Southwest Tops JetBlue in Buying American’s Washington Flights

Jan 30, 2014 1:48 pm ET

Jan. 30 (Bloomberg) -- Southwest Airlines Co. won the most flying rights at Washington’s Reagan National Airport, topping JetBlue Airways Corp. in the last major asset sale demanded by regulators for the merger creating American Airlines Group Inc.

Southwest agreed to purchase slots for 27 daily round trips, while JetBlue will buy rights for 12 round trips and acquire eight pairs now being leased from American, the airlines said today in statements. The buyer of slots for five additional round trips hasn’t been disclosed.

The sales fulfill the U.S. Justice Department’s requirement that buyers be airlines that would expand competition and offer more low fares. That condition was part of the settlement of an antitrust lawsuit opposing the AMR Corp.-US Airways Group Inc. tie-up on grounds that the combined carrier would be too dominant at the airport closest to downtown Washington.

“American is working on definitive agreements with a number of carriers,” said Casey Norton, a spokesman for the Fort Worth, Texas-based airline who works at Weber Shandwick.

Financial terms weren’t disclosed, and the sales must be approved by the Justice Department. A slot allows for one takeoff or landing, and a pair is needed for a round trip. American agreed to give up 104 slots, or enough for 52 daily round trips.

Virgin America

Virgin America Inc., the carrier partly owned by U.K. billionaire Richard Branson, is interested in Reagan slots, said Jennifer Thomas, a spokeswoman. She declined to confirm that Virgin bid on them.

Southwest, the biggest discount carrier, said it will increase daily departures at Reagan to 44 from 17 now. Destinations, fares and schedules will be announced later this quarter, with flights starting in the third quarter, the Dallas- based airline said.

JetBlue said it will use the slots to build its daily service at Reagan to 30 round trips from 18 now. The New York- based carrier plans to add flights to new destinations as well as increase frequencies on some existing routes.

“That’s a significant presence for us,” Scott Laurence, JetBlue’s vice president for network planning, said in an interview today. Cities the airline may consider for Reagan flights include Charleston, South Carolina; Jacksonville, Florida; and Portland, Maine, he said.

American, the world’s largest airline, will still operate a majority of the flights at Reagan, with 57 percent. The combined airline would have had 69 percent of Reagan flights without the slot sale, the Justice Department said in its original complaint. The merger was completed last month.

LaGuardia Rights

American divested flight rights in December at New York’s LaGuardia Airport, the other focus of regulators’ objections. Southwest bought 11 slot pairs, including five already being leased from American, while Virgin America picked up six pair. JetBlue failed to win LaGuardia slots.

Under the lawsuit settlement, US Airways and AMR also agreed to give up two airport gates each at Boston Logan, Los Angeles International, Chicago O’Hare, Dallas Love Field and Miami International.

--Editors: John Lear, Ed Dufner