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Reason Foundation


Congestion Pricing Will, Indeed, Fly

Charging airlines market prices for runways will reduce delays without reducing passenger volume

Robert Poole
January 18, 2008

Flight delays have gotten so bad that this week, the federal Department of Transportation announced its endorsement of a congestion-pricing plan for airports. That's the kind of approach that New York, in particular, really needs.

New York's three major airports now account for 37 percent of air travel delays nationwide. That's compared with just 12 percent five years ago. How did things get so bad?

In the past five years, the airlines "down-gauged" many of their flights in New York. That means they shifted from, say, four flights a day on 200-seat planes to eight flights on 100-seaters. This increase in small jet traffic is clogging New York's runways and gates.

At Kennedy, flights by planes with fewer than 100 seats have increased 128 percent the past five years. At LaGuardia, there were 240 daily flights in planes of less than 100 seats in 2002; today there are 324.

In response to New York's mounting delays, which then cause backups at the nation's other airports, the Department of Transportation is also imposing cuts in the maximum number of flights allowed to land and take off at Kennedy and Newark. A similar cap is already in effect at LaGuardia.

But in addition to reducing the number of overall passengers and hurting the region's economy, flight caps fail to address the underlying problem. New York's airports have limited runway capacity, so it's important to use it productively.

The massive down-gauging uses up a lot of that valuable capacity on small planes carrying few passengers. Airlines have shifted to smaller planes to give passengers more frequent service, but they also now knowingly schedule more flights than the airports and air traffic system can safely handle - guaranteeing delays for passengers and other airlines before the day even begins.

Changing the way New York's airports charge for using their runways is a more sensible, long-term fix, and would limit the airlines' overscheduling abuses.

Today, airports charge a fee based solely on the weight of the plane. That means a 767 carrying 300 people pays about 10 times as much as a 35-passenger regional jet. Both planes use the same air traffic control resources and runways, but the smaller plane is lighter and thus pays a fraction of the fee.

A much smarter way is to charge all planes the same amount to use the runway (since they use the same resources) and to make that price much higher during rush hours and lower at off-peak times.

Such congestion pricing would cause airlines to move some flights out of the busiest periods, reducing delays. Small jets that jam runways during rush hours without consequence would be forced to choose cheaper, off-peak times or make sure passengers are willing to pay the significantly higher ticket prices that come with rush hours.

For Kennedy, a recent Reason Foundation study estimates that during the morning peak, the departure price should be $1,800 to $1,900 per plane. In the afternoon peak, prices would be up to $2,000 per flight.

Congestion pricing would also stimulate "up-gauging" - meaning airlines would reduce flights but use bigger planes to ensure they could carry the same number of passengers as they do today. For example, there are 30 flights a day between Kennedy and Baltimore-Washington International. Ten of those flights are on small regional jets during peak hours. The same number of passengers could be handled by about 20 flights using larger jets, cutting air traffic by one-third.

Although the DOT will now allow congestion pricing, the decision to use it ultimately rests with the Port Authority, which operates all three metropolitan area airports. Unfortunately, the authority has so far poured cold water on the idea.

But if the authority examines the facts, and not rhetoric from big airlines, it will see congestion pricing would reduce delays while maintaining today's passenger levels by giving airlines a strong incentive to shift to larger planes during congested periods.

With congestion pricing, passengers have choices. One airline may charge a premium to continue small jet service to Boston at peak hours, while a competitor may seek to serve price-sensitive customers by offering only a few daily flights at off-peak hours in larger planes.

More airport capacity and better air traffic technology, which the authority argues are among the keys to solving overcrowding, are undoubtedly needed at these airports.

But that's a longer-term part of the equation. Right now, New York's airports need to charge airlines the market price for the runways they use and the delays they cause by overscheduling. Congestion pricing does that, reducing delays without reducing passenger volume.

Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy

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