The FAA plans to award 16 daily departure and landing slots at capacity-constrained Newark Liberty Airport to a single low-cost carrier (LCC) or ultralow-cost carrier (ULCC).
The operating authorizations, all of which would be for peak-hour operations, are among the 36 slots Southwest gave up when it stopped serving Newark in 2019.
Awarding those slots to a single discount carrier would be the most effective way to foster competition with dominant Newark carrier United, the FAA and DOT say in a notice to be published in the Federal Register.
Those 16 slots in question have their own long history. They were among the 36 Newark slots United transferred to Southwest in 2010, a move made by United to assuage competition concerns put forward by the Justice Department as the carrier worked to merge with Continental.
When Southwest later abandoned those slots, the FAA reallocated 20 of them but decided not to re-allocate the other 16 peak afternoon and evening slots in order alleviate congestion at Newark.
That decision led to a legal challenge from Spirit Airlines, and in May the U.S. Court of Appeals for the D.C. Circuit vacated the decision, questioning why the FAA prioritized modest gains in operational efficiency at the airport over the consumer benefits offered by more direct competition in the market. United, the FAA/DOT notice says, held 66% of Newark’s slots as of August 2019. Reintroducing the 16 slots in question would increase delays at Newark by an average of 1.2 minutes throughout the day, according to an FAA analysis, although increases would be longer during peak times and shorter in off-peak hours.
Faced with the court’s decision, and in light of the Biden administration’s stated emphasis on fostering competition throughout the U.S. economy, the DOT and FAA are proposing to put the 16 slots back up for allocation, but only to discount carriers. The DOT will take public comment on the proposal for seven days following its publication in the Federal Register.
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“In airline transactions involving constrained markets, where market concentration is at issue, the department has found the LCCs and ULCCs have the greatest competitive impact upon entry by their ability to dramatically lower fares and increase the volume of passengers in a market,” the notice says.
The FAA plans to solicit applications for those slots from existing low-cost domestic operators in Newark with a goal of selecting the winning carrier in time for the upcoming winter flying season. Allegiant, Alaska, Frontier, Spirit and JetBlue all serve Newark, with JetBlue, followed by Spirit, having the largest operations, Bureau of Transportation Statistics data shows.
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