Delta and US Airways are hoping that the third time’s a charm by putting the long-proposed slot swap in New York and Washington back on the table with some slight modifications. This time, I have to believe that it’s going to go through. They wouldn’t bother putting this out there if it was going to fail once again.
Here’s the plan this time around:
US Airways no longer wants the Japan slots it had wanted before, mostly because there is now an open skies agreement between the two countries and it doesn’t need to buy them. It also will no longer give up its terminal location in LaGuardia as before. Delta will get a few more slots in the deal, and US Airways gets a bunch of cash. Here’s the full rundown depending upon where you live:
- Delta will give 42 slot pairs (1 slot pair = 1 departure + 1 arrival) to US Airways at National and US Airways will begin service to at least 15 new destinations. Back when US Airways first announced it would do this deal in 2009, it gave 15 new destinations it would serve, so I imagine it will be similar.
- Delta will continue to serve its 7 (!) domestic hubs from National – which I assume are New York/JFK, Atlanta, Memphis, Detroit, Minneapolis/St Paul, Cincinnati, and Salt Lake City along with the shuttle to LaGuardia and some “select” cities, whatever that means. Delta never gave us any inkling before, so we can only guess now.
- This is pure speculation, but I would assume that US Airways will acquire more gates on the middle pier at National which would allow United to move to some old Delta gates on the south pier to be right next to Continental.
- If needed, Delta will give an additional 8 slot pairs to be divested for use by airlines with limited or no service at National. US Airways would still end up with 42 new slot pairs regardless. I assume the feds will make this a requirement.
For New Yorkers
- Delta will get a whopping 132 new slot pairs (
up from the 125 in the first dealin the last deal, Delta would buy 125 but lease another 15 with the option to buy, so this is actually a decrease) at LaGuardia. We have no clue where they’ll go, but we can expect to see Delta replace US Airways on many of the airline’s current routes. Delta also says it will double the number of total destinations it serves, including some that aren’t currently served by US Airways.
- Delta will use an all-jet fleet at LaGuardia instead of the turboprops that US Airways currently uses. Wanna guess where those jets are coming from? My guess is the obvious. (*cough*Memphis*cough*Cincinnati*cough*)
- US Airways will give up 18 of the 20 gates in its terminal at LaGuardia (called Terminal C) to Delta. Delta will use those plus 11 in its current terminal (now Terminal D) for 29 in total. Delta will then build a connector between the two terminals so that it can operate as a single terminal from a passenger perspective. (They aren’t physically connected now.)
- Delta will continue to run the Shuttle from LaGuardia to Boston and Washington from six gates in the Marine Air Terminal, which is a change from the previous plan to consolidate in one place.
- US Airways will
still have two gates in LaGuardia’s Terminal C along with 7 other parking spots from where it will run its operationhave 6 gates once the terminal is reconfigured to add more spots plus 3 parking positions for regional jets. It will continue to have the Shuttle to Washington and Boston along with flights to Philly, Charlotte, and Pittsburgh but that’s it. The previous plan to keep Wilmington (who knows why) won’t happen.
- Delta will take over the current US Airways Club at LaGuardia in Terminal C and turn it into a Sky Club to complement the existing club in Terminal D. US Airways will build a new, smaller lounge for its operation.
- Delta (not US Airways) will give up 16 slot pairs at LaGuardia to new entrants if needed, and you can bet that will be the case.
On top of all this, US Airways will get a slot to fly to Sao Paulo in 2015, which is on top of another slot it already has acquired on its own. As mentioned above, the Tokyo slot that was previously included is gone since Japan and the US now have open skies. To make everything work out after these changes, Delta will drop $66.5 million into a US Airways bank account.
So why do I say this is a done deal? Because it has to be. US Airways and Delta had filed an appeal in the courts to force the feds to allow this to happen. As part of this new deal, the airlines are dropping the appeal. There has to have been a lot of backroom bargaining here. The feds must have given the green light behind the scenes or these airlines wouldn’t have bothered making another proposal. To me, the only question is who will get those divested slots and will the full amount be required.
As Delta and US Airways both make clear, things have changed a lot since the swap was first proposed nearly two years ago. Southwest has gone into LaGuardia on its own and its purchase of AirTran gives it more slots there as well as some at National for the first time. JetBlue has found its own way into National as well. So there is a lot more low cost airline penetration and connectivity to the rest of the country. It should be enough.
