Is Slot Swap in Jeopardy

[FM2436]

Many airlines and airport sponsors lining up to oppose Delta/US Airways slot swap.

http://www.bloomberg.com/news/2011-08-30/southwest-air-objects-to-delta-s-proposed-new-york-slot-trade.html?cmpid=yhoo

http://www.airportbusiness.com/online/printer.jsp?id=47153

 

[CallawayGolf]

Many airlines and airport sponsors lining up to oppose Delta/US Airways slot swap.

http://www.bloomberg.com/news/2011-08-30/southwest-air-objects-to-delta-s-proposed-new-york-slot-trade.html?cmpid=yhoo

http://www.airportbusiness.com/online/printer.jsp?id=47153

Southwest prefers federal regulations and restrictions over free market competition when it benefits them to do so. On the contrary, Southwest opposes government interference with the Wright Amendment because it restricts their ability to compete in the DFW area. I guess this lifts the veil off the notion that Southwest can successfully compete in any market with any airline. Southwest is pulling out of markets where they cannot compete or make a profit and now they want Uncle Sam to protect their bottom line against free-market competition.

They must really be feeling the pinch from not charging for checked bags.

 

[Move2CLT]

Southwest prefers federal regulations and restrictions over free market competition when it benefits them to do so. On the contrary, Southwest opposes government interference with the Wright Amendment because it restricts their ability to compete in the DFW area. I guess this lifts the veil off the notion that Southwest can successfully compete in any market with any airline. Southwest is pulling out of markets where they cannot compete or make a profit and now they want Uncle Sam to protect their bottom line against free-market competition.

They must really be feeling the pinch from not charging for checked bags.

Now there's a great post!


clap,clap,clap

 

[BoeingBoy]

" prefers federal regulations and restrictions over free market competition when it benefits them to do so."

You could put any airline's name in that statement and it'd be true.

Jim

 

[does this plane go to paris]

" prefers federal regulations and restrictions over free market competition when it benefits them to do so."

You could put any airline's name in that statement and it'd be true.

Jim

I seem to recall that Parker and company were some of the loudest voices for the Government handouts following 9/11. After they secured their funding from the Airline Stabilization Board, they opposed other airlines from getting the same type of assistance. They also have know the inside of US BK court system. I wonder if that is a restriction on a free market? Put a bad business plan out there, run it in the ground and then when it doesn't work, hide from your creditors, slash your employee pay and give you "new" management a bonus for coming up with a new plan.

 

[WorldTraveler]

Well said, Callaway.

And it is absolutely true that any other airline - or company - would say the same thing except that WN has fought "the system" more times than any others to their benefit. Remember that WN was birthed as an intra-Texas airline that soon decided to start flying outside of TX' borders and fought tooth and nail ... and ultimately won.
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Everyone that stands to lose something in the slot deal are going to argue against it... that is the nature of a comment period.
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With the FL purchase, WN is probably now too large to qualify for receiving any slots at either airport... so after the EWR slots from the UA/CO merger and the FL slots at DCA and LGA, on top of what they already have, WN will have to make what they have, work. What a concept.
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It is very possible that Virgin could win slots in the lottery... perhaps not many but they could.
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But it doesn't mean that there will be any change in the DOT or DOJ's position on the matter... given that there are still slot divestitures and there is more low fare competition in the NE than ever before - and the slot deal will add even more.
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The option is that DL and US could continue to underutilize their current slot holdings which benefits NO ONE... or the free market can be allowed to work. There is no one in Washington that will argue that locking the network airlines into their current level of slot holdings is the right thing to do... esp. since the UA/CO merger DID result in increased concentration in slot holdings which was "fixed" with relatively minor slot divestitures.
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Keep in mind that there are carriers that are just months away from being able to launch new service at LGA and DCA as a result of these divestitures and they are going to be supportive of their opportunities; you will have the airports and local gov'ts supporting the deal and airlines that stand to lose against it. Not unexpected but doesn't mean it won't move forward.
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Note also that the Airports Council's objection is really part of the same argument that DL and US made originally - that the federal gov't is interferring in the ability of airlines to sell and trade slots in an open market. ACI doesn't want the deal to move forward because it further cements precedent that the government is regulating slot transactions.
DL and US dropped their lawsuit against the DOT/FAA after basically conceding that the chances of fighting the FAA/DOT's ability to regulate slots is a far bigger deal than just giving up some of the slots.
It is highly doubtful that the ACI's objectives will make it much further along than 6 inches away from the trashcan.

