The Department of Transportation has made its determination about the five new “beyond perimeter” routes that would be permitted to operated at Washington’s National airport. These are flights provided for in the FAA Reauthorization Act which are farther the airport’s current cap for most flights of 1,250 miles. The decision was made months after the agency was statutorily required to announce it.
Here are the (5) awards that they propose in their tentative order:
- American Airlines: San Antonio
- Alaska Airlines: San Diego
- Southwest Airlines: Las Vegas (adds to existing American Airlines service)
- Delta Air Lines: Seattle (adds to existing Alaska service)
- United Airlines: San Francisco (adds to existing United and Alaska service)
That means nothing for JetBlue (a second San Juan flight), Frontier (San Juan), and Spirit (San Jose). This is pretty much what I’ve expected, though Spirit’s San Jose, California proposal is far stronger than United’s San Francisco.
How The Decision Was Made
Congress gamed this by stating that four of the new routes had to go to the largest airlines already serving the airport (non-limited incumbents) and one to an existing airline at the airport that was smaller (limited incumbent). New entrants to the market were legally barred from one of the slot pairs.
In case there was any doubt what was intended, Senator Maria Cantwell – who chairs the committee that wrote the law – sent a letter to Transportation Secretary Pete Buttigieg making clear that American, Alaska, Southwest and Delta should get these slots. The fix was in.
The whole issue really hinged on who would get awarded the fifth flight, and that depended on which airlines qualified as a limited incumbent. It turns out the rules on this are complex. I think DOT is misreading them. The excluded airlines, for their own reasons, think so too. And a dispute seems likely to follow.
The rest of the arguments over whose proposal is best is almost entirely moot. The only dimension where that wasn’t the case is JetBlue’s suggestion of a second San Juan flight where they’re the only carrier in that market to begin with. That was always going to be a non-starter.
The rest of the wrangling and sniping between airlines over whether United’s proposed times for San Francisco were permitted, and whether American had too many slots, where all only meaningful if DOT considered Alaska Airlines to be a non-limited incumbent and therefore they had to compete with San Diego for their proposals.
Did DOT Get The Legal Analysis Right?
The Department of Transportation uses something of a tortured reading of the FAA Reauthorization statute and related regulations to decide which airlines are eligible as a ‘limited incumbent’ carrier for the one slot pair set aside for that designation.
- They say the carrier has to be an incumbent at the airport, and incumbent isn’t defined and so their approach is to use the clear meaning of the language.
- And separately that the carrier has to be a limited incumbent, which is defined.
Therefore, they say, they can exclude airlines that weren’t flying from the airport when the law was enacted – meaning Spirit Airlines – even though Spirit qualifies as a limited incumbent.
Frontier flies from the airport today and doesn’t fly so much that they’re ineligible, but all of their slots are exemption slots. They do not have a single regular slot, which under the rules makes them a new entrant to the airport. The regulatory definitions here are tortured, but DOT seems correct here, and Frontier is ineligible (since no slots are set aside for new entrants).
Of course, Frontier pitching an additional San Juan flight for the airport wasn’t ever super compelling. It was really just a proposal that made sense if all other potential winners of the limited incumbent slot were disqualified (Spirit, Alaska).
While I think they’re wrong on their interpretation of Spirit’s ineligibility, they’re especially far afield in their discussion of why Alaska Airlines is eligible.
- Their status as a limited incumbent is supposed to be judged in total with their codeshare partners. They codeshare with American Airlines at the airport. That should be the end of the discussion. Combined, they are the largest at the airport and not a limited-incumbent.
[A]n air carrier that operates under the same designator code, or has or enters into a code-share agreement, with any other air carrier shall not qualify for a new slot or slot exemption as a new entrant or limited incumbent air carrier at an airport if the total number of slots and slot exemptions held by the two carriers at the airport exceed 20 slots and slot exemptions.
- DOT acknowledges this but says that since American and Alaska can’t codeshare on Alaska’s flights out of National airport based on a legal agreement, giving them another exemption slot won’t add to their American Airlines codeshare.
- Alaska does put their code on more than 50 American Airlines flights from the airport, so I’m not sure how DOT can conclude that “Alaska does not receive any meaningful access to the DCA market via its relationship with American” nor is it obvious that this should matter – the clear meaning of the language, which DOT elevates earlier in its discussion, clearly says Alaska is ineligible.
