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N.Y. Area Flight Limits To Benefit Larger Airlines

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By JOHN WILEN, The Associated Press

Published: December 20, 2007

NEW YORK - Analysts view established carriers such as JetBlue Airways and Continental Airlines as winners - and smaller startups or any carrier looking to grow as losers - under the federal government's plan to limit the number of hourly flights at New York area airports.

Under new Transportation Department rules set to take effect in March, John F. Kennedy International Airport will be allowed only 82 to 83 flights an hour at peak times, down significantly from 90 to 100 an hour at peak times this past summer. Newark Liberty Airport faces similar caps, though the exact number has yet to be determined. Flight caps are in place at LaGuardia Airport.

For carriers that already have significant operations at the airports, flight caps help by keeping competitors out.

"It discourages new entrants," said Michael Derchin, an analyst at FTN Midwest Securities Corp. in New York.

That's good for incumbent airlines, but not for consumers. "A tighter seat supply could enable airlines to raise prices," said Ray Neidl, an analyst at Calyon Securities in New York.

Obvious beneficiaries include JetBlue and Continental, the largest carriers at JFK and Newark, respectively, although it was unclear what the caps could mean to flights from Tampa to New York area airports. Airlines fly between Tampa International Airport and all three major New York airports, with the most daily flights - seven - serving JFK. JetBlue flies six of the Tampa-JFK nonstop flights

Hurt by the plan are small carriers hoping to launch flights to or from JFK or Newark at peak morning or afternoon travel times. Foreign carriers looking to take advantage of the Open Skies agreement between the United States and European Union may serve JFK only at undesirable off-peak times. Left in the middle are carriers such as Delta Air Lines Inc., which has ratcheted back plans to add more flights at JFK during peak periods, anticipating flight caps.

The Federal Aviation Administration and Department of Transportation "must respect our efforts to address delays in the New York area through schedule reductions and ensure that new entrant carriers are not allowed to add new flights in the congested period," said Delta CEO Richard Anderson in a statement.

Bob Cortelyou, Delta's senior vice president of network and planning, said the airline's overall number of flights will not change under the plan. Planes will fly later in the evening or during the late-morning to early afternoon lull.

JetBlue spokesman Bryan Baldwin said the airline is confident it can shuffle its schedule to meet the cap without trimming service.

Larger, established carriers would be likely winners in a slot auction, analysts say. If, in the future, technological or capacity improvements let JFK increase its hourly flights, the government's plan calls for additional slots to be sold in a slot auction.

"The guys with the biggest pockets," would have the best chances of winning those auctions, Derchin said.

Tampa Tribune reporter Ted Jackovics contributed to this report.

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