Airlines Take Sides on Route Allocation Plan : Aviation: Proposal would allow long-haul carriers to give slots to commuter companies. Debate centers on competition.
Major airline carriers followed their pocketbooks in praising and criticizing a John Wayne Airport proposal that would allow long-haul operators to give some of their flight slots to commuter companies.
In written comments sought by the airport, some carriers said the proposed rule change would open the airport to more competition--and possibly lower fares--while others charged that a few big companies would wind up controlling most of the flights, which could lead to higher prices.
Low-fare leader Southwest Airlines criticized the proposal as anti-competitive and challenged the airport’s authority to alter the rules that are used to determine which carriers can gain access to the limited flights out of the Orange County airport.
“In fact,” the company said in its response, “we believe it is feasible to argue, if not litigate, that the proposed modifications contradict” federal law. It accused the airport of trying to “help the industry” compete against it.
But upstart discounter Reno Air, which stands to gain landing slots from its affiliation with American Airlines, praised the airport staff for its willingness to change access rules “despite the somewhat hostile reaction of certain parties who oppose the increased competition that could result.”
The contentiousness of the battle is not lost on county politicians. “It’s such a sensitive issue that I’d rather not discuss it,” said Supervisor Thomas F. Riley, whose district includes the airport.
Airport Director Jan Mittermeier initiated a review of the so-called affiliate rule in May, shortly after Southwest started serving John Wayne Airport. The final version of the proposal, which was first formulated last month, was to be turned over today to the Airport Commission for review at a meeting Wednesday. But federal regulators, who also are reviewing the plan, are expected to ask for a two-week delay.
The comments from Southwest, Reno Air, American Airlines and five other carriers and the city of Tustin are not expected to change the airport staff’s recommendation in any substantial way, said Courtney C. Wiercioch, the airport’s special projects director.
The proposed affiliate rule recognizes newer ways under which carriers operate. But it also would change the present way of allocating routes or flights to air carriers.
The proposal would allow airline companies to lend some of their unused air routes and flights to a company with which it has formed a working relationship, such as an agreement to market their routes together and coordinate their flights and other operations.
The existing rule requires that airlines with unused routes or flights return them to the county, which then allocates the flights to carriers that have been put on a waiting list. The existing rule also allows a company like United Airlines to allocate some of its routes to a subsidiary, such as United’s Shuttle by United commuter division.
The affiliate issue is hotly contested because there is little room for growth at John Wayne Airport, which is one reason ticket prices are typically higher.
A longtime settlement of a lawsuit puts a limit on the noise created by jets and the number of customers the airport can accommodate. So when an airliner isn’t using a route or a flight, others are eager to take it over.
But under the proposed rule, it won’t always be the county that determines who wins. By letting in a wider array of affiliates, the proposal effectively gives carriers the right to give those slots away.
Sharing slots became an issue last spring when Reno Air wanted to pick up six slots from American under a marketing agreement between the two. The flights to San Jose were not profitable for American, but Reno Air thought its lower costs could help it make money--while customers still could earn frequent-flier miles from American.
Other carriers objected, saying it was unfair to let Reno Air skip ahead of those on the waiting list. Federal regulators were concerned about the airport’s proposed restrictions on Reno Air. The carrier, though, withdrew its plan while the airport worked to revise its access rule. Last month, it sought comments on the proposal, and the response was strong.
The proposal violates federal law, “distorts” competition and “encourages carriers at JWA to enter into cartels to frustrate competition,” United Airlines charged in its response.
By letting American “shelter” its unused flights by lending them to a non-competitive company, the county is helping the giant carrier maintain its “overwhelming numerical advantage over its competitors,” asserted Delta Air Lines. Northwest Airlines said it “strongly opposes” any change that would allow transfers to such affiliates, saying it would block new carriers from serving the airport and reduce service for passengers.
American supported the proposal, but with modifications that would encourage more airlines to form groups of affiliates. It suggested, for instance, that the airport eliminate a requirement that a carrier seeking to turn over slots to an affiliate also give the county two flights by its noisiest jets.
Reno Air praised the proposal as one that promotes competition, efficiency and flexibility by recognizing “developing changes in the industry.” It responded to some of the criticism by contending that there is little difference between transferring flights within a corporation, such as from United to Shuttle by United, and transferring flights among separately owned companies that have formed an association, such as American and Reno.
The proposal also won support from America West Airlines, another short-haul operator like Southwest and Reno Air, and Continental Airlines, which owns a stake in America West.
The city of Tustin urged only that the county not reallocate any unused flights returned to it that involve the use of noisier jets.
WHAT’S NEXT
A report on the proposed change in air carrier access to John Wayne Airport is to be turned over today to the Airport Commission. The Airport Commission will review the proposal at a meeting on Wednesday and will submit a recommendation to the County Board of Supervisors. The Board of Supervisors plans to vote on the matter Sept. 27.
