gmcc wrote:

There was also a little tidbit in the conference call from Brad Tilden, I think. It was something along the lines of, if a couple of the inside perimeter slots were to become outside the perimeter slots they would revert to AS. Seem like a creative way to get revenue for an asset, possible more that flying, and being able to get it back if conditions change.

I am going to have to watch/listen to that conference call and see what Mr. Tilden was referring to. I have no idea how that could happen but I'm intrigued at the possibility! I'd love to know more about this.

EA CO AS wrote:

CHI2DFW wrote:

AS has no interest in DAL.

Ugh, not this again. DAL isn't going anywhere, and AS will simply serve DAL from other west coast cities instead of LGA/DCA.

I wondered how long it would take you, EA CO', to jump in and try to set half of this thread discussion straight! Thank you. (Really gets tiresome doesn't it?)

bb

tphuang wrote:

fastmover wrote:

jfklganyc wrote:

Also, just searching back...

AS was using 4 slots at LGA

B6 was using 2 of the 6 slots

If that still holds true, B6 not only lost out on bidding for slots, but will actually have to cut 2 roundtrips to LGA.

Were they being leased to jetblue?

Will find out soon enough. If that's the case, this is huge epic misstep. I'm still shaking my head of how bad they blew this one.

We will see let’s not get to workedup yet

DL would definitely like more DCA slots, but the yields on BOS would be trash.

My candidates for new routes (assuming DL doesn’t just increase frequencies on current routes) if DL were to get more slots would be MSY, IND, BNA, and MKE.

phluser wrote:

airliner371 wrote:

MSY is an obvious add for WN at LGA, probably IND and CMH too, perhaps OMA or BWI.

At DCA, increased frequencies, perhaps IND. ISP would be a cool add, though I know it's crazy. Would solidify WN's presence at ISP and show their commitment to the NYC area.

I think we could see some adjusting at EWR too. More west coast. SMF, SJC, LAX (area), LAS, SAT, SJU, CUN and PDX all seem like reasonable possibilities for WN EVENTUALLY out of EWR, considering they have a strong within-perimeter network at LGA. These west coast flights would be focused at getting west coast passengers to NYC, less so the other way around...

I agree about LGA/EWR adjustments. Most likely, IND-EWR shifts to IND-LGA. I'm not sure what it will do at DCA though.

For EWR additions, I'm not sure WN will go heavy on long distance flights: I'm guessing it might be intro of DAL and ATL. Never understood why EWR-ATL was bypassed at so many times when other EWR routes were added and then deleted. Long time ago, WN announced plans for DAL which included EWR. But when VX announced DAL-LGA, WN forego EWR to just beef up DAL-LGA. Given that Northern/Central NJ and Atlanta metro and even Dallas have a large minority VFR populations (Black, Indian American, etc.), WN should do well with these large markets.

IND-EWR wouldn't shift to LGA as WN has already tried IND-LGA. They got 45 percent load factors and were forced to shift it to EWR which resulted in a jump to about 75-80 percent. There is no way they would shift it back.

zackary747 wrote:

phluser wrote:

airliner371 wrote:

MSY is an obvious add for WN at LGA, probably IND and CMH too, perhaps OMA or BWI.

At DCA, increased frequencies, perhaps IND. ISP would be a cool add, though I know it's crazy. Would solidify WN's presence at ISP and show their commitment to the NYC area.

I think we could see some adjusting at EWR too. More west coast. SMF, SJC, LAX (area), LAS, SAT, SJU, CUN and PDX all seem like reasonable possibilities for WN EVENTUALLY out of EWR, considering they have a strong within-perimeter network at LGA. These west coast flights would be focused at getting west coast passengers to NYC, less so the other way around...

I agree about LGA/EWR adjustments. Most likely, IND-EWR shifts to IND-LGA. I'm not sure what it will do at DCA though.

For EWR additions, I'm not sure WN will go heavy on long distance flights: I'm guessing it might be intro of DAL and ATL. Never understood why EWR-ATL was bypassed at so many times when other EWR routes were added and then deleted. Long time ago, WN announced plans for DAL which included EWR. But when VX announced DAL-LGA, WN forego EWR to just beef up DAL-LGA. Given that Northern/Central NJ and Atlanta metro and even Dallas have a large minority VFR populations (Black, Indian American, etc.), WN should do well with these large markets.

IND-EWR wouldn't shift to LGA as WN has already tried IND-LGA. They got 45 percent load factors and were forced to shift it to EWR which resulted in a jump to about 75-80 percent. There is no way they would shift it back.

Why would EWR be more successful for this route?

jfklganyc wrote:

zackary747 wrote:

phluser wrote:

I agree about LGA/EWR adjustments. Most likely, IND-EWR shifts to IND-LGA. I'm not sure what it will do at DCA though.

For EWR additions, I'm not sure WN will go heavy on long distance flights: I'm guessing it might be intro of DAL and ATL. Never understood why EWR-ATL was bypassed at so many times when other EWR routes were added and then deleted. Long time ago, WN announced plans for DAL which included EWR. But when VX announced DAL-LGA, WN forego EWR to just beef up DAL-LGA. Given that Northern/Central NJ and Atlanta metro and even Dallas have a large minority VFR populations (Black, Indian American, etc.), WN should do well with these large markets.

IND-EWR wouldn't shift to LGA as WN has already tried IND-LGA. They got 45 percent load factors and were forced to shift it to EWR which resulted in a jump to about 75-80 percent. There is no way they would shift it back.

Why would EWR be more successful for this route?

