REMARKS FOR
THE HONORABLE MARY PETERS
SECRETARY OF TRANSPORTATION

AIR FARES, CAPS, AND COMPETITION NEWS CONFERENCE
CHICAGO, IL

OCTOBER 29, 2008
11:30 AM

Good morning. Thank you, Commissioner Rodriquez, for that kind introduction. It is always good to be in Chicago.

As someone who has spent a career in transportation, I always assumed when people referred to this town as the city of big shoulders, they were talking about the space between the road and the curb. But when you think about all the things this city is doing to improve operations at this airport, it is clear that the nickname comes from your ability to tackle big challenges.

Indeed, since record airline delays in 2004 at this airport caused delays from coast to coast and forced us to put in place caps for the next four years, this city has literally moved mountains to get operations back on track. In fact, these caps will come off in two days, on October 31.

In a few short weeks, we will be back in town to dedicate a new runway and open a new air traffic control tower. Meanwhile, construction has already begun on a new eighth runway.

These efforts have been difficult, expensive, and controversial. But they were absolutely necessary and absolutely essential to getting this airport back on track.

Thanks to Mayor Daley and his team, you didn't give up when times got tough. You didn't walk away when people doubted your plans, and you didn't give in to countless special interest groups that fought you every step of the way. Instead, you stayed focused on the one group that matters the most – the travelers.

I would like to say the hardest part is soon going to be over, but the sad truth is, all your hard work and tireless tenacity may be undermined because of the record airline delays too many travelers experience every day at the three New York area airports.

We have known for some time that delays at LaGuardia, JFK, and Newark airports affect flights nationwide. And now a new analysis of our most recent delay data shows just how these delays are affecting Chicago's historic efforts here at O'Hare.

Our Bureau of Transportation Statistics has concluded that fewer than half the flights between O'Hare and New York's three airports were on-time this summer, compared to almost 80 percent on time for all other connections to O’Hare. No amount of new concrete will help if your planes are stuck in New York.

As you may know, we have been taking aggressive steps for over a year now to tackle these delays. We have put new hourly caps in place at Newark, reintroduced caps at JFK and lowered the caps at LaGuardia. We have put a new air traffic czar in charge of coordinating the region’s airspace.

We have launched an ambitious redesign of the region's airspace and accelerated deployment of new technology and new techniques to expand capacity. And earlier this month, we committed to investing $89 million in physical improvements to make JFK's runways and taxiways more efficient.

As with Chicago, these efforts will not change things overnight, but they will cut delays and improve operations over the coming months. But unlike Chicago, there is no room for new runways. Which means our task will be more complex, and our solutions more creative.

So we have put in place new rules to encourage airlines to better utilize existing capacity. These rules will make a limited number of our landing and take off slots available for auction. The idea is simple – airlines that value these slots enough to bid for them will better use those slots.

Meanwhile, the revenue from these slot auctions will provide vital supplemental resources that can be used to expand capacity in the New York region.

These rules also will keep airfares competitive while the flight caps are in place. Even though caps can cut delays, they also eliminate new competition. And without competition, airfares rise.

According to new average air fare data the Department is releasing today, air fares across the country are up 8 percent from last year. But at Newark Airport, where caps were put in place in May, fares grew at double that rate, up 16 percent. That is even higher than at other, capped airports, like O’Hare, where fares were up 11 percent.

Competition is the key to lowers fares. Slot auctions are the best way to get new airlines to serve New York’s airports while the caps are in place. Airfares dropped by more than 25 percent in Philadelphia, for example, when Southwest Airlines started serving the market.

But just as fixing Chicago’s aviation congestion was not easy, it has been no cake walk in New York. And while our measures are different, the opposition is the same – a staunch defense of the status quo that benefits the few over an embrace of new approaches that benefit the many.

But none of us can afford to let the status quo prevail in New York. That is because New York’s aviation challenges are just as much Chicago’s problems as they are every traveler’s headache. Before this airport can live up to its amazing new potential, we have to get things right in New York. After all, Chicago should not have to play second city to New York’s aviation shortcomings.

Thank you and now I would be happy to answer your questions.