The Federal Aviation Administration slammed the Port Authority of New York and New Jersey for excessive fees at Newark Airport. The result may be cheaper airfare…or at the very least higher airline profits.
United Airlines, which operates a large hub out of Newark Liberty International Airport, noticed something. Although Newark (EWR) and Kennedy (JFK) airports are both run by the NY/NJ Port Authority, fees at EWR are 75% higher than at JFK. United also noticed the airport revenue was often diverted for non-airport projects, like roads and bridges not even tangentially connected to the airport. Thus, United filed a complaint…in 2014. Sometimes the wheels of justice turn slowly.
Finally responding to the complaint from United, the FAA agreed that the complicated web of taxes and fees at Newark are levied in a manner which is neither transparent nor reasonable. More specifically, the FAA report cited “no established, consistent, clear and fully justified method of establishing the rate base on a predictable schedule.” The report also cited several non-aviation related projects that airport fees were used for.
This issue is broader than the recent jet fuel tax increase, which also drew the ire of United. The FAA thew out the entire fee scheme, giving port authority officials a month to come up with a new (and likely lower) fee plan. As Bloomberg reports:
The FAA gave the agency 30 days to identify how much airport revenue it has diverted to other uses since 2012, adjust Newark rates and fees to reflect those amounts, modify its accounting practices, correct how it allocates costs and say how it intends to apply that revised method at Newark. The Port Authority can appeal.
United is naturally happy over the news, wisely measuring its words to only, “We are pleased to see the FAA take seriously the concerns we raised.”
Put simply, the FAA caught New Jersey with its hand in the cookie jar. While this might cause airport fees to drop at Newark, look for those savings to be remain in the pockets of airlines instead of customers. Even so, this move might slow the growth of fees and thereby also stunt rises in airfare.