I never fully understood why LGA did so bad and why EWR is doing so well. I guess because there is less competition on EWR from IND. Maybe also more connections possibly??

scoping2008 wrote:

WWads wrote:

So this basically confirms that AS bought VX to kill it and prevent B6 from making the acquisition and actually using the merger to improve its network.

Nice one regulators.

Did you overlook the entire State of California? Alaska became the #2 carrier at SFO, a relevant presence at LAX, and added several additional California routes when it acquired VX. So, Alaska has greatly improved its network. Dropping two routes from DAL to the East Coast makes sense when your business model is centered around creating a dominant West Coast carrier.

Dominant carrier in CA? Mmmm, i dont think so. There's two other airlines that are bigger,stronger with many more airplanes and more money in the bank that beg to differ.

zackary747 wrote:

jfklganyc wrote:

zackary747 wrote:

IND-EWR wouldn't shift to LGA as WN has already tried IND-LGA. They got 45 percent load factors and were forced to shift it to EWR which resulted in a jump to about 75-80 percent. There is no way they would shift it back.

Why would EWR be more successful for this route?

I never fully understood why LGA did so bad and why EWR is doing so well. I guess because there is less competition on EWR from IND. Maybe also more connections possibly??

WN routes more connections through EWR-IND now than when they ran LGA-IND. EWR has something like 10 destinations on WN, and the only other logical connecting flow from EWR would go only go over DEN, STL, and MDW. So therefore is more of a chance for pax to connect through IND, and usually the EWR-IND flights continue onto LAS, RSW, TPA, MCI, e.t.c.

Not having to compete with DL has likely allowed WN to raise their ticket prices. Competing with UA is more ideal, as they don't have the a large FF base in IND.

Busyboy2 wrote:

scoping2008 wrote:

WWads wrote:

So this basically confirms that AS bought VX to kill it and prevent B6 from making the acquisition and actually using the merger to improve its network.

Nice one regulators.

Did you overlook the entire State of California? Alaska became the #2 carrier at SFO, a relevant presence at LAX, and added several additional California routes when it acquired VX. So, Alaska has greatly improved its network. Dropping two routes from DAL to the East Coast makes sense when your business model is centered around creating a dominant West Coast carrier.

Dominant carrier in CA? Mmmm, i dont think so. There's two other airlines that are bigger,stronger with many more airplanes and more money in the bank that beg to differ.

Did I write "dominant carrier in California?" Why don't you read what I wrote again. Which carrier is better positioned on the entire West Coast, from Seattle to San Diego? Or, Anchorage to San Diego for that matter.

CHI2DFW wrote:

HeeseokKoo wrote:

tphuang wrote:

The only question I have is how come there are so many slots? I thought they only had 4 pairs for LGA-DAL and 3 pairs for DCA-DAL

VX successfully purchased 6 at LGA, 4 at DCA when AA-DL swapped LGA-DCA slots back in 2014.

A bigger news is, AS plans to shut down DAL-East Coast flights from this fall.

AS has no interest in DAL. This is just the beginning of the consolidation at DFW. Now what they do with the gates?

I still believe AS wants to strengthen their West Coast Cities. So it will be DAL - West Coast especially DAL - California.

A shame, but pretty much expected. Back to the Southwest/AA virtual duopoly on DAL/DFW-LGA/DCA.

As a reminder, those gates are not owned by Alaska. They are subleased from AA, who was forced to give them up, but not sell them, as part of the merger between US and AA. I can't remember the full details off the top of my head, but AS transferring/subletting them to another airline would likely require government approval.

SANFan wrote:

gmcc wrote:

There was also a little tidbit in the conference call from Brad Tilden, I think. It was something along the lines of, if a couple of the inside perimeter slots were to become outside the perimeter slots they would revert to AS. Seem like a creative way to get revenue for an asset, possible more that flying, and being able to get it back if conditions change.

I am going to have to watch/listen to that conference call and see what Mr. Tilden was referring to. I have no idea how that could happen but I'm intrigued at the possibility! I'd love to know more about this.

I read an article earlier (can't remember where) that also mentioned this. It said if AS could fly from the West coast they would use the slots, so they put in a provision that they get some (not all) back if perimeter rules change.

us330 wrote:

A shame, but pretty much expected. Back to the Southwest/AA virtual duopoly on DAL/DFW-LGA/DCA.

As a reminder, those gates are not owned by Alaska. They are subleased from AA, who was forced to give them up, but not sell them, as part of the merger between US and AA. I can't remember the full details off the top of my head, but AS transferring/subletting them to another airline would likely require government approval.

You are correct on the gates not being owned by AS and they were forced to be given up by AA by the DOJ in order to merge with US. (also had to give up slots at DCA) AA hasn't flown to DAL since 2008 and was subleasing the gates to DL and DL had planned to expand when the wright amendment had expired and filled to get the two gates from AA (they were the only takers at first) VX then states that they want the gates and the DOJ basically forces AA to give the gates to VX because "they are a low cost carrier" (kind of ironic now because VX is now AS; a legacy carrier) This had lead to the whole WN/DL gate fiasco as DL now no longer has a place to stay in the airport and has been sharing a gate with WN since 10/14 (forced by the federal judge)

Back to the present day now. AS is not giving up their gates at DAL as you state and is instead ending DAL-DCA/LGA flights and is giving up a total of 10 slot pairs at DCA and LGA to WN (they don't have to be used to DAL) and AS will instead expand on their DAL-west coast flights.

us330 wrote:

A shame, but pretty much expected. Back to the Southwest/AA virtual duopoly on DAL/DFW-LGA/DCA.

