The deal for US Airways and Delta to trade large chunks of their operations at New York City‘s LaGuardia and Washington, DC‘s National airports has received approval from the Federal Aviation Administration. The swap, which has been in limbo since it was initially proposed about two years ago, will see Delta increase its market share significantly in the New York area, bringing it on par with United Airlines which has held a significant lead thanks to the hub operations at Newark by its Continental subsidiary.
The final agreement calls for Delta to gain 132 slot pairs at LaGuardia in exchange for 42 slot pairs that US Airways will gain in Washington. An additional 24 slot pairs – 16 in NYC and 8 in Washington – will be divested by the carriers to competitors. The divestment plan, which pretty much matches the original proposal from years ago, will have the slots auctioned in a cash-only, blind bid offering managed by the FAA. With the Southwest buyout of AirTran and acquisition of those slot portfolios the Texas-based carrier is no longer in as strong a position to oppose the swap or the blind distribution of the slot divestiture.
In addition to the FAA review of the slot swap there is a Department of Justice Anti-Trust investigation ongoing for the transaction. The DoJ announced that they are no longer concerned with the anti-trust implications in the New York City market but they are still looking into the US Airways monopoly issues at National. If that is too significant an issue it could still result in the deal being scuttled but at this point it does seem like the deal is quite likely to go through.
This represents a significant shake-up in both markets. Delta has not been shy recently about wanting to attack the New York City market and taking a sizeable chunk of that market share from competitors. They will still be running a split hub environment with major operations at both LaGuardia and JFK airports but they’ll have significantly more traffic going forward. For the Washington, DC market the domination at National by US Airways will be much more significant (hence the continued DoJ efforts).
Still plenty of excitement and new developments to come on this front but things are finally back in motion after being stalled for so long.
- Southwest shows AirTran some LUV – $1.4Bn buyout announced
- Delta/US Airways slot swap still on hold
- Slot swaps galore, part 2
- Slot swaps galore in New York and Washington, DC
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