Spirit Airlines could soon secure more slots at Newark Airport. A ruling by the US Court of Appeals for the DC Circuit found that the FAA acted improperly in choosing to not reallocate slots vacated by Southwest Airlines its Newark station closed in late 2019. As a result of that decision Spirit was unable to increase its presence at the airport. With this ruling, however, the FAA likely will be forced to allocate the slots and Spirit (or other airlines) could pick them up.
If the FAA again decides to retire Southwest’s peak-period slots, it should be prepared to provide a reasoned explanation for preferring to cut travel time an average of one minute rather than to cut the price of flying by as much as 45 percent on routes that would gain a second carrier.
– Senior Circuit Judge Ginsburg, writing for the Court
As a condition of approval for its merger with Continental Airlines, United Airlines was required to cede 36 slots at Newark to a competitor. Southwest Airlines picked those up in 2010 and operated at the airport for nearly a decade. By the time Southwest packed up, however, Newark no longer operated under slot controls. At least not explicitly.
While technically there are no limits on operations the airport does have coordination of slots. These are voluntary but the Department of Transportation has made clear “if voluntary schedule adjustments are not achievable, consideration may be given to whether [slot control] is necessary.”
And a return to slot control would mean only sanctioned operations would be grandfathered in. As a result, the Court suggests that voluntary cooperation with the guidance is more of a “voluntold” situation. While it may technically be voluntary the risks associated with exercising that option effectively make it mandatory.
By declaring that only approved flights would be grandfathered should it reimpose slot control, however, the FAA effectively created two classes of flights of profoundly different value. The first class comprises flights an airline operates with the FAA’s approval; they would be given precedence if congestion worsens and slot controls return. The second class consists of flights operated without the FAA’s approval; they would assuredly be barred under slot control. Thus, the FAA’s decision to retire Southwest’s peak slots rather than allocating them to Spirit denied Spirit (and perhaps other airlines) both the chance to use those slots in the present and the value they would have should the FAA reimpose slot control in the future.
The FAA also claimed its decision to not reallocate the slots was part of an effort to reduce congestion at the airport and reduce delays. Spirit also objected to that reasoning. The carrier noted that scheduling reduction meetings with all carriers are the typical approach to that scenario, not taking away one airline’s allocation unilaterally. The Port Authority of New York and New Jersey as well as the US Department of Justice’s Antitrust division both supported Spirit’s position. The FAA, however, rejected that approach.
Agency data presented to the court, however, shows that removing the flights from Newark would fail to deliver a significant impact on delays:
The FAA anticipated no delay reduction whatsoever from retiring the flight Southwest operated during the 7:00 a.m. hour or the two flights it operated during the 1:00 p.m. hour. Retiring the seven flights Southwest operated during the 2:00 p.m. or 5:00 p.m. hours was anticipated to reduce the average delay per operation (i.e., per landing and takeoff) by about 20 seconds. Retiring the three flights Southwest operated during the 7:00 p.m. hour was anticipated to reduce delays by about one minute per operation. The greatest reduction would occur if the agency retired the two flights Southwest operated between 8:00 p.m. and 9:59 p.m. In that case, delays would decrease by about four minutes per operation, from approximately 28 minutes to approximately 24 minutes per flight. In total, the FAA’s model suggested retiring all of Southwest’s authorizations during peak hours – as it did – would reduce delays on average by a little over one minute per operation.
The ruling does not force the FAA to reinstate the Southwest slots and reallocate them to other carriers. The agency could, instead, convene a delay reductions meeting and work with all the carriers to reduce operations at the airport. But even under that approach many of these contested slots would return to service. In either scenario, however, Spirit or other airlines are likely to benefit significantly while United stands to lose, either slots or monopoly positioning on routes.
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