DL and NK also serve LGA nonstop from DFW in addition to AA, and DL also has 7 daily nonstops to LGA from DFW. UA also serves EWR nonstop from DFW in addition to AA, and both AA and DL have nonstop service to JFK from DFW. There will still be plenty of competition on DFW/DAL-NYC after the discontinuation of AS DAL-LGA nonstop service.

While AA is the only airline to serve DCA nonstop from DFW, UA does have nonstop service to IAD from DFW and NK has nonstop service to BWI from DFW.

Sooner787 wrote:

How long until DL makes an offer to AS for their 2 KDAL gates?

Doesn't make sense for AS to operate from both DFW and Love Field,
especially with such a small presence in the Dallas market

Those gates are AA’s, AS can’t sell them, they don’t own them.

Midwestindy wrote:

zackary747 wrote:

jfklganyc wrote:

Why would EWR be more successful for this route?

I never fully understood why LGA did so bad and why EWR is doing so well. I guess because there is less competition on EWR from IND. Maybe also more connections possibly??

WN routes more connections through EWR-IND now than when they ran LGA-IND. EWR has something like 10 destinations on WN, and the only other logical connecting flow from EWR would go only go over DEN, STL, and MDW. So therefore is more of a chance for pax to connect through IND, and usually the EWR-IND flights continue onto LAS, RSW, TPA, MCI, e.t.c.

Not having to compete with DL has likely allowed WN to raise their ticket prices. Competing with UA is more ideal, as they don't have the a large FF base in IND.

That's interesting - I suppose it will stick with it if it's doing well.

On another note, for WN at LGA, LGA-FLL would likely be considered since WN built up an international terminal at FLL. It has added IAD and PHL (year-round) and EWR to FLL, but didn't add link LGA to FLL, likely because of the limited slots. NYC's largest market is So. Florida, and even though EWR is a NYC serving airport, there is still a difference in catchment from New Jersey to New York.

Such an addition would be a sting to B6. I wonder why B6 was passive for these slots at LGA/DCA and didn't bid higher (assuming it was given the opportunity to make an offer for these slot pairs).

phluser wrote:

Midwestindy wrote:

zackary747 wrote:

I never fully understood why LGA did so bad and why EWR is doing so well. I guess because there is less competition on EWR from IND. Maybe also more connections possibly??

WN routes more connections through EWR-IND now than when they ran LGA-IND. EWR has something like 10 destinations on WN, and the only other logical connecting flow from EWR would go only go over DEN, STL, and MDW. So therefore is more of a chance for pax to connect through IND, and usually the EWR-IND flights continue onto LAS, RSW, TPA, MCI, e.t.c.

Not having to compete with DL has likely allowed WN to raise their ticket prices. Competing with UA is more ideal, as they don't have the a large FF base in IND.

That's interesting - I suppose it will stick with it if it's doing well.



Such an addition would be a sting to B6. I wonder why B6 was passive for these slots at LGA/DCA and didn't bid higher (assuming it was given the opportunity to make an offer for these slot pairs).

Perhaps B6 has they’re hands full with large ops at JFK and BOS already as well as modest ops at DCA as well as stations at EWR along with LGA. I think they have the northeast basically covered, especially the NYC area.

Given the operational issues that come with weather in this part of the country maybe B6 is realizing that having a majority of ops in a delay prone region is causing major problems throughout the system and that expanding more from LGA isn’t really worth it. The fleet is pretty much stretched to its max as it is. I’m guessing next move on building B6 is out west if anything.

WWads wrote:

So this basically confirms that AS bought VX to kill it. To prevent B6 from making the acquisition and actually using the merger to improve its network.

Nice one regulators.

So cutting two of the worst performing routes in the system confirms that they are "killing" VX? LFs were around 79% on the A319, 81% after the switch to E175, and were only 88% at the highest point (4Q '17). And that's load factors, not necessarily yields. These routes were NOT performing well. Why keep them going?

HeeseokKoo wrote:

A bigger news is...

Ugh.

This and The bigger question is... are such pet peeves.

It’s not and never is. It’s simply another point presented rudely.

WWads wrote:

So this basically confirms that AS bought VX to kill it. To prevent B6 from making the acquisition and actually using the merger to improve its network.

Nice one regulators.

I predicted this from Day1, if not Day -1.

It may be a little disingenuous of AS to say this was approved by regulators. Here's why. The structure of a 10 year lease is peculiar. I can only really think of one reason to do it, DOT/FAA have not reviewed slot leases. If you look back they have never required any kind of offering to smaller carriers as a result of a slot lease. That tells me that the deal is structured to avoid regulator oversight.

It's also interesting they leased to WN. I doubt they would be high bidder. Much more likely AA or B6 would be and since it is a lease there's really no reason AA couldnt have bid without regulatory fear.

Finally, I fully agree the VX acquisition is a liquidation and VX will not stay at DAL as I have always suspected. They will not have enough flights to hold their gate position at DAL which may be WN's greater interest in this deal as there may be a handshake that they will steer the gates toward WN use.

This whole transaction to acquire VX was very troubling and despite the stock rocketing up as earnings decline and the airline gives away all the items it stated as valuable in the merger.

I have to say this makes sense, and seems like a smart move on the part of AS. VX was wise to jump on slots at limited airports when they did, because those are great assets, but VX never really knew what to do them without an east coast hub. AS, focusing on the west coast, is in the same boat. Good assets, but little use for them. Might as well monetize the asset.

