 

remains too high. The FAA anticipates 

it would call for a Schedule Reduction 

Meeting should further reductions be 

warranted. In any case, the FAA would 

fully meet its obligations under the APA 

at that time, and this rule does not 

provide a means for further cap 

reductions absent subsequent action on 

the part of the agency. For the reasons 

discussed earlier, this provision is 

limited to Common Slots. 

2. Impact of the Final Rule on the Port 

Authority’s Ability To Run Its Airport 

The ACI–NA and the Port Authority 

both claim that the proposal to auction 

slots interferes with the Port Authority’s 

ability to run the airport and constitutes 

an impermissible infringement on the 

Port Authority’s right to collect revenue 

for use of the airport facilities. The ACI– 

NA believes that market-based access 

issues should remain within the 

exclusive purview of the airport’s 

proprietor. The Port Authority 

expressed similar sentiments in its 

comments to the NPRM suggesting it 

develop a method of allocation at the 

airport. 

The FAA has never proposed to deny 

carriers gate access at JFK or Newark, 

nor has it proposed to otherwise address 

issues associated with the facilities at 

the airport. The FAA recognizes that the 

Port Authority bears responsibility for 

the terminal-side portion of the airport. 

However, it is the FAA, and not the Port 

Authority, that has responsibility for 

managing the airspace. While the Port 

Authority claims that slot auctions 

would somehow be disruptive to the 

airport, it fails to explain how, in terms 

of making arrangements for gates and 

other airport facilities, acquiring a slot 

via an auction is any different from 

acquiring a slot via the secondary 

market, or for that matter, via a lottery, 

as was the case under the HDR. 

To the extent public policy goals 

could arguably be better achieved by an 

airport proprietor rather than the FAA, 

the agency notes that this rule provides 

for no special carve-outs. To the extent 

an airport could address these policy 

issues through a market-based, or even 

administratively based mechanism, it is 

free to do so consistent with its grant 

obligations and any other restrictions 

imposed by Federal law, policy and our 

international obligations. 

3. Minimum Usage Requirements for 

Slots Acquired Through Sublease 

In the NPRM, the FAA proposed to 

provide for a 90 day waiver of the 

minimum usage requirement for 

common and limited slots acquired by 

sublease. We have subsequently 

determined that there is no need for 

such a provision. The starting date of a 

sublease is fully within the control of 

the contracting carriers and can be 

easily negotiated to address any possible 

concerns related to starting new service. 

Moreover, in the event of highly 

unusual or unpredictable 

circumstances, a carrier may apply 

under § 93.170(c) for a waiver of the 

minimum usage requirements. 


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V. Potential Loss of Service to Small 

Communities 

Several commenters expressed their 

concern that this rule may adversely 

affect service to small communities 

because the rule will make operating at 

JFK and EWR more expensive. AAAE 

suggests that this will serve as a 

disincentive for airlines to bid for slots 

for flights to small communities because 

the smaller number of seats that 

typically fly to small communities. 

Several foreign carriers further note that 

a reduction in service to small 

communities may negatively affect their 

opportunities to provide a wide variety 

of services with their U.S. carrier 

partners. ACI–NA suggests that the FAA 

take action to protect services to small 

communities. 

Although not directly related to the 

loss of service to small communities, the 

FAA notes the Canadian Airports 

Council (CAC) expressed concern that 

air service to Canada would be 

jeopardized because the major Canadian 

cities are much smaller than their U.S. 

counterparts and cannot sustain larger 

aircraft. The CAC further suggests that 

that we grant an exemption to the rule 

for international flights, including 

transborder flights. This rule does not 

violate our international obligations, we 

will therefore not grant such an 

exemption. 

The FAA recognizes the importance 

of small community service at JFK and 

Newark and believes that this rule will 

provide adequate opportunity for 

services to small communities because 

90 per cent of slots will not be affected, 

and the remaining 10 percent of slots 

will be auctioned over the first five 

years of the rule. Under these conditions 

carriers will have the opportunity to 

adjust their services to continue services 

as the market warrants. Furthermore, 

the agency continues to believe that a 

system whereby upgauging to larger 

aircraft is completely voluntary 

decreases the likelihood of a whole-sale 

withdrawal from smaller markets. 

Although there may be a slight 

reduction to small community service 

by not dedicating slots for those 

particular cities, we believe market 

conditions and fuel prices are the 

primary motivation for any reduction in 

service, and not a consequence of 

federal action in this rule. Due to these 

facts, and the Administration’s decision 

to rely on the market to allocate slots 

according to their highest and best use, 

we do not believe it is appropriate to 

develop a separate class of slots 

specifically for use to and from small 

communities. The FAA wishes to avoid 

any unintended consequences on a 

carrier’s marketing and network 

decisions that could result from set 

asides or exemptions for small 

communities. 

VI. Regulatory Notices and Analyses 

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, the 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 

(Pub. L. 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 final rule (1) has 

benefits that justify its costs, is a 

‘‘significant regulatory action’’ as 

defined in § 3(f) of Executive Order 

12866, which is also known as an 

‘‘economically significant regulation 

action,’’ 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 

Through implementation of an 

auction, FAA estimates that this final 

rule will result in a long-term 

improvement in the allocation of scarce 

slot resources at JFK and Newark. The 

estimated present value of net benefits 

of improved slot allocation by auctions 

is $272 million at JFK and $225 million 

at Newark from 2009 to 2019. The costs 

of the rule, with a present value of $34 

million at JFK and $20 million at 

Newark, are due to the design, 

implementation and participation in an 

auction of slots. These costs assume that 

the full cost of setting up the auction 

mechanism and participating in the 

auctions are individually borne at each 

airport; in fact, if auctions are 

conducted at more than one airport in 

the New York area, the costs of the 

setting up and participating in the 

auctions could be shared among the 

users of the airports and would be lower 

on a per airport basis. The net benefits 

of the auctions are, therefore, $238 

million at JFK and $205 million at EWR. 

This regulatory impact analysis 

assumes as a baseline that in the 

absence of this rulemaking, the FAA 

would not otherwise impose long-term 

caps on aircraft operations at JFK and 

Newark. Therefore, the FAA estimates 

that, through the long-term 

implementation of a cap on aircraft 

operations, this final rule will result in 

about a 25 percent reduction in the 

average delay per operation at JFK 

relative to a situation with no cap. After 

allowing for the lost consumer and 

producer surplus due to a reduction in 

air service caused by the caps, the net 

value of the savings in average delay 

attributable to the cap generates a 

present value net benefit of about $1,629 

million from 2009 to 2019. At Newark, 

this final rule will result in about a 23 

percent reduction in the average delay 

per operation at Newark relative to a 

situation with no cap, generating a 

present value net benefit (after 

deducting lost producer and consumer 

surplus from reductions in air service) 

of about $634 million from 2009–2019. 

