[Federal Register Volume 80, Number 5 (Thursday, January 8, 2015)]
[Proposed Rules]
[Pages 1273-1306]
[FR Doc No: 2014-30378]

Vol. 80

Thursday,

No. 5

January 8, 2015

Part V

Department of Transportation

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Federal Aviation Administration

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14 CFR Part 93

Slot Management and Transparency for LaGuardia Airport, John F. Kennedy
International Airport, and Newark Liberty International Airport;
Proposed Rule

Federal Register / Vol. 80 , No. 5 / Thursday, January 8, 2015 /
Proposed Rules

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 93

[Docket No.: FAA-2014-1073; Notice No. 14-11]
RIN 2120-AJ89

Slot Management and Transparency for LaGuardia Airport, John F.
Kennedy International Airport, and Newark Liberty International Airport

AGENCY: Federal Aviation Administration (FAA), Department of
Transportation (DOT).

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: The FAA proposes to replace the Orders limiting scheduled
operations at John F. Kennedy International Airport (JFK), limiting
scheduled operations at Newark Liberty International Airport (EWR), and
limiting scheduled and unscheduled operations at LaGuardia Airport
(LGA). The Orders are scheduled to expire when this proposed rule
becomes effective but not later than October 29, 2016. This proposal is
intended to provide a longer-term and comprehensive approach to slot
management at JFK, EWR, and LGA. The FAA proposes to maintain the
limits on scheduled and unscheduled operations in place under the
Orders, limit unscheduled operations at JFK and EWR, and require use of
an allocated slot 80% of the time for the same flight or series of
flights to retain historic precedence. The FAA also proposes five
alternatives for a secondary market that would allow carriers to buy,
sell, lease, and trade slots. The DOT proposes to review certain slot
transfer transactions for significant anti-competitive effects and
harms to the public interest. Finally, the FAA proposes minor
miscellaneous amendments to remove inapplicable references in the High
Density Rule.

DATES: Send comments on or before April 8, 2015.

ADDRESSES: Send comments identified by docket number FAA-2014-1073
using any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and follow the online instructions for sending your
comments electronically.
     Mail: Send comments to Docket Operations, M-30; U.S.
Department of Transportation (DOT), 1200 New Jersey Avenue SE., Room
W12-140, West Building Ground Floor, Washington, DC 20590-0001.
     Hand Delivery or Courier: Take comments to Docket
Operations in Room W12-140 of the West Building Ground Floor at 1200
New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays.
     Fax: Fax comments to Docket Operations at<PHONE_NUMBER>.
    Privacy: In accordance with 5 U.S.C. 553(c), DOT solicits comments
from the public to better inform its rulemaking process. DOT posts
these comments, without edit, including any personal information the
commenter provides, to www.regulations.gov, as described in the system
of records notice (DOT/ALL-14 FDMS), which can be reviewed at
www.dot.gov/privacy.
    Docket: Background documents or comments received may be read at
http://www.regulations.gov at any time. Follow the online instructions
for accessing the docket or Docket Operations in Room W12-140 of the
West Building Ground Floor at 1200 New Jersey Avenue SE., Washington,
DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays.

FOR FURTHER INFORMATION CONTACT: For technical questions concerning
this action, contact Molly Smith, Office of Aviation Policy and Plans,
Federal Aviation Administration, 800 Independence Avenue SW.,
Washington, DC 20591; telephone<PHONE_NUMBER>; email
<EMAIL_ADDRESS>Susan Pfingstler, System Operations Services,
Air Traffic Organization, Federal Aviation Administration, 600
Independence Avenue SW., Washington, DC 20591; telephone (202) 267-
6462; email<EMAIL_ADDRESS>or Peter Irvine, U.S. Department
of Transportation, Office of Aviation Analysis, 1200 New Jersey Avenue
SE., Washington, DC 20590; telephone<PHONE_NUMBER>; email:
<EMAIL_ADDRESS>    For legal questions concerning this action, contact Robert Hawks,
Office of the Chief Counsel, Regulations Division, Federal Aviation
Administration, 800 Independence Avenue SW., Washington, DC 20591;
telephone<PHONE_NUMBER>; email<EMAIL_ADDRESS>or Cindy Baraban,
U.S. Department of Transportation, Office of the General Counsel, 1200
New Jersey Avenue SE., Washington, DC 20590; telephone<PHONE_NUMBER>;
email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: See the ``Additional Information'' section
for information on how to comment on this proposal and how the FAA will
handle comments received. The ``Additional Information'' section also
contains related information about the docket, privacy, the handling of
proprietary or confidential business information. In addition, there is
information on obtaining copies of related rulemaking documents.

Authority for This Rulemaking

    This rulemaking is promulgated under the authority described in
Title 49 of the United States Code, Subtitle VII, Part A, Subpart I,
Sections 40101, 40103, 40105, and 41712
    The Secretary of Transportation (Secretary) is the head of the DOT
and has broad oversight of significant FAA decisions.\1\ In addition,
under 49 U.S.C. 41712, the Secretary has the authority to investigate
and prohibit unfair and deceptive practices and unfair methods of
competition in air transportation or the sale of air transportation.
The Secretary is required to consider several objectives as being in
the public interest, including, without limitation, the following:
Keeping available a variety of adequate, economic, efficient, and low-
priced air services; placing maximum reliance on competitive market
forces and on actual and potential competition; avoiding airline
industry conditions that would tend to allow at least one air carrier
unreasonably to increase prices, reduce services, or exclude
competition in air transportation; encouraging, developing, and
maintaining an air transportation system relying on actual and
potential competition; encouraging entry into air transportation
markets by new and existing air carriers and the continued
strengthening of small air carriers to ensure a more effective and
competitive airline industry; and ensuring that consumers in all
regions of the United States, including those in small communities and
rural and remote areas, have access to affordable, regularly-scheduled
air service.
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    \1\ See 49 U.S.C. 102 and 106.
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    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 the FAA deems necessary for safe and
efficient utilization. It further directs the FAA to prescribe air
traffic rules and regulations governing the efficient utilization of
navigable airspace. The FAA should ensure efficient use of navigable
airspace in a manner that does not effectively shut out potential
operators at the airport and in a manner that takes account of
competitive market forces. The FAA should take steps to ensure the
operational limits imposed and the rules

governing their allocation and transfer do not inefficiently constrain
competitive market forces. 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 airport is
hindered, in large part, by the imposition of operations limits.
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.
    These authorities empower the DOT to ensure the efficient
utilization of airspace by limiting the number of scheduled and
unscheduled aircraft operations at JFK, EWR, and LGA, while balancing
between promoting competition and recognizing historical investments in
the airport and the need to provide continuity. They also authorize the
DOT to review proposed transfers of slots and to limit or prohibit
transfers where they present a potential for significant
anticompetitive effects or adverse effects on the public interest.

Table of Contents

I. Overview of Proposed Rule
II. Background
    A. High Density Rule and AIR-21
    B. LaGuardia Airport After AIR-21
    C. John F. Kennedy International Airport After AIR-21
    D. Congestion at Newark Liberty International Airport
    E. Exploration of Long-Term Congestion Management
    F. Congestion Management Rules of 2008
    G. Current Slot Management at LGA, JFK, and EWR
III. Discussion of the Proposal
    A. Hourly and Daily Slot Limits
    B. Allocation of Slots
    C. Usage Requirement
    D. Transfer of Slots
    E. Oversight of Competitive and Public Interest Issues
    F. Retiming, Suspension, and Withdrawal of Slots for Operational
Reasons
    G. Unscheduled Operations
    H. Miscellaneous Amendments
IV. Regulatory Notices and Analyses
    A. Regulatory Evaluation
    B. Regulatory Flexibility Determination
    C. International Trade Impact Assessment
    D. Unfunded Mandates Assessment
    E. Paperwork Reduction Act
    F. International Compatibility and Cooperation
    G. Environmental Analysis
V. Executive Order Determinations
    A. Executive Orders 12866 and 13563
    B. Executive Order 13132, Federalism
    C. Executive Order 13211, Regulations That Significantly Affect
Energy Supply, Distribution, or Use
VI. Additional Information
    A. Comments Invited
    B. Availability of Rulemaking Documents
VII. The Proposed Amendment

I. Executive Summary

    This proposed rule would replace the Orders limiting scheduled
operations at JFK and EWR and the Order limiting scheduled and
unscheduled operations at LGA. Those Orders remain effective until this
proposed rule becomes effective but not later than October 29, 2016. If
adopted, this proposed rule would apply to all scheduled and
unscheduled operations every day at JFK and EWR between the hours of
0600 and 2259, local time. This proposed rule would apply to all
scheduled and unscheduled operations at LGA Monday through Friday
between the hours of 0600 and 2159, local time, and Sunday between the
hours of 1200 and 2159, local time. This proposed rule would apply, in
large part, the International Air Transport Association (IATA)
Worldwide Slot Guidelines (WSG) to administering slots at each airport.
    The following tables provide a comparison between requirements
under the current Orders and under this proposal. The first table
summarizes existing requirements for each airport under the Orders. The
second table summarizes this proposal's establishment of an initial
slot base based on carrier holdings under the Orders, the slot-
controlled periods, hourly and daily limits for scheduled operations,
hourly limits for unscheduled operations, and the general processes
that would be used to allocate slots or reservations for scheduled and
unscheduled flights. It also identifies differences between the five
potential alternatives for a secondary market to buy, sell, lease, or
otherwise transfer slots between carriers and introduces a review of
slot transfer transactions for significant anti-competitive effect.

                                      Current Orders for JFK, EWR, and LGA
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             Feature                          JFK                        EWR                       LGA
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Slot Base........................  Seasonal slot holdings,    Seasonal slot holdings,   Slot holdings, as
                                    as approved by the FAA.    as approved by the FAA.   approved by the FAA.
Slot (called Operating             Operational authority to   Operational authority to  Operational authority to
 Authorization under the Orders).   conduct an arrival or      conduct an arrival or     conduct an arrival or
                                    departure operation on a   departure operation on    departure operation
                                    particular day of the      a particular day of the   during a specific 30-
                                    week during a specific     week during a specific    minute period.
                                    30-minute period.          30-minute period.
Slot-controlled hours............  Daily: 0600 to 2259,       Daily: 0600 to 2259,      M-F: 0600 to 2159,
                                    Eastern time.              Eastern time.             Eastern time
                                                                                Su: 1200 to 2159,
                                                                                Eastern time.
Hourly slot limits...............  81 per hour or in any 60-  81 per hour or in any 60- 71 per hour or in any 60-
                                    minute period.             minute period.            minute period.
                                  ------------------------------------------------------------------------------
Daily slot limits................  Not formally set but based on accepted schedules and modeled delay when
                                    Orders adopted.
                                  ------------------------------------------------------------------------------
Hourly unscheduled operations      None.....................  None....................  3.
 limits.
Unscheduled operations             None.....................  None....................  Reservations available
 reservation system.                                                                     through the Enhanced
                                                                                Computer Voice
                                                                                Reservation System (e-
                                                                                CVRS) 72 hours in
                                                                                advance; reservations
                                                                                for certain public
                                                                                charter operations
                                                                                available through the
                                                                                Slot Administration
                                                                                Office 6 months in
                                                                                advance.
Allocation of slots..............  Adapted from IATA WSG....  Adapted from IATA WSG...  Lottery.
Scheduling season................  IATA WSG.................  IATA WSG................  Slot usage reporting on
                                                                                bimonthly basis.
                                  ------------------------------------------------------------------------------