Until/if AS has an east coast or midwest hub, LGA/DCA slots are of little use to them, beyond cashing them in.

enilria wrote:

WWads wrote:

So this basically confirms that AS bought VX to kill it. To prevent B6 from making the acquisition and actually using the merger to improve its network.

Nice one regulators.

I predicted this from Day1, if not Day -1.

It may be a little disingenuous of AS to say this was approved by regulators. Here's why. The structure of a 10 year lease is peculiar. I can only really think of one reason to do it, DOT/FAA have not reviewed slot leases. If you look back they have never required any kind of offering to smaller carriers as a result of a slot lease. That tells me that the deal is structured to avoid regulator oversight.

It's also interesting they leased to WN. I doubt they would be high bidder. Much more likely AA or B6 would be and since it is a lease there's really no reason AA couldnt have bid without regulatory fear.

Finally, I fully agree the VX acquisition is a liquidation and VX will not stay at DAL as I have always suspected. They will not have enough flights to hold their gate position at DAL which may be WN's greater interest in this deal as there may be a handshake that they will steer the gates toward WN use.

This whole transaction to acquire VX was very troubling and despite the stock rocketing up as earnings decline and the airline gives away all the items it stated as valuable in the merger.

I don't think DAL ops were a critical part of regulatory approval of the merger - that being said, with the forcible separation from AA, is DFW really that much more valuable to AS at this point?

The main benefit of the merger was certainly the denial of a major West coast foothold to B6, but who can really blame AS for using that as the major motivator? And is cutting underperforming routes such a bad thing if they are going to drag down the bottom line, especially if those frames can be used more profitably elsewhere? I don't think AS has the critical mass to be absorbing loss-leading routes into the network, regardless if they include big names like LGA and DCA.

I totally see a back office deal with this!
AS wanting to off load money losing LGA and DCA slots. WN agreed to lease them in return AS adds out of DAL to the west coast don't fill up the 2 gates all day at LOVE anymore. Quickly looking at AS departures and arrivals for DAL with the reductions of LGA and DCA that leaves 6 big gaps throughout the day. This will leave DL plenty of room to shift over and use a Gate with AS. End result gives WN space to add another 5 or 6 flights from DAL and the cost saving of lengthy pointless lawsuit.

Flyguy

That deal makes no sense!

What was the carrot for AS?

LGA and DCA slots are worth a lot of money.

They could sell them to anyone...and had no need to “unload” them to WN. There would be a line if buyers

jfklganyc wrote:

That deal makes no sense!

What was the carrot for AS?

LGA and DCA slots are worth a lot of money.

They could sell them to anyone...and had no need to “unload” them to WN. There would be a line if buyers

Selling them would have triggered a more aggressive regulatory review in all likelihood since VX got these as a result of slot divestitures to make DCA/LGA more competitive. Selling the slots to AA/UA/DL would have been flagged as anti-competitive. G4/NK/F9 don't have that deep of pockets to pay a premium.

The carrot for AS was they dumped money losing routes, will get a nice steady cash flow for a decade for the lease and could breeze through the regulatory review. The only carrier that maybe could have and should have been more aggressive is B6. However, I'm not sure B6 could do much with the DCA slots. They've struggled to use the DCA slots they currently have.

FlyPNS1 wrote:

jfklganyc wrote:

That deal makes no sense!

What was the carrot for AS?

LGA and DCA slots are worth a lot of money.

They could sell them to anyone...and had no need to “unload” them to WN. There would be a line if buyers

Selling them would have triggered a more aggressive regulatory review in all likelihood since VX got these as a result of slot divestitures to make DCA/LGA more competitive. Selling the slots to AA/UA/DL would have been flagged as anti-competitive. G4/NK/F9 don't have that deep of pockets to pay a premium.

The carrot for AS was they dumped money losing routes, will get a nice steady cash flow for a decade for the lease and could breeze through the regulatory review. The only carrier that maybe could have and should have been more aggressive is B6. However, I'm not sure B6 could do much with the DCA slots. They've struggled to use the DCA slots they currently have.

B6 is actually doing pretty well in dca. Even if they weren’t interested in dca slots, they could have still bid higher for lga slots.

Wn is still irrelevant in nyc with more lga slots. B6 actually had a lot to gain here, which is why this is baffling to me.

jfklganyc wrote:

That deal makes no sense!

What was the carrot for AS?

LGA and DCA slots are worth a lot of money.

They could sell them to anyone...and had no need to “unload” them to WN. There would be a line if buyers

UA is also leasing out two gates at DAL to WN. Most likely, it's a high dollar lease in both situations.

However, AS can't monetize it's already subleased gates at DAL to WN. I'm still not convinced that the end, it's AS leaving DAL for DFW.

tphuang wrote:

FlyPNS1 wrote:

jfklganyc wrote:

That deal makes no sense!

What was the carrot for AS?

LGA and DCA slots are worth a lot of money.

They could sell them to anyone...and had no need to “unload” them to WN. There would be a line if buyers

Selling them would have triggered a more aggressive regulatory review in all likelihood since VX got these as a result of slot divestitures to make DCA/LGA more competitive. Selling the slots to AA/UA/DL would have been flagged as anti-competitive. G4/NK/F9 don't have that deep of pockets to pay a premium.

The carrot for AS was they dumped money losing routes, will get a nice steady cash flow for a decade for the lease and could breeze through the regulatory review. The only carrier that maybe could have and should have been more aggressive is B6. However, I'm not sure B6 could do much with the DCA slots. They've struggled to use the DCA slots they currently have.