 

[WorldTraveler]

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I have read through all of the comments filed to the DOT and they fall under one of several categories...
1. There aren't enough slots being divested... some such as WN are trying to argue that nothing has changed in the NYC market... obviously a distortion of the facts given the slots that were given to WN as part of the UA/CO merger... there has been a net increase in slots in NYC in the past year in addition to the WN/FL merger which adds a stronger competitor to NYC and DCA. Other arguments are in the vein of that network airlines will control too much of the NYC/DCA markets and LFCs may not get another chance to increase their holdings... clearly these issues were addressed by the DOT already.
2. Slots should not be transferred to new carriers in 8 flight bundles... not sure where this rule came up with but I agree... it leaves one or two airlines as winners of the slot auction and makes it very hard for most carriers to be able to add that many flights. I agree with these arguments.
There are also arguments that DL/US should not be allowed to profit from their divestitures. The simple answer to this is that DL and US will have a strong legal position to argue that their property is being confiscated if they do cannot be compensated for it... the FAA is not attempting to change the assumption that slots are property held by airlines - which is an advantage to the network airlines and a detriment to the low fare carriers who have less access. The Obama administration has clearly decided it is not worth attempting to change the law on this issue... and if they did try, it is highly possible they could lose the entire right to "interfere even a little bit."
3. The FAA has no legal right to be imposing restrictions on the transfer of slots... the same issue DL and US raised. Again, without filing a lawsuit and forcing the issue before the courts, and at the same time asking for the DL/US deal to be blocked on the basis of a point of law, it is unlikely these arguments will go nowhere.

WN alone also wants to require facility divestitures to ensure they have enough facilities to operate the flights they may win in an auction, they want to be able to bid on ALL of the slots that may become available (the DOT/FAA says a carrier must acquire 8 slots but no more than 8 slots), and WN wants the ability to top any other bid once the "final" bid has been published.... obviously all efforts by WN to use its financial power to crush any other carrier's ability to bid on the slots....
it is highly doubtful that WN will find any support for its motions which are clearly intended to allow them to leapfrog every other bidder - and it isn't clear that they will be allowed to bid. B6 argues that the 5% slot holding threshold was artificially created and has no basis in law, arguing that the threshold should be reduced to a level that would exclude FL/WN.
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Nice to see the low fare carriers all kicking each other in the shins while arguing how evil the whole slot concept is.... the reality is that WN WANTS to maintain slot controls - AFTER it successfully spends its wad of cash to buy all it can....
not unlike what the network carriers have done for decades before.
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There is nothing in these filings that makes me believe the deal will not move forward.
It is noteworthy that some airlines that filed objections are quite interested in obtaining slots.. they just don't like the process. If push comes to shove, they are most certainly going to bid for them and figure out how to make it work.

 

[signals]

Southwest prefers federal regulations and restrictions over free market competition when it benefits them to do so. On the contrary, Southwest opposes government interference with the Wright Amendment because it restricts their ability to compete in the DFW area. I guess this lifts the veil off the notion that Southwest can successfully compete in any market with any airline. Southwest is pulling out of markets where they cannot compete or make a profit and now they want Uncle Sam to protect their bottom line against free-market competition.

They must really be feeling the pinch from not charging for checked bags.

Well the vultures feel that they once again found a Southwest carcass to feed on. Never mind that airports, B6, Virgin are also objecting, lets go after WN the crybaby! Ever since this swap was announced, DufUS thought they can run it their way. They picked the carriers they wanted, and cried when it didn't go their way. Now they want to cut the number of slots ans feel that everyone should be OK with it. The pots and the Kettles have united to call everybody else 'black!'

This is turning into the low cost vs. the legacies vs. Delta-because the Delta cheerleader said so. But WN is the crybaby

The checked luggage fees will become the legacies and Delta's shrapnel as it will blow up in their faces once WN comes to town!

