United claims operator mark-up at Newark airport costs it $50m

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United Airlines claims that higher costs at Newark Liberty International airport put it at a cost disadvantage to airlines operating from nearby New York JFK International airport.

The 30% higher costs levied by the Port Authority of New York and New Jersey (PANYNJ) cost the Chicago-based carrier more than $50 million annually and put it at a competitive disadvantage in the New York City market, says Kate Gebo, vice-president of corporate real estate, during a Twitter chat today.

The higher costs are due to a different lease and business agreement at Newark compared to JFK, says Gebo.

The PANYNJ manages the three terminals at Newark itself while various airlines and private companies manage the six terminals at JFK independently under long-term leases with the authority.

The operator declines to comment on United’s statement.

Gebo’s comments are similar to ones by United chief executive Jeff Smisek in November 2013 on costs at Washington Dulles International airport, another one of the airline’s hubs.

“This hub also disproportionately bears a lot of debt service compared to other airports inside of MWAA [Metropolitan Washington Airports Authority], which is a terrible competitive burden and inappropriate burden on this hub,” he said.

United is in the first year of a five-year $2 billion cost cutting programme, which includes improved productivity, reduced sourcing costs and optimised distribution and route network changes.

The PANYNJ and United signed a 20-year extension to the airline’s terminal facilities lease at Newark in April 2013. The agreement included a minimum investment of $150 million by the airline in facilities at the airport.