Delta, US Airways may drop planned slot swap

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ATLANTA - The government says Delta Air Lines and US Airways can swap takeoff and landing slots at airports in New York and Washington, but there's a catch: They must sell some of the slots to protect competition.

The two airlines said in a joint statement Tuesday that if the order is implemented as proposed, they don't expect the deal to go forward.

"Both airlines will review the DOT's proposed rulemaking to determine our next steps," the statement said.

A slot is an interval of time during which an airline can takeoff or land its aircraft at an airport. A pair refers to cities airlines fly between. Slots, especially at peak times of day and in busy corridors like the Northeast, are valuable to airlines.

US Airways agreed in August to transfer 125 operating slot pairs to Delta at LaGuardia Airport in New York. In exchange, Delta agreed to transfer 42 operating slot pairs to US Airways at Reagan National Airport in Washington.

The Transportation Department said Tuesday it has tentatively allowed the transaction to proceed as long as the airlines sell some of their slot interests to carriers with no or limited service at the two airports.

The approval requires the airlines to sell 14 pairs of slot interests at National and 20 pairs at LaGuardia.

The deal could still find some resistance. A final decision won't be issued until after a 30-day public comment period.

Delta's general counsel wrote in a Jan. 29 letter than the airline has been told the Justice Department's antitrust division staff planned to recommend that the division challenge the proposed transaction.

The same week as the Delta-US Airways deal was announced, it was also disclosed that AirTran Airways, based in Orlando, Fla., planned to stop flying to and from Newark, N.J., and give its takeoff and landing slots there to Continental Airlines in exchange for Continental slots at LaGuardia and National airports.

Continental, based in Houston, has a hub at Newark Liberty International Airport, which is used by many travelers heading to or from New York City.

The flurry of slot swap transactions was prompted by the carriers' desire to serve destinations where they believe they can be more profitable than on routes where they have been cutting service.

Through the transactions, the airlines are seeking more bang for the buck in congested areas where slot access is limited and where they face increased competition from Southwest Airlines, which has a knack for bringing lower fares to new markets it serves.

Delta, based in Atlanta, had projected it would operate nearly 30 percent of the total available seat miles from the three main airports serving New York City, if the swap with US Airways went through as the two airlines wanted. Available seat miles measure an airline's capacity for carrying passengers. It equals the number of seats available multiplied by miles flown.

US Airways, based in Tempe, Ariz., wants to expand its service at Washington National, and obtain access from Delta to slots at airports in Tokyo and Sao Paulo, Brazil. The carrier has said it planned to reduce its Express flights at LaGuardia, while mainline and Shuttle flight levels would not be affected.

At LaGuardia, Delta's plan calls for building a connector between the adjacent Delta and US Airways main terminals and rebranding US Airways' existing main terminal gates, ticket counters and lounges to Delta standards. Delta Shuttle operations, currently housed in a separate terminal called the Marine Air Terminal, would be moved to Delta's consolidated main terminal. US Airways' Shuttle operations would move to the Marine Air Terminal. A fourth terminal currently houses gates from other airlines.

The slots DOT is requiring be divested would have to be sold to U.S. or Canadian carriers that have less than 5 percent of the total slot interest holdings at the two airports, do not codeshare on flights to or from the airports with any airline that has 5 percent or more slot interest holdings there, and are not subsidiaries of a company whose combined slot interest holdings are equal to or greater than 5 percent at National or LaGuardia.


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