As Delta's Nero continues to fiddle, Datlanta will soon be occupied by LUV

It's funny how a hostile takeover attempt has made for strange bedfellows. Must be a peaceful coexistance thingy

If the real LCCs go after the legacies, there will be plenty of time to go after Delta

The Delta cheerleader always emphasizes what happens when WN enters a market and also informs us how WN is run by intelligent people. Since Delta has an 80 year history in aviation, its MO is easier to follow than a 40 year evolving bohemeth.

So the vultures may want to make sure that WN is down for the count, before you wave your Mission Accomplished banners. In the words of the famous Mr. Bugs Bunny-Of course you realize that this means WAR!

 

[WorldTraveler]

Well the vultures feel that they once again found a Southwest carcass to feed on. Never mind that airports, B6, Virgin are also objecting, lets go after WN the crybaby! Ever since this swap was announced, DufUS thought they can run it their way. They picked the carriers they wanted, and cried when it didn't go their way. Now they want to cut the number of slots ans feel that everyone should be OK with it. The pots and the Kettles have united to call everybody else 'black!'

This is turning into the low cost vs. the legacies vs. Delta-because the Delta cheerleader said so. But WN is the crybaby

The checked luggage fees will become the legacies and Delta's shrapnel as it will blow up in their faces once WN comes to town!

As Delta's Nero continues to fiddle, Datlanta will soon be occupied by LUV

It's funny how a hostile takeover attempt has made for strange bedfellows. Must be a peaceful coexistance thingy

If the real LCCs go after the legacies, there will be plenty of time to go after Delta

The Delta cheerleader always emphasizes what happens when WN enters a market and also informs us how WN is run by intelligent people. Since Delta has an 80 year history in aviation, its MO is easier to follow than a 40 year evolving bohemeth.

So the vultures may want to make sure that WN is down for the count, before you wave your Mission Accomplished banners. In the words of the famous Mr. Bugs Bunny-Of course you realize that this means WAR!

except the concept seems to elude you that DL and WN and every other company will fight for what makes sense to them. If they can manage to find others who benefit from their actions - and more of them than not - they win.
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The US/DL slot swap deal benefits more people than it harms and those who support it didn't file rebutalls this go around but they did before.
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While trumpeting all the parties who filed, you fail to note that the majority of the comments were against the requirement to take 8 pairs of slots at a time. I agree. Only WN disagreeed to the those objections saying they wanted to be able to bid FOR THEM ALL and they also wanted to be able to top everyone else's bid.... that should come as no surprise given now much wealthier WN is... but also proof positive as to why there will be protections put in place to make sure that a DL/US duopoly will be replaced by a DL/WN or US/WN duopoly. Despite conventional wisdom, WN does raise fares and will price its product as high as it can - which is exactly what they will do if they are allowed to operate a large enough amount of flights to squash the competition - no different than what any other airline would do.
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For all you and others want to believe that WN is out to each DL's lunch, you might want to consider that there are all kinds of rumors about 717s, terminal swaps in ATL, and other events that WN might need in order to make the FL merger work.
WN and DL both know that they both have figured out how to effectively compete against each other at the expense of others. DL and WN have far more to gain by EACH taking the hide of other airlines than fighting among themselves.
Yet, no one will ever doubt that DL and WN will do what is in both of their own best interests - including at times doing things that the other will not like including belly-aching to regulators.
At the end of the day (and it is "sunset" already), the slot deal will happen and it will be a win for DL and US at the expense of others... and WN will come up w/ a few wins of their own.
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To somehow think that DL and WN won't continue to grow domestically and instead turn on each other- where each now carries about 25% of the domestic market - is far fetched at best.

 

[signals]

Wah,wah, wah. Don't blame me because Delta is about to be subjected to an involuntary fornication situation.

DL/US have changed the rules and made the rules since this whole thing was announced and WN wanted in. You both(DL/US) couldn't care less about 'people's benefit' and we all know it's about Tempe and Datlanta's bottom line.

 

[WorldTraveler]

Wah,wah, wah. Don't blame me because Delta is about to be subjected to an involuntary fornication situation.

