U.S. proposes to auction some slots at NY LaGuardia

WASHINGTON (Reuters) - Airlines would have to relinquish some of their coveted takeoff and landing rights at New York's LaGuardia airport under a plan to ease delays announced on Wednesday by the U.S. government.

The Transportation Department wants to auction operating rights for flights, called slots, which are limited and mainly controlled by major airlines. Bigger airlines at LaGuadia include US Airways Group Inc, American Airlines, a unit of AMR Corp, and Delta Air Lines Inc.

Regulators conclude that reducing some access for big airlines will force them to fly more people on bigger planes, reducing congestion. Auctioning returned slots could ensure access for low-cost airlines shut out of LaGuardia because of space restrictions.

"This proposal increases choices for passengers and adds competition, which is proven to lower fares. It also cuts delays and funds new aviation capacity projects for the region," Transportation Secretary Mary Peters said in a statement.

The industry's top lobbyist called the plan "ridiculous" and said it would do nothing to reduce delays at LaGuardia, a popular destination for business travel and for years one of the worst airports in the nation for delayed flights and congestion.

"It is truly mystifying, with the airline industry in a financial meltdown due to overwhelming fuel prices, that DOT decides now is time for a costly economics experiment at LaGuardia," said Jim May, chief executive of the industry's chief lobbying group, the Air Transport Association.

Delays are the No. 1 consumer complaint about airline travel.

Overall, 2007 was the worst year for flight disruptions. More than one-in-four flights, or 29 percent, were delayed or canceled, affecting 163 million passengers. Delays hit all time highs over the summer months.

Resolving delay problems in New York, a priority of regulators, is crucial because flight delays there ripple throughout the United States.

Some experts blame airline overscheduling at peak times of the day at the busiest airports. Airlines say the nation's aging air traffic control system, which is constrained in the number of flights it can handle, is the culprit.

Heavy spring and summer travel periods are the worst for delays.

Regulators have pushed flight caps at John F. Kennedy and Newark airports. For LaGuardia, Peters has offered two market-based options to manage the problem to replace temporary flight caps. One would auction 8 percent of slots over five years and receipts would pay for future initiatives to reduce congestion. The second would auction more slots but allow airlines to keep the proceeds.

The Transportation Department on Wednesday also finalized a rule that would double maximum compensation -- up to $800 in some cases -- for passengers who are involuntarily denied boarding, or bumped from a flight.

Airlines flew 571 million passengers last year and reported

that 63,800 were involuntarily denied boarding, Transportation Department figures show. Among the biggest airlines, Delta reported the highest number at 16,600, or 2.4 per 10,000 passengers. JetBlue Airways Corp was the lowest among all airlines at 43.

Denied boardings most often result from oversold flights. Airlines will usually reschedule travel or offer refunds or vouchers for future travel.

(Reporting by John Crawley in Washington; editing by Carol Bishopric)