With the closure of the American Airlines/US Airways merger now complete many of the final pieces are falling in to place. Among them, the landing slot divestiture for LaGuardia has been confirmed by FlightGlobal. And, unlike most other bits of news during this merger, the announcement includes a bit of surprise. Of the 17 slot pairs at LGA required to be sold off to other carriers 5 were already spoken for in that they were leased to Southwest Airlines. Those were transferred permanently as part of the deal. The remaining twelve slots have been split evenly between Southwest and an actual new entrant in the market: Virgin America.
Access to the New York City airport is highly sought after but typically it comes from an airline with established east coast operations which LaGuardia connects to readily. Virgin America’s hub operations on the west coast – San Francisco and Los Angeles – are both outside the perimeter which limits flights to or from LaGuardia to shorter routes. The perimeter rule* requires that Virgin America now operate east coast flights, but to where?
With only six slots it seems unlikely that the carrier could be competitive in either the Chicago, Boston or Washington, DC shuttle markets. Plus, DC would require additional slots there, something which could be applied for as part of the merger divestment deal with the DoJ but which Virgin America does not yet hold. One option being suggested is that the carrier will use the slots to initiate service to Dallas’s Love Field. Such service is not permitted today due to the Wright Amendment** restrictions in place at the Texas airport but those will not be repealed until October 2014 and it is not yet clear when the slot swap will actually take effect.
Assuming the slots don’t open up until late in 2014 (which I doubt a bit) there is another consideration: the route faces stiff competition (at least theoretically) on many fronts. American already operates more than a dozen daily frequencies between nearby DFW and LaGuardia. With Southwest picking up more slots and operating their home hub at Love Field it seems quite likely that they will be launching service on that route later in 2014. And Virgin would have limited feed on the Dallas end (presumes that the SFO-Dallas flights would move to Love as well) and no feed at the LaGuardia end. It is hard to believe that there is a lot of money to be made in a market where there would be no feed and a whole bunch of competition.
Virgin America does already offer service to a few other east coast cities but none are particularly well suited to providing connecting service for their existing passenger flows.
This will be a very interesting development to watch in the coming weeks/months.
* Perimeter Rule – Flights to/from LGA are limited to distances of 1500 miles or shorter except on Saturdays or to Denver. This was to force larger/longer flights to JFK and keep LGA as a quieter, local airport. Success/impact of the rule is hotly contested.
** Wright Amendment – Put in place in 1979 in an effort to screw Southwest and protect DFW and Braniff, the Wright Amendment limited flights from DAL to only neighboring states. It has been revised a couple times since and will be fully repealed in October 2014.
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