Originally Posted by
lolwut
So US/AA have to give up gates and slots all over the country, but WN can bid to be an almost monopoly at DAL?
DOJ has said this on the matter.
2. Competitive Effects
As alleged in the Complaint, this merger would combine two of the four major “legacy” carriers, leaving “New American,” Delta, and United as the remaining major national network
carriers. Those three carriers would have extensive national and international networks, connections to hundreds of destinations, established brand names, and strong frequent flyer reward programs. In contrast to the legacy carriers, other carriers (hereinafter referred to as “low-cost carriers” or “LCCs”), such as Southwest Airlines (“Southwest”), JetBlue Airways (“JetBlue”), Virgin America Frontier Airlines, and Spirit Airlines, have less extensive networks and tend to focus more heavily on lower fares and other value propositions. Southwest carries the most domestic passengers of any airline, however, its route network is limited compared to the four current legacy carriers, especially to significant business-oriented markets. Although the LCCs serve fewer destinations than the legacy airlines, they generally offer important competition on the routes that they do serve.
This merger would leave three very similar legacy airlines—Delta, United, and the New American. By further reducing the number of legacy airlines and aligning the economic
incentives of those that remain, the merger would make it easier for the remaining legacy airlines to cooperate, rather than compete, on price and service.
However, especially in large cities, low-cost carriers have demonstrated some ability to overcome those disadvantages with the help of lower costs, when they are able to obtain access to the necessary airport facilities.
The Complaint alleges that the merger will diminish New American’s incentives to maintain these strategies and increase its incentives to coordinate with the other legacy carriers rather than compete.
Past antitrust enforcement demonstrates that providing LCCs with access to constrained airports results in dramatic consumer benefits. In 2010, in response to the United States’
concerns regarding competitive effects of the proposed United/Continental merger, United and Continental transferred 36 slots, three gates and other facilities at Newark to Southwest. Southwest used those assets to establish service on six nonstop routes from Newark, resulting in substantially lower fares to consumers. For example, average fares for travel between Newark and St. Louis dropped 27% and fares for travel between Newark and Houston dropped 15%. In addition, Southwest established connecting service to approximately 60 additional cities throughout the United States.
The Divestiture of Gates at Other Key Airports
Section IV. H of the Proposed Final Judgment requires that New American will transfer, consistent with the practices of the relevant airport authority, to another carrier or carriers approved by DOJ in its sole discretion, in consultation with the Plaintiff States, all rights and interests in two gates, to be identified and approved by DOJ in its sole discretion, in consultation with the Plaintiff States, and provide reasonable access to ground facilities (e.g., ticket counters, baggage handling facilities, office space, loading bridges) at each of: ORD, LAX, BOS, MIA, DAL on commercial terms and conditions identical to those pursuant to which the gates and facilities are leased to New American.
The proposed Final Judgment also includes divestitures at Dallas Love Field, an airport near American’s largest hub at Dallas-Fort Worth International Airport (“DFW”). Gates at DFW are readily available, but Love Field, which is much closer to downtown Dallas, is highly gate-constrained. Although today operations at Love Field are severely restricted under current law, those restrictions are due to expire in October 2014, at which point Love Field will have a distinct advantage versus DFW, particularly in serving business customers. The divestitures will position a low-cost carrier to provide vigorous competition to the New American’s nonstop and connecting service out of DFW.