There’s nothing I like more than ripping apart the Department of Transportation (DOT) for its poor rule-making abilities, but every so often, the department does something right. We might as well celebrate on the rare occasion when that happens. Yesterday was one of those days as the DOT doled out slots at Washington’s National Airport.

The DOT had four slot pairs to give away at National as part of the recent Federal Aviation Administration (FAA) reauthorization. As a quick refresher, National has a rule that prevents any flights longer than 1,250 miles from operating at the close-in airport. About a decade ago, Congress started allowing exemptions, primarily so Congressmen could fly nonstop to get to their home district (my interpretation, at least).

As part of the reauthorization bill this year, eight more slot pairs (one takeoff and one landing) were added to the pool. Four of them were meant for the big incumbent airlines at the airport. These airlines could convert one normal slot to one long haul. Here’s what they did.

• American will start a daily flight to its Los Angeles “cornerstone”
• Delta will add a second daily flight to its Salt Lake hub
• United will start a daily flight to its San Francisco hub
• US Airways will start a daily flight to San Diego

With the stage set, there were four more to give away either to new entrants or limited incumbents. There was a lot of competition for these, so the results weren’t easy to predict. Let’s start with the losers.

• Air Canada wanted to fly to Vancouver, but it’s a small, highly seasonal market.
• Alaska wanted to fly to San Diego, but that was its second choice. Once US Airways announced it would fly the route, this became a tough sell.
• Frontier wanted to fly to Colorado Springs, but that’s a very small market and would have been hard to justify.
• JetBlue wanted to fly to Austin, but that was also a second choice and Southwest put that up as its first choice.
• Sun Country wanted to fly to Vegas, but there are already a lot of flights in that market and Sun Country couldn’t connect people anywhere from there either.

Each of those had a big flaw, especially when compared to the four that seemed to deserve the flights far more. Incredibly, those four are actually the ones that won. Here they are.

• Alaska gets one daily flight to Portland. Portland is the airline’s second hub and has a decent-sized local market. Alaska will not only bring good service to the locals, which are largely loyal to Alaska, but it also adds good connecting options for a lot of small cities. This one seemed like the most obvious winner to me.
• JetBlue gets one daily flight down to San Juan. This one is a great move since JetBlue has been building up its presence in San Juan. This gives nonstop service to a place that will benefit from it, and it also opens up new connecting opportunities into the rest of the Caribbean. I like this route and how it fits into JetBlue’s strategy quite nicely.
• Southwest gets one daily flight to Austin. Nobody flies to Austin from National today and if anyone can serve it well, it’s Southwest. That’s why Southwest was obvious for this route while JetBlue was a longshot. It’s no surprise that Southwest won this.
• Virgin America gets one daily flight to San Francisco. Even though San Francisco will already get its first nonstop to National from United, that certainly won’t be a low fare service. Besides, Virgin America was the only applicant with no service to National, so you had to figure that the airline would get a foot in the door. The airline actually wanted two pairs, but the DOT rightfully shot that down and spread the wealth. This market should do well.

So, for once, I’ll say “good work, DOT.” Something tells me this praise won’t last very long.

If you’d like, you can read the full decision at regulations.gov.

Ok, Bill from DC, this one is for you. Let’s talk new flights at Washington/National airport. There is a lot going on these days.

• American will use an exemption to fly from National to LA
• Delta will use an exemption to add a 2nd daily flight from National to Salt Lake
• United will use an exemption to start National to San Francisco
• Virgin America wants to use an exemption to also do National to San Francisco
• Southwest has applied for a different slot to fly to Oklahoma City (and then on to Dallas)
• Frontier wants that same slot to fly to Louisville
• US Airways wants to keep that slot flying to Jackson, MS

If you really want to keep up on this, follow Dan Webb over at Things in the Sky. But for now, let’s get talking. What will US Airways do with its slot exemption? Who will get the four beyond perimeter slots for new entrants? Will Sarah find out that her husband has been cheating on her with her sister? Tune in next time on Slots of our Lives.

