Congestion Pricing: Unpopular On The Ground And In The Sky

<p>Federal officials backed away from a plan to use congestion pricing to manage commercial air traffic in the New York region.</p>
December 25, 2007, 1pm PST | Christian Madera | @cpmadera
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In a federal plan to prevent chronic delays that can cascade nationwide, the number of flights in and out of New York City-area airports will be capped at busy times next year, starting with John F. Kennedy Airport and then at neighboring Newark, N.J."

"These new measures will cut delays, protect consumer choice, support New York's economy, and allow for new flights as we bring new capacity on line," said Transportation Secretary Mary Peters.

Others saw potential drawbacks.

"'It discourages new entrants' into the New York market, said Michael Derchin, an analyst at FTN Midwest Securities Corp. in New York.

Ray Neidl, an analyst at Calyon Securities in New York, said capping flights has a consequence if demand doesn't decrease. 'A tighter seat supply could enable airlines to raise prices,' Neidl said.

The Air Transport Association, which represents most big airlines, said it doesn't expect any big ticket price increases as a result of the changes, compared to congestion pricing, or charging more at peak travel times. That had been discussed as government officials and airline representatives met during New York-related talks over the past several months.

'One thing I can assure you is prices will remain far more constant than if we had congestion pricing,' said Jim May, head of the trade group. 'I would hope normal competitive forces will remain in place. A lot will depend on the extraordinary cost of fuel.'

The new measures include an agreement to cap hourly operations at JFK, plans for similar hourly limits at Newark and capacity improvements for the region, Peters said."

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Published on Friday, December 21, 2007 in The Houston Chronicle
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