US/DL LGA/DCA Slot Swap Deal

[Airline Employee]

Does anyone know how much money DL & US are getting from this deal from the LCCs?
Also does anyone know when the next DOT offering for Brazil happens? They need to get the GIG/GRU slot swap taken care of quickly before the DOT Brazil offering happens.

I think if WN wanted some LGA slots they could have offered US a boatload of money for 100 slots, in exchange for at least $1,000,000 a slot, plus have SWA agree to give up all PHL gates except 2. That would be very, very appealing to US since they'd eliminate a competitor in their most profitable hub and they'd get cash. Of course they woudn't get any DCA slots, NRT or GRU, but they'd get cash on the spot and eliminate a competitor in PHL. Let's see if WN offers a counter proposal.

 

[Dog Wonder]

Basically if they want LCC competition in the two markets they will accept the deal that US/DL is offering. Otherwise there will be NO LCC competition at DCA in the near future

The Feds don't have to engage in brinkmanship. The airlines can talk all they want, the Feds decide.

 

[boeingdriver213]

yeah, they have the government over a barrel because US is doing this out of the kindness of their heart to allow LCC competition in.

I can't believe DOT will accept this meager offer by Delta and USAirways. They will want more slot divestitures to make it more acceptable. Considering that Delta will basically control LGA and USAirways DCA, DOT will insist on additional measures whether DAL and LCC agree or not. Stay tuned for the next round....

 

[FutureUScapt]

Does anyone know how much money DL & US are getting from this deal from the LCCs?
Also does anyone know when the next DOT offering for Brazil happens? They need to get the GIG/GRU slot swap taken care of quickly before the DOT Brazil offering happens.

I think if WN wanted some LGA slots they could have offered US a boatload of money for 100 slots, in exchange for at least $1,000,000 a slot, plus have SWA agree to give up all PHL gates except 2. That would be very, very appealing to US since they'd eliminate a competitor in their most profitable hub and they'd get cash. Of course they woudn't get any DCA slots, NRT or GRU, but they'd get cash on the spot and eliminate a competitor in PHL. Let's see if WN offers a counter proposal.

The next (and final, absent a new bilateral) 14 Brazilian frequencies become available this October and can be used to fly anywhere except GRU.

The issue with your scenario is that US does not want to sell "some" slots at LGA. They want out of the lease at LGA, and as such, are/were looking for a buyer who would agree to take the vast majority of the slots. Also, I'm not convinced that cash is the #1 thing US is looking for - they want something that will provide them with long-term value and the additional DCA slots will do just that.

I can't believe DOT will accept this meager offer by Delta and USAirways. They will want more slot divestitures to make it more acceptable. Considering that Delta will basically control LGA and USAirways DCA, DOT will insist on additional measures whether DAL and LCC agree or not. Stay tuned for the next round....

You may be right - I've been quite surprised at certain DOT decisions in the past.

Yet, the DOT has the approval of every LCC (except WN), something which WILL influence their decision. Also, let's remember that the DOJ had no issues with the original deal. WN certainly has an uphill battle ahead of them if they intend to get this shot down. Their best chance for success IMO, is to argue that these 5 and 15 slots be auctioned to the highest bidder, which will assure them of as many of those as they want. The problem is that it creates a sticky situation because it would require the DOT to strip US and DL of those slots when US/DL have agreed to sell these slots in compliance with the original ruling (i.e, to a carrier with less than 5% share at LGA.DCA).

 

[flyhigh]

I'd say the DOT has the upper hand here. Both carriers are looking to leave the respective airports to make a long term bet. DL is willing to let go of DCA and US from LGA. Who are their respective big competitors in each. So, essentially, what you have is two competitors saying you can have this and I'll take that and we leave each other alone and stop beating each other up. Problem is...the DOT is saying you can either give your slots up the way we want you too or you can beat each other up until you have to sell them for less than they are worth later. Either way, we want Southwest to get the slots because they are doing the best lobbying...

 

[wings396]

I agree that the feds are unlikely to think this is enough. Southwest is already screaming bloody murder. Would be interesting to see if the agreements prohibit the airlines from selling the slots to WN.

Let Southwest scream, kick, and cry all they want. They have been handed so many "deals" by smaller airports in order to get them to start service there, and as a result they have come to expect to be part of any/all deals. Given that they have made it a point to do battle with US anywhere they can, I would rather see these slots sold to Aeroflot over SWA.

 

[US1YFARE]

Let Southwest scream, kick, and cry all they want. They have been handed so many "deals" by smaller airports in order to get them to start service there, and as a result they have come to expect to be part of any/all deals. Given that they have made it a point to do battle with US anywhere they can, I would rather see these slots sold to Aeroflot over SWA.

don't blame southwest for US's inability to rationalize fares.