The benefits are estimated by comparing 

the no-rule scenario (similar to the 

situation at JFK and Newark in August 

2007) with the proposed cap. 

Who Is Potentially Affected by This 

Rulemaking 

• Operators of scheduled and nonscheduled, domestic and international 

flights, and new entrants who do not yet 

operate at JFK or EWR. 

• All communities, including small 

communities with air service to JFK or 

EWR. 

• Passengers of scheduled flights to 

JFK or EWR. 

• The Port Authority of New York 

and New Jersey, which operates the 

airports. 

• Passengers on scheduled and 

unscheduled flights in New York 

airspace. 

Key Assumptions 

• Baseline JFK: No operating 

authorizations or caps (the rule will 

generate approximately $1,867 billion in 

net benefits compared to this case, of 


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29A ‘‘slot’’ is defined as the right to land or depart 

(not both) in IFR conditions in a 30-minute time 

window. 

30 GRA, Incorporated ‘‘Economic Values for FAA 

Investment and Regulatory Decisions, A Guide’’, 

prepared for FAA Office of Aviation Policy and 

Plans, (October 3, 2007). The passenger value of 

time reflects a mix of business and leisure travel 

developed for the New York area. 

which approximately $238 million is 

due to reallocation benefits associated 

with the auctions and the balance due 

to the caps). 

• Baseline EWR: No operating 

authorizations or caps (the rule will 

generate approximately $839 billion in 

net benefits compared to this case, of 

which approximately $205 million is 

due to reallocation benefits associated 

with the auctions and the balance due 

to the caps). 

• A cap on operations from 81 

scheduled operations plus one to two 

unscheduled operations per hour at 

each airport, which features: 

• 100 percent of slots 29 held by 

carriers with fewer than 21 slots at each 

airport will be reassigned to the carrier 

with 10 years of life; 

• For holders with 21 or more slots, 

90 percent of slots above the baseline of 

20 slots will be reassigned to the carrier 

with leases of 10 years and ten percent 

of slots above the baseline will be 

assigned to the carrier with shorter 

leases and then auctioned over five 

years. 

• For the purposes of this evaluation, 

the effective date is (11/1/08). 

Other Important Assumptions 

• Discount Rates—7% 

• Period of Analysis—2009 through 

2019 (The rule will sunset in ten years) 

• Assumes 2008 Constant Year 

Dollars. 

• Passenger Value of Travel Time— 

$30.02 per hour.30

Alternatives We Have Considered 

• No caps: The FAA expects that 

without regulatory caps, operators 

would expand operations at both 

airports above current levels, and hence 

further worsen airport delays. 

• Caps without auctions: This 

alternative would impose caps at 81 

scheduled operations plus one to two 

unscheduled operations per hour; it 

would implicitly assign operations to 

current holders of operating 

authorizations at the airports. 

• Caps with auctions: This alternative 

would permanently impose caps at 81 

scheduled operations plus one to two 

unscheduled operations per hour; it 

would assign the large majority of 

operations to current holders of 

operating authorizations at the airport; 

and would auction a small but 

consistent number of slots for the first 

five years of the rule. 

Benefits of This Rulemaking 

Since publishing the NPRM, we have 

updated our benefit estimates, with a 

significant upward adjustment to the 

cap benefits at JFK. This adjustment was 

necessary because the FAA identified a 

calculation error attributable to an 

incorrect reference to an output value in 

the airport delay model. We also made 

a smaller, downward adjustment to the 

Newark cap benefits. Finally, we 

reduced the estimated net benefits of 

improved slot allocation caused by the 

auctions at both airports relative to 

those recorded in the NPRM. These 

latter reductions resulted from the 

higher estimates of airline auction 

participation costs that we used in the 

final regulatory evaluation for this final 

rule. 

A detailed discussion of the applied 

methodology as related to consumer and 

producer surplus can be found in the 

final regulatory evaluation. The primary 

benefits of this rulemaking are due to 

the delay reduction from the caps on 

operations and an improvement in the 

efficiency of allocation of scarce slot 

resources through the use of an auction 

mechanism and secondary slot 

subleasing markets characterized by 

clearly defined property rights. 

Costs of This Rulemaking 

The major costs of this final rule are 

the costs to the public and private 

sectors of designing, implementing and 

participating in the auction. 

Additionally, the implementation of 

caps under this rulemaking will lead to 

a reduction in flights into JFK and 

Newark compared to what would occur 

without the caps. The FAA has 

estimated the value of these scheduled 

flight reductions and has deducted them 

from the delay benefits of the caps at 

each airport to calculate overall net 

benefits of the caps. 

Paperwork Reduction Act 

This proposal contains the following 

new information collection 

requirements. As required by the 

Paperwork Reduction Act of 1995 (PRA) 

(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. 

The ATA claimed that the FAA’s 

estimate of the paperwork burden of the 

rule is ‘‘totally flawed’’ and understated. 

It cited what it believed to be an 

inconsistency in the PRA estimates for 

both JFK and EWR in which the first 

year burden hours were not added to 

recurring annual hours in the NPRM. In 

fact, the FAA believed it was clear in its 

presentation that the first year and 

annual recurring numbers were additive 

for the first year. However, to avoid 

misunderstanding, the combined first 

year and recurring year burdens for both 

airports are given a separate line item in 

this final rule. 

The ATA claimed that realistically, 

management of this program will take at 

a minimum 50% of a management 

employee’s time and could require a full 

time employee, depending on the final 

rule. The FAA notes that the analysis of 

paperwork burden does not attempt to 

include the time required to participate 

in auctions, only the reporting 

requirements to the government. The 

full assessment of time that an airline 

might spend in its voluntary 

participation in an auction is provided 

in the Final Regulatory Evaluation of 

this rule. However, the FAA has added 

a significant recurring burden of 32 

hours per carrier per year at each airport 

in which an auction occurs (inserted in 

the paperwork requirements of Section 

93.165(c) below). The FAA made this 

change to reflect the paperwork required 

if a carrier actually participates in an 

auction. This addition of time to the 

PRA estimate leads to a considerable 

increase in the total labor hours 

assigned to PRA purposes under this 

rule. 

The ATA also noted that there will be 

significant legal fees associated with 

negotiating, drafting, executing and 

monitoring the secondary market. The 

FAA believes that the reporting labor 

requirements estimated under Section 

93.168 for the PRA reflect the actual 

reporting requirement burden, noting 

that the negotiating of the sublease itself 

is not an activity involving reporting to 

the government. The FAA reemphasizes 

that participation in the auction and 

secondary market are not requirements 

of this rule. A carrier with existing slots 

at JFK and EWR is permitted to continue 

operations at the airport using the 

common slots provided to them as part 

of this final rule. Carriers will only need 

to engage in the secondary market and 

auctions if they choose to buy, lease or 

sell slots. 

