We learned Tuesday that US Airways and American Airlines have settled their antitrust lawsuit with the U.S. Department of Justice and several state attorneys general.
The deal, as expected, requires the combined carrier to divest itself of assets in some major business markets — mostly New York and Washington, but also other places, like Chicago, Boston and Los Angeles. Many experts believe American and US Airways did pretty well in the deal, and I agree. The new American should be at least as strong as competitors Delta and United. The biggest divestiture comes in the form of slots — or takeoff and landing rights — with the new airline losing 34 slots at New York La Guardia and 104 at Washington Reagan.
My job is to focus on West Coast aviation. So let’s take a look at the nuts and bolts of what the DOJ Settlement means for LAX.
American and US Airways will lose 2 gates at LAX
As part of its agreement with the Justice Department, the combined airline will give up two gates at Los Angeles International Airport. The gates the airlines will lose are in Terminal 3, where US Airways is supposed to move this winter or spring. US Airways is now in Terminal 1 with Southwest, but needs to move to accommodate a Southwest renovation project. I think US Airways has only been given three total gates at Terminal 3, so that presumably means the combined airline now owns only one gate in Terminal 3. I’m not sure what American can do with a single gate, but I’m sure American will find a way to create value with it.
The new American — like the old American — faces a gate crunch at LAX.
The current American Airlines is already too big for Terminal 4 where it is the only tenant. It is sometimes difficult to find gate space for airplanes.
The good news is that American will, eventually, be able to use several gates at the new Tom Bradley International Terminal. (No one can tell me exactly when American will get those gates, though.) But surely American was planning to pick up a few more gates with the US Airways merger. Now, without those gates, some flights might need to be cut. The important flights — New York, Chicago, Miami — are untouchable, so I would imagine midsize cities will be first to go.
Another option could be to simply for American to be more efficient in how it allocates gates space. I’m sure the airline has already tried hard to increase efficiency, but there’s probably still room to do better. US Airways is a particularly nimble operation and might be able to teach American some things about turning aircraft.
Jetblue and Virgin America could find room to grow at LAX
Two or three gates isn’t much, but the fact that US Airways is giving up gates in Terminal 3 could help the main two tenants there — Jetblue and Virgin America. Virgin, especially, might be interested in extra gates. It only has six now at LAX, according to airport officials. That’s not very many for an airline that is considered a West Coast carrier.
Check back again soon for more posts about what the merger will mean for LAX. And please, if you have opinions, leave them in the comments section.