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VOL. 128 | NO. 223 | Thursday, November 14, 2013

Airline Merger Could Bring Changes to Memphis Airport

By Bill Dries

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Delta Air Lines considers itself a “low-cost carrier” that should be able to apply for the slots and gates US Airways Group Inc. and American Airlines are giving up as part of their merger settlement agreement with the U.S. Justice Department.

(Daily News File/Andrew J. Breig)

And if Delta is able to get the slots the two airlines are giving up at Washington’s Reagan National Airport, it could undo the gains Memphis International Airport made in March 2012 when US Airways began service between Memphis International and Reagan National that competed with Delta.

Delta has since de-hubbed Memphis International Airport and cut its flights even more dramatically than it was in the process of doing when airport leaders touted the US Airways service to and from Washington as a sign that Memphis International was finding a way around the Delta cuts.

The Justice Department this week required US Airways and American Airlines, whose parent company is AMR Corp., “to divest slots and gates at key constrained airports across the country to low-cost carrier airlines in order to enhance system-wide competition in the airline industry resulting in more choices and more competitive airfares for consumers,” according to the Justice Department’s announcement of the agreement Tuesday, Nov. 12.

The agreement settles not only the Justice Department claims but challenges to the merger from several states, including Tennessee.

Tennessee Attorney General Bob Cooper said the settlement requires the merged airline carrier, which will be the largest in the world, to continue to serve Tennessee’s five largest airports, including Memphis International Airport, for five years.

Cooper specifically cited the reduction of service at Memphis International following Delta’s merger with Northwest Airlines.

“This resulted in fewer flying options and higher prices for Tennesseans,” Cooper said Tuesday. Tuesday’s “agreement should provide Tennesseans more opportunities to buy low-cost airline options. It also opens the door to increased competition to smaller carriers, benefiting consumers and businesses.”

Delta executives, in a written statement Tuesday, said the airline “looks forward to the opportunity to acquire slots that will be divested under the agreement, particularly at Washington Reagan National Airport.”

“Delta is the airline best positioned to continue competitive nonstop flights from Reagan National to small and mid-sized cities that could otherwise see service reduced or eliminated, which should be a strong consideration in the divestiture,” the Delta statement added.

U.S. Attorney General Eric Holder said the agreement could “shift the landscape of the airline industry.”

“By guaranteeing a bigger foothold for low-cost carriers at key U.S. airports, this settlement ensures airline passengers will see more competition on nonstop and connecting routes throughout the country,” Holder added in a written statement in which he said his goal was “to ensure vigorous competition in airline travel.”

In January 2012, Memphis International Airport leaders announced the Washington service, touting US Airways’ competition with Delta.

A quick check of airfares at both airlines for a Wednesday, Nov. 13, flight out of Memphis International to Reagan National in Washington showed a direct nonstop flight for $542 flying coach on US Airways. An economy direct nonstop on Delta out of Memphis to Reagan National had a fare of $1,087.

American Airlines and US Airways together had 14 of the 104 scheduled daily flights out of Memphis International in September. The totals include regional and commuter air service.

The 88 slots at Reagan National will be sold under Justice Department procedures, “taking into account specific slot times to ensure commercially viable and competitive patterns of service for the recipients of the divested slots,” according to the settlement agreement. And the Justice Department has final approval of who gets the slots.

“Preference will be given to airlines at each airport that do not currently operate a large share of slots or gates,” the Justice Department announcement added.

The US Airways service between Memphis and Washington that began in 2012 was made possible by a “slot swap” with Delta in which US Airways gave up 132 takeoff and landing slots at LaGuardia Airport in New York City for 43 slots at Reagan National.

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