FEDERAL APPEALS COURT RULES IN FAVOR OF REALLOCATING SLOTS AT NEWARK
June 1, 2021
On May 21, 2021, the U.S. Court of Appeals for the D.C. Circuit issued a decision in the case of Spirit Airlines v. DOT, finding that the FAA should have reallocated peak-period flight authorizations (i.e. slots) previously held by Southwest Airlines when the airline stopped serving Newark Liberty International Airport. Following a decision by Southwest Airlines in 2019 to leave Newark Airport, the FAA announced that it would continue its existing approval policy for the next six-month period, meaning the FAA would not approve new flights in time slots that exceeded established scheduling limits, but its approvals would still grandfather certain slots approved in the previous year, including those slots previously held by Southwest. Spirit challenged this decision by the FAA, arguing that it was arbitrary and capricious because the FAA improperly failed to: i) consider the effect on competition; ii) consider less burdensome alternatives; and iii) support its decision with substantial evidence. The FAA defended itself, arguing that its decision was unreviewable because it was not final agency action. The court found that FAA’s decision was indeed a final agency action because it prevented Spirit from operating as many peak-period flights as it would otherwise have done in the Summer 2020 scheduling season. The court then determined that the FAA’s decision was arbitrary and capricious because the agency disregarded warnings about the effect of its decision on competition at Newark. The court pointed to the fact that the Department of Justice, the Port Authority of New York and New Jersey, and Spirit all complained that the FAA’s decision would cause substantial harm to competition and hence passengers at Newark, and FAA seemingly ignored these complaints. As a result, the court vacated the FAA’s decision to retire the peak-period flight authorizations previously held by Southwest. Regarding next steps, FAA will now need to show that it has adequately analyzed what effects the loss of Southwest’s slots will have on traffic at EWR, and potentially hold a delay reduction meeting with carriers at Newark prior to making a new determination on how to resolve the issue.
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