I'll say I believe skill should get it most of the time. To me, tenure based promotions resemble a union too much.
That said, depending on the kind of job you have, I could see where there's a reasonable expectation of work to be accomplished and if both candidates can hit that quota, great. Now it'll come down to versatility, maybe the experienced guy is a jack of all trades but master of none...sometimes that is good enough, and the more skilled worker is simply a master in one arena. I know in my Dad's shop, we preferred hiring folks that could be 90% independant on the mills, wire machines, water jets, etc, instead of a guy that was 100% independent on one machine.
Another potential reason are business contacts...hell in my young career, I've seen plenty of strategic inept hirings, just because of the clients/customers they bring with them.
I think these hypotenticals also apply to promotions. There's something to be said for the intangibles as well, the guy may be a complete screw up, but if he can get his guys to produce, and the other guy is a boss' dream but can't relate to his team, which would you prefer?
I'm not saying any of these apply in your case, but I could see those being exceptions.