It’s really interesting to watch US Airways as it starts to announce how it’s going to use its newly acquired slots at Washington’s National Airport. While Delta made a huge splash in New York with its hub-creation at LaGuardia after it got the US Airways slots there, US Airways has gone with a softer launch with the Delta slots it acquired at National. That’s quite fitting.

Unlike Delta, US Airways is going with a phased introduction of new flights. Of the 42 slot pairs that it’s getting from Delta, it looks like it’s only announcing what will happen with 26 of them. I’m told by the airline that more will be announced in February. Meanwhile, Delta has already shown which flights will be getting the axe, so we have a pretty good picture of what’s happening. Here it is.

Now, I pulled all this up by hand, so there could be a couple of issues with the number of frequencies in some of these markets, but you get the idea. I’ve highlighted the most interesting ones to me in green.

As expected, Delta is pulling out of every market save for its hubs with one little exception. Want to guess which one that is? It’s Lexington, Kentucky, where it appears Delta will continue to have 1 daily flight on a CRJ. Why? I have no clue. Maybe there’s something special about that particular slot which will keep Delta serving that market, or maybe it was just an oversight and will be removed shortly. Regardless, other than that, there are no other non-hub flights for Delta.

That includes the ditching of all flights between Boston and Washington/National, a market which has probably suffered greatly with JetBlue in there. There’s plenty of room for US Airways and JetBlue in there, but it was probably a little too crowded with Delta anyway. There’s also a noticeable reduction in flights to JFK. I assume that’s because Delta is really trying to shift domestic flying over to LaGuardia. It doesn’t need as many flights to JFK anymore.

But let’s get to the meat of this story. What is US Airways doing? It is not following Delta by ramping up service in larger markets. Instead, it’s really serving some of the little guys out there. Look for flights to Fayetteville and Jacksonville . . . North Carolina. There will also be service to Ft Walton Beach, Pensacola, and Tallahassee in Florida. These are cities that have been begging for service to the nation’s capital and now they’re getting it. I imagine a lot of this is actually military traffic, come to think of it.

The upshot here is that US Airways is really bringing some great new service to smaller cities, a rarity today. That does mean that some of the cities Delta abandons will truly suffer. Des Moines and Jackson (MS) are the big losers here; they lose their only nonstop to National when Delta pulls out. Unless US Airways adds them in the next round of flights announcements, they’re out of luck.

Mid-sized cities Charleston (SC), Columbus (OH), Jacksonville (FL), New Orleans, Providence, and Tampa will all keep the US Airways service they have today, but they won’t get more flights. They will, however, be losing Delta as nonstop competition. That’s bound to impact fares to some extent. Grand Rapids and Madison are losing Delta as well, but they have new service from Frontier coming in just in time. That actually might turn out to do alright.

It’s funny to see big cities like Miami lose Delta service but not get US Airways in return. That’s probably a smart move on the part of US Airways. The airline doesn’t want to serve every big city from National. It wants to serve every city it can serve profitably. The high costs and massive frequency and loyalty advantage held by American in Miami probably make it worth avoiding.

But what will the next round of adds bring for US Airways? Great question. I would assume that the airline wanted to add the routes it thought had the most potential first, but there could be more in the next round that will surprise. Maybe we’ll even see some summer seasonal stuff, I don’t know. Either way, it seems to be a very methodical process for the airline, somewhat different from Delta in New York.

With Delta, it seems like it has an idea about which cities need to be served from New York in order to “win” the town. The airline made the flashy announcement so it could make its mark. For US Airways, however, it’s really a market-by-market decision based on viability, with no effort to “win” a city. Not quite as flashy, but it gives great insight into the amount of demand to different cities from Washington.

I look forward to seeing what’s next.

Remember that whole Delta/US Airways slot swap deal? US Airways gave most of its slots at New York’s La Guardia airport to Delta in exchange for most of Delta’s slots at Washington’s National Airport along with a couple of other considerations. As part of that, Delta had to put 24 slot pairs up to auction for new entrants. That happened last week, and now, we know the winners . . . sort of.

