WASHINGTON - The U.S. Justice Department said on Tuesday it has sued to stop United Airlines from acquiring 24 takeoff and landing slots at Newark Liberty International Airport from Delta Air Lines, which could possibly thwart United's expansion plans at its New Jersey hub.
"There are 35 million air passengers who fly into and out of Newark every year. And we know that airfares at Newark are among the highest in the country while United’s service at Newark ranks among the worst," Assistant Attorney General Bill Baer said on a call with reporters.
"This transaction will reduce competition by removing from the hands of a competitor, in this case Delta, a scarce resource that it needs to compete with United at Newark."
The lawsuit, filed in U.S. District Court for New Jersey in Newark, alleges that the acquisition would lead to higher fares and fewer choices for travelers.
United said it will "vigorously defend our ability to operate effectively, efficiently and competitively at Newark" and that the transaction "benefits our customers and the region by enabling us to enhance service at our Newark hub and manage congestion at the airport."
In essentially a swap, Delta took over United's slots at New York's John F. Kennedy International Airport and then United planned to acquire Delta's slots at Newark, where it is making a $2 billion investment to provide customers with access to connecting flights, new restaurants and technology displays. United ended its JFK service after seven years of failing to profit.
"Delta’s agreement to lease slots at Newark to United, the focus of the Department of Justice lawsuit announced today, is an independent transaction and does not affect Delta’s separate agreement to lease slots from United at New York-JFK Airport," said Delta spokesman Trebor Banstetter in a statement.
Delta began flights with the JFK slots on Nov. 1.
The Justice Department said that United already controls 73 percent of the slots at Newark, which are authorizations from the Federal Aviation Administration to take off from or land at the airport. It also said United allegedly "grounds" as many as 82 slots each day at Newark, limiting flight opportunities.
The federal government has been concerned about a possible monopoly since 2010, when United, the third largest airline in the world by revenue, divested 36 of its slots to Southwest Airlines to help win approval of its merger with Continental Airlines.
Separately, United’s former CEO Jeff Smisek resigned in September amid a federal grand jury investigation into the airline's dealings with the agency that operates airports in New York and New Jersey, including Newark.
United also is investigating Smisek’s dealings with former Port Authority Chairman David Samson, whose activities have been subject of document requests from the U.S. attorney's office in New Jersey, including Samson's votes on United Airlines projects at Newark Airport.
The votes occurred at the same time United was restarting flights from Newark to Columbia, South Carolina, near where Samson has a vacation home. United began a roughly twice-weekly direct flight from Newark to Columbia after Samson became chairman. It was canceled days after he resigned last year.