A US appeals court has overturned a year-old order by the US Department of Transportation (DOT) that cost Republic Airways Holdings two coveted slot exemptions at Washington National airport.
The court's decision will likely force Sun Country Airlines to give the slots back to Republic.
The ruling on 6 January also reinforces a series of precedents allowing airlines to automatically take over slot exemptions by acquiring or merging with another carrier.
The now-defunct Midwest Airlines, which Republic acquired in July 2009, had used the two slot exemptions at National to operate a nonstop, round-trip flight to Kansas City.
Two months later, Republic notified the DOT that it would take over Midwest's slot exemptions. Although Midwest would be dissolved, the slot exemptions would be handed over to Frontier Airlines, another Republic-owned subsidiary airline. Frontier would continue service to Kansas City, but downgrade the aircraft from the former Midwest-owned Boeing 737 to an Embraer regional jet.
Slot exemptions are normally prohibited from being bought or sold.
Republic, however, noted that the DOT has allowed slot exemptions to transfer because of a corporate merger or acquisition.
Either the DOT or the FAA allowed slot exemptions to transfer during the American Airlines acquisition of Reno Air in 1999, the US Airways merger with America West in 2006 and the Southwest Airlines purchase of some ATA Airlines assets in 2008, Republic said.
But the DOT ignored that argument in an informal letter sent to Republic executives two months later. For DOT, the key difference in the Republic case was the airline's decision to dissolve Midwest and give the routes covered by the slot exemptions to Frontier.
Finally, on 10 December 2010, the DOT formally withdrew the former Midwest slot exemptions from Republic's ownership and instead gave them to Sun Country.
The Minnesota-based low-cost carrier launched service from National to Lansing, Michigan. The flight was still listed today on Sun Country's online reservation system.