I’m actually surprised that Delta is willing to pony up 24 slots just to appease the feds here. But Delta has been foaming at the mouth around cementing its role in New York and this would be a huge step forward. It would also be a major slap at American. The new United and Delta will be the two biggest players in the New York area and American will have to figure out how it wants to respond, if it does at all.
I still like this swap a lot, and I think it should have been approved two years ago. Let’s hope that this is effectively a done deal at this point.
Updated 5/26 @ 1009a to reflect that I forgot about the previous deal to lease 15 slots to Delta at LaGuardia. Also received clarification from US Airways that the terminal will be reconfigured and it will still have 6 gates plus 3 parking positions at LaGuardia.
Any chance that Wilmington was on the old list because of political reasons? Any important Senate Committee members, Cabinet members, etc from Delaware that the airlines were trying to appease?
Just an idea. Would love to have been privy to all the horse trading on this one.
IIRC the Wilmington in the old list was the one in North Carolina (ILM). perhaps it was an homage to the halcyon days of Piedmont?
Yes, it was the one in NC and I imagine it was some sort of political thing. It always is, right?
I think ILM was probably an Air-21 thing. US was allocated a DCA slot exemption to serve (among other cities) Wilmington back in 2004. Air-21 slot exemptions are usually non-transferable… and, perhaps, Delta didn’t want it anyway?
very interesting but what’s Air-21? thanks in advance!
Air-21 is Public Law 106-181, which created new slot exemptions both within and beyond perimeter for DCA among other aviation law changes.
I hope US will choose a new set of 15 new destinations ex-DCA; I didn’t care too much for the earlier list.
You know, I think Wilmington is on there because it is a banking hub (smaller than Charlotte, but still there.) Plus you’ve also got a bunch of companies incorporated in Wilmington. Most of the business they need to do there can be done remotely, but I’m sure sometimes people have to show up.
I think you’re still talking about Wilmington, DE instead of Wilmington, NC…Wilmington DE doesn’t even have a commercial airport…you’ve got to drive to Philly.
Actually, Wilmington, DE does have a commercial airport but it just doesn’t have any commercial service today. Delta flew there up until 2007 but then gave up, and I believe that was the last airline in there.
Oops, you’re right. I was thinking of Wilmington, DE.
Intriguingly, I think, the more interesting ramification of said deal was at the end of your analysis…
“It would also be a major slap at American. The new United and Delta will be the two biggest players in the New York area and American will have to figure out how it wants to respond, if it does at all.”
I feel like there’s been a lot of actions/comments by Delta recently designed to kick AA while they’re down…
I wonder how much of this is Delta returning the favor to AA for running them out of DFW six years or so ago?
Absolutely none. There is no way this is unrelated and there’s no way Delta is doing this to spite American at all. This is a business decision.
i’m w/ cranky, just DO this already! even w/ DCA as my home airport and DL as my preferred airline (although not nearly as much as it used to be), this just makes too much sense to not do. new markets will be opened into DCA instead of having DL duplicating service on mid-tier cities like MSY, MCO, GSO, etc. perhaps US will upgauge existing flights to mainline service as well. obviously, pricing will obviously be but hopefully IAD and BWI act as regional buffers against too much price gouging on DCA monopoly routes.
•US Airways will give up 18 of the 20 gates in its terminal at LaGuardia (called Terminal C) to Delta. Delta will use those plus 11 in its current terminal (now Terminal D) for 29 in total. Delta will then build a connector between the two terminals so that it can operate as a single terminal from a passenger perspective. (They aren’t physically connected now.)
Cranky, Terminal C has 22 gates.
So I’m not intimately familiar with LGA, but that map and every other one I’ve seen shows gates going up to 22 but no 13 or 14. So there are 20 gates.
GOOD CALL. =)
There is a big discussion of A.net about the gate usage. There will be a total of 31 gates in the combined C-D terminal. What is not clear is whether the 29 gates that will be used by Delta includes the 6 gates at the Marine Air Terminal. 2 gates does not seem (to me) to be enough for the U.S. Shuttle plus the remaining U.S. op. I also hope Delta does a bit of remodeling on Terminal D. It could use it.
The 29 gates do not include the MAT. From the release:
“Delta will operate a total of 18 gates in Terminal C, and add one additional gate at Delta’s Terminal D, for a total of 29 gates in the two terminals.”
That leaves US Airways with only 2 actual gates but the airline says it will use 9 gates and parking positions, so it’s going to require some walking outside or buses, it would appear.