Use-or-lose......................  Must use allocated slot 80% of the time throughout the previous corresponding
                                    season; waiver for highly unusual and unpredictable condition lasting 5 or
                                    more consecutive days; waiver for Thanksgiving, the Friday after
                                    Thanksgiving, and the period from December 24 through the first Sunday of
                                    January.
Secondary market.................  Privately-negotiated lease and trade that extend no longer than terms of
                                    Order; request for FAA approval.
Logistical slot swaps............  Permitted.
Competitive review...............  None.
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                                    Proposed Regulation for JFK, EWR, and LGA
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             Feature                          JFK                        EWR                       LGA
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Slot Base........................  Seasonal slot holdings, as approved by the FAA.
Slot.............................  Operational authority to conduct an arrival or departure operation on a
                                    particular day of the week during a specific 30-minute period.
                                  ------------------------------------------------------------------------------
Slot-controlled hours............  Daily: 0600 to 2259,       Daily: 0600 to 2259,      M-F: 0600 to 2159,
                                    Eastern time.              Eastern time.             Eastern time
                                                                                Su: 1200 to 2159,
                                                                                Eastern time.
Hourly slot limits...............  81 per hour or in any 60-  81 per hour or in any 60- 71 per hour or in any 60-
                                    minute period and 44 in    minute period and 44 in   minute period and 38 in
                                    any 30-minute period.      any 30-minute period.     any 30-minute period.
Daily slot limits................  1205 for hours 0600 to     1205 for hours 0600 to    1136.
                                    2159.                      2159.
Hourly unscheduled operations      2........................  1.......................  3.
 limits.
                                  ------------------------------------------------------------------------------
Unscheduled operations             Reservations available through the e-CVRS 72 hours in advance; reservations
 reservation system.                for certain public charter operations available through Slot Administration
                                    Office 6 months in advance.
Allocation of slots..............  Adapted from IATA WSG.
Scheduling season................  IATA WSG.
Use-or-lose......................  Must use allocated slot 80% of the time for the same flight or series of
                                    flights throughout the previous corresponding season; waiver for strike;
                                    waiver for highly unusual and unpredictable condition lasting 5 or more
                                    consecutive days; waiver for slot allocation or acquisition by new entrant
                                    carrier.
Secondary market (Alternative 1).  Privately-negotiated buy, sell, lease, and trade without prior public notice;
                                    request for FAA approval must include terms of transaction; terms of final
                                    transaction posted on the FAA Web site.
Secondary market (Alternative 2).  FAA publishes a bulletin board notice of buy, sell, lease, and trade; bidding
                                    and negotiation between seller and bidders after public notice; request for
                                    FAA approval must include terms of transaction; terms of final transaction
                                    posted on the FAA Web site.
Secondary market (Alternative 3).  FAA publishes a bulletin board notice of buy, sell, lease, and trade;
                                    negotiations prior to public notice permitted; bidding and negotiation
                                    between seller and bidders; request for FAA approval must include terms of
                                    transaction; terms of final transaction posted on the FAA Web site.
Secondary market (Alternative 4).  FAA publishes a bulletin board notice of buy, sell, lease, and trade; bids
                                    posted on bulletin board; request for FAA approval must include terms of
                                    transaction; terms of final transaction posted on the FAA Web site.
Secondary market (Alternative 5).  FAA publishes a bulletin board notice of buy, sell, and lease without
                                    identifying poster; cash-only bids posted on bulletin board without
                                    identifying bidders; seller must accept highest bid; request for FAA
                                    approval must include terms of transaction; terms of final transaction
                                    posted on the FAA Web site.
Logistical slot swaps............  Permitted.
Competitive/Public Interest        Performed by DOT based on submitted transaction terms; DOT has 14 days to
 review.                            decide whether to review transaction; DOT approval or non-objection required
                                    for FAA approval of transfer.
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    The FAA developed this analysis using 2009 data to model the
behaviors of carriers based on meeting the minimum requirement of the
proposed rule. Under this assumption, carriers would incrementally
increase actual operations in year one to meet the new usage
requirement, and this new operating level would grow by the FAA's
Terminal Area Forecast (TAF) until it reached the daily limits. The
analysis period is the first year because compliance cost is the
highest in that year, and if benefits exceed the cost in the first
year, this relationship will continue until passenger demand forces
operations up to 100% of the available slots. In the first year,
carrier utilization of slots will be at least 80%. Thereafter,
increases in operations and slot utilization are a result of an
increase in forecasted demand. Assuming the highest cost secondary
market alternative (either alternative four or five) is adopted, the
total benefits and costs are estimated at $74,696,596 ($65,242,900
Present Value at 7%) for benefits and $53,056,768 ($46,341,836 Present
Value at 7%) for costs. These costs and benefits result from the
changed behavior concerning use-or-lose, secondary market, and
reporting requirements under this proposal as compared to current
behavior under the existing Orders for each airport. Moreover, the FAA
believes that this rule would improve utilization of existing slots,
possibly increase a carrier's penalty for retaining slots of limited
value and thus result in the return of some slots, and would result in
net benefits.

                    Total Cost and Benefits of Alternatives Four or Five of the Proposed Rule
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                                                   Present value                   Present value
           First year                Benefits          (7%)            Costs           (7%)        Net benefits
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Regulatory Case.................     $74,696,596     $65,242,900     $53,056,768     $46,341,836     $18,901,064
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II. Background

A. The High Density Rule and AIR-21

    To manage airspace congestion, in 1968, the FAA adopted the High
Density Rule (HDR), which limited take-offs and landings at JFK, EWR,
LGA, Washington National Airport (DCA), and Chicago O'Hare
International Airport (ORD).\2\ In 1970, the FAA suspended the HDR's
application at EWR because airport capacity could meet demand.\3\ To
operate during the slot-controlled hours, a flight needed a
reservation, commonly known as a ``slot.'' The HDR divided the
allowable slots by categories of users (i.e., air carriers other than
air taxis, scheduled air taxis, and others).\4\ These reservations
applied to both scheduled and unscheduled (i.e., ``Other'') operations.
While LGA, DCA, and ORD were constrained throughout much of the day,
JFK was constrained for only 5 hours from 1500 through 1959, Eastern
Time.
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    \2\ 33 FR 17896 (Dec. 3, 1968) (codified at 14 CFR part 93
subpart K).
    \3\ 35 FR 16591 (Oct. 24, 1970).
    \4\ 33 FR 17896 (Dec. 3, 1968).
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    Under the HDR, air carrier slots were allocated through airline
scheduling committees, operating under then-authorized antitrust
immunity, and the airlines would agree to the allocation. The FAA's
role was limited to determining how many operations air traffic control
(ATC) could reasonably handle during congested periods and enforcing
operator compliance with the rules. After the Airline Deregulation Act
in 1978, new entrant airlines sought access to, and legacy carriers
sought expansion at, slot-controlled airports. This increased
competition made it more difficult for airlines to reach agreement on
slot allocation, and the scheduling committees began to deadlock. The
Civil Aeronautics Board or DOT periodically stepped in to resolve the
deadlocks. In resolving a 1980 deadlock at DCA, the DOT divested a
small percentage of slots from incumbent airlines and reallocated them
to a requesting new entrant. The DOT noted that additional reduced fare
service was likely to increase competition and thus be consistent with
the general pro-competitive policy of the Airline Deregulation Act of
1978.\5\ The U.S. Court of Appeals upheld the DOT's action on review
following an airline challenge.\6\
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    \5\ SFAR 43, 45 FR 72637 (Nov. 3, 1980).
    \6\ Northwest Airlines, Inc. v. Goldschmidt, 645 F.2d 1309 (8th
Cir. 1981).
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    In 1981, the FAA responded to a nationwide shortage of air traffic
controllers by reducing the level of air traffic operations and
imposing slot controls on the nation's 22 busiest airports.\7\ Through
that experience, the FAA implemented new allocation and slot management
methods. In 1982, the FAA utilized a lottery allocation and imposed a
minimum usage requirement for the first time.\8\ Also in 1982, the FAA
implemented an experimental ``Buy/Sell'' program, permitting transfers
of slots in any number and for any consideration, to provide for
``adjustments in slot assignments that may be occasioned by seasonal
variation in demand, competitive pressures, or economic decisions of
the carriers'' and to increase flexibility of the slot allocation
system.\9\ For the 6 weeks the ``Buy/Sell'' program was in place,
approximately 190 slots were transferred by sale among carriers.\10\
Thereafter, the FAA no longer permitted slot sales (though trades
continued to be permitted) because the necessity for slots was
diminishing as the ATC system was being restored.\11\
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    \7\ See SFAR 44, 46 FR 39606 (Aug. 4, 1981); SFAR 44-1, 46 FR
44424 (Sept. 4, 1981); SFAR 44-2, 46 FR 48906 (Oct. 5, 1981). Those
were then William B. Hartsfield Atlanta International Airport,
Boston's Logan International Airport, ORD, Cleveland Hopkins
International Airport, then Dallas/Fort Worth Regional Airport,
Denver's Stapleton International Airport, Detroit Metropolitan Wayne
County Airport, Fort Lauderdale-Hollywood International Airport,
then Houston Intercontinental Airport, Kansas City International
Airport, JFK, LGA, Las Vegas' McCarran International Airport, Los
Angeles International Airport, Miami International Airport,
Minneapolis/St. Paul International Airport, EWR, Philadelphia
International Airport, Pittsburgh International Airport, San
Francisco International Airport, Lambert-St. Louis International
Airport, and DCA. SFAR 44-3, 47 FR 7816 (Feb. 22, 1982).
    \8\ SFAR 44-3, 47 FR 7816 (Feb. 22, 1982).
    \9\ 47 FR 19989 (May 10, 1982).
    \10\ 47 FR 29814 (Jul. 8, 1982).
    \11\ Id. at 29815.
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    The FAA established more permanent allocation procedures for slots
under the HDR in 1985 when it adopted the Buy/Sell Rule, which allowed
carriers to buy, sell, lease, and trade most slots.\12\ In a companion
rulemaking to the Buy/Sell Rule, the FAA provided for the withdrawal of
up to five percent of slots at slot-controlled airports through a
reverse lottery to provide a pool of slots for new entrants and limited
incumbents.\13\ The Buy/Sell Rule included use-or-lose provisions and
explicitly stated slots were an operating privilege and not the
carriers' property.
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    \12\ 50 FR 52195 (Dec. 20, 1985).
    \13\ SFAR 88, 51 FR 8630 (Mar. 12, 1986).
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    For the next 15 years the agency relied primarily on the secondary
market authorized by the Buy/Sell Rule to address access issues at HDR
airports, particularly for domestic operations. However, carriers
without a substantial presence at HDR airports increasingly criticized
the Buy/Sell Rule because their access to slot-controlled airports was
severely limited. Those carriers complained to the FAA that
grandfathering 95 percent of slots at slot-controlled airports to
incumbent carriers left insufficient capacity available for
reallocation. Carriers further criticized the Buy/Sell Rule for failing
to foster a robust secondary market and complained about a lack of
transparency that permitted private transactions arranged to reduce
competition. Some carriers also complained they were unaware of slots
potentially available for sale or lease even when they were seeking to
initiate or expand service. Finally, a small number of carriers
contended they were effectively denied access to the airports because
their competitors refused to sell slots or provide meaningful lease
terms.
    In 1994, Congress began to relax the HDR by authorizing the
Secretary, upon making a public interest finding, to grant exemptions
from the HDR to enable new entrant carriers \14\ to provide air
transportation at certain slot-controlled airports, including JFK and
LGA.\15\ At JFK, the DOT granted 75 slot exemptions to new entrant
carrier JetBlue Airways (JetBlue) under this authority in 1999, which
were phased in over a 5-year period.\16\ The order stated

that JetBlue would operate the majority of its flights outside the 5
HDR slot-controlled hours. The Secretary also granted 30 slot
exemptions at LGA to new entrant carriers.
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    \14\ The term ``new entrant carrier'' was defined as ``an air
carrier that does not hold a slot at the airport concerned and has
never sold or given up a slot at that airport after December 16,
1985, and a limited incumbent carrier.'' 49 U.S.C. 41714(h)(3).
    \15\ Pub. L. 103-305 Sec.  206(a)(1) (Jan. 25, 1994) (codified
at 49 U.S.C. 41714).
    \16\ Application of New Air Corporation for Exemption from 14
CFR part 93, subparts K and S of 49 U.S.C. 41714(c), Order 99-9-11
(Sep. 16, 1999).
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    On April 5, 2000, Congress enacted the Wendell H. Ford Aviation and
Investment Reform Act of the 21st Century (AIR-21).\17\ AIR-21 phased
out and terminated the HDR at JFK, LGA, and ORD.\18\ In phasing out the
HDR, AIR-21 directed the Secretary to grant two types of exemptions
from the HDR's flight restrictions at LGA and JFK. The first type of
exemption was designed to promote more competition at slot-controlled
airports and required the Secretary to grant exemptions to a new
entrant or limited incumbent, defined as a carrier holding fewer than
20 slots or slot exemptions.\19\ The second type of exemption was aimed
at improving service to small communities and required the Secretary to
grant exemptions to a carrier operating an aircraft with less than 71
seats to small-hub or non-hub airports for an unrestricted number of
flights.\20\ AIR-21 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.'' \21\
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    \17\ Pub. L. 106-181.
    \18\ Congress directed the HDR phase-out for JFK and LGA by
January 1, 2007. 49 U.S.C. 41715(a)(2). Congress directed the HDR
phase-out for ORD by July 1, 2002. 49 U.S.C. 41715(a)(1). AIR-21 did
not phase out the HDR at DCA, and it remains the only HDR airport.
    \19\ AIR-21 also granted authority for this type of exemption at
DCA and ORD.
    \20\ AIR-21 also granted authority for this type of exemption at
ORD.
    \21\ 49 U.S.C. 41715(b).
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B. LaGuardia Airport After AIR-21

