Investing.com -- The U.S. Department of Justice filed a civil antitrust lawsuit on Tuesday against United Continental Holdings Inc (N:UAL) in an attempt to scuttle the airline carrier's acquisition of two dozen take-off and landing slots from Delta Air Lines Inc (N:DAL) at Newark Liberty International Airport earlier last month.
The Justice Department's Antitrust Division, in a lawsuit filed in the U.S. District Court for the District of New Jersey in Newark, alleged that United's proposed acquisition of 24 Delta slots could enhance the airliner's already dominant position at the airport and provides another competition barrier for rival companies looking to expand travel options for customers in the New York-New Jersey metropolitan area. The resulting transaction could provide the airport's 35 million annual travelers with higher ticket prices and fewer options, according to the Justice Department.
United currently controls 902 of the 1,244 or 73% of the slots allocated to commercial airlines companies at Newark Airport by the Federal Aviation Administration (FAA). None of United's closest competitors control more than 100 of the landing or take-off slots at one of the nation's busiest airports. In addition, United grounds as many as 82 flights per day, according to the complaint, in effect depriving customers of other flight options that could be available if the slots were owned by other airlines companies.
“A slot is essentially a license to compete at Newark,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “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. Allowing United to acquire even more slots at Newark would fortify United’s monopoly position, and weaken rivals’ ability to challenge that dominance, leaving consumers to pay the price.”
For instance, the Justice Department outlined significant decreases in the cost of airline prices in five travel routes out of Newark last year after Southwest acquired 36 slots from United. The transaction resulted in a 27% decline in prices for flights from Newark to St. Louis and a 17% reduction in prices for flights from Newark to Houston.
Last month in what essentially amounts to a slot swap, United assumed control of Newark slots formerly owned by Delta in exchange for handing over slots at John F. Kennedy International airport. The $14 million sale took place following United's decision to move cross-country flights to Los Angeles and San Francisco out of JFK and into its Newark hub.
A United spokesman said Tuesday that the company will vigorously defend its ability to operate "efficiently, effectively and competitively," at Newark Airport.