ANALYSIS: Southwest sweeps Washington National slot auction

New York
This story is sourced from Pro
See more Pro news »

Southwest Airlines scored 27 slot pairs at Ronald Reagan Washington National airport, taking more than half of the pairs on auction.

JetBlue Airways won 12 of the remaining 17 pairs and will keep eight that it already leases from American Airlines, it says in a statement. The remaining five are still up for grabs, however, Virgin America is widely speculated as the winner of those slots.

Virgin America declines to comment on whether it has succeeded in the slot auction.

“Consumers who appreciate the value and reliability that Southwest and our people deliver are the real winners in this deal,” says Gary Kelly, chairman, president and chief executive of Dallas-based Southwest, in a statement. “Reagan has long been a convenient but high-fare airport. Southwest plans to change that by bringing much needed competition to the nation’s capital.”

JetBlue senior vice-president of government affairs and associate general counsel Rob Land echoes this consumer-wins sentiment, saying that average fares have decreased 31% and traffic increased 93% between Washington National and Boston since it entered the market.

American agreed to divest the 52 slot pairs, as well as five gates, at the airport under an agreement with the US Department of Justice (DOJ) in exchange for approval of its merger with US Airways. The merger closed on 9 December 2013.

The question now is what Southwest, JetBlue and whoever wins the remaining slots decides to do with them.


“I think Southwest will essentially link National with its mid-continent operations,” says Robert Mann, an airline industry analyst with RW Mann & Company and a senior executive at American in the 1980s. “It’ll be [Dallas] Love Field from the point the Wright Amendment expires, Houston Hobby, [Chicago] Midway, Nashville and Atlanta.”

Flights to these cities would allow Southwest to easily connect Washington National to the rest of its network, even destinations outside the airport’s 2,012km (1,250 mile) perimeter, he adds.

The cities Mann lists are home to some of the low-fare carrier’s largest operations within the perimeter, with Atlanta, Chicago Midway, Dallas Love and Houston Hobby among its 10 busiest stations.

The Wright Amendment, which limits flights from Dallas Love, will be repealed on 16 October.

Fort Lauderdale and Orlando are two other destinations that Southwest could consider serving from Washington National. While they are already served with nonstop flights on American-subsidiary US Airways and JetBlue, they are two of Southwest’s larger stations. The airline’s plans also call for Fort Lauderdale to become a key connecting point to Latin America and the Caribbean in the future.

Southwest and its AirTran Airways subsidiary fly to Atlanta, Austin, Fort Myers, Houston Hobby and Milwaukee from Washington National with 17 slot pairs currently. It will begin once daily service to Kansas City with a slot that Republic Airlines will return to the US Department of Transportation (DOT) on 1 February.


JetBlue says today that it plans to add service to both cities that it serves from Washington National as well as ones that it does not.

The New York-based carrier flies to Boston, Fort Lauderdale, Orlando, San Juan and Tampa from Washington National. It could add service to any of these except San Juan, which is outside the perimeter.

Additional flights to Fort Lauderdale are likely. JetBlue is building a gateway to Latin America and the Caribbean at the airport and plans to increase capacity there by 15% in 2014, according to JetBlue chief financial officer Mark Powers.

Where else JetBlue may fly from Washington National is difficult to determine. It could add flights to its New York JFK base or launch service to cities that it already serves that only have limited options from the airport, for example Buffalo, Hartford and Jacksonville.

Raleigh-Durham could also be on its short-list. The North Carolina airport is about to lose six or seven daily flights on American as it integrates its schedule with US Airways. Both mainline carriers currently operate the route.

“JetBlue, I’m afraid, is going to be to large cities as well,” says Mann. “The real loser here is going to be small city service, which Parker warned about.”

Doug Parker, chief executive of American, warned US Senators of those cuts during a hearing in June 2013.

“We, will by definition with a scarce resource, continue to serve the [communities] that are most lucrative and reduce service to the ones that are the least lucrative as we should do as business people,” he said. “What that means is reduce service to small- and medium-size communities.”

He kept his word. American announced earlier in January that it would end service between Washington National and Augusta (Georgia), Detroit, Fayetteville (North Carolina), Fort Walton Beach, Islip, Jacksonville (North Carolina), Little Rock, Minneapolis-St. Paul, Montreal, Myrtle Beach, Nassau, Omaha, Pensacola, San Diego, Savannah and Tallahassee in 2014.

JetBlue is expected to move to the five gates – gates 24, 26, 28, 30 and 32 – that American is divesting on Washington National’s centre pier, sources tell Flightglobal. Virgin America will likely continue to use one of the gates in the centre pier.

Under this scenario, Southwest would expand its footprint to six gates in terminal A by taking takeover JetBlue’s three gates there.

“We look forward to working with our airline partners as changes occur in air service at Reagan National,” says the airport operator Metropolitan Washington Airports Authority (MWAA). “Our top priority is serving the needs of the travelling public and we will keep passengers informed throughout the process.”

JetBlue and Southwest decline to comment on where they plan to fly from Washington National with their new slots. American declines to comment on the slot auction.