Thank you, Victor (Ganzi), for that extremely kind introduction. I also would like to thank Goldman Sachs for hosting us today, as well as our sponsors – the Partnership for New York City and Seimens Corporation.
And Happy New Year to all of you! Your forum today is extremely timely, because 2008 is shaping up to be a definitional year for our nation’s transportation systems.
We have reached what can best be described as a crossroads moment when it comes to the congestion that is clogging our roads and overwhelming our airways. Gridlocked streets and delayed flights reached record levels in 2007, a clear indication that our current course is unsustainable. Either we take advantage of the opportunity now before us to fundamentally reshape the outdated transportation policies that have produced this mired mess, or we will continue to struggle along the current failed path.
That is what excites me about being here in New York today. Thanks to the bold leadership of Mayor Bloomberg, Kathy Wylde and the Partnership, and many others, this great city is primed to show America and the world that there is an alternative to the unproductive pattern of higher transportation taxes, more pork barrel spending, growing congestion and declining quality of life.
It lies in tapping into New York’s natural strengths in business and finance to allow market mechanisms to work for transportation – bringing the benefits of pricing, efficient investment and resource allocation, and innovation.
I met with Mayor Bloomberg this morning. We talked about the tremendous opportunity New York has to reduce traffic tie-ups and aviation delays by embracing many of the same market-based principles that have made this city the financial capital of the world and can help it maintain its preeminence. I know everyone in this room recognizes that the precipitous decline we have seen in transportation performance represents a very real threat to the economic life and vitality of this city and to its position as the world’s financial capital.
The Partnership produced a study quantifying the annual cost of traffic congestion in New York at a staggering $13 billion and 50,000 lost jobs. And the city’s Comptroller issued a report last month estimating that increased taxi-out time at New York’s three major airports cost travelers almost $200 million in 2007, and is diminishing the city’s competitiveness domestically and internationally.
Even in the Internet age, important business and financial dealings require more than a “cyber-handshake.” Yet it is difficult – and often undesirable – to schedule face-to-face meetings when people have to make travel choices to New York based on the “least unreliable” system.
A recent Orbitz survey reveals how travelers are adapting travel plans because of delays. One in three of respondents now either books the earliest flight of the day, or travels the night before a meeting or appointment to be sure to get there on time. This growing buffer translates into more time away from family and impacts businesses’ bottom lines. Worse, it can cause companies to take their business elsewhere, avoiding New York altogether.
The Bush Administration, working closely with the airlines and local leaders, is taking decisive steps to ease the aviation delays that make travel to the New York region so unpredictable. These include prioritizing operational and capacity improvements, establishing executive-level aviation “Czar” for the region, and capping the number of hourly flights at JFK and Newark to bring them more into line with airport capacity.
These caps will not only cut the longest delays significantly, they will also allow airlines to operate more flights this summer than they did last year. The difference is that they will be spaced out more reasonably.
As operational and capacity improvements make more take offs and landings possible, we will be able expand the number of hourly flights that can operate at New York’s airports. That is where we begin to put market mechanisms into play. These new “slots” as we call them will be available for lease to the carrier valuing them the highest. As a result, any airline will have the opportunity to enter into – or expand – operations in New York. And the revenue from these leases will then be available for investments in new airspace and airport improvements for the region.
Giving airports new ways to raise money for needed projects and to cut delays is going to be vital as we work to reduce aviation congestion here in New York and around the country. That is why, today, I am announcing important changes to our “Rates and Charges” policy that will make it easier for airports to reduce congestion and add capacity.
Starting today, we will encourage congested airports in New York and across the country to move away from the decades-old practice of charging aircraft landing fees based simply on the weight of the plane. Instead, airports can choose to charge aircraft different amounts based on the time of day and the volume of traffic. As a result, airports will be able to use the power of pricing to encourage aircraft operators to spread their schedules more evenly throughout the day. This change would allow airports to handle flights more efficiently, give passengers fewer delays, and help all of us avoid the need for government intervention and hourly caps in the first place.
More significantly, however, the new policy will allow airport operators to include the cost of projects designed to expand capacity in the new landing fees. Until now, airports could only include those costs after the projects were completed. This restriction needlessly drove the cost of construction projects up by forcing airports to pay hefty finance fees first, only to recoup the costs later.
Now, airports will be able to more efficiently and effectively finance the kind of projects that will give travelers more options, airlines more opportunities, and cities like New York more visitors.
Finally, the new policy will allow airport operators like the Port Authority of New York and New Jersey that run multiple fields to distribute landing fee revenue among those different facilities. That means landing fees collected at LaGuardia, Newark or JFK will now be available for improvements to Stewart Airport, for example. As a result, more travelers may soon be able to take advantage of that underutilized field, relieving pressure on the other airports and giving the city’s travelers even more options.
All told, these new market-based measures will help reduce congestion and improve airport investments – in much the same way as New York City’s Urban Partnership Agreement promises to ease traffic congestion and improve transit investments.
America expects big ideas from the world’s most innovative city, and I want to commend Kathy and the Partnership for being out front in advancing congestion or cordon pricing for New York. It would make New York the first city in the United States to charge motorists a fee to discourage driving in its congested core.
When I was in Europe in December, I got a first-hand look at how well London’s congestion pricing plan – which is very similar to the plan Mayor Bloomberg wants to try in New York – keeps traffic moving.
The idea is building steam because it works – traffic in London is down 26 percent since congestion pricing began in 2003. Where else can you find a growing city with declining traffic?
Other European cities, including Milan and Berlin, launched their own versions of congestion pricing programs as this year began.
The concept is gaining momentum here as well. A Quinnipiac Poll released just last week found New Yorkers strongly support a congestion pricing plan that uses the revenues to improve mass transit.
The Department of Transportation has put $354 million in federal money on the table to help New York implement the type of bold and comprehensive road pricing plan contemplated by the Mayor.
The draft report released last week by the Congestion Commission includes some possible alternatives to the Mayor’s plan. While we respect the need for the city and state to have their input and consider alternatives, it is important that the plan recommended by the Commission include a congestion pricing component and/or a variable pricing component. It was this innovative congestion management tool that was the decisive factor in the Department naming New York an Urban Partner. I also want to remind you that the March 31st deadline is firm.
So my message to you is to keep up the pressure to innovate… keep driving real reform. The coming year is going to be a defining one for transportation in New York – and the United States. Push back against the naysayers who would rather resign themselves to growing transportation gridlock than make the necessary transition from tax-and-spend transportation policies to price-and-invest.
You need to be the ones setting the pace. The world’s financial capital has a unique opportunity to show that market-based measures like road pricing, like airport slot auctions and congestion pricing, and like public-private partnerships can improve travel, support economic growth, and drive the development of new capacity.
Your success will send ripples throughout the globe, spurring further innovation in this country and abroad. It will have massive ramifications for New York as a financial capital. And it will eliminate hassles for the millions of people who commute within and travel to and from New York City every day.
I look forward to helping you get there. And I look forward to the day when traveling to and around New York is as easy as finding an open restaurant after midnight in the Big Apple.
Speech from http://www.dot.gov/affairs/peters011408.htm.