Atsb Will Take Tougher Stance Now

[enilria]

Two points:

1) Wall Street analysts have been saying uniformly that the ATSB was going to take a laissez-faire attitude until the election and then take a much harder stand with their obligated airlines.

It would seem to me that is what has happend so far and the ATSB has been a pushover, except perhaps to prevent AmWest from bidding for ATA which is the rumored story.

How bad is this expected change in the ATSB for US Airways?

2) Also, noting how much of a fight JetBlue is going to mount over the handful of slots (listen to JetBlue's quarterly call) Air Tran is trying to acquire from ATA, imagine the firestorm if the ATSB or Bronner attempted to sell LGA or DCA slots.

Clearly JetBlue is sending out the strong message that no deal will be done without a lot of attorneys and a lot of delays. JetBlue wants any abandoned slots returned for reallocation.



In a perverse way the latter could be good for US Airways because the ATSB is secured by the slots and if there is risk they could be lost in a 3rd party transaction that pushes the ATSB toward continuing its cowardly stance.

 

[jimntx]

Clearly JetBlue is sending out the strong message that no deal will be done without a lot of attorneys and a lot of delays. JetBlue wants any abandoned slots returned for reallocation.

[post="197741"][/post]​

One of the problems with court system in the U.S. today is that anyone can sue for anything. Winning is another issue entirely.

Considering that it has been standard procedure for a long time that airlines have been allowed to treat landing slots at restricted airports as "owned" assets that could be bought/sold/traded with other airlines, it is unlikely that a court would step in at this point and change the system. Yes, JB can delay the transfer of the landing rights, but at what cost? They can cost ATA some money in legal fees, but they have to pay their own lawyers as well.

Besides, if ATA's BK judge agrees that the slots belong to ATA to do with as they choose--particularly if it is to the benefit of the creditors--JB would have to fight with the judge in a court where they have no standing because they are not a creditor. Now, JB might be able to convince the judge to oversee a bidding war for the slots, but they then run the risk of jacking up the price of the slots to a point that makes them unprofitable.

 

[enilria]

Considering that it has been standard procedure for a long time that airlines have been allowed to treat landing slots at restricted airports as "owned" assets that could be bought/sold/traded with other airlines

[post="197811"][/post]​

JB's point which is a valid one is that the Air21 law setup sunset provisons for slots at ORD/JFK/LGA. Subsequently, a massive number of RJs were deployed to LGA as the RJ rules were first to sunset. The airport then reinstituted a use it/or lose it slot system because of the chaos that ensued. So technically LGA slots are now airport slots created by Air 21 and not federal slots any more.

JB's contention is that precedent has already been set on Air21 slots and that they must be put back in the pool for reallocation. They point to TWA's DCA-LAX slot which was an Air21 slot and AA could not retain when they bought TWA. The slot went up for reallocation and was awarded to Delta. DCA never had its slots sunsetted under Air21, but it created a new set of Air21 slots which were added to the original. Some of US Airways DCA slots are Air21 as well.

So, in summary their is a precedent out there JB wants to expand upon. JB has a case.

 

[sfb]

JB's contention is that precedent has already been set on Air21 slots and that they must be put back in the pool for reallocation. They point to TWA's DCA-LAX slot which was an Air21 slot and AA could not retain when they bought TWA. The slot went up for reallocation and was awarded to Delta. DCA never had its slots sunsetted under Air21, but it created a new set of Air21 slots which were added to the original. Some of US Airways DCA slots are Air21 as well.

Actually, TWA's DCA-LAX "slot" was not a slot; it was a beyond-perimeter slot exemption. When that particular slot exemption was awarded (along with the others to F9, HP, and AS, if memory serves), the terms of the slot exemption prohibited the transfer or sale of said exemption. So, no precedent regarding slots was established when DOT took the DCA-LAX exemption back. Moreover, I believe the additional "slots" created at LGA for RJ's and possibly new entrants back in 2000 were also exemptions. Now, if ATA's LGA slots came from that allocation, jetBlue may have a case to block their transfer, but if they predated that process, they probably don't. Similarly, there were two rounds of within-perimeter slot exemptions for DCA awarded as well; again, if ATA's DCA slots were awarded as exemptions, then they may not be transferred and there will be a process for re-awarding them.

