OST-97-2873 / AirTran / Knoxville-Washington DCA / Answer of US Airways / September 17, 1997

Application of

for an exemption from Subparts K and S of l4 C.F.R. Part 93 (Knoxville-Washington DCA))

September 17, 1997

ANSWER OF US AIRWAYS. INC.

AirTran seeks an exemption from the high density airport slot rules at DCA in order to provide nonstop service in the Knoxville-DCA market, a market that already receives (4) daily nonstop roundtrip flights by a US Airways Express carrier. Notwithstanding this substantial level of service, AirTran believes that the market justifies either an exemption from the slot rules or the extraordinary relief of slot withdrawal from DCA incumbents to

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support AirTran's proposed service in the market. Not only is AirTran's application woefully deficient on its face, but it cannot be granted under law.

The Department does not have the authority to grant AirTran's request. AirTran seeks an exemption from the slot limitations at DCA, which since 1986 have been prescribed by federal statute. Congress has expressly forbidden DOT from issuing exemptions to new entrants at National, an airport where congestion and noise is a special federal concern. AirTran requests, in the alternative, that the Department withdraw slots from incumbents at DCA and reallocate them to AirTran under Rule 93.223, but that rule does not apply here. Nor could the request be granted under any other regulation because Congress has expressed its intent that DOT not take slots from incumbent carriers at DCA.

A. DOT Cannot Grant Exemptions To New Entrants At DCA.

As part of the FAA Authorization Act of 1994, Congress enacted a new section of Title 49 governing the availability of slots. 49 U.S.C. ~ 41714. AirTran attempts to invoke the provision in that section permitting DOT to grant exemptions from the slot rules "to new entrant air carriers. like AirTran (in "exceptional" circumstances). However, that provision expressly does not apply to DCA. Instead, "special rules" for DCA authorize DOT to grant slot exemptions Wanly . . . - to an air carrier currently holding or-operating a slot at Washington National Airport .... Section 41714(d) (emphasis supplied). Moreover, exemptions can only be issued to existing DCA operators in very limited circumstances, to "slide" slots from one time period to another. See Conf. Rep. 103-677, p. 53 (1994)

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("section should be used in limited circumstances to meet the needs of carriers holding a limited number of slots.). And, importantly, the statute expressly states that no exemption can be issued at DCA that would "result in the withdrawal or reduction of slots operated by an air carrier. Section 41714(d)(1)(D). /1

Congress' decision to prohibit slot exemptions at DCA for new entrants is directed at protecting DCA -- a uniquely situated airport -- from any possible increase in noise and congestion. Congress has had a longstanding interest in this objective. ~ transferring DCA to local control in 1986, Congress made the slot limits at DCA a statutory mandate, responding to concerns by citizens and local elected officials. /2 Senator Exon, a key proponent of the slot provision in the 1994 Authorization Act, emphasized the "surrounding community concern[s] about noise" in the debate on the legislation, and reported that the special provisions on DCA, allowing only "slides," would ensure that "no phantom slots

1/ Additionally, an exemption to an incumbent is not authorized if it would result in an increase in the total number of daily DCA slots, increase the number of operations in any one hour period by more Han two operations, or result in a net increase in noise impact on surrounding communities resulting from changes in timing of operations. Further, exemptions are to be provided only for operations with Stage 3 aircraft.

2/ During the debate on a slot bill in 1993,-Congresswoman Morella noted that there had been proposals to alter the DCA slot rule in previous years to enhance "airline competition. but argued that "[c]hanges in the slot rule would destroy years of hard work by citizens, by members of Congress, and airport officials to provide genuine relief to the surrounding communities impacted by the traffic in and out of National Airport." 139 Cong. Rec. H 7598 (daily ed. Oct. 7, 1993) (Statement of Rep. Morella).

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could be created under this legislation to effectively increase the number of slots at National Airport." 140 Cong. Rec. S 6997 (daily ed. June 16, 1994) (Statement of Sen. Elton).

