Southwest Interest in LGA and DCAl Slots if Delta and US Complete Swap

[Dont call me Shirley]

http://nycaviation.com/2010/03/05/on-this-...tory-march-5th/

According to an FAA memorandum, legal representatives from Southwest Airlines recently initiated a conference call with the Department of Transportation in which the carrier expressed an interest in understanding the mechanics of the possible DOT-mandated sale of Delta and US Airways slots at LaGuardia and Reagan National airports. The DOT ruled in early February that a proposed trade of slots between Delta and US at the two airports would only be allowed to proceed if each airline were to sell some of their slots....

This could get interesting...

 

[jimntx]

Maybe the "secret" meeting in Dallas between US Airways and AA execs was really between US Airways and Southwest execs. Maybe US Airways is hoping to sell the slots at a fair price as opposed to being required to sell them at fire-sale prices in a government-ordered divestiture.

 

[BoeingBoy]

as opposed to being required to sell them at fire-sale prices in a government-ordered divestiture.

If US and DL sell slots in order for the slot swap to go through, it is a government-ordered divestiture. One of the options in the ruling was for US and DL to find buyers for the slots, another was for the FAA to accept offers with the highest bidder buying the slots from DL or US. Of course, if only US sells slots the deal with DL won't go through.

Jim

 

[signals]

I think this whole US-Delta slot swap deal is a smoke screen. I think LUV wants to take advantage of this bluff.

 

[BoeingBoy]

One thing is for sure, it's very rare for that many slots at two slot controlled airports end up on the market at one time. It's yet to be seen if US/DL want to move forward with their deal despite the requirement to sell slots, however.

Jim

 

[FrugalFlyerv2.0]

This may sound harsh, but from the US point of view, wouldn't selling the slots to SW be the equivalent of shooting yourself in the foot, peeing in your cornflakes, cutting off the nose to spite the face ... ... ...
I mean, dominance of slot restricted airports like DCA by US and the minimal (negligible) low-cost presence is one asset that US has, isn't it?
I understand why SW wants the slots but I do not understand why US (and DL) would sell to SW.

 

[BoeingBoy]

Per the terms of the ruling, the slots pretty much have to be sold to a low cost carrier. Other than AS, who would probably have little need for within perimeter slots, who else has less than 5% of the slots at either airport?

All of which would explain why both US and DL said the deal was dead if they had to sell of slots - all that planning by each to have 50% or better of the limited entry markets only to see yields drop.

Jim

 

[signals]

Bottom Line or LUV attack!

 

[BoeingBoy]

Bottom Line or LUV attack!

Unfortunately, bottom line is an intraday snapshow (all the big airlines are down except B6 @ 3pm) while LUV attack is a more permanent phenomenon.

Jim

 

[does this plane go to paris]

I mean, dominance of slot restricted airports like DCA by US and the minimal (negligible) low-cost presence is one asset that US has, isn't it?
I understand why SW wants the slots but I do not understand why US (and DL) would sell to SW.


To be honest, I don't understand why the swap was going on in the first place but then I can't explain many things that come come from Tempe. They were giving up many more slots compared to DL in return for some International route's. There has to be some sort of cash incentive for Tempe to do the deal with DL, but again, don't know the entire deal or thought process.

I really don't like conspiracy therories but maybe DL and US knew the government was going to make them offer some of the slots for sale and the only way to get money from the only airline that has money (ie SWA), they make a big announcement that it isn't fair, blah, blah, blah, but gladly accept a check from LUV.

Can US and DL now back away from the plan and keep life as it is?

 

[BoeingBoy]

but I do not understand why US (and DL) would sell to SW.

Since this originated on the US board from a second or third hand rumor of some hush-hush high level meeting in the DFW area, I'm not sure I'd put much faith in any of it being true. However, WN is probably the one carrier that could afford all the slots and doesn't already have slots at DCA.

To be honest, I don't understand why the swap was going on in the first place

For US it was about greater domination at DCA, a higher yield airport than LGA. For DL I assume it was at least partially about setting up a domestic hub to complement it's international operation at JFK.

but gladly accept a check from LUV.

While I'm sure US would gladly accept a check - they're not exactly flush with cash - the last thing they want is the DCA yields to drop further. Which is why I'm not convinced this rumor is true.

Can US and DL now back away from the plan and keep life as it is?

Absolutely, as both have already said they'll do.

Jim

 

[does this plane go to paris]

Jim,

I agree with you and this leads me to think/question, how willing (or desparate) is either US or DL to continue on the deal.

I could see where WN lobbied to approve the deal with stipulations, meaning "hey, we want in". And why not? They can offer a new market, charge a profitable rate, make their competitor charge a lower price and thus not make it as endearing as either ATL or PHX wanted.

So, here are two cash strapped, debt ladden companies wanting to close up a market, but being told by big brother that you have to your share your candy with the big bully. IMHO, US needs the money that WN can offer to keep the doors open. (I don't think US will close if the deal doesn't go thru) DL has a little more wiggle room, not much, but will they agree? I see this falling towards WN favor. Double edge sword for both US and DL but a win for WN.

 

[signals]

Here's a question from out of left field...Could WN enter the Charlotte market in the future or are there restrictions that keep it from doing so? :unsure:

 

[does this plane go to paris]

Here's a question from out of left field...Could WN enter the Charlotte market in the future or are there restrictions that keep it from doing so? :unsure:

CLT is not slot controlled. Any airline can enter CLT. I'm sure that WN has looked at CLT but when they enter a market, they look for the right gates, right routes, rent etc to make a profit. In my humble opionion, WN needs more service in the Carolina region and Geogia, but that is based solely on personal reasons since I fly there 3-4 times a year.

WN had been avoiding the large mega-hubs but since starting up DIA, WN has reentered SFO and began service to PHL, IAD and MSP. Out of the fortress cites left, ATL, CLT, CVG and MEM are good candidates, catering to the business traveler and should see new service. IAH is too close to HOU and WN is fine there, same thing with ORD. While the deep south did see a lot of snow this winter, hell hasn't completly frozen over and so don't look for WN to fly into DFW any time soon.

 

[Dont call me Shirley]

WN had been avoiding the large mega-hubs but since starting up DIA, WN has reentered SFO and began service to PHL, IAD and MSP.

I was a bit surprised when they returned to SFO, very surprised to see them in the LAX-SFO market. (Where there are many fewer flights than there once were).