UPDATED Big breaking news: Southwest makes bid to serve New York LaGuardia

In a surprise this morning, Southwest Airlines says it wants to serve New York LaGuardia, one of the most congested and delay-prone airports in the country. Southwest, which once assiduously avoided congested airports around New York and elsewhere (until it came to PHL four years ago), said in a news release that it was bidding $7.5 million in bankruptcy court for ATA Airlines so that it can get 14 takeoff-and-landing slots at LGA that ATA holds, ATA, Southwest's former code-share partner, filed for Chapter 11 in Chicago federal court last spring, where the matter will be adjudicated. Southwest says it doesn't intend to operate ATA, only use its precious landing rights at LGA.

This move is a testament to the way Southwest's stepped up to a new challenge with its entry into the Philadelphia market in May 2004, operating in a congested major airport close to New York. Southwest now has 12 percent of the passengers at PHL, making it the No. 2 carrier after US Airways, evidence of how hungry local travelers were for low-fare competition. The service is so popular that some bargain-hunting New York area travelers, especially from North Jersey, now come to PHL for flights. I think that traffic flow, especially by New Jersey residents, will continue, even with some service by Southwest at LaGuardia. The large populations of the Philly and New York areas means there will be demand for Southwest service from both cities.

Southwest didn't say where it will fly from LaGuardia if it gets the slots, but it will be very limited at first, with just 14 slots. Think of where the discounter has "focus cities," known as hubs to other carriers: Baltimore/Washington and Chicago Midway are among them. Having the airline on those routes would be additional competition for US Airways and Delta, operators of the New York-Washington shuttles, and American. the three are the big carriers at LaGuardia. Southwest would be able to offer only seven daily roundtrips a day with the slots -- but it usually starts service to a new city with only a few flights. PHL was an exception to that pattern. Souithwest's start here was big, to six cities the first day, and was quickly expanded to more than a dozen when the customers responded so eagerly.

It's unclear how Southwest's bankruptcy court bid relates to the auction of slots at LGA, Kennedy and Newark airports that the U.S. Department of Transportation is planning. That move is strongly opposed by incumbent airlines at the airports and the subject of lawsuits in federal court. The New York area airports are among the few in the country where airline operations are limited by regulation, and yet the airports still have some of the highest percentages of delayed flights.