    LGA, which provides almost exclusively domestic service,\22\
consistently has been one of the most congested airports in the nation.
Its proximity to midtown Manhattan makes it a desirable airport for
many travelers, and airlines attempt to meet that demand by operating
many flights to LGA. Physical constraints of the airfield limit the
ability to expand capacity.
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    \22\ The Port Authority of New York and New Jersey limits the
distance to which commercial flights may operate on a nonstop basis.
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    The slot exemptions mandated by Congress under AIR-21 facilitated
access for new entrants and small community service at LGA, but the
trade-off for this service was increased airport congestion and delays.
By fall 2000, carriers had added over 300 new scheduled flights at LGA
and had plans to operate even more, resulting from more than 600
exemption requests. While the number of allowable scheduled operations
under the HDR remained constant at 62 per hour, the actual number of
scheduled operations rose to over 100 in several hours with the
additional AIR-21 slot exemptions. With no new airport infrastructure,
overall airport capacity remained the same while the number of aircraft
operations and delays soared. Additional operations following AIR-21
resulted in significantly higher delays at LGA than existed before
2000. The average minutes of delay for all arriving flights at LGA
increased 144% from 15.52 minutes in March 2000 (the month before AIR-
21 was enacted) to 37.86 minutes in September 2000.\23\ The increase in
delay as a result of AIR-21 was not limited to delays at LGA. Flights
that arrived and departed late at LGA affected flights at other
airports and in the national airspace system (NAS). By September 2000,
flight delays at LGA accounted for 25 percent of the nation's delays,
compared to 10 percent for the previous year.\24\
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    \23\ FAA Aviation System Performance Metrics (ASPM).
    \24\ Calculated from the FAA's Air Traffic Operations Network
Database (OPSNET).
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    Using its authority under 49 U.S.C. 40103, and pending the
development of a long-term solution, the FAA published a Notice of
Intent in the Federal Register on November 15, 2000, announcing its
intent to temporarily limit AIR-21 slot exemptions at LGA and to
allocate them via a lottery.\25\ The lottery, which was conducted on
December 4, 2000, was premised on the imposition of an airfield and
airspace capacity management limit of 75 scheduled operations per hour
(plus six unscheduled operations primarily used by the general aviation
community) beginning January 31, 2001.\26\ This limit still allowed a
significant increase in operations at the airport above the HDR's
regulatory limits, thus serving Congressional objectives while
stretching capacity to its practical limits. The number of AIR-21 slot
exemptions at LGA was restricted to a total of 159 a day between the
hours of 0700 and 2159. As a result of the hourly restrictions, the
average number of aircraft delays at LGA fell from 330 per day in
October 2000 to 98 per day in April 2001.
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    \25\ 65 FR 69126 (Nov. 15, 2000).
    \26\ 65 FR 75765 (Dec. 4, 2000).
---------------------------------------------------------------------------

    Under AIR-21, slots allocated under the HDR at LGA were scheduled
to expire on January 1, 2007. Based on its experience in 2000, the FAA
determined that simply lifting the HDR at LGA would result in a
significant increase in delays and adversely impact the airspace around
New York City and the NAS as a whole.
    In August 2006, the FAA published a notice of proposed rulemaking
(LGA NPRM) proposing a continuation of the existing cap of 75 scheduled
and six unscheduled hourly operations as well as a new method of
allocating capacity.\27\ In addition to retaining the existing cap, the
FAA proposed to impose an average minimum aircraft size requirement for
much of the fleet serving the airport. By incentivizing carriers to use
larger aircraft, the proposal was designed to maximize passenger
throughput consistent with the airport's physical constraints. The FAA
also proposed to implement a limit on the duration of slots that would
assure 10 percent of the capacity at the airport would be available
annually for reallocation by the FAA.
---------------------------------------------------------------------------

    \27\ 71 FR 51360 (Aug. 29, 2006).
---------------------------------------------------------------------------

    The FAA recognized that it would be unable to complete its
rulemaking by January 1, 2007, when the HDR was scheduled to expire.
After providing for notice and comment, the agency published an FAA
Order Operating Limitations at New York LaGuardia Airport (LGA
Order).\28\ The LGA Order retained the existing limit of 75 scheduled
operations and a reservation system for unscheduled operations that
permitted six unscheduled operations per hour. The LGA Order did not
distinguish between operations conducted pursuant to HDR slots and AIR-
21 slot exemptions; rather, flights conducted pursuant to exemptions
were included in the hourly cap without restriction. The slots and
exemptions were grandfathered to the then-current holder as ``Operating
Authorizations.'' The LGA Order also explicitly linked its duration to
the publication of a final rule and noted that no rights to Operating
Authorizations allocated under the Order would survive beyond the
Order. No one challenged the terms of the LGA Order or the FAA's
authority to re-impose caps at the airport following the expiration of
the HDR.
---------------------------------------------------------------------------

    \28\ 71 FR 77854 (Dec. 27, 2006). The LGA Order was amended on
November 8, 2007 (72 FR 63224), on August 19, 2008 (73 FR 48428), on
January 15, 2009 (74 FR 2646), on October 7, 2009 (74 FR 51653), on
April 4, 2011 (76 FR 18616), on May 14, 2013 (78 FR 28278), and on
March 27, 2014 (79 FR 17222).
---------------------------------------------------------------------------

    In August 2008, the FAA reduced the number of reservations
available for unscheduled operations at LGA from six

to three.\29\ In January 2009, the FAA reduced the limits on scheduled
operations to 71 per hour.\30\ Although the FAA did not withdraw
Operating Authorizations to reach 71 operations, it stated it would
retire any returned Operating Authorizations to reach that limit. These
two actions were intended to further reduce congestion and delays at
LGA.
---------------------------------------------------------------------------

    \29\ 73 FR 48428 (Aug. 19, 2008).
    \30\ 74 FR 2646 (Jan. 15, 2009).
---------------------------------------------------------------------------

C. John F. Kennedy International Airport After AIR-21

    Until recently, most operations at JFK took place during relatively
pronounced arrival and departure banks corresponding to the operating
windows of transatlantic flights. The FAA accommodated those banks and
achieved maximum efficiency by using either two arrival runways and one
departure runway, or two departure runways and one arrival runway. Air
traffic controllers have employed that configuration to facilitate the
historical transatlantic traffic flows.
    Beginning in the spring of 2006, U.S. air carriers serving JFK
significantly increased their domestic scheduled operations throughout
the day, changing the historical arrival and departure patterns. For
example, the traditional transatlantic arrival and departure periods
now have significant levels of departing and arriving flights,
respectively. While demand is somewhat more balanced, some loss of
efficiency associated with a two-arrival or two-departure runway
configuration has resulted.
    While operations at LGA remained capped throughout 2007, caps on
afternoon operations at JFK were lifted on January 1, 2007, when the
HDR expired at that airport. Operations at JFK already had begun to
increase during the morning hours, but the increase in operations in
the afternoon hours soon led to long delays, especially for departing
flights during the evening transatlantic departure bank.
    During fiscal year 2007, the average daily operations at JFK
increased 21 percent over fiscal year 2006. At the same time, on-time
performance and other delay metrics declined year over year. The on-
time performance at JFK, which is defined as the arrival at the gate
within 15 minutes of the scheduled time, declined from 68.5 percent in
fiscal year 2006 to 62.19 percent in fiscal year 2007. On-time arrivals
during the peak travel months of June, July, and August declined from
63.37 percent in 2006 to 58.89 percent in 2007, while on-time
departures declined from 67.49 percent to 59.89 percent during that
period. For fiscal year 2007, the average daily arrival delays
exceeding 1 hour increased by 87 percent over fiscal year 2006 levels.
Additionally, taxi-out delays, which measure the time that aircraft
wait prior to departing the runway, increased by 15 percent. Taxi-out
delays in the evening departure periods frequently exceeded 1 hour in
duration.
    In September 2007, the FAA re-designated JFK as a Level 2 Schedules
Facilitated Airport \31\ for the summer 2008 scheduling season in
accordance with the WSG.\32\ Under the WSG, carriers must inform the
schedules facilitator of projected operations at a Level 2 airport for
the next scheduling season. When submitting the required information,
the airlines expressed their intent to add new flights at JFK during
peak and off-peak hours for summer 2008.
---------------------------------------------------------------------------

    \31\ An airport is designated an IATA Level 2 Schedules
Facilitated Airport when demand is approaching capacity, and a more
formal level of cooperation is required to avoid the circumstances
of over-capacity. At a Level 2-designated airport, a schedules
facilitator seeks the cooperation and voluntary agreement of
carriers serving the airport to avoid congestion.
    \32\ 72 FR 54317 (Sept. 24, 2007).
---------------------------------------------------------------------------

    Also in September 2007, the Secretary and the Administrator
determined that a delay reduction meeting was necessary to discuss
flight reductions with U.S. air carriers to reduce over-scheduling and
flight delays at JFK during peak operating hours.\33\ On October 22,
2007, the FAA opened a docket for information on the establishment of
flight reduction targets at JFK during peak hours.\34\ To address
increases in demand by U.S. and foreign air carriers and to provide a
process for schedule actions, the FAA designated JFK a Level 3
Coordinated Airport.\35\
---------------------------------------------------------------------------

    \33\ Under 49 U.S.C. 41722, the Secretary may request a delay
reduction meeting if ``(1) the Administrator determines that it is
necessary to convene such a meeting; and (2) the Secretary
determines that the meeting is necessary to meet a serious
transportation need or achieve an important public benefit.''
    \34\ 72 FR 59579 (Oct. 22, 2007).
    \35\ 72 FR 60710 (Oct. 25, 2007). When demand for an airport
exceeds capacity, voluntary cooperation is unlikely to resolve the
problem, and short-term capacity enhancements are not available, an
airport may be designated as an IATA Level 3 to inform airlines that
scheduling increases may be disallowed.
---------------------------------------------------------------------------

    To address the projected increased demand for summer 2008 and the
previous over-scheduling in summer 2007 when the airport lacked
scheduling limits, the FAA convened a scheduling reduction meeting on
October 23-24, 2007. The FAA's goal was to obtain voluntary schedule
reductions from historically operated and planned flights. Subsequent
in-person and telephonic meetings took place as well. American
Airlines, Delta Air Lines, and JetBlue, which together accounted for
three-quarters of the total JFK operations, withdrew the schedule
increases each had proposed for summer 2008 during the airport's 1500
to 1959 peak hours. They also adjusted the timing of operations
throughout the day to smooth out peaks. Other airlines agreed to retime
peak operations. Consequently, the FAA was able to offer additional
operations during non-peak hours, which increased the daily total of
operations while decreasing delays over the previous summer season. As
a result of the agreements reached at that meeting and other
discussions held with carriers regarding their planned summer 2008
schedules, the FAA issued a temporary Order limiting scheduled
operations at JFK to 81 per hour from 0600 to 2259 (JFK Order).\36\
That temporary Order allocated slots to carriers operating at the
airport based on the number and timing of operations negotiated during
the schedule reduction meetings. Because the schedule reductions were
voluntary, slot allocations in some hours exceeded 81. The Order
permits the FAA to retire slots that exceed the hourly limit if those
slots are returned to the FAA until the slot limit is reached. On
February 14, 2008, the FAA amended the JFK Order to modify the use-or-
lose provisions so that they would correspond to the WSG.\37\ The JFK
Order temporarily responds to the carriers' desire to schedule
operations above the airport's capacity during peak operating hours,
relieves the substantial inconvenience to the traveling public caused
by excessive congestion-related flight delays at the airport (which
rippled through the NAS), reduces the average length of delays,
improves carriers' ability to plan operations and network connections,
and provides for more efficient use of airspace.
---------------------------------------------------------------------------

    \36\ 73 FR 3519 (Jan. 18, 2008), as amended by 73 FR 8737 (Feb.
14, 2008), 74 FR 51650 (Oct. 7, 2009), 76 FR 18620 (Apr. 4, 2011),
78 FR 28276 (May 14, 2013), and 79 FR 16854 (Mar. 26, 2014).
    \37\ 73 FR 8737.
---------------------------------------------------------------------------

    In July 2008, the FAA proposed to limit unscheduled operations at
JFK to two hourly reservations from 0600 through 1359, to one hourly
reservation from 1400 through 2159, and to two from 2200 through 2259
at JFK.\38\ The FAA never adopted that proposed Order, but the
unscheduled limits were incorporated in the 2008 Congestion Management
Rule for JFK and EWR, which is discussed later.
---------------------------------------------------------------------------

    \38\ 73 FR 41156 (Jul. 17, 2008).

