US Airways starts flights to Rio tonight. That’s a definitely confirmed event. What remains completely uncertain is how, really if, and when the airline will add additional flights to South America from CLT, its largest hub and primary connect point for destinations to the south.
We’re use to largely deregulated aviation markets, where airline determine routes, not governments. Domestic airline service has been deregulated for over 30 years now. “Open sky” treaties between the U.S. and a number of foreign countries have opened up air service internationally as well.
Air service liberalization has not really hit South America though. That’s not say that there aren’t steps in the right direction, like Brazil allowing a few more flights to the U.S. in 2009 and 2010, but gaining access to the major markets in South America remains a challenge for US Airways. And, of course, something the airline has little control over. Of course, the flip side is that controlled-entry markets also offer exceptional profit opportunities for those lucky enough to hold the rights. At least usually. And which appears to be one reason US Airways is targeting the markets that it is.
Next up?: Possibly Sao Paolo, which is Brazil’s largest market, starting next fall. US Airways would certainly like for it to be. For that to happen though requires two things to happen. The agreement allowing extra flights to Brazil in 2009 and 2010 effectively doesn’t allow flights to Sao Paolo. So as part of a swap of slots at LaGuardia and Washington Reagan with Delta, US Airways would trade its seven weekly restriction (can’t be used for Sao Paolo) frequencies to Brazil for seven weekly unrestricted frequencies and use those to serve Sao Paolo. US Airways would then bid for seven of the 14 weekly restricted frequencies available next year to serve Rio.
There’s no guarantee US Airways would be awarded replacement Rio frequencies in 2010; other airlines could offer proposals the DOT considers to be stronger. And there’s certainly no way US Airways gets any of those frequencies over any other bid unless the slot swap with Delta is approved. The slot swap was announced four months ago; the DOT has yet to act. I would not take that as a good sign.