The information requirements in 

today’s rule are similar to those 

specified in the just-issued final rule for 

congestion management at LaGuardia 

Airport. The FAA has modified these 

requirements for JFK and EWR and 

summarized them below. 

Title: Congestion Management Rule 

for John F. Kennedy International 

Airport and Newark Liberty 

International Airport. 


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Summary: The FAA is assigning the 

majority of operational slots at JFK and 

Newark to current occupants and 

developing a secondary market by 

annually auctioning off a limited 

number of slots at each airport. This 

rule also contains provisions for use-orlose and withdrawal for operational 

need. The rule will sunset in ten years. 

More information on the requirements 

adopted today is detailed elsewhere in 

today’s notice. 

Use of: The information is reported to 

the FAA by scheduled operators holding 

slots at JFK and Newark. 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 slots among the operators 

and facilitates the transfer of slots in the 

secondary market. The FAA also uses 

this information in order to maintain an 

accurate accounting of operations to 

ensure compliance with the operations 

permitted under the rule and those 

actually conducted at the airports. 

Respondents: The respondents to the 

information requirements in today’s rule 

are scheduled carriers with existing 

service at JFK and Newark, carriers that 

plan to enter the JFK and Newark 

markets (by auction or secondary 

market), and carriers that enter the JFK 

and Newark market in the future. There 

are currently seventy-seven (77) carriers 

with existing scheduled service at JFK 

and thirty-nine (39) carriers with 

existing scheduled service at Newark. 

Various carriers included in these totals 

have service at both airports. 

Frequency: The information collection 

requirements of the rule involve 

scheduled carriers notifying the FAA of 

their use of slots. Each carrier must 

notify the FAA of its: (1) Designation of 

50 percent of its Limited Slots, if 

applicable, as well as auction 

paperwork requirements; (2) request for 

confirmation to sublease slots; (3) 

consent to transfer slots under the 

transferring Carrier’s marketing control; 

(4) requests for confirmation of one-forone slot trades; (5) slot usage 

(operations); (6) request for assignment 

of slots available on a temporary basis; 

and (7) usage rate as detailed in the rule. 

Annual Burden Estimate: The annual 

reporting burden for each subsection of 

the rule is presented below. Annual 

burden estimates presented in today’s 

notice are based on burden estimates 

from the final rule ‘‘Congestion 

Management Rule for LaGuardia 

Airport’’ (Docket No. FAA–2006–25709; 

Notice No. 08–04). 

The burden is calculated by the 

following formula: 

Annual Hourly Burden = (# of 

respondents) * (time involved) * 

(frequency of the response). 

§ 93.164(c)(2) Categories of Slots: A 

Carrier shall designate 50 percent of its 

Limited Slots 

JFK 

(4 carriers with Limited Slots) * (80 

hours per submittal) = 320 hours. 

Based on the current allocation of 

Operating Authorizations and the level 

of baseline operations each carrier 

would be assigned under today’s 

proposal, we assumed the four carriers 

with the most operations at JFK would 

expend up to ten days of planning time 

each, potentially 80 hours, to develop 

and submit their designations of 50 

percent of its Limited Slots, for a total 

of 320 hours. This designation would 

occur once, ten days after the final rule 

effective date. 

Newark 

(1 carrier) * (240 hours per submittal) 

= 240 hours. 

(5 carriers) * (80 hours per submittal) 

= 400 hours. 

Total Annual Hourly Burden = 640 

hours. 

Based on the projected allocation of 

Operating Authorizations and the level 

of baseline operations each carrier will 

be assigned under today’s rule, we 

assumed that one carrier, Continental 

Airlines, with the most operations at 

Newark would expend up to 30 days of 

planning time, potentially 240 hours, to 

develop and submit its designation of 50 

percent of its Limited Slots. The 

remaining five carriers required to 

designate Limited Slots would each 

expend up to 10 days of planning time, 

potentially 80 hours each, to develop 

and submit their designation of 50 

percent of their Limited Slots. These 

five carriers would therefore need 400 

hours. In total, the six carriers at 

Newark required to designate Limited 

Slots would require 640 hours of effort 

to make the designation. This 

designation would occur once, ten days 

after the final rule effective date. 

Section 93.165(c) Initial Assignment of 

Slots 

JFK 

(77 carriers) * (32 hours per carrier) * 

(1 occurrence per year) = 1,462 hours 

Whereas the FAA does not believe 

that all carriers, or even a majority, will 

participate in each auction, we have 

assumed for this exercise that the 77 

carriers operating at JFK will expend be 

required to allocate some time to 

develop and submit the paperwork 

required if a carrier actually participates 

in an auction. Specifically, this 

paperwork includes the Auction 

Expression of Interest and the bid file to 

FAA auction system. These paperwork 

submission requirements will be filed 

electronically. Note that the estimate 

below does not include auction 

participation labor and costs. 

Participation in auctions is voluntary 

and these hours and costs (which 

encompass those for paperwork 

requirements) are quantified and treated 

as a cost of the rule in the Final 

Regulatory Evaluation. 

Newark 

(39 carriers) * (32 hours per carrier) * 

(1 occurrence per year) = 1,248 hours 

Section 93.166(b)–(c) Assignment of 

New or Returned Slots 

We made no assumptions about 

additional workload for carriers at either 

airport associated with the IATA-like 

administrative process for assigning 

new or returned slots. Workload would 

vary depending on how many (if any) 

new or returned slots were to develop 

at either airport over the 10 year period 

of the proposed rule. In any case, 

carriers are already familiar with and 

use IATA-like allocation methods and 

would handle them in the course of 

normal operations at JFK and Newark. 

Section 93.168 (b),(d),(f) Sublease and 

Transfer of Slots 

JFK 

(18 carriers) * (1.5 hours per 

submittal) * (4 occurrences per year) = 

108 hours. 

(59 carriers) * (1.5 hours per 

submittal) * (2 occurrences per year) = 

177 hours. 

Total Annual Hourly Burden = 285 

hours. 

Based on burden estimates from 

‘‘Congestion Management Rule for 

LaGuardia Airport,’’ we assumed the 77 

carriers operating at JFK would expend 

one and one half hours for each 

occurrence of a lease or transfer of a 

slot. For each operator with 6 or more 

slots (18 carriers total), we assumed that 

a lease or transfer of a slot would occur 

on average quarterly. For each operator 

with fewer than 6 slots (59 carriers 

total), we assumed that a lease or 

transfer of a slot would occur on average 

biannually. The total annual hourly 

burden for all carriers collectively 

would be 285 hours. 

Newark 

(1 carrier) * (1.5 hours per submittal) 

* (16 occurrences per year) = 24 hours. 

