Who Will Get Spirit Airlines’ Coveted Flights at LaGuardia?

Spirit Airlines is dead, but its coveted place at one of the New York area’s three main airports is up for grabs.

A bankruptcy judge said last week that Spirit could start soliciting bids for its allotment of 22 flights a day at LaGuardia Airport, along with its Florida corporate headquarters and other assets.

The access to LaGuardia is prized, but also fraught.

The Port Authority of New York and New Jersey, which oversees the airport, wants a say in on how Spirit’s rights to fly to and from the airport are sold. The Federal Aviation Administration also has demands. It wants Spirit to be replaced by another budget carrier. But it’s not clear how interested smaller airlines will be because operating at LaGuardia, while lucrative, can be expensive.

“It all comes down to this sort of brass-knuckle economics that favors the strong and the rich and is punishing to the carriers who are trying to serve the consumer with low fares and low costs,” said Dan Akins, an aviation expert with Flightpath Economics.

The F.A.A. closely regulates access to three congested airports — LaGuardia, Kennedy International Airport and Ronald Reagan Washington National Airport — by assigning airlines “slots,” or permission to land and take off at certain times. It also reviews and approves flights at Newark Liberty International Airport and airports serving Chicago, Los Angeles and San Francisco, though the agency does not impose a strict limit on the number of daily flights.

In an April bankruptcy filing, Spirit said its 22 LaGuardia slots could be worth as much as $87 million. Spirit’s planes, engines and aircraft parts are expected to bring in far more money — cash that will be used to repay its lenders, employees and others it owes money to.

The F.A.A. has said it wants Spirit’s LaGuardia slots to be absorbed by an airline that will continue to offer relatively low fares. If that does not happen, it might do away with the slots to ease congestion, Bryan Bedford, the F.A.A. administrator, told reporters last month.

The F.A.A. did not respond to requests for comment.

Two large airlines — Delta Air Lines and American Airlines — account for most of the flights at LaGuardia. Last summer, Delta had about 511 slots at the airport and American 327, out of a total of 1,141.

But flying at LaGuardia is not cheap. All airports charge airlines fees to fund infrastructure and other improvements. Those costs have been on the rise across the country, and LaGuardia is among the most expensive airports for carriers, aviation experts said.

“Slots are just not the same today that they were 20 years ago, just not the same value,” said William Swelbar, an aviation consultant and economist.

JetBlue Airways, which has a large hub at Kennedy Airport, has cut back on flying at LaGuardia in recent years because of those rising costs. At an investor conference in March, the airline’s president said JetBlue paid about $40 per departing passenger to fly at LaGuardia. JetBlue said in a statement that it was evaluating the opportunity to expand at LaGuardia, but that it was also “mindful of the significant costs associated with operating at New York-area airports.”

Frontier Airlines, Spirit’s biggest rival among budget airlines, may bid for the slots, too. After Spirit and JetBlue proposed a merger in 2022, Frontier agreed to take those slots once the deal was completed. But the merger fell through when the Justice Department successfully sued to stop it, arguing that it was bad for consumers. Frontier had four slots at LaGuardia last year and declined to comment on whether it planned to bid for Spirit’s slots.

Flying at LaGuardia could be risky for budget airlines. Spirit failed partly because it flew at too many airports like LaGuardia that were dominated by larger carriers that had deeper pockets, owned more planes and flew to more places. The larger airlines can offer travelers more departures, more connecting flights and other perks that a smaller carrier cannot, experts said.

Spirit’s 11 round-trip flights may not be enough to justify the expense of flying out of such a busy airport.

“The question is, what would you do with 22 slots at LaGuardia?” said Bob Mann, an industry consultant and a former airline executive.

Larger carriers like Delta or United Airlines, which dominates flying at Newark Liberty, have an easier time offsetting high airport costs because they make a lot of money from business and first-class seats, corporate customers, branded credit cards and loyalty programs.

The Port Authority of New York and New Jersey, which oversees the region’s airports, bridges and other infrastructure, has pushed back on Spirit’s planned auction, saying it should be more involved. Slots are useless without airport gates, the Port Authority argued, so any company assuming Spirit’s slots must also take over its lease at Terminal A, which is also known as the Marine Air Terminal.

If an airline buys the slots but does not use Terminal A, it could cause congestion at other parts of the airport while leaving that terminal underfunded, the Port Authority argued. Terminal A opened in 1940 and is highly regarded by architecture and art experts for its Art Deco design and the large mural in its public spaces.

The process of replacing Spirit at Newark and LaGuardia should be “driven by competition, access and serving new or underserved markets,” the Port Authority’s executive director, Kathryn Garcia, said in a May letter to Mr. Bedford of the F.A.A. that was obtained by The New York Times.

At a hearing last week, Judge Sean H. Lane of U.S. Bankruptcy Court for the Southern District of New York, who is overseeing Spirit’s bankruptcy, acknowledged the Port Authority’s concerns but allowed the bidding process to begin anyway, saying his decision would amount to a “starting gun” in the race to find a buyer.

Airlines sometimes trade slots, especially when they are merging or selling themselves. But federal regulators often review such transactions and sometimes force companies to give up some airport access as a condition of merger approval. In 2013, for example. Southwest acquired a dozen slots at LaGuardia after American Airlines was forced to put them up for sale as part of its merger with US Airways.

Spirit’s executives could earn big bonuses from the slot sales, according to a proposed incentive plan, a common part of bankruptcy proceedings intended to encourage top managers to maximize asset sales.

The Justice Department and unions representing pilots, flight attendants and other Spirit employees have pushed back on that plan, saying executives have already been handsomely paid while workers have been left without compensation for vacation and sick leave. But Judge Lane said he was inclined to allow it.

The bids for Spirit’s slots are due by the end of this month.

Whatever happens, the slots will be a drop in the bucket compared with Spirit’s other assets. Its planes, which are mostly sitting in desert storage in Arizona and California, and engines are worth as much as $1.35 billion, according to a bankruptcy court document the company submitted in April.