Revises Approved 2009 Deal That Airlines Chose Not To
Accept
In a deal that Delta and US Airways have been trying to close
for nearly two years, a new slot swap agreement between the
airlines to transfer takeoff and landing rights at New York's
LaGuardia and Washington D.C.'s Reagan National airports was filed
Monday with the FAA. The new agreement revises a 2009 transaction
agreed to between Delta and US Airways and approved by the DOT, but
under terms not acceptable to the carriers, and never completed.
The new agreement enables Delta and US Airways to expand service
and increase competition at two of the nation's key cities, and
provides the opportunity for additional access to LaGuardia and
Reagan National for new entrants and airlines with a limited
presence at the airports.
Under the agreement, Delta would acquire 132 slot pairs at
LaGuardia from US Airways and US Airways would acquire from Delta
42 slot pairs at Reagan National and the rights to operate
additional daily service to Sao Paulo, Brazil in 2015, and Delta
would pay US Airways $66.5 million in cash. In addition, the
transaction could result in the divestiture of up to 16 slot pairs
at LaGuardia and eight slot pairs at Reagan National to airlines
with limited or no service at those airports. The completion of the
transaction is subject to certain closing conditions, including
government and regulatory approvals. A slot pair is the authority
to operate one takeoff and one landing.
"With this agreement, Delta will enhance competition in New
York, which is already one of the most competitive aviation markets
in the world, by expanding the passenger capacity at LaGuardia by
as many as 4 million seats annually without increasing congestion,"
said Richard Anderson, Delta's Chief Executive Officer. "Our
expanded presence at LaGuardia will double our available
destinations, offering customers more frequent and convenient
service at New York's preferred airport for business travel."
(L-R) Richard Anderson, Doug Parker
US Airways' Chairman and Chief Executive Officer Doug Parker
said, "This agreement further strengthens our commitment to
increase service and create more options for our customers wishing
to travel to and from Washington, D.C. As a result of this
transaction, many communities, including several smaller ones, will
be able to enjoy additional nonstop service to our nation's
capital."
The carriers say the proposed transaction will provide
significant direct benefits to consumers flying to and from New
York and Washington, as well as consumers traveling to other
destinations along the East Coast as the two airlines enhance their
networks. These benefits are generated by improved connectivity,
enhanced service and increased efficiency at both airports.
In addition, the airlines say the competitive landscape in both
cities has changed significantly since the transaction was first
proposed in 2009. New entrants and smaller carriers, including
AirTran Airways, JetBlue Airways and Southwest Airlines, have
gained considerable access to slots at both LaGuardia and Reagan
National and expanded service at these and other airports in the
New York and Washington regions. Also, mergers between United
Airlines and Continental Airlines and Southwest and AirTran have
dramatically sharpened competition on the East Coast generally and
particularly in the New York and Washington regions. Nonetheless,
to address concerns previously raised by the Department of
Transportation, the agreement provides for the divestiture of up to
16 slot pairs at LaGuardia and eight at Reagan National if required
by the regulatory authorities.
The proposed transaction has generated significant support from
elected officials and community leaders in New York and Washington.
In addition, the City and State of New York, and both U.S. Senators
from New York have supported the proposal, as have members of
Congress representing New York, elected leaders in small
communities and airports across the nation.
The airlines will dismiss their appeal of the DOT's order
regarding the original 2009 transaction that is currently pending
in the U.S. Court of Appeals in Washington. Dismissing the appeal
clears the way for DOT to consider the revised application.
Delta says its expanded operation at LaGuardia will allow more
and improved connecting service in New York, and ensure
economically viable service to small communities, while creating an
expanded network that will be particularly valuable for New York
business customers. The airline will approximately double the
number of nonstop destinations it serves from LaGuardia, including
top business destinations and many cities not currently served
nonstop by Delta or US Airways.
Delta will replace turboprop aircraft currently operated by US
Airways with larger jets, adding as many as 4 million additional
roundtrip seats available at LaGuardia without increasing
congestion.
As part of the agreement, Delta will take control of US Airways'
Terminal C to create an expanded main terminal for customers. Delta
will operate a total of 18 gates in Terminal C, and add one
additional gate at Delta's Terminal D, for a total of 29 gates in
the two terminals. A 600-foot connector will be built to connect
the two terminals. Delta also will convert the existing US Airways
lounge in Terminal C to a Sky Club, while continuing to operate its
current Sky Club in Terminal D.
Delta will continue to operate its popular hourly Delta Shuttle
from its six gates at the Marine Air Terminal. In addition, Delta
will spend up to $117 million to expand, renovate and consolidate
terminals C and D over the next two years. Overall, the transaction
will directly and indirectly generate an estimated 6,000 new jobs
in New York.
At Reagan National, US Airways would expand operation to connect
more small, medium and large communities with the nation's capital
and create additional flight options throughout the airline's route
network. US Airways expects to further increase its use of dual
class mainline aircraft and soon to be dual class larger regional
jets at Reagan National. The move will benefit customers by
increasing the number of available seats between Washington and
favorite destinations without increasing congestion.
US Airways plans to add at least 15 new destinations from
Washington, to its network as a result of the transaction and
competition will be further enhanced by US Airways adding service
to popular destinations that are currently served by other
carriers. As a result, business and leisure travelers as well as
military and government employees will have more access to the
nation's capital and its downtown airport.
Following full implementation of the new schedule, US Airways
will operate approximately 230 peak-day departures at Reagan
National, a 20 percent increase over current service levels. The
airline anticipates an increase of approximately 20 to 25 percent
in passenger enplanements at Reagan National as a result of the new
flights and schedule improvements. However, there will be no
increase in congestion at the airport due to US Airways' planned
increase in scale and Delta's reduction in slots.
The expansion is consistent with US Airways' previously
announced strategic plan to focus on growing its key, most
profitable airports at its Washington focus city, its Phoenix,
Philadelphia and Charlotte hubs and its US Airways Shuttle service.
Once the transition is complete, more than 99 percent of US Airways
capacity will be to or from its key airports.
Delta will continue to operate a robust schedule at Reagan
National, with nonstop service between the airport and its seven
domestic hubs and select cities. It also will continue to operate
its Delta Shuttle between Reagan National and New York.
US Airways would also acquire from Delta the rights to operate
additional daily service at one of world's most important business
destinations – Sao Paulo, Brazil in 2015. As US Airways
continues its strategic expansion into South America, the
additional rights would allow it to operate two daily flights to
Sao Paulo and continue its existing daily service to Rio de
Janeiro, Brazil.
Since the 2009 transaction, Japan and the U.S. have made
an Open Skies agreement that would enable US Airways' service to
Tokyo Narita International Airport. As a result, the transfer of
slots at Narita from Delta to US Airways that was included in the
2009 transaction is not part of the new transaction.