Just got clarification from US Airways on the gate issue. US will have 6 gates plus 3 parking positions for regional jets. Work will be done to reconfigure the existing gates so that the math works out.
Q. Where will we operate at LGA?
A. We’ll operate all of our flights at LGA from our existing terminal – Terminal C – rather than being split between the Marine Air Terminal and Terminal D as we originally proposed in 2009. We’ll operate out of nine gates in Terminal C: six gates with jetways and three other parking positions that can be easily accessed from the terminal. Our customers will also have access to a new 5,000-square-foot US Airways Club located near our gates in Terminal C.
It would also be a major slap at American. The new United and Delta will be the two biggest players in the New York area and American will have to figure out how it wants to respond, if it does at all.
at this point, JBLU might be in a better position to buy AMR!
JetBlue would be bankrupt in a heartbeat with AA’s cost structure. The current arrangement (or a full blown code share) is probably the best way forward for both carriers at this point. This slot swap puts American in a worse position from a market share perspective, but (and it’s a big but) the quality of its LGA network is far better than that of US Airways. US pointed out from the beginning that its LGA network was poor compared to the others at the airport; and its less than optimal network was part of the reason LGA is a marginal operation at best.
is it possible, USAirways is swapping these assets, in part, to force AA into merging with USAirways? Regain market share in the NYC area? Parker’s done nothing but try to merge off his airline for years now with UAL, multiple times, DL, hostile takeover, now AA?
what’s this make AA, number THREE in market share after all the mergers, DL/NW and UAL/CO and if approved, this asset swap in NYC?
just dawned on me that US should have negotiated to keep the entire marine air terminal and used it for all of its ops (shuttle, mainline and express, if any remains) and ceded all of its existing terminal to DL or the airport authority.
The MAT works for a shuttle operation but really doesn’t have enough room at the gates to accommodate a US’s entire operation. There is also a shortage of space for check-in and baggage claim.
The way it’s structured now means less moving around for both parties.
What I find intriguing is that Delta is potentially willing to give up all of the slots needed to make this new agreement work (as US Airway’s SEC filing apparently indicates). If I remember correctly, US was going to have to give up 14 slot pairs (1/3rd of the 42) at DCA to make the original plan fly (pun intended, sorry). Not only is US not giving up any slots at DCA (although it’s giving up 7 more at LGA … ) but it’s getting a cool $66.5 million in cash. Is Tokyo worth that much?
I saw a post (by a Brazilian contributor) on a.net that one doesn’t buy or sell slots at GRU, but route authorities (I’m not sure about this, but found it interesting). I also note that the GRU authority doesn’t kick in until 2015 (about the time the United lease expires, although the press release mentions additional service). It should be interesting to see what happens by then, especially if there’s a US / AA merger in the meantime (but that’s getting way ahead of myself and speculating way too much). I’m probably well advised to leave things where they are.
Yep, that’s right. You buy authorities. US Airways already has an authority for Sao Paulo that it got from United but it has yet to negotiate acceptable slot times. This also happens in China, and its why American delayed its Beijing flight – it couldn’t get good slot times when it first received the authority.
I still find it interesting that Delta is the only carrier giving up slots. That notwithstanding, the deal makes a lot of sense.
American Buying JetBlue? HAHAHAHAHAHAHAHAHAHAHA!
More like American buying US Airways. If that happens you can say goodbye to Philadelphia & Phoenix as viable hubs as Dallas Fort Worth & JFK are nearby. Charlotte has a chance to survive being a finantial center, although it’s a short hop to Miami.
JetBlue could come out a head with such a tie up.
American buying US Airways would do absolutely nothing for its presence in New York. Also, you do realize that Dallas and Phoenix are further from each other than Atlanta and New York, right?
It also probably fouls up US Airways’s cost structure. I’m not sure, but I’d make a small bet that much of US Airways’s routes wouldn’t be profitable at AA’s cost structure.
CF, Your point is even more relevant since US is giving up market share to do this deal. Bigger isn’t always better. US Airways’ current position in LGA is evidence of that. Maybe quality will prove to be better than quantity?
Written by DesertGhost on May 26, 2011. Your point is even more relevant since US is giving up market share to do this deal
but, that’s just it, it’s giving up market share to place pressure on AA to maintain/regain marketshare in NYC, plus reduce any regulatory issues with a merger of these two carriers in NY.
Absolutely nothing for it’s presence in NY? Owning the shuttle would be beneficial, it’s the closest airport to the financial capital of the world.
US will continue operating its shuttle.