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

D. Congestion at Newark Liberty International Airport

    EWR has grown to be one of the most delay-prone airports in the
country. In 2007, demand during peak hours approached or exceeded the
average runway capacity, resulting in significant volume-related
delays. These delays were aggravated by weather or other adverse
operating conditions.
    Comparing fiscal year 2007 to fiscal year 2000, the percent of on-
time gate arrivals decreased from 70.66 percent to 61.71 percent, and
arrival delays greater than one hour increased, on average, from 54 to
93 per day. EWR's on-time arrival performance of 61.8 percent was the
second worst among the 35 busiest airports. Based on ``the airport's
performance metrics and imbalance between ATC capacity and demand that
is expected to continue in the near term,'' the FAA designated EWR a
Level 2 IATA Schedules Facilitated Airport for the summer 2008
scheduling season.\39\ The FAA explained that ``increased levels of air
traffic operations, congestion and delay at [both JFK and EWR] and a
tangible decrease in operational performance'' warranted this
designation.\40\ The FAA found the peak morning and afternoon hours
were particularly congested, but that capacity otherwise was available
for retiming of flights or new operations.
---------------------------------------------------------------------------

    \39\ 72 FR 54317 (Sept. 24, 2007).
    \40\ Id.
---------------------------------------------------------------------------

    The information provided by carriers for the summer 2008 scheduling
season reflected a projected increase in flight schedules, especially
during the peak hours. U.S. and foreign carriers had planned about 100
new operations per day at EWR, many during the afternoon and early
evening hours. For several consecutive hours, the number of hourly
arrivals and departures would have reached between the upper 80s and
mid-90s. These operations would have significantly exceeded the
airport's average of 83 total operations per hour over the 12-month
period ending August 2007. These additional flights would have caused a
spike in congestion and delays at EWR and also would have adversely
affected other airports in the New York-New Jersey region and the NAS.
    In the autumn of 2007, the FAA found it necessary to informally
discuss summer 2008 schedules with carriers operating at EWR because it
was concerned proposed operations would cause excessive congestion-
related delays. Modeling indicated a potential delay increase of almost
50 percent if the scheduled flights were operated as planned. The FAA
asked carriers to consider scheduling flights at times when there was
available capacity. However, the FAA realized some carriers intended to
proceed with their plans to begin operating their proposed schedules
during the busiest hours, regardless of the potential impact on delay.
The FAA also believed limiting operations at JFK would create a
spillover effect at EWR, thus exacerbating historical and projected
delays. To prevent carriers from adding flights to already
oversubscribed hours at EWR and from shifting flights from JFK to EWR,
the FAA designated EWR as a Level 3 Coordinated Airport effective for
summer 2008.\41\ After the designation, a series of discussions with
the FAA led some carriers to move a few of their historical flights
from the most oversubscribed hours. The movement of these flights
permitted addition of a few new entrant operations without a net
increase in delays.
---------------------------------------------------------------------------

    \41\ 72 FR 73418 (Dec. 27, 2007).
---------------------------------------------------------------------------

    In May 2008, the FAA placed temporary limits on peak hour
operations at EWR to mitigate persistent congestion and delays at the
airport (EWR Order).\42\ The EWR Order limited scheduled operations
during constrained hours to an average of 81 per hour.\43\ That
temporary Order allocated slots to carriers operating at the airport
based on the number and timing of operations negotiated during the
schedule discussions. Because the schedule reductions and retimings
were voluntary, slot allocations in some hours exceeded 81. The Order
permits the FAA to retire slots that exceed the hourly limit if those
slots are returned to the FAA until the slot limit is reached. The
provisions regarding the use of the WSG for use-or-lose mirrored those
in place for JFK. In July 2008, the FAA proposed to limit unscheduled
operations at EWR to two hourly reservations from 0600 through 1159, to
one hourly reservation from 1200 through 2159, and two from 2200
through 2259.\44\ The FAA never adopted that proposed Order, but the
unscheduled limits were incorporated in the 2008 Congestion Management
Rule for JFK and EWR, which is discussed later.
---------------------------------------------------------------------------

    \42\ 73 FR 29550 (May 21, 2008), as amended by 74 FR 51648 (Oct.
7, 2009), 76 FR 18618 (Apr. 4, 2011), and 78 FR 28280 (May 14,
2013), and 79 FR 16857 (Mar. 26, 2014).
    \43\ The appendix to the Order included a few operations for
summer 2008 above the 81 per hour limit.
    \44\ 73 FR 41156 (Jul. 17, 2008).
---------------------------------------------------------------------------

E. Exploration of Long-Term Congestion Management

    Following the enactment of AIR-21, the FAA and the DOT began
investigating a long-term congestion management plan for the New York
City area airports. In June 2001, the FAA published a variety of
congestion management alternatives for public comment, including the
use of auctions, congestion pricing, and administrative
alternatives.\45\ Additionally, the FAA and the DOT, in conjunction
with the National Center of Excellence for Aviation Operations Research
(NEXTOR), conducted research initiatives of these alternatives.
---------------------------------------------------------------------------

    \45\ 66 FR 31731 (Jun. 12, 2001).
---------------------------------------------------------------------------

    The level of interest in a long-term plan increased as the sunset
of the HDR neared and following the experience of increased operations
at the airports. Nationally, the summer of 2007 was the second worst on
record for flight delays. Delays impacted all three New York City area
airports and cascaded throughout the NAS. On September 27, 2007, the
Secretary announced the formation of the New York Aviation Rulemaking
Committee (NYARC) to help the DOT and FAA explore available options for
congestion management and how changes to current policy for JFK, EWR,
and LGA would affect the airline access and utilization of the
airports.
    The NYARC was designed to provide opportunity for extensive input
by all stakeholders, having members from every major U.S. air carrier,
several foreign carriers, associations representing different aviation
interests, and the Port Authority of New York and New Jersey (Port
Authority). The NYARC submitted a report of its findings and
recommendations to the Secretary, dated December 13, 2007.\46\
---------------------------------------------------------------------------

    \46\ A copy of the ARC Report may be found at http://www.faa.gov/regulations_policies/rulemaking/committees/documents/media/NY.ARC.Final.Report.20071213.pdf. The report contained
recommendations for operational improvements for the airports and
associated airspace; discussed the use of market-based systems to
allocate airport capacity at the airports; explored a gate
utilization system at LGA proposed by the Port Authority; explored a
US Airways proposal to relax the LGA perimeter rule; examined
priority air traffic preferences; and considered the adoption of
IATA WSG at the airports.
---------------------------------------------------------------------------

    The increased congestion and associated delays at JFK, EWR, and LGA
impact each other and the NAS. The airspace redesign for the New York/
New Jersey/Philadelphia metropolitan area, approved in 2007, documents
the costs and far-reaching impacts of delays that originate from this
area.\47\ Implementing

airspace redesign will provide increased efficiency and congestion
relief by, among other things, opening additional arrival and departure
routes in the New York City area, and the FAA has begun that process.
---------------------------------------------------------------------------

    \47\ See http://www.faa.gov/air_traffic/nas_redesign/regional_guidance/eastern_reg/nynjphl_redesign/documentation/.
---------------------------------------------------------------------------

    Further, the FAA continues to work with stakeholders to implement
short-term initiatives to improve the efficiency of airport operations
and air traffic control, particularly during severe weather.
Additionally, the FAA has increased the use of a second departure
runway at JFK when conditions permit. However, none of these
initiatives offer an immediate or complete solution.

F. Congestion Management Rules of 2008

    With the three temporary Orders limiting operations in place, the
FAA determined to pursue a long-term solution for limiting operations
and allocating slots for all three airports. After evaluating comments
to the LGA NPRM and input from the NYARC, the FAA decided not to adopt
its earlier proposal to require upgauging aircraft size and to
reallocate 10 percent of the existing capacity each year. Instead, the
FAA published a supplemental notice of proposed rulemaking (LGA SNPRM)
in April 2008.\48\ The LGA SNPRM proposed to allocate the majority of
slots to historical operators. The agency also proposed to develop a
robust market and encourage competition by withdrawing some slots and
auctioning them during the first 5 years of the rule. The LGA SNPRM
would have allocated any new or returned capacity via auctions.
Finally, the FAA proposed to sunset the rule in 10 years.
---------------------------------------------------------------------------

    \48\ 73 FR 20846 (Apr. 17, 2008).
---------------------------------------------------------------------------

    In conjunction with the LGA SNPRM, the FAA published an NPRM for
JFK and EWR that sought to provide a longer-term solution and address a
number of congestion-related issues (JFK/EWR NPRM).\49\ Similar to the
LGA SNPRM, the FAA proposed to continue the hourly limits on flight
operations at JFK and EWR, and to allocate the majority of slots at
each airport to the historical operators. Similar to the proposal in
the LGA SNPRM, the agency proposed to develop a robust market and
induce competition by annually auctioning a limited number of slots
during the first 5 years of the rule. Given the significant
international presence at both airports, the JFK/EWR NPRM proposed to
use WSG procedures instead of auctions to allocate new or returned
capacity. Additionally, the JFK/EWR NPRM contained provisions for
adoption of the WSG for use-or-lose, historic precedence, unscheduled
operations, and slot withdrawal for operational needs. The FAA proposed
to sunset the rule in 10 years.
---------------------------------------------------------------------------

    \49\ 73 FR 29626 (May 21, 2008).
---------------------------------------------------------------------------

    The FAA issued a final rule for JFK and EWR, which was consistent
with the JFK/EWR NPRM, in October 2008 with a published effective date
of December 9, 2008.\50\ The FAA issued a final rule for LGA, which was
consistent with the LGA SNPRM, in October 2008 with an effective date
of December 9, 2008.\51\ Multiple parties challenged these final rules
under the Administrative Procedure Act, and the U.S. Court of Appeals
for the District of Columbia Circuit stayed their effectiveness pending
litigation.\52\ The FAA rescinded both final rules on October 9,
2009.\53\
---------------------------------------------------------------------------

    \50\ 73 FR 60544 (Oct. 10, 2008), amended by 73 FR 66516 (Nov.
10, 2008).
    \51\ 73 FR at 60574 (Oct. 10, 2008), amended by 73 FR 66517
(Nov. 10, 2008).
    \52\ 74 FR 52132 (Oct. 9, 2009) (JFK and EWR); 74 FR 52134 (Oct.
9, 2009) (LGA).
    \53\ 74 FR 52132 (Oct. 9, 2009) (JFK and EWR); 74 FR 52134 (Oct.
9, 2009) (LGA). The FAA rescinded the rules because of the
uncertainty caused by an Omnibus Appropriations Act provision
prohibiting the agency from conducting slot auctions and the
possible impact of the significantly changed economic circumstances
on the slot auction program. Id.; see also Division I, section 115
of the Omnibus Appropriations Act of 2009, Pub. L. 111-8, 123 Stat.
115 (Feb. 17, 2009).
---------------------------------------------------------------------------

G. Current Slot Management at LGA, JFK, and EWR

    Currently, the JFK and EWR Orders remain in effect, limiting
scheduled operations to 81 per hour at each airport, until this
proposed rule becomes effective.\54\ The LGA Order remains in effect,
limiting scheduled operations to 71 per hour and unscheduled operations
to three per hour, until this proposed rule becomes effective.\55\ The
following tables show a comparison of allocated slots and average
actual operations for each airport for August 2012.\56\
---------------------------------------------------------------------------

    \54\ 79 FR 16854 (Mar. 26, 2014) (JFK); 79 FR 16857 (Mar. 26,
2014) (EWR).
    \55\ 79 FR 17222 (Mar. 27, 2014).
    \56\ Allocated slots represent slot allocations for Thursdays
during August 2012 as reflected in slot records maintained by the
FAA's Slot Administration Office. For actual operations, an average
was calculated from Aviation System Performance Metrics (ASPM) data
for each Thursday during August 2012. The ASPM data used for this
comparison reflects runway arrival or departure time and may vary
from a flight's scheduled arrival or departure (slot) time due to
taxi time or other operational reasons.

