NEW YORK—The U.S. Department of Justice (DOJ) alleviated any antitrust concerns and approved the pending merger between Continental Airlines Inc. and UAL Corp., the parent company of United Airlines.
The merger between the No. 3 and No. 4 U.S. carriers are expected to close on Oct. 1.
The approval came late last Friday after DOJ decided that the merger would not cause too much competition overlap, as United is a major player in the U.S. West and Asia, while Continental’s dominance is mainly in the Eastern U.S. and European routes.
The biggest concern was Newark Liberty International Airport. Continental agreed to lease takeoff and landing rights at Newark—one of the three major airports serving the busy New York City market—to Southwest Airlines, the nation’s biggest discount airline carrier.
“The transfer of slots and other assets at Newark to Southwest, a low cost carrier that currently has only limited service in the New York metropolitan area and no Newark service, resolves the department’s principal competition concerns,” said a DOJ statement.
The agreement went increase competition at Newark—where Continental and United were the largest tenants. Continental has its biggest hub and the largest market share in the New York market. According to the airlines, Continental and United together operate 442 daily flights in and out of Newark.
“We think this would be a fair solution that would allow Continental and United to create an airline that will provide customers with an unparalleled global network and top quality products and services, while enhancing domestic competition at Newark,” said Jeff Smisek, Continental’s chairman, in a statement.
Continental will lease 36 slots at Newark to Southwest, equivalent to 18 daily round-trip flights starting in March 2011.
“We’ve seen tremendous demand for Southwest Airlines in the New York City/Newark area in the past year,” said Bob Jordan, Southwest executive vice president. The lease is contingent upon United and Continental closing its merger deal by Nov. 30 as well as certain regulatory approvals.
Due to the difficulty in obtaining flight slots in the New York market, Southwest currently only operates eight daily flights out of LaGuardia Airport in the New York market, which it began in 2009. It also has operations at Long Island’s Islip Airport, which is outside of the greater New York area.
The deal is expected to generate discontent among other discount U.S. carriers—especially Virgin America, which has not been able to obtain rights to expand its service in the New York area. An overwhelming majority of flights in and out of the New York City metro area is dominated by three airlines—American Airlines, Delta Airlines, and Continental.
Flight slots are limited rights granted to operate flights in markets where passenger demand surpasses supply of flights—restricted by the local airspace, runways, and airport capacity.
The merger between the No. 3 and No. 4 U.S. carriers are expected to close on Oct. 1.
The approval came late last Friday after DOJ decided that the merger would not cause too much competition overlap, as United is a major player in the U.S. West and Asia, while Continental’s dominance is mainly in the Eastern U.S. and European routes.
The biggest concern was Newark Liberty International Airport. Continental agreed to lease takeoff and landing rights at Newark—one of the three major airports serving the busy New York City market—to Southwest Airlines, the nation’s biggest discount airline carrier.
“The transfer of slots and other assets at Newark to Southwest, a low cost carrier that currently has only limited service in the New York metropolitan area and no Newark service, resolves the department’s principal competition concerns,” said a DOJ statement.
The agreement went increase competition at Newark—where Continental and United were the largest tenants. Continental has its biggest hub and the largest market share in the New York market. According to the airlines, Continental and United together operate 442 daily flights in and out of Newark.
“We think this would be a fair solution that would allow Continental and United to create an airline that will provide customers with an unparalleled global network and top quality products and services, while enhancing domestic competition at Newark,” said Jeff Smisek, Continental’s chairman, in a statement.
Continental will lease 36 slots at Newark to Southwest, equivalent to 18 daily round-trip flights starting in March 2011.
“We’ve seen tremendous demand for Southwest Airlines in the New York City/Newark area in the past year,” said Bob Jordan, Southwest executive vice president. The lease is contingent upon United and Continental closing its merger deal by Nov. 30 as well as certain regulatory approvals.
Due to the difficulty in obtaining flight slots in the New York market, Southwest currently only operates eight daily flights out of LaGuardia Airport in the New York market, which it began in 2009. It also has operations at Long Island’s Islip Airport, which is outside of the greater New York area.
The deal is expected to generate discontent among other discount U.S. carriers—especially Virgin America, which has not been able to obtain rights to expand its service in the New York area. An overwhelming majority of flights in and out of the New York City metro area is dominated by three airlines—American Airlines, Delta Airlines, and Continental.
Flight slots are limited rights granted to operate flights in markets where passenger demand surpasses supply of flights—restricted by the local airspace, runways, and airport capacity.
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