JetBlue and Southwest Confirm Success in Bid for Washington Reagan National Slots

US carriers JetBlue Airways and Southwest Airlines have both revealed that they have been successful in their bids to secure slots at Ronald Reagan Washington National Airport but await final approval of the tentative ruling. These assets became available as a result of divestitures mandated by the US Department of Justice (DOJ) in the American Airlines-US Airways merger.

JetBlue said it had successfully secured 12 slot pairs at the airport, located close to downtown Washington. Once it has received formal approval from the DOJ, JetBlue expects to add 12 new non-stop services to cities it does not currently serve from the airport, expanding its popular service to more communities, as well as adding more flights on some existing routes. It said it will operate up to 30 daily non-stop flights from Washington National by the end of 2014.

JetBlue first introduced flights at the airport in 2010 and today offers 18 daily round-trip flights to Boston, Fort Lauderdale/Hollywood, Orlando, Tampa, as well as the airport's only non-stop service to San Juan, Puerto Rico. Last year it had a 4.4 per cent share of the flight departures from the airport and a 5.6 per cent share of seat capacity.

"For more than a decade, JetBlue worked tirelessly to gain access to Washington National, a high-fare market perfectly made for our everyday low fare business model," said Rob Land, senior vice president of government affairs and associate general counsel, JetBlue Airways. "The JetBlue Experience is about serving the under-served with affordable, award-winning and nonstop service, to places people want to visit, not through spokes in a wheel.”

JetBlue has been cited by an independent study from the Massachusetts Institute of Technology (MIT) as the airline that lowers fares the most when it begins service in a new market, as measured by fares during the 2007-2012 timeframe. The JetBlue Effect, MIT says, lowers fares $32 one way on average, or $64 on a roundtrip fare.

“JetBlue has already had a major impact at Reagan National in just a few short years with its everyday low fares, such as in the key business market to Boston, where since our entry in 2010, average fares have been reduced 31 per cent and traffic has nearly doubled, soaring 93 per cent,” added Land.

In addition to its successful bid for 12 new slot pairs, JetBlue and American have agreed to a permanent transfer to JetBlue of eight other Washington National slot pairs owned by American, as required by the DOJ settlement conditions, that JetBlue has been operating on a temporary basis since 2010.

Southwest confirms it has been notified of its winning bid in an auction for 54 slots –allowing 27 additional daily flights from Washington Reagan National. The additional slots will translate to an increase in Southwest's service at Reagan National from 17 daily departures to 44 daily departures but the carrier says further details of its bid for the slots remain confidential under terms of the deal.

"Consumers who appreciate the value and reliability that Southwest and our People deliver are the real winners in this deal," said Gary Kelly, chairman, president and chief executive officer, Southwest Airlines. "Reagan has long been a convenient but high-fare airport. Southwest plans to change that by bringing much needed competition to the nation's capital."

The carrier plans to announce destinations and schedules for the additional flights later this quarter and anticipates it will begin flying in the third quarter of 2014. In a separate development, Southwest recently announced new service between Reagan National and Kansas City International Airport commencing February 1, 2014.

"When we learned another carrier planned to stop flying to Washington, we thought Southwest Airlines was the right airline to step in," said Mark VanLoh, director of aviation, Kansas City International Airport. "More than 270 passengers per day fly from Kansas City to D.C., and now they can get there non-stop on Southwest!"

In our analysis we look at the largest airlines at Washington Reagan National by seat capacity in 2013 and how this compared with the previous year. JetBlue is currently the fifth largest operator at the airport but will become the fourth largest following the amalgamation of American and US Airways. Its own capacity at Washington National increased 37.8 per cent in 2013 (versus 2012) with its share of traffic growing from 4.1 per cent to 5.6 per cent over the same period. Meanwhile, Southwest had a 1.5 per cent share in 2013, but this increases to 5.1 per cent when you also include the activities of AirTran Airways, which will eventually be integrated fully into the Southwest operation.