(12 carriers) * (1.5 hours per 

submittal) * (4 occurrences per year) = 

72 hours. 


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(26 carriers) * (1.5 hours per 

submittal) * (2 occurrences per year) = 

78 hours. 

Total Annual Hourly Burden = 174 

hours. 

As with JFK, we assumed the 39 

carriers operating at Newark would 

expend one and one half hours for each 

occurrence of a lease or transfer of a 

slot. For the largest operator, we 

assumed that a lease or transfer of four 

slots would occur on average quarterly. 

For those operators at Newark with 6 or 

more slots (12 carriers total, excluding 

Continental Airlines), we assumed that 

a lease or transfer of a slot would occur 

on average quarterly. For each operator 

with fewer than 6 slots (26 carriers 

total), we assumed that a lease or 

transfer of a slot would occur on average 

biannually. The total annual hourly 

burden for all carriers collectively 

would be 174 hours. 

Section 93.169 (b), (d) One-for-One 

Trades of Slots 

JFK 

(18 carriers) * (1.5 hours per 

submittal) * (4 occurrences per year) = 

108 hours. 

(59 carriers) * (1.5 hours per 

submittal) * (2 occurrences per year) = 

177 hours. 

Total Annual Hourly Burden = 285 

hours. 

Based on burden estimates from 

‘‘Congestion Management Rule for 

LaGuardia Airport,’’ we assumed the 77 

carriers operating at JFK would expend 

one and one half hours on paperwork 

for each occurrence of a one-for-one 

trade of a slot. For each operator with 

6 or more slots (18 carriers total), we 

assumed that a one-for-one slot trade 

would occur on average quarterly. For 

each operator with fewer than 6 slots 

(59 carriers total), we assumed that a 

one-for-one slot trade would occur on 

average biannually. The total annual 

hourly burden would be 285 hours. 

Newark 

(1 carrier) * (1.5 hours per submittal) 

* (16 occurrences per year) = 24 hours. 

(12 carriers) * (1.5 hours per 

submittal) * (4 occurrences per year) = 

72 hours. 

(26 carriers) * (1.5 hours per 

submittal) * (2 occurrences per year) = 

78 hours. 

Total Annual Hourly Burden = 174 

hours. 

As with JFK, we assumed the 39 

carriers operating at Newark would 

expend one and one half hours on 

paperwork for each occurrence of a onefor-one trade of a slot. For the largest 

operator, we assumed that a one-for-one 

trade of four slots would occur on 

average quarterly. For those operators at 

Newark with 6 or more slots (12 carriers 

total, excluding Continental Airlines), 

we assumed that a one-for-one slot trade 

would occur on average quarterly. For 

each operator with fewer than 6 slots 

(26 carriers total), we assumed that a 

one-for-one slot trade would occur on 

average biannually. The total annual 

hourly burden would be 174 hours. 

Section 93.172(a)–(b) Reporting 

Requirements 

JFK 

(77 carriers) * (1.5 hours per 

submittal) * (4 occurrences per year) = 

462 hours 

This estimate is based on burden 

estimates from the ‘‘Congestion 

Management Rule for LaGuardia 

Airport’’ (Docket No. FAA–2006–25709; 

Notice No. 08–04). We assume the 77 

carriers operating at JFK would expend, 

on average, one and one half hours two 

times per summer and winter season to 

submit the data required by § 93.172. 

Newark 

(39 carriers) * (1.5 hours per 

submittal) * (4 occurrences per year) = 

234 hours. 

This estimate is based on burden 

estimates from the ‘‘Congestion 

Management Rule for LaGuardia 

Airport’’ (Docket No. FAA–2006–25709; 

Notice No. 08–04). We assume the 39 

carriers operating at Newark would 

expend, on average, one and one half 

hours every two months to submit the 

data required by § 93.172. 

Summary 

JFK 

Total First Year Hourly Burden—320 

Hours. 

Total First Year Hourly Burden Plus 

Recurring Cost in First Year—3,816 

Hours. 

Total Recurring Annual Hourly 

Burden (per year for 10 years)—3,496 

Hours. 

Newark 

Total First Year Hourly Burden—640 

Hours. 

Total First Year Hourly Burden Plus 

Recurring Cost in First Year—2,470 

Hours. 

Total Recurring Annual Hourly 

Burden (per year for 10 years)—1,830 

Hours. 

The burden estimates for JFK and 

Newark do not include the time 

required to participate in the annual 

auctions. The FAA provides 

participation hour and cost estimates in 

its Final Regulatory Evaluation for this 

rule. 

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. 

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 final rule most directly affects 

four scheduled operators at JFK (Delta 

Air Lines, JetBlue Airways, American 

Airlines, and United Airlines) and six 

scheduled operators at Newark 

(Continental Airlines, American 

Airlines, United Airlines, Delta Air 

Lines, U.S. Airways, and Northwest 

Airlines). These carriers will receive one 

or more Limited Slots. None of these 

carriers are small businesses. However, 

the FAA considered that some small 

regional operators affiliated with these 

carriers and using slots provided by 

these carriers could be affected. Based 

on a review of the number of employees 

for each scheduled operator, the FAA 


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found that only one scheduled operator 

(CommutAir) at JFK, and none at 

Newark, are considered small by Small 

Business Administration size standards 

(in this case, firms with 1,500 or fewer 

employees). CommutAir operates under 

the name Continental Connection for 

Continental Airlines. Continental 

Airlines has fewer than 20 operations 

per day at JFK and therefore neither it 

nor CommutAir is affected by this rule. 

As discussed in more detail in the 

final rule, several commenters 

expressed their concern that this rule 

may adversely affect service to small 

communities because the rule will make 

operating at JFK and EWR more 

expensive, particularly because such 

communities are served by smaller 

aircraft with higher per seat costs. 

The FAA believes that this rule will 

provide adequate opportunity for 

services to small communities because 

more than 90 percent of slots at JFK and 

EWR will not be affected, and the 

remaining less than 10 percent of slots 

will be auctioned in 2 percent 

increments over the first five years of 

the rule. Moreover, once auctioned, a 

carrier may or may not upgauge a slot. 

The agency believes that a system 

whereby upgauging to larger aircraft is 

completely voluntary decreases the 

likelihood of a wholesale withdrawal 

from smaller markets. 

There may be a slight reduction in 

small community service by not 

dedicating slots for those particular 

cities, but we believe market conditions 

and fuel prices are the primary 

motivation for any reduction in service 

rather than a consequence of federal 

action in this rule. We believe market 

forces will generate appropriate 

allocations of slots and do not believe it 

is appropriate to develop a separate 

class of slots specifically for use to and 

from small communities. 

