DOJ Files Lawsuit to Prevent United Airlines from Extracting a Higher Premium at Newark Airport
United Airlines has come under increased antitrust scrutiny during the latter half of 2015. As we previously reported the U.S. Department of Justice (“DOJ”) is investigating an alleged passenger-capacity conspiracy between United and three other airlines, and the Department of Transportation is investigating whether United and others engaged in price gouging after a Spring 2015 Amtrak derailment.
The DOJ dealt United its latest regulatory blow on Tuesday after it filed suit to prevent United from renting 24 slots—Federal Aviation Administration takeoff and landing authorizations—at Newark Liberty International Airport. United seeks to rent these slots on a long term basis from Delta Airlines—United’s largest competitor at Newark Airport. The DOJ alleged that this transaction would allow United to enhance or maintain its monopoly at Newark Airport where it already controls 902 out of 1,233 available slots.
United obtained the bulk of its existing slots at Newark Airport through its 2010 merger with Continental Airlines. Before approving that merger, the DOJ had required United to divest 36 slots to Southwest Airlines. According to the DOJ, United’s current proposal to rent slots is its third attempt reverse the benefits that flowed to consumers as a result of its earlier slot divestiture. In 2014, United had proposed renting slots from Southwest, and in Spring 2015 United had sought to rent slots from American Airlines.
The DOJ seems to be skeptical of United’s proposed slot rental largely because United does not use many of the slots that it currently maintains. The DOJ alleged that United “grounds” as many as 82 slots per day, and that the airline’s non-use of slots far exceeds other competitors’ non-use.
Overall, the DOJ’s complaint and its accompanying press release argue that United’s current monopoly over Newark Airport slots is hurting consumers. Most notably, the DOJ claimed that “United is already extracting a 'Newark premium.' Airfares at Newark are among the highest in the country while United’s service at Newark ranks among the worst.”