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Facing the Bush administration's final months in office and another delay-plagued summer, the Transportation Department is making a final push to harness market forces to relieve chronic air traffic congestion in the New York-New Jersey region. Rampant backups and cancellations have made the area's skies the most crowded in the country and snarled air traffic nationwide. The department thinks that the laws of supply and demand, not government-imposed restrictions, are the best solution.

But its controversial proposal to auction takeoff and landing time slots at New York City's LaGuardia Airport faces fierce resistance from the region's congressional delegation, the airline industry, and airport operators. Already angered by a long-running battle with DOT over many other issues, opponents on Capitol Hill have prepared amendments to derail the rule. The airline industry's main lobbying arm, the Air Transport Association, is threatening to sue the department on the grounds that it is acting illegally.

Transportation Secretary Mary Peters and the Bush administration tried unsuccessfully last fall to use economic incentives to ease overcrowding at the area's two other major airports, John F. Kennedy International and Newark Liberty International. But they still believe that letting the market set the price for choice slots gives airlines the strongest incentive to make the most of a limited resource. The administration hopes that auctioning slots at LaGuardia would prompt airlines to either schedule more flights during off-peak hours--which presumably would cost less--or find ways to fly more passengers during the peak times they paid dearly to acquire.

DOT General Counsel D.J. Gribbin told National Journal that the status quo "hasn't worked well." Citing the success of toll lanes and variable pricing to control traffic, he said, "When we have a mechanism that has worked in every other industry it has been tried and has worked incredibly well, we think we should use it" in aviation.

Critics counter that the department shouldn't be pursuing what Air Transport Association President and CEO James May called "a costly economics experiment," especially with recent revelations of airline safety lapses and lax oversight by the Federal Aviation Administration. "The most offensive thing is that they're trying to do an eBay-style auction at LaGuardia when they should be focusing on safety," said an aide to one delegation member, requesting anonymity. "Their priorities are out of whack."

According to DOT, one-third of all U.S. air traffic originates or passes through the New York-New Jersey region. Delays, cancellations, and flight diversions, as a result, can ripple outward to tie up travel across the country. Last year LaGuardia, JFK, and Newark served a record 110 million passengers, an increase of more than 5 percent over 2006, according to the Port Authority of New York and New Jersey, which operates all three airports. Three-quarters of all delays occur in the region, by DOT's estimate.

After last summer's record delays, which were up 20 percent over the previous year, President Bush and Peters created a panel to recommend ways to curb congestion at New York-area airports. The administration advocated market-based approaches such as charging more for peak time slots, known as "congestion pricing," or using auctions to drive up the price of the best slot times to encourage airlines to use them more efficiently. But vehement opposition from the airlines, the Port Authority, and Congress forced the department to instead impose two-year restrictions on the number of flights at JFK and Newark.

In January, DOT unveiled a plan to let airports charge airlines higher fees to land at peak times, sparking a renewed outcry, although the airports welcomed the move as a useful tool to manage congestion and finance runway construction. A DOT spokesman said that the new pricing policy should be in place by summer or, at the latest, fall.

The administration would like to go further, using auctions at LaGuardia to combat over-scheduling. On April 16, it proposed two options for annual auctions. Both would let the airlines keep 20 of their existing slots for the 10-year life of the rule. LaGuardia has 1,192 slots available daily. US Airways has the most slots with 396, followed by American Airlines with 260, and Delta Air Lines with 240.

Both of DOT's plans would directly affect few flights. Under the first option, 14 of the 1,192 slots would be auctioned--seven chosen by the airlines and seven chosen by the department--and a handful of slots would be retired over five years. The FAA would use the proceeds to fund other efforts to relieve congestion in the area. The second option would auction 36 slots, half chosen by the airlines and half by DOT, and the airlines would keep the proceeds.

The administration intends to make the rule final before the end of the year and to conduct an auction before it leaves office in January, Gribbin said. The proposal is undergoing a 60-day public comment period.

Members of Congress from the region were already frustrated with the FAA over safety and management issues. These include mounting runway incursions and near-misses at Newark; the lack of experienced air traffic controllers at the region's busiest airports; and local communities' complaints about the impact of DOT's plan for redesigning the airspace. Since February, Democratic Sens. Frank Lautenberg and Robert Menendez of New Jersey have blocked the Senate from considering the nomination of FAA acting Administrator Robert Sturgell to head the troubled agency, saying that the FAA hasn't responded adequately to their concerns.

The LaGuardia slots rule and new airport pricing policy have fueled the delegation's frustration and prompted plans to stop DOT's market-based initiatives, which members say might make flying too expensive for middle-class families. At press time, Sen. Charles Schumer, D-N.Y., was preparing an amendment to the FAA reauthorization bill pending before the Senate that would block the rule. Rep. Nita Lowey, D-N.Y., a member of the Appropriations Committee, is leading the charge to choke off funding for the rule in the House. She has already cleared with the Transportation and Infrastructure panel language to accomplish this goal, and wants to include the provision in the annual transportation appropriations bill.

The Port Authority and the airline industry consider slot auctions a tax that will drive up costs for cash-strapped airlines and consumers. Airports, meanwhile, see them as a government intrusion on their right to run their facilities. Although the airports are the only ones to favor congestion pricing, all in the industry agree that the best approach to reducing tie-ups involves operational fixes and expanding capacity in the near term and modernizing the antiquated air traffic control system in the long run.

ATA spokesman David Castelveter said his group believes that the Transportation Department lacks the legal authority to "collect fees [and] taxes or redistribute billions of dollars of assets," which it asserts that the auction plan does. The ATA wants to have the comment period extended, Castelveter said, and will pursue "all options" to kill the auction plan.

In contrast, the Reason Foundation's Robert Poole maintains that the auction plan doesn't go far enough. Poole, who is director of transportation studies at the libertarian think tank, said, "I give DOT credit for trying to do something, but it's so small that it's hard to see how this would make much of a difference."

Poole calls the free-market approach "the least bad way to allocate scarcity" when the demand to fly at peak times is greater than airlines and airports can handle. Pricing desirable time slots higher, he added, can also raise revenue to pay for expanding capacity.

But with New York and New Jersey members poised to block the plan and the airline industry spoiling to sue, the administration likely won't even get the chance to try--a prospect that DOT's Gribbin calls unfair to beleaguered fliers. "To prematurely shut this process down is a pretty callous way to approach the concerns of consumers who are facing another summer of delays," he said. Given the forces lined up against it, it may be the FAA that is in for another long, hot summer.