LGA Perimeter Rule and Smaller Airports
2015.03.02 — Brett Snyder (aka, the Cranky Flier) had an interesting post today on “Which Airlines and Cities Stand to Win if the LaGuardia Perimeter Rule Disappears.” As usual, it’s worth reading. Also as usual, our interest is on the airport side, but for smaller airports to understand why their LGA service is so at risk requires them to understand how airlines think.
Were the LGA Perimeter Rule to disappear, for DL’s and AA’s network planners and C-Suiters it’s not ridiculously hyperbolic to say it would be a “once in a career” opportunity to repurpose a major city on the network; one both carriers view as strategic (though at last check with different point of origin objectives). Smaller cities should be worried irrespective of how profitable their LGA service might be.
Even in the post-2007 environment (capacity discipline, yada yada), there are airports in which airlines are willing to make strategic investments (i.e., lose money to gain market share over time). SFO and LAX are two great examples of this. A sudden lifting of the LGA perimeter rule would be the airline equivalent of the Oklahoma land rush, with AA and DL the carriers most eager and able to take advantage. Each will want to “win” LGA, and neither airline’s employees will want to answer to their bosses or boards how they “lost” LGA to the other. So, they will err on the aggressive side, and will be ready to pull all LGA service they do not consider essential to achieving that strategic goal, even if that service makes more money in the short run than the longer haul service that takes that slot. Small RJ cities that are less profitable will go first, but even more profitable ones will be reviewed for “right sizing”, if not complete withdrawal, of LGA service in order to free slots for longer haul strategic cities. Unless a smaller airport can demonstrate to AA or DL how its LGA service over time can financially and strategically outperform, say, SEA service (and good luck with that), its LGA service will be at significant risk.
We’re not saying this is bad, or good. Your take depends upon where your interests lie; but whenever supply of something is constrained, as LGA slots are, for every winner there will be a loser. Unless the relaxation also comes with a slot expansion and some congressional interference (oh, like THAT would ever happen), every city currently getting nonstop RJ service to LGA should be concerned.