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The now-stalled merger between USAirways and American Airlines appears to be gaining altitude. The U.S. Department of Justice is suggesting it could step out of the way and drop its antitrust suit if the airlines lessen their presence at key airports, which would be a change from the DOJ’s initial decision.
That sounds easy — give up a few gates and landing slots and the feds will green light the making of the world’s largest airline. But it’s a bit more complex, and much of that complexity falls on a scarcity of gates at Washington’s Reagan National Airport.
“At the larger airports, and the more congested ones, gates are the primary restriction on how many flights you can fly,” says PwC director of transportations and logistics advisory Richard Wysong.
So what does it take for a new airline to get one of those highly-prized gates? They have to hit up the competition and “find an airline that controls the gate that’s willing to sublease to them,” says Wysong.
The process is called a gate swap. And at Washington Regan National Airport, a gate swap amounts to a pipe dream. That’s because gates are scarce, demand is high, and few carriers want to give up their cash cow.
“Allowing another airline to use those gates would involve competition,” says Michael Lum of Sixel Consulting Group.
While that’s enough to make American and US Airways reluctant to give up a gate, they’re equally hesitant to shed landing slots. Combined, the two control about 70 percent of take-offs and landings at Washington-Regan. The DOJ wants some of those slots back, in the process incubating more competition.
That’s bad news if you’re the airline, but not so bad if you’re the passenger.
“As a general rule of thumb, the more competition — the better it is for passengers,” says FareCompare.com editor Anne McDermott, adding, “More competition generally translates into lower airfare.”
Despite the complexity of the airline industry, McDermott says they still operate on basic market principles.
“With less competition, the airlines are in the driver’s seat price-wise,” she says. And in a tight market like Washington, DC, that’s exactly where carriers want to stay.
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