The great US Airways/Delta slot swap is back in the news, and the airlines are now willing to offer some concessions to the DOT to get the deal approved. These aren’t nearly what the DOT was asking for, but we’ll see if they’re in a bargaining mood or not. Here’s how it now works.
We all remember the original deal, right? US Airways would give Delta 125 slot pairs at LaGuardia in exchange for 42 slot pairs at Washington/National along with route authorities to fly to Sao Paulo and Tokyo from other cities in the system. And yes, I believe Delta is still demanding that Pete Rose rookie card as well. The DOT came back and said that the deal was only going to fly if they divested 14 slot pairs in Washington and 20 in New York. Now the airlines have come back with their own response.
Once this deal is done, US Airways says it will sell 5 slot pairs in Washington to JetBlue. Delta will sell 15 slot pairs in New York, 5 each to Spirit, WestJet, and AirTran. That’s obviously not exactly what the DOT was looking for here.
The DOT’s biggest concerns were in Washington, and US Airways isn’t even getting close to what the DOT wants there. I have a feeling New York is a non-issue here. That divestiture seems like it should be enough. But Washington is a tough one. Meanwhile, Southwest is making some serious noise about the deal demanding that even more be given up. (Translation: “We want in”)
Why would US Airways and Delta agree to give these up? Well the deal will be beneficial for both. Apparently, it will be beneficial enough that it’s worth forfeiting a handful of slots. Besides, they’re able to pick and choose who gets the slots, so the sale can do the least harm to them.
WestJet is a no-brainer for New York. They can only fly north of the border, keeping them out of Delta’s hair for the most part. Spirit being the ultra low cost carrier that it is, is probably less of a competitive threat than some others out there. It’s hilarious to see AirTran in the mix since they have been a giant thorn in Delta’s side for years. But Airtran may very likely have been the best option left under the DOT’s rules that it goes to someone with a very small or non-existent presence at the airport. In DC, JetBlue is probably a smart move as well. Maybe some flights to New York or Boston? They wouldn’t be able to offer many flights so the impact would be limited.
The key is that no airline gets more than 5 slots, so there’s not a ton they can do to make a massive impact from a competitive standpoint. I also fully expect to see these flights go in markets that already have plenty of competition, but if it satisfies the DOT, then it’s probably a relatively small price to pay.
I just have to wonder if this will satisfy the DOT. It’s a significant cut compared what they had proposed originally, but you would hope they’ll be open to negotiation. This seems like the final offer to me. Either it goes through or the deal blows up.