2nd UPDATE: Delta, US Airways To Swap Slots
August 12 2009 - 2:26PM
Dow Jones News
US Airways Group Inc. (LCC) and Delta Air Lines Inc. (DAL) plan
to swap 167 pairs of take-off and landing slots at two of the
nation's most congested airports, with each airline adding service
to small U.S. cities.
The move comes as U.S. airlines have cut capacity to tailor
their business to the slowdown in business and leisure travel.
At the same time, airlines are coming under increasing scrutiny
from U.S. regulators, especially at New York's LaGuardia Airport,
where slots for each take-off and landing are tightly controlled by
the Federal Aviation Administration.
The proposal would more than double Delta's non-stop flights at
LaGuardia, adding 125 slots, and essentially forming a hub for
domestic flights. Delta, the world's biggest airline, already
operates an international hub out of New York's John F. Kennedy
International Airport.
Delta spokesman Kent Landers declined to comment on how
profitable the company expects the transaction to be. The carrier
plans to add service to more than 30 small and medium-sized
markets.
US Airways will get 42 pairs of slots at Ronald Reagan
Washington National Airport, now operated by Delta. It will also
acquire rights to fly to two new markets, Tokyo and Sao Paulo. The
carrier plans to fly direct to Tokyo from Phoenix and to Sao Paulo
from Charlotte.
United Airlines, a unit of UAL Corp. (UAUA), and a partner to US
Airways in the Star Alliance, has a hub at Washington's Dulles
International Airport.
Delta said the loss of the international flying rights won't
affect passenger service.
US Airways will keep a "significant" presence at LaGuardia, the
low-cost carrier said, remaining as the third-largest airline
there. But it plans to cut 300 jobs at its regional airline
subsidiary, Piedmont Airlines, eliminating Express flights. The
move is expected to boost US Airways' bottom line by more than $75
million annually, President Scott Kirby said in a message to
employees.
US Airways Chairman and Chief Executive Doug Parker said the
deal will add service from Washington, D.C., to smaller
communities, serving 15 new locations from Reagan National. It will
increase seat capacity by one-third through the new flights and use
of larger planes.
The swap at LaGuardia will consolidate all of Delta's operations
into an expanded main terminal with 11 extra gates. Chief Executive
Richard Anderson said increasing presence in New York is a key part
of the airline's long-term strategy. Delta plans to invest $40
million at LaGuardia, once the deal is approved.
Landers said Delta will ask the FAA to grant a waiver from
temporary slot restrictions at LaGuardia. The U.S. Department of
Justice and Department of Transportation also need to sign off on
the pact.
The airline decided earlier this decade to make New York into a
hub, and has made investments in the region to add new routes and
expand advertising. The New York market - with air service divided
among three major airports, LaGuardia, JFK and Liberty
International in Newark, N.J. - has been hotly contended in recent
years as airlines, including American Airlines, a unit of AMR Corp.
(AMR), and Continental Airlines Inc. (CAL) jockey for the right
position there and regulators contend with increased flight delays
due to heavy air traffic.
Southwest Airlines Co. (LUV), the largest passenger carrier
within the U.S., said earlier this year that it will add service at
LaGuardia.
-By Ann Keeton, Dow Jones Newswires; 312-750-4120;
ann.keeton@dowjones.com