In the first part of this story, I wrote about the renewed effort to try and kill the perimeter rule (or at least add more beyond perimeter exemptions) which restricts flying from Washington’s National Airport (DCA) to 1,250 miles (with a few exceptions). Today, I want to talk about which airlines should fall on which side of this argument. You’ll quickly see why this is a thorny issue.
Sometimes it’s easy to know what an airline will want. Delta is the perfect example, and not just because it’s already supporting the repeal effort. There is nothing for Delta to lose here with the exception of there potentially being more competition on its single daily LAX flight. That barely counts as a negative. There is so much for Delta to gain.
But what about the rest? Well, let’s start with a look at the share of departures at the airport and then we’ll work our way down the list from biggest to smallest (except Delta which was already covered).
Washington/National May 2023 Departure Share
American Airlines – Kill The Perimeter (Or Maybe Not) But Don’t Add More Slots
American is the 800-pound gorilla at National with more than half of all slots and nearly 60 percent of daily departures. Just by having all those slots, American could be considered a winner because it has the greatest ability to redirect existing slots to beyond-perimeter markets if the rule were to fall. But this is far more complicated than that.
Yes, it would enable American to serve large airports for which it has no exemptions today, like maybe Austin, Denver, Seattle, and San Francisco. If you think of DCA as a hub, then American would want to serve the biggest markets that matter. Today it can’t do that beyond the perimeter other than Las Vegas, Los Angeles, and Phoenix.
There are downsides here, however. First, the obvious one is that Delta is looking to improve its situation at DCA, and that should be a red flag for American. It will mean more competition for the airline in LA at the very least. Other airlines could also invade American’s markets,especially if new slots are created.
Beyond this, if American were free to reallocate its aircraft to the most profitable markets, it would end up burning some bridges along the way. Every single flight from DCA has a politician who considers it to the most important flight in the world.
Would it be a better use of an airplane to fly an American 737 to Austin instead of a CRJ-700 to Tallahassee? No question. But that Florida delegation wouldn’t be too happy about seeing that slot repurposed. The political minefield would be a nightmare, and that’s another reason why American would want to tread carefully here.
Southwest – Keep the Perimeter (With Some Indifference) But Do Add More Slots
Southwest is a relative newcomer to DCA, but it has really taken advantage of all those merger-related slot divestitures to become the third largest carrier there. Today, Southwest has one exemption market, and that’s Austin. I’m sure it likes having the nonstop monopoly in that market and would love to see it remain a monopoly. At the same time, it has a huge hub in Baltimore, and it probably prefers — all else being equal — there being less competition on those routes from DCA thanks to the perimeter rule. But does that really matter? Probably not.
On the other hand, might it want to stretch those legs and fly to Denver from DCA? Sure it would. Maybe you’d throw Phoenix and Vegas in there as well, but those longer hauls aren’t really Southwest’s bread and butter anyway. Still, having one flight to each seems entirely reasonable.
Really, however, above all else what Southwest wants is more slots, so just killing the perimeter rule isn’t helpful. Without additional slots, this becomes far less interesting to Southwest. I would think that Southwest would be happy letting others fight this out while it looks for any angle it can find to grab more slots at the airport.
United – Keep the Perimeter (With a Side of Desperation) and Don’t Add More Slots
If there’s any airline that stands to lose big in this whole thing, it’s United. United’s hub at Dulles has done better than many give it credit for over the years, but there’s little question that it would do a whole lot worse if DCA flights could be sent to LA, San Francisco, and elsewhere beyond the perimeter without restriction.
Yes, United can still make it work, especially on the back of the large international gateway since that won’t exist at DCA no matter what. And yes, United has taken advantage of the growth out toward Dulles to be able to create a more sustainable operation even if the perimeter goes. But in the end, there is nothing to gain for United if this rule is gone. It already flies once a day to both Denver and San Francisco using exemptions. Sure, it could fly more with no perimeter or with additional exemptions, but so could other airlines. The potential gain is very minor compared to the potential loss.
While we’re at it, I’d throw Air Canada into this bucket. Not that anyone cares what Air Canada has to say in this fight, but Air Canada must know that and will presumably be happy to back up its good friend and joint venture partner United.
JetBlue – I Have No Idea
On the one hand, you have JetBlue trying to be a business airline, partnering with American. In that relationship, I have to assume JetBlue would gladly support American’s position.
On the other hand, the feds absolutely hate American and JetBlue’s partnering with it. The feds also hate JetBlue buying Spirit. If JetBlue were to support the same position that American takes, it would be another red flag in the ongoing quest by the feds to kill consolidation and partnering efforts.
JetBlue has little to gain with the perimeter going away. Today it has one beyond perimeter exemption going to San Juan, but most of the rest of its flying goes to Florida leisure destinations. (Yes, it also flies to rich people islands in the summer — Nantucket and Martha’s Vineyard — along with ample Boston service which is part of its American deal.)
If the perimeter goes away, does it really want to reallocate those airplanes to the West. If it decides to put its Spirit hat on, JetBlue can challenge the big guys on transcons and bring lower fares with its Mint product. But this is not part of the alliance with American, so it would then go into direct competition on a route that would make partner American very angry.
On the other hand, additional exemptions would certainly interest JetBlue, but the airline is on the feds’ shitlist right now, so I can’t imagine it would benefit much anyway.
Lots of twists and turns here, so what should JetBlue do? It should just keep its mouth shut and let this play out.
Alaska – Keep the Perimeter And Don’t Add More Slots
Alaska only flies beyond the perimeter today using exemptions to reach its home markets. It has 2x daily to Seattle and 1x each to LA, Portland, and SFO. Might it like more in those markets? Sure, so more exemptions wouldn’t be bad… except that it would undoubtedly face more competition from other airlines in its existing markets. It’s way better off having the perimeter stay in place with the same number of slots so that it doesn’t have to face nonstop competition on any of those routes (except LA where others have the exemption today).
Frontier – Keep the Perimeter But Do Add More Slots
What I said for Alaska goes for Frontier in one sense. It has 3x daily flights, all of them going to Denver. Does it want more competition in Denver? No. Is it happy minting money on those flights? Yes. It sees no benefit from the removal of the perimeter, only pain, without more slots. But if there are additional slots created, well, then Frontier would certainly like to get in there I’m sure.
How strongly every airline feels about this remains to be seen. We obviously have Delta feeling very strongly about removing the perimeter/adding exemptions since they’ve publicly joined the fight. And United feels very strongly about keeping it. This is a political landmine that has even divided Congress in odd ways. The senators in both Maryland and Virginia — states that don’t need their senators to fly home but do have constituents impacted by noise — are strongly against this move. Others will be in favor. This isn’t a party-line issue.
In the end, this is all probably just a silly exercise anyway. Getting this done requires Congress to put it in the FAA reauthorization bill. The FAA has no head as of today, and the chances of an FAA reauthorization happening anytime soon are slim. There are far bigger issues that need to be dealt with today, and this is a distraction at best. But hey, can’t blame Delta and friends for trying.
