US/DL ask DOT to review Slot swap again

[smoot4208]

My link


The other thread turned into a WN/US at CLT so I started a new relevant thread...

Basically is says that since the Feb ruling:

-AA/B6 traded slots
-UA/CO gave slots to WN at EWR
-WN/FL merger (WN will gain access to DCA)

I think they have a good chance at getting this approved in light of all of this

 

[FWAAA]

My link


The other thread turned into a WN/US at CLT so I started a new relevant thread...

Basically is says that since the Feb ruling:

-AA/B6 traded slots
-UA/CO gave slots to WN at EWR
-WN/FL merger (WN will gain access to DCA)

I think they have a good chance at getting this approved in light of all of this

None of the items listed affects the increased market concentration at LGA and DCA that DL and US want to accomplish thru their slot swap, so I disagree - I don't think the feds will alter their earlier decision. DL already controls a lot of LGA slots and wants more (from US). US is already dominant at DCA and wants to increase that dominance - thru the acquisition of more slots from DL. WN getting access to EWR or buying FL (and gaining its LGA/DCA slots) doesn't change the anticompetitive results of the DL/US deal. That AA and B6 traded some DCA slots for some JFK slots has nothing to do with the competitive position of DL and US at LGA and DCA.

Sorry, but James Olson doesn't sound terribly convincing.

 

[RowUnderDCA]

But if DL/US propose to go forward with their compromise position: some other carriers get new entrant slots, then DOT gets WN AND other new players. Wouldn't that be appealing?

 

[BoeingBoy]

Wouldn't that be appealing?

Speaking of appealing, wouldn't getting the most money possible for slots that have to be divested appeal to DL and US? Why would they not want that? Could they possibly have an ulterior motive?

I can possibly see the DOT relaxing it's requirements on who can get the divested slots, but I can't see it ignoring the concentration of slots in one carrier's possession issue.

Jim

 

[Airline Employee]

None of the items listed affects the increased market concentration at LGA and DCA that DL and US want to accomplish thru their slot swap, so I disagree - I don't think the feds will alter their earlier decision. DL already controls a lot of LGA slots and wants more (from US). US is already dominant at DCA and wants to increase that dominance - thru the acquisition of more slots from DL. WN getting access to EWR or buying FL (and gaining its LGA/DCA slots) doesn't change the anticompetitive results of the DL/US deal. That AA and B6 traded some DCA slots for some JFK slots has nothing to do with the competitive position of DL and US at LGA and DCA.

Sorry, but James Olson doesn't sound terribly convincing.

He doesn't sound too convincing if you work for SWA like you do. But too much has changed and SWA has proved that if they want slot that they can buy them. And since the DOJ allowed CO to lease slots while forcing US & DL to completely divest them seems way beyond the scope of what a government agency should be doing.
And BoeingBoy, US/DL cannot sell the slots to the highest bidder. They weren't allowed to sell to AC, AA, CO or UA. The divested slots couldln't be sold, bought or leased, so how much valued did those slots lose under those rules written in order to give SWA a bunch of slots? If SWA wants slots just tell to buy them on the open market. SWA & FL will have 28 flights with 27 slots so they won't have any leg to stand on to say that they "want more".
SWA will eliminate a competitor in BWI while reaping an almost 80% market share. They couldn't ask with a straight face for more slots at DCA. SWA is increasing their already dominant position at TPA, MCO, BWI & MDW while eliminating a competitor and that should not be allowed weather or not there are slots at those airports.

 

[FWAAA]

He doesn't sound too convincing if you work for SWA like you do. But too much has changed and SWA has proved that if they want slot that they can buy them. And since the DOJ allowed CO to lease slots while forcing US & DL to completely divest them seems way beyond the scope of what a government agency should be doing.

I don't work for WN. I don't work for any airline.

You're not thinking about it from an antitrust law perspective - but I am. The antitrust harm in the proposed DL/US deal is the increased market concentration of DL and US at LGA and DCA, respectively. The feds proposed a remedy and DL and US should have accepted it in a heartbeat. Instead, they arrogantly rejected the feds' position and devised a scheme to divest fewer slots and in such a way as to attempt to prevent WN from getting them. The feds rightly rejected the alternative remedy. Of course slots can be bought and sold - but the Clayton Act prohibits mergers and asset acquisitions where the feds believe the acquirer is gaining too much market power. That WN might convince others to part with their slots at DCA and LGA doesn't change the fact that the feds have determined that DL and US want to exercise too much market power.

The rest of your arguments are based on emotions and not on the market power that DL and US are attempting to gain at LGA and DCA. What other airlines get to do without government interference has nothing to do with the decision.

 

[BoeingBoy]

And BoeingBoy, US/DL cannot sell the slots to the highest bidder. They weren't allowed to sell to AC, AA, CO or UA. The divested slots couldln't be sold, bought or leased, so how much valued did those slots lose under those rules written in order to give SWA a bunch of slots?

The DOT proposed that US and DL divest the slots in a blind auction with each getting the proceeds of their respective slot sales. Granted the buyer couldn't turn around and provide the purchased slots to another carrier, effectively acting as a proxy buyer for a carrier that wasn't eligible to bid. In case you're not familiar with a blind auction, neither the seller or bidders know what any other specific bidder has bid. So for anyone wanting any/all the slots it would be inadvisable to try to low-ball the bidding - they probably wouldn't get anything. A blind auction is as good as any other type auction in getting the highest value possible for whatever is being sold - you put in your best bid (no starting low and hoping to get a deal) and highest bidder gets it.

