The Justice Department filed a lawsuit Tuesday to block a proposed deal between United and Delta airlines to swap access between their NY City-area hubs, in an effort to preserve competition at Newark Liberty worldwide Airport.
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United has proposed to abandon John F. Kennedy global Airport and give its so-called slots that allow an airline to take off and land at a congested airport to Delta.
Under the deal, Delta was planning to sell 24 slots (each slot consists of a takeoff and landing) to United.
Bill Baer, head of the Justice Department’s Antitrust Division, said competition at the airport is in “critically short supply” and that allowing United to get more slots would only make the airline more dominant.
Delta’s share of Newark slots would decline to 3%, or 40 slots, if the transaction went through.
“United inherited most of its Newark slots from Continental Airlines when those two merged in 2010”.
Baer said on the conference call that the Delta transaction is United’s third attempt in the a year ago and a half to restrict competition by buying slots at Newark. United already grounds as many as 82 slots each day, which is more than any other competitor can even fly, the lawsuit contends.
“We firmly believe this transaction benefits our customers and the region by enabling us to enhance service at our Newark hub and manage congestion at the airport”, the company said.
The suit could set back plans by United, the second-largest US airline by capacity, to raise the profile of the New Jersey airport. Tuesday’s complaint, which also names Delta as a defendant, accuses United of unlawfully trying to maintain a monopoly. “Indeed, it has always been able to charge a so-called ‘Newark premium, ‘ on average charging more for its Newark service than for comparable service out of other NY airports”. “We will vigorously defend our ability to operate effectively, efficiently and competitively at Newark”. United’s then-CEO, Jeff Smisek, lauded the settlement as a “fair solution that would allow Continental and United to create an airline that will provide customers with an unparalleled global network and top-quality products and services, while enhancing domestic competition at Newark”.
In response to the department’s concerns expressed during its review of the United/Continental merger in 2010, United divested its 36 slots at Newark to Southwest Airlines. In exchange, Delta would leave 24 year-round, three summer and three winter slots at JFK also for $14 million, the lawsuit said. United ceased operating from JFK altogether on October 25 in anticipation of leasing the slots from Delta at EWR.
The slot restraints at Newark run from 6 a.m.to midnight.
He added, “We know that airfares at Newark are among the highest in the country while United’s service at Newark ranks among the worst”.
In the letter, Alaska Air Group Inc., Virgin America Inc., Allegiant Travel Co., Spirit Airlines Inc. and Frontier Airlines Inc. urge the federal government to change the way it allocates slots at Newark, JFK and LaGuardia.
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Slots are takeoff and landing rights.
