UPDATE 2-Southwest, JetBlue win slots at Washington Reagan airport

Thu Jan 30, 2014 4:15pm EST

* Carriers say Justice Dept must give final approval

* Southwest gains 54 slots, good for 27 departures

* JetBlue adds 12 new slot pairs, full control of 8 more

* Shares of both carriers rise

Jan 30 (Reuters) - Southwest Airlines and JetBlue Airways won takeoff and landing rights at Reagan National Airport near Washington that American Airlines Group must sell under an agreement with the U.S. government, the carriers said on Thursday.

Dallas-based Southwest said it successfully bid for 54 slots, which will allow it to operate 27 additional daily flights at Reagan National. New York-based JetBlue said it won 12 slot pairs, or 24 slots, and will also gain control of eight other slot pairs from American that it had been operating temporarily since 2010, for a total of 20 slot pairs at Reagan.

A slot is the right to operate one takeoff or landing. Of the 52 Reagan National slot pairs American agreed to give up, there are five left to be sold.

JetBlue shares were up 6.4 percent to $9.05 in afternoon trading, while Southwest gained 3.2 percent to $21.27. American Airlines shares rose 2.7 percent to $33.86.

The slot purchases are subject to final approval of the U.S. Justice Department, Southwest and JetBlue said.

The slots will likely be a worthwhile investment for the receiving carriers, said Robert Mann, an aviation consultant in Port Washington, New York. Reagan National is a popular, gate-restricted airport that serves the political and business communities.

"For JetBlue, it gives them a meaningful position at National," Mann said. He said the new slots could give Southwest, which already has a sizable presence at Baltimore/Washington Thurgood Marshall International Airport (BWI), a means to connect people to its major hubs in Chicago, Houston and Atlanta from Reagan National.

American's former parent, AMR Corp, and US Airways agreed to give up 52 pairs of takeoff and landing rights, or 104 slots, at Reagan National as well as gates at other airports under a settlement of an antitrust lawsuit by the U.S. Justice Department seeking to block their combination. The merger, completed in December, formed the world's largest airline.

Late last year, Southwest and Virgin America, a carrier in which Richard Branson's Virgin Group is a minority share investor, won slots at New York's LaGuardia Airport that American sold.

Southwest and JetBlue said they intend to bring lower fares and more competition to Reagan National, a key goal of the Justice Department in requiring American to make the divestitures.

"Reagan has long been a convenient but high-fare airport," Southwest Chief Executive Gary Kelly said in a statement.

JetBlue added that once its agreement for the slots is approved, it expects to add 12 new roundtrip flights at Reagan National and provide non-stop flights to cities it does not yet serve from that location, with Jacksonville, Florida, and Charleston, South Carolina, as possibilities. With the new slots, JetBlue plans to operate up to 30 roundtrips per day at Reagan National, compared with 18 currently.

Southwest said it would use the new slots to increase its service at Reagan National to 44 daily departures from 17. It plans to announce destinations, schedules, and fares for the newest flights later this quarter and to start service in the third quarter.

The Justice Department did not immediately respond to a request for comment. American said it was working on agreements with a number of carriers on the airport slots and gates it must divest.

Virgin America had also said it was interested in the airport assets available as a result of the American merger settlement.

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