B6 is actually doing pretty well in dca. Even if they weren’t interested in dca slots, they could have still bid higher for lga slots.

Wn is still irrelevant in nyc with more lga slots. B6 actually had a lot to gain here, which is why this is baffling to me.

But do we even know if they were put up for bid?
You can’t bid on something if they are not offered to you.
Seems like a lot of guessing here.

The perimeter rule at LGA knocked out any chance of success for AS.

FlyPNS1 wrote:

jfklganyc wrote:

That deal makes no sense!

What was the carrot for AS?

LGA and DCA slots are worth a lot of money.

They could sell them to anyone...and had no need to “unload” them to WN. There would be a line if buyers

Selling them would have triggered a more aggressive regulatory review in all likelihood since VX got these as a result of slot divestitures to make DCA/LGA more competitive. Selling the slots to AA/UA/DL would have been flagged as anti-competitive. G4/NK/F9 don't have that deep of pockets to pay a premium.

The carrot for AS was they dumped money losing routes, will get a nice steady cash flow for a decade for the lease and could breeze through the regulatory review. The only carrier that maybe could have and should have been more aggressive is B6. However, I'm not sure B6 could do much with the DCA slots. They've struggled to use the DCA slots they currently have.

I don't know about LGA, but at DCA, Southwest is the second-largest carrier. In 2016, they eclipsed DL with 15% of all enplanements. Not sure how leasing slots to WN is pro-competition but doing so to DL or UA would be flagged.

http://www.mwaa.com/about/reagan-air-traffic-statistics

blockski wrote:

FlyPNS1 wrote:

jfklganyc wrote:

That deal makes no sense!

What was the carrot for AS?

LGA and DCA slots are worth a lot of money.

They could sell them to anyone...and had no need to “unload” them to WN. There would be a line if buyers

Selling them would have triggered a more aggressive regulatory review in all likelihood since VX got these as a result of slot divestitures to make DCA/LGA more competitive. Selling the slots to AA/UA/DL would have been flagged as anti-competitive. G4/NK/F9 don't have that deep of pockets to pay a premium.

The carrot for AS was they dumped money losing routes, will get a nice steady cash flow for a decade for the lease and could breeze through the regulatory review. The only carrier that maybe could have and should have been more aggressive is B6. However, I'm not sure B6 could do much with the DCA slots. They've struggled to use the DCA slots they currently have.

I don't know about LGA, but at DCA, Southwest is the second-largest carrier. In 2016, they eclipsed DL with 15% of all enplanements. Not sure how leasing slots to WN is pro-competition but doing so to DL or UA would be flagged.

http://www.mwaa.com/about/reagan-air-traffic-statistics

I would never, ever had guessed that WN is the #2 airline at National Airport. But you're right, in looking at the 2017 monthly data and 2016, ever since the AirTran merger, WN has been roughly neck and neck and usually slightly above DL. DL has, if I am correct, 55 slot pairs. So this shows the difference 737s vs. RJs make.

I'm still very intrigued by Brad's remarks about the scenario in which some of those DCA slots might somehow become outside-perimeter slots -- mentioned a couple of times up-thread, as well as in the AS conference call yesterday. I wonder if there have been some rumors about this happening? I certainly haven't heard anything about such a possibility. Is there a basis for Brad mentioning this, or just wishful thinking?

I personally couldn't be happier than if AS somehow got the authorization (or ability) to start nonstop service between SAN and DCA, as they applied for back in 2012 during the last DCA Outside-Perimeter hearing. AAG already has routes from Reagan Airport to SEA, PDX, SFO and LAX so SAN is the largest missing piece here; I'm sure AS would also add SJC-DCA if possible.

Can anyone add to the background of this remark by Brad?

bb

tphuang wrote:

Wn is still irrelevant in nyc with more lga slots. B6 actually had a lot to gain here, which is why this is baffling to me.

If the slots were even offered to B6, I suspect the condition that allows AS to take (some? all?) slots back in the event of a relaxation of either perimeter rule might have been an issue.

enilria wrote:

the airline gives away all the items it stated as valuable in the merger.

Arguably the most important assets obtained in the merger, based on the known business plan, were VX's hubs at SFO & LAX. It's unlikely AS could have gained access to enough gates at either airport to build a similar-sized presence within any reasonable time frame.

And even though gates at DAL are indeed some of the scarcest assets in the U.S. aviation market, they're pretty much irrelevant to anyone apart from WN and maybe DL. The VX "focus city" at DAL was always a joke because they had no prayer of ever being a viable alternative to WN at DAL or AA at DFW. Sure, they served four or five of the largest markets from Love Field, but that's still nowhere near enough to be a carrier of choice for the vast majority of people in the region. The product wasn't sufficiently better than WN for 90% of passengers.

It was even more ridiculous that AA was permitted to cede the DAL gates as a "remedy" for the AA-US merger because the net result was the elimination of two competitors (US & VX) at their largest fortress hub, DFW!

These slots are worth alot more to Southwest than Alaska. Alaska is best to focus on its core areas.

wnflyguy wrote:

I totally see a back office deal with this!
AS wanting to off load money losing LGA and DCA slots. WN agreed to lease them in return AS adds out of DAL to the west coast don't fill up the 2 gates all day at LOVE anymore. Quickly looking at AS departures and arrivals for DAL with the reductions of LGA and DCA that leaves 6 big gaps throughout the day. This will leave DL plenty of room to shift over and use a Gate with AS. End result gives WN space to add another 5 or 6 flights from DAL and the cost saving of lengthy pointless lawsuit.

