The sudden flurry of airlines swapping takeoff and landing slots at Washington and New York area airports continued Wednesday with Delta and US Airways striking a deal similar to one between AirTran and Continental disclosed the day before.
The carriers will get more bang for the buck in congested areas where slot access is limited and where they face increased competition from Southwest Airlines, which has a knack for bringing lower fares to new markets it serves.
They also will be able to serve destinations where they believe they can be more profitable than routes where they are cutting service, all at a time when weak demand for air travel has shed billions of dollars in revenue from airlines' balance sheets.
"In any industry, you want to do what you do best," said airline and travel consultant Bob Harrell.
Another airline consultant, Darryl Jenkins, said the deals appear to be good for all the airlines involved. He noted that new slots at the airports involved are hard to come by.
There's no consensus on what will happen to fares as a result, but experts agree that passengers in general should not be affected much by big players changing positions at three airports. The deals are subject to government approval, and the Department of Transportation is expected to scrutinize the swaps.
A slot is an interval of time during which an airline can takeoff or land its aircraft at an airport. A pair refers to cities airlines fly between. Slots, especially at peak times of day and in busy corridors like the Northeast, are valuable to airlines. In these two deals, no money is changing hands as the carriers are simply swapping slots.
Tempe, Ariz.-based US Airways Group Inc. has agreed to transfer 125 operating slot pairs to Delta at LaGuardia Airport in New York. In exchange, Atlanta-based Delta Air Lines Inc. has agreed to transfer 42 operating slot pairs to US Airways at Reagan National Airport in Washington.
The transition will add 11 gates to Delta's LaGuardia operations. The world's biggest airline operator said the deal will allow it to create a domestic hub at LaGuardia, even as Delta maintains a strong presence at New York's John F. Kennedy International Airport. At the Washington airport, Delta expects to cut its daily departures from 89 to 55, according to a spokesman.
US Airways will expand its service at the Washington airport, and also obtain from Delta access to slots at airports in Tokyo and Sao Paulo, Brazil. The carrier plans to reduce its Express flights at LaGuardia, while mainline and Shuttle flight levels will not be affected.
The airline's regional carrier Piedmont will be hit hard by US Airways' plans to discontinue service to 26 destinations served by US Airways Express. That will result in the elimination of roughly 300 Piedmont positions at LaGuardia when the reduced flight schedule is implemented in early 2010, the airline said.
"The truth is we can better utilize the slots at National, and Delta can better utilize our slots at LaGuardia," US Airways President Scott Kirby said in an interview.
At LaGuardia, Delta's plan calls for building a connector between the adjacent Delta and US Airways main terminals and rebranding US Airways' existing main terminal gates, ticket counters and lounges to Delta standards. Delta Shuttle operations, currently housed in a separate terminal called the Marine Air Terminal, would be moved to Delta's consolidated main terminal. US Airways' Shuttle operations would move to the Marine Air Terminal. A fourth terminal currently houses gates from other airlines.
AirTran Airways, a unit of Orlando, Fla.-based AirTran Holdings Inc., plans to stop flying to and from Newark, N.J., effective Oct. 25 and will give its takeoff and landing slots there to Houston-based Continental Airlines Inc. in exchange for Continental slots at LaGuardia and National airports. Continental has a hub at Newark Liberty International Airport, which is used by many travelers heading to or from New York City. The AirTran-Continental deal was disclosed Tuesday.
Dallas-based Southwest Airlines Co., meanwhile, began flying to LaGuardia in June and will gain entry to National Airport in Washington, if its $170 million bid to buy the parent of Frontier Airlines succeeds. A bankruptcy court auction to sell Denver-based Frontier is set for Thursday.
Delta executives said the changes are part of the airline's effort to adapt its business to the weak economic environment facing it and other carriers. US Airways said it will be able to connect the nation's capital to more small, medium, and large communities across the country.
The airlines downplayed any potential threat from Southwest, saying the deals are about ensuring their long-term profitability.
"I think the fact you see these two transactions being announced a day apart shows this industry taking the necessary steps to deal with high fuel prices and a weak economy," Kirby said.
But Harrell, the consultant, said "Southwest is always in the equation when they are within 50 miles of what you are talking about, and they are."