DL/US have changed the rules and made the rules since this whole thing was announced and WN wanted in. You both(DL/US) couldn't care less about 'people's benefit' and we all know it's about Tempe and Datlanta's bottom line.

and you somehow think that WN isn't interested in their own bottom line? of course they are. And they darn well better be.
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DL and US created a deal that adds value to both companies by transferring assets that were underutilized. Despite lots of calls for the end of slots, the US to reposses all slots, etc... the Feds have taken the approach that the slots remain private property of the airlines... their only intent and their only action was to require that a certain amount of the slots be given to competitors that can check the potential for a carrier to hold 50% of the slots at an airport at which other airports cannot freely enter.
It's no different than what was required of AA/BA at LHR, resulting in a slot divestiture that DL chose to benefit from... but the slots remain AA/BA's, DL must pay rent for those slots to AA/BA, and other new entrant carriers - US, DL, CO, NW included, did not get all they wanted.
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This slot swap is no different. There will be some nit picking over the details but AA/BA will remain dominant at LHR; DL will remain dominant at LGA; US will remain dominant at DCA.... until others are willing to spend the money to buy the assets that AA/BA, DL, or US have used to build their market positions, the rest of the industry will have to make do w/ what they have.

The only crying is and will be by those who didn't have the forethought to win in a competitive and limited access situation.
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Just to be clear, using the slots WN already has as a result of the merger w/ FL, they could offer enough seats to be the #3 carrier in each of the three airports - EWR, LGA, and DCA - if they upgraded all of their flights to their future 738s. If they gain 8 more slots each at DCA and LGA, highly likely since they can outbid just about anyone, they could be in a position to have half the seats AA has at LGA - the current #2 which won't change w/ the slot deal and #3 behind DL at DCA; although it is hard to know what DL will do at DCA after the slot deal.
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Bottom line is that WN is in very good position at DCA and LGA as well as EWR already and the slot deal will only add even more seats.

Considering that WN didn't even serve LGA, DCA, or EWR until a few years ago, they have done pretty good and it will likely be good enough for them to bump one of the other network carriers in ranking in the next few years.

 

[signals]

and you somehow think that WN isn't interested in their own bottom line? of course they are. And they darn well better be.
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DL and US created a deal that adds value to both companies by transferring assets that were underutilized. Despite lots of calls for the end of slots, the US to reposses all slots, etc... the Feds have taken the approach that the slots remain private property of the airlines... their only intent and their only action was to require that a certain amount of the slots be given to competitors that can check the potential for a carrier to hold 50% of the slots at an airport at which other airports cannot freely enter.
It's no different than what was required of AA/BA at LHR, resulting in a slot divestiture that DL chose to benefit from... but the slots remain AA/BA's, DL must pay rent for those slots to AA/BA, and other new entrant carriers - US, DL, CO, NW included, did not get all they wanted.
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This slot swap is no different. There will be some nit picking over the details but AA/BA will remain dominant at LHR; DL will remain dominant at LGA; US will remain dominant at DCA.... until others are willing to spend the money to buy the assets that AA/BA, DL, or US have used to build their market positions, the rest of the industry will have to make do w/ what they have.

The only crying is and will be by those who didn't have the forethought to win in a competitive and limited access situation.
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Just to be clear, using the slots WN already has as a result of the merger w/ FL, they could offer enough seats to be the #3 carrier in each of the three airports - EWR, LGA, and DCA - if they upgraded all of their flights to their future 738s. If they gain 8 more slots each at DCA and LGA, highly likely since they can outbid just about anyone, they could be in a position to have half the seats AA has at LGA - the current #2 which won't change w/ the slot deal and #3 behind DL at DCA; although it is hard to know what DL will do at DCA after the slot deal.
Bottom line is that WN is in very good position at DCA and LGA as well as EWR already and the slot deal will only add even more seats.

Considering that WN didn't even serve LGA, DCA, or EWR until a few years ago, they have done pretty good and it will likely be good enough for them to bump one of the other network carriers in ranking in the next few years.

The point is that this whole slot swap was for the benefit of US and Delta. And they think they can call the shots, like picking and choosing the low cost carriers that will fill those slots.

Since WN got into the picture, DL and US have been trying to alter the agreement so that their MAIN competition doesn't get the upper hand. Continue to spin the obvious as you have proven to do already.

I still believe that if WN had just let you think you got your way with the original agreement, there would have been many strokes and heart attacks when FL became LUV! Surprise!

So lets keep spinning it to suit the Delta double-standard, but actions speak louder than bandwidth

 

[WorldTraveler]

The point is that this whole slot swap was for the benefit of US and Delta. And they think they can call the shots, like picking and choosing the low cost carriers that will fill those slots.

