JetBlue, Southwest and US Airways Push for Reagan National Slot Exemptions

Three US carriers have made official applications to the US Department of Transportation (DOT) to introduce new flights from Ronald Reagan Washington National Airport from the start of the Northern Summer schedule next year. US Airways plans flights to Oklahoma City, Southwest Airlines intends to use the slots for a link to Houston, while JetBlue Airways is proposing flights to Jacksonville.

The process for the tender of two slot exemptions at the airport was launched by the DOT on November 13, 2012 after Spirit Airlines announced it would no longer require the two slot exemptions it used to provide flights to Fort Lauderdale after it switched service to Baltimore Washington International Airport. These slot exemptions authorise service to a medium hub or smaller airport within the 1,250-mile perimeter established for civil operations at Reagan National Airport.

JetBlue Airways intends to offer what it describes as a “much-needed, low-fare competitive service” from Reagan National to Jacksonville, a route currently served on a monopoly basis by US Airways. The airline says it could launch daily operations on the route “within 90 days” of a final order awarding the slot exemptions and would use a 150-seat Airbus A320 on what will operate as a continuing service to its focus city of San Juan.

In its application to the US DOT, JetBlue says its low-fare stimulation model will serve as a powerful catalyst for lower fares and increased traffic on the route. It claims that with the introduction of a new low-fare competitive service, traffic will grow by 50 per cent, with average fares falling by at least 30 per cent in the first year of service.

JetBlue inaugurated operations at Reagan National in November 2010 with seven daily flights to Boston and one each to its focus cities of Fort Lauderdale/Hollywood and Orlando. Since its arrival on the Boston route JetBlue says average fares to/from Reagan National have fallen by 31 per cent from $173 to $118 and there has been a corresponding increase in the amount of traffic on the route with daily passengers nearly doubling from 761 to 1,471.

Today, the Washington Reagan – Jacksonville market has four daily non-stop flights in each direction, which appears to be an ample level of service. But, according to JetBlue, an analysis of the market shows it is in need of competition. “Upon Delta’s exit from the market in January 2012, US Airways has flown smaller aircraft and increased fares, leading to declines in the number of passengers carried on the route,” says the carrier in its DOT evidence. “Considering that Washington is the seat of the federal government and Jacksonville has a high concentration of government/military installations, the level of service and enplanements in this market should be much higher,” it adds.

Southwest Airlines also plans to introduce competition to an existing market from Reagan National with a link to Houston. The airline plans a daily service to William P Hobby Airport in the city and would bring “sorely needed low-fare competition” in a market currently served by United Airlines under a full operational monopoly.

In its official application to the DOT, Southwest says current average fares for non-stop service between Houston and Washington National are more than 60 per cent higher than Southwest's average non-stop fare between Houston and Baltimore Washington International, a similar distance. According to Southwest, United’s average one-way non-stop fare in Reagan National – Houston market (serving George Bush Intercontinental Airport) is $334, 43 per cent above average Reagan National fare levels for that distance. In fact, it says, Houston is the “fourth most overpriced of all Reagan National non-stop markets”.

The low-cost carrier projects its flight option would attract tens of thousands of new passengers. A projection produced by Campbell-Hill on its behalf using standard traffic forecasting techniques, suggests Southwest’s service proposal will stimulate over 105,000 new annual passengers in this market. It says it will “carry many” of the new passengers itself, but others will be carried by United, “which historically lowers its fares” in response to direct Southwest competition.

"Houston is one of Southwest Airlines' three original cities, and this proposed new service is another example of our strong commitment to continue adding value to the community," said Gary Kelly, Chairman, President, and Chief Executive Officer, Southwest Airlines.

Meanwhile the third carrier pushing for the slots, US Airways, proposes to inaugurate the first-ever non-stop service between Reagan National and Oklahoma City, fulfilling the slot exemption requirements of bringing competitive air services to a community unserved from the airport. It plans to offer a daily service on the route using a two-class, 99-seat Embraer 190. In addition to this new service US Airways plans to offer double daily flights from Oklahoma City to its Charlotte Douglas hub, further enhancing US domestic connectivity.

In its application to the US DOT, US Airways says its ‘three-for-one’ service proposal will provide The Oklahoma City community of over 1.3 million people access to the nation’s capital, its Charlotte-Douglas hub and over 125 destinations across its network. It says Oklahoma City is currently the largest metropolitan area lacking a direct service to Reagan National and anticipates carrying around 56,000 passengers annually on the service. A further 84,000 passengers are forecast for the Oklahoma City – Charlotte Douglas route, which will be served using 67-seat Bombardier CRJ700s and 79-seat CRJ900s.

The deadline for the applications was earlier this month and the US DOT will now analyse them all before making a final decision on the award of the slot exemptions, expected to be announced early in the first quarter of 2013 to enable services to commence in the spring or early summer.