JetBlue And Southwest Are Reaping The Benefits Of The American Airlines-US Airways Merger

In August, the Department of Justice sued to block the $US11 billion merger of American Airlines and US Airways into the world’s largest airline, arguing the loss of competition in the industry would hurt consumers.

In November, it relented and let the deal go ahead, on the condition that the airlines give up key landing and takeoff spots at seven airports, many of them at Washington D.C.’s Reagan National.

In parceling out those slots, the DOJ said it would favour low-cost airlines like Southwest and JetBlue.

Those airlines’ “competitive model” would be “kind of a magic potion” for driving down fares, Assistant Attorney General for the Antitrust Division Bill Baer told the media.

Today, JetBlue and Southwest both announced they have acquired slots at Reagan National, allowing them to offer more flights into and out of the popular destination.

JetBlue’s 12 new slot pairs will allow it to add 12 daily flights. The carrier plans to add nonstop service between Washington, D.C. and cities it does not serve. All told, it will operate 30 daily flights out of Reagan. Southwest got 54 slots and will add 27 daily flights, for a total of 44 daily departures.

The deals, made between the carriers and American Airlines, are subject to DOJ approval, but there’s no reason to believe they won’t go through. The terms are confidential.

Giving space at key airports to low-cost carriers has lowered fares before, and it’s not a stretch to say that since this is the largest divestiture of airport slots ever in an airline merger, those benefits will be multiplied.

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