Low-cost carriers would get more airport slots in US Airways, American Airlines settlement

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An agreement that helps clear the way for the US Airways and American Airlines merger won't save a flight operations center or heavy maintenance jobs at Pittsburgh International Airport but will preserve service levels for at least five years.

The settlement -- reached between the U.S. Justice Department, the attorneys general of six states, including Pennsylvania, and American and US Airways -- will force the airlines to give up 104 slots at Reagan National Airport in Washington, D.C., and 34 slots at New York's LaGuardia Airport to low-cost carriers.

It also will require the airlines to relinquish two gates each to the same brand of carriers at five other airports -- Boston Logan, Chicago O'Hare, Dallas Love Field, Los Angeles and Miami -- in a deal that the Justice Department described as "groundbreaking."

"This settlement will disrupt the cozy relationships among the incumbent legacy carriers, increase access to key congested airports and provide consumers with more choices and more competitive air fares on flights all across the country," assistant U.S. attorney General Bill Baer said Tuesday.

But the settlement does nothing to protect the $32 million US Airways operations control center in Moon, built with the help of $3.75 million in state grants and tax credits, or the heavy maintenance base at Pittsburgh International, both of which could be in jeopardy once the merger is finalized.

The deal, if approved by a federal judge, is expected to close by mid-December and form the world's biggest airline, which will be known as American.

Local, state and federal politicians have been pressing the airlines and the Justice Department to save the Pittsburgh facilities, which employ more than 1,600 people. But Allegheny County Executive Rich Fitzgerald said the agreement does not address either.

"We would have liked to have seen that in there. We realized that it was kind of a long shot. Early on, the Department of Justice was focused on competition. Their No. 1 concern, obviously, was the competitive nature of the industry in some of these major markets. We were always kind of secondary," he said.

"I guess I'm pleased that Pittsburgh didn't lose more, but it's disappointing that we did not gain and that we probably stand to lose the operations center and the maintenance center in the long run," said U.S. Rep. Tim Murphy, R-Upper St. Clair.

Philadelphia, which will keep its hub for at least three years under the agreement, "once again has benefited immensely and Pittsburgh once again will have to fight for its survival," Mr. Murphy said.

"Pittsburghers are used to scrapping and clawing for everything we get, and we will continue to do that," he vowed.

Mr. Fitzgerald described the settlement as a "mixed bag" for the region.

While it did nothing for the flight operations or heavy maintenance facilities, the airlines have pledged to keep their existing flights in Pittsburgh for the next five years, he said.

He described that as a "big win," adding that Pittsburgh may be able to pick up more service from other carriers because of the takeoff and landing rights, or slots, US Airways and American will have to relinquish in Washington and New York. US Airways, the region's dominant carrier, currently has 42 flights a day from Pittsburgh and American 15.

Pennsylvania Attorney General Kathleen Kane called the settlement "good news for consumers," arguing that 1 million travelers in the state would have been negatively impacted by the merger as it was initially proposed. She said the agreement keeps the hub in Philadelphia for at least three years and continues service at all airports in the state currently served by American and US Airways for five.

While Pennsylvania and other states pressed for concessions regarding facilities, federal antitrust laws are not the best vehicle for making such a case, he said.

Concerns over the flight operations center have been brewing since March, when US Airways CEO Doug Parker said during a meeting with pilots that, "If we were betting right now, it's only fair to tell people that, you know, Dallas has a bigger [operations] center, and [it's] more likely than not" that employees would move there.

In a conference call Tuesday with reporters, Mr. Parker, who will head the merged airline, said he had nothing new to report regarding either the Pittsburgh flight operations center or heavy maintenance base. But he added that he saw the flight operations center "much like a corporate headquarters function."

William Swelbar, research engineer at MIT's International Center for Air Transportation, said he expects Southwest, JetBlue and Spirit to be the main competitors for the slots and gates being given up by American and US Airways.

Even with the concessions at Reagan National, the merged airline will be the largest carrier there, with 68 percent of the slots.

William Lauer, an Allegheny Capital Inc. principal who has followed the airline industry for years, saw some potential for the merged airline to increase capacity and frequency to Pittsburgh and perhaps use the airport as a mini-hub to compensate for the loss of slots in Washington.

"This is the kind of thing that would require intense lobbying on the part of the airport authority. The ball is in their court. I'm just trying to be Nostradamus," he said.

Mark Belko: mbelko@post-gazette.com or 412-263-1262.

Mark Belko: mbelko@post-gazette.com or 412-263-1262. First Published November 12, 2013 1:07 PM

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