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) 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.
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) 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.
But in a little-noticed part of its New York expansion, American said it will also compete more aggressively at LaGuardia, adding flights to its competitors' hubs -- seven a day to Atlanta, five to Charlotte and four to Minneapolis. -- Written by Ted Reed in Charlotte, N.C. .