The Port Authority of New York New Jersey is trying to stop the bankruptcy sale of Spirit Airlines slots at New York LaGuardia.
- Spirit does not own a transferrable right to operate at LaGuardia. They say that the debtors assume the slots are “fungible and transferable” but a slot is not enough to operate at the airport. Port Authority permission can’t be auctioned in bankruptcy. The FAA controls runway operating authority and the airport owner controls facilities.
- But the FAA does allow airlines to lease or trade slots for money! The FAA has to approve the transaction but slot sales are permitted.
For instance, US Airways sold the bulk of its position at New York LaGuardia to Delta (132 slot pairs) in exchange for slots at Washington National airport (42 slot pairs plus cash). The FAA required 32 LaGuardia slots and 16 DC slots to be sold to eligible new entrants or limited incumbents. JetBlue and WestJet won auctioned slots. And the Department of Justice required American and US Airways to divest slots as part of its merger.
When American Trans Air went bankrupt, the FAA tried to argue that the slots couldn’t be sold – but it was still allowed because the bankrupty sale included the defunct business as a hole it still proceeded. That’s how Southwest got ATA’s 14 LaGuardia slots.
Ultimately, a bankruptcy sale can’t transfer Spirit’s airport gate and ticket counter leases, but that’s not surprising. The Port Authority of New York New Jersey has no say in the sale of LaGuardia slots.
Now, the FAA Administrator said that they’d support the slots going to another low cost carrier. He wants to micromanage the result the way the administration criticized the Biden administration for in its antitrust choices.
And it’s not clear whether it even makes sense for low cost carriers to try to operate out of high cost New York airports (or to buy slots outright versus leasing them). He’s said that if the transfer wasn’t going to be to a low cost carrier he’d want the slots retired.
So the Port Authority’s position is largely irrelevant. They win on bankruptcy not transferring a lease, but they still have to lease space if needed. They have to make airport facilities available on “reasonable terms and without unjust discrimination” to airlines as an airport receiving federal grants.
It doesn’t have to be the same Marine Air Terminal space that Spirit had, or even preferential use gates. It could be different space! But they can’t refuse to offer space.
PANYNJ is a bit of a mafia, and I say that with the utmost respect (please, don’t hurt me.)
The FAA has consistently held that slots are federal assets and the FAA can do what they want with them; they have also said they can be traded but not sold.
The massive DL/US slot deal was a swap, not a sale.
There have been multiple other slot deals but they have been leases.
The FAA does not have the right to use slots to determine competitive outcomes but the airlines are the ones that would have to take them to court to prove that point and no one is willing to do that.
Ultimately, the feds are trying desperately to keep ULCC competition alive but they can’t even make it in major markets like LGA, JFK and DCA w/ slot controls.
It is also worth noting that DL is the largest federal slot holder in the US because of its huge LGA and JFK holdings but it has less than 50% of operations at both airports – as well as its #2 position at DCA. AA is the 2nd largest slot holder but still heavily underutilizes its NYC slots – which is fine w/ DL because DL uses slots which AA and B6 aren’t using. AA does use its DCA slots well which just goes to show that hub dominance matters whether in NYC or DCA.
Notably, EWR is not slot controlled because of UA’s mistakes in underutilizing slots a decade ago but UA still operates a majority of EWR slots – far larger than DL has at JFK or LGA – and EWR operations are capped.
UA is trying to get some of the flight times which B6 and NK operated at EWR. It will be very interesting – and worthy of a challenge by other carriers – if UA is allowed to add more flights at EWR while LGA and JFK slots cannot be traded to anyone.
For the ULCCs other than maybe Frontier, and given their financial woes buying slots at LGA might not be a good decision, is that LGA doesn’t fit their business model. They are more towards underserved routes which can support less than daily service. Maybe Southwest and JetBlue will have an interest but are they a “LCC.” Is there even such a thing anymore? It’s not like there are huge differences in fares between Southwest, Jetblue and the US3.
It may come down to an operational airline can buy and sell slots, but nobody else. Otherwise, Elon Musk or the pilots union could buy slots and extort.
@Tim Dunn — “The FAA has consistently held that slots are federal assets and the FAA can do what they want with them…” Good to know. So, when, say, in the future, the FAA screws over Delta for whatever reason, you’ll repeat that to yourself, right? RIGHT??
Tim – The swap included cash… that is by definition a sale. The exchange of cash for a good, product, or asset.
Personally I think if the FAA and PANYNJ wants full control move it from slots to usage % or bidding without control or ownership.