NEW YORK – A plan by US Airways and Delta Air Lines to make their New York and Washington, D.C., operations more profitable could get the axe unless they agree to open those markets to more competition.
Late Tuesday, the U.S. Department of Transportation said it gave tentative approval for a plan to swap 125 pairs of US Airways operating slots at New York’s LaGuardia Airport for 45 Delta slots at Ronald Reagan Washington National.
A slot grants the owner the right to schedule a landing or departure from an airport during a specific time.
But for the deal to move ahead, the airlines would have to first sell some of their slot interests to an airline with no or limited service to the two airports. That would lessen the harm to customers’ wallets that might otherwise result from the carriers’ increased dominance in those markets, the DOT said.
Neither airline is willing to make that concession, saying the transaction would not go as proposed by the DOT.
“Delta and US Airways are disappointed in the DOT’s decision that, if implemented, would negatively impact the consumer and economic benefits created by the proposed transaction by divesting 16% of the transaction at New York’s LaGuardia Airport and 33% of the transaction at Washington-National,” the carriers said in a joint statement.
“This could scuttle the deal,” said Henry Harteveldt, an analyst with Forester Research.
“It will be interesting to see if they can construct a deal by either swapping just some of the slots or by working out a compromise with the DOT,” Harteveldt said in an interview. “It’s also possible people could dig in their feet and there will be no deal, and the airlines get stuck with the status quo.”
Harteveldt said the next move could take at least a month as the U.S. waits out a 30-day public comment period.
Washington National is critical for US Airways to open secondary markets and potentially new routes to Tokyo and Sao Paulo, Brazil. It is also a profitable airport for the airline, unlike their operations at LaGuardia.
In August, US Airways said the deal could add $75 million to its annual results.
For Delta LaGuardia is critical for their strategy to tap more premium-paying corporate travelers. It already has a large presence at New York’s John F. Kennedy Airport, but from LaGuardia it can take on Continental, AMR Corp.’s American Airline and JetBlue Airways.
It will allow Delta to more than double its number of nonstop destinations and add more than a dozen new cities, potentially bringing in more than 2 million additional passengers annually.