At La Guardia, there were two bundles of 8 slot pairs being auctioned off. That means that two airlines will get the right to operate 8 takeoffs and 8 landings per day at good times. The bidders had to be either new entrants or airlines with very small presences at the airport already. One of the winners has been officially announced . . . WestJet.

That’s right. Those crazy Canucks are swooping in to fly 8 daily trips to La Guardia. It’s not a surprise that WestJet was interested. The rumors were that WestJet’s proposed partnership with Southwest ended over something closely related to La Guardia. See, WestJet wanted to be able to partner with multiple airlines in order to help feed its network. This was important at La Guardia, where Southwest couldn’t add much. Southwest supposedly didn’t want to see WestJet partner with anyone else. The partnership ended so that WestJet would be free to pursue a life of religious fulfillment, er, um, multiple partnerships.

Earlier this year, Delta launched an interline partnership with WestJet. I imagine we might see it get a little cozier now that Delta will have so many flights that could feed WestJet. Someone is going to need to fill those 8 flights, most if not all of which are undoubtedly bound for Toronto.

But what about the other eight? That’s a bit more of a mystery. Though it hasn’t officially been announced, Bloomberg reports that JetBlue won that bid. It also is said to have picked up the 8 slot pairs down at Washington/National as well. That’s a big win for the Blue Crew.

JetBlue’s interest should be no surprise. It already runs just shy of a dozen daily flights out of La Guardia to Ft Lauderdale, Orlando, and West Palm Beach. At National, it has nine with flights to Boston, Ft Lauderdale, and Orlando. This will help the airline expand its reach at those airports with a nice chunk of new slots.

So is anything surprising about this whole thing? You bet. The most surprising thing is that Southwest didn’t win anything. It has a gajillion* dollars in the bank (*rough estimate) and certainly could have outbid anyone if it wanted. It has made serving big cities a priority lately as a way to get its customers wherever they need to go in the US.

Southwest fought its way into La Guardia when it got 8 slot pairs there to start flights to Baltimore and Chicago. It gained more when it acquired AirTran, which has about 20 slot pairs. It acquired its first beachhead at National with AirTran’s 12 slots there. So you would think it would have been hungry for more, and in fact, it has expressed great interest in the past. It just somehow got outbid this time.

So, Southwest fans won’t be thrilled, but JetBlue lovers should be. There will be more JetBlue flights coming soon, assuming the deal gets done. And Canadians can rejoice that they will have another option to get to New York.

Now we just have to wait for all the “i’s” to be dotted and “t’s” crossed. Oh yeah, and we’re still waiting for final governmental approval in a couple areas. But things are starting to shape up nicely.

If you want to follow this closely, head on over to Things in the Sky. Dan Webb is keeping a close eye on this.

[Original photo via Flickr user Bob n Renee/CC 2.0]

After years of back and forth, the Department of Transportation has finally decided to do the right thing and let US Airways trade a host of slots at New York’s La Guardia for a bunch of Delta’s slots at Washington National Airport. This swap is not a simple transaction. There are a lot of logistics behind it, and it took major creativity and commitment from both parties to make something like this work. Hopefully American is taking notice. And I say that not because Delta has made a move that will once again hurt American in New York, but rather because American needs to get off its butt and start doing some bold things like this to fix its business.

After last week’s post on American’s decision to order 460 new airplanes, I had some great offline conversations with people about it. I still stand by my belief that it was a good move. I have no doubt American beat up the manufacturers to get a great deal, and it will certainly help to lower operating costs when the airplanes start coming in, probably at little to no additional cost to American. But that doesn’t mean that American’s problems are solved. If American thinks this is the solution, and I really can’t imagine that’s the case, then the airline is screwed. This doesn’t touch American’s revenue problems at all.