None of this should even matter to whether or not Alaska gets awarded its preferred route to San Diego – it is likely compelling enough to win one of the four non-limited incumbent slot pairs. It would simply bump out United’s award of another San Francisco trip (and make room, potentially, for Spirit to San Jose), which was the weakest proposal since there are already two flights and two carriers serving that market.
However awarding the limited-incumbent slots to Alaska, and ruling Spirit ineligible, should generate appeals and litigation.
Delta should be flying a plane with Delta One between DCA and SEA.
@ Gary — Hopefully Senator Allred will end the DCA-SAT route.
the bottom line is that AA and AS both are getting competition on routes where they currently operate monopoly nonstops while both are also getting newer monopoly routes although in smaller markets.
As for the language of who is eligible or not, the ship has sailed and the awards are highly unlikely to change. But the real issue is that the alternate bidders that weren’t awarded face significant strategic and financial challenges right now so the DOT took a fairly low-risk approach to making sure they don’t have to revisit the topic anytime soon.
And DL not only won with a 3rd outside perimeter destination from DCA but also in adding 5 more new flights from DCA to the west coast which UA fought against because it weakens their IAD hub, even if one of those flights will be on UA.
While UA seems to accept that it is in a no-growth situation at EWR, IAD is its best hope for moving connecting traffic out of EWR; AA is trying once again to make its CLT and PHL hubs work better together while DL is using its lineup of ATL, JFK and BOS to be the largest east coast transatlantic carrier. These 5 routes do matter in the scope of how the big 3 are positioned on the east coast. and they also matter to AS which has a niche but strong position at DCA – far better than they have in any other east coast city – thanks to legislative influence – and also ensures that B6 will continue to slip relative to its competitors.
FNT,
AA, DL and UA all have narrowbody domestic aircraft in their fleet now with some sort of lie flat business class cabin
Yet, so far as I know, DL is the one of the 3 that uses an aircraft with a lie flat cabin on its DCA-LAX flight with one of their 757s.
The 757 is the ideal plane to do a coast to coast route year round out of DCA (or LGA if it was permitted) regardless of weather and still offer a lie flat product. and yet the DL lie flat 757s will be reconfigured to standard domestic use when their A321 transcon NEOs enter service. Clearly DL would have an advantage compared to AS if they used a lie-flat aircraft to SEA; DOT data shows DL gets a revenue premium out of DCA to LAX but the 757 can carry about 20 more total passengers w/ business class (but no premium select) than the A321NEO which will have PS.
@ Timmy — Regardless of whatever you are attenpting to say, flying United will continue to be a superior experience versus Delta.
“the bottom line is that AA and AS both are getting competition on routes where they currently operate monopoly nonstops while both are also getting newer monopoly routes although in smaller markets.”
LMAO. Both AA/AS clean DL’s clock on any outside perimeter route from DCA besides SLC. Of course you would mention “smaller markets” as a negative. Somehow, your delusional mind will justify DL’s 3 flights (LAX/SLC/SEA) running over AA’s 7 flights (LAX/PHX/LAS/SAT) & AS’s 6 flights (SEA/PDX/SFO/LAX/SAN).
The Alaska question is answered by the committee being chaired by Maria Cantwell, a senator from Washington state, where Alaska Airlines calls home.
roberto,
you confuse volume with quality as measured by actual fare data – which is available.
we knew going into this perimeter exemption process that AA and AS had more perimeter exemptions than DL or UA but the actual fare data shows that DL gets more revenue per seat than AA or AS – and the 3 all do compete in the DCA-LAX market.
and Gene,
UA doesn’t fly DCA-LAX but chose to get a leg up over AS to SFO which makes more sense than trying to become the 4th wheel in a market where 3 other carriers are already established.
And DL will most certainly pull some decent revenue onto its new SEA flight; AS tried to deny how much of a revenue premium that it actually gets but DL has access to all of the local DCA and connecting revenue that AS and AA can carry via DCA. DL has LESS need to carry connections via DCA which is exactly what AS needs to do to maximize revenue because, without a joint venture which AA and AS DON’T have, AA and AS each want to carry the maximum amount of revenue on their own metal before turning the passenger over to each other. Given that AS doesn’t fly to SEA, DCA is the most geographically suited AA hub that AS serves at which AA can “complete” an itinerary to the SE US.
and, gene, we know full well that when you don’t like the actual facts that exist, you just argue against them.
Delta handedly outperforms Alaska in average fare to the eastern US.