Premier U.S. passenger carrier
Delta Airlines Inc.
) insists that the Department of Justice (DOJ) should not be
biased toward low cost carriers while divesting airport slots and
assets related to the proposed merger of American Airlines and
US Airways Group Inc.
). Recently, both American and U.S. Airways cleared all
competition-related litigation raised by the DOJ along with
attorneys general of six states and the District of Columbia in
As part of the clearance, the airlines will have to give up 52
take-off and landing slots at Washington's Reagan National
Airport (DCA) and 17 pairs at La Guardia airport in New York
(LGA). Further, the carriers have to divest two gates and related
facilities at each of the Boston, Chicago, Dallas, Los Angeles
and Miami airports. The DOJ has argued that opening up of slots
will induce more competition within the industry.
Delta wishes to get an opportunity to bid for slots and
facilities at these airports particularly in DCA and Love Field
Airport at Dallas, from where it operates non-stop flights to its
international hub in Atlanta. The bidding will be through a DOJ
approved process following completion of the merger, which is
expected in Dec 2013.
Atlanta-based Delta has argued that if the divesture is
limited to low cost carriers, it may led to reduction of flights
to small and medium communities as budget airlines generally
avoid these routes. Further, with their fleet of small aircraft,
the carriers will be able to provide regular service from DCA and
LGA to other smaller and medium size cities.
However, during the settlement procedure, DOJ hinted that low
cost carriers like would be a significant part of the divesture
process. Reiterating that view, recently a DOJ lawyer confirmed
that carriers like Delta and United Airlines are unlikely to win
slots at these airports. Others such as
Southwest Airlines Co.
JetBlue Airways Corp.
), Virgin America and
) are considering participation in the divesture process.
Winning newer landing and take-off slots will only strengthen
the presence of legacy carriers like Delta in the above mentioned
airports. However, it remains to be seen whether Delta will
ultimately win any slot, given the inclination of the DOJ toward
Delta currently carries a Zacks Rank #2 (Buy).
DELTA AIR LINES (DAL): Free Stock Analysis
JETBLUE AIRWAYS (JBLU): Free Stock Analysis
US AIRWAYS GRP (LCC): Free Stock Analysis
SOUTHWEST AIR (LUV): Free Stock Analysis
SPIRIT AIRLINES (SAVE): Free Stock Analysis
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