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Flying to N.Y. or D.C.? Get Ready to Pay the 'Babysitters'

Oct 20, 2015   |   by Alan Neuhauser   |   US News

How airlines block the competition at America's busiest airports – and make passengers pay through the nose.

planes in line
Airlines line the tarmac waiting for takeoff at LaGuardia Airport.

Landlords call it squatting. The airlines call it "babysitting."

At four of the nation's busiest airports – JFK, LaGuardia and Newark in and around New York City, and Reagan-National in the nation's capital – airlines pay extra to take off and land.

This arrangement is known as slot control: Carriers lease the time slots they want at these four airports, and the Federal Aviation Administration caps the total available. The system is popular at major airports in Europe and Asia to limit congestion, and it's accomplished the same here since it was launched in 1969.

But now experts have accused America's three mega-airlines – American, Delta and United – of purposely gumming up the works, deliberately reducing capacity at the airports where it's most desperately needed, simply to block competitors from acquiring lucrative take-off and landing slots – in turn allegedly driving up ticket prices for passengers.

"They have this stranglehold on competition," says travel columnist William McGee, author of the 2012 airline industry expose, "Attention All Passengers." "They're holding onto slots at all costs."

The alleged culprit: babysitting. Airlines sit on the time slots they don't have to use and, for those where they're compelled by federal "use-it-or-lose-it" rules, allegedly fly the smallest possible airplanes to the closest possible airports to minimize fuel and crew costs, regardless of actual passenger demand.

At the New York airports and Reagan-National, flights are 75 percent more likely to be scheduled with planes that have fewer than 100 seats, a September 2012 report by the Government Accountability Office found. What's more, even though these planes are smaller and flying from some of the most crowded airports in the world, they tend to be less full than flights at other airports.

"Capacity is used more inefficiently than at like-sized airports that are not slot-controlled, thereby limiting passenger growth and access by new-entrant airlines that could offer new service or lower fares," the GAO said...

... The FAA has vowed to reform the slot system, starting with New York. Last year, it proposed new rules that it expects to make final by the end of October 2016, regulations it says will address some of the GAO's findings.

"These changes would encourage greater us of allocated slots," the FAA said in a statement.

The major airlines, however, are staunchly opposed – and not without reason. While budget airlines like Allegiant, Frontier or Spirit might attract just 1 percent or 2 percent of passengers at an airport, their mere presence can lower fares for every airline across the entire airport, studies find, cutting into the legacy carriers' bottom lines. Plus, every time passengers fly with a competitor is a chance they'll form a relationship with that other airline. And no matter the airline, in New York and Washington's near-insatiable markets, each slot is like a tap on a maple tree, opening a veritable flow of profit.

"We found some evidence that actually the airlines will operate even marginally unprofitable flights to keep the slot," says Vikrant Vaze, an assistant professor at Dartmouth University's Thayer School of Engineering who has studied this system of takeoff and landing slots.

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