Using Enhanced Traffic Management 

System (ETMS) data, the FAA has 

determined that there are approximately 

54 identifiable unscheduled operators at 

JFK and 61 identifiable unscheduled 

operators at Newark who could be 

affected by this rule. While some of 

these operators may be small 

businesses, the FAA does not believe 

they will be significantly impacted by 

this rulemaking. These operators 

typically have greater flexibility to 

adjust operations and carry out very few 

operations during peak hours compared 

to scheduled opearators. During peak 

hours in the summer of 2007, there were 

fewer than two average unscheduled 

operations per hour at each airport, 

whereas the proposed rule would allow 

1 to 2 operations per hour. In summary, 

while the final rule reduces the number 

of unscheduled operations per hour, it 

does not significantly affect the overall 

number of current unscheduled 

operations that take place at each 

airport. 

Using 2007 Census data, the FAA has 

also reviewed whether there would be 

interruptions to service to communities 

with a population of less than 50,000. 

We do not know if there will be any 

service interruptions as a result of the 

rule. In the IRE, we reviewed population 

statistics for every city served from JFK 

and Newark in August 2007 (the base 

for initial allocation of slots under the 

proposal) and found none with a 

population of less 50,000. The ATA, 

however, identified two cities—Bangor, 

Maine, and Burlington, Vermont—that it 

stated fell below 50,000 in population. 

The FAA notes, however, that the 

metropolitan areas of these cities are 

well above 50,000, with Bangor at 

91,000 as of 2000 and Burlington at 

169,000. 

The ATA identified an inconsistency 

in the definition of small community 

that was used in the NPRM and the IRE. 

The FAA concedes that the definition of 

a small community used in the IRE was 

too expansive, involving any 

community served by a small or nonhub airport. The correct definition for 

this rulemaking is the 50,000 threshold 

value used in the NPRM. 

Therefore, the FAA certifies that this 

rule will not have a significant 

economic impact on a substantial 

number of small entities. 

International Trade Impact Assessment 

The Trade Agreements Act of 1979 

(Pub. L. 96–39), as amended by the 

Uruguay Round Agreements Act (Pub. 

L. 103–465), prohibits Federal agencies 

from establishing any standards or 

engaging in related activities that create 

unnecessary obstacles to the foreign 

commerce of the United States. 

Pursuant to these Acts, the 

establishment of standards or engaging 

in related activities is not considered as 

creating unnecessary obstacles to the 

foreign commerce of the United States, 

so long as the standards and activities 

have a legitimate domestic objective, 

such as the protection of safety, and do 

not operate in a manner that excludes 

imports that meet this objective. The 

statute also requires consideration of 

international standards and, where 

appropriate, that they be the basis for 

U.S. standards. The FAA notes the rule 

to establish slots and limited auctions of 

slot leases at JFK and Newark is 

necessary for the efficient utilization of 

the national airspace system, and has 

assessed the effects of this rulemaking to 

ensure that the final rule will not 

impose costs or barriers to international 

entities within the national airspace 

system. 

Foreign entities at both JFK and 

Newark will not have any slots 

classified as Limited Slots. Foreign 

carriers might benefit from the rule if 

they choose to participate in the 

proposed auction to acquire additional 

slots or to sublease slots in the 

secondary market. Several foreign 

carriers further note that a reduction in 

service to small communities could 

negatively affect their opportunities to 

provide a wide variety of services with 

their U.S. carrier partners. As explained 

above, the FAA believes that this rule 

will provide adequate opportunity for 

services to small communities. Foreign 

trade will not be adversely affected. 

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) 

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 $136.1 

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 final rule 

under the principles and criteria of 

Executive Order 13132, Federalism. We 

determined that this action will 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 normally 

categorically excluded from preparation 

of an environmental assessment or 

environmental impact statement under 

the National Environmental Policy Act 

(NEPA) in the absence of extraordinary 

circumstances. The FAA has 

determined that this rulemaking 

qualifies for the categorical exclusions 


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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)’’ and 

paragraph 312f, ‘‘Regulations, standards 

and exemptions (excluding those which 

if implemented may cause a significant 

impact on the human environment.)’’ It 

has further been determined that no 

extraordinary circumstances exist that 

may cause a significant impact and 

therefore no further environmental 

review is required. The FAA has 

documented this categorical exclusion 

determination. A copy of the 

determination and underlying 

documents has been included in the 

Docket for this rulemaking. FAA 

received no comments explicitly 

addressing the documented categorical 

exclusion. Minor changes have been 

made to the documentation that was 

available for the NPRM. FAA Order 

1050.1E, ‘‘Environmental Impacts: 

Policies and Procedures’’ identifies FAA 

actions that are normally categorically 

excluded from preparation of an 

environmental assessment or 

environmental impact statement under 

the National Environmental Policy Act 

(NEPA) in the absence of extraordinary 

circumstances. 

The FAA has determined that this 

rulemaking qualifies for the categorical 

exclusions 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)’’ and paragraph 312f, 

‘‘Regulations, standards and exemptions 

(excluding those which if implemented 

may cause a significant impact on the 

human environment.)’’ It has further 

been determined that no extraordinary 

circumstances exist that may cause a 

significant impact and therefore no 

further environmental review is 

required. The FAA has documented this 

categorical exclusion determination. A 

copy of the determination and 

underlying documents will be included 

in the Docket for this rulemaking. FAA 

received no comments explicitly 

addressing the documented categorical 

exclusion. Minor changes have been 

made to the documentation that was 

available for the NPRM. 

Regulations That Significantly Affect 

Energy Supply, Distribution, or Use 

The FAA has analyzed this rule 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 while a 

‘‘significant regulatory action’’ under 

Executive Order 12866, it is not likely 

to have a significant adverse effect on 

the supply, distribution, or use of 

energy. 

Availability of Rulemaking Documents 

You can get an electronic copy of 

rulemaking documents using the 

Internet by— 

1. Searching the Federal eRulemaking 

Portal (http://www.regulations.gov); 

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. 

You may access all documents the 

FAA considered in developing this final 

rule, including economic analyses and 

technical reports, from the internet 

through the Federal eRulemaking Portal 

referenced in paragraph (1). 

VII. Regulatory Text 

List of Subjects in 14 CFR Part 93 

Air traffic control, Airports, 

Navigation (air). 

■ In consideration of the foregoing, the 

Federal Aviation Administration 

amends Chapter I of Title 14, Code of 

Federal Regulations, as follows: 

PART 93—SPECIAL AIR TRAFFIC 

RULES 

■ 1. The authority 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. Part 93 is amended by adding 

Subpart N to read as follows: 

Subpart N—John F. Kennedy International 

Airport and Newark Liberty International 

Airport Traffic Rules 

Sec. 

93.161 Applicability. 

93.162 Definitions. 

93.163 Slots for scheduled arrivals and 

departures. 