As far as AC, AA, CO, & UA: AA traded slots with B6 so apparently had slots they felt they didn't need as much as more access to JFK, so no negative there necessarily. UA & CO may have been interested but were excluded. I think AC was eligible - they definitely have less than 5% and although a potential codeshare with US (via Jazz) was part of the POR for BK2 I don't it was ever finalized.

Other than a "US should get whatever it wants" attitude, I don't know why it's so difficult to understand the difference between US/DL wanting to be super heavyweights in the respective capacity controlled airports vs relative minor players exchanging slots which leaves the market concentration basically the same.

Jim

 

[FutureUScapt]

Sorry, but James Olson doesn't sound terribly convincing.

I strongly disagree with the DOT/FAAs decision as there are obvious fallacies and major gaps in their thought processes, but I've made my opinion clear in previous threads, so I won't reiterate it here.

What many here seem to be forgetting though is whether or not the FAA even has the authority to intervene in economic matters. This will hopefully be decided in the outcome of the lawsuit. Mind you, it will take a precedent setting decision by the courts to acknowledge that the FAA does indeed have that authority.

But in the meantime you and BoeingBoy are right - this merger does nothing to satisfy any of the DOT/FAA's concerns, nor quite obviously does it address the issue of whether or not the FAA has the authority to regulate economic matters.

As far as AC, AA, CO, & UA: AA traded slots with B6 so apparently had slots they felt they didn't need as much as more access to JFK, so no negative there necessarily. UA & CO may have been interested but were excluded. I think AC was eligible - they definitely have less than 5% and although a potential codeshare with US (via Jazz) was part of the POR for BK2 I don't it was ever finalized.

CO and UA were indeed excluded; CO had more than 5% of the slots at DCA and UA had more than 5% at LGA. UA is automatically excluded because they codeshare with US; CO, already excluded at DCA, was excluded at LGA because they codeshare with UA. As a combined entity, they are both over 5% and would be excluded on that basis now. AC codeshares with both CO and UA; therefore, they are excluded from both. AS, even if they did desire within-perimeter slots, is excluded at both by virtue of their codeshare with AA; F9 may possibly be excluded as well, as a result of the parent company Republic Airways effectively operating a codeshare with US Airways at both.

Interestingly enough (and really the only thing this merger definitively changes), WN/FL would now be disqualified from receiving any slots at LGA through this transaction as together I believe they now hold more than 5%.

 

[BoeingBoy]

AC codeshares with both CO and UA; therefore, they are excluded from both.

Now that you mentioned that, I stand corrected. Don't know why but I was thinking that the codeshare had to be with US or DL to exclude a carrier from bidding on the respective slots.

Jim

 

[Airline Employee]

Boeing boy I know what a blind auction is and I know why the DOT wanted it, they wanted SWA to get slots at both airports, DUH. Did CO have one for the 18 SWA slots or did they "handpick a carrier"? CO keeps a 75% marketshare but DL can't have 50%????? US can't have 55% while serving smaller communities?
Were AA & BA forced to have a blind auction Boeingboy? No, they get to handpick the carrier.

But the courts will have to rule if the FAA has authority on economic matters which is a power that Congress never gave them. They can ask DL to give up some slots at LGA, but not at DCA. Only the DOJ can do that and with a lawsuit. And as I said before with 27 slots at FL & WN and 28 flights they are not a limited carrier since they will be at a 5% threshhold at LGA. With a stranglehold on BWI now that FL will be out of the way I would love to see how the government rules on this merger. THe DOJ said that they'd oppose United & America West merging in the 90s because of the west coast which was surprising. They would not have had a stranglehold on competition like SWA will at MDW & BWI. With an almost 80% market share at BWI it will be hard for SWA to argue that the 11 slots acquired form FL means that they should get more. SWA faced the fact that neither DL nor US will help them get slots and thus they purchased an airline that had them.
So a lot has changed. SWA is the biggest airline in the country and will be bigger while eliminating a huge competitor with lower operating costs. I hope US/DL wins. It's nice when the government loses.

 

[BoeingBoy]

You're entitled to your opinion, I just disagree with it.

Jim

 

[Dog Wonder]

So a lot has changed. SWA is the biggest airline in the country and will be bigger while eliminating a huge competitor with lower operating costs. I hope US/DL wins. It's nice when the government loses.

When did Airtran get huge?

 

[FWAAA]

US, DL and government may be negotiating a solution:

Delta Air Lines Inc., US Airways Group Inc. and federal officials have told a U.S. appeals court they may be able to resolve a dispute over airport landing slots in New York and Washington that prompted a lawsuit.

In a filing yesterday, the airlines, the Federal Aviation Administration and the U.S. Transportation Department sought to delay further hearings as discussions continue.

http://www.bloomberg.com/news/2011-01-21/delta-us-airways-say-talks-may-resolve-airport-slot-dispute.html?cmpid=yhoo

 

[FA Mikey]

Were AA & BA forced to have a blind auction Boeingboy? No, they get to handpick the carrier.

Not true.

 

[john john]

When did Airtran get huge?

What a difference 4 months make