"Airlines Vie for Washington Airport's First Long Trips Since '04"

Thursday, March 8, 2012

Airlines Vie for Washington Airport's First Long Trips Since '04
By Mary Jane Credeur
Bloomberg News


Southwest Airlines Co. and Virgin America Inc. are poised to jockey for new
long-distance flights at Ronald Reagan Washington National Airport, the
first such routes added since 2004.
 
Up for grabs are rights to four round trips for carriers with limited or no
service at Reagan National, along with four more earmarked for the largest
incumbents at the airport. Together, they will push daily long-haul
departures to 20 in the coming months, a 67 percent increase.
 
The extra flight slots will open transcontinental routes from cities such as
San Francisco that lacked service to Reagan National, which is prized by
business and government fliers for its proximity to downtown Washington.
It's the only airport outside New York where regulators control that access,
and most flights are limited to a 1,250-mile (2,011-kilometer) radius.
 
"Anyone who gets these slots will be ecstatic," said Ed Faberman, executive
director of the Air Carrier Association of America, a Washington-based group
that represents the interests of small airlines. "It's going to be a major
race because new slots are so rare. It will create all sorts of new
business."
 
Airlines face a March 12 deadline to apply for new service.
 
United Continental Holdings Inc. is among the four big airport tenants each
getting an extra long-distance flight, while Southwest, Virgin America and
Alaska Air Group Inc.'s Alaska Airlines said they will vie for the new,
so-called beyond-perimeter routes.
 
Smaller Competitors
 
They may be joined by JetBlue Airways Corp., Spirit Airlines Inc., Republic
Airways Holdings Inc.'s Frontier unit and Sun Country Airlines Inc.,
Faberman said. Spokesmen for those companies declined to comment on their
plans or didn't return calls seeking a comment.
 
Other eligible airlines such as Hawaiian Holdings Inc. and Air Canada didn't
return calls seeking a comment. WestJet Airlines Ltd. hasn't yet decided
whether to apply, Jennifer Sanford, a spokeswoman, said by e-mail.
 
"This is significant, because if you're traveling on business and can leave
from National you might not have to make as many connections anymore, or
possibly no connections on certain routes," said Jeff Straebler, an
independent airline analyst in Stamford, Connecticut.
 
The new beyond-perimeter slots were authorized by a funding bill for the
Federal Aviation Administration signed into law in February, and are the
first created since 2004, according to Bill Mosley, a Transportation
Department spokesman.
 
Perimeter Rule
 
Regulators added the perimeter rule in the 1960s when noise from scheduled
jet service angered nearby residents. The 1,250- mile limit for most flights
allows nonstop service to cities as far away as Houston. More-distant
cities, such as Las Vegas or Los Angeles, must have a connection or be
operated under a dozen existing exemptions that allow certain carriers to
fly nonstop.
 
For example, US Airways Group Inc. has the only nonstop flight from National
to Las Vegas and Alaska Airlines is the only carrier allowed to fly nonstop
to Los Angeles.
 
San Francisco is now the biggest market on the U.S. West Coast without
direct access to Reagan National, according to Virgin America. The
Burlingame, California-based carrier is seeking two daily round-trip flights
between Reagan National and San Francisco, its hometown and largest base for
flights.
 
About 2,100 passengers fly daily between San Francisco and Washington's
three airports -- Dulles International, Reagan National and
Baltimore-Washington, according to Virgin America. Approximately 85 percent
of them use Dulles, which can be an hour or more by car from downtown, the
airline estimates. Reagan National can be only a 15-minute drive from the
White House.
 
Apple, Google
 
Bay Area technology companies such as Apple Inc., Google Inc., Intel Corp.
and Cisco Systems Inc. would benefit if Virgin America succeeds, Chief
Executive Officer David Cush said.
 
"These are the companies that are driving the economy right now, and
government is a big component of what they do," Cush said. "I have no doubt
that we could fill two frequencies" to San Francisco.
 
Southwest, which flies from Baltimore-Washington and gained inside-perimeter
flights at Reagan National as part of its 2011 purchase of AirTran Holdings
Inc., applied for one of the new long-haul flights, said Whitney Eichinger,
a spokeswoman. The flight would go to Oklahoma City and then to Dallas Love
Field, the home airport for the biggest discount carrier.
 
An Alaska spokeswoman, Bobbie Egan, declined to say what destinations or how
many flights it would seek.
 
US Airways, United
 
US Airways is "still evaluating" where to use its new round-trip flight,
said Todd Lehmacher, a spokesman for the Tempe, Arizona-based airline. Two
of its three big peers at Reagan National are targeting extra California
service.
 
United plans to use its new route to fly from National to San Francisco
starting in May, and AMR Corp.'s American Airlines will start service to Los
Angeles in June, according to regulatory filings. Delta Air Lines Inc. will
add another flight from National to Salt Lake City in June.
 
Greater competition on transcontinental routes from Reagan National to
cities such as Los Angeles and United's plans to start San Francisco flights
make it "crucial" that discount carriers gain a toehold in nonstop service,
said Faberman of the small-airline trade group.
 
"Some of these cities will see flights to National for the very first time,
or competition to National for the very first time," Faberman said. "The
whole industry is paying attention to this."

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