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The FAA has issued a preliminary finding that the Port Authority of New York and New Jersey improperly allocated fees paid by airlines at Newark Airport to non-aviation projects.
In addition to violating rules that apply to airports accepting federal grants, the port authority failed to be transparent in the method it used to establish fees.
As a result of the Nov. 19 ruling, which stemmed from a 2014 case filed by United Airlines, the FAA has ordered the port authority to submit a corrective plan within 30 days that transparently lays out how Newark Airport allocates its costs. The plan must also identify the amount of money that the port authority improperly diverted from Newark between 2012 and 2018. The port authority must reduce its charges at the airport to reflect its newly calculated costs.
The port authority says it will appeal the ruling.
“The FAA has now issued an initial agency determination on United’s 2014 complaint as to certain Port Authority financial and accounting practices from 1995 to 2014,” the agency said in an emailed statement. “This does not constitute a final agency decision.”
According to the order, between 2009 and 2014 Newark Airport generated surplus revenues of $1.35 billion, or 28.6% higher than expenses. That was higher than the surplus revenues at New York’s Kennedy and LaGuardia airports (both operated by the Port Authority of New York and New Jersey) in total dollars and by percentage.
The order, which was signed by FAA director of airport compliance and management analysis, also states that the port authority improperly budgeted $241 million in Newark Airport revenue in 2014 for work on the Pulaski Skyway highway project and the Wittpenn Bridge in New Jersey.
The port authority contends that those revenue diversions were allowed under a grandfather clause within the federal Airport Improvement Program grant program, but the FAA rebuffed that argument.
In a statement, United struck a conciliatory tone about the ruling.
“We are pleased to see the FAA takes seriously the concerns we raised,” the carrier said in an email. “We look forward to continuing our important work with the port authority in pursuit of our shared goal: better service for our customers at Newark Liberty International Airport.”
Source: travelweekly.com
