Delta, US Airways In NY, DC Slot Swap

August 12, 2009

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Delta Air Lines and US Airways have agreed to a significant swap of takeoff and landing rights at New York LaGuardia and Washington Reagan National airports, the airlines said on Wednesday.

The unusually large deal has been in the works for some time and continues the efforts by US Airways to reorganise its route structure and potentially expand overseas.

Delta's objective is to enhance its New York operation as a destination for business travel and expand links to international flights.

"Really this is about getting the assets in the hands of airlines that can use them most efficiently," US Airways President Scott Kirby said.

US antitrust and transport regulators must sign off on the planned exchange of airport slots, which equal access for roundtrip flights.

Industry consultants knowledgeable about the deal said Justice Department officials would look closely at the plan for US Airways to boost operations at Reagan National, where it is already the dominant carrier.

The airlines would also have to convince Transportation Department regulators to end a recent ban on slot sales at LaGuardia.

The deal, the second of its kind involving big US airlines in two days, is structured as "two simultaneous asset sales" but no cash will be exchanged, the companies said.

The deal would transfer 125 pairs of slots from US Airways to Delta at LaGuardia. Those slots are currently used by US Airways Express.

US Airways has been criticised for underutilising the space over the years by flying regional jets instead of larger planes. Delta plans to use bigger aircraft.

More efficient use of LaGuardia, notorious for congestion and delays, has long been a priority of transport and aviation regulators.

In return, US Airways would receive 42 pairs of slots from Delta at Reagan National -- as well as the rights to expand to Sao Paulo and Tokyo.

US Airways said it expects to earn USD$75 million a year from the transaction.

Delta competes aggressively with Continental Airlines and JetBlue Airways in New York. Delta said it expects to more than double the number of nonstop destinations it serves from LaGuardia.

After the transaction, US Airways would provide nonstop service from Reagan to 15 new destinations a day. US Airways competes with United Airlines and Southwest Airlines at Baltimore.

Separately, AirTran Airways and Continental Airlines will swap slots at New York-area and Washington airports.

AirTran will stop flying from New Jersey's Newark airport, giving its access to Continental. In return, Continental will exchange some of its slots at Reagan National and LaGuardia.