OST-98-35837 / Pro Air / High Density Rule, New York LaGuardia / Answer of Detroit City Airport Study Committee in Opposition / March 20, 1998

Slot Restrictions at New York LaGuardia Airport

The Detroit City Airport Study Committee (the "Committee"), a community alliance representing approximately 900,000 citizens living in the shadow and under the flight paths of Detroit City Airport ("DET") /1 opposes strongly the application of Pro Air, Inc. ("Pro Air") for an exemption from the High Density Rule at New York's LaGuardia Airport, filed pursuant to 49 U.S.C. § 41714(c), to allow nonstop service between DET and LaGuardia. The Secretary has previously determined, in connection with an application filed by Spirit Airlines for almost identical service, that "exceptional circumstances" did not exist for DET/LaGuardia service because the Detroit-New York LaGuardia market was already served by a significant number of nonstop flights; because the carriers' proposal was "speculative, risky, and without quantified benefits;" and because of the potential adverse effects on airport delay and congestion. Order Denying Exemption Spirit Airlines, Inc., Order 95-8-38 at 9. There is little to distinguish the Spirit application from the present Pro Air application except perhaps the riskier more speculative nature of the latter. The Detroit-LaGuardia market is still amply served by nonstop flights and the delay and congestion at LaGuardia

1/ DET is a small airport located near downtown Detroit. It opened in 1927 as the primary airfield for the city. DET has a precision instrument approach runway that measures 5,090 feet in length and 100 feet in width. Its cross-wind runway is 4,025 in length and 100 feet in width. Detroit Metropolitan Wayne County Airport ("Detroit Metro") is now the principal airport for the Detroit metropolitan area.

The (committee is a group of elected officials from many of the jurisdictions surrounding DET who have banded together to protect the quality of life enjoyed by their citizens. The Committee is made up of representatives from the communities of CenterLine, the City of Grosse Pointe, Grosse Pointe Farms, Grosse Pointe Woods, Harper Woods, Macomb County, Warren, and Tecumseh, Ontario.

Pro Air, Inc.

Pro Air currently conducts scheduled passenger service from DET to Newark, Baltimore/Washington, Indianapolis, Orlando and Ft. Myers utilizing two 737-400 airplanes. Pro Air is a "new entrant" air carrier having commenced operations on July 3, 1997. Pro Air's application seeks take-off and landing slots for four daily operations at LaGuardia from DET. Pro Air projects that it will carry 212,000 passengers in that market which equates to a 55 percent load factor. Application of Pro Air, Inc. at 4. There is nothing in Pro Air's application, however, to support those projections.

The financial and operational viability of Pro Air at DET is highly questionable. Pro Air's passenger load factor through the end of 1997 is 17 percent (down from 20 percent through the end of the third quarter); it is unable to pay its debts; and it could not continue flying without a substantial, and perhaps inappropriate, subsidy from DET Moreover. the Operations Specifications issued by the FAA which authorized Pro Air to conduct scheduled operations at DET are currently under review in the United States Court: of Appeals for the District of Columbia Circuit because of an inadequate environmental assessment conducted by the E AA. Detroit City Airport Study Committee v. Federal Aviation Administration, case no. 97-1434. As a consequence, the proposed service is not "operationally and financially viable" within the decisional standards adopted by the Secretary under which such applications are considered. Order Granting and Denying Applications for Slot Exemptions at New York's LaGuardia Airport Applications of Frontier Airlines' Inc. ValuJet Airlines, Inc. and Airtrain Airways Inc., Order 97-10-17.