93.164 Categories of slots. 

93.165 Initial assignment of slots. 

93.166 Assignment of new or returned slots. 

93.167 Reversion and withdrawal of slots. 

93.168 Sublease and transfer of slots. 

93.169 One-for-one trade of slots. 

93.170 Minimum usage requirements. 

93.171 Unscheduled operations. 

93.172 Reporting requirements. 

93.173 Administrative provisions. 

Subpart N—John F. Kennedy 

International Airport and Newark 

Liberty International Airport Traffic 

Rules 

§ 93.161 Applicability. 

(a) This subpart prescribes the air 

traffic rules for the arrival and departure 

of aircraft used for scheduled and 

unscheduled service, other than 

helicopters, at John F. Kennedy 

International Airport (JFK) and Newark 

Liberty International Airport (Newark). 

(b) This subpart also prescribes 

procedures for the assignment, transfer, 

sublease and withdrawal of slots issued 

by the FAA for scheduled operations at 

JFK and Newark. 

(c) The provisions of this subpart 

apply to JFK and Newark during the 

hours of 6 a.m. through 10:59 p.m., 

Eastern Time. No person shall operate 

any scheduled arrival or departure into 

or out of JFK or Newark during such 

hours without first obtaining a slot in 

accordance with this subpart. No person 

shall conduct an unscheduled operation 

to or from JFK or Newark during such 

hours without first obtaining a 

reservation. 

(d) A U.S. Air Carrier conducting 

operations solely under another carrier’s 

marketing control with unified 

inventory control shall not be 

considered a separate carrier for 

purposes of this rule. 

(e) The slots assigned under this 

subpart terminate at 11 p.m. on March 

30, 2019. 

§ 93.162 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 JFK and 

Newark. 

Baseline operations are those 

common slots held by a carrier at JFK 

or Newark on December 9, 2008, that do 

not exceed 20 operations per day. 

Carrier is a U.S. or foreign carrier with 

authority to conduct scheduled service 


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under parts 121, 129, or 135 of this 

chapter and the appropriate economic 

authority for scheduled service under 14 

CFR chapter II and 49 U.S.C. chapter 

401, 411 and 413. 

Common slot is a slot that is assigned 

by the FAA as a lease under its 

cooperative agreement authority for the 

length of this rule. 

Enhanced Computer Voice 

Reservation System (e-CVRS) is the 

system used by the FAA to make arrival 

or departure reservations for 

unscheduled operations at JFK, Newark, 

and other designated airports. 

Limited slot is a slot held every day, 

the lease for which expires prior to the 

expiration of this rule for subsequent 

award by the FAA as an unrestricted 

slot. 

New Entrant is any carrier that is 

administratively allocated a total of 8 or 

fewer slots on any day of the week at 

JFK or Newark, respectively, during 

controlled hours at any point during the 

duration of the rule. 

Public charter is defined in 14 CFR 

380.2 as a one-way or roundtrip charter 

flight to be performed by one or more 

direct carriers that is arranged and 

sponsored by a public charter operator. 

Public Charter Operator is defined in 

14 CFR 380.2 as a U.S. or foreign public 

charter operator. 

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 on a particular day 

of the week during a specific 60-minute 

period. 

Scheduled operation is the arrival or 

departure segment of any operation 

regularly conducted by a carrier 

between either JFK or Newark and 

another point regularly served by that 

carrier. 

Slot is the operational authority 

assigned by the FAA to a carrier to 

conduct one scheduled operation or a 

series of scheduled operations at JFK or 

Newark on a particular day(s) of the 

week during a specific 30-minute 

period. 

Summer Scheduling Season begins on 

the last Sunday of March. 

Unrestricted slot is a slot that is 

awarded to a carrier by the FAA via the 

auction of a lease. 

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 JFK or 

Newark 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. 

Winter Scheduling Season begins on 

the last Sunday in October. 

§ 93.163 Slots for Scheduled Arrivals and 

Departures. 

(a) During the hours of 6 a.m. through 

10:59 p.m., Eastern Time, no person 

shall operate any scheduled arrival or 

departure into or out of JFK or Newark 

without first obtaining a slot in 

accordance with this subpart. 

(b) Except as otherwise established by 

the FAA under paragraph (c) of this 

section, the number of slots shall be 

limited to no more than eighty-one (81) 

per hour at JFK and eighty-one (81) per 

hour at Newark. At JFK, the number of 

slots may not exceed 44 in any 30- 

minute period, and 81 in any 60-minute 

period. At Newark, the number of slots 

may not exceed 44 in any 30-minute 

period and 81 in any 60-minute period. 

The number of arrival and departure 

slots in any period may be adjusted by 

the FAA as 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. 

(c) Notwithstanding paragraph (b) of 

this section, the Administrator may 

increase the number of slots based on a 

review of the following: 

(1) The number of delays; 

(2) The length of delays; 

(3) On-time arrivals and departures; 

(4) The number of actual operations; 

(5) Runway utilization and capacity 

plans; and 

(6) Other factors relating to the 

efficient management of the National 

Airspace System. 

§ 93.164 Categories of Slots. 

(a) General. Each slot shall be 

designated as a common slot, limited 

slot or unrestricted slot and shall be 

allocated to the carrier under a lease 

agreement. A lease for a common or 

limited slot shall be assigned via a 

cooperative agreement. A lease for an 

unrestricted slot shall be awarded via an 

auction. 

(b) Common slots. 

(1) All slots within any carrier’s 

baseline operations, as determined on 

December 9, 2008, shall be designated 

as common slots. 

(2) Ten percent of the slots at JFK and 

Newark on December 9, 2008 not 

otherwise designated as common slots 

under paragraph (b)(1) of this section 

shall be designated as limited slots. All 

other slots shall be designated as 

common slots. 

(c) Limited slots. Those slots assigned 

to a carrier subject to return to the FAA 

under § 93.165(c) shall be designated as 

limited slots until the date of their 

reallocation by the FAA as unrestricted 

slots. A carrier may continue to use a 

limited slot that has reverted to the FAA 

until the date of its reallocation. 

(1) Each carrier with a total number of 

daily operations at JFK or Newark in 

excess of its baseline operations will be 

notified by no later than December 9, 

2008 how many of its slots will be 

designated as limited slots pursuant to 

paragraphs (c)(2) and (3) of this section. 

(2) A carrier shall designate 50 

percent of its limited slots. The carrier 

must notify the FAA of its 

determination by December 19, 2008. 

(3) The FAA will designate the 

remaining limited slots initially 

excluding those hours in which two or 

more slots have been designated as 

limited slots by the carriers. 

(4) No later than December 29, 2008, 

the FAA will publish a list of all limited 

slots and the dates upon which they 

will expire. 

