Antitrust Division Blocks United Airlines’ Attempt to Bolster Its Monopoly at Newark Airport

Division Update Spring 2016

On November 10, 2015, the Division filed suit to block United Airlines’ proposed acquisition of 24 takeoff and landing slots at Newark Liberty International Airport from Delta Air Lines. As detailed in the complaint, the challenged transaction would have violated Sections 1 and 2 of the Sherman Act by enhancing United’s existing monopoly at Newark—which is one of our nation’s most important and most expensive airports—and subjecting Newark passengers to higher fares and worse service. Earlier this month, United abandoned its attempt to acquire slots after the Federal Aviation Administration (FAA) announced that it planned to lift slot controls at Newark. This is the third time that United has attempted, and abandoned, efforts to acquire Newark slots since 2010.

For some years, the FAA has used takeoff and landing authorizations, or slots, to limit the number of flights that can serve Newark during most of the day. Slots are scarce, and airlines at Newark—especially low-cost carriers—often have had a hard time obtaining them to offer new air service. As the chart below shows, United controls 73% of the slots at Newark and its slot holdings are more than ten times greater than those of any other airline—United holds 902 slots; no other airline has more than 70.

Newark Slots Allocated to Domestic Airlines

Moreover, United’s dominant control of Newark slots enables it to be the monopoly provider on 139 of the 206 destinations served nonstop from Newark.

Notably, United does not use all of the slots it controls at Newark; a fact the FAA relied on in lifting the slot controls. Each day, United “grounds” as many as 82 slots at Newark—more slots than any of its competitors have the option to fly. United’s failure to use the slots it already controls deprives Newark passengers of flight options and lower fares that would exist if the slots were used by United or in the hands of other carriers.

Getting more airlines access to Newark helps the traveling public. For example, Southwest’s acquisition of 36 Newark slots from United in 2010 allowed it to introduce new low-fare competition to United on five routes resulting in substantially lowered fares and increased service on these routes:

Newark Routes

Similarly, when Virgin America acquired slots at Newark in 2012 after several unsuccessful attempts, it introduced competing nonstop service to Los Angeles and San Francisco. This new competition resulted in United reducing its fares by approximately 40%, which, according to United, cost it almost $66 million in annual revenue.

Updated May 5, 2016

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