The Federal Aviation Administration Authorization Act of 1994, authorized the Secretary to grant exemptions from the High Density Rule for, inter Em, new entrant carriers based on a "public interest finding" and "under circumstances determined by the Secretary to be exceptional." 49 U.S.C. § 41714(c). The exceptional circumstances are not further defined in the statute but during the congressional debate on this section, the only exceptional circumstance that was identified and given as an example was the situation where no nonstop air service existed between a city pair. 140 Cong. Rec. S 6997 (daily ed. June 16. 1994) (statement of Sen. Exon). This Senate colloquy concerning the very strict and narrow intent of "exceptional circumstances" was specifically noted by the bill's managers in the Conference Report, H.R. Conf. Rep. No. 677, 103d Cong., 2d Sess. 53 (1994) and subsequently followed by the Secretary in early applications for exemptions to the High Density Rule. Order Granting Exemption. Reno Air. Inc., Order 94-9-30; Order Denying Exemption. Western Pacific Airlines. Inc., Order 95-4-33; Order Deriving Exemption. Spirit Airlines Inc., Order 95-8-38; and Order Granting Exemption. Air South Airlines. Inc., Order 96-5-3 3.

The Secretary has now re-examined those decisional standards in an effort to increase competition and provide lower fares in noncompetitive or underserved markets. Order Granting and Denying Applications for Slot Exemptions at New York's LaGuardia Airport. Applications of Frontier Airlines. Inc., ValuJet Airlines, Inc. and Airtrain Airways. Inc., Order 97-10- l7 at 4. Because of the limited nature of slots available, however, the Secretary determined that there should be a reasonable expectation that the proposed service would be operationally and financially viable. Id. at 4 and 13. The Pro Air application must be denied on that basis.

Airport traffic for a metropolitan area tends to concentrate at specific airports due mainly to increased frequency of service, until such time as congestion no longer makes that concentration attractive. de Neufvill, Planning Multi-Airport Systems in Metropolitan Regions in the l990s, prepared for the FAA (May 11, 1994). There is nothing in Pro Air's application indicating congestion at Detroit Metro or any other airport in the Detroit region (including Flint's Bishop International Airport) that would cause traffic (airline or consumer) to gravitate to DET. Moreover, geographic catchment areas as a predictor of passenger use at an airport "can be discarded." de Neufville at 3. It doesn't matter how many people live close to DET. Frequency of service at an airport, e.g., Detroit Metro, is a more reliable indicator of demand.

The reintroduction of scheduled turbojet passenger service at DET triggered an environmental assessment by the FAA. That assessment was completed in June 1997 with the issuance of a Finding of No Significant Impact ("FONSI). The FAA then authorized scheduled service at DET and amended Pro Air's Operations Specifications accordingly. Pro Air commenced operations on or about July 3, 1997.

The fact that Pro Air can continue to conduct operations at DET in the face of extraordinarily low passenger loads and obvious cash flow difficulties may be a result of inappropriate subsidies being provided by the airport. The Airline-Airport Use and Lease Agreement between Pro Air and the (2ity of Detroit, operator of DET, appears to waive landing fees and terminal rents for a 2 1/2 year period (July 3, 1997 through December 31, 1999). Under FAA policy, an airport may pay certain promotional expenses but may not provide a direct subsidy for airline operations, including the waiver or discounting of fees (landing and other fees) for a period that would exceed an acceptable "promotional period." 61 Fed. Reg. 66735, 66738. The FAA is currently reviewing this situation for compliance. See Letter from Jonathan W. Cross, Airport Law Branch to James T. Bitts re: Complaint Against City of Detroit, Michigan and Detroit City Airport (Nov. 25, 1997).

The application of Pro Air falls far short of demonstrating the exceptional circumstances necessary for the Secretary to grant an exemption to the High Density Rule. The Detroit-LaGuardia market is currently well served by nonstop service. Pro Air serves the New York market (Newark) from DET but has only a 25 percent passenger load. There is nothing to indicate that DET/LaGuardia would suddenly engender 55 percent loads, as projected. Exemptions to the High Density Rule should be judiciously granted and only under circumstances indicating operational and financial success. The Pro Air application is far short of that standard and should be denied by the Secretary.

Respectfully submitted,

Jim Burnley

Jim Pitts

WINSTON & STRAWN

1400 L Street, N.W.

Washington, D.C. 20005

(202) 371-5700

Counsel for Detroit City Airport Study Committee