US DoJ still investigating airport slot swap agreement between Delta and US Airways

Published On 11/10/2011 | By David Crino | Uncategorized

Two years since first attempting to trade slots at New York LaGuardia and Washington National airports, US Airways and Delta Airlines are still waiting for approval from the United States Department of Justice (DoJ).

The arrangement has a long history of negotiations between the airlines and the Department of Transportation (DoT).  The carriers had restructured an earlier slot-swap proposal after the DoT required it to give up a higher number of slots than they were willing.

A slot pair is the authority to operate one take-off and one landing.

On 7 October 2011, however, the carriers reached a milestone when their latest arrangement, under which US Airways will transfer 132 slot pairs at LaGuardia to Delta – and receive 42 slots pairs at National, the right to operate additional daily service to Sao Paulo in 2015 as well as US$66.5 million in return – was approved by the Department of Transportation, on condition that the carriers relinquish eight slot pairs at National and 16 at LaGuardia to airlines with limited or no service at those airports.

The DoT noted that the increased role played by budget carriers made the swap more palatable than in 2009, particularly since the airlines are willing to give up slots.  The DoT also concluded that other potential benefits could arise from the swap, such as enhanced service benefits to passengers and a more efficient use of slots at the airports.

Despite this, on 11 October 2011, the Antitrust Division of the DoJ issued a statement noting that it has been conducting an investigation to determine the transaction’s impact on competition and traveling consumers.  They noted that while they had concluded that they no longer had competitive concerns surrounding Delta’s acquisition of slots at New York’s LaGuardia Airport, it would continue to investigate the acquisition of slots at Reagan National, “with a focus on the increase in US Airways’ share and use of slots…and the resulting decrease in Delta’s share of slots at this slot-constrained airport, at which passengers pay among the highest fares in the country.”

This isn’t the first time the DoJ and the DoT have taken a separate path in an airline investigation, with diverging approaches taken in relation to both the Star Alliance and Oneworld applications for antitrust immunity.

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About The Author

is a solicitor in the competition litigation practice of King & Wood Mallesons in Sydney.

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