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[GRAPHIC] [TIFF OMITTED] TP08JA15.004

BILLING CODE 4910-13-C
    JFK and EWR currently have similar demand profiles, with an early
morning peak followed by lower demand in the mid-morning. Demand then
approaches the average runway capacity in the early afternoon and
typically continues until about 2200. LGA, on the other hand, has
consistently high demand at or above the average runway capacity
throughout the entire day.
    To determine the scheduling limits and associated delay mitigation
goals under the Orders, the FAA modeled congestion and delays for each
airport.\57\ To determine the average adjusted capacity for an airport,
the FAA considered the airport's capacity to be the higher value of
either the aircraft throughput at the airport in a given hour or the
number of arrivals and departures that ATC personnel identified as
achievable in that hour. As a result, the FAA accepted the higher
number when the airport's performance exceeded expectations, as well as
when the airport's potential capacity exceeded demand. This measurement
reflects the airport's demonstrated and potential performance over time
under actual meteorological and operational conditions. The FAA
reviewed weekday operations over a two-year period to capture the
variables in daily ATC operations. Delay and congestion modeling used
by the FAA assumes that all flights operate as scheduled. Average
unscheduled demand is randomized within the hour. These assumptions
ensure the modeling reflects full utilization of the airport under
various limits and allows the modeled queuing delay to be measured
consistently as the scheduling limits are varied against demand. The
model calculates arrival delay and departure delay relative to
schedule, mean delay, and delay greater than 0, 15, 60 and 120 minutes.
The model shows delay by time of day to ensure consideration of peak
period delays.
---------------------------------------------------------------------------

    \57\ This modeling used an aircraft queuing model produced for
the FAA by the MITRE Corporation's Center for Advanced Aviation
System Development (CAASD). When determining airport capacity, delay
targets, and slot limits, the FAA relies on modeled delay data
because it establishes the peak of congestion and delays. Modeled
delay and actual delay may differ because a variety of things occur
on the day of operation that a model cannot consider (such as not
scheduled or cancelled operations). Actual delay statistics for
airports are published by the Office of the Assistant Secretary for
Research and Technology Bureau of Transportation Statistics and can
be found at http://www.rita.dot.gov/bts/data_and_statistics/by_mode/airline_and_airports/index.html.
---------------------------------------------------------------------------

    When developing the scheduled and unscheduled limits (of 71 and 3,
respectively) for LGA, modeling showed a reduction in the scheduled
limit from 75 to 71 could generate a 41% decrease in mean delays. As
discussed earlier, the FAA established a limit of 75 in December 2000
to reduce delays associated with new flights operating under AIR-21
slot exemptions.\58\ Subsequently the FAA reduced the hourly scheduled
limit from 75 to 71 to provide an opportunity for delay reduction at
LGA from voluntary returns or slots failing to meet the minimum usage
rules.\59\ The FAA did not withdraw operating authority to achieve the
lower limit, but reserved the authority to retire returned slots
exceeding the limit.
---------------------------------------------------------------------------

    \58\ These hourly limits were adopted in the LGA Order.
    \59\ In early 2009, the FAA sought voluntary schedule reductions
from carriers to reduce LGA delays. American Airlines voluntarily
returned 13 Operating Authorizations in February 2009.
---------------------------------------------------------------------------

    When developing the scheduled limits for JFK, operational analysis
showed that the average adjusted capacity was steadily increasing over
time.\60\ Additionally, a procedural change in early 2007 allowed
departures on Runway 31L beginning at Taxiway KK, thereby providing
increased runway capacity and reduced departure delays. Modeling for
JFK used the higher adjusted airport capacity numbers since early 2007,
rather than over the two-year historical period initially reviewed to
capture that increased capacity. The FAA conducted discussions with
carriers to seek voluntary agreement to retime flights at JFK from the
busiest hours to less congested times when they could be accommodated
with a lower delay impact. The FAA also restricted carriers from adding
flights in the peak periods. The FAA's goal was to reduce the peak
evening departure delays from the summer 2007 average of about 80
minutes.\61\ The limit of 81 scheduled operations per hour in the JFK
Order reflected that goal and permitted a margin for unscheduled
operations.\62\ As a result, modeled peak departure delays decreased to
about 50 minutes, or by 30 minutes per flight when compared to summer
2007. As part of the schedule discussions for JFK, the FAA accepted
some flights that exceeded the scheduling limits but reserved the
authority to retire returned slots exceeding the limits and work with
carriers to continue to further depeak their schedules.
---------------------------------------------------------------------------

    \60\ The FAA reviewed JFK's hourly operations over a 2-year
period, from July 2005 through July 2007. Over the entire period,
the average adjusted capacity was 77 hourly operations. During the
first year, from July 2005 through June 2006, the airport had an
average adjusted capacity of 74 hourly operations. Over the final 6
months of the period (February 2007 through July 2007), the average
adjusted capacity increased to 81 hourly operations. Changes in
capacity can result from a number of factors, and it often is
difficult to determine the specific cause of the capacity change.
These factors can include changes in runway configurations, taxiway
configurations, ground movement procedures, airspace procedures, and
the interplay of regional demand. The FAA strives to increase
efficiency of operations at all airports with a specific focus on
safely and efficiently meeting the daily operational demand.
    \61\ Schedules initially submitted by carriers for summer 2008
would have increased the evening departure delays to more than 120
minutes per flight.
    \62\ The Order also adopted an Appendix that contained the
actual schedules then existing at the airport. In some hours,
scheduled operations exceeded the limit of 81 scheduled operations.
---------------------------------------------------------------------------

    When developing the scheduled limits for EWR, modeling showed an
average adjusted capacity of 83 total operations per hour with high
sustained delays throughout the day. Additionally, the FAA modeled the
proposed 2008 schedules and projected an even higher level of
congestion and delays from those proposed schedules with EWR already
one of the most delay-prone airports in the system. The FAA established
a goal of no increase in delays at EWR while permitting additional
operations to the extent practicable. The limit of 81 scheduled
operations per hour reflected that goal and permitted a margin for
unscheduled operations.\63\ Although the FAA accepted some flights
above the hourly limits, it reserved the authority to retire returned
slots exceeding the limits and work with carriers to depeak their
schedules.
---------------------------------------------------------------------------

    \63\ The Order also adopted an Appendix that contained the
actual schedules then existing at the airport. In some hours,
scheduled operations exceeded the limit of 81 scheduled operations.
---------------------------------------------------------------------------

    The FAA has continued to monitor the three New York City area
airports since the Orders were put in place to determine whether the
limits continue to be appropriate. Actual performance in summer 2008
through 2012 was compared to the modeled projections to ensure that the
model results were consistent with actual experience. Adjusted airport
capacity information for 2008 through 2012 was updated. This
information includes hourly arrival and departure rates based on runway
configuration, demand, operating conditions, and actual hourly runway
operations. Peak summer unscheduled demand for each hour between 0600
and 2259, Eastern time, was reviewed for 2008 through 2011.
    Performance at JFK and EWR has improved in each year when compared
to summer 2007. In some cases, actual operations were below allocated
slot levels, and this contributed to delay reduction. However, as
discussed later in this proposal, underutilization of

slots at a carrier's discretion also has potential competitive and
service consequences that must be considered along with delay
mitigation goals. The 2012 analyses indicated that daily unscheduled
flights have decreased slightly compared to 2008 while peak morning and
afternoon demand are similar to 2007. The adjusted airport capacity
analysis indicated modest changes at EWR and JFK, but the FAA is not
proposing to change the current scheduling limits. The FAA will
continue to monitor whether changes in adjusted airport capacity are
long-term trends that warrant adjustment of the scheduling limits at
one or more airports.
    During summer 2010, one of the main runways at JFK was closed or
partially closed so a valid comparison to earlier periods is not
practical. Carriers voluntarily reduced scheduled operations, and the
FAA waived the usage requirements to mitigate delay impacts from the
construction and reduced airport capacity. The FAA used non-preferred
runway configurations and waived slot usage requirements to facilitate
temporary carrier schedule reductions to mitigate delays. In addition,
the Port Authority has adopted an automated departure queuing program
at JFK to manage when aircraft are released from the gate. This program
reduces taxi-out delays for aircraft waiting to depart. Many of these
procedural changes, including the departure queuing program, have been
permanently implemented.
    As stated earlier, delay modeling for EWR and JFK analyzed the
effects of both scheduled and unscheduled operations. Although not
adopted, the FAA had proposed limits on unscheduled operations at the
airports, while accommodating existing scheduled operations without
creating high levels of congestion and delays. For 2007, unscheduled
operations at the two airports averaged two per hour with several hours
exceeding that average. The FAA had proposed limits for each airport of
one and two operations per hour depending on the time of day. For
summer 2010, actual operations were down at JFK and EWR to an hourly
average of roughly one unscheduled operation. Unscheduled operations
averaged just less than two per hour at both airports during the
afternoon hours.
    The current Orders limit a carrier's ability to transfer a slot
(either by trade, lease, or sale) beyond the duration of the Orders.
The Orders were intended as a short-term measure to allow time for
development of a long-term, comprehensive rule that included a
secondary market mechanism. The transfer mechanisms in place under the
Orders differ significantly from those permitted under the HDR,
currently in place only at DCA, which allow slots to be bought, sold,
leased, or otherwise transferred for any duration and to any person.
    The following tables show the approximate percentage of slots held
at each airport by carriers holding more than one percent of total
slots.\64\ Since 2008, numerous carriers have obtained slots at EWR,
JFK, and LGA through either FAA allocations or slot transactions with
incumbent airlines.\65\ At EWR, new carriers include: Austrian
Airlines, Avianca Airlines, Cathay Pacific Airways, Icelandair, Iceland
Express Airlines, La Compagnie, Southwest Airlines, Virgin America, and
Vision Airlines. At JFK, new carriers include: Arik Air, Brussels
Airlines, Fly Jamaica Airways, Hawaiian Airlines, Hellenic Imperial
Airways, Interjet, LAN Peru, Nippon Cargo Airlines, Nordic Global
Airlines, Norwegian Air Shuttle, Qatar Airways, Transaero Airlines,
Virgin America, WestJet, and XL Airways France. At LGA, new carriers
include: Southwest Airlines, Virgin America, and WestJet.
---------------------------------------------------------------------------

    \64\ This information is current as of August 2014 as reflected
in slot records maintained by the FAA's Slot Administration Office.
    \65\ This information is current as of August 2014 as reflected
in slot records maintained by the FAA's Slot Administration Office.
Not all indicated carriers may be currently operating at the
airports.

