If you've ever sat on the runway for hours at John F. Kennedy International Airport or La Guardia Airport, two of the busiest hubs in the country, you've certainly thought: there must be a better way. Yet yesterday the House of Representatives passed "The FAA Reauthorization Act of 2007," co-sponsored by five New Yorkers, which would throw money at the problem without using simple pricing mechanisms to cure delays. President Bush has promised to veto the bill, which passed 267-151, if this version reaches his desk.
Airports are overcrowded at the most popular times of day - early morning and early evening - because the prices airlines must pay to take off, to land, and to use gates are too low.
Small civil aviation planes, corporate jets, and "regional" jets pay too little to land and consequently frequently use the runways. Raising prices for "slots" and gates and using the proceeds to expand airport facilities is the only way to cure delays.
Airport delays have worsened in recent years. Since 2003, delays have risen from 13% of airline flights in America to 22%.
At Kennedy, La Guardia, and Newark Liberty International Airport, the increases have been worse. Delays at La Guardia have doubled since 2003, from 11% of departures in 2003 to 23% in the first seven months of 2007. Delays at Kennedy and Newark have more than doubled, from 15% to 31% and 13% to 30% respectively.
Keep in mind that in the airline industry a delayed takeoff is one that is more than 15 minutes late. If you take off 14 minutes late, you're supposedly "on time."
These delays add up and hurt the economy. A professor at George Mason University, George Donohue, using 2004 estimates of flight delay and hourly earnings for all workers, calculated that passengers lost $2.6 billion in productivity in 2004 due to delays. With more flights, higher earnings, and higher rates of delay in 2007, today's productivity loss is much greater.
Even worse, more than 100,000 flights will be canceled this year. The consequent delays, annoyance, missed meetings, and lost productivity are substantially greater than from delayed flights. Everyone bemoans the delays and cancellations. Consumers blame the airlines for bad management; the airlines blame the government for poor air traffic control; and the government blames the airlines for having too many flights. Meanwhile, Congress does nothing.
As was the case in the 1970s with gasoline, shortages and lines in air travel are all symptoms of the same ill - prices are too low. Higher prices would discourage peak-period demand and reduce lines of aircraft waiting to take off and circling to land, as well as giving airports sources of funds for modernization and expansion.
Consider prices paid by airlines for landing slots. A tiny Piper Cub, a small light aircraft with a slower rate of climbout, uses the same time to clear a runway as a Boeing 747. For efficient use of runway capacities, each plane, large or small, should pay roughly the same to use a runway at a particular time of day, more during peak demand hours and less during off-peak hours.
But current airport pricing schemes charge Piper Cubs much less than Boeing 747s, because the price is based on the weight of the aircraft. The result, not surprisingly, is that at even the busiest airports, small private planes and corporate jets pay little to take off or land and consequently frequently use the runways when the airport is busiest.
By setting landing-rights prices too low, the government is forcing commercial airline passengers to wait unnecessarily. If airports set take-off and landing fees to reflect the full demand for airport take-off and landing services, there would be little or no waiting on runways. The fees would be passed on to passengers and would encourage them to switch to off-peak hours or less-crowded airports.
The same pricing problem applies to airport-gates. Sometimes arriving planes wait on the tarmac for a gate to open. In many airports, gates are "grandfathered" to historical users, and so gate assignments reflect usage patterns of many years ago, but not today. Once again, if airports charged airlines for gate rights based on usage, there would be no artificial gate shortages and associated delays. Use of a gate at 6 p.m. would cost more than a gate at 9 p.m.
There are different ways of pricing airline slots. Two prominent experts, director of transportation studies at the Reason Foundation, Robert Poole, and senior fellow at the Brookings Institution, Clifford Winston, recommend a surcharge on landing fees that might vary by time of day. This could be implemented within a few months and would quickly reduce delays at New York's airports.
Mr. Donohue, on the other hand, recommends auctioning off the airline slots. Perhaps the optimal solution is to impose an immediate surcharge and then work on an auction system for 2008.
The proceeds from surcharges or auctions could be used to improve airport facilities and technology, including moving to "Next Generation Air Transportation System" technologies, which would increase both capacity and safety.
Whether through auctions or surcharges, New York's airports need to enter the 21st century and adopt realistic pricing because the status quo is unacceptable. Washingtonians and Bostonians visiting New York can use Amtrak, or drive their cars, but travelers from California and Texas cannot. They may just stay away from New York if long delays persist.
If the Port Authority of New York and New Jersey used peak-period pricing at JFK, La Guardia, and Newark, most delays at the tri-state area's airports would end. Air travelers, both those who continue to use existing facilities, and those who have abandoned them in despair, would be better off.
Diana Furchtgott-Roth is a senior fellow at the Hudson Institute and former chief economist of the U.S. Department of Labor. She can be reached at [email protected]
