A decision from the United States Court of Appeals in the Washington D.C. Circuit has come out against the Federal Aviation Administration (FAA). Spirit Airlines brought the court case against the FAA last year over a decision the FAA made regarding Newark Liberty International Airport (EWR). The airline sought to expand its flying at Newark, but the FAA had other plans, leading to the case.
Why was Spirit Airlines suing the FAA?
The aviation world is not without its court cases and squabbles. To understand why the decision came against the FAA, it is important to understand the case. The story of the case starts in 2010.
United Airlines and Continental Airlines wanted to merge. However, to get final approval for the merger, the US Department of Justice (DOJ) wanted to see a transfer of takeoff and landing rights at EWR. Those rights went to Southwest Airlines.
The DOJ’s rationale behind giving the rights to Southwest was that, as a low-cost carrier, Southwest would be able to offer lower fares and competition against United Airlines. This was designed to counteract United’s massive hub at Newark.
In November 2019, however, Southwest Airlines announced it would be pulling out of Newark and consolidate its New York-area operations at LaGuardia Airport (LGA), which is actually in New York. Newark is in New Jersey. Southwest highlighted lagging financial results as the reason.
Instead of offering those rights to other airlines, the FAA decided to retire Southwest’s slots. The goal was to reduce congestion at the airport by ending those rights. Spirit Airlines strongly disagreed and filed a case in court against the Department of Transportation (DOT) and FAA.
The FAA has lost
On Friday, the DC Circuit sided with Spirit Airlines, stating the following:
“We conclude the FAA’s decision was final because it prevented Spirit from operating as many peak-period flights as it would otherwise have done in the Summer 2020 scheduling season. We also conclude the FAA’s decision was arbitrary and capricious because the agency disregarded warnings about the effect of its decision on competition at Newark. We therefore grant Spirit’s petition for review and vacate the FAA’s decision to retire the peak-period flight authorizations previously held by Southwest.”
Of Southwest’s 36 slots at Newark, approximately 16 were in the peak hours running from 07:00 to 08:59 and 13:30 to 21:59 with the greatest demand. Spirit Airlines wanted them and pitched itself as the low-cost successor to those rights to continue to offer lower fare competition in the market.
The decision cited concerns over the FAA’s review process and decision to cut Southwest’s operations from the schedule. Moreover, it cited the FAA’s review in finding that cutting those flight times out of Newark would barely impact delays.
For example, the FAA found that Southwest’s one flight during the 07:00 hour and the two flights it operated during the 13:00 hour would lead to no anticipated delay reduction.
Meanwhile, retiring the seven flights Southwest operated during the 14:00 or 17:00 hours were expected to reduce the average delay per operation by about 20 seconds. Retiring the three flights Southwest operated during the 19:00 hour would reduce delays of about one minute per operation.
The greatest reduction would occur between 20:00 and 21:59. Retiring Southwest’s two flights were anticipated to decrease delays by about four minutes per operation. All in all, this averaged out to delay reductions on average of just over a minute per operation.
The slot situation at Newark
Newark is not slot-controlled like airports such as New York’s John F. Kennedy International Airport (JFK), LaGuardia (LGA), or Washington D.C.’s Reagan National Airport (DCA) are.
While the airport was slot-controlled when the United-Continental merger happened, in 2016, the FAA relaxed its controls at Newark. There are limits on operations in Newark, but there is more of a partnership between agencies and airports to reach the best possible schedule in and out of Newark.
However, the FAA has stated that it would bring back slot controls if voluntary schedule adjustments are not made. Essentially, if airlines and authorities cannot reach a final agreement on Newark operations, the FAA could step back in and return the airport under slot controls.
So, while airlines do not expressly need to go out and secure specific takeoff and landing slots, they need to work with authorities on their schedules to maximize terminal and runway usage and minimize noise pollution over surrounding areas.
Newark’s competitive situation
Newark is a massive hub for United Airlines. A major international long-haul gateway for flights to Europe and Africa, the Port Authority of New York and New Jersey also had concerns about removing Southwest’s flight times from the schedule.
United Airlines already operated around 72% of the peak period operations at Newark. With the retirement of Southwest’s authorizations, that number goes up to 75%. Moreover, the Port Authority was concerned about fares, nothing that competitive markets generally see airfares fall by nearly 45% when a second airline begins flying on monopoly routes.
Without Southwest around, United Airlines would maintain its massive competitive advantage. Spirit Airlines wants to counteract that and gain a bigger footprint in the New York area focused on Newark.
JetBlue has started to build up its presence in Newark. However, JetBlue is still not as large enough to counteract United’s massive position on its own. Moreover, the airline is not fully a low-cost carrier in the sense that Spirit is.
What happens now?
With the court officially granting Spirit’s petition to review the decision, it does not return Southwest’s authorizations to Newark and make them up for grabs.
However, the decision prompts the FAA to make some more substantive changes, such as moving to conduct a fuller review of the slots or else working with airlines and authorities to reach new conclusions to minimize delays, as the FAA intends.
Nevertheless, the decision against the FAA is highly likely to bring more options to Newark for airlines to schedule flights. Spirit Airlines is likely to benefit, and as the recovery pans out, the airline is likely to turn an aggressive stance at Newark if it gets more authorizations.
Ultimately, this is bad news for United, which is likely to see some more competition. Whether it be from Spirit Airlines or other carriers that get authorizations to up their flight schedules,
What do you think about this court decision? Was the FAA in the right or the wrong? Let us know in the comments!
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