United, EWR’s largest tenant, files pointed complaint against the PANYNJ over its fees

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The owner of the largest airport in the State of New Jersey has a problem. Its largest tenant has filed a complaint against the Port Authority of New York and New Jersey at the Federal Aviation Administration. A predicate for submitting such a Part 16 accusation must be that efforts between the airline and the airport to resolve their differences have failed. United carries 68% of the passengers at EWR. When a landlord and its anchor tenant cannot agree, that’s not good.

The 81 page United complaint cites $2 billion diversion from the PANYNJ’s aviation account to pay for major road repairs, among other unauthorized expenses. The contract between the FAA and the PANYNJ, called the Grant Assurances, basically mandates that the sponsor must expend the revenues earned at the airport ONLY on the airport.

The PANYNJ’s books must be transparent; so the numbers which support UA’s claims must be correct. As with all complex institutions, the finances, bookkeeping, cost accounting and economics will assure that much time and many legal fees will be consumed before this case is closed.

To make its point the complainant pointed out the EWR fees are 70% higher than those charged at PANYNJ facility across the Hudson, JFK. Further,

United said its average landing fee at Newark is $11.77 per 1,000 pounds of weight, compared to $4.54 in Los Angeles and 82 cents in Atlanta. The airline said the fees are burdensome with 135,000 departures a year at Newark.”

Aside from the Part 16 implications of such a cost differential, United is implying that there are good and cheaper options.

To exacerbate the situation the PANYNJ, it is alleged, plans to raise the fees and is ready to add to the EWR expenses. The “Aircraft Rescue and Fire Fighting” plan will raise airline costs at EWR by $25 million a year. According to the complaint police and firefighters get an average $242,000 in compensation, overtime and benefits.

The FAA process to handle such issues, if the case is docketed, will produce a detailed record with lots of experts testifying. One suspects that enlightened management might try to settle this matter.

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