 

[jimntx]

JB's point which is a valid one is that the Air21 law setup sunset provisons for slots at ORD/JFK/LGA. Subsequently, a massive number of RJs were deployed to LGA as the RJ rules were first to sunset. The airport then reinstituted a use it/or lose it slot system because of the chaos that ensued. So technically LGA slots are now airport slots created by Air 21 and not federal slots any more.
So, in summary their is a precedent out there JB wants to expand upon. JB has a case.

[post="197920"][/post]​

But, if JB prevails with this argument, that makes the ATSB "lien" on US Airways slots as loan collateral worthless. If U fails or doesn't use it's slots then they would just go back in the pool for re-allocation. Don't think ATSB would like this turn of events.

Not saying you're wrong. Just thinking out loud.

 

[BoeingBoy]

jimntx,

I think what JB is saying is that the ATA LGA slots are "slot exemptions" and that the rules are different because of that. I certainly don't know whether they are traditional "slots" or "slot exemptions" and what, if any, difference it might make.

As to whether "regular" slots "belong" to the airline and can't be forfeited, the ATSB took no chances. One of the provisions of the ATSB agreement is that US take no actions (or conversely not take necessary actions) that would result in the loss of the slot collateral.

Jim

 

[RowUnderDCA]

jB does not have a convincing case.

 

[funguy2]

I suspect that TZ has all "real" slots. My recollection is that the "slot exemptions" that were issued were only for underserved markets. I don't think IND or MDW is underserved. Remember during that RJ boom at LGA, CO was flying LGA-GRR, and I believe YX got an exemption to fly DCA-DSM.

At any rate, jB's argument would only hold merit for slot exemptions, which TZ may have some, but certainly not all, slot exemptions.

Using DCA beyond-perimeter-rule exemptions as a precident is a very weak argument, since the that is a different situation that LGA/TZ.

However, it is important to note that jetBlue was issued something like 150 slot exemptions at JFK when it started service. Since then, slot hours have been reduced to the prime evening European departure window, so I am not certain how many of those JFK exemptions are still valid (i.e. if slots are no longer required at 10am, then any jB exemptions at 10am would also presumably have "disappeared".)

 

[enilria]

Actually, TWA's DCA-LAX "slot" was not a slot; it was a beyond-perimeter slot exemption.

[post="197953"][/post]​

The law does not make that differentiation. All slots created under Air21 are non-transferable whether they are exemptions or not. It can be argued that a) the LGA slots are now airport slots and not transferable as they used to be and B) the slots were recreated by Air21 which prohibits transfer.

 

[BoeingBoy]

funguy2,

The exemptions were not just for underserved markets...

"Under the Aviation Investment and Reform Act for the 21st Century (AIR-21), which took effect in April 2000, new-entrant airlines and those serving small communities were granted exemptions to slot limitations at LaGuardia, as well as to New York's John F. Kennedy, and Chicago's O'Hare airports, providing significant levels of new access to the facilities."

The "small community" exemptions were limited to "under 71 seat" aircraft at the time, don't know if we received permission to use the Emb-170 on any of those.

I've been trying to find something definitive on the ATA slots at LGA. At least some of them are exemptions, but haven't been able to establish whether all are or not.

Jim

 

[enilria]

But, if JB prevails with this argument, that makes the ATSB "lien" on US Airways slots as loan collateral worthless.

[post="197958"][/post]​

That is the final point of my original post. If JB prevents this slot transfer it helps US Airways survive as a whole because it means to retain the slots US Airways must continue.

It is actually in the best interest of the US Airways employee for Jet Blue to win and thus take the option of selling the slots off the table from management.

In essence it would be a partial reinstitution of the fragmentation provisions of the contract that were struck down by the judge.

 

[jimntx]

That is the final point of my original post. If JB prevents this slot transfer it helps US Airways survive as a whole because it means to retain the slots US Airways must continue.

It is actually in the best interest of the US Airways employee for Jet Blue to win and thus take the option of selling the slots off the table from management.

[post="198046"][/post]​

Or, if JetBlue wins, the ATSB could decide that the collateral that U had put up was worthless--kinda like finding out the diamonds are cubic zirconia--and call the loans immediately.