As per media reports, U.S. budget carrier
Southwest Airlines Co.
) and Virgin America will purchase slots at LaGuarida (LGA)
airport in New York. The carriers will buy the slots from
U.S. Airways Group Inc.
) and American Airlines Inc. which must sell these as part of
their merger deal.
The low cost carriers are acquiring 34 landing and take-off
slots at this busy international airport with limited capacity.
However, the distribution of slots is unknown as neither of the
carriers divulges any detail on the news.
If sources are to be believed, Southwest has already leased 10
of the slots at LGA from American and will be eyeing part of the
remaining slots. Rival carrier
JetBlue Airways Corporation
) is believed to be interested in DCA slots.
Notably, the merger suffered a setback following opposition
raised by the DOJ (Department of Justice) along with attorneys
general of six states and the District of Columbia as they
believe that it will result in concentration of power in the
hands of a few airlines thereby posing difficulties for
Both the carriers have now cleared all litigations against
them after they agreed to give up 52 take-off and landing slots
at Washington Regan (DCA) and 17 pairs at LGA in New York.
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 and is believed to be favouring
the low cost carrier. Meanwhile,
Delta Airlines Inc
) wished to get an equal opportunity to bid for slots and
facilities at these airports particularly in DCA and Love Field
Airport at Dallas. It remains to be seen whether incumbent
carriers like Delta can get some slots, which depends upon the
discretion of the DOJ.
If successful, Southwest will only gain from the process as it
will give the Dallas-based carrier an opportunity to expand its
network in New York, which remains a strong foothold for JetBlue
and bigger rival Delta.
Southwest 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
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