(d) Unrestricted slots. Unrestricted 

slots are slots acquired by a carrier 

through a lease with the FAA awarded 

via an auction. Unrestricted slots are not 

subject to withdrawal by the FAA. 

§ 93.165 Initial assignment of slots. 

(a) Except as provided for under 

paragraphs (b) and (c) of this section, 

any carrier utilizing operating rights 

allocated under the Order limiting 

operations at JFK or the Order limiting 

operations at Newark as evidenced by 

the FAA’s records, will be assigned 

corresponding slots in 30-minute 

periods consistent with the limits under 

§ 93.163(b) and its summer and winter 

season schedules as approved by the 

FAA. If necessary, the FAA may utilize 

administrative measures such as 

voluntary measures or a lottery to retime the assigned slots within the same 

hour to meet the 30-minute limits under 

§ 93.163(b). 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 the Order limiting 

operations at JFK or the Order limiting 

operations at Newark, but the operating 

rights were held by another carrier, then 

the corresponding slots will be assigned 

to the carrier that held the operating 

rights for that period, as evidenced by 

the FAA’s records. 

(c) Starting January 13, 2009, and 

every year thereafter through 2013, onefifth of the total number of Limited slots 

shall revert to the FAA in accordance 

with the schedule published under 


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§ 93.164(c)(4) and be auctioned as 

unrestricted slots by the FAA. Any slot 

receiving no responsive bids will be 

retired until the next auction. An 

affected carrier will be allowed to use 

the limited slot until the date of its 

reallocation by the FAA as an 

unrestricted slot. 

§ 93.166 Assignment of new or returned 

slots. 

(a) This section describes the process 

by which the FAA assigns new slots, as 

well as slots returned to the FAA 

pursuant to the provisions of § 93.170. 

These slots will be assigned by the FAA 

to requesting carriers for the summer 

and winter scheduling seasons. 

(b) Requests for the new slots or 

returned slots or both must be submitted 

to the Federal Aviation Administration, 

Slot Administration Office, AGC–200, 

800 Independence Avenue, SW., 

Washington, DC 20591 (Facsimile: (202) 

267–7277; e-mail: 7-awaslotadmin@faa.gov), by the deadline as 

published by the FAA in a Federal 

Register notice for each summer and 

winter scheduling season. The 

requesting carrier must submit its entire 

schedule at JFK and Newark for the 

particular season, noting which requests 

are in addition to, or changes from, the 

previous corresponding season at the 

respective airports. 

(c) Before assigning new or returned 

slots under this section, the FAA will 

first accommodate carrier requests to 

retime slots for operational reasons or to 

bring the flight time closer to the time 

originally requested by the applicant 

carrier in previous corresponding 

seasons, as reflected in FAA records. 

(d) After accommodating carrier 

requests for retiming of slots, the FAA 

will assign 50% of the new slots and 

returned slots to new entrants, unless 

requests by new entrants constitute 

fewer than 50% of available slots. 

(e) With the remaining available slots, 

if all requests for slots under this section 

cannot be accommodated, the FAA will 

give priority to requests to introduce 

year-round service or to extend an 

existing operation to a year-round 

operation. 

(f) Thereafter, the FAA will assign 

slots considering all relevant factors 

including: 

(1) The effective period of operation; 

(2) The extent and regularity of 

intended use of a slot; 

(3) Schedule constraints of carriers 

requesting slots. 

§ 93.167 Reversion and withdrawal of 

slots. 

(a) This section does not apply to 

unrestricted slots. 

(b) A carrier’s common slots or 

limited slots at JFK or Newark revert 

back to the FAA 30 days after the carrier 

has ceased all operations at the 

respective airport(s) for any reasons 

other than a strike. 

(c) The FAA may retime, withdraw, or 

temporarily suspend common slots and 

limited slots at any time to fulfill 

operational needs. 

(d) Common slots and limited slots 

temporarily withdrawn for operational 

need will be withdrawn in accordance 

with the priority list established under 

§ 93.173 and international obligations. 

(e) Except as otherwise provided in 

paragraph (a) of this section, the FAA 

will notify an affected carrier before 

withdrawing or temporarily suspending 

a common slot or limited slot and 

specify the date by which operations 

under the common slot or limited slot 

must cease. The FAA will provide at 

least 45 days’ notice unless otherwise 

required by operational needs. 

(f) Any common slot or limited slot 

that is temporarily withdrawn under 

this paragraph will be reassigned, if at 

all, only to the carrier from which it was 

withdrawn, provided the carrier 

continues to conduct scheduled 

operations at the respective airport. 

(g) Should the Administrator 

determine that the cap on scheduled 

operations at Newark or JFK is too high, 

he may withdraw common slots to 

reduce the cap. Any such action by the 

Administrator shall be subject to the 

notice and comment provisions of the 

Administrative Procedure Act. 

§ 93.168 Sublease and transfer of slots. 

(a) A carrier may sublease its slots to 

another carrier in accordance with this 

section and subject to the provisions of 

the carrier’s lease agreement with the 

FAA. The character of the slot (e.g., 

common slot) will not change. 

(b) A carrier must provide notice to 

the FAA to sublease a slot. Such notice 

must contain: the slot number and time, 

effective dates and, if appropriate, the 

duration of the lease. The carrier may 

also provide the FAA with a minimum 

bid price. 

(c) The FAA will post a notice of the 

offer to sublease the slot 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. 

(d) Upon consummation of the 

transaction, written evidence of each 

carrier’s consent to sublease must be 

provided to the FAA, as well as all bids 

received and the terms of the sublease, 

including but not limited to: 

(1) The names of all bidders and all 

parties to the transaction; 

(2) The offered and final length of the 

sublease; 

(3) The consideration offered by all 

bidders and provided by the sublessee. 

(e) The slot may not be used until the 

conditions of paragraph (d) of this 

section have been met, and the FAA 

provides notice of its approval of the 

sublease. 

(f) Slots may be transferred among a 

U.S. carrier and another carrier that 

conducts operations at JFK or Newark 

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 

and the FAA must confirm and approve 

these transfers in writing prior to the 

effective date of the transaction. 

However, the FAA will approve 

transfers under this paragraph up to five 

business days after the actual operation 

to accommodate operational disruptions 

that occur on the same day of the 

scheduled operation. The FAA Vice 

President, System Operations Services 

is the final decision-maker for any 

determinations under this section. 

(g) A carrier wishing to sublease a slot 

via an FAA auction under § 93.165, 

rather than pursuant to this section, may 

do so. The carrier shall retain the 

proceeds and the slot shall retain the 

same designation that it had prior to the 

carrier placing it up for auction. 

§ 93.169 One-for-one trade of slots. 

(a) A carrier may trade a slot with 

another carrier on a one-for-one basis. 

(b) Written evidence of each carrier’s 

consent to the trade must be provided 

to the FAA. 

