United Air Drops Bid to Buy Newark Flying Rights From Delta

  • Decision follows Justice Department lawsuit to block the deal
  • FAA agreed to ease flight caps at the New Jersey airport

United Continental Holdings Inc. abandoned a plan to buy more landing rights at New Jersey’s Newark Liberty International Airport, almost five months after the U.S. sued to block the deal due to the carrier’s already dominant market share.

The airline gave up the effort to purchase 24 takeoff-and-landing authorizations, or “slots,” from Delta Air Lines Inc., the Justice Department said in a statement Wednesday. The deal would have subjected Newark passengers to higher fares and fewer choices since United already has 73 percent of slots, the government said in a November lawsuit.

This is the third time in the last two years that United failed to gain more rights at Newark, where the carrier is focusing all of its New York-area flying after pulling out of John F. Kennedy International Airport. United’s decision follows the Federal Aviation Administration’s announcement last week that it would allow carriers to apply to offer new service at Newark for the first time since 2008.

“United has used its slots monopoly to dominate air travel in and out of Newark,” assistant Attorney General Bill Baer said in a statement. “The FAA’s action opens up Newark to more robust competition and achieves the very outcome we sought in litigation: protecting consumers from United’s plan to enlarge its monopoly at Newark.”

Public Interest

The FAA’s recent move to lift hourly flight caps at the airport and allow new service “may undo United’s significant efforts to minimize congestion-related passenger delays at Newark, and we fear that the already strained New York air space will be further exacerbated,” the Chicago-based carrier said in a statement. United said the acquisition of additional rights at Newark would have been in the public’s interest.

A Delta spokesman declined to comment.

United had hoped to gain the 24 Newark slots from Delta in a $14 million transaction, while United provided the Atlanta-based airline with a similar number of slots at Kennedy, the government’s complaint said. The Justice Department’s lawsuit didn’t affect Delta’s acquisition of the Kennedy slots, which has already gone through.

Two Failures

United also failed to acquire Newark slots from Southwest Airlines Co. in July 2014 and from American Airlines Group Inc. in March 2015, Baer said on a November conference call. The carrier gave up those previous efforts after the government expressed concern, he said.

Newark is a major international hub for United, and the world’s third-largest carrier has by far the biggest market share there, carrying 48 percent of the airport’s passengers last year when regional affiliates are excluded, according to the Bureau of Transportation Statistics.

Buddy Anslinger, a former route network executive at Continental Airlines, which merged with United in 2010, said the pursuit of more flying rights at Newark has more to do with expanding opportunities at a congested airport than killing competition.

“You can’t fault United for trying to expand at Newark,” said Anslinger, an aviation consultant in Dallas with AV8 Advisory. “The problem is there’s just not a lot of space on the ground or in the air at Newark.”

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