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NYC market lands new discount airline option

MoneyWatch Headlines for June 28, 2016

NEWARK, N.J. - Allegiant Air (ALGT) has been given final approval to begin offering service at Newark Liberty International Airport, making it the first discount carrier to operate there since a federal lawsuit charged United, Newark's dominant airline, with monopolizing takeoff and landing slots and keeping competitors out.

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Allegiant will begin offering flights in November between Newark and Cincinnati, Ohio; Savannah, Georgia; Asheville, North Carolina and Knoxville, Tennessee, the airline said. Tickets can be purchased starting Tuesday, some for as low as $39 one-way.

The airline will operate two flights per day during the morning hours, out of Newark's Terminal B.

"It's been something we've talked about for years, and now we're just so excited to serve the New York metropolitan area," said Lukas Johnson, Allegiant's vice president for network and pricing.

Allegiant was one of several smaller, low-cost carriers which wrote last fall to U.S. Transportation Secretary Anthony Foxx to complain that United, Delta and American were driving up fares at New York-area airports by controlling the vast majority of slots, which are takeoff and landing authorizations.

Chicago-based United controlled about 900 of the roughly 1,200 slots at Newark -- more than 10 times as many slots as any other airline -- the Justice Department lawsuit last fall alleged, and wasn't fully utilizing the slots it had.

In April, United announced it had abandoned its plan to purchase 24 additional slots at Newark from Atlanta-based Delta Airlines.

Around the same time, the Federal Aviation Administration opened up more slots at Newark by relaxing hourly limits on arrivals and departures that had been put in place in 2008 to reduce delays.

It remains to be seen if fares will decrease at Newark with the arrival of low-cost carriers like Allegiant. Currently, a one-way fare for a weekday flight on United from Newark to Cincinnati begins at $161.

"We compete vigorously with many airlines throughout our network, including at Newark Airport, and believe customers will continue to value our frequent flights to more than 150 destinations worldwide and our extensive support of organizations throughout the region," said United spokesman Rahsaan Johnson.

Allegiant's base fare is often lower than its competitors but it adds on extra fees that many travelers aren't used to. The Las Vegas-based airline charges extra to book flights online, or to use a credit card. Selecting a seat in advance costs $5 to $75 each way, depending on the length of a flight. Even a bottle of water costs $2. Placing a suitcase in an overhead bin is $10 to $25 extra, each way. Allegiant offers an inch or two less legroom than full-service airlines like United.

Big airlines like Delta have been reacting to low-cost carriers by offering on some routes deeply discounted tickets that come with restrictions such as no advance seat assignments. United is expected to unveil its highly restrictive bargain fares in the coming months.

"It's important to note that we serve a very different customer than United," Johnson said. "They have a tremendous amount of frequency and service and they serve the business customer. For us, it's really about the leisure-only customers, and flying to those markets 3-4 times per week. So we really look at this as a separate customer."