By Mary Schlangenstein and Alan Levin - Nov 24, 2011 4:00 AM GMT+0700
JetBlue Airways Corp. (JBLU) won an auction to add flights at New York’s LaGuardia airport and Reagan airport in Washington, beating rivals that included Southwest Airlines Co. (LUV), two people familiar with the matter said.
JetBlue will receive eight pairs of takeoff and landing slots at each of the airports, said the people, who weren’t authorized to comment publicly about the U.S. Transportation Department auction. WestJet Airlines Ltd. (WJA) said it won the auction for eight other slot pairs at LaGuardia.
Federal rules limit flights at both airports, so airlines can expand only by securing slots. LaGuardia International, part of the nation’s busiest aviation market, and Ronald Reagan National are prized by carriers because each is popular with business fliers who typically buy the most-expensive tickets.
“Surprisingly, it does not look like Southwest put in a credible bid for either LaGuardia group,” said Jeff Straebler, an independent aviation analyst in Stamford, Connecticut. “At least for now, it appears that Southwest is satisfied with its position at LaGuardia, given slots it picked up from the AirTran acquisition.”
Southwest, the largest low-fare carrier, had said publicly that it would bid for flights at both airports. Brandy King, a spokeswoman for Dallas-based Southwest, declined to comment today. Southwest had eight daily LaGuardia flights and obtained 20 more when it bought AirTran Holdings Inc. in May, a deal which also gave Southwest 12 daily departures from Reagan.
Delta, US Airways
The airlines bid on slots that Delta Air Lines Inc. (DAL) was required to surrender to win U.S. approval for a trade of the flight spots with US Airways Group Inc. (LCC) at the two airports. The auction may be the biggest for landing rights at LaGuardia and Reagan, according to Sandy Rederer, a principal at consultant Aviation Planning & Finance in Washington.
JetBlue’s winning bids totaled $72 million, while Calgary- based WestJet bid $17.6 million, according to data on a government website. Mateo Lleras, a spokesman for New York-based JetBlue, declined to comment.
JetBlue has as many as 11 daily flights from LaGuardia and nine from Reagan. The airline probably bid more for the Reagan slots because it needs to expand in the Washington area, Straebler said. The airline has the most daily domestic flights from New York’s Kennedy airport.
‘Dark Horse’
“WestJet was always the credible dark horse at LaGuardia, given a strong cash position and its stepping up competition against Air Canada for ‘golden triangle’ traffic -- Toronto, Montreal and Ottawa,” Straebler said. “LaGuardia service to any of these cities will be a nice complement.”
Securing the flight slots was a “once-in-a-lifetime opportunity,” WestJet Chief Executive Officer Gregg Saretsky, said in a statement. “Our ability to serve New York demonstrates we are focused on delivering on our business traveler strategy.”
Other airlines that registered to bid were Frontier Airlines, a unit of Republic Airways Holdings Inc. (RJET); Spirit Airlines Inc.; Allegiant Travel Co. (ALGT); and closely held Sun Country Airlines Inc. Under rules set for the auction, airlines or affiliates already holding a certain amount of slots could not participate.
US Airways and Delta are awaiting approval from the Port Authority of New York and New Jersey to complete the LaGuardia side of the swap, after securing federal consent.
The Transportation Department also approved the Reagan portion, although the U.S. Justice Department has yet to sign off. The airlines have said they hope to close the transaction this year.
Rules set for the auction say the government won’t identify winners until carriers complete the sales, which must be done by Dec. 1. The Transportation Department declined to comment further, spokesman Bill Mosley said in an e-mail.
The exchange would give Atlanta-based Delta 132 more pairs of LaGuardia slots, assuring control of more than half the flights there. US Airways will get 42 pairs at Reagan, $66.5 million in cash and an additional daily route to Sao Paulo and will scale back unprofitable operations at LaGuardia.
To contact the reporters on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net; Alan Levin in Washington at alevin24@bloomberg.net
To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net; Bernard Kohn at bkohn2@bloomberg.net
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