Flyguy

I don't think AS will have any trouble filling those 2 gates once DCA and LGA are gone. In addition to adding frequencies to the existing w/c destinations served from DAL -- SEA, PDX, SFO, SJC, LAX and SAN -- I'm sure AS will have no trouble adding more western destinations such as SNA, SMF, OAK, BUR, etc. Longshots might include BOI, FAT, ONT, STS or PAE. After all, WN serves the following cities on the w/c from DAL: SAN, SNA, LGB, ONT, BUR, LAX, SJC, OAK, SFO, SMF, RNO, PDX, and SEA. And yes, I do realize WN has a hub at DAL which AS doesn't.

bb

SANFan wrote:

I'm still very intrigued by Brad's remarks about the scenario in which some of those DCA slots might somehow become outside-perimeter slots -- mentioned a couple of times up-thread, as well as in the AS conference call yesterday. I wonder if there have been some rumors about this happening? I certainly haven't heard anything about such a possibility. Is there a basis for Brad mentioning this, or just wishful thinking?

I personally couldn't be happier than if AS somehow got the authorization (or ability) to start nonstop service between SAN and DCA, as they applied for back in 2012 during the last DCA Outside-Perimeter hearing. AAG already has routes from Reagan Airport to SEA, PDX, SFO and LAX so SAN is the largest missing piece here; I'm sure AS would also add SJC-DCA if possible.

Can anyone add to the background of this remark by Brad?

bb

I took it as just an "if" it happens and protecting themselves if it does, not that a change was going to happen or had even been discussed.

Jshank83 wrote:

SANFan wrote:

I'm still very intrigued by Brad's remarks about the scenario in which some of those DCA slots might somehow become outside-perimeter slots -- mentioned a couple of times up-thread, as well as in the AS conference call yesterday. I wonder if there have been some rumors about this happening? I certainly haven't heard anything about such a possibility. Is there a basis for Brad mentioning this, or just wishful thinking?

I personally couldn't be happier than if AS somehow got the authorization (or ability) to start nonstop service between SAN and DCA, as they applied for back in 2012 during the last DCA Outside-Perimeter hearing. AAG already has routes from Reagan Airport to SEA, PDX, SFO and LAX so SAN is the largest missing piece here; I'm sure AS would also add SJC-DCA if possible.

Can anyone add to the background of this remark by Brad?

bb

I took it as just an "if" it happens and protecting themselves if it does, not that a change was going to happen or had even been discussed.

I pretty much agree except that it's such an out-of-the-blue remark to make. Does anyone out there really think that such a change in policy could/would ever happen? Why would Brad even bring up such a possibility?

Anyway, I'll remain curious...

bb

The problem with adding other routes out of DAL for AS is that they will get killed in yields. They have lower yield than WN even to SEA/PDX while operating on OO. I don't see how SAN/SJC or WN strongholds like OAK/SMF could do better than that. Interesting enough, VX operated flights to LAX/SFO actually did pretty well out of DAL.

Wonder if this might be the key for a second daily LGA-MCI flight. They've had 1 for like 3 years now and it's constantly packed.

HPRamper wrote:

enilria wrote:

WWads wrote:

So this basically confirms that AS bought VX to kill it. To prevent B6 from making the acquisition and actually using the merger to improve its network.

Nice one regulators.

I predicted this from Day1, if not Day -1.

It may be a little disingenuous of AS to say this was approved by regulators. Here's why. The structure of a 10 year lease is peculiar. I can only really think of one reason to do it, DOT/FAA have not reviewed slot leases. If you look back they have never required any kind of offering to smaller carriers as a result of a slot lease. That tells me that the deal is structured to avoid regulator oversight.

It's also interesting they leased to WN. I doubt they would be high bidder. Much more likely AA or B6 would be and since it is a lease there's really no reason AA couldnt have bid without regulatory fear.

Finally, I fully agree the VX acquisition is a liquidation and VX will not stay at DAL as I have always suspected. They will not have enough flights to hold their gate position at DAL which may be WN's greater interest in this deal as there may be a handshake that they will steer the gates toward WN use.

This whole transaction to acquire VX was very troubling and despite the stock rocketing up as earnings decline and the airline gives away all the items it stated as valuable in the merger.

I don't think DAL ops were a critical part of regulatory approval of the merger - that being said, with the forcible separation from AA, is DFW really that much more valuable to AS at this point?

The main benefit of the merger was certainly the denial of a major West coast foothold to B6, but who can really blame AS for using that as the major motivator? And is cutting underperforming routes such a bad thing if they are going to drag down the bottom line, especially if those frames can be used more profitably elsewhere? I don't think AS has the critical mass to be absorbing loss-leading routes into the network, regardless if they include big names like LGA and DCA.

Alaska will still have more than 3 times as many DAL flights compared to DFW with 13-14 daily to SEA, PDX, SJC, SFO, LAX, and SAN even after the east coast drops. With the loss of a meaningful AA partnership DFW almost certainly is not more valuable than DAL at this point. One of Alaska's stated merger goals was to create an airline of choice for west coast fliers, chopping a few marginal oddball point to point Texas-East coast flights that couldn't even break an 80% LF on Virgin before the merger that they only needed due to limited slot access and that don't support your core goals is hardly a "liquidation."

evank516 wrote:

Wonder if this might be the key for a second daily LGA-MCI flight. They've had 1 for like 3 years now and it's constantly packed.

I know AA dropped the route recently. I don't know if that means there isn't enough demand or that now there would be a hole to fill with them no longer flying it. A morning and evening flight would make sense.

