Yes, it was announced on April 1, 2016. No, it is not a prank, though some may consider it a bad joke. Newark Airport is going to be reclassified as a Level 2, schedule-facilitated airport as of 30 October 2016, just over eight years after it was assigned slot controls in May 2008. And it presents an interesting set of circumstances for several airlines with considerations at the airport.
United Airlines, the hub carrier and – by far – the holder of the most slots stands the most to lose with the change. The carrier has used its slot portfolio to limit competition and keep fares higher in many markets. Some competition has crept in over the years but United invested significant capital in acquiring slots, swapping out positions at other airports or paying for them outright. The most recent deal was with Delta for a swap at JFK and Newark. That deal fell apart over government objections and now the removal of slot controls. United has also taken flack from authorities over inappropriate use of the slots, effectively hoarding them and not flying all the allocated frequencies. The counter-claim to this assertion is that it is necessary to hold the additional slots and only fly some of them to ensure that the airline is able to operate smoothly with the ATC delay challenges hampering operations. In other words, the only reason the FAA can reasonably drop the slot controls is because United purposefully limited operations to ensure better performance for the airport (and it still is far from stellar in terms of on-time performance and completion rates).
While United is unlikely to be happy with the news there are a couple competitors who have spoken out optimistically about the move. In quarterly earnings calls over the past few days both Alaska Airlines and JetBlue have been asked their opinions on the market and potential. Both see opportunity to grow. For Alaska Airlines the desire to expand transcon capacity pre-dates the announced acquisition of Virgin America. The carrier recently added JFK service to help on that front and during the earnings call Chief Commercial Officer Andrew Harrison suggested that “we’ve often wanted to grow in Newark” so expect that Alaska Airlines will make a move there, assuming it can secure gate space. JetBlue’s position is similar, though less about transcon service. Speaking on that company’s earning’s call today CEO Robin Hayes noted that the company has slowly managed to increase operations to over 20 daily flights, acquiring slots ad hoc where it could. There are still challenges but Hayes is optimistic:
Obviously gates and other facilities do act as a form of constraint but we are very happy with the news…we definitely see an opportunity for expansion there. Newark is the sort of airport where we do extremely well. It is a constrained airport with an incumbent competitor that charges very high fares. We can go in, offer a better product at lower fares and do very well.
No one is making major announcements yet with regard to new routes or frequencies. But there are plenty of indications that such will be coming soon. Or, as Hayes said in the call, “Watch this space” for news.
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