The Federal Aviation Administration yesterday ended, at least temporarily, its experimental program that permitted the nation's airlines to buy and sell landing rights at 22 major airports.
The program was designed to allow the marketplace to help the airlines reallocate their resources among the airports where flights have been restricted since the air traffic controllers' strike last August. At least some of the airports will be controlled to some degree until the end of 1983, FAA officials have said.
Although the buy-sell permission lapsed yesterday, the FAA said its decision wasn't final. The agency said it would decide on July 6 whether or not to reinstate the program after it has reviewed the comments and evaluated the impact of the purchases on airlines and the communities they served.
The FAA two weeks ago proposed ending the buy-sell program, as of yesterday, but faced a storm of protest from the Office of Management and Budget, the Justice Department, the Federal Trade Commission, and two former Civil Aeronautics Board chairmen. All of them argued that the program had been an admirable example of the marketplace at work, allowing airlines to make rational economic decisions about the allocation of scarce resources.
In contrast, although many of their individual members bought and sold slots, the Air Transport Association and the Regional Airline Association, trade associations representing major airlines and commuters, both filed comments opposing the program.
During the six weeks' duration of the program, more than 100 slots--as landing rights are called--reportedly were sold for various amounts of money and services, and more were traded. The highest prices paid for slots were estimated at between $500,000 and $600,000 each.
Industry sources said the big buyers were American Airlines, giving Empire Airlines a reported $1.5 million in computerized reservations services and a slot at New York's JFK International in exchange for three slots at Chicago's O'Hare International; United Airlines, paying $2 million to Pioneer Airlines for 12 slots at Denver; and People Express, giving Altair Airlines about $1.75 million and three Boston slots for 5 slots at Washington National Airport.
Aviation sources said one airline that sold slots for a hefty amount was able to make a down payment on six aircraft which it plans to deploy to new cities on its route system. Another commuter reportedly sold all its operating rights at controlled airports--where it was losing money--and plans to move flights to smaller or less-heavily-used airports. One small operator at Chicago's O'Hare International reportedly packed up and went to Florida with the money he got from United Airlines for his two slots.
Franklin K. Willis, deputy assistant secretary of transportation for planning and policy analysis, said yesterday that DOT in the next week will be trying to analyze how the program had worked. Had it allowed many different kinds of carriers in different kinds of situations to take advantage of the program? he asked. Or have large airlines with deep-pockets bought everything in sight, small carriers been disadvantaged and small communities lost service as a result of it?
Aviation sources said yesterday a prohibition on the sale of slots won't stop the practice. "All it will do is force people underground--black-market style--and they'll deny they're doing it," one industry source said.
Since carriers continue to have the right to trade slots, a sale will be disguised as a trade, and carry along with it some undisclosed cash or services, one source explained. One carrier will simply trade "junk" slots, or less desirable slots, away that it doesn't mind giving up in exchange for monetary reward or services, he said.
In anticipation that the program would be ended yesterday, a number of deals were worked out at the last minute, one source said. Included was the sale of four slots at National Airport by Air Florida to Continental Airlines for a reported $1 million. It's not clear whether Continental, Texas International Airlines or New York Air, all under common control, will use the slots.