                                   EWR
------------------------------------------------------------------------
                                                              Percent
------------------------------------------------------------------------
United Airlines.........................................              73
American Airlines.......................................               7
Delta Air Lines.........................................               5
JetBlue.................................................               2
FedEx...................................................               2
Air Canada..............................................               2
Porter Airlines.........................................               2
Southwest Airlines......................................               1
------------------------------------------------------------------------

                                   JFK
------------------------------------------------------------------------
                                                              Percent
------------------------------------------------------------------------
Delta Air Lines.........................................              31
JetBlue.................................................              26
American Airlines.......................................              17
United Airlines.........................................               4
British Airways.........................................               2
Virgin America..........................................               2
------------------------------------------------------------------------

                                   LGA
------------------------------------------------------------------------
                                                              Percent
------------------------------------------------------------------------
Delta Air Lines.........................................              45
American Airlines.......................................              29
United Airlines.........................................               8
Southwest Airlines......................................               5
Air Canada..............................................               4
JetBlue.................................................               3
Spirit Airlines.........................................               2
WestJet.................................................               1
Republic Airline........................................               1
Virgin America..........................................              12
------------------------------------------------------------------------

III. Discussion of the Proposal

    Because of the combination of high demand and limited ability to
increase capacity at JFK, EWR, and LGA, the FAA must address a dilemma:
How can the agency manage delays while promoting access to carriers
wishing to operate at the airport, thus encouraging competition? This
proposed rule attempts to address that dilemma.
    Ongoing implementation of the New York/New Jersey/Philadelphia
Metropolitan Area Airspace Redesign project and Next Generation Air
Transportation System (NextGen) technologies are expected to increase
the efficiency and reliability of the airspace structure and ATC system
and reduce delays within the next 10 years. Although the FAA continues
to develop and implement these improvements, which it believes over
time will reduce congestion and delays at the New York City area
airports, it does not anticipate these airspace improvements will
provide significant benefits at JFK, EWR, and LGA in the immediate
future. Letting the Orders expire without replacing them with a more
permanent solution likely would result in a growth in operations and
consequently high levels of congestion and delays, as was experienced
following AIR-21.
    Rather than take repeated and piecemeal approaches to manage slots
and efficient use of airspace at JFK, EWR, and LGA, the FAA believes a
longer-term and comprehensive rule is prudent. The FAA's longstanding
preference for addressing capacity limitations is to expand airport
infrastructure, increase airport throughput, and improve airspace and
airport surface efficiency. The FAA currently is implementing ways to
utilize the airspace in the New York City area more efficiently and to
decrease delays, but there are physical limitations to expanding these
airports in the foreseeable future. This proposed rule would complement
planned airspace and airport capacity improvements by encouraging more
efficient use of existing capacity.
    This proposed rule would treat all three New York City area
airports

similarly. To achieve the goal of delay management, it would limit
scheduled and unscheduled operations. To achieve the goals of promoting
market access and competition, it would permit transfer of slots
between carriers in a secondary market that encourages transparency.
Proposed changes to the usage requirement also could improve
competition and market access at the airports by increasing the number
of scheduled operations that are actually operated. Under the current
Orders, some slots are allocated but not scheduled and operated. The
FAA believes it is necessary to address allocation and distribution of
slots at JFK, EWR, and LGA in a coordinated manner because traffic at
each of these airports affect each other and the NAS as a whole. The
airports are located close to each other and consistently have been
among the most delay-prone airports. This proposal presents five
different alternatives the FAA is considering for how slot transfers
would operate in a secondary market, and these alternatives are
discussed in detail later in the preamble. The FAA intends that any
final rule would become effective at the beginning of a scheduling
season to facilitate the transition from the Orders to a final rule.
    Currently, hourly scheduled operations are limited under the Orders
to 81 at JFK, 81 at EWR, and 71 at LGA, and hourly unscheduled
operations at LGA are limited to three under the LGA Order. This
proposal, if adopted, would replace those Orders. It would adopt the
current limits on operations, limit hourly unscheduled operations to
two at JFK and one at EWR, and establish daily limits on scheduled
operations at all three airports.
    For seasonal allocations of available slots, the FAA proposes to
substantially follow the WSG at each airport. The WSG generally
provides a consistent, transparent, and fair method of slot allocation.
This proposed rule specifically addresses the WSG processes being
applied. For WSG processes not specifically addressed in this proposal
or for future changes to the WSG, the FAA would consider whether they
are consistent with this proposed rule or other U.S. statutes or
regulations. The current allocation mechanisms at JFK and EWR generally
are consistent with the WSG. The FAA proposes to extend this allocation
approach to LGA, even though it is an overwhelmingly domestic airport,
because these international guidelines are widely understood by
carriers. One allocation mechanism for all airports also maintains
consistency and reduces the opportunity for confusion on how slot
management applies at an individual airport. The allocation mechanism
is discussed later and any significant deviations from the WSG are
noted.
    The FAA also proposes to retain the 80 percent usage requirement,
which is consistent with the WSG, at each of the airports. The usage
requirement would be applied to slots on an individual day-of-week
basis over the entire season at each of the airports, similar to the
method currently used at JFK and EWR. However, the FAA proposes a
change in the way the utilization rules were applied under the Orders
and under the HDR. The FAA proposes a specific flight or series of
flights be identified for each requested slot throughout the entire
season. Because each slot has a corresponding series of flights, a
flight associated with one slot in the same 30-minute slot time period
could not be used to help another slot meet the minimum usage rules.

A. Hourly and Daily Slot Limits

    Based on modeling of airport capacity and demand at each of the
airports, the FAA has determined that limits should apply throughout
most of the day. As discussed in the Background section, operational
demand is steady and approaches airport capacity throughout the day.
The FAA proposes to retain the slot-controlled hours as they exist
under the Orders. Accordingly, the FAA proposes the following slot-
controlled hours: for JFK, daily from 0600 through 2259; for EWR, daily
from 0600 through 2259; and for LGA, Monday through Friday from 0600
through 2159 and Sunday from 1200 through 2159. All times are expressed
in Eastern time, which is the local time for all three airports. The
FAA would use the 24-hour clock because carriers currently submit
schedules using that international standard in local time or
Coordinated Universal Time (UTC).
    Although not proposed, the FAA is considering changing the slot-
controlled hours to daily from 0600 to 2259 for LGA to maintain
consistency across all airports. The FAA believes a consistent approach
across the three airports would reduce confusion for carriers as to
when slots are required for an operation and reduce the carriers'
burden when submitting slot requests. If the FAA changed the slot-
controlled hours at LGA, it would have to allocate slots in those new
hours. The FAA tentatively is considering allocating daily slots to
each carrier for the summer and winter scheduling seasons that
correspond to the maximum number of flights that actually were operated
by the carrier in that hour from the last Sunday in March 2014 through
the first Saturday in September 2014. Carriers would be afforded an
opportunity to return unneeded slots to the FAA. Any modifications to
allocations in those hours due to operational changes between the
publication of the NPRM and effective date of any final rule would be
handled on an individual basis and could be temporarily allocated until
a permanent (historic precedence) allocation is made for the subsequent
corresponding season. The FAA requests comments, including specific
benefits and drawbacks, on whether it should adopt a common definition
of ``slot-controlled hours'' across the three airports.
    The FAA proposes to limit scheduled operations to no more than 81
per hour (or any 60-minute period) at JFK, 81 per hour at EWR, and 71
per hour at LGA. The FAA also proposes to assign slots specifically as
an arrival or departure in 30-minute windows, a practice already in
place under the Orders, to manage peaking of operations within the
hour. These proposed schedule limits would be 44 in any 30-minute
period at JFK, 44 in any 30-minute period at EWR, and 38 in any 30-
minute period at LGA. While the FAA does not propose to change the
limits from those currently in effect, it may change them in the
future. Enhanced capacity or delay reduction resulting from
technological advances or procedural changes (e.g., NextGen or wake
turbulence recategorization) may result in future increases in slot
limits at the airports. The FAA will continue to review each airport's
capacity and operations before each scheduling season when determining
whether to change slot limits.
    The FAA acknowledges that allocated slots exceed these schedule
limits in several hours at each airport, but the FAA does not propose
to withdraw any allocated slots. As applies under the Orders, the FAA
would reserve authority to retire any returned slots until allocations
in an hour no longer exceed the limits. The FAA would continue to work
with carriers and encourage retiming of operations to depeak individual
time periods, as necessary to mitigate congestion and delays.
    The nature of operations at JFK, and to a lesser extent at EWR, is
such that demand has historically been less in mid-morning and very
early afternoon. Therefore, many of those lower demand hours have
allocations below the hourly limits of 81. These low demand hours
currently provide a recovery period that reduces delays and prevents
them from continuing into the peak afternoon

hours. The FAA has determined that allowing allocations in these hours
to grow to the limit would result in higher and sustained delays
throughout the entire day because total operations would exceed the
airport's actual capacity. To mitigate increasing delays while
preserving historic allocations, the FAA proposes a daily slot limit.
This daily limit would apply to the slot-controlled hours at LGA and
from hours 0600 to 2159 at JFK and EWR. The FAA believes applying the
daily limit to the 2200 hour at JFK and EWR is unnecessary because
operations in that hour contribute little to cumulative daily delays.
The daily limit would not affect operations outside of those hours. A
daily limit would provide flexibility to carriers scheduling flights
because the FAA could approve new flights or retime existing flights to
less congested hours while preventing a build-up of the schedule across
the day that would result in significant increases in delays.
    The FAA acknowledges the benefits of a daily limit at LGA are not
as significant as at JFK and EWR because allocations in most hours at
LGA currently are at or above the hourly limit. A daily LGA limit would
limit additional allocations in hours that may be below 71 scheduled
operations, now or in the future, providing modest delay-management
benefits. Nevertheless, the FAA proposes a daily limit at LGA for
consistency purposes and to ensure the operational impacts of
additional flights are considered.
    The FAA considered actual allocations accepted in 2008 and what was
currently operating at each airport to determine this daily limit.
These 2008 allocations, and subsequent slot allocation decisions made
with respect to the Orders, establish the upper bound of allocations at
the airport to meet the established delay goals. The FAA proposes a
daily slot limit of 1,205 at both JFK and EWR and 1,136 at LGA. This
proposed limit would not result in any withdrawal of slots. Based on
current allocations at JFK, there would be roughly 20 slots in low
demand hours available for allocation. At EWR or LGA, there would be no
slots available for allocation. Additionally, like the hourly limit at
LGA, actual allocations currently exceed the LGA daily limit. Because
slot allocation and usage are dynamic, this number of available slots
is likely to change prior to the FAA issuing a final rule.

B. Allocation of Slots

    The FAA proposes to grandfather all existing slot allocations made
under the Orders for both the summer and winter scheduling seasons.
This grandfathering recognizes that carriers have made investment,
marketing, operating, and business decisions based on the assignment of
Operating Authorizations under the Orders and the expectation that
those slots would continue to be available in future seasons subject to
the usage and other general Order provisions. On the proposed rule's
effective date, at JFK and EWR, the FAA would assign, according to its
records, each carrier all slots for the summer scheduling season that
had been approved for the previous summer scheduling season as amended
through the slot allocation process. Similarly, the FAA would assign,
according to its records, each carrier all slots for the winter
scheduling season that had been approved for the previous winter season
as amended through the slot allocation process. At LGA, for the hours
of 0600 through 2159 or 1200 through 2159 on Sunday, the FAA would
assign each carrier all slots held as of the effective date for both
the summer and winter scheduling seasons and for each day-of-week.
    Temporary, one season-only, and other contingent allocations would
not automatically receive historic precedence at the same times. For
all other slots allocated under this transitional mechanism, carriers
would have historic precedence, provided all other proposed conditions
are met, for the subsequent corresponding scheduling season. The FAA
tentatively has determined this is the most efficient method of
transitioning from the temporary Orders to a more permanent regime.
These allocated slots, however, would be subject to reversion to the
FAA under the proposal's minimum usage requirements and could be
withdrawn for operational reasons.
    When making decisions regarding the allocation of available slots,
the FAA would seek to allocate in a manner that ensures efficient use
of a scarce resource and maximizes the benefits to both airport users
and the traveling public. Except as indicated in the following
discussion, the proposed allocation priorities mirror current WSG
priorities. The FAA believes the WSG approach is well-understood and is
an internationally-recognized system of slot allocation at airports.
These allocation procedures would apply to JFK, EWR, and LGA. A WSG-
like allocation process already applies under the JFK and EWR Orders
because those airports have a significant international presence, and
the WSG is commonly applied to international slot-controlled airports
and understood by carriers with international service. Although a WSG
procedure previously has not applied to LGA, the FAA proposes to do so
to maintain consistency between the airports. A common approach to
allocating slots reduces the administrative burden of multiple
procedures for both the FAA and carriers. A common approach also
reduces confusion with respect to the rules for each airport. The FAA
understands that carriers with only domestic service would have some
adjustment to the new rules at LGA, but most of these carriers already
operate at JFK or EWR (and would have familiarity with the WSG at those
airports). The FAA does not anticipate changing the allocation and
usage mechanisms at LGA would be overly burdensome.
    Like the WSG, the FAA proposes to afford priority treatment for
slot requests by new entrants. The FAA proposes to define a ``new
entrant'' as a U.S. or foreign air carrier that holds or operates fewer
than 20 slots on any day of the week, in any combination during the
slot-controlled hours, at the respective airport. That number would
include any slots that had been returned to FAA after the slot return
deadline, or that had been revoked by the FAA for insufficient use,
during the two corresponding scheduling seasons immediately preceding
the scheduling season for which a slot allocation is being conducted. A
carrier would not be eligible for slot allocation as a new entrant if
it had returned slots to the FAA after the slot return deadline, or had
slots revoked by the FAA for insufficient use, during the two
corresponding scheduling seasons immediately preceding the scheduling
season for which a slot allocation is being conducted.
    The proposed ``new entrant'' definition differs from the definition
contemplated under the WSG, which sets a threshold of five slots,
because the lower threshold would provide little opportunity for a new
entrant to establish its operations before losing new entrant status
and thereafter being able to expand in those markets only through slots
obtained in the secondary market. With up to 20 slots, a carrier would
have sufficient flexibility to establish a competitive presence at a
large metropolitan airport such as LGA, JFK, or EWR, giving the carrier
not only a basic foothold but also a critical mass of frequencies that
would allow it to compete effectively. The FAA also proposes the
definition be applicable at each airport, thus establishing a uniform
definition that is easily understood by all stakeholders.
    For purposes of slot allocation, the FAA historically has treated
U.S. air carriers conducting operations solely