SANFan wrote:

Jshank83 wrote:

SANFan wrote:

I'm still very intrigued by Brad's remarks about the scenario in which some of those DCA slots might somehow become outside-perimeter slots -- mentioned a couple of times up-thread, as well as in the AS conference call yesterday. I wonder if there have been some rumors about this happening? I certainly haven't heard anything about such a possibility. Is there a basis for Brad mentioning this, or just wishful thinking?

I personally couldn't be happier than if AS somehow got the authorization (or ability) to start nonstop service between SAN and DCA, as they applied for back in 2012 during the last DCA Outside-Perimeter hearing. AAG already has routes from Reagan Airport to SEA, PDX, SFO and LAX so SAN is the largest missing piece here; I'm sure AS would also add SJC-DCA if possible.

Can anyone add to the background of this remark by Brad?

bb

I took it as just an "if" it happens and protecting themselves if it does, not that a change was going to happen or had even been discussed.

I pretty much agree except that it's such an out-of-the-blue remark to make. Does anyone out there really think that such a change in policy could/would ever happen? Why would Brad even bring up such a possibility?

Anyway, I'll remain curious...

bb

It's an insurance policy for AS. But the reason it's in the news is because it's FAA reauthorization season, which means someone always proposes to mess with DCA's perimeter rules.

https://www.politico.com/newsletters/mo ... ded-177900

Jshank83 wrote:

evank516 wrote:

Wonder if this might be the key for a second daily LGA-MCI flight. They've had 1 for like 3 years now and it's constantly packed.

I know AA dropped the route recently. I don't know if that means there isn't enough demand or that now there would be a hole to fill with them no longer flying it. A morning and evening flight would make sense.

Yes, they did drop it which I find hard to believe, but I think AA relied way too heavily on O&D. DL keeps it going and WN has been holding it's own with that flight for 3 years now. Always full, and tons of people from the KC area on board, I've flown that route my fair share of times before becoming fed up with WN over other issues. However this route is sorely lacking a morning departure from LGA. There's a large enough WN presence in MCI to justify some through flying as well so they shouldn't have any issue selling seats.

enilria wrote:

...It may be a little disingenuous of AS to say this was approved by regulators. Here's why. The structure of a 10 year lease is peculiar. I can only really think of one reason to do it, DOT/FAA have not reviewed slot leases. If you look back they have never required any kind of offering to smaller carriers as a result of a slot lease. That tells me that the deal is structured to avoid regulator oversight.

It's also interesting they leased to WN. I doubt they would be high bidder. Much more likely AA or B6 would be and since it is a lease there's really no reason AA couldnt have bid without regulatory fear.

The settlement in US v AAG & Virgin America Inc requires DOJ review, even of leases, and prohibits Alaska from letting AA get their hands on these slots. "Defendants shall not directly or indirectly sell, trade, lease, or sub-lease any of the US/AA Divestiture Assets without the prior written consent of the United States. Defendants shall not directly or indirectly transfer any interest in the US/AA Divestiture Assets to American or permit American to use the US/AA Divestiture Assets" (https://www.justice.gov/atr/case-docume ... 1/download). And the US/AA Divestiture Assets are defined as the DCA & LGA slots, and the DAL gates.

So no, AA couldn't have gotten these. And Alaska's statement that this was approved by regulators presumably means that they got the required "prior written consent."

ScottB wrote:

Arguably the most important assets obtained in the merger, based on the known business plan, were VX's hubs at SFO & LAX. It's unlikely AS could have gained access to enough gates at either airport to build a similar-sized presence within any reasonable time frame.

And even though gates at DAL are indeed some of the scarcest assets in the U.S. aviation market, they're pretty much irrelevant to anyone apart from WN and maybe DL. The VX "focus city" at DAL was always a joke because they had no prayer of ever being a viable alternative to WN at DAL or AA at DFW. Sure, they served four or five of the largest markets from Love Field, but that's still nowhere near enough to be a carrier of choice for the vast majority of people in the region. The product wasn't sufficiently better than WN for 90% of passengers.

It was even more ridiculous that AA was permitted to cede the DAL gates as a "remedy" for the AA-US merger because the net result was the elimination of two competitors (US & VX) at their largest fortress hub, DFW!

I have flown between DFW and LAX once on VX, and I did like the seatback entertainment system that the VX planes were equipped with. While I am a big fan of WN, the VX product was (at least in my opinion) better than the WN product, and the main factor that made the VX product better than the WN product was VX's seatback entertainment system. However, I have watched streaming television on my laptop or tablet on WN flights using the in-flight wi-fi.

I agree that the DOJ should not have forced AA to give up its 2 gates that it leased at DAL to a carrier approved by the DOJ as a condition of the AA-US merger. The DOJ and the United States District Court for the District of Columbia were both wrong in requiring AA to give up the 2 gates that it leased at DAL. There was already nonstop service to LAX, PHX, ORD, LGA, and PHL from DFW on airlines other than AA or US prior to the AA-US merger, and AA's DFW-MIA nonstop service was in competition with NK's DFW-FLL nonstop service. CLT only had nonstop service from DFW on AA and US prior to the AA-US merger, but WN added DAL-CLT nonstop service in August 2015. DCA only had nonstop service from DFW on AA, but AA's DFW-DCA nonstop service was in competition with UA DFW-IAD nonstop service and NK DFW-BWI nonstop service prior to the AA-US merger. There is still competition on nonstop service between DFW/DAL and the other AA hub markets, and competition would still have existed on these routes if AA wasn't required to give up the gates that it leased at DAL and if AA had resumed service out of DAL after the repeal of the Wright Amendment.

