DOT to reallocate ex-Southwest slots at Newark to an LCC
The US Department of Transportation (DOT) is planning to reallocate 16 peak hour slots at New York Newark, returned by Southwest Airlines (WN, Dallas Love Field) in 2019, to another budget carrier.
The proposal, published in the US Federal Register last week, ends a two-year court dispute with Spirit Airlines (NK, Fort Lauderdale Int’l) over the use of the runway timings. When Southwest announced that it would cease all operations from Newark in 2019, the DOT initially decided to reallocate only the 20 non-peak slots out of its daily total of 36. The 16 peak ones were not reallocated. The DOT argued that due to severe congestion and above-average delays at the airport, reducing the number of authorised operations during peak hours was preferable. The decision was criticised by the Assistant Attorney General for the Antitrust Division and subsequently challenged in court by Spirit Airlines.
The DC Circuit Court of Appeals ordered the DOT in May 2021 to reevaluate its decision. While it did not explicitly tell the regulator to reallocate all 16 slots, it said that if it retook the same decision, “it should be prepared to provide a reasoned explanation for preferring to cut travel time an average of one minute rather than to cut the price of flying by as much as 45 per cent on routes that would gain a second carrier”.
Responding to the decision, the DOT said it would reallocate all 16 timings. It underlined that its models showed that since these frequencies would lead to an above-capacity number of operations during peak hours, they would increase the average delay at Newark by 1.2 minutes per movement.
“The Department believes that the benefits of lower fares significantly outweigh the impacts of additional delays,” the DOT said.
The regulator intends to reallocate all 16 frequencies to a single carrier to achieve sufficient economies of scale and offer lower fares to passengers. It hopes the reallocation will proceed quickly and allow the airline to launch new routes from Newark in the Winter 2021/22 season.
The DOT argued that its decision was partially motivated by Executive Order 14036, issued by President Joe Biden on July 9, 2021, which aims to promote competition across various sectors of the US economy.
Once reallocated, the frequencies will boost competition to United Airlines at the airport, even though the carrier is set to remain Newark’s dominant carrier. According to the ch-aviation capacities module, it currently has a 59.5% market share by scheduled seating capacity out of the airport (although the reduced number of international services currently lowers the share).
The slots in question were initially transferred to Southwest by United in 2010 as a condition for its merger with Continental Airlines. Newark was a Level 3 slot-controlled airport at that time, which permitted slot trades and transfers. However, in 2016, Newark became a Level 2 airport. Under US regulation, airlines are allocated runway timings in a collaborative process instead of tradeable slots. These slots are adjusted based on capacity and schedule declarations but cannot be traded or transferred between airlines.