DL and UA swap EWR/JFK slots, UA exits JFK transcon market

[WorldTraveler]

In a move that strengthens DL at JFK, UA will move its PS flying from JFK to EWR and exit the JFK market.

DL and UA will swap slots at EWR and JFK, subject to regulatory approval.

http://finance.yahoo.com/news/united-airlines-strengthens-york-jersey-160000098.html

big news among the big 3 in NYC.

 

[N628AU]

Should be interesting to watch the spin here. I am sure if someone objects, DL will say all three NYC airports are a combined NYC entity, the same argument they are saying does not exist in DAL/DFW.

 

[FWAAA]

While I personally don't believe that DL and UA should be prohibited from trading JFK and EWR slots, I wonder if Parker will object and claim that AA should be given an opportunity to obtain those JFK slots, since DL and B6 enjoy such a big lead on AA at JFK?

 

[Hope777]

It will be interesting to see which routes DL will scale back at EWR?  And how many slots we are talking about?

 

[Kev3188]

Good questions...

 

[robbedagain]

I have to question why is UA pulling out of JFK  and does their hub at EWR have a lot of say as to why theyre pulling out.
 
Second I would think WN  NK   B6 and may be even Allegiant or V.A. could also make moves for the slots  with an argument along the lines that UA  AA and DL are already big in the NYC market

 

[Hope777]

Robbed, it looks as if UA Only flies from JFK to LAX&SFO with 6/7 flights each day.  With AA and B6 offering Equipment catering to the High Yield Pax, UA just couldnt compete.  It was mainly O&D traffic.  I know UA still has a few hundred mechanics in JFK but guess some will bump to EWR.  UA claims they havent posted a Profit at Kennedy in the last Seven Years.

 

[jcw]

This is good for both DL and UA if the DOT lets it happen

 

[WorldTraveler]

While I personally don't believe that DL and UA should be prohibited from trading JFK and EWR slots, I wonder if Parker will object and claim that AA should be given an opportunity to obtain those JFK slots, since DL and B6 enjoy such a big lead on AA at JFK?

given that the DOT JUST allowed AA and AS to trade LAX-MEX and int'l route authorities like slots can be traded on the open market, AA has no basis for that argument if it tried.

Further, AA and B6 have traded slots at JFK and DCA

 

[robbedagain]

thank you Hope    I cant hardly imagine how an airline loses money for 7 yrs and counting  at JFK

 

[MAH4546]

Should be interesting to watch the spin here. I am sure if someone objects, DL will say all three NYC airports are a combined NYC entity, the same argument they are saying does not exist in DAL/DFW.

 
Remember the rule - when a private slot transaction involves Delta, it is fully allowed. When it does not involve Delta, Delta will simply sue the government. That's just what it is. 

 

[eolesen]

While I personally don't believe that DL and UA should be prohibited from trading JFK and EWR slots, I wonder if Parker will object and claim that AA should be given an opportunity to obtain those JFK slots, since DL and B6 enjoy such a big lead on AA at JFK?

On another site, it was mentioned that AA would definitely have grounds to cry foul, especially given that one of the restrictions in their slot divestitures was that they could reacquire slots, but only within a particular tolerance. I don't see them getting a shot at the slots, but I could see them making noise with the DOJ or DOT that if UA can violate the spirit of the divestitures done for merger approval, then AA should be free to do likewise.

CO-UA Announcement:

http://www.justice.gov/opa/pr/united-airlines-and-continental-airlines-transfer-assets-southwest-airlines-response

US-AA Announcement:

http://www.justice.gov/opa/pr/justice-department-requires-us-airways-and-american-airlines-divest-facilities-seven-key

AA's restrictions: 

The settlement also prohibits the merged company from reacquiring an ownership interest in the divested slots or gates during the term of the settlement. The companies must also provide advance notice of any future slot acquisition at Reagan National regardless of whether or not it is a reportable transaction under the premerger notification law and further provides for waiting periods and opportunities for the department to obtain additional information in order to review the transaction.

Even if the slot swap gets struck down, I don't see UA reversing course. JFK is just a really big spoke operating in EWR's shadow. If the perimeter rule is ultimately struck down, this may turn out to be very nicely played on their part.

Oh, and I'm sure that DL's largest fan thinks that this is all good news for DL. Not so fast, there, Skippy. AA already announced increasing JFK-SFO frequencies, and DL's pattern of service leaves a lot to be desired compared to the ~hourly service on AA, and better hard products on VX & B6. If anything, it's probably going to be a wash as to who gets the customers who don't follow UA over to EWR.

Jamie Baker agrees:
 

The competitive impact at JFK is muted - United's JFK exit is not anticipated to have a material competitive impact on incumbents. For example, JetBlue's share of premium capacity is expected to rise from 14% to 18%, while its share of economy capacity rises from 24% to 30%. Similarly, larger Delta JFK slots holdings (subject to regulatory approval) are not expected to materially impact its overall share of the NYC market.

It's certainly going to be interesting to see what happens next.

 

[WorldTraveler]

There is no more basis to believe that AA has a case to cry foul than it was when the DOT ruled in favor of AA/AS' private transaction. DL's request was denied, just as AA's would be if it tried to interfere.

Further, if the DOT decided to require that UA or DL could not obtain more slots - and it is far more likely it would be UA at EWR given they have a much higher share - they would not be looking to give slots to AA. The DOT and DOJ has shifted assets to increase competition; AA is in the JFK market and has given up size relative to its peers because of AA's own failure to compete in the market and AA is smaller today at JFK than it was in the past.

Further, it is highly possible that DL might not really care if the deal falls thru because it was UA's fallback to try to get something out of its departure from JFK. DL will undoubtedly give up fewer slots at EWR than it will gain at JFK and the reason why analysts recognize that DL's competitive position won't change is because DL is already the largest carrier at JFK based on multiple measures including flights, seats, ASMs, and revenue.

and DL has said that it would use the slots to increase capacity on its JFK-SFO route, using 767s as it does to LAX. Let's remember that some of the same people who are crying here about AA having a case to appeal for the slots were CONVINCED that DL's JFK-LAX 767 operation was temporary - because they were brainwAAshed into believing that 767s couldn't profitably operate on the transcons. DL apparently not only agrees on JFK-LAX but believes it can do the same to SFO using both the largest aircraft in the market but also by serving the cargo market which has no passenger carrier serving it. IN LAX and SFO, DL will be adding capacity which allays competitive fears that DL will be hoarding slots and reducing capacity.

Given that AA's own slot sale/lease allowed VX to enter EWR, UA could well see this move as a means to put the pressure on AA. which will be further pressured in the NYC market as DL and UA both grow and as AA potentially has to defend its transcon market from both LGA and JFK.

Let's not rule out that UA did this transaction because it knows that longhaul domestic flights are coming to LGA - which AA has said it is not supportive of any longer. Not only will DL have the largest transcon operation at JFK and UA will at EWR but DL has the ability to start LGA transcon flights and still serve the local NYC market from both airports.