The Justice Department has sued United Airlines in an effort to block what federal authorities are characterizing as the carrier's attempt to monopolize service at Newark Liberty International Airport.
The filing, made on Nov. 10 in the U.S. District Court in Newark, came as the FAA and the DOT are weighing potential changes in the way they oversee and allocate departure and landing slots at all three New York metro area airports, including Newark, Kennedy and LaGuardia.
Specifically, the Justice Department (DOJ) suit asks the court to invalidate an agreement that United entered into on June 16 with Delta under which Delta would lease to United 22, year-round Newark takeoff and landing slots in addition to two summer season slots, for $14 million.
Also on June 16, United and Delta entered into a separate $14 million agreement under which United is leasing to Delta 24, year-round slots at Kennedy Airport as well as six seasonal slots.
Slots, which are takeoff and landing authorizations granted by the FAA, are precious in the New York City metropolitan area, where regulators use them to manage airport congestion.
The Justice Department is accusing United, which already controls 73% of Newark's 1,233 daily slots, of attempting to restrain interstate trade and commerce in violation of federal antitrust laws.
"A slot is essentially a license to compete at Newark," Assistant Attorney General Bill Baer said in a statement last Tuesday. "United already holds most of them, and as a result, competition at Newark is in critically short supply. 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."
Due to its role in the proposed slot swap with United, Delta is also named in the suit.
In a statement last week, United defended its agreement with Delta.
"With three major airports, the New York/Newark area is the most competitive air transportation market in the country," the carrier said. "We firmly believe this transaction benefits our customers and the region by enabling us to enhance service at our Newark hub and manage congestion at the airport. We will vigorously defend our ability to operate effectively, efficiently and competitively at Newark."
Delta, meanwhile, said that its agreements with United did not amount to a swap.
"Delta's agreement to lease slots at Newark to United, the focus of the Department of Justice lawsuit announced today, is an independent transaction and does not affect Delta's separate agreement to lease slots from United at New York JFK Airport," the carrier said in an email to Travel Weekly. "Delta began flights with those slots on Nov. 1 and continues to operate that expanded JFK service."
According to the Justice Department suit, United's proposed Newark deal with Delta is the continuance of an effort the airline began in the summer of 2014 to acquire more landing slots at Newark.
The DOJ rejected United's July 2014 proposal to acquire 36 slots from Southwest.
Likewise, the DOJ rejected a United proposal in March to provide 26 Kennedy slots to American in exchange for 18 of American's slots at Newark.
The DOJ said that when United faces route competition out of Newark, airfares go down. For example, when Southwest introduced flights from Newark to St. Louis after obtaining slots in 2010, fares on that route decreased 27% year over year.
Justice officials also accused United of sitting on its existing Newark slots.
According to the lawsuit, on a given day the airline leaves as many as 82 of the 902 departure and arrival slots it controls at Newark unused. That's 12 more slots than Newark's second largest operator, American, even controls.
The suit's filing came one week after Alaska, Allegiant, Frontier, Spirit and Virgin America airlines sent a joint letter to the FAA and the DOT imploring them to allocate additional landing slots at New York-area airports to smaller carriers.
Among them, American, Delta and United control 91% of all slots operated by U.S. passenger airlines at Newark, 88% at LaGuardia and 63% at JFK, the five smaller airlines said.
In January, the FAA proposed new slot management rules at the New York-area airports. The proposals, which would take effect next October, would place more stringent use requirements on airlines that control slots.
In addition, they would require greater transparency when airlines sell, lease or trade slots.
American, Delta and United have decried the proposals as being too rigid, while smaller carriers have said they are a good start but don't go far enough.