Love the graphics!
… especially the Pete Rose baseball card. Maybe it’s worth $66.5 million.
Where will they be located? The newer western pier where us express operates or the eastern pier where the us shuttle operates today? Where will the parking spaces be? Having trouble figuring out where they will add the 4 additional gates (since US says they will have 6 gates, not the 2 left over after Delta takes 18).
I don’t have that information, but US Airways did say that it will have 6 gates and 3 parking stands. How everything else falls out is up to Delta.
6 total, including MAT, or 6 remaining in their current terminal?
As has been stated above, US Airways will not go to the MAT. US Airways will have 6 gates in Terminal C along with 3 parking spots.
sorry, i missed frank’s reply above previously. so now i am wondering what DL will do w/ the whole MAT!!!
Where is DL getting $66.5 million from, aren’t the airlines always saying how they don’t make money.
Obviously, they believe the $66.5M investment will pay off with greater returns. In New York, it’s hard NOT to make money.
Well US isn’t making much money in LGA which is why they want this swap… And with costs especially fuel as high as they are, as well as competition driving fares down somewhat, it actually is somewhat hard to make money.
$66.5 million is a drop in the bucket for a company that generates more than $30 BILLION in revenue each year.
I find the exclusion of Narita from this deal (or, more precisely, the reason cited for it) to be curious. At issue are slots at NRT — not government route authorities. Open Skies has nothing to do with slots at NRT. Sure, NRT may make more slots available in general as the airport continues to expand, but obtaining them will still carry a cost — so indeed there is less value to US Airways in the latest proposal than if NRT were still included. The filing certainly implies that NRT slots are now irrelevant, which is not at all the case.
I don’t believe we are talking slots, actually. I believe it was always route authorities, and I’m just being a little loose with the terminology.
Well, if route authorities are bought and sold, could the slots be kept as well? (US has the same arrival/departure times as the last DL flight to use that slot) Or would US have to go through with reapplying for slot times?
I don’t believe so, but I’m not as familiar with the Brazil market. Slots are usually decoupled from the route authorities, but maybe someone else with better info on Brazil can answer.
This is interesting, but I’m wondering how much “competition” these low-cost carriers actually provide at a slot-controlled airport. US Airways is going to have far more slots at Reagan National than the LCCs, and since the airport is slot-controlled, this situation is locked in. So how much downward pressure on prices can the LCCs exert with the few cities they can serve from the few slots they have?
as a frequent DC flyer, IAD and BWI service applies fairly significant pressure on pricing at DCA. rarely do i pay more than $50-60 more at DCA per r/t than i would for similar itineraries at WN-dominated BWI or UA-dominated IAD. for me, that’s $50-60 VERY well spent!
AA has shuffled RJ’s around LGA with no clear strategy, US has preferred to operate a zillion daily PHLLGA’s to anything else out of LGA, and B6 and WN are moving in fast and furious to LGA and NYC. How is this DL strategy going to work??
JetBlue and Southwest aren’t moving in fast and furious because the airport is slot-controlled. If they want to continue to grow, they’ll need to find more slots, and that won’t be simple. For Delta, it’s an attempt to really provide better flight options for New Yorkers. It will have much more success than US Airways and its orphan operation at the airport. Delta already has great breadth in order to appeal to the corporate market, but getting the edge at LaGuardia will help further. It makes a lot of sense to me.
They’re restricted by slots but they’ve only just started serving NYC (ISP does not count) and it will remain a focus. WN just picked up around 20 daily departures with FL, plus they have WN pricing via one+ stops. I think this DL LGA strategy will look a bit like their RDU/LAX RJ strategy. They’ll upgrade everything US flew to RJs/mainline and then some, and then you’ll be able to hit a stopwatch to see how long it takes before it’s downgraded or dropped.
Southwest buying JetBlue would make a whole lot more sense. Besides ATL it would give them a big presence in BOS/NYC/WAS. I don’t think WN is done shopping yet.
Cranky, DL started DCA-STL service (which duplicates AA service), and I don’t see that as being acquired by US in your table. So perhaps that is one of the “selected” other cities that will retain DL service to DCA.
The slots that are being acquired are not airport-specific, so it will really be up to Delta to decide where it wants to serve. I happen to agree with you on this that St Louis might be just the type of place that Delta decides to keep serving since it has tried to build up a minor service increase there to take advantage of American’s shrinkage.
Shrinkage? I heard American was in the pool!
great! just imagine how many employees will be displaced and out of work!