Delta Air Lines and United Airlines spent the past five months bickering over a scarce resource: access to fly from the US to Cape Town South Africa. Both United and Delta sought to add three weekly flights from the US. But with just four total frequencies available for allocation, the requests could not both be satisfied.
After a series of regulatory filings filled with sniping and, in some cases, questionable data, the US Department of Transportation came up with a unique solution. It asked South Africa to authorize more flights. The South African government agreed to this. As such, both Delta and United will be able to launch flights for the coming Winter season.
Leading up to and during the course of this proceeding, the Department has engaged in a number of bilateral communications with the Department of Transport of the Republic of South Africa (SADoT), seeking to negotiate an exchange of extrabilateral opportunities. The Department specifically requested two additional frequencies in order to accommodate the increase in U.S. carrier demand for passenger service to South Africa. On June 22, 2022, the SADoT advised that upon certain conditions being met, the two extra frequencies requested shall be considered as espoused in the Agreement. The Department is separately addressing the corresponding SADoT request, and we fully expect that SADoT will honor its commitment to permit U.S. carriers to operate two weekly frequencies in addition to the 21 weekly frequencies currently provided for in the Agreement. We have requested that SADoT grant the applications of authorized U.S. carriers no later than August 15, 2022.– US DOT Show Cause Order
Delta initially applied on 17 February. United put in an application two weeks later. Formal proceedings began in May. With the decision now handed down, both airlines can begin planning in earnest, including marketing the flights to passengers.
Both carriers receiving the allocations also affects the market dynamics a bit. The two carriers will each see additional competition and capacity in the market that was not anticipated when the applications went in. It is unlikely, however, that either will use that as a reason to decline this compromise solution.
One quirk in the ruling is that the US DOT will award each carrier two of the currently available four regular frequencies, plus one each of the additional frequencies. United previously suggested the 2-2 split and Delta rejected it. Each getting 2+1 should solve that problem, though it does leave open a sliver of risk that the South African regulator rescinds the extra two flights, leaving Delta and United with just two each.
Also, if South Africa does not follow through on the promise to issue the two additional slots the US DOT “expressly reserves the right to revisit the entire allocation at issue here.”
“We extend our sincere gratitude to the Department of Transportation, as well as the numerous government and community leaders, airports, customers and employees who supported this application, for recognizing the tremendous benefits to tourism, commerce, and diplomacy that a direct link between Cape Town and Washington DC provides,” said United President Brett Hart in a statement. “United has steadily grown its flight offerings to South Africa and across the continent. These new direct flights will promote competition and provide affordable and consistent service to Africa for U.S. travelers.”
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