(c) No recipient of the trade may use 

the acquired slot until written 

confirmation has been received from the 

FAA. 

(d) Carriers participating in a one-forone trade must certify to the FAA that 

no consideration or promise of 

consideration was provided by either 

party to the trade. 

§ 93.170 Minimum usage requirements. 

(a) This section does not apply to 

unrestricted slots. 

(b) Any common slot or limited slot 

included in a summer or winter season 

schedule approved by the FAA that is 

not used at least 80 percent of the time 

during the period for which it is 

assigned will be withdrawn by the FAA. 

(c) The FAA may waive the 

requirements of paragraph (b) of this 

section in the event of a highly unusual 

and unpredictable condition which is 

beyond the control of the carrier and 

which affects carrier operations for a 

period of five or more consecutive days. 


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Examples of conditions which could 

justify a waiver under this paragraph are 

weather conditions that result in the 

restricted operation of the airport for an 

extended period of time or the 

grounding of an aircraft type. 

(d) The FAA will treat as used any 

common slot or limited slot held by a 

carrier on Thanksgiving Day, the Friday 

following Thanksgiving Day, and the 

period from December 24 through the 

first Sunday of January. 

§ 93.171 Unscheduled operations. 

(a) During the hours of 6 a.m. through 

10:59 p.m. Eastern Time, no person may 

operate an aircraft other than a 

helicopter to or from JFK or Newark 

unless he or she has received, for that 

unscheduled operation, a reservation 

that is assigned by the Airport 

Reservation Office (ARO) or in the case 

of public charters, in accordance with 

the procedures in paragraph (d) of this 

section. Requests for reservations will 

be accepted through the e-CVRS 

beginning 72 hours prior to the 

proposed time of arrival to or departure 

from JFK or Newark. Additional 

information on procedures for obtaining 

a reservation is available on the Internet 

at http://www.fly.faa.gov/ecvrs. 

(b) Reservations, including those 

assigned to public charter operations 

under paragraph (d) of this section, will 

be available to be assigned by the ARO 

on a 60-minute basis as follows: 

(1) At JFK, two reservations per hour 

between 6 a.m. and 1:59 p.m. and 

between 10 p.m. and 10:59 p.m. and one 

reservation per hour between 2 p.m. and 

9:59 p.m. 

(2) At Newark, two reservations per 

hour between 6 a.m. and 11:59 a.m. and 

between 10 p.m. and 10:59 p.m. and one 

reservation per hour between 12 noon 

and 9:59 p.m. 

(c) The ARO will receive and process 

all reservation requests for unscheduled 

arrivals and departures at JFK and 

Newark. 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) One reservation per hour will be 

available for assignment to public 

charter operations prior to the 72-hour 

reservation window in paragraph (a) of 

this section. No more than 25 percent of 

the reservations available from 12 noon 

through 9:59 p.m. will be made 

available to public charter operations 

under this paragraph. 

(1) The public charter operator may 

request a reservation up to six months 

in advance of the date of the flight 

operation. Reservation requests should 

be submitted to Federal Aviation 

Administration, Slot Administration 

Office, AGC–200, 800 Independence 

Avenue, SW., Washington, DC 20591. 

Submissions may be made via facsimile 

to (202) 267–7277 or by e-mail to: 

7-awa-slotadmin@faa.gov. 

(2) The public charter operator must 

certify that its prospectus has been 

accepted by the Department of 

Transportation in accordance with 14 

CFR part 380. 

(3) The public charter operator must 

identify the call sign/flight number or 

aircraft registration number of the direct 

air carrier, the date and time of the 

proposed operation(s), the airport 

served immediately prior to or after JFK 

or Newark, aircraft type, and the nature 

of the operation (e.g., ferry or 

passenger). Any changes to an approved 

reservation must be approved in 

advance by the Slot Administration 

Office. 

(4) If reservations under paragraph 

(d)(1) of this section have already been 

assigned, the public charter operator 

may request a reservation under 

paragraph (a) of this section. 

(e) The filing of a request for a 

reservation does not constitute the filing 

of an IFR flight plan as required by 

regulation. The IFR flight plan may be 

filed only after the reservation is 

obtained, must include the reservation 

number in the ‘‘Remarks’’ section, and 

must be filed in accordance with FAA 

regulations and procedures. 

(f) Air Traffic Control will 

accommodate declared emergencies 

without regard to reservations. Nonemergency flights in direct support of 

national security, law enforcement, 

military aircraft operations, or publicuse 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. 

(g) 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 unlikely, the FAA may 

determine that additional reservations 

may be accommodated for a specific 

time period. Unused slots may also be 

made available temporarily for 

unscheduled operations. Reservations 

for additional operations must be 

obtained through the ARO. 

(h) Reservations may not be bought, 

sold or leased. 

§ 93.172 Reporting requirements. 

(a)(1) No later than September 1 for 

the summer scheduling season and 

February 1 for the winter scheduling 

season, each carrier holding a common 

slot or limited slot must submit an 

interim report of slot usage for each day 

of the applicable scheduling season. (2) 

No later than 30 days after the last day 

of the applicable scheduling season, 

each carrier must submit a final report 

of the completed operations for each 

day of the entire scheduling season. 

(b) Such reports, in a format 

acceptable to the FAA, must contain the 

following information for each common 

slot or limited slot: 

(1) The slot number, time, and arrival 

or departure designation; 

(2) The operating carrier; 

(3) The date and scheduled time of 

each of the operations conducted 

pursuant to the slot, including the flight 

number, and origin/destination, and 

aircraft type identifier; and 

(4) Whether a flight was actually 

operated. 

(c) The FAA may withdraw the slot of 

any carrier that does not meet the 

reporting requirements of paragraph (a) 

of this section. 

§ 93.173 Administrative provisions. 

(a) Each slot shall be assigned a 

number for administrative convenience. 

(b) The FAA will assign priority 

numbers by random lottery for common 

slots and limited slots at JFK and 

Newark. Each common slot and limited 

slot will be assigned a withdrawal 

priority number, and the 30-minute time 

period for the common slot or limited 

slot, frequency, and the arrival or 

departure designation. 

(c) If the FAA determines that 

operations need to be reduced for 

operational reasons, the lowest assigned 

priority number common slot or limited 

slot will be the last withdrawn. 

(d) Any slot 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 slots may be made available 

for unscheduled operations on a nonpermanent basis and will be assigned 

under the same procedures applicable to 

other operating reservations. 

(e) All transactions under this subpart 

must be in a written or electronic format 

approved by the FAA. 

Issued in Washington, DC, on October 6, 

2008. 

Robert A. Sturgell, 

Acting Administrator. 

[FR Doc. E8–24046 Filed 10–9–09; 8:45 am] 

BILLING CODE 4910–13–P 


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