Virgin America argues Newark flight caps are anticompetitive

Washington DC
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Virgin America asked the US DOT to reconsider forthcoming flight caps at Newark Liberty International airport, claiming they will erect barriers to entry by new domestic entrants.

The airline argues it would be limited to three roundtrips at the airport, with no operations during afternoon or evening hours–periods it says are essential for viable long-term service, especially given the carrier’s point-to-point, high aircraft utilization business model.

The arrival times allotted to Virgin America would require West Coast departures at 10:30 p.m., 2 a.m. and 3 a.m., it explains, “none of which can be competitively marketed, much less priced at a level sufficient to sustain operations at a major New York area airport”.

Virgin America currently does not operate from Newark, and argues the caps shut out new entrants while preserving market power of the airport’s largest operator, Continental Airlines, which holds a 72% share air the airport.

The carrier tells DOT “over one-half of all domestic non-stop routes at Newark are already total or near monopolistic routes”.

Last month, DOT and carriers operating out of Newark agreed to a temporary two-year flight cap that will allow 83 flights per hour during peak periods starting in May.

The cap, which applies to domestic and international carriers, enables 30 more flights per day than the summer of 2007 and is similar to caps at New York’s JFK airport. JFK caps began 30 March and continuing through 24 October and limit operations to 81 per hour between 6 a.m. and 11 p.m.

Virgin America says it could provide low-fare service between Newark to Los Angeles, as well as, San Francisco.