Latest New York LaGuardia and Washington National slot deal is a win-win for Alaska Air Group and Southwest Airlines

The value of slots at New York LaGuardia and Washington National never diminishes, and Southwest Airlines just increased its portfolio at those key airports after striking a deal with Alaska Air Group to acquire take off and landing rights at those facilities as Alaska continues work to maximise the value of its combined network with Virgin America.


Summary:

  • Alaska Air Group is leasing within perimeter slots to Southwest Airlines at Washington National and New York LaGuardia airports;
  • Southwest Airlines plans to lease 12 within perimeter slots at Washington National and eight of the same types of slots at New York LaGuardia from Oct-2018;
  • Alaska Air Group has concluded flying the former Virgin America routes from Love Field to National and LaGuardia is not strategic for the company;
  • Southwest Airlines has not announced how it will use the slots, but it will not doubt carefully consider bolstering frequencies to National and LaGuardia in order to compete more effectively for business travellers in those markets.

Southwest Airlines plans to lease 12 within perimeter slots at Washington National and eight of the same types of slots at New York LaGuardia. The perimeter at National is 2,011km and 2,414 at LaGuardia.

The lease agreement commences in Oct-2018, and Alaska stresses the deal “enables us to monetise these valuable slots, while reallocating our flying from DCA [National] and LaGuardia into [Dallas] Love Field to more strategic and profitable opportunities of the West Coast”.

Alaska inherited operations Dallas Love Field through its acquisition of Virgin America. In late 2014 Virgin America opted moves its operations from Dallas Fort Worth International airport to Dallas Love Field to capture more lucrative business travellers.

CHART – Combined, Alaska Airlines and Virgin America represent 8.8% of Love Field’s departing frequencies, versus the 89% share of Southwest, which has its headquarters at the airportSource: CAPA – Centre for Aviation and OAG (data: w/c 23-Apr-2018)

Presently, Alaska and Virgin America operate flights from Love Field to San Francisco, Los Angeles, Portland, Seattle, San Diego, Washington National and LaGuardia.

It is a logical move for Alaska to sell those within perimeter slots to Southwest and cut service from Love Field to Washington National and LaGuardia. First, it gives Alaska an opportunity to bolster its cash balance, and second, it allows it to exit markets where its presence is overshadowed by Dallas’ hometown carriers Southwest and American Airlines.

CHART – Southwest Airlines currently accounts for two in every three seats in the Dallas Love Field – New York LaGuardia market (top) and three in every four seats available between Dallas Love Field and Washington national (bottom), the latter a market where its share has grown significantly versus last yearSource: CAPA – Centre for Aviation and OAG (data: w/c 23-Apr-2018

Analysis of schedule data shows Alaska’s seat share between Love Field and LaGuardia is 33% compared with Southwest’s 67%. Alaska has a 25% share on flights from Love to Washington National, and Southwest has a commanding 75% share. In the overall Dallas (Dallas/Forth Worth and Love Field)to LaGuardia market, American holds a 54.6% seat share, and a 61% seat share on service to Washington National.

Alaska has concluded flying from Love Field to National and LaGuardia is not strategic for the company, which obviously has more loyalty and brand recognition on the US West Coast. “We’re happy to do this transaction,” says Alaska. “So that we can line up our aircraft and our assets with our strategies.”

The airline  also operates flights from Dallas/Forth Worth to its hubs in Seattle and Portland, and has no plans to eliminate those flights. Southwest has not announced how it will use the slots, but it will not doubt carefully consider bolstering frequencies to National and LaGuardia in order to compete more effectively for business travellers in those markets.