This all sounds like Tony Soprano trying to defend his New Jersey turf from rival gangs and the prying eyes of federal investigators. Just sayin’….
United and Delta last summer announced plans to swap takeoff/landing slots in the New York market, with Delta giving up 24 slots at Newark Airport to United in exchange for 24 United slots at JFK Airport. But now the federal government’s competition watchdogs have stepped in to try to block the deal, claiming that United is building up too much market power at its Newark hub.
Those slots are enough for 12 flights a day. United last month gave up its JFK operations, moving its “p.s.” premium service Los Angeles and San Francisco flights to Newark, but even if it is successful, the Justice Department’s suit — filed this week in a New Jersey federal court — is unlikely to affect that move.
Indeed, one of the arguments in DOJ’s complaint is that United already has more slots than it needs at Newark — up to 82 United slots a day go unused, the agency said in its complaint. DOJ suggested that United’s only reason for wanting more slots at Newark is to prevent competitors from getting their hands on them. (Newark Airport, LaGuardia and JFK are all slot-controlled, i.e. filled to capacity, so the only way airlines can gain access to them is by buying or trading for slots from an incumbent carrier.)
The government has established a daily limit of 1,233 slots at Newark, DOJ noted, and United currently controls 902 of them, or 73 percent — mostly acquired in its 2010 merger with Continental. The number two airline at Newark, American, only has 70, and Delta has just 64. So United has more unused slots at Newark than any other airline’s total number of slots.
To win Justice Department approval of its Continental merger, United agreed to give up 36 slots at Newark to Southwest — but then tried to buy them back in 2014. And earlier this year, United proposed a swap with American that would give United 18 slots at Newark. Both efforts were dropped when the Justice Department objected.
The proposed transaction with Delta would “substantially reduce the likelihood of entry or expansion by other airlines at Newark,” DOJ said in its complaint. “As the third largest slot holder at Newark, Delta is one of the most promising sources of slots for new entrants seeking to serve the airport…. In the hands of anyone other than United, these slots would result in more competition for United at Newark. By contrast, if the slots are acquired by United, such competition is foreclosed.”
The Justice Department’s action comes just a week after five smaller carriers — Virgin America, Spirit, Frontier, Alaska and Allegiant — sent a letter to the FAA and the Transportation Department complaining about their inability to add flights to the three New York-area airports because the slots there are mostly held by legacy carriers that refuse to give them up.
Does it feel like the major carriers exert too much control over the New York City market? Which airport do you prefer to use most? Why? Please leave your comments below.
NOTE: Be sure to click here to see all recent TravelSkills posts about: Trip Report: Singapore Airlines + 5 ways to save using Uber/Lyft +Best/worst airports for Thanksgiving + Trans-Pac fare war?