FAA Hands Out Slot Subsidy To Delta, American and United

The U.S. will extend slot waivers at New York JFK, LaGuardia and Washington National through October. United, Delta, and American asked for this jointly, to protect their turf without actually having to fly full schedules.

Among other reasons for agreeing, the FAA cites “global vaccination rates” as well as “continued unpredictability of [international] travel restrictions” and “the disparity between demand for domestic air travel and demand for international air travel” despite the fact that only one of the three slot-controlled airports in the U.S. (New York JFK) carries much international traffic at all. In addition,

At four other U.S. airports where the FAA has a formal schedule-review process – Chicago O’Hare, Newark in New Jersey, Los Angeles and San Francisco – the agency proposes to extend credits to airlines for flights that were canceled in the pandemic as though those flights were operated.

At the most congested airports, the federal government limits the number of takeoffs and landings that are permitted.

  • They assign those takeoffs and landings to specific incumbent airlines
  • Who treat them as a property right, even buying and selling them

The slot control process is a giant subsidy for entrenched carriers, who get valuable assets from the government for free. The one rule is that they actually have to use a slot 80% of the time or else they can lose it to another airline that wants to fly, since the point is to provide air service to the greatest extent possible.

Slots are a bad way of limiting flights anyway. Far better would be congestion pricing. Simply charge for takeoffs and landings when there’s more demand than capacity. Instead of giving out a corporate subsidy, and keeping out competitors, you’d get the most valuable flights at the most peak times.

However if wedded to slots (and it would be hard to wrest those assets from entrenched interests) at least don’t make them permanent gifts. Offer them at auction as multi-year leases. Free the slots and you can bring competition to big aviation markets.

At the very least when Delta, American and United come to the government together to ask for something, be skeptical that it’s in your interest.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I’m sure Pete Buttigieg is totally reviewing slot subsidies at individual airports – if you’re going to try and dunk, at least do it well

  2. The exemptions affect ALL airlines with slots at those airports. Far more airlines than just American, Delta and United have not used all of their slots.

    The real loser is the ULCC sector that has failed to get more access to slot controlled airports, unlike the LCC sector including Southwest and JetBlue.

  3. I’m ok with protecting the Big 3 – at least for now. They are the ones that provide a stable, viable network – not just globally but to smaller communities in this country.

    Whereas the LCCs and ULCCs just come and go opportunistically with no responsibility or continuity whatsoever. So there aren’t really any “slots” to hold for them, just ghosting.

  4. I’m not sure that your solution — auctioning slots — would have the results you’re hoping for. The large network carriers can afford to buy them, yes, but they’re willing to pay more for them than the ULCC’s. The latter will fly from ISP and BWI instead of LGA and DCA, and you’ll have less competition at those airports, not more. And the passenger will end up paying for the price of the slot.

    Government-issued slots exist precisely to ensure that low-cost carriers will get some of the slots at these airports. That’s why the slot system exists in the first place: to ensure competition and keep costs down.

    If more people would first ask why a government program was instituted before they call for privatization, the country would be better off.

  5. @Jim I’m sure Pete Buttigieg is totally reviewing slot subsidies at individual airports – if you’re going to try and dunk, at least do it well.

    If you think that core agency aviation policy can be specifically waived without the Secretary of Transportation being aware of it and approving it, you really don’t understand how any of this works. Do you think it’s the staff that comes up with and approves these ideas? This is a political decision made by political appointees.

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