Monday, May 23, 2011

Delta and USAirways try again in DC and NY

Delta and USAirways, who previously (as we discussed here) tried to swap slots and gates at New York's LaGuardia and Washington Reagan National airports but were ultimately blocked by competitive concerns are at it again.

In the plan announced today, DL and US will still trade a similar number of slots and cash and will open up some additional slots for new competition and destinations from both LGA and DCA.

One major change this time around is Delta's plan to continue to operate the Delta Shuttle from the Marine Air Terminal at LGA (last time it was going to become USAirways home). USAir, Shuttle and all, will remain their current home at Terminal C at LGA in the new plan.

As before, Delta plans to operate 132 slots worth of flights (that is 66 departures and arrivals for those of you counting) with regional jet equipment vs. the prop-jets that USAirways utilizes on most of these departures. The cities may change, of course, but we expect that they will look largely as they do today.

One odd part of the press release is that the USAirways Shuttle is described as the "popular hourly Shuttle service between LaGuardia, Reagan National and Boston that is operated on dual-class mainline jets will remain unchanged as a result of the transaction." However, a quick scan of Sabre from our friends at reveals that while the LGA-DCA flights are, indeed, all operated with dual-class mainline jets, the service to Boston with the exception of the 6AM departure is actually operated with Regional Jets - USAirways' unions will probably have a field day with this...

Accuracy aside, we view this as a great move for both airlines, consumers and the cities served by USAirways from LGA today. Regional Jets will provide significantly more lift into LGA than the Dash-8s and such that USAirways operates today and Delta's much larger presence at LGA will create substantially more connecting opportunities from those smaller bergs than USAirways offers today. USAirways offers very limited connecting opportunities today unless you happen to want to fly from Portland, ME to Norfolk and such. Delta will offer those same connections from Portland to Norfolk but will also offer connections to many larger cities that Delta serves from LGA such as Orlando, Tampa, Fort Lauderdale and the like. This is good for those cities and good for consumers who gain more choice and competition.

As for Cincinnati and Memphis - we expect the aircraft Delta will require to operate these flights will come from those operations. Both are largely duplicative with Delta's hubs in Detroit and Atlanta, respectively. Delta certainly is not going to acquire new regional jets to "fund" this expansion in New York and the small amount of flights they are giving up in DC are not nearly enough. Look for a final de-hubbing in CVG and MEM following the inevitable approval of this transaction.

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