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What Delta Wants at LaGuardia

Under its recently published June schedule, Delta serves 41 markets at LaGuardia, while US Airways serves 29. Of the 70 markets, eight -- including Bangor, Maine; Charleston, S.C.; Columbus, Ohio; Norfolk, Va.; Portland, Maine; Raleigh-Durham, N.C.; Richmond, Va. and Washington National -- have service on both airlines.

Delta said that if the deal is approved, it would double the number of cities it serves from LaGuardia. That would mean service to 82 cities, up from 63 today. It would also replace small planes with bigger ones in most markets. Delta also said it would establish a LaGuardia hub and enable passengers to connect to shuttle flights.

Not only would consumers benefit; Delta and US Airways would benefit too. "This is such a good deal for the airlines that even if they have to give stuff up, they will figure out a way to get it done," said consultant Robert Mann. "Their thinking is, if they have to give away what they have described as an excessive amount, [it's okay] if you give them to people who don't hurt you too badly."

Southwest quickly objected to the revised deal. It noted the original deal would have pushed Delta's share of the slots at LaGuardia to 50% from 25%, while pushing US Airways' National share to 57% from 47%.

The key to the deal for Delta is that it increases the carrier's presence in the world's pre-eminent aviation market, where four carriers compete for dominance. Iconoclastic JetBlue (JBLU) has a hub at Kennedy and is the airport's leading domestic carrier. Continental (CAL - Get Report) has the region's biggest hub in Newark. Delta has the biggest international hub at Kennedy and wants to build another hub at LaGuardia.

The fourth carrier, American (AMR), had seemed threatened by Delta's buildup, but moved Wednesday to bolster its position by partnering with JetBlue at Kennedy. American also has the advantage of its imposing $1.3 billion Kennedy terminal, which opened in 2007. American CEO Gerard Arpey said Wednesday that American is working with airport officials to bring partner British Airways into the terminal.

Mann noted that a LaGuardia hub would enable Delta to build a domestic hub while focusing on Kennedy as a place where passengers connect to international flights. This would be particularly useful, he said, if Delta has to disrupt its Kennedy operation to construct a new terminal, a plan it has hinted at for years.
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