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What Delta Wants at LaGuardia

NEW YORK ( TheStreet) -- For a place that is considered one of the most valuable pieces of real estate in commercial aviation, New York's LaGuardia Airport houses some decidedly low-rent flying.

For instance, four times a day, US Airways (LCC) flies a 34-seat plane to Manchester, N.H. Three times a day, it flies a 37-seat airplane to Charlottesville, Va. And three times a day, it flies 50-seat airplanes to Bangor, Maine, a city where Delta (DAL - Get Report) also flies 50-seat airplanes twice a day.

While offering frequent service to small cities is a national and political priority, the practice does not always represent the best use of congested New York air space. Moreover, it is widely felt that some of US Airways' route choices represent little more than efforts to retain slots by providing service on regional carriers, since a slot is allocated on a "use it or lose it" basis.

Now, Delta and US Airways are offering a remedy -- more efficient use of slots, more low-fare carriers at LaGuardia and Washington's Reagan National and more destinations from both airports, if regulators will allow them more dominance at the two congested airports.

Like every deal, this one is a trade-off, and the obvious loser is Southwest (LUV), because US Airways and Delta are proposing to provide slots to four low-fare carriers -- a group that does not include Southwest.

In the original deal proposed in August, Delta agreed to give US Airways 42 slot pairs at National in exchange for 125 slot pairs at LaGuardia. A revised deal, unveiled last week, seeks to overcome regulators' objections. It gives US Airways 37 slot pairs at National while Delta would get 110 slot pairs at LaGuardia, and a smattering of slots would be transferred to four low cost carriers: AirTran (AAI), JetBlue (JBLU), Spirit and Canada's WestJet.

Three of the carriers would get up to five pairs of roundtrip slots each at LaGuardia, while JetBlue would receive five pairs of slots at National.

"We want to grow in New York and we feel we can make better use of the assets in New York to benefit consumers and our employees by building a more robust operation that better serves the area," said Delta spokesman Kent Landers.

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