under another carrier's marketing control with unified inventory
control as a single carrier. Also, U.S. carriers having more than 50
percent common ownership have been treated as a single carrier for slot
allocation purposes; however, individual foreign carriers, regardless
of their ownership, have been treated as separate carriers. Under
international obligations, Canadian carriers are treated the same as
U.S. carriers for slot purposes at U.S. high-density airports. The FAA
does not propose to change this approach.
    Prior to the start of the scheduling season, and according to the
schedule published by IATA, the FAA would publish a notice in the
Federal Register announcing the deadline for submitting schedule
requests for the upcoming season. Prior to announcing the submission
deadline, the FAA would conduct an informal airport capacity review for
each airport, which is consistent with its historical practice at JFK
and EWR and with the WSG. The FAA also would provide each carrier with
a listing of its historic slots. The method for calculating historic
precedence is discussed in more detail later in this document. By the
deadline stated in the Federal Register notice, each carrier would
submit its proposed requests for each airport noting which requests are
in addition to, or changes from, the previous corresponding season. If
a carrier wishes to make a change from an historic slot, it should
submit a request to retain that slot and indicate that it also is
requesting the change to avoid losing the historic slot if the FAA
could not confirm the change. Based on the FAA experience with
carriers' slot trading when developing domestic schedules, the FAA
believes that many carriers would not be ready to submit their
schedules for LGA according to the IATA schedule, which requires slot
request decisions several months before the start of the scheduling
season. The FAA requests comment on whether the FAA should set a later
submission deadline for LGA and what any later deadline should be.
    The FAA is not proposing a particular format for the submission of
schedule requests because it wants to avoid an unnecessary burden,
especially for carriers that operate a large number of slots at the
airports, and wants to maximize carrier flexibility. However, each slot
request would be required to indicate the effective dates of the
request, proposed days of operation, proposed time of operation
(indicated as either UTC or local time), whether the operation is an
arrival or departure, flight number, and aircraft type. Although not
required under this proposal, the FAA would accept schedule submissions
in IATA Standard Schedules Information Manual (SSIM) format or another
similar format.
    The FAA would accommodate these requests by allocating available
slots according to the priorities set forth in proposed Sec.  93.41.
First, the FAA would confirm any requests for historic slots, including
those that have adjustments within the same 30-minute period or other
minor changes that do not affect operations, prior to the IATA Slot
Conference. The FAA then would split the remaining available slots into
two pools: One pool for new entrants as defined in proposed Sec.  93.36
and another pool for all carrier requests. The FAA acknowledges this
method of establishing two pools prior to accommodating retimings
differs from the WSG, but the FAA believes that it provides new
entrants with a better opportunity to access desirable slot times. The
FAA would allocate any available slots according to these priorities
until there were no available slots remaining in each pool.
    Within each pool, the FAA first would accommodate carrier requests
to retime slots for operational reasons. The FAA recognizes that a
carrier may request a retiming of a slot in a particular time period
that the FAA cannot accommodate, and the FAA may offer a slot in a
different time period. The carrier may then trade the slot with another
carrier to conduct its desired operation or may operate in the
allocated time period. A carrier in this situation that makes a request
for a retiming to its desired slot time for a subsequent corresponding
season will receive priority treatment within the set of requests for
retimings. The FAA would use the carrier's previous requests and slot
transfer records to make this determination of priority.
    After addressing requests for retimings within each pool, the FAA
then would accommodate requests by carriers to extend an allocated
seasonal slot to year-round service. Consistent with the WSG, the FAA
gives priority to requests for year-round service because that service
most efficiently uses the scarce resource of available slots.
    Finally, the FAA would accommodate any remaining requests. The FAA
would consider the extent and regularity of the intended slot use by
giving priority to intended year-round service and greater weight to
requests for daily service. The FAA would consider the effective period
of operation by giving greater weight to intended use throughout the
entire season. The FAA also would consider schedule constraints of the
carriers requesting slots, especially if the carrier is operating to or
from another slot-controlled airport. Finally, the FAA would consider
the overall operational impacts of schedule requests, including the
distribution of flights and mix of arrivals and departures. This
holistic approach allows the FAA to best manage airport and airspace
congestion.
    Because the FAA expects that requests for slots would exceed the
number of slots available in most seasons, the FAA proposes to include
some tie-breaker factors to aid in allocation decision-making. Although
the FAA does not intend these factors to be determinative, it could
consider airport facilities constraints (such as constraints on gates,
terminals, aircraft parking, customs and immigration, and curfews) and
impacts to competition and markets served when weighing which request
to accommodate.

C. Usage Requirement

    The FAA proposes to retain the current 80% usage requirement for
historic precedence, but the methodology for calculating usage would
change. The proposed calculation method would be used to determine
historic precedence only for slots allocated for summer and winter
scheduling seasons after this proposed rule becomes effective.
Determining historic precedence for the first summer and winter
scheduling seasons after this proposed rule becomes effective would use
the calculation method under the rules in effect when the slots were
allocated and operated.
    The 80% usage requirement provides a reasonable allowance for
planned and unplanned cancellations. The usage calculation would be
applied on an individual day-of-week basis. This method currently is
used for JFK and EWR slots, and using this method for LGA slots would
ensure consistency among the airports and afford carriers greater
flexibility for slot allocations.
    A carrier must use the allocated slot at least 80% of the time for
the same flight or series of flights throughout the period for which it
is allocated during the scheduling season. The same series of flights
would be at least five flights at approximately the same time on the
same day-of-week, generally with the same flight number, generally
serving the same market, and distributed regularly in the same season
(for example, a 1035 JFK-LAX flight on every Monday of the summer
season). This definition of same series of flights allows the FAA to
see the intent to operate a series of flights but is not intended to
preclude a carrier from

changing the flight number, origin/destination, or flight time (within
the same 30-minute slot time period) during the scheduling season. The
requirement to identify markets served with a particular slot is not
intended to restrict a carrier's service in a particular market; it is
simply a tool to assist the FAA in tracking the use of a specific slot.
The FAA recognizes tying a slot to a series of flights for usage
calculation is a departure from how it has historically applied usage
rules. This change, however, is consistent with the WSG in that a
carrier should hold only slots it plans to operate. This change is
intended to address actions by some carriers that report a series of
flights in different slots on various days during the reporting period
to record usage on multiple slots with a single flight. Although those
actions are not prohibited by the current Orders, they artificially
allow carriers to meet the minimum usage rules without scheduling a
flight for each slot.
    The FAA has found that the practice of spreading individual flights
over a set of slots to achieve 80% usage potentially underutilizes
slots because the full allocation of slots is not being scheduled and
operated. Theoretically, operating four flights 100% of the time could
meet the 80% usage requirement for five slots, which could result in
non-utilization of 20% of the allocated slots (thereby limiting market
access). While the FAA acknowledges scheduling realities make
underutilization to this extent impractical, the FAA has observed some
underutilization behavior at JFK, EWR, and LGA. The FAA believes this
behavior could adversely affect the opportunities for new entrants to
begin service at a particular airport or could reduce the choices
available to consumers.
    This proposal would better ensure that the scarce resource of slots
is used optimally. The FAA acknowledges that requiring carriers to
operate their full allocation of slots could increase the number of
operations. However, any increase in delays over current levels should
remain within the accepted delay levels that were modeled at the time
the current Orders, and corresponding hourly slot limits, were
implemented. This model assumed full slot usage. It is likely that any
increase in flights also would increase the number of flight choices
available to consumers. The FAA believes another result of the changed
usage calculation could be that a carrier that operates fewer flights
than its slot holdings could dispose of the excess slots on the
secondary market. The exchange of these slots could increase
competition at the airport and provide consumer benefits, especially if
the slots were acquired by a new entrant. Although the FAA believes it
unlikely, especially in the peak demand hours, a carrier with excess
slots could return those slots to the FAA, and they could be retired in
hours exceeding the slot limits (providing delay-reduction benefits) or
could be allocated to other carriers (providing consumer and economic
benefits).
    The FAA requests comment on whether the proposed usage rate is
appropriate. Additionally, in theory, it is possible that usage
requirements may encourage carriers to fly smaller-than-optimal
aircraft or to fly less-than-full aircraft. The FAA requests comment on
how the proposed usage requirement might impact utilization of slots.
Please provide data supporting the comments.
    The FAA would have discretion to waive the usage requirements when
a carrier ceases operation at an airport due to a strike. The FAA also
would retain discretion to waive the usage requirements in the event of
a highly unusual and unpredictable condition beyond the carrier's
control and affecting operations for 5 or more consecutive days. These
exceptions allow carriers and the FAA flexibility to adapt to unusual
and unexpected cancellations in contrast to the usual localized weather
and mechanical cancellations the 80-percent usage rule permits. These
usage waivers are similar to those under the WSG, and they previously
have been successfully applied at U.S. slot-controlled airports. In
certain circumstances, the FAA also could waive the usage requirements
for a period up to 180 days for a new entrant acquiring slots at an
airport either through FAA allocation or the secondary market.
    Under the HDR and the Orders limiting operations, slots held by a
carrier were treated as used on Thanksgiving Day, the Friday following
Thanksgiving Day, and the period from December 24 through the first
Sunday of January. Under those rules, a carrier was allocated slots for
the entire season rather than according to the schedule submitted by
the carrier. Under this proposed rule, a carrier may give back a slot
to the FAA for short periods of time (e.g., the week between Christmas
and New Year's Day) when the slot would not be scheduled. These periods
of time are not included in the usage calculation. The carrier also
would not receive historic precedence for the periods of time when the
slot is given back to the FAA. However, because of the anticipated
limited duration of these returns, the FAA believes it is unlikely the
carrier would be prohibited from scheduling during that period in the
subsequent corresponding season. Accordingly, the FAA proposes to
eliminate general waivers for holiday periods. The FAA requests comment
on whether the elimination of these general waivers would create a
hardship on carriers that the FAA has not considered. Comments should
be supported by specific data demonstrating a hardship.
    To aid in the usage calculation, the FAA proposes to require
carriers to submit an interim and final usage report to the FAA, as is
required under the JFK and EWR Orders. The interim report would be due
by September 1 for the summer scheduling season and February 1 for the
winter scheduling season. The final report would be due no later than
30 days after the end of the respective scheduling season. The interim
and final reports should detail slot usage for each day of the
respective scheduling season and report the following information for
each slot held: The slot number, airport code, time, and arrival or
departure designation; the operating carrier; the date and scheduled
time of the actual operation, the flight number, origin and
destination, and aircraft type identifier; and whether the flight was
actually conducted. These reporting requirements are similar to those
under the HDR and Orders. In addition to analyzing slot usage reports,
the FAA would monitor slot usage throughout the scheduling season.