 

[Dog Wonder]

That Southwest makes me soooo mad. They fly everywhere they want, make those mean commercials, and make money.

It would just make me vomit to see them at DCA or LGA.

 

[FlyUs]

Those "other" airlines want access to DCA/LGA - why would they turn around and sell them to WN? WN is now fighting this battle alone since B6/FL/NK/WS have already given their seal of approval to the new deal.

The original DOT ruling was absurd by all accounts; US/DL in turn went back and proposed a more sensible solution that still allows LCCs some additional access into DCA and LGA. To that point, here's a quote from Kirby today effectively saying "take it or leave it"

"We expect the FAA to respond to our new proposal in the next few months. Should the FAA decide to not approve this new agreement, we will not press forward with the transaction, which could result in both LGA and DCA losing prime opportunities for expanded competition and growth."

I guess we shall see how this all winds up in the coming month(s).

Any idea where B6 will fly to from DCA? Also it was reported in the USA Today on Monday that US will reduce their BOS daily departures from 84 to 44. I think they may have it wrong. Other than the reduction of non-stop flights to the Caribbean, everything else stays the same.

 

[wings396]

don't blame southwest for US's inability to rationalize fares.

SWA has been targeting US in specific for years to a much greater extent than any other airline regardless of fares. They knew US was hurting, and made every effort to finish them off. I realize that it's all in the nature of the business, but I would be damned if I did ANYTHING to help them even more. As things heat up a bit more in this industry, lets see how SWA fares battling with the combined NW/DL, as well as the expansion of Airtran and Jetblue. Southwest's labor rates are rising as their workforce becomes more senior, and the playing field is leveling off more and more with most of the other airlines cutting costs anyway they can. I'm not saying that SWA won't continue to run a profitable airline, but they will not continue to do it at the expense of others. Let's face it, had US not been the mis-managed mess that it was/is for the last 15 years, SWA wouldn't be anywhere near the size they are now in the Northeast part of the country. Herb once said that his major key to success was due to US Air's blunders.

 

[john john]

Basically if they want LCC competition in the two markets they will accept the deal that US/DL is offering. Otherwise there will be NO LCC competition at DCA in the near future

So the deal is bad if you gave away something that has little competition. Why would you? I smell a rat. HPAirway is hell bent to give away the slots

 

[john john]

I can't believe DOT will accept this meager offer by Delta and USAirways. They will want more slot divestitures to make it more acceptable. Considering that Delta will basically control LGA and USAirways DCA, DOT will insist on additional measures whether DAL and LCC agree or not. Stay tuned for the next round....

Who controls DCA and LGA now?

 

[does this plane go to paris]

I find this interesting that US and DL are playing the victim. They have slots that were bought with the intention of the slots being used. Since US has been in a financial tailspin, they have decided to go the route of EA, PA, TW and downsize their airline to profitability. One of their downsizing targets has been to close cities and bases. One of those cities, LGA, is a slot controlled airport and they realized they have an asset and attempted to make a deal with a competitor and swap cities that are both controlled by slots. Well, the person who owns those slots, the DOT said yes, but you have to divest a percentage of the slots to other carrier's. There was no mention in the DOT that they had to give them to an lcc, just sell them to someone who has less than 5% of the market.

So here are DL and US agasht that they have to do this and decided amongst themselves that they are going to pick and choose who they are going to sell them to. If you rent a house and find out that you can no longer afford the place and have the option to sublet the place, do you or the owner get to make the decision? I think it's ironic that a few years ago US, HP and DL all needed the government's protection via the BK court to stay around and HP and US needed federal assistence to keep the doors open after 9/11, but they are "shocked" that the DOT can dictate slot's they they don't need or want anymore. If you don't want to use them, give back to the owner and them resell them to the highest bidder.

The final irony is the talk here that US and DL are now encouraging lcc competition by inviting Low Cost Carrier's, isn't that the hand picked stock symbol that Doug Parker sold investors 5 years ago. Is he saying that he's not a low cost carrier?

 

[a320av8r]

I believe Southwest is playing the victim here. Nobody HAS to sell them anything.
I'm pleased with the response and agree.

 

[MERV]

Who controls DCA and LGA now?

In its objection, filed late Monday, Southwest said the original deal would have pushed Delta's share of the slots at LaGuardia to 50% from 25%, while pushing US Airways' share at National to 57% from 47%.
Southwest Blasts Revised Slot Deal
http://www.thestreet.com/story/10708679/1/southwest-blasts-revised-slot-deal.html