Airports Crack Down On Gamesmanship Over Gates

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The Wall Street Journal

June 7, 2005

THE MIDDLE SEAT
By SCOTT MCCARTNEY

Airports Crack Down On Gamesmanship Over Gates

United Maintains Presence Despite Drop-Off in Traffic, Riling Budget Competitors
June 7, 2005; Page D4

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While UAL Corp.'s United has canceled pensions, slashed flights and negotiated sizable pay and benefit cuts from employees amid its years-long reorganization under bankruptcy law, the airline has yet to take the same cost-cutting vigor to shedding the little-used airport gates it controls. Indeed, in Los Angeles and Denver -- both hubs for United -- the carrier today has all the look of classic gate-hoarding to stave off low-fare airline competition.

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In Los Angeles, United is still using the same 26 gates it had when it was a much bigger carrier, even though its passenger count has fallen 41% since 2000. By comparison, Southwest Airlines uses just 12 gates for more daily flights than United -- and is dying for more space. Consumers pay a price. Gate gamesmanship is a longstanding but rarely noticed element in airline competition, a sneaky way for airlines to block new entrants over the years. It can be cost-effective for airlines: The price of the gate is much cheaper than slashing prices to compete. And so when one airline prevents another's growth by hanging on to little-used gates, travelers have fewer flights and ultimately higher fares.

Airports have been fighting back in recent years by buying back long-term leases on their own gates. Earlier this year, the Dallas-Fort Worth International Airport was so eager to keep Delta Air Lines from blocking new entrants that it paid Delta $7 million to vacate 24 gates as the airline closed its hub operation. In 2002, the Maryland Aviation Administration agreed to pay US Airways Group Inc. $4.3 million to give up 29 gates at Baltimore-Washington International Airport, enabling expansion by both Southwest and AirTran Holdings Inc.

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Southwest's LAX home, Terminal 1, is so clogged that security lines sometimes stretch down the street. Meanwhile, United's Terminal 8 is so empty you could roll bowling balls the length of the concourse at noon. Not surprisingly, Los Angeles World Airports, the city department that owns and operates LAX, wants United to give up gates. The airport says it even has offered to pay United cash for its leased facilities, but United has refused. Instead, United announced last week that it wants to turn the nine gates in Terminal 8 into a commuter facility and stop busing customers to a remote regional-airline loading zone. "We are looking at the total customer experience which includes our United Express partners," said Pete McDonald, United's chief operating officer.

But LAWA doesn't allow commuter operations at main terminal gates unless it gives the airline a waiver, and Executive Director Kim Day sent United a letter Friday saying it doesn't consider turboprops and jets with fewer than 100 seats "reasonable gate utilization." At a meeting yesterday with United, airport officials agreed to let the airline temporarily use Terminal 8 for commuter flights, but United will lose some of its scheduling preference for gates in Terminal 6 and could be forced to stop using those gates for domestic flights, an airport official said. Southwest, which would like to see America West Airlines and US Airways move out of Terminal 1 and relocate to some of United's underutilized space, says LAWA should be tougher with United. "The situation is so bad now," says Bob Montgomery, vice president of properties for Southwest, that the Transportation Security Administration is screening passengers at Terminal 2 and busing them back to Terminal 1.

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