While the VX pullout did eliminate a competitor from DFW, that void had been partially filled in by DL resuming DFW-LAX nonstop service in November 2014. DL has increased nonstop service to LAX from DFW since its resumption in November 2014, and DL now has 4 daily nonstops to LAX from DFW.

I would like to see WN add 2x FLL at a minimum

My guess: MSY 1, MCO 2, FLL 2, TPA 1

blockski wrote:

FlyPNS1 wrote:

jfklganyc wrote:

That deal makes no sense!

What was the carrot for AS?

LGA and DCA slots are worth a lot of money.

They could sell them to anyone...and had no need to “unload” them to WN. There would be a line if buyers

Selling them would have triggered a more aggressive regulatory review in all likelihood since VX got these as a result of slot divestitures to make DCA/LGA more competitive. Selling the slots to AA/UA/DL would have been flagged as anti-competitive. G4/NK/F9 don't have that deep of pockets to pay a premium.

The carrot for AS was they dumped money losing routes, will get a nice steady cash flow for a decade for the lease and could breeze through the regulatory review. The only carrier that maybe could have and should have been more aggressive is B6. However, I'm not sure B6 could do much with the DCA slots. They've struggled to use the DCA slots they currently have.

I don't know about LGA, but at DCA, Southwest is the second-largest carrier. In 2016, they eclipsed DL with 15% of all enplanements. Not sure how leasing slots to WN is pro-competition but doing so to DL or UA would be flagged.

http://www.mwaa.com/about/reagan-air-traffic-statistics

For Monday June 4 - which should be a good travel day, DL has 55 departures out of DCA, while WN has 40 departures. These extra four (from AS) will still leave WN behind DL. I translate these counts to being approximate to the slot pair count.

WN has more volume of passengers using fewer slots, but DL uses of a lot of it's slot pairs on DCA-LGA. That one particularly isn't designed for attracting the masses. It also has DCA-LEX/MSN which might be AIR21 slots.

AS is giving up just four slot pairs - realistically not enough for DL anyways if DL really wants DCA-BOS. It would need 10-12 departures a day to be competitive to AA and B6, and it would have to skim from DCA-ATL and other places. Maybe it's doable and it can get up to 8 departures with these 4. But it might not be worth the hassle for 4 slot pairs as it already holds 55, 15 more than WN.

UA has a lot fewer slot pairs, and probably doesn't have interest (because of IAD), but we don't know. WN also acquired NK's DCA slot pairs in a rather behind the scenes way.

tphuang wrote:

FlyPNS1 wrote:

jfklganyc wrote:

That deal makes no sense!

What was the carrot for AS?

LGA and DCA slots are worth a lot of money.

They could sell them to anyone...and had no need to “unload” them to WN. There would be a line if buyers

Selling them would have triggered a more aggressive regulatory review in all likelihood since VX got these as a result of slot divestitures to make DCA/LGA more competitive. Selling the slots to AA/UA/DL would have been flagged as anti-competitive. G4/NK/F9 don't have that deep of pockets to pay a premium.

The carrot for AS was they dumped money losing routes, will get a nice steady cash flow for a decade for the lease and could breeze through the regulatory review. The only carrier that maybe could have and should have been more aggressive is B6. However, I'm not sure B6 could do much with the DCA slots. They've struggled to use the DCA slots they currently have.

B6 is actually doing pretty well in dca. Even if they weren’t interested in dca slots, they could have still bid higher for lga slots.

Wn is still irrelevant in nyc with more lga slots. B6 actually had a lot to gain here, which is why this is baffling to me.

Perhaps WN is irrelevant in NYC. Or they're the largest small player NYC has...

At the end of the day, WN is focused on getting people across their network TO NYC, not too focused on NYC based travel. But they do it with about 58 flights a day, not including ISP, not too shabby considering only a decade ago did they serve NYC solely through ISP.

STT757 wrote:

My guess: MSY 1, MCO 2, FLL 2, TPA 1

They already do TPA 2x daily.

Thinking MSY, CMH, IND, OMA, FLL & MCO all have good chances at LGA service. The DCA slots are interesting... looking forward to see what they do there.

airliner371 wrote:

tphuang wrote:

FlyPNS1 wrote:

Selling them would have triggered a more aggressive regulatory review in all likelihood since VX got these as a result of slot divestitures to make DCA/LGA more competitive. Selling the slots to AA/UA/DL would have been flagged as anti-competitive. G4/NK/F9 don't have that deep of pockets to pay a premium.

The carrot for AS was they dumped money losing routes, will get a nice steady cash flow for a decade for the lease and could breeze through the regulatory review. The only carrier that maybe could have and should have been more aggressive is B6. However, I'm not sure B6 could do much with the DCA slots. They've struggled to use the DCA slots they currently have.

B6 is actually doing pretty well in dca. Even if they weren’t interested in dca slots, they could have still bid higher for lga slots.

Wn is still irrelevant in nyc with more lga slots. B6 actually had a lot to gain here, which is why this is baffling to me.

Perhaps WN is irrelevant in NYC. Or they're the largest small player NYC has...

STT757 wrote:

My guess: MSY 1, MCO 2, FLL 2, TPA 1

They already do TPA 2x daily.

Thinking MSY, CMH, IND, OMA, FLL & MCO all have good chances at LGA service. The DCA slots are interesting... looking forward to see what they do there.

They are definitely irrelevant. So they would need to launch routes to places where they have strong point of sale.

their yields on ewr fll and mco are disastrous.