US sues over proposed deal between United, Delta at Newark
WASHINGTON (AP) - The federal government wants to block a deal that would further strengthen United Airlines' control over Newark Liberty International Airport, saying that it would drive up fares that are already high.
The Justice Department on Tuesday sued to block a deal that would let United acquire 24 takeoff and landing slots at Newark from Delta Air Lines. Federal officials said United already controls 73 percent of the slots at the airport, which serves 35 million passengers a year.
Newark had the highest average fares of the largest U.S. airports at the start of 2015, according to the Bureau of Transportation Statistics.
Assistant Attorney General Bill Baer, the head of the Justice Department's antitrust division, said if his agency allowed United to acquire even more slots, it would "fortify United's monopoly position and weaken the ability of other airlines to compete."
United responded that with three major airports, the New York City area is the most competitive airline market in the country.
"We firmly believe this transaction benefits our customers and the region by enabling us to enhance service at our Newark hub and manage congestion at the airport," said United spokesman Rahsaan Johnson.
The government filed the lawsuit in federal court in Newark, New Jersey. The Justice Department said that United already controls 902 out of the 1,233 Newark slots allocated by the Federal Aviation Administration - over 10 times more than its closest competitor.
In June, United sold its remaining slots at New York's John F. Kennedy International Airport to Delta while getting slots from Delta at Newark, which is closer to Lower Manhattan.
United expected the deal to win regulatory approval. It ran its last JFK flight on Oct. 25.
The Justice Department charged that United is intentionally limiting Newark flights and not fully using its current slots. United operates 386 daily roundtrip flights at Newark even though it could operate 451, according to the government. Airlines sometimes don't use slots at off-hours if ticket demand isn't strong enough. United said it complied with FAA regulations on use of its Newark slots.
Delta issued a written statement saying that the lawsuit over the Newark slots would not affect its takeover of United's JFK slots. Delta began using those slots for expanded JFK service on Nov. 1.
Smaller low-cost airlines have been pushing for more access to the three main New York City-area airports - JFK, Newark and LaGuardia. Frontier, Spirit, Alaska, Virgin America and Allegiant wrote last week to Transportation Secretary Anthony Foxx to complain that United, Delta and American are blocking competition and driving up New York fares by controlling the vast majority of slots.
The smaller carriers said they control less than 2 percent of the slots at the three airports while United, Delta and American control 91 percent of slots operated by U.S. carriers at Newark, 88 percent at LaGuardia, and 63 percent at JFK.
Slots are takeoff and landing rights. The government limits slots at the popular New York airports.
Over the objections of some antitrust experts, the Justice Department allowed a series of mergers from 2005 through 2013 that left four airlines - American, United, Delta and Southwest - controlling more than 80 percent of the domestic travel market.
Virgin America CEO David Cush said Tuesday's lawsuit represented a recent effort by the Justice Department to promote competition, as it did when it required American to give up slots and gates at several airports to win approval for its merger with US Airways.
"The Justice Department rightfully sees that that remedy was positive for consumers," Cush said in an interview. "This (lawsuit) is another step in that direction."
Shares of United Continental Holdings Inc. fell 9 cents to close at $60.06. Delta Air Lines Inc. shares dropped 33 cents to $50.30.
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Koenig reported from Dallas. AP Airlines Writer Scott Mayerowitz in New York contributed to this report.