First, apologies for the short postings this week – it’s the last week of classes for me and that’s always a very hectic time. Anyway…
So, remember the slot swap? It was exciting stuff but I think we all got distracted with Continited/Unitenental, and everything else. We last left off with the DOT saying that 14 slots at Reagan and 20 slots at LaGuardia needed to go to carriers that we’re either small players or new entrants. I wasn’t a fan of that deal – especially with a third of the Reagan slots in the deal going away. The carriers didn’t like it either, and suggested their own compromise. WestJet, Spirit, and AirTran would get new slots in New York, and JetBlue would get some slots in Washington. That compromise would certainly add some new airlines to the mix, while also limiting competition a bit.
Well, the DOT issued a new ruling today, and it’s basically the same thing as the first one – they simply didn’t like the compromise as proposed by Delta and US Airways. When the airlines made this suggestion, they said they wouldn’t go through with the deal if it wasn’t accepted by the DOT, and they’re not bluffing – they plan to take this to the courts. Which only further proves why I love this industry – it never gets boring!
Anyway, I’m with the airlines on this one. They have the slots, they should decide what’s happening with them. DOT says they’re for protecting the consumer, but one can look at this two ways. If someone like a Southwest gets some slots, we’ll probably see lower fares in LaGaurdia, which is certainly a good thing for some consumers. But smaller cities will undoubtedly lose nonstop service, inconveniencing others.
Meanwhile, I can’t see United and Continental being too happy about this. Of course, this is an unrelated issue. And I would argue that a United-Continental merger has less in terms of anti-trust than a United-US Airways pairing, where Washington would probably be a big issue. But here the DOT (and the DOJ in its comments) came down pretty hard on the carriers. Remember when Delta wanted the merger to happen when we still had a Bush White House? They thought that administration might be a bit more pro-merger.
Anyway – those are my quick thoughts. For a more in-depth look at this news head on over to Cranky.
And, sorry again for the short posts this week – things should get back to normal next week (hopefully).
The airlines have the slots, but the law makes it clear that they are not private property, and the government can take them away. I have particularly little sympathy if the airline just got the slots for free, just because it happened to be serving that airport in 1960.
As for the relative balance of customers who benefit: The lower fares on the sorts of routes that Southwest or jetBlue would serve would benefit far more people than the handful of cities that would lose nonstop service.
And most cities that might lose nonstop service to LGA will still have it to JFK, EWR or HPN. The only cities that might lose all non-stop service to NYC are Charlottesville and Roanoke. To which I say, so what. Who cares. Delta might have dropped those in the long term, anyway.