There are two slots (one pair) up for grabs at Washington National – and a few airlines are fighting over them. Picking up slots at a restricted like National is a rare opportunity, and it’s always interesting to see carriers argue about it. Eventually, the DOT will have to choose who should get them. It’s basically like the TV show The Bachelor, I guess. I’ve never watched it, honestly.
Granted, the applications came in a couple of weeks ago, but I’ve really wanted to blog about this.
First – let’s talk about how these slots became available in the first place. There are slots currently being used by Republic for Kansas City service that was inherited from the Midwest acquisition – and that’s the problem. These slots can’t be transferred. Republic argued last year that they should hold on to the slots, noting how they were keeping the Midwest brand and such, but the DOT disagreed:
After careful review, we have concluded that a “transfer” of exemptions has in fact occurred. Midwest, the party to which the awards were granted, has now ceased to exist as a carrier. Unlike Frontier, which was acquired by Republic but still operates as a subsidiary under its own operating certificate, Midwest clearly no longer holds or operates the exemptions, and Republic’s claim to these exemptions arises only as a result of its transaction with Midwest.
Another interesting mention in the DOT’s letter from November:
Moreover, the fact that Midwest operated relatively few slots was deemed a key factor in its qualifying for award of the slot slide exemptions. When Midwest’s various applications for the five slot slides were considered, the Department noted in approving them that Midwest met a statutory “exceptional circumstances” requirement in part because it had operational limitations due to holding only a limited number of slots at DCA. Based on FAA August 2009 data, we understand that Republic holds over one hundred exemptions at DCA – a fact that clearly distinguishes its current status from that of Midwest when Midwest was awarded the exemptions.
This is an interesting situation for Republic. Of course, those slots are tied up with their US Airways Express operation at DCA. In its application for the slots a few weeks ago (which I’ll be getting into more shortly), Republic argued:
RJET obtained the slots in a sale/leaseback transaction with US Airways in 2005, as a financing mechanism to enable US Airways to raise additional money…US Airways has retained complete control over and has the exclusive right to use the slots. Importantly, although RJET is listed as the holder of record of those slots, Republic has no control over the use of, nor can it sell, the DCA slots. Moreover, US Airways has the right to repurchase the commuter slots at any time.
Anyway – after analyzing the situation, the DOT decided to launch a proceeding to determine what airline should receive the slots. A quick summary of the applications.
Republic, not surprisingly, wants to hold on to the slots for its current Kansas City service. These slots are used for one of the airline’s three Kansas City flights under its branded service. “Failure to grant the slot exemptions to Republic would result in substantial harm to leisure, business, and government travelers, the affected local and beyond communities, and inter-carrier competition,” says the airline in its application. The carrier is “proposing to operate Stage 3-compliant, 99-seat ERJ-190 aircraft between DCA and MCI with these two slot exemptions, effective December 1, 2010″ and adds that “effective December 1, 2010, all three of Republic’s nonstop DCA-MCI services will
be operated with 99-seat ERJ-190 aircraft.” Right now, this is an E-170 route. Just for reference, US Airways also has DCA-MCI service, some of which is provided by Republic.
Next up is AirTran, looking to obtain the slots the slots for service to Ft. Myers (a market it already serves from DCA) or Sarasota. The airline doesn’t commit to an aircraft type, saying it will use either 717s or 737-700s. I just found this application a bit interesting, since in the past AirTran has tried to get the ability to reduce its Ft. Myers service. Meanwhile, US Airways serves both of these markets, but it appears that Ft. Myers flights are seasonal.
Speaking of US Airways, the carrier has tossed its hat in the ring as well, proposing service to Pensacola. This is the “third within perimeter slot allocation proceeding in four years in which US Airways has applied,” the airline notes. Service would be operated with E-175s during the summer and 170s during the winter. “With 99-seat Embraer EMB-190s a part of US Airways’ fleet, US Airways could further increase seats should demand warrant,” US Airways adds.
Southwest has also applied for the slots for its own flights to Kansas City. Had this been a year or two ago, I would’ve been shocked by this application, but the airline publicly showed its interest in DCA with the proposed slot swap between US Airways and Delta, which is now tied up in court. I have to think – does this application really make sense for Southwest when we exclude AirTran? Historically speaking, Southwest has avoided small stations, with only a handful of cities having less than ten daily departures. Having an airport with only one departure is very un-Southwest-y, at least to me.
And, to save the best/most interesting for last – Sun Country is giving this a whirl as well, for flights to Lansing. Why Lansing? Well, the DOT has said that these slots must be used for small or medium hub airports, and Sun Country is considering building up there. But what’s more interesting is that Sun Country is planning for the Lansing flights to originate and end in Minneapolis. So here Sun Country can say they’re providing service to a smaller city while providing new competition with Delta. In terms of the actual application – I’m not entirely sure what was going on here. Sun Country submitted its original application, and then corrected it. Based on the differences in the schedule listed in the appendices of both, it appears that Sun Country originally thought they could run two roundtrips.
What I found very interesting, however, is who didn’t apply. JetBlue said in a March 3 letter to the DOT that it was “prepared to use the two AIR-2l slots immediately,” yet they didn’t apply. I asked them why not, and here’s what they had to say:
JetBlue regrets that DCA remains artificially restricted, and while we are grateful that Congress has begun to shine light on this [with the recent MWAA oversight hearing before the Senate Aviation Subcommittee], acquiring one slot pair, limited to specific cities defined by the government and not by the free market or by JetBlue itself, made such an application economically unfeasible. We look forward to greater access opportunities in the future.
Anyway – that’s just the applications. The airlines have recently submitted their responses to the applications of the competing airlines, and that’s where this really gets fun. Expect a post about those in the next few days.
Meanwhile – also up for grabs are Republic/Midwest’s five slot slides. What is a slot slide, you ask? Basically, each slot is assigned for a time period, but under certain conditions (generally, to boost competition) the DOT will allow an airline to “slide” that slot do another time of the day. The DOT said in its announcement for this proceeding that it “will conduct a separate proceeding with regard to Republic’s five slot slide exemptions at DCA.”
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