In Feb. 2014 the DOT granted Southwest restricted slots at DCA so that commercial service to Kansas City (MCI) would remain in place. The route was placed in jeopardy when Republic Airways informed the DOT on Jan. 24 that it intended to drop the route as part of its sale of Frontier. The DOT then proceeded to solicit alternatives from other carriers on how best to use the slots. American offered a flight to Islip (ISP), JetBlue a flight to Jacksonville (JAX), People Express to Myrtle Beach / West Palm Beach, and Southwest proposed to keep the Kansas City service. The DOT has now formally declared Southwest the winner. Here are their responses on the other proposals –
American – While at the time of its application, American provided service between DCA and ISP, it recently terminated this service in July, 2014. The other communities in question, Kansas City and Jacksonville, both have existing service to DCA from American. Additionally, both JetBlue and Southwest would use non RJ equipment while American proposed 50-seat regional jets.
People Express – Not yet approved for commercial service.
JetBlue – Given the constrained nature of operations at DCA, we find that Southwest would use the limited resources that are these slot exemptions more efficiently. Moreover, Kansas City is a much larger market than Jacksonville, providing for a larger pool of potential passengers. According to the U.S. Census Bureau, the Kansas City Metropolitan Statistical Area (MSA) is home to 2,054,473 people, while Jacksonville is home to 1,394,624 people. When examining current schedules, we also found that there is less nonstop air service between DCA and Kansas City than between DCA and Jacksonville, even though Kansas City is the larger market. The DCA-MCI market has 1,432 weekly nonstop seats while the DCA-JAX market has 2,201 weekly nonstop seats.
MCI also offers more online connecting opportunities for passengers than does JAX. According to September, 2014 published schedules, the only connecting service offered by JetBlue at JAX is to San Juan, Puerto Rico, which JetBlue already serves directly from DCA. On the other hand, Southwest offers connecting service from MCI to at least ten beyond destinations, including Denver, Phoenix, Los Angeles, Seattle, and others.
While JetBlue’s application has merit, we find that Southwest’s application will likely produce greater consumer benefits for a larger pool of passengers in a market with less DCA service than would JetBlue’s Jacksonville service. The proposals from both Southwest and JetBlue would bring competition to their respective proposed markets, but we conclude that the maximum competitive benefits will be realized by the award of these two slot exemptions to Southwest for service to MCI.