Air Transp. Ass'n Of America Inc. v. United States Dep't Of Transp.
| Decision Date | 13 July 2010 |
| Docket Number | No. 08-1293.,08-1293. |
| Citation | 613 F.3d 206 |
| Parties | AIR TRANSPORT ASSOCIATION OF AMERICA, INC., Petitioner v. UNITED STATES DEPARTMENT OF TRANSPORTATION and Federal Aviation Administration, Respondents Airports Council International-North America, Intervenor. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
OPINION TEXT STARTS HERE
On Petition for Review of an Order of the Department of Transportation and the Federal Aviation Administration.
Robert S. Span argued the cause and filed the briefs for petitioner.
Peter R. Maier, Attorney, U.S. Department of Justice, argued the cause for respondents. With him on the brief were Michael Jay Singer, Attorney, Paul M. Geier, Assistant General Counsel for Litigation, U.S. Department of Transportation, and Mary F. Withum, Trial Attorney. Lewis Yelin, Attorney, U.S. Department of Justice, entered an appearance.
Scott P. Lewis argued the cause for intervenor. With him on the brief was Douglas H. Wilkins.
Before: GINSBURG and HENDERSON, Circuit Judges, and WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge GINSBURG.
In order to reduce congestion at major airports the Department of Transportation in 2008 amended its 1996 Policy Regarding Airport Rates and Charges. The Amendments allow an airport to charge aircraft higher landing fees at peak times, a practice known as congestion pricing. The Air Transport Association of America (ATA), on behalf of U.S. scheduled airlines, petitions for review of the Amendments, arguing they (1) allow airports to charge unreasonable and discriminatory fees, (2) allow state and local airport authorities to charge fees that are preempted by federal law, (3) provide inadequate guidance to airports on how the DOT will evaluate the reasonableness of the fees, and (4) constitute an unexplained reversal of prior policy. Airports Council International (ACI), which represents governmental bodies that own and operate major airports in the U.S., including 36 of the 37 airports the DOT deems “currently congested,” has intervened in support of the DOT. We deny the petition for review.
As the primary manager of the Nation's air transportation system, the DOT determines whether the fees an airport charges its users comply with the various federal statutes requiring that the fees be reasonable. The Secretary of Transportation is required by statute to publish regulations “establishing ... the standards or guidelines” he will use to evaluate the reasonableness of an airport's fees. 49 U.S.C. § 47129(b)(2). This case involves a challenge to one set of regulations promulgated under that statute.
In the 12 years between the promulgation of the 1996 Policy and of the 2008 Amendments, the number of landings by airlines in the United States increased more than 25%, to 10.3 million from 8.2 million per year. See Bureau of Transportation Statistics, National Transportation Statistics, Table 1-34 (April 2010). * This increase in traffic has led to more frequent and longer delays; in 2007, for instance, “flight arrivals were delayed by a total of 4.3 million hours.” U.S. Congress Joint Economic Committee, Report, Your Flight Has Been Delayed Again: Flight Delays Cost Passengers, Airlines, and the U.S. Economy Billions 1 (May 22, 2008). The causes for delay range from inclement weather to mechanical problems; this case involves delays caused by excess demand for airport takeoff and landing capacity.
Excess demand arises when demand for a good or service at the prevailing price exceeds the supply, which results in would-be buyers having to queue. In the air transportation system, the buyers are airlines, the service is allowing an aircraft to land at a particular airport, and the price is the landing fee the airport charges the airline for landing. The delays in landing are manifestations of there being a queue.
In an ordinary market, supply and price adjust to eliminate excess demand, but this is no ordinary market. Airports cannot readily increase the supply of landing slots because building more runways takes years and at some airports is not feasible at all. See Policy Regarding Airport Rates and Charges, 73 Fed.Reg. 3310, 3312/3 (proposed Jan. 17, 2008). Nor may airports freely increase the price as demand increases; the amount an airport may charge as a landing fee is constrained by the oversight of the DOT and by several federal statutory restrictions.
Adding to the difficulty of managing congestion, the volume of air traffic varies significantly both throughout the day and from one airport to another. Not all airports suffer from significant congestion, even at the most desirable times (or “rush hours”). Addressing this variation in the demand for landings requires giving airports some flexibility in rate-setting.
There are two ways in which an airport might increase its landing fee to the market-clearing level-that is, to the price just high enough to eliminate the excess demand and hence the queue at peak times. The first is to sell at auction the right to land an aircraft at a particular airport at a particular time; that right is called a “landing slot.” In an auction an airport would first determine the number of landings it can accommodate during a given period of time, such as an hour, and then allow airlines to bid for each slot in an auction; the winning bid would determine the price of the landing slot. The alternative is “congestion pricing,” which entails the airport itself increasing the price (landing fee) until it elicits demand for only as many landings as it can accommodate, thereby eliminating queuing and delay. Both a slot auction and congestion pricing will converge upon the same price and the same quantity.
In principle neither system is preferable to the other. See Martin L. Weitzman, Prices v. Quantities, 41 Rev. Econ. Stud. 477 (1974). Many commentators, however, have advocated slot auctions rather than congestion pricing because an airport operator knows how many landings the airport can safely accommodate per hour but can learn only by trial and error what fee will yield that many landings. See, e.g., S.J. Rassenti et al., A Combinatorial Auction Mechanism for Airport Time Slot Allocation, 13 Bell J. Econ. 402 (1982); D. Grether et al., The Allocation of Landing Rights by Unanimity Among Competitors, 71 Am. Econ. Rev. 170, 170-71 (1981). But see Michael E. Levine, Landing Fees and the Airport Congestion Problem, 12 J.L. & Econ. 79 (1969) (). The regulations under review represent the DOT's attempt to implement a system of congestion pricing. **
As the air transportation system has become increasingly congested, the Department of Transportation's task of managing the system has become increasingly difficult. The Department has tried to solve the problem of congestion using its statutory authority to supervise the fees an airport charges its users, including the landing fees paid by airlines.
The Airports and Airways Improvements Act requires that airports “be available for public use on reasonable conditions and without unjust discrimination.” 49 U.S.C. § 47107(a)(1). *** We have interpreted that obligation as “a requirement that [an] airport's fees be reasonable.” Air Transp. Ass'n of Am. v. DOT, 119 F.3d 38, 39 (1997) ( ATA I ) (citing New England Legal Found. v. Mass. Port Auth., 883 F.2d 157, 169-70 (1st Cir.1989)). The Anti-Head Tax Act also requires that the fees be reasonable. See 49 U.S.C. § 40116(e). The Federal Aviation Administration Authorization Act requires the Secretary of Transportation to publish regulations, such as the ones here under review, “establishing ... the standards or guidelines that [he will use] in determining ... whether an airport fee is reasonable.” 49 U.S.C. § 47129(b)(2).
Airports currently operate under the DOT's 1996 Policy Regarding Airport Rates and Charges, 61 Fed.Reg. 31,994 (June 21, 1996), vacated in part by ATA I, 119 F.3d 38, as amended at 129 F.3d 625 (D.C.Cir.1997), which, as we have noted before, provides airports with precious little guidance, see ATA I, 119 F.3d at 41 (). As a result, airlines and airport proprietors regularly ask the DOT whether a particular landing fee is reasonable, see 49 U.S.C. § 47129, and seek judicial review of its decision in this court. See, e.g., ...
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