The demise of Spirit Airlines sparked concerns that airfares would soar in the absence of a significant low-cost carrier. While the defunct airline's planes were repossessed by leasing companies, its airport slots need to be sold off. FAA Administrator Bryan Bedford wants Spirit to sell off its desirable slots at LaGuardia Airport in New York to another low-cost airline. Spirit's estate plans to auction off the 22 spots on July 9. However, a bankruptcy court must approve the winning bid.
For those unfamiliar with the airline industry, a slot is permission to take off or land at an airport at a designated time. The price of any given slot is based on supply and demand. The bigger the city or busier the airport, the higher the prices for acquiring slots. According to the Points Guy, Spirit's LaGuardia slots were valued at $87 million in April. It's definitely a high price, but Spirit owed roughly $2 billion after its bankruptcy restructuring to put the predicament into perspective.
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Federal regulators are concerned that a mainline carrier could use the slot auction to tighten its grip on the New York market. In theory, any airline could acquire all 22 slots. Delta Air Lines would be the only carrier that would face antitrust scrutiny over a winning bid, as the Atlanta-based airline already has over 40% market share at LaGuardia. Spirit's slot would put Delta over 45%. Bedford told the Wall Street Journal that he would prefer to see the slots retired to ease congestion if there isn't a low-cost bidder.
If Spirit were restricted in who could purchase the slots, it would naturally reduce their value and make it easier for one of their former competitors to toss their cap in the ring. Frontier Airlines already filled the void left by Spirit at Dallas-Fort Worth, Las Vegas and Orlando. On a much smaller scale, Breeze Airways took over for Spirit's lone-carrier operations at Atlantic City International Airport in New Jersey. Any bidder would be better than American, Delta, United or Southwest.
