Delta and US Airways: Let's Try Again

ATLANTA (TheStreet) -- Nearly two years after they first agreed to swap slots at LaGuardia and Reagan National airports as well as other assets, Delta(DAL) and US Airways(LCC) have announced a new deal that is very similar to the original terms.

Previous arrangements never received regulatory approval. This time, however, because of dramatic changes in the size and scope of the nation's three low-fare airlines, the two carriers think the chances that the government signs off on the agreement have increased.

The newest deal was filed with the Federal Aviation Administration on Monday. It still enables US Airways to increase flights at Washington's Reagan National Airport, while Delta would get the same benefits at New York's close-in domestic airport.

"We believe the agreement filed today is well-suited for regulatory approval as the landscape has changed significantly in the last two years," said US Airways President Scott Kirby, in a message to employees. During that period, Southwest>(LUV) began flying to Newark and merged with AirTran, increasing its presence at LaGuardia, while JetBlue(JBLU) began service to National.

"We certainly expect the FAA to do a robust review of the proposal," said Delta spokesman Trebor Bannister. "We feel like it addresses any concerns they have about competition in this market."

In an aviation system where critical mass at key airports is a valuable asset, both carriers would benefit significantly from the deal. Delta would get stronger in New York, the world's largest aviation market, in a four-way battle with American (AMR), Jet Blue and United >(DAL). US Airways would grow at National, already one of its four key cities.

Under the new agreement, Delta would acquire 132 slot pairs at LaGuardia from US Airways while US Airways would acquire from Delta 42 slot pairs at National. A slot pair is the authority to operate one takeoff and one landing. Also, US Airways would get $66.5 million in cash from Delta as well as the right to operate additional daily service to Sao Paulo, Brazil in 2015.

In the original deal, Delta was to acquire 125 slot pairs at LaGuardia while US Airways got 42 slot pairs at National. In a second deal, Delta got 110 slot pairs at LaGuardia while US Airways got 37 slot pairs at National. Essentially, the third deal revives the first one.