Delta, US Airways seek slot review

When the Federal Aviation Administration put onerous conditions for allowing the LaGuardia/Washington National slot deal between Delta and US Airways, few could have predicted the market conditions would have changed so rapidly as to make the FAA decision seem ridiculous.

But market conditions have changed and Southwest, the government’s darling, now not only has growing access to New York with its acquisition of AirTran and is Newark slot deal resulting from the United/Continental merger, but it now also has slots at National.

Indeed, the environment is so changed, that Delta and US Airways, in the middle of a suit which questions FAA authority in setting the conditions it did, are asking regulators to re-evaluate its decision, citing the Southwest/AirTran merger.

The LaGuardia slots are key to Delta’s strategy to become New York’s number one carrier and the National slots that would have been gained by US Airways would strengthens its presence at the airport. Indeed, it would well be argued that the slot swap is even more critical now given the entrance of Southwest and JetBlue in the Washington National market and Southwest’s coming growth at LaGuardia.

Initially, FAA called for the two to give up slots to allow for more low-cost carriers to serve the airports. However, their six-way deal making slots available to JetBlue, Spirit, AirTran and Westjet, was crafted not only to deny Southwest more access but to gain more allies in their quest for FAA approval. However, FAA nixed the idea in favour of a blind auction. Delta and US Airways then filed suit questioning FAA’s authority.

See related report: Delta-US Airways slot swap approved, but FAA calls for blind sale

A US Airways spokesman told Bloomberg of the plans. Stifel Nicolaus analyst Hunter Keay suggested that, despite the change in market dynamics, they may have to cede more slots to Southwest. However, that would seem to be overkill given the size and power of the low-cost carrier as the largest domestic carrier should its plans to acquire AirTran come to fruition.

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