U.S. airlines are already worried about government efforts to cap flights at John F. Kennedy International Airport, but on the horizon is something that scares them even more—a proposal to make them pay extra fees for flying when demand is highest.

Spurred by the outcry over chronic delays at JFK, the FAA is negotiating with airlines to reduce hourly schedules to what it says is a more manageable level. While this will have the greatest effect on Delta Air Lines, JetBlue Airways and American Airlines, the rest of the airline industry is presenting a united opposition. “I don’t think there’s any question that if [flight cuts] are successful in New York, the [FAA] will try to apply them at other parts of the country,” Air Transport Assn. President James May says.

Through the ATA, airlines argue that the government should be looking to increase capacity rather than restricting demand. This horse has probably already bolted as far as JFK is concerned, but the airlines are also staking out positions for a looming battle over congestion pricing.

Transportation Secretary Mary Peters and her senior advisers are giving increasingly strong signals that a premium charge for flying in peak periods is on the way for New York area airports. The idea is that the airlines would find it economically attractive to shift flights to less busy periods. This is separate from another move under consideration by the Transportation Dept., in which airlines could face fines for flights that are nearly always delayed.

When she opened the first round of scheduling talks in Washington Oct. 23, Peters told airline representatives she has a “strong preference for using market mechanisms like congestion pricing” to fight delays. Even though schedule reductions will be needed in the short term, Peters stresses she has “high hopes for market-based incentives,” noting that they have succeeded in other sectors such as highways, electricity supply and telecommunications.

The Transportation Dept. has some political momentum on its side, after President Bush last month weighed in on the flight delay issue. Bush acknowledged public anger about delays, and committed the administration to taking action.

The ATA’s May promises a court challenge if the Transportation Dept. tries to introduce congestion pricing. The airlines have “a number of legal or legislative options available . . . I don’t think [the department] would have the legal grounds to stand on,” May says.

The timetable for any Transportation Dept. proposal remains unclear. In parallel with the schedule negotiations, the department has formed an advisory committee to examine what other steps can be taken to address delays at New York area airports. One of the issues the committee has been tasked with considering is congestion pricing.

Transportation Dept. officials say they will wait until the last committee meeting on Dec. 10 before recommending a course of action. After only a handful of meetings, though, some participants say it is clear the committee—which includes representatives from airlines, airports and other aviation groups—will oppose peak-pricing fees.

The International Air Transport Assn. has also spoken out against congestion pricing. This approach has “never been proved effective” in reducing delays, says IATA’s regional vice president for North America, Douglas Lavin. According to IATA, only 7% of the 190 member states of the International Civil Aviation Organization use peak-pricing.