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Justice Dept.’s Letter to Dallas: It’s Settled. Virgin Gets the Love Field Gates

The letter that the Justice Department sent to the city manager and the city attorney yesterday is pretty definitive:

Having considered the proposals of Delta Airlines, Southwest Airlines, and Virgin America for the Love Field gates, we have concluded that divestiture to Virgin America, which has no existing presence at Love Field and will introduce a new competitor at that airport, accomplishes the goal of the Final Judgment. The other two proposed acquirers do not. Delta, a legacy carrier, is not an appropriateĀ divestiture candidate for reasons the Antitrust Division has explained in its filings with the Court. We rejected the proposal by Southwest given its already significant presence at Love Field, an airport that is gate constrained pursuant to law. Southwest already controls 16 of the 20 Love Field gates. If it obtained the two American gates, it would then dominate 90% of Love Field gates, thereby denying consumers the benefits of meaningful competition at this facilities-constrained airport. We would also reject a proposal from the City of either of these two acquirers.

So the City Council can talk about it all they want tomorrow, but the matter appears settled.

3 comments on “Justice Dept.’s Letter to Dallas: It’s Settled. Virgin Gets the Love Field Gates

  1. Not sure this letter means much at all. Look at the last paragraph where he says “We would appreciate your approval of that request.” Not “you must approve”…

    This will go to court regardless of what happens. It is not settled.

  2. It doesn’t mean anything at all. The DOJ doesn’t have any standing to tell the City what to do, and doesn’t have any redress against the City if it decides not to do the Government’s bidding.

  3. To make it short, the DOJ has standing from at least two lines of authority. For one thing, The Department of Justice Antitrust Division is responsible for enforcing the federal antitrust laws. The two gates in question are available as a settlement of an antitrust case regarding the merger of US Airways and American Airlines. The government antitrust role is to maintain competitive markets by seeking to block anti-competitive mergers in court.

    Secondly, the DOJ has an advisory role with the DOT.

    The FAA, as a part of the DOT, has authority to regulate and oversee all aspects of American civil aviation. That includes airports. So the DOT has to sign off on this. They have approved only Virgin of the three airlines who applied for the two slots. As both the DOT and the DOJ see increasing Southwest’s use of gates at Love to 90% of the gates would lessen competition in the marketplace.