US Airways and Delta cite improved conditions for slot swap

Washington DC
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Managements of US Airways and Delta believe recent deals at Washington National and New York LaGuardia enlarging low cost carrier access to those airports should tip regulatory favour towards their proposed slow swap at those airports.

In 2009 US Airways proposed transferring 125 of its Express slots at LaGuardia to Delta while Delta agreed to cede 42 slots pairs at National to US Airways.

Regulators told the carriers in order to move forward with the deal the divestiture of 14 slots at National and 20 slots at LaGuardia to incumbent or new entrant carriers was necessary. The government rejected a subsequent proposal from the carriers that entailed fewer divestitures.

Today during an earnings call US Airways executive vice president of corporate Steve Johnson said since DOT's rejection of the proposed deal, the dynamics have changed, and low cost carriers have secured more slots. JetBlue gained slots at National through an agreement with American, United and Continental agreed to transfer slots New York Newark slots to Southwest. Southwest through its proposed acquisition of AirTran receives key slots at National and LaGuardia.

"As a result of those deals slots have continued to evolve into the hands of lost carriers, and both greater New York and greater Washington have gotten less concentrated," says Johnson.

Citing similar comments made by Delta management during its earnings call, Johnson of US Airways states: "At Washington National there are now more slots in the hands of low cost carriers today than the number the DOT [US Department of Transportation] targeted with the required divestitures."

US Airways believes those changes have resulted in a "significantly different environment. One that should allow DOT to approve our slot deal without the divestitures, and that's the focus of our discussions and our work with DOT".

US Airways chief executive Doug Parker says that Southwest's intended acquisition of AirTran "acknowledges what many of us have been saying all along, which is, if indeed you want access to slot-controlled airports you should go acquire it".

Parker explains in the past Southwest and other carriers have argued they should be given slots at those airports. He believes Southwest now realises slots are assets that "are not something to be given, but something you go acquire".

As Delta and US Airways worked to get approval for their deal, Southwest argued the slot swap as anti-competitive, and argued any slot divestitures required should be conducted through a cash auction.