Trump’s Presidency Is Changing How Airlines Petition For Routes

I love following airline filings with the Department of Transportation. Stuff is filed almost every day, and it’s interesting to see the arguments that airlines make to justify why they should be granted a route over another airline, etc.

While most of the support I saw from airline CEOs during the election was in favor of Hillary Clinton, many airline CEOs have come forward to say that they’re looking forward to working with Donald Trump to “protect American jobs,” which many airlines interpret as the U.S. taking a protectionist approach of their businesses, including airlines.

For example, the Partnership for Open & Fair Skies (the U.S. lobbying group against the Gulf carriers) released the following statement after Emirates announced a new flight between Athens and New York:

“We look forward to working with President Trump and his team to enforce these agreements and protect American jobs – something that the Obama administration failed to do.”

Similarly, American and Qantas had their expanded joint venture request denied under the Obama administration. Rather than appealing it immediately, they decided to wait until Trump was in office to apply again.

Well, Aeromexico and Delta recently had a joint venture approved, and as part of that, they’re forced to give up some slots at Mexico City Airport. The DOT argued that they had too much power with so many slots, so now they’re being given away to other airlines. Several airlines are requesting these slots, including JetBlue, Southwest, and vivaAerobus.

Aeromexico-Lounge-Mexico-City - 35

What’s especially interesting is how airlines have changed the way they’re framing their requests with the DOT. This isn’t surprising — after all, they’re trying to appeal to their audience, which varies based on who is in office. For example, here’s part of Southwest’s argument to the DOT about why only U.S. carriers should be granted these slots at Mexico City Airport:

Southwest urges the Department to grant all U.S. carrier requests in full before allocating any MEX slots to Mexican carriers. Not only would this be consistent with the Trump Administration’s clearly stated goal to put America’s interests first, but there is no basis for depriving U.S. carriers of scarce MEX slots in order to increase the holdings of Mexican carriers that already have vastly more slots than all eligible U.S. carriers combined.

It is the responsibility of the United States Department of Transportation to act in the United States public interest. In this case, that responsibility would be achieved by putting American carriers’ interests first.

flying-to-havana-10

So Southwest is arguing that Mexican airlines shouldn’t get any of the slots, which JetBlue isn’t even arguing. Instead JetBlue argues that U.S. carriers should get 50% of the slots, while Mexican carriers should get 50% of the slots.

JetBlue-A321

vivaAerobus agrees with Southwest that the airline offering the lowest fares adds the greatest good for consumers, but they say they’ll beat Southwest on fares by a long shot, and therefore should be granted the rights to some of these slots:

As Southwest recognized in its application, its low fares have and will stimulate passenger growth in their market, by offering existing passengers lower fares and giving an opportunity to new passengers who would not fly absent the low fares (i.e. Southwest Effect). viva concurs with this analysis, and highlights that viva fares are even lower than Southwest and every other carrier which submitted an application. With the lowest fares in the market, viva will be able to significantly stimulate passenger growth in the seven markets it wishes to enter.

vivaaerobus

Bottom line

There’s no denying that who is in office can have a big impact on how the DOT grants routes. We’re already seeing airlines take a different approach with how they request routes, like from Southwest above.

Now the big question is whether the DOT actually radically changes their decision making process. If so, I wouldn’t be surprised to be see some reciprocal protectionist policies from other countries as well for their own airlines.

Comments

  1. I heard a similar item on the radio the other day about Emirates, apparently the Trump administration is considering restricting their expansion into the US to protect US airlines. Of course, this means less competition and higher prices for everyone. Wonder how Trump will sell that to the working class people who voted for him?

  2. @Nick, I think working class people don’t fly Emirates or make frequent trips to Europe. I have a feeling that flying is a rare occurrence for many people who are hoping Trump will improve the economy.

    Those of us who leverage miles and points to fly many times a year are probably the 1% of travelers.

  3. So, if we’re the 1% of travelers, (hooray!) I must say it’s a pretty easy choice amongst these three airlines. JetBlue and SW are known commodities. But, and just envision how truly wonderful this airline must be to fly, VivaAerobus was developed out of a partnership between Ryanair and Mexico’s largest bus company.

