The US Department of Transportation is proposing to allow Delta Air Lines and US Airways to exchange some of their operating rights at Reagan Washington National Airport and New York's LaGuardia Airport, subject to a number of conditions. The Department is asking for public comment on its proposal to allow the carriers to exchange take-off and landing rights at the two airports.
Approval of the transaction is subject to a number of conditions designed to protect consumers, principally that the carriers divest themselves of eight pairs of daily slots at Reagan National and 16 pairs at LaGuardia, and that they complete the transaction in phases.
The announcement marks a key step to the conclusion of an arrangement that was first brought to the DOT in 2009 when the two carriers requested approval for a similar slot swap transaction at the two airports. However, the DOT said it would allow the swap only on the condition that the carriers divest themselves of 14 pairs of daily slots at Reagan National and 20 pairs at LaGuardia, in order to reduce the impact on competition and provide more opportunities for new-entrant carriers at the airports.
As a result of the Department’s response the carriers did not proceed with that transaction, but instead submitted a revised proposal to the Department on May 23, this year, which included Delta transferring 42 slot pairs at Reagan National for 132 US Airways slot pairs at LaGuardia. The carriers also offered to divest some slots as an alternative to their argument that no divestiture should be required.
In tentatively approving the new proposal, the Department noted that recent events “had resulted in an increased presence of low-cost carriers at the two airports,” but that divesting slots to new entrants or low-cost carriers would “still be necessary to reduce the prospects for competitive harm”. The Department also found that other potential benefits could arise from the swap, such as enhanced service benefits to passengers and a more efficient use of slots at the airports.
In a joint statement the two airlines said they welcomed the DOT ruling. “Upon final approval we intend to move forward with the plan, as conditioned by the department, which will enhance competition and allow the airlines to improve service, consumer choice, modernise facilities and create jobs at both airports," they said. The statement added more information of the revised slot swap including details on Delta requesting the rights to operate a further daily service to Sao Paulo, Brazil from Reagan National in 2015 and of an additional $66.5 million cash payment to US Airways.
If the decision is formalised, the carriers would be required to sell the 24 slot pairs through a blind sale to airlines that currently have little or no service at these airports. Slot pairs would be sold in bundles large enough to ensure that a purchaser would have a sufficient number of slots to provide meaningful new competition,” says the DOT. In addition, Delta and US Airways would be required to wait 90 days before beginning their new operations on a phased-in basis, in order to allow the new services to establish a foothold at the airports.
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