To save merger, US Air, American may seek changes at Reagan National

Posted Tuesday, Nov. 05, 2013  comments  Print Reprints
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The fate of an $11 billion deal to create the world’s largest airline may hinge in large part on one airport, but not just any airport: It’s the one right across the Potomac River from the nation’s capital.

When the Justice Department sued in August to block the merger of Fort Worth-based American Airlines and US Airways, it cited the potential impact on Ronald Reagan Washington National Airport. The combined airline would control 69 percent of the takeoff and landing slots at the terminal there, a deal-breaker for the department’s antitrust division.

“Blocking the merger will preserve current competition and service at Reagan National Airport, including flights that US Airways currently offers to large and small communities around the country,” Assistant Attorney General Bill Baer said when he announced the lawsuit in August.

Now the two sides have launched talks to reach a settlement. And if the airlines and the government agree to resolve the case before going to court, aviation observers think it will involve giving up some of the carriers’ dominance in Washington.

On Monday, Attorney General Eric Holder said at a news conference that “divestitures of facilities at key constrained airports” would be part of any resolution to the case.

But other carriers might not be interested in flying from Reagan to smaller markets with less traffic.

“The new American is the only airline that can feasibly serve those markets,” said Tom Reich, director of air service development at AvPORTS, a consulting firm in Dulles, Va.

Reagan National’s unusual location, noise restrictions and congressionally imposed rules limit the number of flights and the distances they can travel.

“You’ve got some markets that simply won’t be served,” said Bob Mann, an aviation analyst and consultant in Port Washington, N.Y. “Some of those people are going to lose service.”

The Washington area is served by two other major airports, Dulles International and Baltimore-Washington International Thurgood Marshall, but they’re at least half an hour away. For most visitors and lawmakers, Reagan National is the most convenient gateway. It’s a short subway or taxi ride from monuments, museums and the U.S. Capitol.

Since February, when the airlines announced their intent to merge, lawmakers with smaller airports in their districts that are served directly from Washington have worried about losing those connections. Anticipating that the Justice Department might force the merged company to divest some slots at Reagan National, more than 100 members of the House asked Holder in May to consider the impact.

“Requiring a reduction of slots by the merged company could reduce the flights to our communities and the economic benefits these flights provide,” they said in a letter to Holder.

For example, US Airways has direct flights from Washington to smaller airports in North and South Carolina. The merged company might decide it could serve communities such as Myrtle Beach, S.C., or Fayetteville, N.C., through its hub in Charlotte, N.C., instead.

Reagan National is unique among the nation’s major airports because of long-standing restrictions on operations due to congestion and other concerns. For instance:

Few flights from Reagan can travel more than 1,250 miles — enough to get to Dallas-Fort Worth or Houston, but not Austin or Denver. Congress approved that boundary and has granted limited exemptions for cities beyond it.

The most likely recipients of Reagan National slots would be Southwest Airlines and JetBlue Airways, both of which have small footprints in Washington and make no secret about their desire to expand.

But they wouldn’t use the slots to serve smaller airports. Southwest, for instance, has hubs at Chicago Midway and Houston Hobby. And next year, when the Wright Amendment expires, Southwest could fly from Washington to Dallas Love Field for the first time since its founding in 1971.

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