Since WN got into the picture, DL and US have been trying to alter the agreement so that their MAIN competition doesn't get the upper hand. Continue to spin the obvious as you have proven to do already.

I still believe that if WN had just let you think you got your way with the original agreement, there would have been many strokes and heart attacks when FL became LUV! Surprise!

So lets keep spinning it to suit the Delta double-standard, but actions speak louder than bandwidth

well, duh. Of course the slot swap was intended to benefit DL and US at the expense of its competitors.... that is the nature of competition. Doesn't really matter who it was.
WN happened to seize upon the opportunity to cry that they were being shut out when in fact they already are or can be the solid #3 carrier in EWR, LGA, and DCA by upgrading just half of the slots they have to 738s once those a/c become available.
WN did what was good for WN... but they are hardly being relegated to the bottom of the heap even if they didn't get any slots as a result of the DL/US slot swap. They likely will, though, and I'm not even so sure that they talked the gov't into packaging the slots into sets of 8 just for their benefit - because money and the ability to use add'l slots are of no limitation to WN.

The only real question is whether DL and US should be allowed to operate up to 50% of the slots at these key airports; the gov't obviously thought long and hard about it and decided that it is ok - and they put remedies in place to ensure there are other strong competitors - although there might be a lot of people disappointed at how high WN prices seats on its slots in a few years; it is well established now that they are often not the lowest fare carrier either on specific flights or on average.

Unless the Feds back down, the deal will move forward, those who cried it was uncompetitive can start working on another song, and WN will manage to have built itself a very handsome presence in WAS and NYC in a very short period of time.

The only losers will be those airlines that weren't smart enough to come up w/ the deal in the first place or to figure out how to get a piece of it for themselves. DL, US, and WN all come out looking good because of the deal

 

[signals]

well, duh. Of course the slot swap was intended to benefit DL and US at the expense of its competitors.... that is the nature of competition. Doesn't really matter who it was.
WN happened to seize upon the opportunity to cry that they were being shut out when in fact they already are or can be the solid #3 carrier in EWR, LGA, and DCA by upgrading just half of the slots they have to 738s once those a/c become available.
WN did what was good for WN... but they are hardly being relegated to the bottom of the heap even if they didn't get any slots as a result of the DL/US slot swap. They likely will, though, and I'm not even so sure that they talked the gov't into packaging the slots into sets of 8 just for their benefit - because money and the ability to use add'l slots are of no limitation to WN.

The only real question is whether DL and US should be allowed to operate up to 50% of the slots at these key airports; the gov't obviously thought long and hard about it and decided that it is ok - and they put remedies in place to ensure there are other strong competitors - although there might be a lot of people disappointed at how high WN prices seats on its slots in a few years; it is well established now that they are often not the lowest fare carrier either on specific flights or on average.

Unless the Feds back down, the deal will move forward, those who cried it was uncompetitive can start working on another song, and WN will manage to have built itself a very handsome presence in WAS and NYC in a very short period of time.

The only losers will be those airlines that weren't smart enough to come up w/ the deal in the first place or to figure out how to get a piece of it for themselves. DL, US, and WN all come out looking good because of the deal

I'm guessing you got beat up a lot as a kid! I know the swap was to benefit US and DL, but WN is protesting because they can't seem to hold up their end of the bargain, or finding loopholes to suit them AFTER the facts.

 

[WorldTraveler]

So I was beat up as a kid because I set the facts of what this slot deal is all about - plus all of the other ideas that you have about WN which aren't rooted in reality?
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I'm not sure why you find it unusual that any company would fight for what is in their best interest.
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Despite what you want to believe, what DL and US proposed and are executing is legal and WN really doesn't have any grounds to stop it or get any more than what the Feds are willing to allow them and other carriers to bid on.
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Quit trying to make it something personal and accept that there are some things that network airlines continue to do well and in which they have advantages. DL and US just happened to create a deal which was intended to help them... and the appropriate checks and balances have been gone through and if final approval is granted as expected, then the focus will shift to what DL and US will do with these slots and how other carriers will figure out how to compete in the changed environment.
Regardless of how you slice it, I don't see DL, US, or WN losing anything.