The Justice Department filed an antitrust lawsuit Tuesday to block a deal between United and Delta Air Lines in a bid to preserve competitive prices for passengers flying out of Newark Liberty International Airport.
Officials are concerned that United’s plan to acquire 24 takeoff and landing slots from Delta in Newark would result in higher prices and fewer choices for consumers at an airport that the Bureau of Transportation Statistics already calls the nation’s most expensive.
United holds 902 out of the 1,233 slots (73 percent) available at Newark, according to the lawsuit filed in U.S. District Court for the District of New Jersey.
“It is the monopoly nonstop carrier — it faces no nonstop competition — on 139 of the 189 destinations it serves directly from Newark, and is able to charge fares reflecting its dominant position,” said Assistant Attorney General Bill Baer. “Indeed, it has long been able to charge a so-called Newark premium, on average charging more for its Newark service than for comparable service out of other New York airports.”
Federal Aviation Administration regulations ban the sale of slots at the Newark airport, but the two airlines reached an agreement this summer by which Delta would lease United its 24 slots for $14 million, according to the lawsuit. A separate deal concerning New York’s John F. Kennedy International Airport has Delta leasing all of United’s remaining slots there.
United defended the deal Tuesday, noting that the three major airports in the New York metropolitan area make the region the most competitive air transportation 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,” United spokesman Rahsaan Johnson said. “We will vigorously defend our ability to operate effectively, efficiently and competitively at Newark.”
United acquired the bulk of its slots in a 2010 merger with Continental Airlines — a move that raised Justice Department concerns at the time and resulted in United divesting 36 slots, according to the lawsuit. In the time since, United has sought three times to increase the number of slots it holds at the airport.
The lawsuit says United does not use all of the slots it holds and grounds as many as 82 a day. By doing so, the lawsuit says, the airline “deprives Newark passengers of flight options that would exist if the slots were flown.”
“With each additional slot it acquires, United reduces competition and forecloses entry or expansion of a rival that would otherwise use the slot to compete,” the lawsuit states.
Consumer advocate George Slover praised the Justice Department’s challenge to the deal.
“This enforcement action highlights the harm that airline mergers and the increased market concentration are doing to consumers,” said Mr. Slover, senior policy counsel for the Consumers Union. “This concentration makes it too easy for airlines to restrict consumer choice and jack up fares.”
• Andrea Noble can be reached at anoble@washingtontimes.com.
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