The news that Delta and US Airways received approval of the slot swap provids a great contrast between Delta/US Airways and American. Delta and US Airways have been very proactive at doing the right thing and improving their respective businesses. For US Airways, it’s been all about focusing the business on reliability, convenience, and appearance while re-forming the route network to fit its strengths. US Airways shut down the money-losing Vegas operation. It got rid of all the non-hub flying on the east coast that was a drain. It cleaned up its airplanes, and focused on on time performance. And now, it’s ditched its turboprop-based hub at La Guardia in favor of strengthening its position at Washington’s National Airport where it’s a much stronger player and can draw better revenue.

For Delta, the change has been no less significant. It has pulled down flying at minor hubs like Cincinnati and more recently Memphis. It’s parking smaller airplanes and cutting service to small cities that simply aren’t profitable. The airline built up a more comprehensive premium product and has worked on setting product standards from its 70 seaters on up. It has positioned itself as a technology leader in a variety of ways, and it has worked hard to improve the airport experience. Now, it can trade its Washington position in order to strengthen its already strong capabilities in New York.

For both US Airways and Delta, this is yet another effort to play to their strengths, and it’s going to provide a great deal of benefit to both. Let’s contrast that with American.

Instead of doing hard work on its own, American is relying on partners to fix its problems. It has put its eggs in the joint venture basket – saying that its partnerships with British Airways/Iberia as well as with Japan Air Lines will spike revenues. It’s built up a partnership with JetBlue to feed its flights in New York and Boston. That’s nice, but it doesn’t fix the structural problems. It’s just a patch.

If you didn’t see the investor report issued by Bob McAdoo back in May, then you missed out on a scathing review. Bob noted some very simple things, like the fact that American’s 10 worst routes lose about $450 million a year, more now that oil has spiked. He uses Chicago to London as an example. American gets a much lower fare than United but it flies larger airplanes and has more frequencies. The same goes from JFK to LA and San Francisco. The average fare to LA has dropped over $100 since 2000 but the level of service stays the same, losing money all along the way.

Instead of addressing these big problems, American pokes around the edges. Sure, it made some moves, like slowly killing the San Juan hub, and cutting some vestigial flying, but it’s been mostly minor changes. It stops flying routes like San Francisco to Honolulu and starts flying to Helsinki and calls that a strategy. (This week, it’s building up Ft Lauderdale a little. Woohoo.) It has its cornerstone strategy of focusing on LA, Dallas, Chicago, New York, and Miami. That’s fine. But instead of just culling service around those cities, it seems the problem is how American serves those cities in the first place, at least that’s what the McAdoo report makes very clear. Then there’s New York. Delta has made huge strides in New York, and it will now have a ton of new service from La Guardia to offer up to its corporate clients. American stands still.

It’s not just the route network but the onboard product as well. The most glaring deficiency is that American is the only long haul domestic airline without a plan for flat beds in business class. It rolled out its substandard business class about the time United went fully flat, so it was obsolete from the start, and nothing has changed. Even US Airways has been actively rolling out flat beds.

Even when American has been a leader, it’s quickly fallen behind. It was an early adopter of gogo inflight internet, but it only put it on a limited portion of the fleet. While Delta put it everywhere, American stuttered and is only now catching up. Hopefully some of its more forward-thinking moves, like working on streaming video with gogo will actually go past the testing stage and give the airline a leadership position in . . . something.

I’m sure many of you will say a merger is the answer, but it’s most definitely not. American’s costs are higher than any potential merger partner, so it would effectively kill an airline that works well today on its own. The math becomes 1+1=0.5 if they were to do an ill-advised combo. So the weight falls squarely on American to do the hard work. It has spent a lot of time raising cash, but it keeps losing money while others profit. Instead of slowly bleeding cash, American needs to invest that money into fixing its problems.

The airline might want to take a hint from its partner Qantas, which is about to make some major changes on August 24 in order to get its house in order. Will these be popular? Not all, but that’s not the point. The point is turning the business around at all costs.

Get bold, American. Do something to get those revenues jumping.