    If someone has flown it I’d love to hear thoughts/stories – what is a mix of a Mexican bus and Ryanair?

  4. @Mark,

    Recently flew MEX-SFO on Volaris and, while not abysmal, is about on the level of Spirit. So if VivaAerobus is anything similar, I’d avoid them. The seat pitch was awful; I’m merely 5’8” and my knees were about a hair’s width from the seat in front of me. You did get one (1) free cup of water, which was nice. But it truly is the sky bus in terms of pax comfort. Don’t expect ANYTHING. The one random upside was that it was free to check 1 bag, but more than an under-the-seat personal item will cost ya.

  5. @Mark @AdamR

    I’m mexican and I have flown both Viva and Volaris and you get what you pay. Actually Im surprised about what you said of the seat pitch cause im 5′ 8″ and I didn’t have any problems with that. Normally Viva is the cheapest option to fly in Mexico, but you have to make sure what things does your tickets includes in order to not have surprises while flying them. The best thing about Viva its that when you fly with them, you can get bus ticket to other mexican cities at a lower fare (50% discount).
    PS: neither viva nor volaros offer free food or beverages, for me that’s not a problem because most of the flights are short.

  6. @alant No offense meant! Looking forward to spending some quality time on Aeromexico and in the DF, but a half price bus ticket doesn’t inspire a lot of confidence to us snobs that get annoyed at not being driven around the airport in a Mercedes with hot and cold towels every 90 seconds 🙂

  7. I’m surprised, and disappointed, that AA did not apply for a slot to fly JFK-MEX, a sorely missing link in the OneWorld network in my view (with JFK otherwise being connected via non-stop service to all major Latin American destinations).

  8. @OT It’d be an interesting 5th route for BA, Finnair, AirBerlin, Iberia or FinnAir too. As an FLLer, intrigued by what JetBlue would do with it though.

  9. Says a lot about Southwest that they’re already jumping on the Trump bandwagon. Just another reason to fly JetBlue.

  10. Why the hate for Ryan Air? Their fleet is newer than any of the US carriers, they allow a full-size carry-on up to 10kg even on their lowest fares (Basic Economy anyone?), service is friendlier than the big 3US as well and fares are lower wherever they fly than for similar routes in the US. And with all that, they are profitable and haven’t needed a government bailout or bankruptcy shield…
    I’d welcome their arrival in the US – it would add a level of competent competition we haven’t seen in a long time…

  11. @Mark, no problem, i get what you’re saying; but airlines like viva weren’t make for people who normally travel in Business class, viva its a airline for middle class people who wants to travel faster but with a low price. I don’t know how is people in Usa, but here in Mexico as buses are very way comfortable than the ones that are in the States, if there aren’t any low price by plane, people prefers the bus, thats why there are a lot of bus services here. Also the bus services of Viva are specifically meant for cities that doesnt have an airport. For example, sometime I have to travel from my hometown (Monterrey) to Ciudad Guzman, Jalisco where my relatives live. As Ciudad Guzman doesnt have a commercial airport, I go to Guadalajara with Viva and then take advantage of the discount and go to Ciudad Guzman.

  12. @ OT
    I think the Legacy carriers aren’t allowed to request slots, it’s only the other airlines that can.

  13. How is it that the U.S. is deciding who gets slots at a Mexican airport? I didn’t understand that part.

  14. @Miles The DOT does allocate slot pair for US airlines to operate abroad as it has in the past such as in the case for Havana flights, Haneda flights, the one Beijing slot. The process is pretty “simple” and is more or less the same every time. A foreign government releases slot pairs a one of its airports for US airlines to utilize, Then the DOT lets carries interested in operating at this airport apply and suggest a route or routes (depending on the number of slots available), then the DOT picks and chooses the routes and flights it deems the most competitive across the board.

    I do share your confusion on why is it that -Mexican- airlines have to ask the DOT for permission to operate additional flights at MEX, in other words, why do these Mexican airlines have to ask the U.S. government for permission to expand out of their own hub? and not ask the Mexican government?

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