D. Transfer of Slots

    When the FAA adopted the Buy/Sell Rule, it recognized slots have
value in the secondary market. The FAA believes the development of a
robust secondary market ultimately is the best way to maximize
competition. Over the years, the FAA has received complaints that
carriers were unaware of possible opportunities to buy or lease slots,
that incumbent carriers were colluding to constrain new entrant
carriers' market access to an airport, and that there was uncertainty
about the value of slots. The DOT and FAA believe increased
transparency in the secondary market would address these concerns as
well as allow interested parties to better understand the nature of
slot transactions. For these reasons, the FAA proposes a secondary
market and offers five alternatives for proposed Sec.  93.45. The FAA
requests comments on each of these alternatives and assumptions
associated with these alternatives. The most helpful comments would
include a weighing of the benefits and drawbacks of how each
alternative

addresses transparency of the market, efficiency of the transfer
process, and carrier flexibility in transferring slots to meet
operational or business goals.
    Under the first alternative, the FAA would permit a carrier to buy,
sell, or lease a slot to another carrier or to trade a slot with
another carrier for a slot at any U.S. or foreign slot-controlled
airport. This alternative is similar to what was permitted under the
Buy/Sell Rule and would permit privately-negotiated transactions
between carriers. The FAA believes this alternative creates the least
administrative burden on carriers, but it does not address previously-
voiced concerns about lack of knowledge of opportunities to acquire
slots. Transparency benefits would be realized largely through the
transaction approval process, which is discussed later.
    Under the second alternative, a carrier seeking to sell, lease, or
trade a slot with another carrier would be required to follow a formal
process to negotiate the terms of the transaction. This alternative
would require a public notice on an FAA-managed bulletin board system.
The carrier would have to submit a notice to the FAA that it intended
to engage in a slot transaction, and the notice would include the
carrier's intended terms. These terms would include the slots available
for transfer (slot time and slot number), the type of transfer intended
(trade, sale, lease), the proposed duration of a lease if applicable,
and the intended effective date. The FAA requests comments on any
additional information that the transferring carrier should provide.
    The carrier would make its request to the FAA at least 4 months in
advance of its intended effective date. The FAA would post a notice of
the offer to transfer and relevant details on the FAA Web site. The FAA
would post that notice at least 3 weeks in advance of the opening date
for bidding, and the notice would state the opening and closing dates
for bidding and the contact information for submitting bids. The
bidding period would last 2 weeks unless the transferring carrier
requested a longer period of time. Carriers (and other interested
parties) would be able to register to receive automatic notices when a
new posting is published on the FAA bulletin board. The transferring
carrier would not be permitted to negotiate terms prior to the start of
the bidding period. The FAA intends all bids would be submitted
directly to the transferring carrier. The transferring carrier could
conduct negotiations during the bidding period to clarify and refine
the bid. The transferring carrier, however, would be able to consider
and negotiate only bids submitted during the bidding period, but that
carrier could request an extension of the bidding period. Once the
bidding period closes, the transferring carrier could select its
preferred offer and negotiate the final terms of the transaction.
    The proposed rule would allow the transferring carrier flexibility
in determining the best offer. The FAA would not require the carrier to
select the highest-dollar offer because a carrier could place a higher
value on non-cash assets and on the overall impact of the proposed
transaction on its operations.
    The FAA requests comments on the timeframes being proposed. Is a 4-
month advance notice to the FAA enough time to complete the proposed
process for completing a transfer transaction? Is this advance notice
period too long to be practical in light of operational necessity? Does
a 3-week public notice provide sufficient time for a carrier to obtain
necessary approvals to bid on a slot? With a system where bids are
submitted directly to the transferring carrier for review and further
negotiation, would a 1-week bidding period be sufficient?
    The third alternative is similar to the second alternative, except
that carriers would be permitted to privately negotiate tentative terms
of a transaction before publishing its intent to transfer slots on the
bulletin board. Carriers could approach any prospective transferor or
transferee to evaluate the market or assess how to package the slots
for transfer. Those tentative terms would be submitted to the FAA and
posted on the bulletin board, and other carriers would be permitted to
submit counter-offers. The transferring carrier could then select its
preferred offer and privately negotiate the final transaction terms.
Like the second alternative, the transferring carrier would be able to
consider only counter-offer bids submitted during the bidding period.
Under this alternative, a carrier would be able to submit a notice of
intent to engage in a slot transaction, as under Alternative 2, without
prior private negotiation.
    The fourth alternative attempts to encourage the greatest
transparency by requiring bidders to post their bids on the bulletin
board during the bidding period. A carrier would submit a notice to the
FAA that it intended to engage in a slot transaction, and the bidding
time frames would be the same as under the second alternative. Bidding
carriers would post their bids, and any counterbids, on the bulletin
board. Therefore, negotiations in the form of iterative bids would be
available to all registered interested parties. Because this
alternative may require posting of proprietary or confidential business
information, a bidding carrier would have the option of posting a
summary bid with more detailed information submitted directly to the
transferring carrier. The FAA requests comment on whether the option
for submitting both a publicly-available summary bid and private
detailed bid adequately ensures protection of proprietary or
confidential business information. What level of detail for the
publicly-available summary bid is adequate to inform other potential
bidders of the transaction value?
    The fifth alternative is similar to the fourth alternative, but the
identities of the offering carrier and bidders would not be revealed.
Bids under this alternative would be cash only because non-monetary
assets could reveal the identity of the parties. Under this
alternative, the offering carrier would be required to accept the
highest bid posted. This alternative would mitigate the possibility of
any collusion between carriers (e.g., by a carrier signaling the
precise value of its bid to the selling carrier). It would also ensure
that the winning carrier is the carrier that places the greatest
economic value on the slots, leading to more efficient use of slots.
The FAA requests comment on whether a blind bidding process would
facilitate a more robust secondary market.
    Under the bulletin board alternatives, the FAA anticipates the
transferring carrier would structure its notice in a way that permits a
transaction involving multiple slots in any desirable combination. For
example, the transferring carrier could require multiple slots be
transferred as a set or it would consider bids for smaller groupings of
slots. The FAA intends to allow maximum flexibility for transferring
slots provided prospective bidders have adequate information on which
to act. The FAA expects that if the material terms of the transaction
change during or after the bidding period, the transferring carrier
would repost the notice of intent to transfer for a new bidding period.
The FAA requests comment on whether it should implement additional
procedures for a subsequent bidding period that included shorter notice
and bidding time frames. Does allowing the transferring carrier to
craft a notice in a way to allow transfer of multiple combinations of
slots ensure both that the transferring carrier would have sufficient
flexibility in transferring the slots, and that bidding carriers would
have an adequate opportunity to acquire the slots?

    Under alternatives one through four, transactions could include
both cash and non-cash consideration, and the transactions via the
bulletin board would not have to be blind. A carrier also would need to
know the identity of a bidder offering non-cash assets to accurately
value those assets. The FAA requests comment on whether non-cash bids
promote competition by enlarging the pool of potential bidders, which
could result in more bidders and more valuable bids.
    Do the bulletin board processes adequately accommodate complex
transactions involving consideration other than cash? Do the bulletin
board processes adequately accommodate transactions that are initiated
by the transferee? The FAA also is willing to consider additional
proposals for, and comments on, alternative secondary market
mechanisms. These additional proposals should encourage the efficient
transfer and use of slots in a transparent environment that permits
meaningful opportunities for all carriers to participate.
    Under each of these alternatives, the transferee would not be able
to use the slot until the FAA approved the transaction.\66\ Each party
to the negotiated transaction would submit a request for approval to
the FAA along with the final terms of the transaction including the
names of all parties, the consideration offered by each party, the
effective date of the transfer, and, if appropriate, the length of the
lease. This information would be publicly available to provide the
market with information to better value slots as well as provide
information to the DOT for determining any anti-competitive effect of
the transaction, which is discussed later in more detail. The FAA
believes this knowledge would help establish a more robust secondary
market and reduce the likelihood of collusive or anti-competitive
behavior.
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    \66\ Because the DOT would be able to review the terms of the
transaction under this proposal, the FAA would strictly enforce the
prohibition against using transferred slots prior to approval of the
transfer transaction.
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    The FAA acknowledges submitting detailed terms of a transaction
could in rare circumstances involve legitimate proprietary or
confidential business information. A carrier may request confidential
treatment of the request for approval while it is under review. The
FAA's general practice has been to not make this type of information
public until after approval is granted, consistent with the Freedom of
Information Act. In addition to confidential treatment while the
request is under review, the FAA requests comment on whether it should
develop a process for confidential treatment of certain information
after the transaction is approved. If so, under what limited
circumstances should this confidential treatment be granted to ensure a
transparent secondary market? The FAA also requests comment on whether
the transaction terms should not be made publicly available for a
period of time after the transaction is approved. If so, what is a
reasonable period of time?
    Under alternatives two, three, four, and five, the FAA proposes
some limited exceptions to using the bulletin board system. The FAA
proposes these exceptions because it believes they would facilitate
transfers made for operational reasons, or as part of a transaction
that does not raise concerns about a transparent secondary market. A
carrier may trade a slot on a one-for-one basis with another carrier
without submitting a bulletin board notice, but no consideration or
promise of consideration may be offered for these trades. A carrier
also may lease a slot to another carrier for a period of time no longer
than two scheduling seasons. The FAA would review a series of short-
term leases to determine whether a carrier is effectively engaging in a
longer-term transaction. For example, a one-season transfer that is
executed for multiple seasons would be construed as a longer-term
transfer. In this situation, the FAA may disapprove the transaction.
Carriers would have the option of posting a notice on the bulletin
board and negotiating a new transaction. Trades among carriers with
unified marketing control are permitted without using the bulletin
board, thus effectively allowing those carriers to treat slots as one
inventory because these transactions do not have the characteristics of
a normal arms-length transaction. Finally, slot transfers that take
place as a result of a carrier merger or acquisition would not be
subject to the bulletin board requirements. These transactions are
subject to Federal agency review under antitrust and other authorities.
While the bulletin board process would be suitable for purposes of
transparency and competitive opportunity for standalone slot
transactions, the proposed process is not designed for slot transfers
that result from a carrier merger or acquisition.
    Under these alternatives, it may be necessary for the DOT to
conduct a public interest or competitive review of a transaction for
anti-competitive effect, which is discussed later in this document. The
FAA would not approve any transaction until it had received an approval
or non-objection from the Secretary or the initial 14-day review period
had elapsed. To be clear, the FAA would monitor compliance with any
required bid procedures.
    The FAA requests comments on whether variations to the five
alternatives presented would better achieve the stated goals of the
rulemaking, including creating a vibrant secondary market. For example,
under each alternative, the FAA would post the final terms of the
transaction. Please comment on whether the availability of this
information facilitates transactions in the secondary market.
    While the FAA seeks comment on the proposed secondary market
alternatives noted above, the FAA also is open to other mechanisms to
more efficiently allocate slots in the secondary market. For this
reason, the FAA requests comments regarding lessons learned from the
use of secondary markets in other regulated industries (such as market
for pollution permits, CAFE credits, or wireless spectrum). This
information may assist the FAA in designing a more robust, flexible,
and efficient secondary market for slots. Additionally, the FAA
requests comments regarding lessons learned from historical secondary
market mechanisms implemented by the FAA (such as the HDR or 2006
Chicago O'Hare final rule).
    The FAA acknowledges that many carriers have engaged in short-term
trades and leases at JFK, EWR, and LGA that extend until the
termination date of the Orders. Carriers may intend these transactions
be permanent rather than temporary, if permitted by FAA rules. In many
cases a permanent transaction has operational or competition-enhancing
benefits, but the Orders prohibit a transaction lasting beyond their
effective dates. To facilitate the transition of these transactions
from the Orders to this proposed rule, the FAA proposes to waive any
bulletin board requirements, if adopted, for 90 days after the