B. DOT Cannot Withdraw Slots From Incumbents For New Entrants At DCA.

AirTran alternatively invokes the slot withdrawal provisions of 14 C.F.R. Part 93. Section 93.223 authorizes the Department to withdraw slots from incumbents "to fulfill the Department's operational needs, such as providing slots for international or essential air service operations or eliminating slots. n Allocation of slots to AiTran obviously is not justified by any DOT "operational" need -- it seeks no international or EAS service -- and thus the withdrawal rule does not apply. It is readily apparent in the regulatory history of the buy-sell rule, moreover, that the slot withdrawal provision was not a part of that rule intended to be used to support new entry. The interests of new entrants were addressed by two other aspects of the rule:

First, the adoption of the buy-sell rule itself permits new entrants to acquire slots on the same basis as incumbents .... Second, the lottery mechanism adopted for the allocation of new, returned, or otherwise unallocated slots provides a set aside of 15 percent of available slots for new entrants. 50 Fed. Reg. 52180, 52184 (1985). Instead of reallocating slots from incumbents to new entrants as an initial matter in the buy-sell rule, as some had suggested, DOT—supported by DOJ and the FTC -- concluded that grandfathering the slot allocations at that time was appropriate because it "recognizes the investments and commitments in personnel, equipment, terminal development, and planning by existing carriers." Id Withdrawing slots

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from incumbents, for any reason, "could leave carriers that now have a large investment in airport assets without the operating rights to utilize those assets." 50 Fed. Reg. at 52184.

Most importantly, however, the statutory language in the 1994 Act prohibiting the Withdrawal or reduction of slots operated by an air carrier" at DCA constitutes an express restriction on the FAA's slot regulations, including Section 93.223. Moreover, Men at other airports, that statute authorizes DOT to benefit new entrants (in "exceptional circumstances") only by exemption, not by slot withdrawals. Federal law thus prohibits DOT/FAA from granting AirTran's request to withdraw slots from other air carriers at DCA under this or any other regulation. /3

C. DOT Cannot Allocate Slots To New Entrants At DCA By Rule.

In addition to invoking the Secretary's limited (and inapplicable) exemption authority in 49 U.S.C. §41714 and the FAA's (inapplicable) withdrawal rule, Airtran refers to Secretary Goldschmidt's 1980 special rule on DCA slots. This rule was the subject of Northwest Airlines, Inc. v. Goldschmidt, 645 F.2d 1309 (8th Cir. 1981), but is not relevant here. DOT there engaged in an informal rule-making not a carrier-specific order as requested by AirTran. The rule at issue -- SFAR 43 -- was promulgated after notice and comment and-affected all-carriers at DCA; it was-not-issued son behalf of "New York Air, as AirTran states. See 645 F.2d. at 1318 ("we [do not] agree that the Secretary improperly

3/ Withdrawing slots without compensation, moreover, would raise serious constitutional issues.

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favored the New York-Washington market and New York Air.). The specific relief Airtran requests, benefitting only AirTran, is not properly the subject of a rule. /4 Nor could it be since DOT is without power today to issue such a rule.

The decision in Goldschmidt would not authorize DOT today to undertake an informal rule-making to reallocate slots at DCA to benefit new entrants, because doing so would be squarely inconsistent with subsequently enacted new statutory provisions. The Goldschmidt court concluded that SPAR 43 was properly issued under the Secretary's broad authority in Section 307 of the FAA Act to ensure the efficient utilization of the navigable airspace. At the time of Goldschmidt, there was no other applicable statutory provision.

Since Goldschmidt, however, Congress has by statute limited the total number of hourly slots at DCA and enacted Section 41714. In short, the broad authority in Section 307 has now been modified by more recent and specific statutory provisions, the most recent of which clearly forbids the Secretary from providing slot exemptions to new entrants at DCA and from issuing any slot exemptions at DCA that would "result in the withdrawal or reduction of slots operated by an air carrier. It is fundamental that the most recent and more specific Congressional pronouncement will prevail over prior or more generalized statutes. See Sutherland Statutory Construction 51.02 (5th Ed. 1992).

4/ Nor has AirTran properly petitioned for a rulemaking under DOT procedures.

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AirTran's application for an exemption Tom the high density airport slot rules at DCA or, alternatively, slot withdrawal from DCA incumbents so that AirTran can serve the Knoxville-DCA market must be denied. As detailed above, AirTran's application cannot be granted under law. Moreover, a market that already receives ~ (4) daily nonstop flights would not warrant an exception to the law even if one were available, which it is not.

WHEREFORE, for the foregoing reasons, AirTran's application should be denied.

Respectfully submitted,

ZUCKERT, SCOUTT & RASENBERGER, L.L.P.

Richard D. Mathias

Frank J. Costello

Cathleen P. Peterson

888 Seventeenth Street, N.W.

Suite 600

Washington, D.C. 20006

(202) 298-8660

Counsel for US Airways, Inc.